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The Market Ignored the Paris Accord Announcement And You Should Too

Refinery

I come from a background where news is important. In the minutes preceding a scheduled major announcement of any kind, an eerie quiet would descend on the normally brash and chaotic dealing rooms where I used to work as everybody stared intensely at their monitors, ready to spring into action once the news was out. What I quickly came to understand though was that it wasn’t the news itself that was eagerly anticipated; it was the reaction to it. News creates volatility, and for a trader volatility equates to opportunity. The actual data or news may decide the initial direction of that volatility but really has little impact beyond that. It was, therefore, with a wry smile that I watched the reaction this week to the “news” that President Trump would be pulling the U.S. out of the Paris Climate Accord, news that energy investors should ignore for a whole host of reasons.

Talking heads on business channels clearly felt that they should react to the announcement and duly did so, often with absolutely no regard to common sense, and usually based on their political bias. I have no time for the extremists either side of the political divide on this issue. The dealing room background that I alluded to above taught me to respect data and expertise over emotion in decision making, so when over 98% of scientists agree that climate change is a problem the logical thing to do is act on the assumption that they are right. That, however, doesn’t excuse those…

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