Climate change is urgent and so should your portfolio preparation. Five ways to start thinking about it, from the strategists at Jefferies

What should investors start thinking about now? Our call of the day, from a team of Jefferies strategists led by Aniket Shah, offers five big investments to take away from the climate report.

1. Bonuses for first responders. The UN warns that carbon emission reductions must be immediate to keep the world below global warming thresholds of 2 degrees. The companies that make the fastest progress on C02 reductions are likely to be rewarded in the capital markets, says Jefferies, who notes that 61% of countries and 21% of companies have net zero targets. “Today there are technologies that allow us to replace emitting point sources with non-emitting point sources, a potential area that stands out to us is that of utilities and the value chain where renewable energies can replace traditional sources. today, ”the team said.

2. Identify the physical risks. In a world above the 2-degree threshold, droughts will be 2.4 times more likely and a 50-year heat wave 13.9 times more likely than in a climate where humans don’t harm it. “Investors will need to develop a much more sophisticated supply chain analysis and risk framework around physical climate risks and their impact on business operations,” Jefferies said. They highlight insurance among industries facing headwinds, which will mean not only higher claims but also possible aggregation risks.

3. Taking into account the tipping points. The UN report explains how warmer temperatures increase the likelihood of high impact effects, and “abrupt responses and tipping points in the climate system … cannot be ruled out.” Jefferies urges investors to “adopt a ‘tipping point” framework for investing in climate change. On the opportunity side, new technologies and policies can also dramatically change the investment landscape, ”they said. One example is President Joe Biden’s goal that half of all new cars sold will be electric by the end of the decade.

4. Risks of elimination of carbon dioxide. Technologies that remove carbon dioxide are big business – the International Energy Agency estimates they could total $ 27 billion this year. But the writers of the UN report seem fully aware of the potential damage to water quality, food supply and biodiversity from such technologies. “For companies that rely heavily on offsets to meet ‘net zero’ goals, this is a potential risk that cannot be ignored,” Jefferies said. Oxfam has calculated that just for Shell RDSA,
   -0.26%

   RDS.A,
   -0.75%,
   BP BP,
   -0.29%

   BP,
   -1.10%,
   TotalEnergies TTE,
   -0.61%

   TTE,
   -0.69%
   and ENI ENI,
   + 0.04%
   net zero targets, twice the size of the UK’s carbon sinks are needed. Carbon sinks are natural or man-made deposits that take CO2 from the atmosphere and store it.

5. Less stuff. The report presents five global socio-economic trajectories projected through 2100, only one of which will keep temperatures in line with the Paris Agreement. This winning path implies a society driven by general well-being and not by economic growth. “The majority of the world economy is consumption, especially the consumption of high-income people; a paradigm shift in economic growth could significantly hurt consumer spending in all sectors and regions, ”Jefferies said. The investment impacts of fewer things: huge.

Read: 20 actions for maximum growth as the world shifts to clean energy

The gloom of small businesses and AMC’s surges

Not yet “out of the woods”. It was AMC from AMC Entertainment,
+ 3.36%
General manager Adam Aron tempered optimism about the film industry’s recovery after reporting a narrower quarterly loss on Monday night. The shares are on the rise. as he also announced a theater deal with AT & T’s T,
-0.39%
Warner Bros.

Small businesses lost almost all of their confidence gains in June in July, according to the latest NFIB survey. Preliminary second quarter productivity and unit labor costs are yet to come, a day ahead of big inflation figures. Chicago Fed Chairman Charles Evans will hold a press conference at 2:30 p.m. EST.

Atlanta Fed Chairman Raphael Bostic said on Monday the conditions were right to start moving forward with the cut, with those thoughts echoed by Boston Fed Chairman Eric Rosengren, who said the bank control panel should start calling back help soon.

The world’s largest technology investor, Softbank 9434,
-0.78%
reports a drop in profits following the drop in the value of some of its most important investments.

Bitcoin BTCUSD,
+ 0.70%
remains at $ 45,000 after the industry failed to secure changes to cryptocurrency tax reporting rules as part of an infrastructure bill expected to pass on Tuesday. Coinbase COIN crypto platform,
+ 8.60%
will release the results after markets close on Tuesday.

The steps

YM00 American Equity Futures,
-0.04%

ES00,
+ 0.02%

NQ00,
+ 0.13%
are flat, although European SXXP stocks,
+ 0.26%
are up and Asian stocks had a rather bullish session, with China’s CSI 300,000,300,
+ 1.16%
earn 1%.

Random readings

In charity camping, the 11-year-old is on his 500th night and has raised £ 600,000.

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