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UK ENERGY: THE TRUMP EFFECT

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UK ENERGY: THE TRUMP EFFECT
  •    Gocompare.com Energy investigate how Trump’s election could affect the energy market in the UK
  •    UK fossil fuel industries, energy research, renewables industry and consumer energy costs set to feel impact of President Trump

Less than an hour after the inauguration of President Donald Trump, the new administration outlined its energy policy*, which aims to focus on gas and oil, and reviving the coal industry, whilst also indicating the Climate Action Plan will be scrapped.

Gocompare.com Energy has highlighted four major areas which could feel the greatest impact from President Trump:

  1.    The UK fossil fuel industry
  2.    UK energy research
  3.    The UK renewables industry
  4.    UK consumer energy costs

The first area which could be affected is the UK fossil fuel industry. Trump has said that he wants to ramp up oil and gas production under an ‘America First Energy Plan’, going after un-tapped shale, oil and natural gas reserves, pressing ahead with fracking and drilling as environmental regulation is cast away.

An increase in production could mean that global prices drop due to a glut of supply, which could hurt UK oil and gas firms operating in the North Sea, who are seeing*1 increasing costs and decreasing investment*2 due to having to drill deeper and in more complex places.

While the industry is striving to improve efficiencies, the high profits enjoyed when oil was expensive have disappeared, and if they drop further due to an American energy boom, jobs could be lost and wages cut.

Also in the firing line is UK energy research. During his campaign Trump said that global warming was a hoax, and that he would scrap the US’s obligations to the Paris Climate Change Agreement and NASA’s lauded climate research programme. His new team are of a similar mind-set, being comprised of climate change deniers and those with ties to the fossil fuel industry.

While this is bad news for the climate, it could mean good things for UK energy researchers. This month 100 important UK researchers and climate scientists penned a letter*3 to Theresa May asking her to be tough on Trump over the climate and encourage him to continue research, but that the UK science community stood ready to welcome scientists from the US who had seen their funding cut.

If President Trump cuts climate research programmes, the UK’s science community, and it’s world-leading climate research institutions, could pick up the slack, and this could be good news for the renewable energy research community.

With increased investment in the fossil fuel industry and a reduction in environmental regulation and research, the US renewables industry looks set to take a hit, and it could potentially be the same for the UK.

On a global level it’s anticipated that the incoming Republican government will only likely slow, not reverse, action on climate change.

If fossil fuel prices drop due to a big increase in US fossil fuel production, then this could hurt renewables due to them having to compete with cheaper oil and gas. If the US were to pull out of the Paris Agreement, it could also cause other countries to drop out, hampering the process.

Because of Brexit, the upcoming UK-US trade negotiations are also a point of contention. If the US holds firm on slapping high tariffs on renewable energy goods made in the UK, this could hit British industry.

But what does Trump’s election mean for the consumer? If his policies and actions cause oil prices to lower globally, fuel and energy prices in the UK could fall.

In terms of renewable energy – if you wanted to purchase solar panels for your home, the issue is very much up in the air. Lower investment could mean a stall in lowering costs, but if renewables are able to weather the storm, solar and wind prices could continue to fall.

It’s also important to think about the impact of the US dollar. Since lots of the world’s energy is priced in USD, a strong dollar will increase import prices, which in turn could raise household energy prices.

Ben Wilson, Energy & Home Services Product Manager at Gocompare.com said: “Although the news over the past few months here in the UK has been focused on Trump, there has been little mention of how he could make an impact on the everyday consumer in the UK.  It’s really important for the British public to understand just how President Trump’s term in office could affect the UK energy market.

“With the world’s eyes fixed firmly on the incoming administration, all sorts of questions are being asked, but ultimately, we’ll all have to wait to see what the Trump effect really means.”

To read the report in full, please visit: http://www.gocompare.com/gas-and-electricity/the-trump-effect/

Investing

What should I invest and How do I invest

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What should I invest and How do I invest 1

By Imogen Clarke

With all the uncertainty that has arisen from 2020, with lockdown threatening businesses and the warning of a second wave, the topic of investments has taken on new meaning. Nowadays, more people are concerned with what makes for a good investment, or, if you’re a novice, how to best invest.

For instance, you might be unsure about the reliability of the company you’re looking to invest in, as well as the long-term prospects of your investment.

If you are unsure of your investments, then it is best to seek advice from financial experts like The Fry Group, who deal with tax, wealth and estate planning. They will see that you have a strong financial plan in place to help meet your objectives. They will develop a strategy that is built around your needs and asses any risks that could hinder your plans.

There are some things you’ll need to consider for your strategy; for instance, are you looking to make investments that are more of a risk and will take longer to come to fruition? Or, alternatively, are you wanting a faster approach that will result in a steady income? Whether or not you decide to play it safe all depends on your current financial situation and whether you have the means to take more of a risk. Do you have any other debts that take precedence over your future plans? Is your investment strategy realistic?

With the aid of a specialist – or investment manager – you can design an investment concept that works for you and your goals, and start to build a regular income from your investments. There are four main areas when it comes to assets (groups of investments) that you can consider:

  • Equities
  • Bonds
  • Alternatives
  • Cash

Your investment manager will test the risks associated with your investment, and if it proves to be a positive investment choice, then you will be able to invest more over time.

So, how do you decide where to invest?

According to The Fry Group, ESG investing (Environmental, Social and Governance) is a good option for investors looking to support businesses that meet their similar ethics.

The main areas of ESG investing include:

  • Environmental challenges (climate change, pollution, etc)
  • Social issues (human rights, labour standards, child labour, etc)
  • Governance considerations relating to company management

According to The Fry Group, “Many investors choose to consider ESG investing in order to ensure any investment decisions reflect personal beliefs and values. As a result, they choose to support companies who are making informed, responsible decisions which take into account their wider societal and global impact. In this way investors can achieve peace of mind that their investments are creating a positive effect.”

ESG investing is also more relevant now than ever, as more businesses are looking to present themselves as an environmentally conscious corporation that recognises the values of their consumers.

As The Fry Group puts it, “In the past, ESG investing has been seen as a niche investment approach, for a relatively small number of people with specific requirements. This has changed significantly in recent years, with a growing awareness of environmental issues such as climate change and an increasing understanding of social issues and human rights. As a result, many people are increasingly interested in reflecting their opinions and lifestyle choices through the way they invest.”

So, if you want your investments to pave the way for your personal values and reflect your own morals, then this is the route to go down. But how does it all work?

There are four areas of ESG investing:

  • Responsible ownership and engagement: when companies are encouraged to make necessary improvements.
  • Avoidance or negative screening: whereby businesses are ‘graded’ based on how ethical their business practices are and are avoided altogether if their methods are not approved.
  • Positive screening strategies:when companies meet the ESG goals and are approved for investments.
  • Impact investment strategies: the purpose of this is to use investment capital for positive social results such as renewable energy.

You will need to take into account your own personal objectives as well as the objectives that meet the ESG investment criteria. And, in terms of financial performance, ESG investing can be hugely beneficial. Those who opt for ESG investing perform a more in-depth analysis into long-term and future trends that affect industries, meaning that they are better prepared for changes in consumer values when they arise. And, with all the unpredictability that this year has offered us so far, isn’t it better to do the research and have all angles covered?

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Investing

Investment Roundtable: Live with Jim Bianco

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With Q4’s macro picture still looking grim amid the return of exponential coronavirus waves in Europe and the U.S. and Europe, we speak with veteran macroanalysis strategist Jim Bianco, CMT for a data-driven deep-dive into the global economy and financial markets on Sept. 7th at 12pm EDT.

Sign up for this exclusive webinar now

Key themes:

  • Learn from Jim’s unique combination of quantitative and qualitative analytics which provide an objective view on Rates, Currencies and Commodities to make smart investment decisions
  • Identify important intermarket relationships he is watching with respect to Global Equities
  • Roadmap a global outlook for 2021 in view of socio-political backdrop giving viewers key takeaways and intermarket perspectives on global investing.

Sign up for this exclusive webinar now

Jim’s robust technical analysis includes a broad look at trends and themes in the markets, market internals, positioning such as the Commitment of Traders (COT), sentiment, and fund flows. Don’t miss out on this exclusive session from one of the investment world’s most insightful thought leaders.

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Equity markets react to a rise in Covid-19 cases, uncertain Brexit talks and the upcoming US election

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Equity markets react to a rise in Covid-19 cases, uncertain Brexit talks and the upcoming US election 2

By Rupert Thompson, Chief Investment Officer at Kingswood

Equity markets had another choppy week, falling for most of it before recovering some of their losses on Friday and posting further gains this morning.

At their low point last week, global equities were down some 7% from their high in early September. US equities were down close to 10%, hurt by the large weighting to the tech giants which at least initially led the market decline.

The market correction is nothing out of the ordinary with 5-10% declines surprisingly common. Indeed, a set-back was arguably overdue given the size and speed of the market rebound from the low in March.  As to the cause for the latest weakness, it is all too obvious – namely the second wave of infections being seen across the UK and much of Europe and the local lockdowns being imposed as a result.

These will inevitably take their toll on the economic recovery which was always set to slow significantly following an initial strong bounce. Indeed, business confidence fell back in September both here and in Europe with the declines led by the consumer-facing service sector. A further drop looks inevitable in October – fuelled no doubt in the UK by the prospect that the latest restrictions could be in place for as long as six months.

The job support package announced by Rishi Sunak did little to boost confidence. Its aim is to limit the surge in unemployment triggered by the end of the furlough scheme in October. However, the scheme is much less generous than the one it replaces as the government doesn’t want to continue subsidising jobs which are no longer viable longer term.  A rise in the unemployment rate to 8% or so later this year still looks quite likely.

Aside from Covid, for the UK at least, there is of course another major source of uncertainty – namely Brexit. Another round of trade talks start this week and we are rapidly reaching crunch time with a deal needing to be largely finalised by the end of October.

Whether we end up with one or not is still far from clear. That said, the prospects for a deal maybe look rather better than they did a couple of weeks ago when the Government was busy tearing up parts of the Withdrawal Agreement. With significant Covid restrictions quite probably still in place in the new year and the Government already under attack for incompetence, it may not wish to take the flack for inflicting yet more chaos onto the economy.

Markets remain unimpressed. UK equities underperformed their global counterparts by a further 2.7% last week, bringing the cumulative underperformance to an impressive 24% so far this year. The UK weighting in the global equity index has now shrunk to all of 4.0%.

It is not only the UK which faces a few weeks of uncertainty. The US elections are on 3 November. We also have the first of three Presidential debates this Tuesday. Joe Biden’s lead looks far from unassailable, a close result could be contentious and control of Congress is also up for grabs.

All said and done, equity markets look set for a choppy few weeks. Further out, however, we remain more positive – not least because the focus should hopefully switch from the roll-out of new lockdowns to the roll-out of a vaccine.

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