Opec Cut Oil Production As Russian Forces Suffer Humiliating Withdrawals In Eastern Ukraine
Last week the energy price crisis is back in the news
after OPEC decided to cut output to bank profits while
they can. The move has reversed some of the recent decline
in the oil price. However, it will probably be a short
term move because a higher oil price contributes to
inflation which means more interest rates hikes and an
increasing likelihood of a recession, which would drive
down the demand for oil.
Meanwhile, in Eastern
Ukraine the Russian army appears to be collapsing as
Ukrainian forces reclaim and increasing amount of the
territory only last week annexed by President Putin is a
rather bizarre display in Moscow’s Red Square.
Following Moscow’s embarrassing losses, on
Thursday US President Joe Biden warned the risk of nuclear
weapons being used was at its highest level since the 1962
Cuban Missile Crisis, as Russia hinted at the possibility
of using tactical nuclear weapons to defend its
“territories” after suffering the major
setbacks.
GLOBAL: OPEC CUTS PRODUCTION TO MAINTAIN OIL
PRICE
Oil cartel OPEC surprised markets by
announcing a big cut in its production target. Oil
producers are under pressure to increase output to offset
rising oil prices but OPEC announced a reduction of 2
million barrels a day as it tries to keep prices high. The
threat of a global recession has helped the price fall
from $120 a barrel in mid-summer to around $85 but the
price jumped after the cut was announced pushing the price
of Brent back to $95 a barrel. The decision was strongly
criticised by the US which accused OPEC and Saudi Arabia
of supporting Russia’s aim of keeping prices high to fund
their war in Ukraine.
The cut is around 2% of
global production but is as much symbolic as it is
practical. OPEC members account for around 40% of total
global production and many members are falling short of
current production targets. Meanwhile, many European
countries are stepping up efforts to curb energy usage and
in the UK the National Grid warned of potential blackouts
if people do not take steps to use less energy this
winter.
We are pleased to report that over the past 2 weeks
we invested in Brent Crude for those clients who
agreed the short term strategy play, and we
successfully sold the holding to consolidate a short
term gain of +2.47% net after fees.
UK: MARKETS CALMER AFTER INITIAL REACTION TO
MINI-BUDGET
UK markets have partially recovered from
their plunge following the mini-budget after Chancellor
Kwasi Kwarteng abandoned plans to get rid of the
additional 5% income tax of for high earners (i.e. 45% v
40% for earnings above £150,000 per annum). Sterling has
recovered from its low of $1.035 and briefly rose above
$1.13 this week. The FTSE All Share has also staged a
recovery, although it remains below its pre-mini-budget
level. Gilts have also seen something of a recovery as
yields have fallen from their recent highs, but their
recovery has not been a strong as markets assess the
outlook for inflation and interest rates.
The
outlook for UK government borrowing remains unclear.
Chancellor Kwarteng has agreed to bring forward the
publication of his detailed spending plan, while reversing
the proposed 45p tax cut which only reduces the estimated
£45bn cost of the reforms by £2bn. Ratings agency Fitch
joined S&P by lowering the UK’s credit outlook from
stable to negative due to uncertainty about how the
government will pay for tax cuts and the rising cost of
borrowing. However, they appear to overlooked the effect
of the stealth taxes as personal allowances have been
frozen whilst inflation means earnings are rising faster
than they have for quite a while. Therefore, it is likely
the tax reversals and tax cuts will not reduce
HMRC’s tax revenue as much as feared.
Meanwhile, retailers are continuing to feel the
impact of rapidly rising inflation. Tesco said its annual
profits will be at the lower end of its predicted range
and its sales volumes are holding up but customers are
spending more on lower cost items. Inflation is also
driving up its costs, including staff wages. However, high
street bakery Greggs said inflation is affecting sales
positively and that despite increasing its prices it
reported an increase in sales as it picks up customers who
are trying to make their money go further by abandoning
the more expensive takeaway outlets. If you’re
looking for financial advice or
executive stockbroking services
amidst the recent fluctuation in the market, contact us
today.
According to the British Retail
Consortium retail inflation is at a record high of 5.7%.
High street fashion retailer Next warned that a weaker
pound will continue to drive up its costs as imports have
become increasingly expensive. It said weaker demand means
full priced sales have fallen slightly and it warned that
without a recovery in sterling, clothing prices are likely
to be considerably higher next year. Businesses that are
able to pass on rising costs to customers continue to fare
much better than those who are price-sensitive.
Antracite Investment ASSET MANAGEMENT – NEWS
New Starter – Imogen Simmonds LL.B(Hons)
Marketing & Business Development Manager | Paraplanner
We are delighted to welcome Imogen to the Antracite Investment Asset Management team, who joined us in September 2022 as Marketing & Business Development Manager, and Paraplanner.
Imogen joined us from Berkeley Rowe International Law firm in Mayfair, London, – where she was a Trainee Solicitor. She completed her seats in the Real Estate team and the Litigation team, – with experience in Company & Commercial matters too. Prior to that Imogen commenced her Training Contract with Simmonds Austin Ryder Solicitors in London & Waltham Cross before the firm was taken over by Fentiman Legal Limited, where she carried on working as a Trainee Solicitor before her move to Berkeley Rowe. Prior to that, during work experience at Carter Ruck the top media law firm, Imogen assisted in securing a super-injunction for a public client.
During her first year of studies for her Law Degree at Kingston University Law School, Imogen was the youngest ever participant to compete in the ESA Manfred Lachs Space Moot Court Competition, which was held in the senior Courts in Lisbon, Portugal. Imogen has now completed her 2-year Training Contract to qualify as a solicitor, and once she has completed her current studies with the University of Law for her Legal Practice Course, she will be admitted to the Roll of Solicitors and will take on the role of in-house solicitor at Antracite Investment Asset Management, alongside her current role.
Imogen is also currently studying for her Level 4 Paraplanner and investment professional exams with the Chartered Institute for Securities & Investment (CISI).
Outside of work Imogen is an accomplished horse rider and competes at unaffiliated dressage shows. She enjoys skiing, tennis and has captained her local hockey and netball teams. Imogen also enjoys attending classic car shows with her pristine condition 1968 MG Midget. Impressively, Imogen is an accomplished artist, and accepts commissions for pets (mainly horses!), whilst sponsoring “horse shows online”.
Imogen sorted out all of the logistics for us to attend the recent Brighton Business Expo which was very successful, and we now look forward to attending The Business Show at the London Excel Centre on 16th and 17th November. Come and meet the team at the biggest such event in the UK where we will have a stand for both days. Please visit the following site for details: Welcome – The Business Show 2022 (greatbritishbusinessshow.co.uk) . We hope to see you there!
Please note that nothing written here by the author should be construed as giving advice, it merely outlines our thinking. Any advice will be discussed and proposed on an individual basis with each client when any advice that is given should be fully discussed with us before proceeding with any proposals made.
If you enjoy reading this weekly update, please feel
free to share it with your friends and / or family who may
also find the contents of interest, and do not hesitate to
contact us if you need any help, information or advice
yourself about any of the areas covered this week.
Yours sincerely,
Phil Simmonds
Philip A. Simmonds MBA, LL.B(Hons), FPFS, Chartered
MCSI
Chartered Wealth Manager | Chartered Financial Planner
Solicitor (company in-house solicitor)
Chief Investment Officer | Head of Strategy
E : phil.simmonds@private-office.co.uk
phil.simmonds@private-office.law (for legal matters)
This document has been prepared for general information
only and is not guaranteed to be complete or accurate. It
does not
contain all of the information which an
investor may require in order to make an investment
decision. If you are unsure whether
this is a
suitable investment you should speak to your financial
adviser. You may get back less than you originally
invested.
Antracite Investment Asset Management is
authorised and regulated by the Financial Conduct
Authority