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Good cop, bad cop

The latest round of U.N. climate talks, known as COP28, gets underway this week in Dubai, with many of the parties looking for concrete pledges to combat the damaging effects of climate change. It's a trend that's been seen since the 2015 Paris Agreement to curb warming at 1.5 degrees Celsius above pre-industrial levels, where progress is yet to be made despite many workshops, gatherings and conferences. Greenhouse gases like carbon dioxide, methane and nitrous oxide even reached new record highs in 2022, while increasing temperatures, a loss of biodiversity and extreme weather events like floods and hurricanes have set off many environmental alarm bells.

Snapshot: Many scientists now say that 2023 is "virtually certain" to be the hottest year ever in recorded history. It doesn't help that regional wars are sparking fears about energy security at the same time that fossil fuel manufacturing usage is being outsourced to developing nations, where deregulation of environmental protections has been used to advance their economies. This can even be seen among countries that are powering the green revolution, like nickel smelting for EV batteries, with further criticism being leveled at the sustainable commitments of some of the world's most profitable companies.

Meanwhile, a backlash against Dr. Sultan Al Jaber erupted as soon as the head of ADNOC, the state-owned oil company of the United Arab Emirates, was appointed president of the COP28. The climate talks this year are also taking place in the UAE, a hydrocarbon heavyweight within OPEC that plans to raise its oil production capacity to 5M barrels per day by 2027. Others argue that is the type of leadership needed to pursue this type of agenda, and can help other fossil fuel leaders enter the climate conversation to transition the globe to a low-carbon economy. The UAE maintains strategic ties ranging from the United States and the European Union to China and Russia.

"Everyone needs to be part of this process and everyone needs to be held responsible and accountable," Al Jaber declared in a recent interview. "That includes all industries and in particular heavy emitting industries like aviation, transportation, aluminum, cement, steel, as well as the oil and gas industry. We need to provide the necessary insurance and the hedging mechanisms to protect the private sector, and incentivize them to come on board to help fix the climate finance challenge. Everyone must be consulted. Everyone must be given the opportunity to contribute."

What to watch: There will be some notable absences at the COP28, including President Biden, who has championed a climate agenda and his signature Inflation Reduction Act that granted $369B in American clean energy subsidies and tax breaks. China's Xi Jinping will also be missing, meaning both leaders of the world's largest greenhouse gas emitters will be absent on the global stage. Like past summits, negotiations at the COP28 will ultimately boil down to questions of fairness and trust, as well as accountability and enforcement mechanisms. Another topic that could also derail the talks is climate reparations, or "loss and damage" payments, to countries that cannot afford to defend themselves against climate risks. Take the WSB survey.

Shopping spree

Black Friday online shopping in the U.S. has been a bright spot for retailers, with consumers spending a record $9.8B, according to Adobe Analytics. The record spending, which was widely expected, was driven by shoppers hunting for the best deals online amid deep discounts and flexible payment options. Thanksgiving online spending also rose to a record $5.6B, and consumers aren't down yet, with Cyber Monday still expected to be this year's biggest online shopping day. MasterCard data also showed that online sales surged, while in-store shopping was less popular. (13 comments)

Gold rush

Gold advanced to a fresh six-month high over the weekend, rising further above the $2,000 an ounce mark, as expectations that the Federal Reserve has reached the end of its rate-hiking cycle pushed the dollar index lower and lifted non-yielding bullion. "Evidence shows that commonly cited fundamental drivers of gold's price are on shaky ground," wrote SA analyst Ralph Wakerly. He cited the Socionomic Theory of Finance as a way to discern sentiment around gold prices, with a review of gold trader positioning at the extremes to demonstrate strong support for the theory. (1 comment)

Zero-day options

This year's trending trade on Wall Street - zero-day options - has now reached the Treasury and commodity markets, with Nasdaq listing new contracts tracking popular ETFs investing in oil (USO), natural gas (UNG), gold (GLD), silver (SLV), and long-term Treasuries (TLT). While they have become increasingly popular, analysts warned that 0DTEs could worsen market volatility if the options reach a big enough scale. Traders use this strategy to make a quick buck and hedge against short-term market moves caused by major events such as CPI reports and the Federal Reserve's policy meetings. (7 comments)

Today's Markets

In Asia, Japan -0.5%. Hong Kong -0.2%. China -0.3%. India closed.
In Europe, at midday, London -0.2%. Paris -0.1%. Frankfurt -0.2%.
Futures at 7:00, Dow -0.1%. S&P -0.2%. Nasdaq -0.1%. Crude -1.4% to $74.52. Gold +0.5% to $2,013.30. Bitcoin -1.8% to $37,038.
Ten-year Treasury Yield -2 bps to 4.46%.

Today's Economic Calendar

10:00 New Home Sales
10:30 Dallas Fed Manufacturing Survey
11:30 Results of $54B, 2-Year Note Auction
1:00 PM Results of $55B, 5-Year Note Auction

Companies reporting earnings today »

What else is happening...

WHO: Pneumonia outbreak in China is no reason for alarm.

The AI gold rush is here. Buy 'picks and shovels' to benefit.

Novo Nordisk (NVO): Huge reality check awaits investors.

Activist Elliott takes over $2B stake in Crown Castle (CCI).

Will Binance's crypto dominance persist post-settlement?

Tesla's battle to avoid unionization in Sweden escalates.

Beijing exchange bars stock sales by major shareholders.

Alibaba (BABA) shuts Quantum computing lab amid rehaul.

Amazon Web Services likely to 'shine' at re:Invent conference.

Moody’s: Health insurers' outlook is stable despite headwinds.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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