Note: The views and opinions expressed in this newsletter are those of the authors and do not necessarily reflect the official policy or position of Newday Impact. Any content provided by our authors is of their opinion and is not intended to malign any religion, ethnic group, club, organization, company, individual, or anyone or anything.
Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Past performance does not guarantee future performance.
FEATURED COMMENTARY
A “Whatever” Attitude is the Enemy
Written by: Richard Moran, Newday Advisory Board
For some people, the combination of the letters E, S and G conjures images of corporate responsibility and compliance. For others it may mean global meetings in Edinburgh or at the World Economic Forum. Or maybe it’s a famous environmentalist (of which there are many) talking at a benefit for ocean health or rain forest preservation. It’s all a little distant and abstract.
Closer to home, to others sustainability means being a good steward. Those actions include ensuring that the recycling is carefully sorted on trash day and everything is organic. Any pesticides are avoided and electric vehicles are parked in the garage. All are welcome behaviors that make a difference.
But what about all those considerations between those two scenarios?
Consider this one. You are driving along the beautiful country road and there on the side of the road is a old couch and a bunch of garbage next to the sign that screams NO DUMPING. The reason that sign is in that exact location is probably because it is a favorite spot for people to get rid of old tires and worn out carpeting. I can visualize the scenario: Someone (probably a guy) goes to the site at night, unloads old cans of paint or a mattress or a bunch of yard waste and says to himself, “Whatever, I paid my taxes, someone will pick it up.”
As I imagined that scenario I realized it was a “whatever” situation that happens way too often. So I wrote a book about it to be published in April – Never Say Whatever, How Small Choices Make a Big Difference. (McGraw Hill) We need to stop saying “whatever”.
I doubt the people who are reading this newsletter are the ones dumping junk on the side of the highway. However, I do think that we can all fall victim to the “whatever” syndrome.
The “whatever’ word conveys any number of messages that we associate with slackers, complainers, wimps and uncooperative non-team players. In general, it conveys a negative or indecisive or wishy-washy approach. When it comes to investing in important initiatives, there is no room for “whatever”. The act of using the word almost always defers or eliminates a decision or a choice that should be made. As someone who is a true believer that life is choices, and it’s better to be positive than negative, I set out to kill the word. As I spoke to leaders and conducted research I found consistent messages regarding decision making and what factors into the “whatever” word. Here’s how to avoid that “whatever” word.
- Be Intentional – Actions follow intent; if you know your intent, the decisions about actions are clear.
- Be Self-Aware – In your heart-of-hearts, you almost always know what the right thing to do is. Do that.
- Be Accountable – Even when no one is looking, don’t take that old refrigerator to the side of the road.
- Be Willing to Take Risks – You may not know everything about that new ESG fund but take that risk to do the right thing.
- Be Ready to Act on Choices – Stop hemming and hawing. Once you make the choice, start implementation.
- Regrets Will Happen, Move On – The biggest regrets are the choices and actions we did not act on.
These universal behaviors are the key to eliminating that sense of being stuck because you avoided decisions, large or small. Because you said “whatever”. ESG investing will be much more robust when people get rid of “whatever”. We might also get rid of those roadside dumps.
IMPACT COMMENTARY
Breaking Barriers
It’s no secret that the world of finance has long been dominated by men. For centuries, women were not allowed to own property or have control over their finances and often were not allowed to work outside the home. However, this began to change in the late 19th and early 20th centuries when women fought to change societal expectations, gender stereotypes, and legal barriers. Despite this progress, they still faced significant obstacles, such as discrimination, unequal pay, and limited opportunities for career growth.
In light of Women’s History Month, we’d like to remember and honor the remarkable trailblazers who made history when they broke into the financial industry working as clerks, bookkeepers, and tellers in banks and broke down barriers and cultivated roots in the financial industry that paved the way for those of us that followed. As women, we are proud to be a part of a generation where gender diversity and equality in the workplace are receiving more attention than ever before, and women in the financial industry are rising within the ranks.
Today, as the Women of Newday Impact, we highlight a few of the role models that inspired us to forge our own careers in the financial industry and pushed us to aim higher despite the perceived barriers often pervasive in the industry.
- Louise M. Weiser: In 1875, she became the first woman President of a bank headquartered in the U.S. This was a significant accomplishment since, at that time, she could legally be refused an account from a commercial bank based on her gender despite being the president of an American banking institution.
- Victoria Woodhull: In 1870 became the first woman, along with her sister Tennessee Claflin, to own a brokerage firm on Wall Street. She was a women’s suffrage movement leader, an activist for women’s rights and labor reforms, and is argued to be the first woman to run for President of the United States in 1872.
- Maggie Lena Walker: In 1903, she became the first woman (and a black woman) to charter a bank in the United States, the St. Luke Penny Savings Bank in Richmond, Virginia. It became the first bank owned and operated by African Americans in the U.S. Her legacy as a pioneering entrepreneur, banker, and civil rights activist continue to inspire generations of Americans, particularly women and people of color.
- Muriel “Mickie” Siebert: In 1967, she became the first woman to own a seat on the New York Stock Exchange. She was a trailblazer for women in finance and often referred to as the “First Women of Finance” and used her success to advocate for equal pay and opportunities for women in the industry.
- Abby Joseph Cohen: In 1988, Cohen became the first woman to lead a Wall Street investment strategy team. She was a highly-respected analyst and strategist, and her insights were sought after by investors around the world.
- Sallie Krawcheck: In 2002, she made history when she became the first woman to lead a major Wall Street bank, serving as the CEO of Citigroup’s wealth management division. Krawcheck was known for her leadership skills and was a vocal advocate for women in finance, and worked to create opportunities for women to succeed in the industry.
- Janet Yellen: In 2014, she became the first woman to serve as Chair of the Federal Reserve and is currently the U.S. Treasury Secretary and the first woman to hold the position. She was known for her expertise in monetary policy and commitment to promoting economic growth and stability. She was also the first woman to hold the position of Chair of the Council of Economic Advisers under President Bill Clinton.
These women’s impact can be seen today in the increasing number of women in finance and the growing recognition of the importance of diversity and inclusion in the workplace. However, there is still work to address the gender gap in finance. According to the U.S. Department of Labor, women account for over 51% of the U.S. population and approximately 54% of entry-level positions in the financial industry. However, women remain underrepresented in leadership positions as the U.S. Government Accountability Office (GAO) shows that women hold only 25% of senior management positions, and only 22% have C-suite and executive roles.
A Diversity of Asset Managers Industry Report published by the Knight Foundation in December of 2021 shows some encouraging trends of women-owned firms and women-managed AUM across asset classes. However, the levels of representation across each asset class are still relatively low and have not seen considerable growth over the last decade (see below). According to Morningstar, 26% of funds were led by a gender-diverse team, meaning the investment team included at least one woman. Yet, less than 2% of the roughly 10,000 U.S. funds they monitor (among allocation, equity, and fixed-income funds) were led exclusively by female teams at the end of 2022. This percentage has remained fairly consistent over the last few years.
At Newday Impact, we are proud that women account for 60% of our executive suite, 55% of employee stock ownership, 50% of our advocate-led NGO partnerships, and seven of our thematic funds led by a gender-diverse team. We are proud of our female leadership statistics that have created a more diverse and inclusive workplace culture. We hope to help break down the barriers and change the gender biases and stereotypes that still exist in the finance industry today. We stand to serve as mentors and role models to encourage and support younger women who may not have considered a career in finance before and help develop the next generation of female leaders in finance.
Please join us in celebrating the great women that helped positively change the trajectory of our nation’s history and honor all the women of finance whose contributions inspired us to do what we do here at Newday Impact today and every day!
MARCH GLOBAL EQUITY COMMENTARY
Written by: Newday Investment Team
After a strong January led by mean reversion of sectors and themes from 2022, volatility returned to markets in February. Global PMIs continued their upswing. The JP Morgan global composite PMI moved above 50 into expansionary territory for the first time since July, rising to 52.1 from 49.8 in January.[1] The rebound was driven primarily by the service sector as manufacturing in Europe and the US remained weak.[2] Despite what we see as rising growth optimism, markets responded negatively to data showing strong US payrolls growth and only a modest deceleration in CPI. U.S. Bureau of Labor Statistics data showed headline CPI decelerated to 6.4% YoY in January (from 6.5% the prior month), while core CPI decelerated to 5.6% YoY (from 5.7%).[3] Likewise, Eurostat data showed Eurozone inflation decelerated only modestly in January and core inflation continued to move higher, accelerating for an eighth consecutive month.[4] US job growth continued to be robust and unemployment claims remain low.[5] Bonds and stocks sold off together and the dollar rallied[6] as key indicators showed a high probability of a coming recession.[7]
The front end of the yield curve had been creeping higher in February as the market priced in some additional Fed tightening in response to the strong CPI and labor market data, however this abruptly unraveled in the first two weeks of March following the implosion of Silicon Valley Bank and the ripple effects across other financial institutions. In response, the Fed announced a new liquidity backstop to protect depositors and quell contagion fears.[8] Meanwhile, the incremental Fed tightening that had been priced into the yield curve in February reversed, with markets now pricing in a terminal rate close to 5%, similar to what had been expected in January prior to the stronger data.[9] Equities were volatile in early March with the VIX briefly spiking above 30 as concerns mounted over the banking sector and knock-on effects to economic growth.[10]
We continue to anticipate some level of disinflation could occur over the next few months given downward pressure from commodity prices. We believe Fed actions to backstop banks will help alleviate concerns around systemic risk. We continue to monitor the debt ceiling debate in Congress, which could come to a head over the summer. We continue to believe these discussions may cause volatility in markets later in Q2 given a compromise solution to raising the debt limit is not currently foreseeable.
In February we opportunistically trimmed exposure to some names that had outsized “January effect” rallies. We also continued cutting exposure to benchmark tech exposure as well as some lower beta holdings that had underperformed. We established new positions in two stocks (NYSE: WFG, WY) in the forest products sector that have adopted sustainable forestry practices and that we feel have significant embedded optionality from the potential value of carbon offsets that we expect to appreciate over time. We also added to our holdings in the global industrial gas space (NYSE: LIN) as we believe the industrial gas producers are high-margin moat businesses and Linde has aggressive ESG targets, including to reduce its scope 1 and 2 emissions 35% by 2035.[11]
The crisis at Silicon Valley bank has not changed our view that global growth expectations bottomed at the end of 2022 and disinflation progress should continue despite recent inelasticity to core inflation in some regions. While the banking concerns may have some consequences for the growth outlook given effects on financial intermediation, it has also made the Fed incrementally more cautious and strengthened the case for a rangebound rates market in the near-term. We are looking at swaps within the technology holdings across our portfolios given significant divergences that were created by the recent banking blowups. We are also looking at adding financials exposure given good actors in the space were dragged down by broader systemic risk concerns that should be mitigated by recent Fed actions. We look forward to sharing additional updates as conditions evolve.
Footnotes:
[1] See https://tradingeconomics.com/world/composite-pmi
[2] See https://tradingeconomics.com/euro-area/manufacturing-pmi, https://tradingeconomics.com/united-states/manufacturing-pmi
[3] See https://tradingeconomics.com/united-states/inflation-cpi, https://tradingeconomics.com/united-states/core-inflation-rate
[4] See https://tradingeconomics.com/united-states/inflation-cpi, https://tradingeconomics.com/united-states/core-inflation-rate
[5] See https://tradingeconomics.com/united-states/non-farm-payrolls, https://tradingeconomics.com/united-states/jobless-claims
[6] See below chart from S&P Global as well as table citing ETF performance calculations using Trading Economics data.
[9] See https://www.cmegroup.com/markets/interest-rates/stirs/30-day-federal-fund.quotes.html
[10] See https://tradingeconomics.com/vix:ind
COUNTRY GOVERNANCE RESEARCH COMMENTARY
Russia continues to struggle as its invasion enters a second year
With the Russian invasion of Ukraine now in its second year, Russia’s forces continued to struggle to make progress in the east of Ukraine. As has been the case for months now, the small town of Bakhmut in the Donetsk region has been the epicenter of the most intense fighting. Russia and in particular the Wagner mercenary group have made progress in encircling the city at the cost of tremendous casualties to their troops. The scope of Ukrainian casualties have been less widely reported, but they are also believed to be significant. The Ukrainians face the difficult choice of either removing their troops from what has become a symbolic fight or risk losing additional troops and equipment they will need for their own expected spring counteroffensive. Ukrainians have reportedly sent reinforcements to the town, but it was not clear if the troops would be used to continue the fight for the town or instead would be employed to facilitate a withdraw to more defensible positions to the west of the city. Further to the south Russian forces have repeatedly failed in their attempts to storm the strategic town of Vuhledar with tanks and infantry. The catastrophic losses Russia has suffered point to the continuing problems the Russian military has had in executing the Kremlin’s unrealistic objectives, and their inability to adjust and correct past mistakes. Estimates are that Russia lost hundreds of troops and dozens of tanks and other heavy equipment over days of repeated headlong assaults.
Implications: Away from the battlefield, there have been continued shows of international support for Ukraine with the UN General Assembly overwhelmingly passing a non-binding resolution calling for Russia’s immediate withdraw from Ukraine. The G20 also issued a statement denouncing Russia’s aggression, though as expected objections from Russia and China prevented a unanimous consensus. China for its part put forward its own peace proposal, though it was widely dismissed given China’s support for Russia. However, Zelensky did not dismiss the proposal out of hand saying there were parts he agreed with such as China’s call for respecting the sovereignty and territorial integrity of all countries.
UK and EU agree on new “Windsor Framework” for trade with Northern Ireland
U.K, Prime Minister Rishi Sunak and European Commission president Ursula von der Leyen recently announced the “Windsor Framework” that both sides hope will end the dispute over Northern Ireland’s post-Brexit trade arrangements. The deal would amend the Northern Ireland Protocol, which was agreed as part of the 2019 Brexit divorce deal. The protocol aimed to prevent a hard border with Ireland. The compromise reached at the time had Northern Ireland remain part of the EU single market so that goods could flow freely over the border with Ireland without additional checks. However, in order to maintain access to both the UK and EU markets, the agreement effectively imposed a customs border in the Irish Sea between Northern Ireland and the rest of the U.K. This has proven difficult to implement and threatened to disrupt the supply of goods such as medicines coming into Northern Ireland. The proposed new framework will divide goods into a “green lane” for goods to be sold in Northern Ireland and a “red lane” for those destined for the EU single market. Only EU bound goods would have to go through full customs checks. There would also be a new mechanism allowing local legislators to object to significant changes to EU rules with the possibility that the U.K. could as a last resort block the proposed legislation.
Implications: Sunak has not yet scheduled a vote in parliament on his framework in order to give unionists in Northern Ireland and pro-Brexit members of his Conservative party time to review the legal text. Northern Ireland’s Democratic Unionist party has boycotted the region’s Stormont assembly in protest over the Northern Ireland Protocol. The DUP agreeing to now return to government would be a powerful endorsement of the deal.
Mexican Congress passes controversial electoral reforms
A controversial package of electoral reforms supported by President Andrés Manuel López Obrador was passed by Mexico’s Senate by a vote of 72 to 50 with all opposition parties voting against. Among the measures included in the legislation is an almost one-third cut to the budget of the independent National Electoral Institute (INE), which is responsible for overseeing the country’s elections. The INE came into existence as part of reforms instituted in the 1990s following decades of electoral fraud, and it is credited with creating the fair conditions that allowed the opposition to win an historic victory in 2000, ending 71 years of one-party rule by the Institutional Revolutionary party (PRI). Obrador has argued that the INE’s budget is excessive and that he would save millions of dollars and make voting more efficient by cutting the bloated bureaucracy. He has also repeatedly claimed, without evidence, that the INE is biased and corrupt. Observers have said he still harbors resentment toward the agency for confirming his narrow defeat in the 2006 presidential election. Presidential and congressional elections will be held next year, and the changes will make it harder for the INE to ensure a level playing field. The Supreme Court is expected to hear a challenge from opponents to the measures in the coming months.
Implications: The Mexican constitution limits presidents to a single six-year term in office, and Obrador has said he will retire at the end of his term. However, he is expected to handpick the presidential candidate for his party, Morena, and there is concern he could use greater control of the electoral machinery to perpetuate his party’s hold on power.
PARTNER COMMENTARY
THE YOUTH-LED MOVEMENT TO SAVE OUR OCEAN PLANET
“It’s essential that we create and foster youth interest in ocean conservation if we hope to establish the sustained momentum needed to address and correct the growing climate challenges impacting people and critical ecosystems globally.”
In 2005, explorer and ocean advocate Philippe Cousteau, Jr and a small team launched EarthEcho International based on a simple concept: youth have the power to change the world. At the time there were very few organizations focused on fostering and building pathways for youth to become informed and active ocean champions. Today, EarthEcho is a leader in the growing movement of youth-focused ocean advocacy. With the fight to protect and restore our ocean planet reaching critical levels, youth leaders are emerging as powerful change agents, from tackling plastic pollution and species decline to influencing policy.
EarthEcho’s unique focus is informed by compelling facts. Covering 70 percent of the Earth’s surface, the ocean transports heat from the equator to the poles, regulating our climate and weather patterns. For this reason, climate change—the warming of the earth and all of the critical problems it causes—is fundamentally an ocean issue. Activating and engaging youth is key to building a durable conservation movement that can move with the speed and audacity needed to transform the future.
To that end, EarthEcho supports and amplifies the voices and work of youth to drive meaningful environmental impact starting at a community level. Reaching more than 2 million people in 146 countries, our core programs provide opportunities and resources for youth to develop and use their leadership skills to drive positive change.
One timely example is the OceanEcho 30×30 initiative, a global campaign designed to amplify the collective impact of youth-led action to protect 30% of our global ocean by 2030 through education and advocacy campaigns, active engagement in ocean policy, and direct coastal restoration efforts. Global concern regarding environmental degradation and anthropogenic impacts on marine ecosystems has led to urgent calls to meaningfully protect 30% of the ocean in the next decade to preserve what remains of ocean biodiversity and restore the ocean to abundance. Critical to the success of these efforts are the voices and leadership of young people around the world. An important piece of OceanEcho 30×30 includes a paid fellowship experience equipping young leaders with tools, training, and funding to launch innovative campaigns building public and political support for the global 30×30 goal in their own communities.
In 2022, OceanEcho Fellows lent their voices and support to advance established marine protected areas. Partnering with mentors in the Aleut Community of St. Paul Island, Friends of the Mariana Trench, the Northern Chumash Tribal Council, the Pacific Remote Islands Coalition, and the Surfrider Foundation, the work of these passionate youth leaders provides a glimpse into the power and relevance of youth-led advocacy. From creating educational roadshows and social media campaigns to public art and museum exhibitions, each of the Fellows was able to add unique perspectives that raised community awareness and support. Through EarthEcho’s digital platform, these emerging leaders will connect and collaborate with a community of over 700 fellow ocean advocates from 50+ countries to share resources, ideas, and inspiration.
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If you have a young person in your life who is passionate about the ocean or is looking for real-world ways to combat climate change, please encourage them to get involved with EarthEcho International by joining GenSea! GenSea is EarthEcho’s community and digital platform connecting young ocean advocates, ages 13-25, for networking, learning, and collective action to protect and restore our ocean planet.
Social Impact Heroes: Why & How Ger Duany Of Newday Impact Investing Is Helping To Change Our World
A former child soldier in what is now South Sudan and refugee in Ethiopia and Kenya prior to resettling in the United States at age fifteen, Duany has spent his adult life advocating for displaced persons around the world. He has served as Goodwill Ambassador at the United Nations High Commissioner for Refugees (UNHCR), where he brought direct experience to advocacy and awareness efforts, as well as authored “Walk Towards the Rising Sun,” a best-selling autobiography about his experiences. He also played a leading role in the film, “The Good Life,” with actress Reese Witherspoon, has appeared frequently in the media about the refugee crisis, and has spoken globally about the issue at major events. While struggling to find inclusion in America and suffering from post traumatic stress due to his childhood, Duany turned to basketball. He earned a Bachelor of Science degree from University of Bridgeport where he also played the sport.
Duany recently joined Asset Management Company, Newday Impact Investing, as part of the executive team. At Newday Ger is in charge of their Advocacy and Corporate Engagement and Stewardship program to help drive sustainability within its portfolio companies, and support the company’s corporate outreach and engagement.