The world may be facing ‘the most dangerous time… in decades’, bank boss Jamie Dimon has reportedly warned.
The chief executive of JP Morgan Chase told investors recently that he was concerned about the risks to the economy from rising geo-political tensions. He said wars in Ukraine and Israel could hit energy and food prices, and global trade.
Thousands have been killed in Israel and Gaza after an unprecedented attack by Palestinian militant group Hamas. Mr Dimon, who leads America’s biggest bank, was speaking as the firm revealed its latest quarterly results.
Banking the profits from higher interest rates
The bank reported $13 billion (£10.7 billion) in profit over the three months to September 2023, up 35% from the same period in 2022.
Dimon said the bank had benefited from U.S. households and business in healthy financial shape but warned that he remained cautious about the state of the global economy, given the many risks emerging. What about the effect of interest rate increases on profits the bank has benefitted from too?
‘My caution is that we are facing so many uncertainties out there,‘ he reportedly said. So helpful Mr. Dimon. He told investors they should be prepared to face higher interest rates, persistent inflation, as well as fallout from the violent conflicts.
How perceptive?
I wouldn’t necessarily call his comments very intuitive – interest, inflation and conflict is there for all to see.
Shame he didn’t use his super magical powers of detection to get ahead of the inflation problem earlier.
The interest the government pays on national debt has reached a 20-year high as the rate on 30-year bonds touches 5.05%.
A rise in the cost of borrowing comes at a difficult time for the chancellor, Jeremy Hunt, as he prepares for the autumn statement on 22nd November 2023. The chancellor has already made clear that tax cuts will not be announced in the autumn statement.
National debt £2,590,000,000,000
The total amount the UK government owes is called the national debt and it is currently about £2.59 trillion – £2,590,000,000,000.
The government borrows money by selling financial products called bonds. A bond is a promise to pay money in the future. Most require the borrower to make regular interest payments over the bond’s lifetime.
UK government bonds – known as ‘gilts’ – are normally considered very safe, with little risk the money will not be repaid. Gilts are mainly bought by financial institutions in the UK and abroad, such as pension funds, investment funds, banks and insurance companies.
QE
The Bank of England (BoE) has also bought hundreds of billions of pounds’ worth of government bonds in the past to support the economy, through a process called quantitative easing or QE.
A higher rate of interest on government debt will mean the chancellor will have to set aside more cash, to the tune of £23 billion to meet interest payments to the owners of bonds. This in-turn means the UK government may choose to spend less money on public services like healthcare and schools at a time when workers in key industries are demanding pay rises to match the cost of living.
Double debt
The current level of debt is more than double what was seen from the 1980s through to the financial crisis of 2008. The combination of the financial crash in 2007/8 and the Covid pandemic pushed the UK’s debt up from those historic lows to where it stands now. However, in relation to the size of the economy, today’s debt is still low compared with much of the last century.
UK debt £2,590,000,000,000
The U.S, German and Italian borrowing costs also hit their highest levels for more than a decade as markets adjusted to the prospect of a long period of high interest rates and the need for governments around the world to borrow.
It follows an indication from global central banks, including the United States Federal Reserve and the Bank of England (BoE), that interest rates will stay ‘higher for longer’ to continue their jobs of bringing down inflation.
£111billion on debt interest in a year
During the last financial year, the government spent £111 billion on debt interest – more than it spent on education. Some economists fear the government is borrowing too much, at too great a cost. Others argue extra borrowing helps the economy grow faster – generating more tax revenue in the long run.
The Office for Budget Responsibility (OBR), has warned that public debt could soar as the population ages and tax income falls. In an ageing population, the proportion of people of working age drops, meaning the government takes less in tax while paying out more in pensions, welfare and healthcare services.
Services output was the main contributor to growth in August 2023, adding 0.4% on the month to offset a fall in production output of 0.7% and a decline in construction output by 0.5%.
This data shows early signs of a cooldown in the labour market and thus, lower inflation further down the economic road.
Bank outlook
The data and outlook for the Bank of England (BoE) suggests that Bank rate increases do not have much upside from here and will most likely remain at current levels, but for a longer period.
The UK economy returning to growth in August 2023 has re-kindled expectations that interest rates will be left unchanged again in Novemeber 2023.
The economy grew marginally by 0.2% in August following a sharp fall in July 2023.
Wholesale U.S. prices rose more than expected in September 2023, according to latest data released indicating that inflation remains a problem for the U.S. economy.
The producer price index(PPI), which measures costs for finished goods that producers pay, increased 0.5% for the month, higher than estimated for a 0.3% rise, the U.S. Labor Department reported Wednesday 11th October 2023.
Excluding food and energy, core PPI was up 0.3%, versus the forecast for 0.2%.
The International Monetary Fund (IMF) is an international organization that monitors the health of the global economy and provides financial assistance to countries in need.
UK interest rate warning from the IMF
The IMF has warned that the UK faces another five years of high interest rates to stem rising prices, which have been falling but remain stubbornly above target.
The IMF expects the UK to have the highest inflation and slowest growth next year of any G7 economies, which includes the US, France, Germany, Canada, Italy and Japan.
The IMF says the UK’s immediate prospects are being weighed down by the need to keep interest rates high to control inflation, which is partly caused by the terms-of-trade shock from high energy prices, the aftereffects of the global pandemic, Brexit fallout and the Russia/Ukraine war.
Peak at 6%!
The IMF believes Bank of England rates will peak at 6% and stay around 5% until 2028. Rates are currently 5.25%.
Buying the dip means purchasing an asset, usually a stock, when its price has dropped. The expectation is that the drop is a short-term anomaly, and the asset’s price will soon go back up. It is a strategy that some traders and investors use to take advantage of price fluctuations and profit from market rebounds.
However, buying the dip can also be risky, as there is no guarantee that the price will recover or that the asset is not in a long-term downtrend. Therefore, it is important to do your research, use indicators, and have a risk management plan before buying the dip.
Current market situation and general ‘readout’
The S&P 500 is still ‘buy the dip’ for the next six months,’ some analysts suggest.
In some reports, it is expected that the profit cycle will be positive over the next six months and for data to improve before a consumer-spending led downturn leads to a selloff in U.S. stocks! That’s the ‘general’ readout.
Corporate profit expectations are behind much of that forecast for stocks. Analysts expect profit growth to accelerate over the next two quarters and see the S&P 500 in a range of 4,050 to 4,750. A mild recession in early or middle 2024 should lead to a higher risk premium, pushing the S&P 500 back close to 3,800. This is all conjecture.
Other analysts doubt the earnings uplift potential and anticipate stocks to fall back sooner as PE ratios sit at an already high level.
Take your pick
My view, for what it’s worth, is for stocks to climb for the time being through into the New Year and then to face pullback.
Truth is, no one knows. We can all make educated guesses.
Just watch the markets and be ready for the fall – that is coming for sure!
Utterly shocking eye watering covid fraud related losses incurred through government incompetence.
The UK covid fraud amount is not a single figure, but rather a sum of various losses due to fraud and error across different government schemes and programmes.
List of government failures and waste
£21bn of public money lost in fraud since COVID pandemic began and most will never be recovered.
£34.5m stolen in pandemic scams by more than 6,000 cases of Covid-related fraud and cyber-crime.
£16bn lost due to fraud and error in Covid loans schemes.
£4.5bn in Covid-19 support lost to error and fraud since 2020.
Breathtaking incompetence
These figures are based on the reports and audits by the National Audit Office, the Action Fraud team, the HMRC, and other sources. However, they may not reflect the full extent of the problem, as some fraud cases may not be reported or detected.
The UK government has taken some measures to tackle fraud and recover the losses, such as creating the Public Sector Fraud Authority, the taxpayer protection taskforce, and the Dedicated Card and Payment Crime Unit.
The incompetence shown by the UK government is utterly breathtaking.
Stocks rallied Friday 6th October 2023 even after the release of stronger-than-expected U.S. jobs data and an increase in Treasury yields.
The U.S. economy added 336,000 jobs in September 2023, the Labour Department said. Economists expected 170,000 jobs.
Confused?
Stocks posted a surprise turnaround on Friday, 6th October 2023 after initially falling on a hotter-than-expected jobs report. At its session low, the Dow had fallen some 270 points, then surged by more than 400 points at in intraday trading. The Nasdaq and the S&P 500 also lost ground too only but then quickly recovered the losses.
Unclear
Traders were unclear as to the reason for the intraday reversal. Some noted it could be the softer wage number in the jobs report that made investors rethink their earlier bearish stance. Others noted the pullback in yields from the day’s highs.
Rally
The rally may just be because the market had been extremely oversold with the S&P 500 at one point in the week down more than 8% from its high earlier this year.
Yields initially surged after the report, with the 10-year Treasury rate trading near its highest level in 16 years. The benchmark rate later eased from those levels, but was still up around 6 basis points at 4.78%.
Extreme market movements maybe here for a while yet.
The latest U.S. jobs report for September 2023 was released on Friday, October 6, 2023.
The U.S. economy added 336,000 jobs last month, much more than expected, despite the Federal Reserve’s struggle to cool the world’s largest economy.
The unemployment rate was 3.8%, in line with August 2023. The data lifted hopes that the central bank will manage to guide the U.S. economy to a ‘soft landing’, where a recession is avoided. Bear in mind the Fed were late in dealing with the initial rise in inflation – so this battle has become harder and prolonged.
The job gains were the largest monthly rise since January 2023, and almost twice what economists had anticipated. Government and healthcare added the most jobs. The labour market still appears solid.
However, not all indicators were positive. The ADP’s national employment report showed that private-sector employers added only 89,000 jobs in September, far fewer than expected. Some factors outside the Fed’s control, such as the autoworker strike and the threat of a government shutdown, could yet damage the U.S. economy.
The labour force participation rate also remained low at 63.2%, indicating that many workers have yet to return to the labour market since the Covid19 pandemic of 2020.
The average rate on the popular 30-year fixed mortgage rose to 7.72% on Tuesday 3rd October 2023, according to latest data
Mortgage rates follow loosely the yield on the 10-year Treasury, which has been climbing this week following strong economic data. Rates have not been this high since the end of 2000.
At the beginning of this year, the 30-year fixed rate dropped mortgage to around 6%, creating a short-lived burst of activity in the spring 2023. But it began rising steadily again over the summer months, causing sales to drop, despite strong demand. The current trend appears to be even higher, with the possibility of rates reaching over 8%.
U.S. mortgage rates, which are close to 8% according to some sources. This is a very high level compared to the recent years, and it may have significant implications for the housing market and the economy.
Main points
Some experts believe that rates could reach 8% later by the end of October, and possibly stay at that level for the remainder of the year. Others, however, think that rates may stabilize or decline slightly if the economic growth slows down or inflation eases.
30 year fixed mortgage rate at 7.72%
The average rate on the popular 30-year fixed mortgage rose to 7.72% as of Oct. 3, according to Mortgage News Daily. This is the highest rate since 2000.
Rates are rising as more economic indicators point to a strong U.S. economy, which increases the likelihood of the Federal Reserve to hike rates further. The 10-year Treasury yield, which closely tracks the mortgage rates, reached 4.8% on Tuesday, the highest level since August 2007.
Hitting 8% will be like crossing a psychological barrier for many buyers, as it will increase their monthly payments and reduce their affordability. It may also dampen the demand for housing, which has already been affected by low inventory and high prices.
Some buyers are already seeing 8% mortgage rates, especially those who have high loan-to-value ratios, high balance-conforming loans, or non-qualified mortgage loans. These could also be borrowers with lower credit scores or non-prime borrowers.
Metro Bank shares have plunged by 25% after reports emerged that the bank is urgently seeking to raise millions to bolster its finances.
The bank is in talks with investors about raising £250m in equity financing and £350m in debt, while asset sales are also being considered to strengthen the lender’s balance sheet.
The bank’s shares have already suffered substantial falls in September after regulators refused to approve a request to lower the capital, or cash, requirements attached to its mortgage business.
It has been reported that the Metro Bank share price has dropped by 70% so far this year.
As of now, it’s unclear whether the bank will be able to secure the funding it needs. As much as £600 million has been muted as need in in some reports.
Is this a worrying sign of worse to come, or just a one-off?
Dow Jones Industrial Average (Dow) performance on 3rd October 2023.
The Dow fell more than 400 points, turning negative for the year. The main reason for the drop was the surge in U.S. Treasury yields, which reached their highest levels in 16 years.
Higher yields mean higher borrowing costs for businesses and consumers, which could hurt the economic recovery and the housing market.
S&P 500 on 3rd October 2023
Nasdaq on 3rd October 2023
The tech-heavy Nasdaq Composite gained a 0.7% on October 3rd, 2023, as some investors saw an opportunity to buy some of the high-growth stocks that had been under pressure recently.
The stock market has been experiencing some volatility and uncertainty in September and October 2023, as investors fret about inflation, interest rates, and the possibility of a U.S. recession.
Main facts affecting the current stock market
The month of October has produced some severe stock market crashes over the past century, such as the Bank Panic of 1907, the Wall Street Crash of 1929, and Black Monday 1987.
October has also marked the start of several major long-term stock market rallies, such as Black Monday itself and the 2002 nadir of the Nasdaq-100 after the bursting of the dot-com bubble.
The S&P 500 dropped 4.5% in September 2023 and finished the third quarter in the red.
The U.S. Treasury yield curve has been inverted for months – which is a historically strong recession indicator.
The Fed maintained interest rates at the current target range of between 5.25% and 5.5% in September 2023, but signalled that it may need to raise rates again to combat inflation.
The consumer price index gained 3.7% year-over-year in August 2023, down from peak inflation levels of 9.1% in June 2022 but still well above the Fed’s 2% long-term target.
The bond market is currently pricing in an 81.7% chance the Fed will choose not to raise rates again on 1st November 2023.
The Dow Jones Industrial Average was down at 33002, Tuesday 3rd October 2023.
Stocks fell as investors pulled money from equities and moved it to the hot bond market.
International markets also faced significant turmoil, sending mini shockwaves through global financial centres, which reverberated in equities.
The dollar rose to the highest since December and is heading towards the twelfth positive week in a row.
Uncertainty
Uncertainty in the U.S. political system is having a major affect too. Especially with the ousting of the speaker and the real fear of a government shutdown looming large.
The U.S. Treasury yields are the interest rates that the U.S. government pays to borrow money. The 10-year and 30-year Treasury yields are the most widely followed indicators of the long-term health of the U.S. economy and the expectations of inflation and growth.
10 year yield at 4.80%
According to the latest data, the 10-year Treasury yield surged to 4.80% on Tuesday, 3rd October 2023, which is the highest level since 12th October 2007.
30 year yield at 4.79
The 30-year Treasury yield rose to 4.79% on Monday, 2nd October 2023, which is the highest since 6th April 2010.
The main reasons for the rise in the Treasury yields
The strong U.S. economic data that showed that the labour market remains hot and the manufacturing sector rebounded in September 2023.
The Federal Reserve’s ‘higher for longer’ mantra signalled that the central bank would keep raising rates until inflation is under control.
The reduced demand for safe-haven assets as the U.S. government averted a shutdown over the weekend by passing a short-term stopgap funding measure.
Uncertainty at the heart of the U.S. political system.
The implications of higher Treasury yields
The higher borrowing costs could weigh on the economic growth and consumer spending in the future.
Higher inflation expectations could erode the purchasing power of the fixed-income investors and increase the risk of a bond market sell-off.
The higher interest rate differential could attract more foreign capital inflows into the U.S. dollar and strengthen its value against other currencies.
Gold value has been slipping in recent months of 2023 – here are some of the reasons gold prices fluctuate.
Dynamic market
Gold is a precious metal that is often seen as a safe haven investment and a store of value, but it is also subject to the forces of supply and demand, as well as many other factors that affect its price.
The gold market is complex and dynamic, and the price of gold can change quickly and unpredictably. Therefore, it is important to do your own research and analysis before investing in gold or any other asset.
Always do your research! Remember, RESEARCH! RESEARCH! RESEARCH!
Gold price from 2005 – September 2023
The production costs of gold
The cost of mining, refining, and transporting gold can influence the supply and the price of gold. If the production costs are high, the gold miners may reduce their output or increase their selling price, which can affect the market balance and the gold price.
Money supply
The amount of money in circulation can affect the value of the currency and the inflation rate, which in turn can affect the demand and the price of gold. Generally, when the money supply increases, the currency value decreases and the inflation rate increases, which can boost the demand and the price of gold as a hedge.
Geopolitical stability
The political and economic events around the world can affect the market sentiment and the risk appetite of investors, which can influence the demand and the price of gold. Generally, when there is uncertainty, instability, or conflict, investors tend to seek safe-haven assets such as gold, which can increase the demand and the price of gold.
Jewellery and industrial demand
The demand for gold from the jewellery and industrial sectors can affect the market balance and the price of gold. Jewelry is the largest source of gold demand, especially in countries like India and China, where gold is culturally and traditionally valued. Industrial demand for gold comes from its use in various electronic and medical devices, such as smartphones, computers, and dentistry. The changes in the consumer preferences, the income levels, the technological innovations, and the environmental regulations can affect the demand and the price of gold from these sectors.
Gold price 3rd October 2023
Central bank actions
The actions of central banks around the world can affect the supply and the demand of gold, as well as the value of the currency and the interest rates, which can influence the price of gold. Central banks hold gold reserves as part of their foreign exchange assets, and they can buy or sell gold to diversify their portfolios, to manage their liquidity, or to intervene in the currency markets. Central banks can also affect the price of gold indirectly through their monetary policies, such as setting the interest rates, printing money, or buying bonds, which can affect the inflation expectations, the currency value, and the opportunity cost of holding gold.
Strength of the U.S. dollar
Gold is priced in U.S. dollars in most of the major trading exchanges around the world, so when the dollar rises against other currencies, gold becomes more expensive for foreign investors, reducing the demand for it. The U.S. dollar has been strengthening since, partly due to the Federal Reserve’s monetary tightening policy that has raised the interest rates and the attractiveness of U.S. Treasury securities.
Rise of global equities
Gold is often considered a hedge against inflation, currency devaluation, and the failure of other financial assets, but when the stock market is performing well, investors tend to shift their money from gold to equities, seeking higher returns and growth potential. The global stock market has been rallying since the bottom of the Covid-19 pandemic in March 2020, boosted by the roll-out of vaccines, the fiscal stimulus, and the economic recovery.
The Krugerrand
The Krugerrand is a South African coin, first minted on 3rd July 1967
Krugerrand gold coins are a type of bullion coin that were first minted in 1967 by the South African Mint. They are made of 22 karat gold and have a diameter of 32.77 mm and a thickness of 2.84mm. The obverse side features the portrait of Paul Kruger, the former president of the South African Republic, and the reverse side depicts a springbok, the national animal of South Africa. The name ‘krugerrand’ is a combination of ‘Kruger’ and ‘rand’, the currency of South Africa.
Krugerrand gold coins are popular among investors and collectors because they have a high gold content and are easy to trade. They are also legal tender in South Africa, although they do not have a fixed face value.
Decline of inflation expectations
Gold is also seen as a protection against the erosion of purchasing power caused by inflation, but when inflation expectations are low or falling, gold loses some of its appeal as an inflation hedge. The inflation expectations have been declining in recent months, partly due to the easing of supply chain disruptions, the moderation of energy prices, and the fading of the base effects from the previous year.
These are some of the main factors that have been weighing on the gold price lately, but there may be other reasons as well, such as the speculations, the market sentiments, and the geopolitical events that can influence the supply and demand of gold.
It has been suggested Rishi Sunak and Boris Johnson have overseen biggest tax rises since the Second World War
‘Fiscal responsibility’ – code words for ‘cock-up!’
Chancellor Jeremy Hunt and Prime Minister Rishi Sunak have stressed the need for ‘fiscal responsibility’ amid still-high inflation and rising debt costs.
According to the Institute for Fiscal Studies (IFS), by the time of the next general election, taxes will likely have risen to around 37% of national income, which is the highest level since comparable records began in the 1950’s.
The IFS said that this is equivalent to around £3,500 more per household, but it will not be shared equally across income group.
Health and Welfare massive tax burden
The IFS also said that this is not a direct consequence of the pandemic, but rather a result of decisions to increase government spending on health and welfare, and some unwinding of austerity. They predicted that this parliament would mark a decisive and permanent shift to a higher-tax economy.
Other think tanks, such as the Nuffield Foundation, have echoed this view and said that there will be strong pressure in future parliaments to raise taxes further to meet growing demand for public services.
Dissatisfied
Some Conservative MPs have expressed their dissatisfaction with the lack of tax cuts from the government, as they believe that reducing taxes is a key part of the party’s philosophy. Chancellor Jeremy Hunt and Prime Minister Rishi Sunak have stressed the need for fiscal responsibility amid still-high inflation and rising debt costs.
Lurching from one problem to the next
We saw this type of response under George Osborne during the ‘austerity’ period after the financial crisis of 2008. And now again, after Brexit and the pandemic. They were all Conservative governments.
Hunt has reportedly said it would be virtually impossible to cut taxes at the moment – no surprise there then!
Labour has criticised the government for clobbering the general public with tax rises and failing to deliver growth and wages.
The stock market can be very volatile and unpredictable, especially in times of uncertainty and crisis. It seems like investors are reacting to every piece of news, whether it’s good or bad, with fear and panic.
According to some analysts, the main factors that are driving the market turmoil are the rising bond yields, the slowing global growth, the ongoing trade tensions, and the potential fiscal risks. These issues have created a lot of uncertainty and anxiety among market participants, who are looking for signs of stability and direction.
Long-term investing makes sense
Some experts suggest that the best way to deal with the market volatility is to have a long-term perspective, diversify your portfolio, and avoid emotional decisions. They also advise to stay informed, but not to overreact to every headline or rumour.
Remember that the market has gone through many ups and downs in the past and has always recovered over time.
Luddites were a group of workers who protested against the use of machinery that threatened their livelihoods in the early 19th century in Britain. They were not opposed to technology in general, but to the specific machines that were ‘taking away their livelihoods’.
They attacked factories and smashed machines that were replacing their jobs with cheaper and less skilled labour.
BIG tech Luddite comparison – is AI the latest threat?
Some people have compared the Luddites to the modern movements that resist the effects of Big Tech and artificial intelligence (AI) on workers’ lives. They argue that these technologies are creating a new wave of automation that is displacing workers, eroding their rights, and increasing inequality.
They also point out that the Luddites had the support of a majority of English people and eventually led to changes in the law that improved workers’ conditions.
Progress?
However, others have criticized this comparison as inaccurate or misleading. They claim that the Luddites were not successful in stopping technological progress, and that their actions were violent and destructive.
Technology will create new jobs
They also suggest that the Luddite fallacy, which refers to the belief that technological progress causes mass unemployment, has been proven wrong by history. They contend that technology can create new opportunities and benefits for workers, as long as society adapts and regulates it properly.
The question of whether a new modern Luddite rebellion can rise against Big Tech is not a simple one. It depends on how we define Luddites, how we evaluate the impacts of technology, and how we respond to the challenges and opportunities it presents.
The Rosebank oil and gas field is a controversial project that has been approved by the UK government despite the concerns of environmental activists and some politicians.
It is located about 80 miles west of Shetland in the North Sea and is estimated to contain 500 million barrels of oil. It is operated by Equinor, a Norwegian state-owned energy company, with its partners Ithaca Energy and Suncor Energy. The development of the field is expected to cost £6 billion and create 2,000 jobs.
Carbon conflict
It is also expected to produce 200 million tonnes of carbon dioxide over its lifetime, which is equivalent to the annual emissions of 40 million cars.
The approval of the Rosebank field has sparked a debate over the role of fossil fuels in the UK’s energy transition and its commitment to net zero emissions by 2050. Critics argue that the project is incompatible with the UK’s climate goals and that it will undermine its credibility. They also claim that most of the cost of the development will be borne by the taxpayers through tax reliefs and subsidies.
UK not yet ready to turn off the oil and gas
However, some supporters of the project contend that it will provide a reliable source of energy and revenue for the UK, as well as support thousands of jobs in the oil and gas sector. They also point out that the UK still relies on fossil fuels for most of its energy needs and that it will need to import more oil and gas from abroad if it does not develop its own resources.
‘Didn’t expect to see you here again, thought you’d retired’. ‘Yeah, me too!’
They argue that the Rosebank field will be developed with high environmental standards and that it will contribute to the UK’s transition to a low-carbon economy by investing in renewable energy and carbon capture technologies.
Contentious
The Rosebank oil and gas field is a complex and contentious issue that reflects the challenges and trade-offs involved in balancing economic growth, energy security, and environmental protection. It is likely to remain a topic of heated discussion.
The field is expected to start producing oil from 2026
If drilling starts on time, Rosebank could account for 8% of the UK’s total oil production between 2026 and 2030.
Roughly 245 million barrels will be produced in the first five years of drilling, with the remaining being extracted between 2032 and 2051.
Though oil is the main product, the site will also produce gas.
About 1,600 jobs are expected to be created during the peak of construction. Long term, the operation will create 450 jobs.
Will it mean lower energy bills in the UK?
No! Oil and gas from UK waters is not necessarily used here – it is sold to the highest bidder on global markets.
What Rosebank produces will be sold at world market prices, so the project will not cut energy prices for UK consumers.
The Norwegian state oil company Equinor – which is the majority owner of Rosebank – has confirmed this.
Oil also tends to be sent around the world to be refined – the UK does not have the capacity to refine all its own oil-based products.
The benchmark 10-year Treasury yield rose Wednesday 27th September 2023, to its highest level in more than 15 years, as traders navigated fears of persistent inflation and higher interest rates for longer than expected.
The 10-year Treasury yield climbed to 4.612%. It had reached 4.566% on Tuesday 26th September 2023, its highest level since 2007.
2 year yield
The 2-year Treasury yield also added 6 basis points to 5.139%.
FED said
Federal Reserve suggested last week that interest rates would go higher still and remain elevated for longer, prompting concerns among investors about what it could mean for the economy.
Credit card losses in the U.S. are rising at the fastest pace since the Great Financial Crisis of 2008.
Goldman Sachs reportedly predicts that credit card losses will continue to climb through the end of 2024 or early 2025 for most issuers. This is unusual because the losses are accelerating outside of an economic downturn.
Unusual trend
The main factors behind this trend are higher interest rates from the Federal Reserve and a surge in spending since the pandemic.
U.S. citizens owe more than $1 trillion on credit cards, a record high, according to the Federal Reserve Bank of New York. Credit card defaults, which occur when a borrower fails to repay debt and the lender writes it off, are also projected to increase by 20% year-over-year in 2023.
This could have negative implications for the economy and consumers’ financial well-being.
According to the latest data, 1.00 GBP is equal to 1.22 USD
This means that one British pound can buy 1.22 U.S. dollars at the current market rate. The exchange rate fluctuates depending on various factors such as supply and demand, interest rates, inflation, trade balance, and political stability.
Weak against U.S. dollar
The British pound has been weakening against the U.S. dollar since the Brexit referendum in 2016, when the UK voted to leave the European Union. The uncertainty and instability caused by the Brexit process have reduced the confidence and attractiveness of the British currency in the global market. The U.S. dollar, on the other hand, has been strengthening due to its status as a safe haven and a reserve currency in times of crisis.
In September 2022 the pound fell to its lowest level against the U.S. dollar
Excessive government spending and tax cuts that undermined confidence in the UK economy.
Price caps and record high inflation that eroded the purchasing power of the pound.
The strength of the dollar as a safe haven currency amid global uncertainty.
The prospect of a new Scottish independence referendum that increased political risk.
The impact of the Covid pandemic and the Russia-Ukraine conflict on supply chains and trade.
Artwork of GBP
UK pound closes in on a six month low
September 2022
The pound reached $1.0327 at one point in late September 2022, its lowest since Britain went decimal in 1971. It also fell more than 1% against the euro to about 86.80p, its lowest level since May 2020.
Today, 22nd Septmber 2023
The current exchange rate of 1.22 USD per GBP is near the lowest point in the last 30 and 90 days, which was 1.2383 USD per GBP.
The highest point in the same period was 1.3128 USD per GBP. The average exchange rate in the last 30 days was 1.2563 USD per GBP, and in the last 90 days was 1.2721 USD per GB pound.
UK interest rates have been left unchanged at 5.25% by the Bank of England (BoE).
The decision comes a day after figures revealed an unexpected slowdown in UK nflation in August 2023.
The Bank had previously raised rates some14 times in a row to tackle inflation, leading to increases in mortgage payments, business loans and consumer borrowing. But it also delivered higher savings rates.
The maker of weight-loss drug ‘Wegovy’ has become Europe’s most valuable company, dethroning the French luxury conglomerate LVMH.
Is there an irony here…? Exploitation of the obese, or a genuine attempt to help? It is used in the fight against diabetes too.
It’s a business after all
Wegovy is a brand name for ‘Semaglutide‘, a prescription medicine used for weight loss in obese or overweight adults with other weight-related medical issues. It works by regulating appetite and reducing calorie intake, leading to weight loss and helping with weight management.
Wegovy was launched in the UK on 4th September 2023 and is available on the NHS as an ‘option‘ for weight management in line with NICE guidance, alongside a reduced-calorie diet and increased physical activity. However, only people with the highest medical need may qualify for the drug, as it is in short supply and its use will be restricted – but celebrities have direct access – do they have the ‘highest medical needs’? Of course they do.
Clinical trials
Wegovy has been shown to be effective in clinical trials, achieving up to a 15% reduction in body weight after one year. It has also been found to reduce the risk of a heart attack or stroke in obese people with cardiovascular disease by 20%.
To get Wegovy on the NHS, eligible adults would need a referral to an NHS specialist weight management service, which would usually be made by a GP. Alternatively, Wegovy can be obtained privately, but it may be expensive and not covered by insurance.
Watercolour image of a generic medicine bottle. Wegovy is a brand name for ‘Semaglutide‘, a prescription medicine used for weight loss in obese or overweight adults with other weight-related medical issues.
Shares rose after the Danish pharmaceutical giant, Novo Nordisk, launched the popular drug in the UK.
At the close of trading on Monday, 4th September 2023, the company had a stock market valuation of $428bn (£339bn).
The drug is now available on the National Health Service in the UK and also via private outlets.
Obesity treatment
Wegovy is an obesity treatment that is taken once a week which tricks people into thinking that they are already full, so they end up eating less and losing weight.
Famous personalities such as Elon Musk are among the reported users of the drug, which has gained traction in Hollywood and with the public more widely since it was approved by regulators in the US in 2021.
Wegovy and Ozempic – a diabetes treatment with similar effects – have been described as ‘miracle’ drugs. Would that be a ‘miracle for the user or for the pharmaceutical company – or both perhaps?
Experts warn the drug is not a quick fix nor a ‘substitute for a healthy diet and exercise’.
In trials, users often put weight back on after stopping treatment.
‘Supply restriction as production ramps up’
There has been a global shortage of the drug, so only limited is awailable for the NHS in the UK.
The company said it will continue to restrict global supplies as it works to ramp up manufacturing.
While the findings still have to be fully reviewed, experts agreed the results were potentially significant.
The Federal Reserve held interest rates steady in a decision released Wednesday 20th September 2023, while also indicating it still expects one more hike before the end of the year and fewer cuts than previously indicated next year.
That final increase, if realised, would be it for now according to data released at the end of the Fed two-day meeting. If the Fed goes ahead with the move, it would be the twelfth rate hike since policy tightening began in March 2022.
No change priced in
Markets had fully priced in no move at this meeting, which kept the fed funds rate targeted in a range between 5.25%-5.5%, the highest in some 22 years. The rate fixes what banks charge each other for overnight lending but also affects many other forms of consumer debt too.
While the no-hike was expected, there was plenty of uncertainty over where the rate-setting Federal Open Market Committee (FOMC), would go from here.
Judging from reports released Wednesday 20th September 2023, the bias appears towards more restrictive policy and a higher-for-longer approach to interest rates.
