The FEDNOW payment system is a new instant payment infrastructure developed by the Federal Reserve that allows financial institutions of every size across the U.S. to provide safe and efficient instant payment services.
Live system
It went live on July 20, 2023 and enables individuals and businesses to send and receive money in near real-time, 24/7/365, through their depository institution accounts.
The service is a flexible, neutral platform that supports a broad variety of instant payments and offers optional features such as fraud prevention tools, request for payment capability, and tools to support payment inquiries.
FedNow is the first new payment rail in the United States since the introduction of the Automated Clearing House (ACH) in the early 1970s.
Digital Dollar?
Is this a possibly a pre-emptive strike to get ahead of international digital currency deployment and set the scene to adopt a digital payment structure of a new ‘crypto coin system’ for the future – the digital dollar?
Rolls-Royce share price soared by 20% in july 2023 after it raised its profit guidance and reported strong demand in its jet engine and defence businesses.
The company, which makes engines for aeroplanes, ships and submarines, repoertedly said it expects to make between £1.2 billion and £1.4 billion in underlying operating profit this year, up from its previous forecast of £800 million to £1 billion.
The profit upgrade reflects the improvement in Rolls-Royce’s operations under its new chief executive, who took over in January with a mandate to turn the companyaround. A transformation programme was launched to boost productivity, efficiency and innovation across all divisions. It appears to be working.
Drivers
One of the main drivers of Rolls-Royce’s recovery is the revival in air travel and flying hours as Covid restrictions were eased. The company charges customers for the number of hours its jet engines run, which have dramatically rebounded from the slump caused by the pandemic. Rolls-Royce said it expects to generate £750 million in free cash flow this year, up from its previous target of £500 million.
Another factor behind Rolls-Royce’s growth is the increased defence spending following Russia’s invasion of Ukraine. The company makes propulsion systems for Royal Navy warships and submarines, as well as engines for military aircraft. Rolls-Royce reportedly said its defence unit had delivered ‘exceptional‘ performance and secured new contracts.
Share price hits 52 week high!
Rolls-Royce’s share price hit its highest level since March 2020, when the prospect of travel bans caused aviation-related stocks to plunge. The stock has almost doubled in value this year, making it the best-performing stock on the FTSE 100 over the past six months.
Analysts and investors have welcomed the signs of progress at Rolls-Royce, which had struggled with profitability and cash flow issues even before the pandemic.
Rolls-Royce is scheduled to report its half-year results next week, which are expected to show profits of between £660 million and £680 million some analysts suggest, more than double market expectations. The company said it remains confident in its medium-term outlook and its ability to deliver value for customers and shareholders.
Definitely one to watch. It’s been on my ‘share radar’ for a couple years now. Share price hit intraday high of £1.94 on 28th July 2023
British Gas owner Centrica and Shell see profits soar as bills rise.
Profit for the six months ending in June 2023 for British Gas owner Centrica rose to around £1.34bn from £262m a year earlier. The rise in profits came from the company’s nuclear and oil and gas business, rather than from the British Gas energy supply business which performed much worse. The average annual British Gas profit has been £584m in recent years.
Profit increase down to Ofgem ‘tweak’
However, the profit boom is surprisingly down to a ‘tweak’ to the regulator Ofgem’s energy price cap that allows the supplier to recover elements of the costs of supplying its 10 million customers during the energy crisis.
The supplier’s current profit highs are likely to upset consumer groups that have campaigned against the supplier’s treatment of vulnerable energy customers as record energy market prices forced millions into fuel poverty. Some have called the profit making ‘legalised robbery’, and demanded to bring energy into public ownership.
Dividend plans
Centrica plans to raise its interim dividend by around a third but remarks that its underlying profitability will ease significantly in the second half of the year. Energy firms saw their profit margins hit last year when wholesale prices surged in the wake of Russia’s invasion of Ukraine. Wholesale prices also jumped as th UK emerged from the dark cloud Covid as markets undicated that the UK was ill prepared for the enconomic recovery. Brexit blues didn’t help either.
The energy price cap remains £1,000 above its pre-pandemic average, despite oil and natural gas costs easing significantly. It is predicted by industry ‘experts’ to remain around the £2,000 a year average for the coming winter months, maintaining excessive pressure on household budgets.
Some ‘windfall’ tax recovery, over the years will apparently go back to ‘society’, British Gas says.
Centrica chief executive reportedly said that a lot of the firm’s profits were ‘going back into society’.
‘I know it’s difficult to see the word profits, or dividends, or similar words when people are having a tough time. I’m very conscious of this,’ he reportedly said.
Windfall
‘Bear in mind, over the next couple of years we are expecting to pay a windfall tax of ‘probably‘ well over £600m on our UK gas business off the back of the profits that we’re seeing, so a lot of this is going back into society.’
A contentious thought
A business needs to make profits otherwise there is no business. It exits to make a profit and to supply a service or product – but it is about how that business makes its profit, isn’t it?
Token windfall tax temporarily slapped on by the UK government is only payable on UK profits. Oil and gas recovery companies will only pay a tax windfall on UK related profits not on overseas returns!
Profits from fossil fuel recovery invested in greener energy for the future – that’s a topic for another article.
