Archive for Opinions – Page 3

22 Nov

Companies are still committing to net-zero emissions, even if it’s a bumpy road – here’s what the data show

By L. Beril Toktay, Georgia Institute of Technology; Abhinav Shubham, Georgia Institute of Technology; Donghyun (Daniel) Choi, Georgia Institute of Technology, and Manpreet S. Hora, Georgia Institute of Technology

Companies around the world are increasingly committed to cutting their greenhouse gas emissions to slow and ultimately reverse climate change.

One indicator is the number of companies that have set emissions targets as part of the Science Based Targets initiative, or SBTi, a global nonprofit organization. That number grew from 164 companies in late 2018 to over 6,600 by November 2024. And thousands more have committed to lower their emissions.

It’s not always a smooth road, however. Some of those companies – including big names like Microsoft and Walmart – have had to pull back on some of their SBTi commitments.

We study the history of SBTi pledges to understand these commitments and what can undermine them. We believe there is more to the story of these pullbacks than meets the eye.

What is net zero?

To understand corporate climate commitments, let’s start with the concept of “net zero.”

The Paris Agreement, an international treaty on climate change, aims to limit global warming to well below 2 degrees Celsius (3.6 Fahrenheit) and ideally to 1.5 C (2.7 F). Meeting the more ambitious target of 1.5 C will require reaching net-zero greenhouse gas emissions by around 2050.

Net zero is the point at which the amount of greenhouse gases released into the atmosphere is balanced by greenhouse gases removed, either through natural sources like forests or technologies such as carbon capture and storage.

The Science Based Targets initiative, developed alongside the Paris Agreement in 2015, provides a framework to help companies align their efforts with the 1.5 C goal.

SBTi commitments have grown quickly

To join the initiative, companies begin by signing a letter of commitment to set near-term (2030) and long-term (2050) targets for reducing their emissions. Companies have 24 months to develop targets that adhere to SBTi guidelines. If the targets are validated and approved by SBTi, the company announces its targets publicly. The targets must be revalidated every five years, or they expire.

The number of global companies committing to and setting targets with SBTi has grown rapidly in recent years.

By the end of 2023, 7,929 companies representing 39% of global market capitalization had committed to set targets, and 4,205 had targets already validated by SBTi. By November 2024, that number had grown to 6,614.

This impressive participation is particularly significant given SBTi’s high expectations. SBTi requires near-term targets to be set so companies reduce emissions by at least 42% by 2030 from 2020 levels.

Why some companies have pulled back

So, why are companies like, Walmart, Microsoft and Amazon scaling back their commitments with SBTi?

While some people attribute these moves to political pressure from fossil fuel supporters, a closer look at data since 2013 reveals a more complex set of factors that may better explain their actions.

We found that, over the past decade, 695 companies either withdrew near- or long-term commitments or had a commitment that expired and was terminated by SBTi. These actions were concentrated in two distinct periods.

The first period followed SBTi’s decision in April 2019 to update its criteria, including tightening the minimum target from under 2 C to either “well below 2 C” or 1.5 C. We believe several companies were unprepared to meet the new requirements. Among the 500 companies that had either committed to or set a target by the end of 2018, 94 (18.8%) terminated their initial commitments after the criteria changed.

The second period was after January 2023, when SBTi introduced a new compliance policy and began removing commitments that had expired. In this period, 531 commitments were terminated – 497 of them because the commitment expired, and 16 because the company withdrew.

It’s important to recognize that SBTi strategically raised the bar to encourage companies to accelerate their progress in addressing climate change.

Reasons some companies have struggled

In a report in March 2024, SBTi provided a candid look at companies’ climate commitments from 2019 to 2021 and, importantly, where they struggled.

Approximately half of the companies that responded to its survey identified the complexity of addressing Scope 3 emissions – emissions from a company’s supply chain and use of its products – as a primary obstacle to setting net-zero targets. The supply chain is often considered a blind spot for measuring environmental impact and is difficult for companies to control.

On the day the report was released, SBTi removed the long-term commitments of 239 companies. About 60% of those companies had near-term targets that remained.

This helps explain the news around companies such as Walmart, Microsoft and Amazon.

Walmart’s and Microsoft’s long-term net-zero commitments were terminated, though both companies still have valid near-term targets with SBTi.

Moreover, both reaffirm their environmental commitments in their annual reports. Walmart is currently finalizing its Scope 3 emissions analysis to inform future strategy development, and Microsoft is investing in carbon removal technologies to become carbon-negative by 2030.

Amazon presents a more challenging case. The company may have faced difficulty meeting SBTi’s stringent mandate, particularly around supply chain emissions. Amazon has said it is still committed to reaching net-zero emissions and plans to explore setting targets with other organizations.

Many companies are on track

Our analysis of SBTi’s progress data, which includes all companies that had set a target by 2022 for which SBTi has emissions data, reveals that companies are cutting their emissions by a median annual rate of 5.4%.

Looking just at direct emissions from companies’ operations (Scope 1) and their purchased electricity (Scope 2), companies did even better. The median annual emissions decrease was 7.25% for companies with both Scope 1 and Scope 2 targets.

Scope 2 emissions are the low-hanging fruit and frequently align with cost-saving measures like improving energy efficiency.

Scope 3 emissions, those generated by companies’ suppliers and by consumer use of their products, are the biggest challenge. Companies with a separate Scope 3 target only reduced those emissions by a median annual rate of about 3%.

In 2024, SBTi announced plans to revise its Net-Zero Standard and allow companies to use carbon offsets to meet their Scope 3 emissions targets, drawing intense criticism. Carbon offsets allow companies to pay projects to reduce emissions on their behalf, such as by planting trees or managing forests.

SBTi’s challenge lies in finding a balance that maintains the integrity of its standards while encouraging broader participation, especially from high-impact industries.

Other ways companies are reducing emissions

While setting and achieving SBTi targets signals a strong commitment to combating climate change, many companies are setting emissions goals and working toward them without joining SBTi.

An example is the Drawdown Georgia Business Compact. It was created to accelerate the adoption of 20 technology- and market-ready solutions and includes nearly 70 companies, from multinationals headquartered in Georgia like Delta and UPS to small- and medium-size enterprises operating in the state.

Through the compact, companies are advancing initiatives with local economic benefits. For example, they are exploring ways to maximize Georgia forests’ ability to remove carbon and discussing effective ways to deploy sustainable aviation fuels.

The road to net-zero emissions will be bumpy. Yet the rapid growth of global corporate commitments, as well as action by a wider range of companies at the regional level, suggests corporate efforts are nevertheless moving forward.The Conversation

About the Authors:

L. Beril Toktay, Professor of Operations Management, Georgia Institute of Technology; Abhinav Shubham, Ph.D. Candidate in Operations Management, Georgia Institute of Technology; Donghyun (Daniel) Choi, Ph.D. Candidate in Operations Management, Georgia Institute of Technology, and Manpreet S. Hora, Professor of Operations Management, Georgia Institute of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Stock Market News
21 Nov

Asking ChatGPT vs Googling: Can AI chatbots boost human creativity?

By Jaeyeon Chung, Rice University 

Think back to a time when you needed a quick answer, maybe for a recipe or a DIY project. A few years ago, most people’s first instinct was to “Google it.” Today, however, many people are more likely to reach for ChatGPT, OpenAI’s conversational AI, which is changing the way people look for information.

Rather than simply providing lists of websites, ChatGPT gives more direct, conversational responses. But can ChatGPT do more than just answer straightforward questions? Can it actually help people be more creative?

I study new technologies and consumer interaction with social media. My colleague Byung Lee and I set out to explore this question: Can ChatGPT genuinely assist people in creatively solving problems, and does it perform better at this than traditional search engines like Google?

Across a series of experiments in a study published in the journal Nature Human Behavour, we found that ChatGPT does boost creativity, especially in everyday, practical tasks. Here’s what we learned about how this technology is changing the way people solve problems, brainstorm ideas and think creatively.

ChatGPT and creative tasks

Imagine you’re searching for a creative gift idea for a teenage niece. Previously, you might have googled “creative gifts for teens” and then browsed articles until something clicked. Now, if you ask ChatGPT, it generates a direct response based on its analysis of patterns across the web. It might suggest a custom DIY project or a unique experience, crafting the idea in real time.

To explore whether ChatGPT surpasses Google in creative thinking tasks, we conducted five experiments where participants tackled various creative tasks. For example, we randomly assigned participants to either use ChatGPT for assistance, use Google search, or generate ideas on their own. Once the ideas were collected, external judges, unaware of the participants’ assigned conditions, rated each idea for creativity. We averaged the judges’ scores to provide an overall creativity rating.

One task involved brainstorming ways to repurpose everyday items, such as turning an old tennis racket and a garden hose into something new. Another asked participants to design an innovative dining table. The goal was to test whether ChatGPT could help people come up with more creative solutions compared with using a web search engine or just their own imagination.

The results were clear: Judges rated ideas generated with ChatGPT’s assistance as more creative than those generated with Google searches or without any assistance. Interestingly, ideas generated with ChatGPT – even without any human modification – scored higher in creativity than those generated with Google.

One notable finding was ChatGPT’s ability to generate incrementally creative ideas: those that improve or build on what already exists. While truly radical ideas might still be challenging for AI, ChatGPT excelled at suggesting practical yet innovative approaches. In the toy-design experiment, for example, participants using ChatGPT came up with imaginative designs, such as turning a leftover fan and a paper bag into a wind-powered craft.

Limits of AI creativity

ChatGPT’s strength lies in its ability to combine unrelated concepts into a cohesive response. Unlike Google, which requires users to sift through links and piece together information, ChatGPT offers an integrated answer that helps users articulate and refine ideas in a polished format. This makes ChatGPT promising as a creativity tool, especially for tasks that connect disparate ideas or generate new concepts.

It’s important to note, however, that ChatGPT doesn’t generate truly novel ideas. It recognizes and combines linguistic patterns from its training data, subsequently generating outputs with the most probable sequences based on its training. If you’re looking for a way to make an existing idea better or adapt it in a new way, ChatGPT can be a helpful resource. For something groundbreaking, though, human ingenuity and imagination are still essential.

Additionally, while ChatGPT can generate creative suggestions, these aren’t always practical or scalable without expert input. Steps such as screening, feasibility checks, fact-checking and market validation require human expertise. Given that ChatGPT’s responses may reflect biases in its training data, people should exercise caution in sensitive contexts such as those involving race or gender.

We also tested whether ChatGPT could assist with tasks often seen as requiring empathy, such as repurposing items cherished by a loved one. Surprisingly, ChatGPT enhanced creativity even in these scenarios, generating ideas that users found relevant and thoughtful. This result challenges the belief that AI cannot assist with emotionally driven tasks.

Future of AI and creativity

As ChatGPT and similar AI tools become more accessible, they open up new possibilities for creative tasks. Whether in the workplace or at home, AI could assist in brainstorming, problem-solving and enhancing creative projects. However, our research also points to the need for caution: While ChatGPT can augment human creativity, it doesn’t replace the unique human capacity for truly radical, out-of-the-box thinking.

This shift from Googling to asking ChatGPT represents more than just a new way to access information. It marks a transformation in how people collaborate with technology to think, create and innovate.The Conversation

About the Author:

Jaeyeon Chung, Assistant Professor of Business, Rice University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Programming
21 Nov

Americans face an insurability crisis as climate change worsens disasters – a look at how insurance companies set rates and coverage

By Andrew J. Hoffman, University of Michigan 

Home insurance rates are rising in the United States, not only in Florida, which saw tens of billions of dollars in losses from hurricanes Helene and Milton, but across the country.

According to S&P Global Market Intelligence, homeowners insurance increased an average of 11.3% nationwide in 2023, with some states, including Texas, Arizona and Utah, seeing nearly double that increase. Some analysts predict an average increase of about 6% in 2024.

These increases are driven by a potent mix of rising insurance payouts coupled with rising costs of construction as people build increasingly expensive homes and other assets in harm’s way.

When home insurance averages $2,377 a year nationally, and $11,000 per year in Florida, this is a blow to many people. Despite these rising rates, Jacques de Vaucleroy, chairman of the board of reinsurance giant Swiss Re, believes U.S. insurance is still priced too low to fully cover the risks.

It isn’t just that premiums are changing. Insurers now often reduce coverage limits, cap payouts, increase deductibles and impose new conditions or even exclusions on some common perils, such as protection for wind, hail or water damage. Some require certain preventive measures or apply risk-based pricing – charging more for homes in flood plains, wildfire-prone zones, or coastal areas at risk of hurricanes.

Homeowners watching their prices rise faster than inflation might think something sinister is at play. Insurance companies are facing rapidly evolving risks, however, and trying to price their policies low enough to remain competitive but high enough to cover future payouts and remain solvent in a stormier climate. This is not an easy task. In 2021 and 2022, seven property insurers filed for bankruptcy in Florida alone. In 2023, insurers lost money on homeowners coverage in 18 states.

But these changes are raising alarm bells. Some industry insiders worry that insurance may be losing its relevance and value – real or perceived – for policyholders as coverage shrinks, premiums rise and exclusions increase.

How insurers assess risk

Insurance companies use complex models to estimate the likelihood of current risks based on past events. They aggregate historical data – such as event frequency, scale, losses and contributing factors – to calculate price and coverage.

However, the increase in disasters makes the past an unreliable measure. What was once considered a 100-year event may now be better understood as a 30- or 50-year event in some locations.

What many people do not realize is that the rise of so-called “secondary perils” – an insurance industry term for floods, hailstorms, strong winds, lightning strikes, tornadoes and wildfires that generate small to mid-size damage – is becoming the main driver of the insurability challenge, particularly as these events become more intense, frequent and cumulative, eroding insurers’ profitability over time.

Climate change plays a role in these rising risks. As the climate warms, air can hold more moisture – about 7% more with every degree Celsius of warming. That leads to stronger downpours, more thunderstorms, larger hail events and a higher risk of flooding in some regions. The U.S. was on average 1.5 degrees Celsius (2.6 degrees Fahrenheit) warmer in 2022 than in 1970.

Insurance companies are revising their models to keep up with these changes, much as they did when smoking-related illnesses became a significant cost burden in life and health insurance. Some companies use climate modeling to augment their standard actuarial risk modeling. But some states have been hesitant to allow climate modeling, which can leave companies systematically underrepresenting the risks they face.

Each company develops its own assessment and geographic strategy to reach a different conclusion. For example, Progressive Insurance has raised its homeowner rates by 55% between 2018 and 2023, while State Farm has raised them only 13.7%.

While a homeowner who chooses to make home improvements, such as installing a luxury kitchen, can expect an increase in premiums to account for the added replacement value, this effect is typically small and predictable. Generally, the more substantial premium hikes are due to the ever-increasing risk of severe weather and natural disasters.

Insurance for insurers

When risks become too unpredictable or volatile, insurers can turn to reinsurance for help.

Reinsurance companies are essentially insurance companies that insure insurance companies. But in recent years, reinsurers have recognized that their risk models are also no longer accurate and have raised their rates accordingly. Property reinsurance alone increased by 35% in 2023.

Reinsurance is also not very well suited to covering secondary perils. The traditional reinsurance model is focused on large, rare catastrophes, such as devastating hurricanes and earthquakes.

Two maps show highest costs on the coasts and in the West and Northeast.
Maps illustrate the average loss from flooding alone and expected increases by mid-century. About 90% of catastrophes in the U.S. involve flooding, but just 6% of U.S. homeowners have flood insurance.
Fifth National Climate Assessment

As an alternative, some insurers are moving toward parametric insurance, which provides a predefined payment if an event meets or exceeds a predefined intensity threshold. These policies are less expensive for consumers because the payouts are capped and cover events such as a magnitude 7 earthquake, excessive rain within a 24-hour period or a Category 3 hurricane in a defined geographical area. The limits allow insurers to provide a less expensive form of insurance that is less likely to severely disrupt their finances.

Protecting the consumer

Of course, insurers don’t operate in an entirely free market. State insurance regulators evaluate insurance companies’ proposals to raise rates and either approve or deny them.

The insurance industry in North Carolina, for example, where Hurricane Helene caused catastrophic damage, is arguing for a homeowner premium increase of more than 42% on average, ranging from 4% in parts of the mountains to 99% in some waterfront areas.

If a rate increase is denied, it could force an insurer to simply withdraw from certain market sectors, cancel existing policies or refuse to write new ones when their “loss ratio” – the ratio of claims paid to premiums collected – becomes too high for too long.

Since 2022, seven of the top 12 insurance carriers have either cut existing homeowners policies or stopped selling new ones in the wildfire-prone California homeowner market, and an equal number have pulled back from the Florida market due to the increasing cost of hurricanes.

To stem this tide, California is reforming its regulations to speed up the rate increase approval process and allow insurers to make their case using climate models to judge wildfire risk more accurately.

Florida has instituted regulatory reforms that have reduced litigation and associated costs and has removed 400,000 policies from the state-run insurance program. As a result, eight insurance carriers have entered the market there since 2022.

Looking ahead

Solutions to the mounting insurance crisis also involve how and where people build. Building codes can require more resilient homes, akin to how fire safety standards increased the effectiveness of insurance many decades ago.

By one estimate, investing $3.5 billion in making the two-thirds of U.S. homes not currently up to code more resilient to storms could save insurers as much as $37 billion by 2030.

In the end, if affordability and relevance of insurance continue to degrade, real estate prices will start to decline in exposed locations. This will be the most tangible sign that climate change is driving an insurability crisis that disrupts wider financial stability.

About the Authors:

Justin D’Atri, Climate Coach at the education platform Adaptify U and Sustainability Transformation Lead at Zurich Insurance Group, contributed to this article.The Conversation

Andrew J. Hoffman, Holcim (US) Professor of Sustainable Enterprise, Ross School of Business, School for Environment & Sustainability, University of Michigan

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
13 Nov

Countries spend huge sums on fossil fuel subsidies – why they’re so hard to eliminate

By Bruce Huber, University of Notre Dame 

Fossil fuels are the leading driver of climate change, yet they are still heavily subsidized by governments around the world.

Although many countries have explicitly promised to reduce fossil fuel subsidies to combat climate change, this has proven difficult to accomplish. As a result, fossil fuels remain relatively inexpensive, and their use and greenhouse gas emissions continue to grow.

I work in environmental and energy law and have studied the fossil fuel sector for years. Here’s how fossil fuel subsidies work and why they’re so stubborn.

What is a subsidy?

A subsidy is a financial benefit given by a government to an entity or industry. Some subsidies are relatively obvious, such as publicly funded crop insurance or research grants to help pharmaceutical companies develop new drugs.

Others are less visible. A tariff on an imported product, for example, can subsidize domestic manufacturers of that product. More controversially, some would argue that when a government fails to make an industry pay for damage it causes, such as air or water pollution, that also amounts to a subsidy.

Subsidies, especially in this broader sense, are widespread throughout the global economy. Many industries receive benefits through public policies that are denied to other industries in the same jurisdiction, such as tax breaks, relaxed regulations or trade supports.

Governments employ subsidies for political and practical reasons. Politically, subsidies are useful for striking bargains or shoring up political support. In democracies, they can mollify constituencies otherwise unwilling to agree to a policy change. The 2022 Inflation Reduction Act, for example, squeaked through Congress by subsidizing both renewable energy and oil and gas production.

Practically, subsidies can boost a promising young industry such as electric vehicles, attract business to a community or help a mature sector survive an economic downturn, as the auto industry bailout did in 2008. Of course, policies can outlive their original purpose; some of today’s petroleum subsidies can be traced to the Great Depression.

How are fossil fuels subsidized?

Fossil fuel subsidies take many forms around the world. For example:

  • In Saudi Arabia, fuel prices are set by the government rather than the market; price ceilings subsidize the price citizens pay for gasoline. The cost to state-owned oil producers there is offset by oil exports, which dwarf domestic consumption.
  • Indonesia also caps energy prices, then compensates state-owned energy companies for the losses they bear.
  • In the United States, oil companies can take a tax deduction for a large portion of their drilling costs.

Other subsidies are less direct, such as when governments underprice permits to mine or drill for fossil fuels or fail to collect all the taxes owed by fossil fuel producers.

Estimates of the total value of global fossil fuel subsidies vary considerably depending on whether analysts use a broad or narrow definition. The Organization for Economic Cooperation and Development, or OECD, calculated the annual total to be about US$1.5 trillion in 2022. Tche International Monetary Fund reported a number over four times higher, about $7 trillion.

Why do estimates of fossil fuel subsidies vary so dramatically?

Analysts disagree about whether subsidy tabulations should include environmental damage from the extraction and use of fossil fuels that is not incorporated into the fuel’s price. The IMF treats the costs of global warming, local air pollution and even traffic congestion and road damage as implicit subsidies because fossil fuel companies don’t pay to remedy these problems. The OECD omits these implicit benefits.

But whichever definition is applied, the combined effect of national policies on fossil fuel prices paid by consumers is dramatic.

Oil, for example, is traded on a global market, but the price per gallon of petrol varies enormously around the world, from about 10 cents in Iran, Libya and Venezuela – where it is heavily subsidized – to over $7 in Hong Kong, the Netherlands and much of Scandinavia, where fuel taxes counteract subsidies.

What is the world doing about fossil fuel subsidies?

Global leaders have acknowledged that subsidies for fossil fuels undermine efforts to address climate change because they make fossil fuels cheaper than they would be otherwise.

In 2009, the heads of the G20, which includes many of the world’s largest economies, issued a statement resolving to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” Later that same year, the governments of the Asia-Pacific Economic Cooperation forum, or APEC, made an identical pledge.

In 2010, 10 other countries, including the Netherlands and New Zealand, formed the Friends of Fossil Fuel Subsidy Reform group to “build political consensus on the importance of fossil fuel subsidy reform.”

Yet these commitments have scarcely moved the needle. A major study of 157 countries between 2003 and 2015 found that governments “collectively made little or no progress” toward reducing subsidies. In fact, the OECD found that total global subsidies nearly doubled in both 2021 and 2022.

So why are fossil fuel subsidies hard to eliminate?

There are various reasons fossil fuel subsidies are hard to eliminate. Many subsidies directly affect the costs that fossil fuel producers face, so reducing subsidies tends to increase prices for consumers. Because fossil fuels touch nearly every economic sector, rising fuel costs elevate prices for countless goods and services.

Subsidy reform tends to be broadly felt and pervasively inflationary. And unless carefully designed, subsidy reductions can be regressive, forcing low-income residents to spend a larger percentage of their income on energy.

So, even in countries where there is widespread support for robust climate policies, reducing subsidies can be deeply unpopular and may even cause public unrest.

The 2021-22 spike in fossil fuel subsidies is illustrative. After Russia’s invasion of Ukraine, energy prices surged throughout Europe. Governments were quick to provide aid for their citizens, resulting in their largest fossil fuel subsidies ever. Forced to choose between climate goals and affordable energy, Europe overwhelmingly chose the latter.

Of course, economists note that increasing the price of fossil fuels can lower demand, reducing emissions that are driving climate change and harming the environment and human health. Seen in that light, price spikes present an opportunity for reform. As the IMF noted, when prices recede after a surge, it “provide[s] an opportune time to lock in pricing of carbon and local air pollution emissions without necessarily raising energy prices above recently experienced levels.”The Conversation

About the Author:

Bruce Huber, Professor of Law, University of Notre Dame

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Energy Opinions
12 Nov

Companies are buying up cheap carbon offsets − data suggest it’s more about greenwashing than helping the climate

By Sehoon Kim, University of Florida 

Carbon offsets have become big business as more companies make promises to protect the climate but can’t meet the goals on their own.

When a company buys carbon offsets, it pays a project elsewhere to reduce greenhouse gas emissions on its behalf – by planting trees, for example, or generating renewable energy. The idea is that reducing greenhouse gas emissions anywhere pays off for the global climate.

But not all offsets have the same value. There is growing skepticism about many of the offsets sold on voluntary carbon markets. In contrast to compliance markets, where companies buy and sell a limited number of allowances that are issued by regulators, these voluntary carbon markets have few rules that can be enforced consistently. Investigations have found that many voluntary offset projects, forest management projects in particular, have done little to benefit the climate despite their claims.

I specialize in sustainable finance and corporate governance. My colleagues and I recently conducted the first systematic, evidence-based look at the global landscape of voluntary carbon offsets used by hundreds of large, publicly listed firms around the world.

The results raise questions about how some companies use these offsets and cast doubt on how effective voluntary carbon markets – at least in their current state – are in assisting a global transition to net-zero-emissions.

Which companies use low-quality offsets might surprise you

Our analysis shows that the global carbon-offset market has grown to comprise a rich variety of offset projects. Some generate renewable energy, contribute to energy-efficient housing and appliances, or capture and store carbon. Others preserve forests and grassland. The majority are based in Asia, Africa and the Americas, but they exist in other regions too.

Companies use these projects to boost their environmental claims in order to help attract investors, customers and support from various groups. That practice has skyrocketed, from virtually nothing in 2005 to roughly 30 million metric tons of carbon offset per year in 2022. Investment banking firm Morgan Stanley in 2023 forecast that the voluntary offset market would grow to about US$100 billion by 2030 and to around $250 billion by 2050.

For our analysis, we examined 866 publicly traded companies that used offsets between 2005 and 2021.

We found that large firms with a high percentage of big institutional investors and commitments to reach net-zero emissions are particularly active in voluntary carbon markets.

Our results also reveal a peculiar pattern: Industries with relatively low emissions, such as services and financial industries, are much more intensive in their use of offsets. Some used offsets for almost all of the emissions cuts they claimed.

In contrast, high-emissions industries, such as oil and gas, utilities or transportation, used negligible amounts of offsets compared to their heavy carbon footprints.

These facts cast a cloud of doubt on how effective voluntary carbon markets could really be at cutting global greenhouse gas emissions. They also raise questions about companies’ motives for using offsets.

Why companies rely on offsets: 2 explanations

One explanation for these patterns is that offsetting is a means to “outsource” efforts to transition away from greenhouse gas emissions. Companies with smaller carbon footprints find it cheaper to buy offsets than to make expensive investments in reducing their own emissions.

At the same time, we found that emissions-heavy companies were more likely to reduce their own emissions in-house, because offsetting massive amounts of emissions every year for an indefinite future would be more costly.

A more pernicious explanation for the growth in voluntary offsets is that offsets enable “greenwashing.” In this view, companies use offsets to cheaply refurbish their image to naive stakeholders who are not well informed about the quality of offsets. Agencies rate offset projects on how likely they are to meet their climate claims, among other indicators of the trustworthiness of offsets. Our reviews of pricing data and ratings found that projects rated as low quality have substantially lower prices.

We found that relatively few of the 1,413 offset projects used by companies in our sample had been verified as high quality by an external carbon rating agency. Most offset credits used by companies were strikingly cheap. More than 70% of retired offsets were priced below $4 per ton.

These explanations are not mutually exclusive. We found that low-emissions companies could easily alter their peer rankings for ESG performance – how well they do on environmental, social and governance issues – by offsetting a small quantity of emissions.

Fixing the voluntary market for the future

Our findings have important implications as policymakers and regulators debate rules for the voluntary carbon markets.

The data suggests that voluntary carbon markets are currently flooded with cheap, low-quality offsets, likely due to a lack of integrity guidelines and regulations for voluntary carbon markets to ensure the transparency and authenticity of offset projects. This lack of guidelines may also encourage the use of low-quality offsets.

Ever since Article 6 of the Paris climate agreement created principles for carbon markets and ways countries could cooperate to reach climate targets, agreeing on how to implement those principles has been a challenge. For the principles to be successful, negotiators must agree on project eligibility and information disclosure standards, among other issues.

In April 2024, SBTi, the world’s leading science-based arbiter of corporate climate targets, added urgency to that process when it announced that it would allow companies to meet their carbon goals with carbon offsets to cover emissions in their supply chains.

The following month, the U.S. Treasury, Energy and Agriculture departments jointly released a policy statement laying out their own template for rules to govern voluntary carbon markets. “Voluntary carbon markets can help unlock the power of private markets to reduce emissions, but that can only happen if we address significant existing challenges,” U.S. Treasury Secretary Janet Yellen said at the time.

Article 6 and standards for carbon offsets are on the agenda for the 2024 United Nations climate conference, COP29, Nov. 11-22 in Baku, Azerbaijan.

With many segments of voluntary carbon markets faltering, the COP29 summit may be a make-or-break moment for voluntary carbon offsets to become a viable contributor to decarbonization going forward.The Conversation

About the Author:

Sehoon Kim, Assistant Professor of Finance, University of Florida

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
10 Nov

Currency Speculators boosted Euro bets, cut GBP & Yen bets on Election Day

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday November 5th and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Changes led by Euro & Swiss Franc

The COT currency market speculator bets were lower this week as four out of the eleven currency markets we cover had higher positioning while the other seven markets had lower speculator contracts.

Leading the gains for the currency markets was the EuroFX (28,651 contracts) with the Swiss Franc (4,017 contracts), Australian Dollar (3,460 contracts) and Bitcoin (412 contracts) also having positive weeks.

The currencies seeing declines in speculator bets on the week were the British Pound (-21,272 contracts), the Japanese Yen (-19,350 contracts), the Brazilian Real (-8,256 contracts), the Canadian Dollar (-7,730 contracts), the New Zealand Dollar (-6,032 contracts), the Mexican Peso (-3,950 contracts) and with the US Dollar Index (-1,589 contracts) also seeing decreased bets on the week.

Currency Speculators boosted Euro bets, cut GBP & Yen bets on Election Day

Highlighting the COT currency’s data for the week was the sharp changes in positioning on the US Presidential election.

The Euro currency positions jumped by over +28,000 net contracts on the election day of Tuesday November 5th. The Euro positions had been falling sharply recently as speculators cut their bets for five straight weeks and for seven out of the previous eight weeks prior to Tuesday. This was an 8-week drop by -150,322 contracts for the Euro and had dropped the overall standing to -50,304 contracts on October 29th before this week’s turnaround.

Despite this week’s boost in bets, the Euro exchange rate had a tough week and fell by over 1 percent against the US Dollar. The Euro has declined in five out of the past six weeks and has now slid from trading at 1.12 in late September to a 1.0729 close this week.

The British pound speculator bets this week dropped by over -21,000 contracts and decreased for the fifth consecutive week. The GBP speculator positions have fallen by a total of -48,681 contracts over these last five weeks and this weakness has brought the overall speculator standing down to a 19-week low, dating back to June 25th. The overall speculator position does remain bullish at a total of 45,084 contracts and has been in a continuous bullish level since May 21st, 2024.

The GBP exchange also has been on the weaker side lately and has now fallen from near 1.3400 in late September to this week’s closing price of approximately 1.2912.

The Japanese yen bets saw a big slide this week and the yen bets have been lower in each of the past six weeks. The total decline of spec bets in the past six weeks has reached -110,178 contracts and has taken the overall speculator standing down from a total of +66,011 contracts on September 17th to this week’s level of -44,167 contracts.

The yen exchange versus the USD has declined for six out of the past eight weeks with the US Dollar (USDJPY currency pair) going from around the 140.75 exchange rate in late September to this week’s close at approximately 152.60.

Currencies Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Australian Dollar

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Australian Dollar (98 percent) leads the currency markets this week. The British Pound (56 percent) and the Japanese Yen (56 percent) come in as the next highest in the weekly strength scores.

On the downside, the US Dollar Index (5 percent), the Canadian Dollar (9 percent), the EuroFX (12 percent) and Bitcoin (19.5 percent) come in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent).

3-Year Strength Statistics:
US Dollar Index (4.7 percent) vs US Dollar Index previous week (8.0 percent)
EuroFX (12.1 percent) vs EuroFX previous week (0.0 percent)
British Pound Sterling (56.4 percent) vs British Pound Sterling previous week (65.9 percent)
Japanese Yen (56.0 percent) vs Japanese Yen previous week (63.7 percent)
Swiss Franc (40.1 percent) vs Swiss Franc previous week (32.0 percent)
Canadian Dollar (9.4 percent) vs Canadian Dollar previous week (12.9 percent)
Australian Dollar (98.3 percent) vs Australian Dollar previous week (95.8 percent)
New Zealand Dollar (25.1 percent) vs New Zealand Dollar previous week (36.7 percent)
Mexican Peso (46.7 percent) vs Mexican Peso previous week (48.7 percent)
Brazilian Real (40.2 percent) vs Brazilian Real previous week (48.0 percent)
Bitcoin (19.5 percent) vs Bitcoin previous week (10.5 percent)

Australian Dollar & Brazilian Real top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Australian Dollar (30 percent) and the Brazilian Real (23 percent) lead the past six weeks trends for the currencies. The Mexican Peso (9 percent) and Bitcoin (2 percent) are the next highest positive movers in the 3-Year trends data.

The Canadian Dollar (-49 percent) leads the downside trend scores currently with the Japanese Yen (-44 percent), EuroFX (-39 percent) and the Swiss Franc (-22 percent) following next with lower trend scores.

3-Year Strength Trends:
US Dollar Index (-1.8 percent) vs US Dollar Index previous week (-0.2 percent)
EuroFX (-39.3 percent) vs EuroFX previous week (-50.5 percent)
British Pound Sterling (-18.8 percent) vs British Pound Sterling previous week (1.5 percent)
Japanese Yen (-44.0 percent) vs Japanese Yen previous week (-32.6 percent)
Swiss Franc (-21.7 percent) vs Swiss Franc previous week (-34.2 percent)
Canadian Dollar (-49.1 percent) vs Canadian Dollar previous week (-42.3 percent)
Australian Dollar (30.0 percent) vs Australian Dollar previous week (48.0 percent)
New Zealand Dollar (-13.0 percent) vs New Zealand Dollar previous week (-0.5 percent)
Mexican Peso (9.2 percent) vs Mexican Peso previous week (13.4 percent)
Brazilian Real (23.5 percent) vs Brazilian Real previous week (26.6 percent)
Bitcoin (1.9 percent) vs Bitcoin previous week (-19.6 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week came in at a net position of 95 contracts in the data reported through Tuesday. This was a weekly lowering of -1,589 contracts from the previous week which had a total of 1,684 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 4.7 percent. The commercials are Bullish-Extreme with a score of 94.0 percent and the small traders (not shown in chart) are Bearish with a score of 22.9 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:66.019.59.9
– Percent of Open Interest Shorts:65.719.610.1
– Net Position:95-46-49
– Gross Longs:20,3326,0043,049
– Gross Shorts:20,2376,0503,098
– Long to Short Ratio:1.0 to 11.0 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):4.794.022.9
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-1.8-1.919.0

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week came in at a net position of -21,653 contracts in the data reported through Tuesday. This was a weekly gain of 28,651 contracts from the previous week which had a total of -50,304 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 12.1 percent. The commercials are Bullish-Extreme with a score of 88.6 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 17.9 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:24.859.111.8
– Percent of Open Interest Shorts:28.159.08.5
– Net Position:-21,65361721,036
– Gross Longs:159,900381,70475,889
– Gross Shorts:181,553381,08754,853
– Long to Short Ratio:0.9 to 11.0 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):12.188.617.9
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-39.342.1-45.8

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week came in at a net position of 45,084 contracts in the data reported through Tuesday. This was a weekly fall of -21,272 contracts from the previous week which had a total of 66,356 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.4 percent. The commercials are Bearish with a score of 39.3 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 84.2 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:54.925.716.2
– Percent of Open Interest Shorts:34.451.011.4
– Net Position:45,084-55,56010,476
– Gross Longs:120,73756,45935,517
– Gross Shorts:75,653112,01925,041
– Long to Short Ratio:1.6 to 10.5 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):56.439.384.2
– Strength Index Reading (3 Year Range):BullishBearishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-18.819.4-14.5

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week came in at a net position of -44,167 contracts in the data reported through Tuesday. This was a weekly lowering of -19,350 contracts from the previous week which had a total of -24,817 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.0 percent. The commercials are Bearish with a score of 45.9 percent and the small traders (not shown in chart) are Bullish with a score of 56.1 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:25.657.715.2
– Percent of Open Interest Shorts:44.337.616.6
– Net Position:-44,16747,295-3,128
– Gross Longs:60,334135,94635,953
– Gross Shorts:104,50188,65139,081
– Long to Short Ratio:0.6 to 11.5 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):56.045.956.1
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-44.045.9-35.4

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week came in at a net position of -29,981 contracts in the data reported through Tuesday. This was a weekly gain of 4,017 contracts from the previous week which had a total of -33,998 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.1 percent. The commercials are Bullish with a score of 63.9 percent and the small traders (not shown in chart) are Bearish with a score of 33.1 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:10.776.512.7
– Percent of Open Interest Shorts:50.224.425.3
– Net Position:-29,98139,519-9,538
– Gross Longs:8,10758,0579,674
– Gross Shorts:38,08818,53819,212
– Long to Short Ratio:0.2 to 13.1 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):40.163.933.1
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-21.729.5-34.2

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week came in at a net position of -175,229 contracts in the data reported through Tuesday. This was a weekly decrease of -7,730 contracts from the previous week which had a total of -167,499 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 9.4 percent. The commercials are Bullish-Extreme with a score of 90.6 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 14.0 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:8.081.18.4
– Percent of Open Interest Shorts:60.027.310.1
– Net Position:-175,229180,918-5,689
– Gross Longs:26,816272,93828,368
– Gross Shorts:202,04592,02034,057
– Long to Short Ratio:0.1 to 13.0 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):9.490.614.0
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-49.149.8-34.0

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week came in at a net position of 30,976 contracts in the data reported through Tuesday. This was a weekly gain of 3,460 contracts from the previous week which had a total of 27,516 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 98.3 percent. The commercials are Bearish-Extreme with a score of 11.0 percent and the small traders (not shown in chart) are Bullish with a score of 52.3 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:51.633.314.4
– Percent of Open Interest Shorts:34.151.213.9
– Net Position:30,976-31,759783
– Gross Longs:91,48859,10825,478
– Gross Shorts:60,51290,86724,695
– Long to Short Ratio:1.5 to 10.7 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):98.311.052.3
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:30.0-16.2-38.9

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week came in at a net position of -8,199 contracts in the data reported through Tuesday. This was a weekly fall of -6,032 contracts from the previous week which had a total of -2,167 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 25.1 percent. The commercials are Bullish with a score of 73.2 percent and the small traders (not shown in chart) are Bearish with a score of 35.4 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:36.557.55.9
– Percent of Open Interest Shorts:50.341.48.2
– Net Position:-8,1999,620-1,421
– Gross Longs:21,85534,3683,501
– Gross Shorts:30,05424,7484,922
– Long to Short Ratio:0.7 to 11.4 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):25.173.235.4
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-13.019.3-48.4

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week came in at a net position of 31,095 contracts in the data reported through Tuesday. This was a weekly decline of -3,950 contracts from the previous week which had a total of 35,045 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 46.7 percent. The commercials are Bullish with a score of 56.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 0.0 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:45.648.62.5
– Percent of Open Interest Shorts:23.967.45.3
– Net Position:31,095-27,000-4,095
– Gross Longs:65,50169,9053,587
– Gross Shorts:34,40696,9057,682
– Long to Short Ratio:1.9 to 10.7 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):46.756.00.0
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:9.2-7.7-14.0

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week came in at a net position of -12,525 contracts in the data reported through Tuesday. This was a weekly fall of -8,256 contracts from the previous week which had a total of -4,269 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.2 percent. The commercials are Bullish with a score of 61.7 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 16.1 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:46.743.03.4
– Percent of Open Interest Shorts:66.022.44.7
– Net Position:-12,52513,371-846
– Gross Longs:30,31827,9292,214
– Gross Shorts:42,84314,5583,060
– Long to Short Ratio:0.7 to 11.9 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):40.261.716.1
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:23.5-21.9-7.5

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week came in at a net position of -1,457 contracts in the data reported through Tuesday. This was a weekly boost of 412 contracts from the previous week which had a total of -1,869 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 19.5 percent. The commercials are Bullish-Extreme with a score of 86.6 percent and the small traders (not shown in chart) are Bullish with a score of 61.8 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:82.26.04.5
– Percent of Open Interest Shorts:86.73.12.9
– Net Position:-1,457927530
– Gross Longs:26,3031,9071,443
– Gross Shorts:27,760980913
– Long to Short Ratio:0.9 to 11.9 to 11.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):19.586.661.8
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:1.9-4.14.3

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
10 Nov

Speculator Extremes: Lean Hogs, AUD, 5-Year & 2-Year Bonds lead Bullish & Bearish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on November 5th.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

Lean Hogs


The Lean Hogs speculator position comes in as the most bullish extreme standing this week. The Lean Hogs speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 58.6 this week. The overall net speculator position was a total of 71,441 net contracts this week with an increase by 10,363 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Australian Dollar


The Australian Dollar speculator position comes next in the extreme standings this week. The Australian Dollar speculator level is now at a 98.3 percent score of its 3-year range.

The six-week trend for the percent strength score was 30.0 this week. The speculator position registered 30,976 net contracts this week with a weekly rise of 3,460 contracts in speculator bets.

Steel


The Steel speculator position comes in third this week in the extreme standings. The Steel speculator level resides at a 94.7 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 12.9 this week. The overall speculator position was -414 net contracts this week with a dip by -261 contracts in the weekly speculator bets.

Ultra U.S. Treasury Bonds


The Ultra U.S. Treasury Bonds speculator position comes up number four in the extreme standings this week. The Ultra U.S. Treasury Bonds speculator level is at a 88.8 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 0.9 this week. The overall speculator position was -264,408 net contracts this week with a gain of 45,626 contracts in the speculator bets.

Russell 2000 Mini


The Russell 2000 Mini speculator position rounds out the top five in this week’s bullish extreme standings. The Russell 2000 Mini speculator level sits at a 88.0 percent score of its 3-year range. The six-week trend for the speculator strength score was -9.0 this week.

The speculator position was 8,792 net contracts this week with a decline of -3,151 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

5-Year Bond


The 5-Year Bond speculator position comes in as the most bearish extreme standing this week. The 5-Year Bond speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -12.8 this week. The overall speculator position was -1,767,409 net contracts this week with a shortfall by -86,938 contracts in the speculator bets.

2-Year Bond


The 2-Year Bond speculator position comes in tied for the most bearish extreme standing on the week. The 2-Year Bond speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -27.9 this week. The speculator position was -1,486,359 net contracts this week with a drop by -6,998 contracts in the weekly speculator bets.

US Dollar Index


The US Dollar Index speculator position comes in as third most bearish extreme standing of the week. The US Dollar Index speculator level resides at a 4.7 percent score of its 3-year range.

The six-week trend for the speculator strength score was -1.8 this week. The overall speculator position was 95 net contracts this week with a decrease by -1,589 contracts in the speculator bets.

E-mini SP MidCap400

The E-mini SP MidCap400 speculator position comes in as this week’s fourth most bearish extreme standing. The E-mini SP MidCap400 speculator level is at a 5.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -14.7 this week. The speculator position was -803 net contracts this week with a small gain of 175 contracts in the weekly speculator bets.

Canadian Dollar


Finally, the Canadian Dollar speculator position comes in as the fifth most bearish extreme standing for this week. The Canadian Dollar speculator level is at a 9.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -49.1 this week. The speculator position was -175,229 net contracts this week with a decline of -7,730 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Opinions
07 Nov

UHS, LRCX & LDOS top latest Large Cap Stocks that made our Watchlist in October

By InvestMacro Research

The fourth quarter of 2024 is about halfway over and today we wanted to highlight some of the top companies that have recently been added to our Cosmic Rays Watchlist. The Cosmic Rays Watchlist is the output from our proprietary fundamental analysis algorithm that analyzes over one thousand companies.

The algo examines company fundamental metrics, earnings trends and overall sector strength trends. The aim is identify quality dividend-paying companies on the NYSE and Nasdaq stock exchanges. If a company scores over 50, it gets added to our Watchlist for further analysis.

We use this system as a stock market ideas generator and to update our Watchlist every quarter. However, be aware this fundamental system does not take the stock price as a direct element in our rating so one must compare each idea with their current stock prices (read: this is not a timing tool!).

Disclaimer: Markets are currently at all-time highs and many studies are consistently showing overvalued markets and that always has to be taken into consideration with any stock market idea.

As with all investment ideas, past performance does not guarantee future results. Remember, a stock added to our list is not a recommendation to buy or sell the security but merely a starting point for your own in-depth analysis.

 

Here are 5 of our Top Stocks scored in October 2024:

Leidos Holdings, Inc. (LDOS):

Leidos Holdings, Inc. (Symbol: LDOS) was recently added to our Cosmic Rays WatchList. LDOS scored a 73 in our fundamental rating system on October 30th, 2024.

At time of writing, only 2.00% of stocks have scored a 70 or better out of a total of 10,417 scores in our earnings database. This stock is on our Watchlist for the first time and rose by 70 system points from our last update.

LDOS is a Large Cap stock and part of the Technology sector. The industry focus for LDOS is Information Technology Services.

Company Description:

Leidos Holdings, Inc., together with its subsidiaries, provides services and solutions in the defense, intelligence, civil, and health markets in the United States and internationally. It operates through three segments: Defense Solutions, Civil, and Health.

Company Website: https://www.leidos.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Leidos Holdings, Inc. (LDOS)22.082.870.7
– Benchmark Symbol: XLK44.232.11.2

 

* Data through November 06, 2024

Universal Health Services, Inc. (UHS):

Universal Health Services, Inc. (Symbol: UHS) was recently added to our Cosmic Rays WatchList. UHS scored a 85 in our fundamental rating system on October 25th, 2024.

At time of writing, only 0.75% of stocks have scored a 80 or better out of a total of 10,417 scores in our earnings database. This stock has made our Watchlist a total of 6 times and rose by 3 system points from our last update.

UHS is a Large Cap stock and part of the Healthcare sector. The industry focus for UHS is Medical – Care Facilities.

Company Description (courtesy of SEC.gov):

Universal Health Services, Inc., through its subsidiaries, owns and operates acute care hospitals, and outpatient and behavioral health care facilities. The company operates through Acute Care Hospital Services and Behavioral Health Care Services segments.

Company Website: https://uhs.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Universal Health Services, Inc. (UHS)13.565.431.28
– Benchmark Symbol: XLV25.115.270.7

 

* Data through November 06, 2024

Comfort Systems USA, Inc. (FIX):

Comfort Systems USA, Inc. (Symbol: FIX) was recently added to our Cosmic Rays WatchList. FIX scored a 68 in our fundamental rating system on October 25th, 2024.

At time of writing, only 4.76% of stocks have scored a 60 or better out of a total of 10,417 scores in our earnings database. This stock has made our Watchlist a total of 3 times and rose by 20 system points from our last update.

FIX is a Large Cap stock and part of the Industrials sector. The industry focus for FIX is Engineering & Construction.

Company Description (courtesy of SEC.gov):

Comfort Systems USA, Inc. provides mechanical and electrical installation, renovation, maintenance, repair, and replacement services for the mechanical and electrical services industry in the United States. It engages in the design, engineering, integration, installation, and start-up of mechanical, electrical, and plumbing (MEP) systems; and renovation, expansion, maintenance, monitoring, repair, and replacement of existing buildings.

Company Website: https://www.comfortsystemsusa.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Comfort Systems USA, Inc. (FIX)33.3118.831.13
– Benchmark Symbol: XLI30.433.961.1

 

* Data through November 06, 2024

Lam Research Corporation (LRCX):

Lam Research Corporation (Symbol: LRCX) was recently added to our Cosmic Rays WatchList. LRCX scored a 77 in our fundamental rating system on October 24th, 2024.

At time of writing, only 2.00% of stocks have scored a 70 or better out of a total of 10,417 scores in our earnings database. This stock is on our Watchlist for the first time and rose by 61 system points from our last update.

LRCX is a Large Cap stock and part of the Technology sector. The industry focus for LRCX is Semiconductors.

Company Description (courtesy of SEC.gov):

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits.

Company Website: https://www.lamresearch.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: Lam Research Corporation (LRCX)24.920.491.48
– Benchmark Symbol: XLK44.232.11.2

 

* Data through November 06, 2024

CF Industries Holdings, Inc. (CF):

CF Industries Holdings, Inc. (Symbol: CF) was recently added to our Cosmic Rays WatchList. CF scored a 50 in our fundamental rating system on October 31st, 2024.

At time of writing, only 8.24% of stocks have scored a 50 or better out of a total of 10,417 scores in our earnings database. This stock has made our Watchlist a total of 3 times and rose by 45 system points from our last update.

CF is a Large Cap stock and part of the Basic Materials sector. The industry focus for CF is Agricultural Inputs.

Company Description (courtesy of SEC.gov):

CF Industries Holdings, Inc. manufactures and sells hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities worldwide. Its principal products include anhydrous ammonia, granular urea, urea ammonium nitrate, and ammonium nitrate products.

Company Website: https://www.cfindustries.com

 

Asset vs Sector Benchmark:*P/E Ratio (TTM)*52-Week Price Return*Beta (S&P500)
– Stock: CF Industries Holdings, Inc. (CF)13.29.310.95
– Benchmark Symbol: XLB18.418.91.2

 

* Data through November 06, 2024

By InvestMacro – Be sure to join our stock market newsletter to get our updates and to see more top companies we add to our stock watch list.

All information, stock ideas and opinions on this website are for general informational purposes only and do not constitute investment advice. Stock scores are a data driven process through company fundamentals and are not a recommendation to buy or sell a security. Company descriptions provided by sec.gov.

Opinions Stock Market Ideas Stock Market News
01 Nov

Week Ahead: US500 braces for US election/Fed showdown

By ForexTime 

  • US500 ends October ↓ 1%, still up ↑ 20% YTD
  • April & October only negative trading months this year
  • US election & FOMC decision = big price swings?
  • Fed expected to cut rates by 25bp in November
  • Technical levels – 5770, 5675 & 5600

FXTM’s US500, which tracks the benchmark S&P 500 index is heading for its worst week since early September.

Disappointing earnings reports from Microsoft and Meta sent the index tumbling almost 2% on Thursday while weaker-than-expected sales in China pressured Apple shares post-market trading.

And we could see more action this afternoon due to the key US jobs report (Friday 1st November).

But all eyes will be on the pivotal US election along with major central bank decisions in the week ahead:

Monday, 4th November

  • Public holiday in Japan
  • CN50: China’s NPCSC meeting
  • GER40: Germany HCOB Manufacturing PMI
  • USDInd: US factory orders

Tuesday, 5th November

  • CN50: China Caixin Services PMI
  • SG20: Singapore retail sales
  • AU200: RBA rate decision, Judo Bank Services PMI
  • UK100: S&P Global Services PMI
  • US500: US Presidential election, ISM Services PMI

Wednesday, 6th November

  • GER40: HCOB Services PMI, PPI
  • TWN: Taiwan CPI
  • JP225: BoJ meeting minutes
  • CAD: BoC meeting minutes

Thursday, 7th November

  • CN50: China trade, forex reserves
  • GER40: Industrial production, balance of trade
  • SEK: Riksbank Rate decision, CPI
  • UK100: BoE rate decision
  • US500: FOMC rate decision, initial jobless claims

Friday, 8th November

  • CAD: Employment change
  • TWN: Taiwan trade
  • UK100: BoE Chief Economist Huw Pill speech
  • USDInd: US University of Michigan consumer sentiment

Despite recent losses, the US500 is still up almost 20% year-to-date – adding to the 24% gains secured in 2023. Still, the index’s outlook hangs on how events play out in the week ahead…

US500 weekly

Here are 3 reasons you should keep a close eye on the US500:

 

    1) US Presidential election

US voters head for the polls on Tuesday, 5th November in what has been a tight presidential race.

This will be the most significant event for the United States in 2024, potentially influencing US stock markets depending on who becomes the new president.

  • A Trump victory could push the US500 higher due to the prospect of corporate tax cuts and a softer regulatory environment boosting company profits.
  • A Harris victory may trigger a “relief rally” as policy continuity removes an element of uncertainty. However, the upside could be capped by a potential hike in corporate taxes and tough regulations.
  • If the US election results are delayed or contested, the US500 may tumble amid the uncertainty.

 

    2) FOMC rate decision

Just two days after the US election the Federal Reserve is expected to cut interest rates by 25 basis points in November. But this decision could be influenced by the incoming US jobs report and the election outcome.

Although annual inflation has edged closer to the Fed’s 2% target, economic data remains mixed. A strong jobs report could fuel bets around slower-than-expected Fed rate cuts. But the election outcome is likely to determine what action the Fed takes in December and beyond.

  • A Trump victory could boost economic growth – triggering inflationary pressures. This may prompt the Fed to keep interest rates higher for longer.
  • A Harris victory that sees tax hikes and more caution to government spending may impact growth – possibly cooling inflation. Such a development could provide room for the Fed to cut rates.

Traders are currently pricing in a 95% probability of a 25-basis point cut in November with a 68% probability of another cut by December.

Considering how tech stocks account for over 30% of the S&P 500 weighting, the Fed decision could trigger price swings. Tech stocks are influenced by interest rates because their value is based on earnings forecasted in the future.

 

    3) Technical forces

The US500 has breached the bullish channel on the daily timeframe with prices trading 3% away from the all-time high at 5890. Interestingly, the Relative Strength Index (RSI) is approaching 30 – signalling that prices could be entering oversold zones.

  • If 5675 proves to be reliable support, prices may rebound back toward 5770, 5820 and 5890.
  • A solid breakdown and daily close below 5675 could see bears target the 100-day SMA at 5600 and 5550.

daily us500

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Opinions
31 Oct

Expert Says Secondary Metals Will Star in New Bull Market

Source: Streetwise Reports (10/30/24)

Bob Moriarty of 321gold sat down with Francis Hunt of The Market Sniper recently to discuss the state of the commodities markets and the recent meeting of the BRICS nations in Russia. Find out why he thinks the bulls will be running for more than just gold. 

Major periods of rising gold prices since 1971 have included the 1970s and the 2000s. Many experts believe we’ve started a new period of such expansion now.

Spot prices touched a new record of US$2,769.02 per ounce on Tuesday “as the run-up to the 2024 presidential election and uncertainty prior to upcoming economic data kept safe haven demand in play,” Investing.com reported.

Bob Moriarty of 321gold sat down with Francis Hunt of The Market Sniper recently to discuss the state of the commodities markets and the recent meeting of the BRICS nations in Russia.

He told Hunt that the most important mechanism in determining their prices is not the textbook answer you’ve always been given.

“Ignore demand, ignore supply, ignore the value of the dollar, ignore the geopolitical, none of those make any difference whatsoever,” Moriarty said in the interview, posted on YouTube. “The only thing that moves the price of anything is sentiment.”

Sentiment Changing Soon

The Investing.com article reported by Scott Kanowsky said the rise is coming from safe haven demand and a string of expected economic readings expected soon, “which are likely to factor into in the Federal Reserve’s plans for interest rates.”

However, Moriarty said the overall price of gold miners has devalued vs. the price of gold and is “at the bottom now.”

“From a relative position of sentiment, everybody hates the miners,” he said of environmental and ESG concerns that have affected the industry. “You can go to Canada, and there’s probably 1,500 stocks, and the number of stocks under 10 cents is absolutely staggering. I own probably 50 different stocks, and I would guess 40 of them are under 10 centers per share . . . You don’t have to know anything about investing if you understand the sentiment.”

And Moriarty expects that sentiment to change soon.

“We’re going to be in a bull market probably for the next 10 or 20 years,” he said. “It has just started the real bull face. You’re going to see it in the other metals, and you’re absolutely going to see it in the miners. And I believe there are a lot of stocks that are going to go up 100-fold.”

But Moriarty said it won’t be just gold; other metals like silver, rhodium, palladium, and platinum will benefit, sometimes even more.

“Gold is going to continue to go up, but just like with dancing, sometimes you lead, sometimes you follow,” he said. “And I think it’s the secondary metals that are going to lead now.”

Most Valuable Precious Metal on the Planet?

Like gold, silver has had a good year so far and is up 42.17%, according to USA Today. It was trading at US$34.02 per ounce on Tuesday, an increase of 1.26% in the previous 24 hours.  Platinum, which was US$1,025.65 per ounce on Monday, is up 3.84% on the year.

But in addition to gold, silver and platinum, the platinum group contains lesser-known metals like osmium, ruthenium, iridium, palladium, and rhodium.

The metals are all very rare and have high corrosion resistance, catalytic properties, and high melting points, according to How Stuff Works.

But Mack Hayden wrote for the site that rhodium, a silver-white metal, is “the most valuable precious metal on the planet.” The automotive industry uses nearly 80% of the world’s supply to make catalytic converters that help reduce toxic gas emissions. South Africa is the leading producer, contributing about 80% of the global supply. It is often found mixed with other platinum group metals and requires extensive processing to extract.

Trading Economics said rhodium has increased US$250 per ounce or 5.65% since the beginning of 2024. While it was US$4,675 per ounce on Monday, it reached an all-time high of US$29,800 per ounce in 2021 — nearly 10 times gold’s current record price.

Hunt pointed out that two of the major producers of platinum, palladium, and rhodium are Russia and South Africa, two members of the BRICS group of nations that met earlier this month in Russia.

“They control price; that’s a big deal,” Moriarty agreed. “We’re going to see some real financial shocks with silver, with rhodium, with palladium, and with platinum.”

BRICS Group Expanding

BRICS is an intergovernmental organization that includes Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates. At its October meeting, it expanded to add 13 new “partner nations.”

At the meeting, China President Xi Jinping referred to BRICS as “a vanguard for advancing global governance reform” and “reform of the international financial architecture.”

Bolivian President Luis Arce said, “the shield of BRICS and multipolarity” can protect formerly colonized nations, helping them resist “Western unipolarity and the tyranny of the dollar.”

With gold hitting record highs and silver rising, the other platinum group metals are nowhere near their eventual highs, Moriarty said.

“The Russians understand this, and they’re going to start buying palladium, they’re going to start buying rhodium, and they’re going to start buying silver because those metals are going to move faster and higher than gold,” he said, predicting record highs for all three.

Important Disclosures:

  1. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
  2. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Metals Opinions
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