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In a statement on Tuesday, the Labor Department reported that its consumer price index rose by 0.6% last month, the largest net monthly gain since August 2012. The price increase follows an easing of 0.1% in May, and exceeds the rise of 0.5% predicted by economists polled by Reuters.

The increase coincides with the reopening of non-essential retailers and other businesses throughout the country, and continued anti-coronavirus stimulus spending that has driven the US budget deficit as high as $3 trillion over the past 12 months.

A hike in the cost of gasoline accounted for over half of the resurgence in consumer spending, with energy prices as a whole rising by 5.1% and gasoline itself rising by 12.3%. However, gas pump prices remain 23.% lower than they were a year ago.

Having risen by 0.7% in May, food prices also saw a further increase of 0.6% in June, contributing to the shift in the Labor Department’s index. Core inflation also rose by 1.2%, far below the Federal Reserve’s target of 2% in annual inflation gains.

It is yet unclear how the consumer price index will be affected by the decision of several states to reverse their reopening plans in late June and early July following a resurgence in COVID-19 cases.

The US economy has been struck dramatically by the COVID-19 pandemic, with the economy entering a recession in February and April seeing the greatest single-month fall in consumer spending since the 2008 financial crisis.

The FTSE 100 has continued its rebound as European markets shook the fear of a coronavirus spread. On the other hand, oil prices have been dropping therefore prompting a sell-off as traders see demand slump.

Yahoo Finance reported the FTSE 100 was optimistic on the spread of the virus after the WHO held out on declaring the outbreak a global emergency. for now, the situation is under wraps and European markets are unshaken.

Connor Campbell, financial analyst at Spreadex, had this to say: “Europe’s major rebound continued unabated on Friday, even if the Dow Jones wasn’t anywhere near as enthusiastic.

“The European indices seemed to shake off the coronavirus concerns that had plagued them for much of the week.”

However, on the oil front prices have been dropping and shares in oil and mining firms have slipped. Brent crude dropped below $58, the lowest price since October 2019.

On close last Friday, Mihir Kapadia, the CEO of Sun Global Investments said: “Oil prices ... look likely to end the week down as growing concerns over the Chinese coronavirus will spread, disrupting supply, demand and affecting economic impact...The reason for the rally is as a result of news from the US revealed a drawdown in crude stocks.

"WTI also enjoyed a reprieve by going up 0.5% to $55.86 a barrel, however both could likely end up 4% and 4.6% lower for the week respectively. Oil sell-offs will likely continue as the virus outbreak in China has now killed 25 people and cases are being reported across the globe. As we have seen recently, investors will react quickly to any sign of negativity and this is no exception as China announces that the issue has become an emergency. This could keep oil prices fragile until the coronavirus shows signs of slowing down, and so far that reassurance has not been provided by Beijing.”

Tracking 65,384 property sales between August 2018 and August 2019 from start to finish, the monthly updated local house market insights tool shows the average differences between asking prices on Rightmove and their actual sold prices lodged at the HM Land Registry.

It was revealed that, out of the 575 assessed properties in South West London, sellers were dropping their asking prices by an average of over £71,000 to secure a sale.  A similar story was seen in North West London, where 206 vendors reduced their initial prices by almost £69,000 on average.

Below are the top 10 areas with the greatest drops have been seen:

Region Average Difference Between Asking and Sold Prices No. of Properties Analysed
South West London -£71,178 575
North West London -£68,840 206
West London -£53,998 243
North London -£37,597 369
Kingston upon Thames -£28,147 641
Harrow -£27,818 260
Slough -£27,584 258
Watford -£25,705 276
Guildford -£25,435 694
Western Central London -£25,268 4

Property Solvers co-founder Ruban Selvanayagam commented: “Even some of the most experienced estate agents are failing to understand the current realities.” 

“Arguably due to the cloud of uncertainty surrounding Brexit, we’re operating in a buyer’s market at the moment and the fact that agents knowingly state exaggerated valuations at the initial stages is a disservice.”

Bearing in mind that prices in the South tend to be higher than in the Midlands and North, some of the lowest asking to sold reductions were seen in Wigan (-£3,890), Hull (-£4,258), Doncaster (-£4,705), Sheffield (-£4,884) and Sunderland (-£4,915).

Selvanayagam goes on to comment: “When we speak to homeowners, we always underline the importance of referring to HM Land Registry sold price data.  It’s never been easier to access this kind of information online.”

"Of course, it’s never a bad idea to incorporate a bit of wiggle room into the price.  Also, if a client has spent a significant amount of money on extending / refurbishing or there’s more floor space then, of course, it makes sense to command more.”

“However, overly inflated price valuations in the current sales climate invariably leads to properties lingering on the market for a lot longer than they need to.”

Do such disparities between asking and sold prices mean that the market is crashing?

“I would say not – although much would depend on the outcome of the seemingly endless Brexit negotiations.  A ‘no deal’ or disruptive exit from the European Union could, however, change the trajectory of house prices.  However, it’s too early to predict at this stage.”

This has stemmed from the fact that in recent years, diesel has come in for a lot of scrutiny recently due to the levels of Nitrogen Oxide our vehicles emit. So much so that the government in the UK proposed plans to ban any sales of new diesel and petrol vehicles by 2040 as they try to clean the nation’s air quality.

We are currently being encouraged to make the transition over to electric and hybrid vehicles, but just what effect will this have on traditional fuel sources? Lookers, who offer a variety of car servicing plans, explore what the future of fuel looks like for the UK.

Will the prices of fuel fluctuate?

The reported on the yo-yo affair of fuel prices in the UK and noted a number of influencing factors. Brexit and harmful emissions to UAE conflict, have meant that fuel prices haven’t been steady for some time now – and a plan to eliminate petrol and diesel cars will not help steady the cost of fuel either.

After witnessing a three-year high in how much petrol and diesel was costing on the UK’s forecourts, the RAC and other industry experts have encouraged supermarkets to reduce their fuel prices to make the public be able to afford the fuel type. At the start of 2018, three of the UK’s leading supermarkets had listened to the RAC’s call for lower fuel prices, and reduced fuel prices by up to 2p per litre as of February 2018.

RAC fuel spokesman, Simon Williams, stated: “Both petrol and diesel are now at their highest points for more than three years which is bound to be making a dent in household budgets.”

“Both petrol and diesel are now at their highest points for more than three years which is bound to be making a dent in household budgets.”

In 2014, the OPEC made a decision to increase the level of domestic fuel production in the UK, which led to a price drop to 98p in January 2016 — the lowest price of fuel per litre since the financial crisis in 2009. However, the UK still heavily relies on imported energy and fuel – around 38% of the UK’s total energy consumption is reliant on imported energy. Could our trading relationships be at risk after Brexit? And, of course, we must also consider how the uncertainty around the value of the pound could affect fuel costs following Brexit.

Immediately following the UK’s decision to leave the EU, the value of the pound experienced a fall of 20% against the dollar. This caused fuel prices to increase by around 10p per litre and experts to raise concern that Brexit could mark the end of cheap fuel in Britain. The combination of higher crude oil prices and the devaluation of the pound mean Britain should expect higher fuel prices become the norm.

Electric Charging Hubs

You may know that the market of electric vehicles has been criticised since the mobile was launched.  This has been due to a lack of EV charging points raising concern for many drivers, but could a transition towards electric and hybrid vehicles see us eventually wave goodbye to traditional fuel?

Following in the footsteps of other countries around the globe, like New Zealand who are rolling out easier-to-find charging stations, in the past 12 months, the UK’s electric car charging infrastructure has evolved substantially to suit the lifestyles of many drivers with many more EV charger installation points appearing. The UK also has over 20 companies and organisations installing and running nationwide or regional electric car charging networks.

The UK’s electric car charging infrastructure has evolved substantially to suit the lifestyles of many drivers with many more EV charger installation points appearing.

BP have also stated that they would be adding an increased number of charging points for electric vehicles into their UK fuel stations within the first few months of 2018. Oil firms are also recognising the potential for growth into the battery-powered vehicle market. A decision that follows in the footsteps of their rival, Shell, who have already invested money in several electric car infrastructure companies to install charging points at their service stations. According to The Guardian, the British oil firm, BP, is also investing $5 million (£3.5 million) in the US firm Freewire Technologies, which will provide motorbike-sized charging units at forecourts to top up cars in half an hour.

Tufan Erginbilgic, chief executive of BP Downstream, commented: “EV charging will undoubtedly become an important part of our business, but customer demand and the technologies available are still evolving.”

A multimillion-pound deal with ChargePoint saw InstaVolt installing at least another 3,000 rapid charging points across fuel station forecourts across the UK. Some researchers have also claimed they could have developed an ‘instantly rechargeable’ method that recharges an electric battery in the same time as it would take to fill a gas tank – a solution to one of the biggest headaches of electric vehicles.

2017 turned out to be a record year worldwide. In November 2017, global figures hit three million for the number of electric vehicles collectively on the roads – with China proving to dominate the market. Whilst oil firms such as BP expect the electric market to continue to rise, they hope the oil demand is not seriously affected – by cutting themselves a slice of the electric vehicle charging cake though, firms are covering their back if traditional oil demand does take a dip in line with the government’s plans to reduce harmful emissions and cut back on crude oil prices.

While fuel’s cost looks like it’ll be uncertain for the foreseeable, it appears that both the high fuel prices and efforts to improve the UK’s air quality will cause the EV market to increase and success is forecast to continue to surge in the years leading up to 2040.

Sources:

https://visual.ons.gov.uk/uk-energy-how-much-what-type-and-where-from/
https://www.petrolprices.com/news/brexit-process-impact-fuel-prices/

http://www.theaa.com/about-us/newsroom/fuel-price-update-october-2017
http://home.nzcity.co.nz/news/article.aspx?id=263989
https://www.rac.co.uk/drive/news/motoring-news/higher-fuel-prices-could-be-new-norm-in-2018/
https://www.rac.co.uk/drive/news/motoring-news/rac-sparks-fuel-price-drop-on-supermarket-forecourts/
http://www.autoexpress.co.uk/car-tech/electric-cars/96638/electric-car-charging-in-the-uk-prices-networks-charger-types-and-top
https://www.theguardian.com/environment/2018/jan/30/bp-charging-points-electric-cars-uk-petrol-stations

Politicians have a widespread and long term impact on so many things every time they speak or do anything. But to what extent do they affect currency volatility?

Forex market experts DailyFX have created a guide that looks at 59 key dates in 2017/18 where world leaders may have had significant influence on currencies. The lists of key dates includes US President Donald Trump, UK Prime Minister Theresa May, Japanese Prime Minister Shinzo Abe, Canadian Prime Minister Justin Trudeau, Australian Prime Minister Malcolm Turnbull and the President of the European Commission Jean-Claude Juncker.

Brought to you by DailyFX

British farmers are being hit by a shortage of migrant workers and are warning a dysfunctional Brexit will have a devastating impact on their industry. They are calling on the government to provide direction and answers on the future of British farming after the UK leaves the European Union. Bloomberg’s Angus Bennett travelled to Kent, in Southern England, to meet the farmers and migrant workers on the front lines of Brexit.

Video by Angus Bennett and Gloria Kurnik

People are paying more for their homes around the world, with average house prices up 6.5% in the last 12 months.

But, where have house prices grown faster than the average income?

Assured Removalists have combined data on average annual salary, income tax and house prices to produce a ratio that shows the measure of housing affordability around the world. The higher the ratio is, the less affordable the houses are.

How does your country compare? You can view the full data set here.

House price vs average income ratio

Most AffordableLeast Affordable

0 - 10
11 - 20
21 - 30
31 - 40
41 - 50
100+
Most affordable places to buy a house
Least affordable places to buy a house

Swipe to move map

10 most affordable places to live

House price vs average income ratio

  • 1.87Suriname
  • 3.02Saudi Arabia
  • 3.41Oman
  • 3.42Bahamas
  • 4.18USA
  • 4.68Honduras
  • 4.79Brunei Darussalam
  • 5.03Jamaica
  • 5.63Kuwait
  • 7.52Qatar

10 least affordable places to live

House price vs average income ratio

  • 181.6Papua New Guinea
  • 133.77Barbados
  • 106Solomon Islands
  • 50.77Maldives
  • 50.57Bhutan
  • 40.91Vietnam
  • 40.8China
  • 36.34El Salvador
  • 32.33Venezuela
  • 32.05Tajikistan

The United Kingdom and Australia placed 44th and 58th respectively in the world’s most affordable places to live.

  • United Kingdom13.13
  • Australia15.49

Sources:
https://www.numbeo.com/cost-of-living/
https://tradingeconomics.com/
http://www.indexmundi.com/
http://www.globalpropertyguide.com/

(Source: Assured Removalists)

Angela Knight, the former head of Energy UK, talks to ELN about whether she believes the government will go forward with the price cap.

With wage inflation stagnating below the rate of increased property prices, it has become very difficult to get a firm foothold on the London property ladder. Many people have therefore been forced into the private rental sector; signified by nearly one in three London household’s renting privately.

Despite the tremendous growth for the sector itself, the increased demand has driven up private rental values. Especially in London, where the average rent for a one bedroom property is a substantial £1,329 per month.

Sellhousefast.uk analysed data from the Office of National Statistics (ONS), revealing that single tenant’s in 25 of London’s 32 boroughs are sacrificing more than 50% of their monthly salary (after income and council tax deductions) on rent for their one bedroom property.

Single tenants living in a one bedroom property in Kensington and Chelsea are sacrificing an astonishing 85% of their monthly salary on rent – the highest out of all the London boroughs.

Single tenants in Kensington and Chelsea are then closely followed by those in Hackney – who give up 81% of their monthly salary to pay for rent on their one bedroom property. In third place is Westminster, where single tenants use up 79% of their monthly salary to pay rent for their one bedroom property.

Single tenants in Bromley as well as Havering, sacrifice the joint lowest percentage of their monthly salary on renting their one bedroom properties in London at 42%. Redbridge (49%), Merton (49%) Richmond upon Thames (48%) and Bexley (43%) are the other London boroughs where single tenants sacrifice less than 50% of their monthly salary on a one bedroom property.

Sellhousefast.uk asked a couple of single tenants living in a one bedroom property in London about their experience of renting.

Jessica, 26, has been renting a one bedroom property in Southwark for the last two years: ‘I am giving up a lot of my monthly income on renting a one bedroom in Southwark. It’s frustrating but I only tolerate it due to the convenience of living a short distance away from my workplace. It’s ideal as I start early and finish late most days. The biggest benefit is that it eradicates any time that I would lose through commuting if I lived outside the area. A lot of my colleagues are also currently doing the same thing as me. Whilst most are unhappy about giving up such a huge proportion of their salary on rent each month, it’s ok for the short-term. But in the long-run, it isn’t sustainable, as I wouldn’t be able to secure a deposit for a property of my own.’

Chris, 29, has been renting a one bedroom property in Hounslow for the last four-years: ‘Rent in London is truly extortionate. For the past three years, over half my monthly salary has gone on covering rent. On top of that, I have to pay for my food, utilities and travel every month – so I am not left with much to save, let alone enjoy any leisure activities. With me nearing thirty I want to settle down with my partner and this tiny one bedroom flat is certainly not going to suffice for the both of us. We have started to look at bigger properties in Hounslow, as we both work in the area. With rental prices as they are in London, it might be an uphill struggle for us’.

Robby Du Toit, Managing Director of Sell House Fast commented: “Demand has consistently exceeded supply over the last few years, Londoner’s have unfortunately been caught up in a very competitive property market where prices haven’t always reflected fair value. This notion is demonstrated through this research whereby private rental prices in London are certainly overstretching single tenants; to the extent they must sacrifice over half their monthly salary. For those single tenants with ambitions to climb up the property ladder – their intentions are painfully jeopardised, as they can’t set aside a sufficient amount each month to save up for a deposit or explore better alternatives. It’s not only distressing for them but worrying for the property market as a whole – where the ‘generation rent’ notion is truly continuing too spiral further.”

(Source: Sellhousefast)

A few weeks back headlines were ripe with news that oil prices have been settling even lower, reaching a three-month low mid-March. Finance Monthly reached out to Jordan Hiscott, Chief Trader at ayondo markets, to give us a rundown of the current situation, and delves into the global economy’s dependence on the fluctuations of oil prices.

With West Texas Intermediate (WTI) Crude falling to $48, we’re now only $3 higher than the level at which OPEC agreed output would be cut. So how high did we get and does the current level pose value on a mean reversion perspective – i.e. if we agree with the theory that suggests prices eventually return to the mean or average over a two-year period?  After the output cut was announced, oil prices rose as high at $54, the highest point in over a year, and until the beginning of March we sustained a clear range between $52 and $54. However, pressure on prices began to materialise around the 8th March, finally falling to $48 in disorderly fashion two days later. In my opinion, this fall is only the beginning of the downward price pressure of WTI, which is likely to be caused by three key catalysts.

Firstly, the lack of adherence to an output cut by OPEC members. The dominance of OPEC and the effect of its actions on international oil markets has waned drastically in recent years. And what was once an extremely united group with a clear objective has become more fragmented, with internal strife and economic difficulties causing individual nations to put their own interests before the group. Should these conditions become more prevalent, especially from a local economic perspective, I suspect it will create a domino effect - when one country breaches output levels, then others follow suit - and prices fall as a result.

Secondly, there is the impact of shale fracking. In a single generation, the US has become completely self-sufficient when it comes to oil and this is largely down to the rise of shale fracking. Remember as recently as 1980, after the Iranian Revolution, the US armed forces realised they had only 30 days’ worth of fuel to power all military vehicles. This led to creation of the Strategic Oil Reserve, located in the New Mexico caves, naturally pressurised, with enough fuel to power the American military for one year. With this dependence on oil from exports no longer significant, it’s certainly arguable that the US might not have engaged in various Middle Eastern conflicts had the supply of oil not been such an issue.

Lastly, and, in my view, most significantly, is the increasing importance of renewable energy.  In a world that is drastically changing its dependence on fossil fuels, the advancement of technology to capture renewable energy is nothing short of remarkable.  As international government adopts clean energy sources, it’s expected by 2025-2030 that we will reach ‘peak oil’, the hypothetical point in time when the global production of oil reaches its maximum rate, after which production will enter terminal decline.

Almost entirely due to technology, certain governments now achieve the majority of their energy needs from renewable sources. Albania, Iceland and Paraguay obtain essentially all of their electricity from renewable sources (Albania and Paraguay 100% from hydroelectricity, Iceland 72% hydro and 28% geothermal). Norway obtains nearly all of its electricity from renewable sources (97 percent from hydropower). In addition, petrol and diesel demand for vehicles is likely to fall in similar patterns. From a consumer perspective, the concept of electric power cars has never been more popular. For example, Tesla, the US electric car company, now has a market capitalisation that has almost eclipsed GM and Ford. The recent jump higher in stock price catapulted Tesla’s market cap to nearly $45 billion. That compares with nearly $48 billion for Ford and, farther off, about $53 billion for GM.  Tesla’s technology means its S battery can now power a car for a range of 265 miles, and what is also remarkable is that Telsa also makes the world quickest production car, accelerating from 0-60mpn in 2.5 seconds.  Currently 95% of all motor vehicles use fossil fuels: however the demand for electric cars is soaring having risen by 42% in 2016 alone. I can only see this trend continuing.

The culmination of these factors is abundantly clear to me: the dependence of the global economy on the fluctuations of the value of Oil will be over in 10-15 years.

In a keynote speech to the American Chambers of Commerce, in Brussels last week, Fiona Dawson (Global President of Mars Food) warned that failure to reach a new UK-EU free trade agreement for food would threaten jobs and lead to higher consumer prices.

Noting that protectionist trends are threatening to undermine global trade and make the world less connected, she noted that the future relationship between Britain and the European Union is a critical test as to what future will unfold. Specifically she:

Jobs and Consumers Must Come First

Key extracts published pre-speech:

"Brexit clearly poses some problems, but the fact is Britain has decided to leave the EU and the task now is to look forward and ensure that the decisions taken from this point forward achieve the most positive outcome for all concerned."

"The absence of hard borders with all their attendant tariff, customs and non-tariff barriers allows for this integrated supply chain, which helps to keep costs down. The return of those barriers would create higher costs which would threaten that supply chain and the jobs that come with it."

"If Britain ends up trading with the EU on the basis of WTO rules, 'Most Favoured Nation' rates would come into force. In the area of confectionery that alone would mean tariffs of around 30%. For animal products, it would be 20%; for cereals over 15%; and for fish and fruit over 10%. Significant new tariffs would also apply outside the food sector, notably in the area of clothing and textiles. Unfortunately there is no way that those costs could be absorbed without flowing through to consumers in the form of higher prices."

"It is a fact that Europe after Brexit will remain a critical market for UK exports and likewise the UK will remain an important market for goods produced and manufactured in other European states. There can be no economic advantage either side restricting trade with a large market situated on its doorstep. In simple terms, if the UK and the EU fail to agree on a new preferential deal, it will be to the detriment of all."

"Reaching an agreement will require compromise and an appreciation of the economic interdependency between the UK and EU. It requires an acceptance of the benefits that common regulatory standards and the movement of labour can bring, and an understanding that the imposition of significant trade barriers would ultimately hurt everyone and undermine, rather than strengthen, European unity."

"Other member states should remember this is not about 'punishing' Britain for her decision to withdraw but rather about finding the best solution for European and UK workers and consumers. That consideration must come first as we build the future."

(Source: Mars, Incorporated)

Truck With Fuel TankOil traders and tanker-owners are set to cash-in on falling oil prices as tumbling prices have caused the market to move into a steep ‘contango’, meaning that investors are willing to pay a premium to receive oil at a later date, according to KPMG.

The depressed demand picture coupled with the abundant global oil supply has seen oil prices fall to near six-year lows. As a result of this, the price for oil in the spot market has traded below the price of oil for future delivery, a market condition known as contango. This differs to a normal backwardation structure where the price of a futures contract trades below the expected spot price.

KPMG says that traders with storage ability will be able to cash-in on the contango market by storing the oil and locking-in higher future prices. At today's prices, September 2015 Brent crude oil futures are trading at a $6.35/barrel (€5.4/barrel) premium to February 2015.

George Johnson, Executive Advisor in KPMG's oil and gas practice said: “The widening contango we've seen over the last few weeks will benefit traders with access to storage facilities. This means traders are not forced to sell at the current spot price; instead, they can store the oil and lock-in a higher future price - providing shareholders with almost risk-free profits. In a contango market the trader with storage options is the one holding the aces.

“Over the coming weeks traders will be reviewing their storage economics with a view to capitalising on this market phenomenon which looks set to stick around for a while.

“Tanker-owners also look set to benefit from the Brent crude oil contango situation as traders seek alternative storage options. Further weakness in the Brent structure will almost certainly make floating storage a viable option”

However, while traders and tanker-owners are set to benefit from the situation, KPMG warns that smaller upstream oil companies operating below break-even levels may struggle.

Anthony Lobo, Head of UK oil and gas at KPMG, said: “There's little comfort out there to suggest prices are due for a significant upside correction any time soon – so further selling pressure is a real possibility. Smaller companies and marginal shale producers without strong balance sheets and access to funding, may struggle to weather the storm, particularly if there are further price falls in the pipeline. We've already seen significant cutbacks to capital expenditure for 2015 across the industry as a whole; however, we're yet to see scale-backs to production.”

 

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