🌮 Eat the rich (companies)

The US has a one-tax mind | BlackRock loves windmills |
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Hi Reader, here's what you need to know for April 9th in 3:11 minutes.

🥤 Finimized over a blueberry and strawberry smoothie at Shell Beans in Malé, Maldives (31°C/87°F 🌤)

Today's big stories

  1. The US government has proposed a new plan for taxing multinational companies
  2. Everyone’s growing fears around inflation might offer you a few contrarian buying opportunities – Read Now
  3. Investment manager BlackRock just raised $4.8 billion to invest in renewable energy

Call Of Duties

Call Of Duties

What’s Going On Here?

The US reckons new tax rules for multinational companies are long overdue, so it proposed a new plan this week to make it happen.

What Does This Mean?

The world’s governments have spent billions keeping their economies ticking over during the pandemic, so it's not surprising that they’re keen to replenish their coffers by raising taxes. What is surprising is that the OECD – the economic organization that’s been locked for years in efforts to revamp the global tax system – has finally made headway on exactly that.

It’s thanks in large part to the US, which last week laid out plans for a minimum global tax rate of 21% – a big jump from the 12.5% the OECD’s long been proposing. The US is now reportedly suggesting countries should be able to tax all the biggest multinational companies based on how much they earn there. And while that wouldn’t necessarily change how much they’d have to pay, it’d certainly change who they’d have to pay.

Why Should I Care?

For markets: Those taxes should come in handy.
The US’s sudden enthusiasm for global taxation isn’t bureaucratic selflessness: a higher worldwide minimum would allow the country to raise its national corporate tax rate from 21% to 28% without the risk other countries will undercut them and lure its companies overseas. Any extra cash in the bank wouldn’t hurt either – especially now it has a $2 trillion infrastructure plan to pay for.

The bigger picture: At least it’s something new to worry about.
US companies won’t be best pleased: analysts reckon the proposed overhaul would cut their earnings growth by up to 9% next year, with the tech and pharma sectors at risk of even heftier shortfalls (tweet this). That might be why tax is now number two on the list of things investors are worried about, according to a survey by Royal Bank of Canada – right behind central bank policies, but ahead of last quarter’s inflation fears.

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2. Analyst Take

Now Might Be A Good Time To Play The Contrarian

What’s Going On Here?

Professional investors have made it very clear that they think inflation will pick up over the next year – and according to our very own “Casual Investor Survey”, you do too.

In fact, a net 81% of the Finimizers we surveyed on a range of investing topics are expecting inflation to be higher a year from now.

But if you’re a bit less convinced, you might read their overwhelming consensus that inflation will pick up as a contrarian signal – especially given similar worries from the professionals.

Contrarian investors, after all, make the case that stocks are most likely to fall when everyone is wildly optimistic, and best positioned to rebound when pessimism is at its peak.

In other words, now might be the time to look for investments that’ll do well if inflation comes in lower than expected…

So that’s today’s Insight: which investments could do well if inflation comes in below expectations, and how you can set about playing the contrarian.

Read or listen to today’s Insight

GreenRock

GreenRock

What’s Going On Here?

BlackRock thinks this whole “habitable planet” trend could really catch on – so much so that the world's biggest investment manager announced on Thursday it’s raised $4.8 billion for a new clean energy fund.

What Does This Mean?

Most of the money BlackRock looks after is invested in exchange-traded funds that passively track groups of stocks, but this new fund will fall into a division that invests in physical assets. In this case, that’ll be things like wind and solar farms, as well as electric vehicle-charging infrastructure.

Over 100 institutional investors put their money into the fund, which raised almost twice as much money as it was targeting. And that influx of cash is just the latest sign of how in-demand the renewable energy sector is becoming – not to mention the growing popularity of investing directly in wind and solar farms, rather than simply companies that operate in the space.

Why Should I Care?

For markets: There’s gold in them hills.
The huge demand isn’t just driven by investors trying to get in on the fastest-growing part of the energy sector, but those looking for steady returns too. Wind and solar farms, after all, generate relatively stable cash flows, which means they can provide a reliable source of income in a world of ultra-low bond yields. That might be why Norway’s sovereign wealth fund – the biggest in the world – has now diversified beyond stocks, bonds, and property by making its first direct investment in renewable energy.

For you personally: The problem – and opportunity – isn’t going away.
According to new data out this week, methane levels in the atmosphere rose by a record amount in 2020. So if you’re looking to stop pumping money into the fossil fuel and animal agriculture companies responsible for the majority of those emissions, you might want to start looking at the vegan, electric vehicle, and clean energy sectors instead…

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💬 Quote of the day

“There is no vaccine for racism.”

– Kamala Harris (the 49th vice president of the United States)
Tweet this

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🤔 Q&A · RE: Plug Life

Q: “What percentage of total car sales are electric, and how’s it been trending over time?”

– James

A: “Let’s start by rewinding a bit, James. According to electric vehicle tracking website EV-Volumes.com, sales of plug-in electric vehicles (PEVs) – which include both pure battery electric vehicles and plug-in hybrids – represented 0.6% of total car sales back in 2015. Over the next four years, PEVs’ market share steadily increased, reaching 2.5% in 2019. Fast forward to last year and that jumped to 4.2%, driven by a near tripling of sales in Europe. That’s higher than analysts were predicting a few years ago: research provider Bloomberg New Energy Finance, for example, said in 2018 that PEVs’ share in 2020 would be just 3%.”

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🌏 Finimize Events

🤜 Make an impact with your investments

Want to make this world a better place, but not sure how to make a real difference? Jamie Broderick, former UK CEO of UBS Wealth, knows a thing or two about that: he’ll guide you through how to become an impact investor, and how to shift the priorities of the companies you’re backing.

🍷 Investing In Wine And Whiskey: 6pm UK time, April 9th
💆 Control Your Emotions, Control Your Trading: 6pm NZ time, April 12th
😎 How To Become An Impact Investor: 4pm UK time, April 15th
🔥 The Three Most Important Trading Signals: 6pm UK time, April 20th
👩‍🎨 Are NFTs A Digital Bargain Or Bubble?: 2pm UK time, April 21st
💡 Investing In Small-Medium Cap Stocks: 6pm UK time, April 21st
🏡 The Pros and Cons Of REITs And Real Estate: 1pm UK time, April 22nd
📈 How To Inflation-Proof Your Portfolio: 6pm UK time, April 22nd
🚀 Space: The Final Investment Frontier: 6pm UK time, April 27th
💰 Crowdfunding Club: 1pm NYC time, April 28th
🛢 The Energy Sector’s New Direction: 4pm UK time, April 29th
🔪 How To Cut Through The Spin: 6pm UK time, April 29th
👋 Live Q&A With CEO Max Rofagha: 1.30pm UK time, April 30th

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