The European Central Bank’s net purchase of bonds through March 19th surpassed 21 billion Euros, the most since December, in an attempt to halt the rise in continental bond yields. According to Bloomberg, the yield on the Generic 10-year Euro Government Bond has risen from -0.67% in mid-December last year to -0.3% currently. Granted, Euro yields from 2-to-10 year issues are still negative but the pace of escalation has many concerned given the economic headwinds caused by the pandemic and the recent resurgence of infections and “re”closings. ECB President Christine Lagarde arguably faces a tougher challenge than her central bank counterparts because the EU does not have the fiscal flexibility of other major economies. That constraint may turn out to be a blessing for them as the US, for instance, implements yet another round of fiscal stimulus amounting to $1.9 trillion while the economy across the pond shows signs of accelerated economic activity.
UN SDG 5 – “Achieve Gender Equality and Empower All Women and Girls”. During Women’s History Month we again turn our attention to equal access to economic opportunity for women in the American workforce. COVID has further exposed one of the ongoing issues with fair and equal compensation, which is the wage gap between women (and particularly women of color) who are mothers and men who are fathers in the same roles. The National Women’s Law Center gathered data pre-pandemic (2018) assessing the compensation picture for frontline occupations which turned out to be the exact roles hurt worst through the last year of COVID, including housekeepers, retail, wait staff, childcare, home health and nursing. Between 15 and 35% are working mothers, and of those as much as 74% of color. The gap between working mothers and fathers ranged from 36 cents down to 13 cents per hour. That is a bit of an abstraction. This week’s chart, taken from the NWLC and the 2018 American Community Survey, illustrates that gap much more starkly in real dollars on an annual basis, and points to the downstream economic drag on food, housing, education, job training and other expenditures and investments families make for healthy living and vibrant communities and economies.
Equity markets around the globe were on edge as February came to a close. The technology-laden NASDAQ fell nearly 7% from an all-time high on February 12th. The weakness in equity prices came despite very accommodative comments from US Federal Reserve Chairman Jerome Powell during his scheduled two-day Congressional testimony last week. Equity markets became unnerved as government bond yields began to rise at an accelerated pace in the US, Eurozone and particularly the UK. Benchmark interest rates have been rising since the beginning of this year and US interest rates have been climbing since last Summer signaling expectations of improving economic conditions in the months ahead. As long as the rate environment increases gradually, gains can continue in equity markets. But, as we witnessed over the past few weeks, a steep ascent in market interest rates will have an expected adverse impact on risk assets. [chart courtesy Bloomberg LP (c) 2021]
What does a pledge from China of carbon neutrality by the year 2060 actually mean, and how do we measure progress? There are various global targets for climate change mitigation that attempt to quantify what needs to be done so that the global system does not exceed the point of no return, generally seen as a rise of 1.5 – 2.0 degrees Celsius. Under the Paris climate accord, a number of nations committed to carbon neutrality in the next 30 years. China said 40, but as the largest economy on Earth how do we measure their progress? This week’s chart from the US Energy Information Administration country analysis of China (Sept. 2020) is just one hint at the structural challenges China faces in achieving the target. On a per-capita basis China’s carbon footprint is still smaller than the developed West, but their total footprint is more than a quarter of the world’s total output, and their energy mix is just 15% non-carbon and more than half coal. After the pandemic interruption that marked the period around the Lunar New Year, China’s carbon output returned to or even exceeded pre-pandemic levels. We are looking for the steps China will take now to level out carbon growth so that it can begin reversing the trend after 2030, and wonder, even worry whether another 10 years of increasing output takes us past the global point of no return.
By September of this past year, both California and Colorado had experienced record-breaking wildfires, exceeding previous history for the largest wildfires in their respective states. According to the National Interagency Fire Center, more than 7.5 million acres had burned across the United States by Fall 2020, surpassing the approximate 6.1 million acre 10-year annual average (NIFC, 2020). Why have we seen increasingly disastrous wildfires in recent years?
Enter stage right the mountain pine beetle. Approximately 5 mm in length with an average life span of one year, the mountain pine beetle may not seem like a formidable opponent, but like all ecosystems, each member is densely interconnected (USDA FS, 2011). An imbalance of one species always equates to consequences for another.
One of 17 species of bark beetles native to North America, the mountain pine is a wood-boring insect that has shaped the forest landscapes from Canada to Mexico for thousands of years (NPS, 2018). From July to August, adult pine beetles colonize forests in search of larger trees (typically no less than 3 inches in diameter). Affected pine species include Lodgepole, Ponderosa, Western White, Whitebark, Jack, and Limber pine. Once a suitable host has been identified, female beetles excrete a pheromone signaling other beetles to follow (Katz, 2017). Females then begin eating tunnels called galleries into the inner bark of the tree, extending up to 30 inches or more from the attack site. The eggs hatch and beetle larvae continue burrowing and feeding until winter freezing temperatures trigger dormancy. By June or early July, larvae pupate and emerge from the tree in search of new hosts to repeat the cycle. Within one year of invasion, infested trees can fade from green to red-brown and die (USDA FS, 2011).