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Joe Hornyak
Former editor of Benefits and Pensions Monitor and founder of Joe Hornyak Communications
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Scorched Earth Policy Creates Market Consequences
A continuation and escalation of financial and economic sanctions which accelerate a decoupling with Russia is “essentially is a scorched earth policy,” says Kristina Hooper, chief global market strategist, at Invesco. She told its ‘Economic, political and market consequences of Russia's invasion of Ukraine’ session that this would create “significant” headwinds for the global economy. While it would not impact all risk assets equally, the base case scenario starts with “we are in a stalemate where negotiations are on and off and while fighting continues, but the Ukraine is not taken over by Russia,” she said. But as the tensions are elevated, sanctions deepen and the greatest certainty is that in that kind of environment, “we see a lot of volatility.” Obviously, the biggest impact would be to Russia and Ukraine, she said, but Germany gets 40 per cent of its energy from Russia and that can be very problematic. The U.S. is “somewhat” insulated, however. Estimates are that there would be a relatively low impact relative to Germany. It also fans the flames of inflationary pressures. The biggest issue with the global economy up until Russia invaded Ukraine was inflation and this only exacerbates inflationary pressures. “Suffice it to say, it will essentially take back the progress that had been made” from COVID, she said.
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Path To Net Zero Requires Capital
The path to net zero by 2050 will likely require significant capital, collaboration, government carrots and sticks (direct funding, tax credits, subsidies, and carbon taxes), and private financing, says Beutel Goodman ‘Canadian Monthly Fixed Income Report.’ As a result, it believes that a large amount of the private financing will likely find its way to the bond market, thereby providing an incremental opportunity for direct engagement with companies when they embark on their debt financing road shows. As well, a large amount of these projects will likely be financed with green, social, and/or sustainable bonds that allow fixed income investors to directly participate in enabling the energy transition.
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