Jay Smith @jaynemesis: "𝐒𝐮𝐩𝐞𝐫 𝐄𝐥 𝐍𝐢𝐧𝐨 - 𝐀..."

United Kingdom

𝐒𝐮𝐩𝐞𝐫 𝐄𝐥 𝐍𝐢𝐧𝐨 - 𝐀 𝐑𝐢𝐬𝐤 𝐌𝐚𝐫𝐤𝐞𝐭𝐬 𝐀𝐫𝐞𝐧’𝐭 𝐏𝐫𝐢𝐜𝐢𝐧𝐠 //𝑃𝑎𝑟𝑡 𝟷 𝑜𝑓 𝟹 - 𝑆𝑒𝑒 𝑐𝑜𝑚𝑚𝑒𝑛𝑡𝑠 𝑓𝑜𝑟 𝑃𝑎𝑟𝑡 𝟸 & 𝟹 𝙒𝙝𝙖𝙩 𝙞𝙨 𝙀𝙡 𝙉𝙞𝙣𝙤? El Nino is the name used by scientists to describe a recurring climate phenomenon where the tropical region of the Pacific Ocean warms up. It’s cyclical, and tends to occur every 3-5 years, with a La Nina event usually occurring between El Nino’s with the opposite effect - a cooling of the same region. Although it occurs in the Pacific Ocean, close to Peru, El Nino and La Nina events have broader climate and weather impacts that reach around the world. The frequency of El Nino means we have good records of how it impacts weather systems and climate. More flooding on the west coast of South America, more heat on the West coast of North America, droughts in Australia, heavy rain in East Africa, etc. 𝙋𝙧𝙚𝙙𝙞𝙘𝙩𝙞𝙣𝙜 𝘼 𝙎𝙪𝙥𝙚𝙧 𝙀𝙡 𝙉𝙞𝙣𝙤 The National Oceanic and Atmospheric Administration (NOAA) defines the strength of El Nino events by benchmarking peak sea surface temperatures against a Relative Oceanic Nino Index (RONI). Essentially, they strip out long-term warming trends from climate change, then measure the temperatures in the central pacific against the long-term average. 𝗦𝘁𝗿𝗲𝗻𝗴𝘁𝗵 / 𝗥𝗢𝗡𝗜 𝗔𝗻𝗼𝗺𝗮𝗹𝘆: Weak / +0.5 to +0.9°C Moderate / +1.0 to +1.4°C Strong / +1.5 to +1.9°C Very Strong / > +2.0°C Although not officially defined, most scientists consider a Super El Nino to be anything over 2.5°C. Historically, only the 1982 El Nino event was this warm. 1997 and 2015 hit +2.4°C, so this year could see us move into completely unprecedented territory. The impact of the 1982/83 El Nino was so severe it directly led to most of the research now used for predicting future El Ninos. So, how accurate are our models usually, and what are they predicting? NOAA’s CFSv2 shows the average of the 40 most recent models at around +2°C with some members hitting +2.4°C (But remember, this number removed the impact of warming oceans due to climate change, so this is very significant). The European Center for Medium Weather Forecasts (ECMWF) uses a slightly different system to RONI so is not directly comparable, but their forecasts are equally concerning, and 7 of the 10 major forecasting models globally are signaling a record breaking El Nino event is now likely. Predicting El Nino events is not as accurate as broader climate change predictions, but accuracy increases significantly as the event draws closer. More specifically, there is a well documented phenomenon known as the “Spring Predictability Barrier”. Forecasts made before or during February - May are significantly less reliable than forecasts made during the rest of the year. We are just now exiting this period, and most major models are still forecasting a Very Strong/Super El Nino. 𝙀𝙡 𝙉𝙞𝙣𝙤’𝙨 𝙄𝙢𝙥𝙖𝙘𝙩: 𝙒𝙝𝙚𝙣 Although the ocean temperatures are likely to peak in November/December this year, the tangible weather impact will take 3-6 more months. The impact is significantly more pronounced in the southern hemisphere, and while storms, floods and heat can be extremely disruptive and damaging locally, it’s the pressure on agriculture that will affect most people. Droughts especially can have a prolonged effect on farming for several seasons, potentially creating supply shortages for some crops into 2028. //𝐸𝑛𝑑 𝑜𝑓 𝑃𝑎𝑟𝑡 𝟷 𝑜𝑓 𝟹 - 𝑆𝑒𝑒 𝑐𝑜𝑚𝑚𝑒𝑛𝑡𝑠 𝑓𝑜𝑟 𝑃𝑎𝑟𝑡 𝟸 & 𝟹 $VRSK (Verisk Analytics) $XYL (Xylem Inc) $COCOA.FUT $WHEAT.FUT $RICE.FUT

Not investment advice. The author may have financial interests in the mentioned instruments.