Newsletter - Week of Oct 9, 2023

Hi All,

What a week it has been! This week's theme is Courage. I haven’t slept well since last Saturday. I have been on the phone with my friends, checking on them. I don’t want to take a side nor is it my place to do so but I want to express my deep regret and sadness on what is happening in Gaza/Israel. More is continued in my 'conscious living' section or in my IG post.

Hope everyone is safe and well - wherever you are in the world. But most importantly, let’s hold LOVE in our hearts in the darkest hour like this…the war in Ukraine is also still going on and Tibet is still under China’s occupation/attack - there are countless wars happening around the world - the world needs more LOVE ❤️ and Kindness from each one of us. #pray

📈Markets & Investing

• My weekly global market recap can be found here.
• Key takeaways from the IMF/World Bank meetings (Reuters, Oct 14, 2023)

key takeaways:

1. The IMF trimmed its 2023 global GDP forecast to 2.7% from 2.9% estimated in July, warning of slowing growth and a 25% chance of recession next year as central banks combat persistent inflation.
2. Policymakers expressed concerns about heavy debt burdens, especially in advanced economies, as bond yields rise and markets reevaluate risks of holding longer-term debt.
3. Some progress was made on debt deals, including Zambia finally agreeing on a debt restructuring plan with creditors including China and France. But challenges persist for others like Sri Lanka.
4. The IMF warned in a stability report that around 5% of banks globally are vulnerable if high rates persist, and 30% would be at risk in a prolonged low growth/high inflation scenario.
5. Disagreements on IMF resources and influence led to no joint statement at the end of the meetings. A pact to boost IMF lending power was made but with few specifics.

• Lagarde, Gopinath, Okonjo-Iweala, Chang Speak at IMF Panel

key takeaways:

1. The IMF panel discussed a mixed global economic outlook with weak projected growth around 3%, despite nearing full employment in many countries.
2. Concerns were raised about vulnerabilities in global supply chains due to over-concentration of production in certain areas, urging against protectionism.
3. In Europe, full implementation of existing service directives and structural reforms were suggested to boost growth and manage previous economic shocks.
4. Emerging markets showed resilience amidst financing challenges and global economic fluctuations, with a positive outlook on their local currency markets.
5. Africa's potential in increasing world trade and opportunities in green energy and technology sectors were highlighted, emphasizing the need for evolved economic instruments.

• IMF's Georgieva on World Economy, Israel-Hamas War: Full Interview

🌍 Sustainability

Some highlights from my reading this week...

• IMF should give poor countries $300bn a year to fight climate crisis, says Joseph Stiglitz (Guardian, Oct 13, 2023)

key takeaways:

1. Nobel prize-winning economist Joseph Stiglitz argues that rich countries should provide $300bn per year to help poorer nations fight climate change. This is far more than the $100bn per year pledged in 2009.
2. The funds would help developing countries cut emissions and cope with the impacts of extreme weather. Stiglitz says failure to provide support will lead to "climate apartheid" between rich and poor nations.
3. Stiglitz criticizes the US and others for not meeting their climate finance commitments. He says the money should be given as grants, not loans which add to debt burdens.
4. He notes the sums are affordable - $300bn is less than 5% of the US stimulus package during Covid. Stiglitz argues morally this is "the minimum of what is required."
5. The economist says the money should go to adaptation measures and renewable energy investments. This will create jobs and boost economies, reducing migration pressures.

• Rishi Sunak’s net zero rollback risks raising household bills, warns climate adviser: Recent U-turns on green pledges will make it harder for Britain to meet legally binding targets, CCC says (FT, Oct 13, 2023)

key takeaways:

1. The UK's independent climate adviser, the Climate Change Committee (CCC), warns that PM Rishi Sunak's rollback of net zero pledges risks leaving Britons with higher bills and making it harder for the UK to meet legally binding emissions targets.
2. The CCC says the UK now only has credible policies in place to meet 28% of the emissions cuts needed by 2030, compared to 31% before Sunak's policy changes such as delaying the petrol/diesel car ban.
3. The committee warns undermining the rollout of electric vehicles will increase costs as EVs are cheaper over their lifetime than petrol/diesel cars. Delaying the fossil fuel boiler phaseout also risks confusion.
4. While recognizing some progress, the CCC chair says Sunak's shift in policy has made meeting future climate targets harder and hurt the UK's leadership position.
5. The UK government insists it remains committed to net zero by 2050 and defends the pragmatic approach as easing burdens on families. But the CCC stresses the risks to legally binding goals.

• Why we need a new generation of climate scenarios (EDHEC, Oct 2023)

key takeaways:

1. Climate scenario analysis is critical to guide climate change responses, but there is limited data and models are uncertain compared to financial stress testing.
2. Assigning probabilities to climate scenarios is challenging but essential to allocate resources effectively. The current framework provides no probabilities.
3. Multiple sources of uncertainty exist - climate physics, economic growth, damage functions, policy actions. A modular approach assessing each is needed.
4. The preferred output is a probability distribution of climate outcomes to inform investment and policy decisions.
5. Though difficult, even limited information on probability distributions is better than none at all. New research is focused on developing full probability climate scenarios.

• The Impact of Climate Change News on Low-minus-High Carbon Intensity Portfolios (EDHEC - Risk Climate Publications, Oct 2023)

key takeaways:

1. The study applies natural language processing to construct climate news indices from major newspaper articles from 2005-2021.
2. Daily climate news indices are created for each news source and aggregated across sources.
3. The indices' unexpected changes are studied in relation to US large cap stock portfolio returns sorted by carbon intensity.
4. Statistical significance is found between news innovations and returns for high carbon portfolios and long-short carbon portfolios.
5. Results show high carbon stocks negatively react to climate concerns in news, but the economic impact appears limited, suggesting incomplete market pricing of climate risks.

Other EDHEC articles:

• Six Questions on Internal Carbon Pricing
• Asleep at the Wheel? The Risk of Sudden Price Adjustments for Climate Risk

• Climate change has become a macroeconomic issue: IMF researcher (Yahoo Finance, Oct 10, 2023)
• If You Want Our Countries to Address Climate Change, First Pause Our Debts - The New York Times (Oct 8, 2023)
• Climate Change in the American Mind (Center on Global Energy Policy - Columbia University, Oct 10, 2023)
• War in the Middle East jeopardizes climate talks (E&E News by POLITICO, Oct 11, 2023)
• Climate Change Is Improving French Wine – For Now (Barron's, Oct 11, 2023)
• Back to basics on sustainability - What happens at COP? & What is net zero? (McKinsey explainer series) (McKinsey, Oct 8, 2023)
• Development banks' climate finance reached record almost $100 billion in 2022 -report (Carbon Pulse, Oct 12, 2023)
• 6 ways climate change hurts your health—and what you can do about it (Fortune, Oct 12, 2023)
• Here is an interesting article on climate value at risk by Visual Capitalist (MSCI sponsored).

🧘🏽 Conscious living

I don't know about you, but it's been an unsettling week for me. I tend to get affected by global events for some reason - perhaps it is my sensitivity and empathy. I tend to pick up other people's energy and feel it as if my own. It took me a while to understand how to set the right boundary to protect my energy instead of feeling overwhelmed and drained by others' heavily dense and toxic environments. It takes a huge courage to process all the emotions that go through our bodies without shutting down the heart so as not to feel anything, because 'feeling' can be so painful at times.

Coincidentally, in today's flow yoga class, the instructor focused on the 'root chakra (color red)' to help us feel more grounded and anchored given all the events that are going on in the world.

We also had the ring of fire on Oct 14, amplifying all the energy in the atmosphere globallyy (did I lose you here? lol).

Re: Israel/Gaza, I grew up with the Israeli Jewish community as well as the Palestinian community around me. When I was in high school in Canada, my host family was the Israeli Jews from Israel (I observed and celebrated all of the Jewish traditions and holidays with them; equally - celebrated all of the traditions and cultures with my Muslim friends - named as an honorary Muslim) and many friends at school were also Jewish as well as Palestinians. This went on as a theme as I went to university in NYC with the Jewish foundation and worked for a company built by Jewish descendent founders for a decade in NYC/London.

So over the past 20 years or so, my life was deeply attached to the Jewish community as well as the Palestinian community. I have amazing friends and colleagues from both sides.

So, when everything happened last Saturday, I felt like part of me was broken. I was moaning, yet I felt lonely as I could not share this moaning with anyone in London nor my parents in South Korea.

Thanks to Daniela @womenmakestories I am giving a space to this grief. She inspired me to have the courage and feel the emotions running through my body (without trying to intellectualize the emotions and self-doubts like - ‘But you are genetically Korean!’ and also hold the space to express myself.

Hope everyone is safe and well - wherever you are in the world. But most importantly, let’s hold LOVE in our hearts in the darkest hour like this…the war in Ukraine is also still going on and Tibet is still under China’s occupation/attack - there are countless wars happening around the world - the world needs more LOVE ❤️ and Kindness from each one of us. #pray

😍 My Favorites

• Diary of CEO - Airbnb CEO, Brian Chesky (Oct 9, 2023): I deeply respect and admire Brian Chesky, the CEO of Airbnb, for his design-centric approach and his remarkable journey from being the last person one might expect to become a CEO, to proving doubters wrong by manifesting his visionary ideas into reality. His dedication to addressing mental health and loneliness by fostering human connections globally resonates with me (he mentions that growing up, he felt lonely because he was 'different' from others - it is a feeling I can definitely relate to...I was great at masking as a happy-go-merrier, but underneath deep within, I felt alone). Chesky's empathetic initiatives, like potentially introducing group travel features to combat loneliness, reflect a unique blend of design thinking and human-centered leadership, something that inspires me greatly.
• What is an annual eclipse (ring of fire)? (Aug 2023, NASA): Anyone fascinated with cosmic events, check out this video by NASA.
• The Musée d'Orsay Tour: Part 2 - The Impressionists, Rebel Artists of 19th Century Paris: In the midst of an unsettling week, I was reminded once again, of the importance of art in our lives. Beauty heals our hearts. I was in Paris in August and finally crossed off one of my bucket lists to visit Musee d'Orsay. I've been to Paris many times over the years, but never got a chance to visit this Impressionist art museum. I wasn't disappointed, and I promised myself to visit Paris again for a proper museum tour next time!

👍 Quote of the week

“You could leave life right now. Let that determine what you do and say and think.” -Marcus Aurelius