Today's big stories

Alphabet sold $6 billion worth of environmental, social, and governance bonds
One Nordea market strategist thinks the US dollar's recent difficulties might actually be a good sign – Read Now
Oil giant BP reported a second-quarter loss and cut its dividend

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Lots More Mr Nice Guy

What’s Going On Here?

You’re safe now, citizen: Alphabet sold a record-setting $10 billion worth of bonds this week, and the all-American do-gooder will be using most of the cash to make the world a better place.

What Does This Mean?

There was almost $40 billion worth of investor demand for Alphabet’s bonds, which pushed their yields – effectively the interest rate the company will pay – way down. So far down, in fact, those interest rates have set a new record low.

And the records didn’t stop there: almost $6 billion of the money Alphabet raised will go toward environmental, social, and governance purposes, making it one of the biggest ever bond sales of its kind (tweet this). It intends to use the cash to fund – among other things – affordable housing, organizations supporting black entrepreneurs, and small businesses hit by coronavirus. Oh, and some clean energy projects are on the table too.

Why Should I Care?

For markets: Team bonding.
The high demand for Alphabet’s bonds is in keeping with the high demand for bonds globally. That demand has been supercharged by the US Federal Reserve’s unlimited bond-buying, which has made the asset look less risky overall and encouraged investors to buy. Of course, since yields all over the world are at near-record lows, most investors can’t hope to earn much profit from their purchases. But seeing as price increases (a.k.a. inflation) are so low and stock prices so high, bonds’ regular fixed payments might be more attractive than stocks – which might not pay you anything at all.

The bigger picture: Team falling apart.
If a company defaults on its bonds, bondholders take control of the company to get repaid however they see fit. Major government bonds are theoretically safer, since places like the US and UK pretty much never miss a payment. But that’s not true of riskier governments whose bonds offer higher returns: Argentina, for instance, is restructuring $65 billion worth of debt after yet another default.

Take action: How to decide which bonds to buy.

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2/3 Premium

The Dollar’s Still The Champ

What’s Going On Here?

July was the worst month in a decade for the US dollar, but one Nordea market strategist has a theory about why there might be a rosy economy on the horizon.

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3/3

Alter Eco

What’s Going On Here?

Investors pushed up BP’s share price even after it announced a second-quarter loss and a reduced dividend on Tuesday, but they might’ve just been impressed by the oil company's greener new look.

What Does This Mean?

While BP had been expected to make a loss, the company actually ended up losing less than analysts had thought. And sure, it suffered from low oil prices and damaged demand, but that was partly offset by the success of its trading arm. That part of the business – which puts cheap oil into storage and sells it on for more further down the line – took full advantage of swings in the commodity’s price to turn a profit.

Even so, BP followed in rival Shell’s April footsteps by announcing a 50% cut to its dividend – its first in a decade. And while those payouts might be restored in due course, investors may be worried they won’t be as high as they were before. Still, once it’s reduced its debts, BP has promised it’ll return 60% of its spare cash to investors via share buybacks.

Why Should I Care?

The bigger picture: United they stand.
BP also gave more details about its green ambitions: it’s planning a 40% reduction in hydrocarbon production by 2030, as well as a ramp-up low-carbon energy investment. It’s even promised not to go looking for oil in any new countries. See, BP reckons the pandemic will accelerate the world’s transition to a lower-carbon economy – and it seems to want to benefit from that shift or else risk getting left behind.

For markets: Why choose?
Environmental, social, and governance (ESG) investors might worry that companies meeting their civic-minded criteria may offer lower returns than those that don’t. And while Finimizers have said that doesn’t necessarily matter to them, BP’s update arguably shows it doesn’t have to be one or the other. Fresh demand from ESG investors, then, could help push its price even higher.

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💬 Quote of the day

“In politics, stupidity is not a handicap.”

– Napoleon Bonaparte (a French statesman and military leader)

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🤔 Q&A · RE: Once Bitten, Thrice Shy

“Why are some assets immediately ‘written down’ while others are amortized over several years?”

– Shopnavo in Illinois, USA

“It’s all to do with a key principle of accounting: conservatism. Put simply, companies should record any possible losses immediately, while any gains should only be recorded when they’re confirmed. So when a company buys an asset, it assesses how long it’s likely to last and, based on that, lowers its value by a proportionate amount each year. That way, its value is reduced to zero by the time it stops being useful. But companies also have to regularly assess whether that asset’s still worth as much as it thinks, and if it’s not, the company must immediately reduce – or ‘write down’ – its value to correct it.”

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👠 Fashion is sashaying forward

The pandemic has changed the fashion industry dramatically. So what’s next for retail stores, and which brands have adapted quickly to suit consumer demand? Find out everything you need to know about the future of the fashion industry at our next Hong Kong Finimize event.

🇿🇦 South Africa: The Impact of COVID-19 on Cryptocurrency – 7pm South Africa Time, August 6th
🇬🇧 UK: The Power of ETFs – 12pm UK Time, August 8th
🇬🇧 UK: Retire with a Smile – 1pm UK Time, August 10th
🇭🇰 Hong Kong: Is Fashion Going Out Of Style? – 9pm Hong Kong Time, August 11th
🇺🇸 USA: Equity & The Racial Wealth Gap – 12pm New York Time, August 12th
🇬🇧 UK: The Pathway to Homeownership – 5.30pm UK Time, August 15th
🇬🇧 UK: Create your Financial Fitness Plan – 2.30pm UK Time, August 26th

📚 What we're reading

Life in plastic, it ain’t fantastic (The Guardian)
Are languages built to be gender-biased? (Scientific American)
How Van Gogh spent his last days (Architectural Digest)

Finimize - 😇 Google says don’t be evil

Today's big stories

Lots More Mr Nice Guy

What’s Going On Here?

What Does This Mean?

Why Should I Care?

The Dollar’s Still The Champ

🌍 One platform, limitless opportunity

Alter Eco

What’s Going On Here?

What Does This Mean?

Why Should I Care?

👠 Fashion is sashaying forward

Older messages

📱 Microsoft wants to buy TikTok

☠️ Oil is dead

😎 Shopify steals Amazon's business

😨 US investors fear China

🎟️ New Events: Financial Stability, Finimize AMA, & What's Next For The Global Economy?

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