Economy

… Led by Chairman Aaron Kinsey, the Texas State Board of Education found that BlackRock was not in compliance with a provision in Texas state code that prohibits state investment in companies that boycott energy companies, a practice that Kinsey found BlackRock’s emphasis on ESG has created.

As a result, the Permanent School Fund (PSF) took action on Tuesday, notifying BlackRock that it was divesting a whopping $8.5 billion from the firm — the largest single divestment from BlackRock since state leaders began rejecting asset management firms with values that run opposite their states’ priorities.

A release from the State Board of Education explains the legal basis for the divestment and how BlackRock ran afoul of Texas code:

Today, PSF leadership delivered an official notice to global asset manager BlackRock terminating its financial management of approximately $8.5 billion in Texas’ assets. Terminating BlackRock’s contract ensures PSF’s full compliance with Texas law.

The PSF’s relationship with BlackRock was not in compliance with Texas Government Code Section 809, commonly referred to as Senate Bill 13, which prohibits state investment in companies like Blackrock that boycott energy companies.

BlackRock’s dominant and persistent leadership in the ESG movement immeasurably damages our state’s oil & gas economy and the very companies that generate revenues for our PSF. Texas and the PSF have worked hard to grow this fund to build Texas’ schools. BlackRock’s destructive approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texans.

Today represents a major step forward for the Texas PSF and our state as a whole. The PSF will not stand idle as our financial future is attacked by Wall Street. This bold action helps ensure our PSF remains in fact permanent and will continue to support bright futures and opportunities for generations of Texas students.

… The negative interest rate policy, combined with other measures to inject money into the economy and keep borrowing costs low, “have fulfilled their roles,” Bank of Japan Gov. Kazuo Ueda told reporters.

The bank has an inflation target of 2% that it used as a benchmark for whether Japan had finally escaped deflationary tendencies. But it had remained cautious about “normalizing” monetary policy, or ending negative borrowing rates, even after data showed inflation at about that rate in recent months.

Ueda said there was “a positive cycle” of a gradual rise of wages and prices, while stressing that monetary policy will remain easy for some time.

Although private sector banks and other financial organizations will make their own decisions about rates, he said did not foresee any drastic rises. The central bank will watch for any big moves in rates, which would cause confusion, he added.

… “Time and patience” are two things Joe Biden can’t afford. Unless he can get that inflation number below 2.5%, his re-election will be in enormous trouble.

Fed officials have been debating how long they need to leave rates at their current level, about 5.3 percent. Elevated borrowing costs make it expensive for people to borrow to buy a house or expand a business, and that can weigh on the economy over time. While the Fed has been trying to tamp down demand enough to bring inflation under control, officials want to avoid crushing growth to the point that it leads to widespread job losses or a recession.

But some economists have been worried that it could be harder to slow inflation the rest of the way than it has been to achieve the progress so far. And Fed officials want to avoid lowering interest rates too early, only to find out that inflation is not fully quashed.

… Originally, the Fed planned a total of three interest rate cuts to bring the rate below 4%, but the latest inflation data should give the Federal Open Market Committee pause in initiating any interest rate cuts.

JPMorgan Chase and institutional investors BlackRock and State Street Global Advisors announced Thursday that they are quitting or, in the case of BlackRock, substantially scaling back involvement in a massive United Nations climate alliance formed to combat global warming through corporate sustainability agreements.

In a statement, the New York-based Jamie Dimon’s JPMorgan explained that it would exit the so-called Climate Action 100+ investor group because of the expansion of its in-house sustainability team and the establishment of its climate risk framework in recent years.

Larry Fink’s BlackRock and State Street, which both manage trillions of dollars in assets, said the alliance’s climate initiatives had gone too far, expressing concern about potential legal issues as well.

The stunning announcements come as the largest financial institutions in the US and worldwide face an onslaught of pressure from consumer advocates and Republican states over their environmental, social and governance (ESG) priorities.