Investing

To understand how important weather and climate risks are to the economy, watch investors. New research shows that two long-range seasonal weather forecasts in particular can move the stock market in interesting ways. We often think about forecasts as telling us what the weather will bring in coming days, but the National Oceanic and Atmospheric Administration also predicts weather conditions several months out. These seasonal climate outlooks tell us whether the hurricane season is likely to be active, whether the winter is likely to be snowy or cold, and whether an El Niño or La Niña climate pattern is likely to emerge with the potential to influence weather across the U.S. I study the impacts of weather on economic activity as an economist. In a new paper, an atmospheric scientist at NOAA and I analyzed the influence of long-range forecasts by looking at the changing prices of stock options over 10 years and thousands of companies. We found that investors are payin...

The Federal Reserve raised interest rates again on May 3, 2023, by a quarter point, making it the Fed’s 10th rate hike since March 2022 in an ongoing fight to tame inflation. These rate hikes have been reverberating through the economy, raising prospects of a recession amid heightened concerns about the fragile state of banks. The rate hikes are also rattling sustainability-focused investing, better known as ESG investing. The trend toward ESG investing, which puts pressure on companies to meet environmental, social and governance benchmarks, has almost redefined asset management over the past decade. ESG funds today are a multitrillion-dollar market. However, the high uncertainty around interest rates today, along with the prospects of a looming recession and a political backlash, has put the future of ESG investors at a crossroads. I specialize in sustainable finance, and my recent work has documented the impact that tough economic times can have on ESG investing dema...