Environmental and Epigenetic Impacts | Weather Modification | Geoengineering | Climate Hacking | Changes to Weather Profitability and Hedging Losses | Weather Futures Traded | Catastrophe Bonds Traded | Cui Bono?
Cui Bono? Who profits and/or limits their losses … IF weather is both engineered AND known about in advance? CAVEAT: This short article is NOT intended to be accusatory in nature, nor to single out any one “Weather Futures” or “Castrophe Bonds (CATs) trading firm in particular. It is also not intended to be critical of capital markets in specific. A simple search on the Internet of the terms in quotes brought up the LINKS and information briefly quoted below. This search also included two of many videos available from a YouTube search.
Readers critical thinking and independent investigation is highly encouraged.
This brief article is a Supplement to PART TWO of a three part series summarized as: “ENVIRONMENTAL AND EPIGENETIC IMPACTS …&c.”
Size and History
“It has been estimated that roughly 20% of the American economy is prone to be affected directly by the weather and that the profitability for virtually every industry sector—e.g., agriculture, energy, travel and entertainment, and construction, to name just a few—depend on fluctuations in temperature, wind, and precipitation. During sworn testimony to Congress in 1998, former commerce secretary William Daley suggested, "Weather is not just an environmental issue, it is a major economic factor. At least $1 trillion of our economy is weather-sensitive."
Weather Futures and CME
In 1999, the Chicago Mercantile Exchange (CME) introduced exchange-traded weather futures, as well as options on those futures, for the first time. Previously, over-the-counter(OTC) weather derivatives were privately negotiated, individualized agreements made between two parties.”
https://www.investopedia.com/terms/w/weatherfuture.asp
“Since Weather products were created, we have continually listened to our customers and augmented the product line to meet the expanding needs of the growing weather risk management market. In the tables below, you can find the CME Globex codes for our temperature, frost, snowfall, rainfall and hurricane futuresand options contracts. [2]” …
Weather Futures and Options Codes." Chicago Mercantile Exchange, CME Group (2012).
https://youtu.be/DJ34lh5LVSU?feature=shared
https://youtu.be/RbqEN_EwFmA?feature=shared
Weather Futures
“WHY TRADE WEATHER PRODUCTS?
Access to unique tools for managing exposure to weather
Transfer risk associated with adverse weather events with index-based products geared to average seasonal and monthly weather in 18 cities globally. …”
_________
“Weather futures enable businesses to protect themselves against losses caused by unexpected shifts in weather conditions. While businesses may have property-casualty insurance policies to cover physical damage caused by relatively rare weather-related events, such as a windstorm or hail, these insurance policies will not cover economic losses if customers aren't able to show up due to heavy rain, or if crops fail to thrive in hot weather.
Weather futures sprung up in the early 1990s as a way for firms to hedge their weather exposure based on changes to indexes that measure changes in average daily temperatures.”
“The buyer of an HDD weather futures contract will stand to gain if the cumulative temperature is below the specified level as heating occurs when temperatures are lower. The opposite would be true for the buyer of a CDD weather futures contract, where they will stand to gain if the cumulative temperature is above the specified level as cooling occurs when temperatures are higher.
The popularity of weather futures is growing rapidly and becoming a more common method for energy companies or agricultural producers to hedge against a change in demand due to changes in temperature. For example, if the month of October is warmer than expected, customers will not use as much heat. This will cause a loss for the energy company. If, however, the energy company has sold a weather future for the month of October, the energy company will receive the value of October's HDD, providing compensation for its losses.”https://www.investopedia.com/terms/w/weatherfuture.asp _________
Carastrophe Bonds (CAT Bonds)
“Understanding Catastrophe Bonds
Catastrophe bonds are used by property and casualty insurers as well as reinsurance companies to transfer risk to investors. First marketed in the 1990s, these bonds offer insurance and reinsurance companies another way of offsetting the risk associated with underwriting policies. Institutional investors can receive a higher interest rate from CAT bonds than from most other fixed-income securities.
CAT bonds are a type of insurance-linked security (ILS)—an umbrella term for financial securities that are linked to pre-specified events or insurance-related risks. CAT bonds are paid to insurance companies only if a catastrophe—that is protected by the bond—occurs.” https://www.investopedia.com/terms/c/catastrophebond.asp
Earthquakes | Hurricanes | Floods | Property Damage
“Any large-scale catastrophe triggers a catastrophe bond. It can be earthquakes, landslides, hurricanes, tornados, tsunamis, floods, etc. Large scale implies the condition where the total payout value exceeds the CAT bond threshold value.”
https://www.wallstreetmojo.com/catastrophe-bond/#h-frequently-asked-questions-faqs
“…A CAT bond might be structured so that the payout occurs only if the total natural disaster costs exceed a specific dollar amount over the specified coverage period. Bonds also can be pegged to the strength of a storm or earthquake, or to the number of events, such as more than five named hurricanes striking Texas. A series of natural disasters would trigger a payout to the insurance company, which funds also would come from the secure collateral account.”
https://x.com/teammagakim/status/1832442055005794311?s=46
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