OUTSIDE THE BOX



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A long-awaited stock-market rotation back to value stocks might benefit oil and gas companies in the short-term, but long-term there are concerns about the sustainability of the energy industry as it now exists. The sector’s woes are such that at the end of August 2020, energy stocks accounted for just 2.6% of the S&P 500 (SPX) , down from more than 16% in 2008. 

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The systemic risk surrounding energy companies due to climate change underscores the difference in approach between active managers and their index-fund counterparts and large retirement funds, as well as the tools active managers can use to make a persuasive case for meaningful change. While active fund managers increasingly are avoiding the energy sector and its risk of permanent capital impairment, many passive-fund investors recognize that as universal owners of the market and, by default, the economy, they have a stake in encouraging a successful energy-sector transition to renewables.

Eschewing the entire industry is short-sighted and misguided. While some investors have divested from fossil fuels, many continue to hold these investments in the hope of driving change through engagement. Active managers, drawn by seemingly low valuations, are engaging alongside them, with the combined weight of their collective voices leading to better reporting and some shift in strategy towards redirecting capital expenditure to renewables. The challenge will be if the change being supported by engagement will be enough to avoid fossil fuel stocks becoming “value traps.”

Read: This is the hottest social issue that U.S. companies are discussing

Active managers have distinct advantages when it comes to proxy voting and engagement, the most obvious being that active managers have a far smaller number of securities to cover than a passive manager. Further, through their research processes, active managers can incorporate

“I agree it was crass,” Culture Secretary Oliver Dowden tweeted on Monday, adding that his staff were not involved in the advertisement, which was part of a “partner campaign encouraging people from all walks of life to think about a career in cyber security.”

Reactions to the advertisement dovetailed with broader criticism that officials have not found ways to communicate effectively with workers facing tenuous employment during the pandemic. Fatboy Slim, a popular British DJ and music producer, said that the government was “throwing the arts under a bus.”

The anger came after beta version of a quiz developed by the British government to help people prepare for career changes became the subject of gallows humor among arts workers last week. The Department of Education quiz asked 50 questions to help respondents decide what careers might best suit them.

But those who took the quiz were often perturbed by the suggestions. This reporter took the test last week and was advised to consider a new career in boxing or as a soccer referee. On Twitter, other users shared images of recommendations that they become lock keepers or airline pilots.

The ballet advertisement, published on the website of training firm QA, appeared to suggest that a ballet dancer named Fatima could soon have a job in cybersecurity, although she did not yet know it.

It was part of a campaign dubbed “Rethink. Reskill. Reboot” — part of CyberFirst, a program launched in 2019 by Britain’s National Cyber Security Centre that encourages young people to get training for careers related to technology.

But for many in the British creative and arts industries, it was interpreted as a further sign that the government did not support them amid venue closures and dwindling opportunities.

Others retweeted the image with a hashtag for “Save

I don’t know about you, but my love of podcasts has intensified under lockdown.

The perfect antidote to hours spent glued to a screen while “living at work”, I would much rather pick up a pair of headphones than the TV remote — and judging by the soaring popularity of podcasts, I am not alone.

I’m often asked about my favourite financial shows. At the start of the pandemic, one of the most effective investment management tools I found was The Boring Talks, a BBC podcast. With episodes devoted to the wonders of coal holes, jigsaws, oboe reeds and teletext, it has nothing to do with money. Yet listening to this took my mind off soaring infection rates and plunging stock markets as I resolved to stick to my long-term investment strategy.

I’ve presented the FT Money Show podcast for five years, but under lockdown, our shiny new studio in the basement of Bracken House was off limits. We used our time off air to rethink the format — and the result is the new Money Clinic podcast which launched this week.

Each week, I will be talking through a real-life money issue with a listener who is willing to unburden themselves down the line. Upcoming episodes feature a graduate nervously navigating the jobs market, a City worker with significant credit card debts and a buyer weighing the pros and cons of shared ownership properties. Problem shared, we then consult the best financial experts about next steps people in a similar position could take.

FT podcast: How can I get started as an investor?

Claer Barrett talks to listener Naureen about how to start investing in the stock market. Download here

Part of the inspiration for this format was my unofficial role as the FT’s financial agony aunt. My desk

Cook County Board President Toni Preckwinkle made it clear on Wednesday: There is no Plan B for the hundreds of thousands of her constituents who risk losing health insurance should Republicans in Washington succeed in repealing the Affordable Care Act.



Toni Preckwinkle looking at the camera: Cook County Board President Toni Preckwinkle speaks on the impact of a potential repeal of the Affordable Care Act during a news conference at Cook County Health in Chicago on Oct. 7, 2020.


© Antonio Perez / Chicago Tribune/Chicago Tribune/TNS
Cook County Board President Toni Preckwinkle speaks on the impact of a potential repeal of the Affordable Care Act during a news conference at Cook County Health in Chicago on Oct. 7, 2020.

She warned of a possibly cataclysmic blowback within Cook County’s public hospital system that runs a massive insurance program made possible by the ACA, also known as Obamacare. Without it, there is no backup for many of the 370,000 low-income enrollees who have come to rely on the county’s largest Medicaid managed care plan to access health care, she said.

“Here’s the bottom line: The repeal of the ACA would not only financially cripple Cook County Health by dramatically increasing the amount of uncompensated health care we provide, it would be catastrophic — catastrophic — for the patients we serve,” Preckwinkle said at a news conference with several Democratic congressmen at Cook County Health’s Chicago headquarters.

Illinois Democrats have sounded the alarm on the implications of repealing the Affordable Care Act before, but Preckwinkle said Wednesday that now more than ever, there is “a very real threat this time around.”

That’s because the U.S. Supreme Court is slated to hear arguments on the law’s constitutionality on Nov. 10 after GOP officials sued the federal government in 2018 to strike down Obamacare. And with the pending confirmation of President Donald Trump’s nominee Amy Coney Barrett to the nation’s highest court, the cards could be stacked against the ACA.

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WASHINGTON (Reuters) – The global economy is in “less dire” shape than it was in June but risks crashing again if governments end fiscal and monetary support too soon, fail to control the coronavirus and ignore emerging market debt problems, International Monetary Fund Managing Director Kristalina Georgieva said on Tuesday.

FILE PHOTO: International Monetary Fund (IMF) Managing Director Kristalina Georgieva makes remarks during a closing news conference for the International Monetary Finance Committee (IMFC), during the IMF and World Bank’s 2019 Annual Meetings of finance ministers and bank governors, in Washington, U.S., October 19, 2019. REUTERS/Mike Theiler/File Photo

Georgieva told an online London School of Economics event that the IMF will make a small upward revision to its global economic output forecasts next week, adding: “My key message is this: The global economy is coming back from the depths of this crisis.”

“But this calamity is far from over. All countries are now facing what I would call ‘the long ascent’ – a difficult climb that will be long, uneven, and uncertain. And prone to setbacks,” she added in a speech billed as her “curtainraiser” for next week’s IMF and World Bank annual meetings.

The Fund in June forecast that coronavirus-related shutdowns would shrink global gross domestic product by 4.9%, marking the sharpest contraction since the Great Depression of the 1930s, and called for more policy support from governments and central banks.

The IMF will publish its revised forecasts next week as member countries participate in the meetings, which will be held largely in an online format.

Georgieva said the IMF was continuing to project a “partial and uneven” recovery in 2021. In June, it forecast 2021 global growth of 5.4%.

But $12 trillion in fiscal support, coupled with unprecedented monetary easing, has allowed many advanced economies, including the United