Daily Update: G-7 Meeting Recap

Today is?Monday, May 22, 2023, and here’s your?curated selection of essential intelligence on financial markets and the global economy?from?S&P Global . Subscribe?to be notified of each new?Daily?Update.?

Top officials from Group of Seven countries met mid-April in Japan to discuss climate, energy and environment ahead of May's larger summit of heads of state and government. In particular, energy security is top of mind for all nations as energy prices soar and markets roil in uncertainty. COVID-19 and Russia's invasion of Ukraine spotlighted energy supply chain weaknesses and exposed the fragility of global energy systems, with energy insecurity running rampant as countries race to lower prices and secure the resources necessary to fuel economic growth.

With energy insecurity suddenly evident, many nations quickly shifted priorities and pushed climate and the environment to the backburner. Although they may have seemed so in the wake of simultaneous crises, energy security and climate-friendly policies are not mutually exclusive — countries can achieve energy security affordably and sustainably, but it requires cooperation and flexibility. The G-7 ministers took a step in that direction at their April meeting.

The G-7 ministers?agreed to pursue various pathways ?to achieve net-zero emissions and ensure energy security by accelerating the energy transition, investing in natural gas and countering geopolitical risks to critical minerals supply chains. The foreign ministers also agreed to a Five-Point Plan for Critical Minerals Security, calling for, among other things, preparation for supply disruptions.

The EU is becoming increasingly familiar with energy supply disruptions as it shifts energy imports away from Russia, cooperating with the?US to fill the void in its gas supply . European Commissioner for Energy Kadri Simson told S&P Global Commodity Insights that the EU considers it possible for?Russia to halt natural gas flows to Europe in 2023 ?but noted that the EU has contingency plans.?

While the EU confronts the challenges of relying overwhelmingly on a single oil and gas supplier, other countries are facing similar risks concerning minerals and metals supply concentration. For example, the world?relies heavily on China ?for many of the critical minerals and metals necessary to manufacture batteries and electrification technologies. On the sidelines of the G-7 meeting, US Assistant Secretary of Energy for International Affairs Andrew Light told S&P Global Commodity Insights that "we don't want to be at the mercy of China and put them in the same position vis-à-vis the rest of the world as Russia has been with Europe." Echoing similar sentiments, Simson noted that "we should not end up in a situation where we're too dependent on one supplier."

Indonesia, a major nickel producer with the potential to increase its role in the global supply of other key energy transition minerals and metals, was also present at the G-7 ministerial meeting. For the growing archipelagic nation, creating jobs and attracting investment in high-value manufacturing is critical to its economic future. One avenue to achieve this is to limit or outright?ban raw material exports ?to pressure companies into developing midstream and downstream pieces of the metals supply chains in Indonesia.

The G-7 ministerial meeting on climate, energy and environment produced several notable agreements to address energy security concerns in alignment with climate and environment goals, but we will see how they're reflected in the communiqué that comes out of the 49th G-7 Summit that took place May 19–21.

Today is?Monday, May 22, 2023, and here is today’s essential intelligence.

Written by Wyatt Scott.

Economy

Week Ahead Economic Preview: Week Of May 22, 2023

Flash PMI for May will be released in the coming week for a first look at economic conditions midway into the second quarter. Additionally, Fed minutes from the FOMC's May meeting will be eagerly anticipated while, on the economic data front, GDP will be due from several economies including the US, Germany, Taiwan and Singapore. Inflation data are also expected from the US, UK, Singapore and Malaysia.

—Read the article from?S&P Global Market Intelligence

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Capital Markets

Big 4 Private Equity Firms Project Optimism Even As Fundraising, Deals Slow

The four largest publicly traded alternative asset managers reaffirmed their optimistic outlook on first-quarter earnings calls, even as they grappled with an ongoing slowdown in private equity fundraising and dealmaking. The average net positivity score for Apollo Global Management Inc., Blackstone Inc., The Carlyle Group Inc. and KKR & Co. Inc. rose for the second consecutive quarter, surpassing the average for S&P 500 companies for the first time since the second quarter of 2022, according to an analysis of the language used by executives and analysts on earnings calls. That brightening tone shone through on the calls amid some frank talk about disappointing private equity performance.

—Read the article from?S&P Global Market Intelligence

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Global Trade

Fuel Suppliers Threaten To Stop Shipments To Bangladesh Amid Payment Delays: BPC

Bangladesh could stop receiving petroleum products from some suppliers as the state-run Bangladesh Petroleum, the country's primary oil importer, struggles to clear pending dues amid sharp currency devaluation, a BPC official told S&P Global Commodity Insights May 17. Most of the oil suppliers have written to Bangladesh Petroleum to clear the pending dues, BPC's director for operations and planning Khalid Ahmed said, adding that some of the entities have even warned of stopping oil supply to Bangladesh if the dues were not cleared "immediately."

—Read the article from?S&P Global Commodity Insights

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Sustainability

Explaining Optimized Weights

Transparency is commonly seen as a key principal of sustainable investing, helping investors understand companies’ sustainability profile and sustainable investment strategies, as well as potentially contributing to investor impact. Sustainability is also multifaceted, illustrated by the differences in many of the Sustainable Development Goals (e.g., no poverty and life below water represent very different goals) and mathematically demonstrated by weakly correlated, or uncorrelated, corporate sustainability KPIs.

—Read the article from?S&P Dow Jones Indices

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Energy & Commodities

Metallurgical Coal Plots Next Cautious Steps In Pricing Evolution

The metallurgical coal market is poised to consider its next steps as pricing structures continue to evolve after world events again delivered extreme price volatility over the past two years. Recent trends are indicative of a market in search of new directions, including an uptick in derivatives volumes, emergence of partially fixed- and partially floating-priced trades, the prevalence of brand optionality and the growing voice of end-users in an increasingly transparent spot market.

—Read the article from?S&P Global Commodity Insights

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Technology & Media

8 Vehicle Inventory Trends You Should Know About In May

Retail advertised inventory — the availability of vehicles as communicated by dealerships across the country — has been on the rise from July 2022 until mid-March 2023. However, based on month-end April data, S&P Global Mobility's Advertised Dealer Inventory analysis shows that inventory recovery will remain erratic and spiky for the near term, depending on the brand and segment. The key takeaway on the new-vehicle purchase front for consumers: The percentage of vehicles offered below MSRP has risen as advertised inventory count increased. Meanwhile, the percentage offered at sticker price has fallen and the percentage offered above MSRP has remained basically stable.

—Read the article from?S&P Global Mobility

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