Good morning and welcome to your Morning Briefing for Monday 31 October 2022. To get this in your inbox every morning click here.
Cutting out greenwashing
When I say ‘ESG’, what does it make you think? For many, they focus on the ‘E’ – environmental – that is, if they even know what ESG is in the first place. When it comes to the ‘S’ and the ‘G’, people are generally less clear.
There has been a multitude of research suggesting people care more now about climate and social issues than they did in the past, and this is reflecting in their investment choices.
PPF compensation uplift issues
In 2018, the European Court of Justice ruled individual members of the Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS) should receive at least 50% of the value of their accrued pension if the employer responsible for funding the scheme they had paid into fails.
The PPF stated at the time that the majority of its members and those paid under the FAS were already in receipt of this level of benefits, therefore most members wouldn’t be seeing an increase.
Quote Of The Day
Credit Suisse plans to execute a challenging restructuring in a deteriorating macroeconomic environment and revenue is already suffering from attrition due to its lower-risk appetite. With spreads exceeding levels seen during the Great Financial Crisis, some commentators have raised the possibility of a Lehman Brothers-style collapse
– Johann Scholtz, equity analyst at Morningstar, comments on Credit Suisse’s attempts to stem heavy losses and investor concerns with job cuts and restructuring
Stat Attack
M&G investment specialist Andrew Eve rounds up some of the Bond Vigilantes’ scariest charts in global finance.
“With rising inflation and the cost of living crisis, 2022 has been a scary year for everyone,” he says. “Turning our focus to markets, rising bond yields and CPI prints mean we have certainly found no shortage of scary charts either.”
“One of the scariest charts for investors this year will be a look at their 2022 portfolio returns.
“Whether in government bonds, corporate bonds, emerging market bonds, currencies or equities, there really were very few places to hide this year from the spectre of rising interest rates and a ghostly slowdown in growth.
“The dollar was one of the few assets in our chart to see a positive return so far this year.”
“Perhaps these leading indicators, along with the inflationary pressures being felt around the world, help explain this next alarming chart.
“Economists’ forecasts for the probability of a recession coming over the next year have been steadily creeping up in 2022.
“This chart makes for terrifying viewing, with forecasts now having reached 80% in the UK and Eurozone.”
“Finally, the cost of Halloween may be going up this year for those hoping some sweet treats may cheer them up after seeing these scary charts.
“The US CPI Candy & Chewing Gum Index reveals inflation here at over 13% in the year from September 2021 to September 2022 – to put this in perspective, it took around seven years to see the same level of inflation in the candy index in the period up to 2021.”
Source: M&G
Women face a number of challenges which could limit their ability to save for retirement, and ultimately contribute to a significant gender pension gap.
These include an unequal distribution of caring responsibilities, the eligibility criteria for automatic enrolment which disadvantages those (mainly women) in part time work, and the menopause.
That is according to a new report by Royal London – Bridging the Gender Pension Gap – which looks at the unique retirement planning challenges women face as well as the contrasting attitudes and savings behaviour of women and men.
Despite the menopause being a life event that almost all women will encounter as they grow older, it is a factor widely unregistered when discussing women’s retirement savings. Menopausal symptoms have forced thousands of women to reduce their hours or worse still, leave work altogether. As a result, these women are missing out on important pension savings at a key stage in their life.
Analysis by Royal London demonstrates the dramatic impact the menopause can have on women’s pension savings.
A 50-year-old woman in full time work until the state pension age of 67 could be better off by over £126,000 in pension savings, when compared to a counterpart who stopped working at the same age. Women reducing their working hours at age 50 could lose out on £63,000 in their pension pot.
From Elsewhere
Sweden’s financial watchdog mulls fine over IT incident at Swedbank (Reuters)
Conservative Party receives £3.6m from hedge fund tycoons and finance firms (The Independent)
Emerging stocks are flashing a 2008 financial crisis signal (Bloomberg)
Did You See?
It’s a worrisome time for your country when Strictly Come Dancing is arguably more democratic than the election of a new Tory prime minister.
And not just any Conservative leader but the third Tory prime minister in seven weeks. The political contest the public has been subjected to has none of Strictly’s qualities.
All of its participants are deeply unpopular with the public, they do not rise to the occasion and none have stable partners. In fact, all the contenders say one thing in public and another in private. There is constant backstabbing and everyone is either very angry or very miserable.
Read acting editor Michael Klimes’ latest Weekend Essay here.
