French energy giant Total stated this morning that it expects the price of oil to remain low for the next year, as supply continues to grow faster than demand.
The price of Brent crude has fallen more than 60 percent over the last year, standing at around $43 a barrel; some of the lowest prices in the last ten years. US light crude is trading below $40 a barrel.
Total CEO Patrick Pouyanne confirmed that he “doesn’t anticipate a recovery in 2016”, and expects supply to continue to outstrip demand. US shale oil has flooded the market over the last 18 months leading to over supply issues which, combined which economic crises in both China and Europe, has pushed down prices.
To add to the problem, the Organization of the Petroleum Exporting Countries (OPEC) ended its meeting this morning without announcing any plans to curb output and lower production, meaning the supply problem will continue. There was no reference to an output ceiling, which could exacerbate the problem when Western sanctions are lifted against Iran and their oil hits the market. A stronger dollar also made it more expensive to hold crude positions.
Crude oil is currently down 2.7 percent at $39.97 a barrel, with Brent down 1.95 percent at $43 a barrel.
Although occasionally dismissed as a ‘myth’ amongst analysts, a Santa Rally is a statistically visible rise in stock prices over the month of December in the run up to Christmas.
Whilst the reasons for this increase in stocks are not exactly known, the head of investing at Axa Wealth, Adrian Lowcock suggests;
“It is probably down to mixture of reasons, including fund managers repositioning their portfolios ahead of the year end or goodwill associated with the festive season putting professional investors in a positive mood.”
The effects of the Santa Rally aren’t unnoticed within the FTSE 100, with December being an average four times more profitable than the average months across the markets.
So what patterns in the market do the Santa Ralley leave?
The growth in returns doesn’t see a slow and steady growth throughout November and December. Instead, the last two years have seen the markets drop in points during the first half of December, following a significant rise from approximately the 15th throughout the rest of the month, sometimes into January.
Considering the FTSE 100 stock market over the past ten years, there has been an average growth between 15th December – 1st January of 160.29 points, with the smallest growth being +19 points in 2007.
This rally hasn’t always positively impacted the markets. The blue-chip index fell by 2.3pc in December 2014; the first December fall in the FTSE 100 for 12 years. This is compared to the most successful year seen by the Santa Rally in 1987, where the markets saw a rise of 8.4pc.
Whilst Santa Rallies have been seen to regularly occur and cause growth in the market, it is not encouraged to make wholesale changes just to take advantage of short-term trends, which is often considered costly.
Despite the chancellor George Osborn referring to the EU’s cap on bank bonuses “counter-productive”, bankers for London investment bankers still look on course to fall on average by 9% from last year.
This cut in bonuses is likely to be a result of a reduced number of IPOs as well as a where banks have had to compensate due to the payment of misconduct fines.
Alice Leguay, from Emolument, has said;
“With ever more restricted bonus pools, it may be that doughnuts (zero bonuses) become more commonplace, as banks limit substantial bonus payments to key outperforming staff they simply cannot afford to lose,”
Following cuts, how much are London’s bankers expected to receive in bonuses? Emolument estimates that a managing director in equities can expect to get a bonus of £361,000, whilst directors across the investment bank should get £114,000-151,000, with Deutsche Bank’s John Cryan admitting bankers get paid too much for what they do.
General secretary of the TUC, Frances O’Grady said;
“With most workers still earning less than they did before the recession, few tears will be shed for bankers who find their six-figure annual bonus is a few pounds less than last year. We need the economic recovery to be far more fairly shared amongst all workers in 2016.”
Bonuses aren’t set to drop everywhere; equities staff and traders are expected to see a rise of between 2-3%
The Bank for International Settlements has warned the impending US rate hike may harm emerging economies, and says the financial markets are experiencing an ‘uneasy calm’ in anticipation of Federal Reserve’s decision later this month.
The U.S. interest rate hike will be the first in almost a decade, and is widely expected later this month. The Bank for International Settlements said in its latest report that, in the bond market, “a number of anomalies suggest that all is not well,” with Claudio Borio, the head of the monetary and economic department at BIS warning that the amount of bad loans in the eurozone is “too high”.
It continued to say that a rate hike may have a negative impact on emerging economies because of their “Less favourable financial market conditions” and “increased sensitivity to US interest rates”.
Speculation of a US rate rise has been steadily increasing since the summer, but the Federal Reserve’s Federal Open Market Committee has continued to keep US interest rates unchanged at record lows of 0% to 0.25%, where they have been since 2008. However, many analysts are expecting their meeting on 15-16 December to be the one to finally hike rates, after a spate of positive economic data for the US.
In recent years, a real change has been seen in the food industry; health foods are having a moment, and the providence of a product is all important. Farmers’ markets have gained in popularity, with hundreds popping up in London alone, and Borough market has gone from a wholesale fruit and veg market to one of the city’s biggest attractions. And where there’s change, there’s opportunity to capitalise on it – as demonstrated by Sourced Market.
Sourced Market, based in St Pancras Station, blends the high quality produce, atmosphere and shopping experience of a great market with the practicality of a convenience store, combining retail with artisan coffee, bakery, food-to-go and casual dining. They source produce from some of the best of Britain’s small, artisan producers and bring it to our customers in St Pancras Station, seven days a week.
Sourced Market: looking for investment
The business, founded by entrepreneur Ben O’Brien in 2007, has gone from strength to strength, drawing on Londoners’ growing desire for fresh, healthy food on their doorstep. Ben lived and worked in Borough Market for six years, building relationships with the producers and traders found there and eventually creating the concept for his own market, Sourced. Sourced Market has now been running for six years, serves over 12,000 customers, commuters and tourists a week and brought in£2.8 million in 2014.
Sourced Market is currently running a crowdfunding campaign on Crowdcube to raise funds to expand further. They have already raised over 80 percent of their £750,000 target, with another two weeks to go. For founder Ben O’Brien, crowdfunding was the best route for Sourced when looking for investment. He said, “I’d urge any entrepreneurs out there to consider crowdfunding. For Sourced Market, crowdfunding the first time round was a great experience – it really raised our profile as a business and we have been reaping results from the campaign on a daily basis since.”
O’Brien is a seasoned pro at raising investment – he has previously raised another £700,000 for Sourced from Oakley Capital Group.
“Raising money can be a lengthy process. While some entrepreneurs can raise investment at the idea stage with just a business plan, most investors will want to see proof of concept – i.e. your idea up and running, albeit on a small scale. I’d suggest getting the ball rolling under your own steam if you can – use your savings, take out a loan, borrow or take investment from friends and family.”“Getting out there and talking to as many people as possible is, in my opinion, the best way to do it.”
However, according to O’Brien, the key to raising funds is in the preparation.
“Nailing your business plan is a prerequisite when starting out. You need to be able to sum up the concept as succinctly as possible and be prepared to sell your idea and your business – not just to potential investors – but to anyone who you want to work with you or for you, i.e. suppliers and employees. Convincing people of your ability to succeed and getting them to believe in you all depends on getting that first pitch right first time, especially as you may only get one opportunity with a potential investor”He continues: “From the onset, you really need to grasp what differentiates you from your competitors. Smaller businesses can react more quickly and bring ideas to fruition much faster than bigger, more established businesses. That’s how at Sourced Market we can compete with competitors with much greater resources, from supermarkets to coffee chains. Try out new ideas and new products regularly and if they work, keep them. If not, move on quickly”
Most importantly though, for entrepreneurs thinking of taking the plunge, is to “never be afraid of failure.”
“Having an appetite for risk is a key attribute for any entrepreneur and working on a trial and error basis is often the best way to learn what works and what doesn’t. Take the plunge by trying out things that you’re not 100% sure will work. It’s better to try five things and find one that works really well and improves your business than to try nothing because of fear of failure.”
Sourced Market’s campaign is open on Crowdcube for another 12 days. They are looking for £750,000 in return for 8% equity in the company – and in addition to superb returns, Sourced Market is offering rewards such as luxury hampers, exclusive events and Sourced Market discounted ‘Blue Cards’ to bondholders. For more information, visit their campaign page here.
Whilst the internet is full of new companies offering to match dog-sitters with interested owners, there’s still a gap in the market for a similar service for cat owners: enter Cat in a Flat, the online cat-sitting service and community. The site connects cat owners with insured and local cat-loving sitters, and is currently crowdfunding on CrowdCube to take the business to the next level.
The site aims to take the stress out of holidays for cat-owners – cats stick to their own routine and, as anyone who owns one will know, dislike being rounded up and taken to the cattery whilst you go off and have fun. Cat in a Flat matches owners with local cat lovers who are willing to come and look after your pet in your own home.
The arrangement is mutually beneficial for both the owner and the sitter – owners can relax, knowing that their pets are at home in a safe environment, and sitters get to spend a little time with some furry friends, whilst making some pocket money at the same time. All cat sitters on the site go through a personal on-boarding process that automatically insures them, and Cat in a Flat provides them with their own personal webpage, service agreement contracts and a secure payment & booking system. If you want, you’ll even get a photo of your cat looking healthy and happy for each day that you’re away.
The market for this is huge. Nearly £2 billion a year gets spent on UK cat caring, and cat ownership is rising – there are 8 million cats in the UK, but with owners working longer hours, there is a growing reliance on domestic services. And since a 2013 survey from PetAround reported that a quarter of families with pets avoided taking holidays or cut down the length of their holidays because of the “hassle and cost of kennels, catteries and cat homes”, there is clearly the need for a more safe and easy cat-sitting service, with sitters looking after cats in their own homes.
Cat in a Flat is currently looking for an investment of £50,000 on Crowdcube, in return for 4.76 percent equity. For more information on this opportunity, visit their campaign page here.
Department store John Lewis set a new weekly sales record after “Black Friday”, with £187.7 million spent both online and in stores.
The retailer said on Friday that sales were up 4.8 percent on 2014, as the US Black Friday tradition continued to take hold in the UK. The strong figures continued on Saturday, with a 9.3 percent rise in in-store sales.
Five items per second passed through John Lewis’s distribution centre during its peak hour as the company processed 18 percent more parcels than last year over Black Friday and the following weekend.
Electrical items were the strongest seller, up 5.5 percent compared with last year.Sales of wearable technology such as fitness monitors up 850 percent, with branded Fitbit trackers up 1200 percent.
British house prices have risen nearly 10 percent this year, according to mortgage lender Halifax, but are likely to rise more slowly in 2016.
Halifax estimated prices to increase by around 3.5 percent in 2015, with the actual figure being more than double that. However, prices are estimated to rise at a slower rate of between 4 and 6 percent next year.
Halifax housing economist Martin Ellis said of the figures:
“House prices look expensive compared to incomes but valuations are supported by the low levels of property for sale, low levels of housebuilding, and exceptionally low interest rates,” adding that the Bank of England’s failure to increase interest rates was a key reason why house prices had risen faster than forecast.
Halifax is one of Britain’s biggest mortgage providers, and is part of Lloyds banking group.
Morrisons (LON:MRW), one of the worst performing supermarkets in Britain’s ‘big four’, is set to drop out of the FTSE 100 after months of tumbling share prices.
The company has been in the FTSE 100 for more than 14 years but fell out of the running today, as its share price has fallen 17 percent this year alone. It currently has a market capitalisation of around £3.51bn.
Back in March Morrisons reported a 52% drop in annual profits to £345 million, its worst results in eight years and significantly weakening its competition against rivals Tesco, Sainsbury’s and Asda.
The chain’s problems reflect wider problems within the sector, with Britain’s major supermarkets seeing an unprecedented fall in sales and profits over the last couple of years, as budget buyers flock over to cut price shops such as Aldi and Lidl.
However, new chief executive Dave Potts’ has been appointed to turn the chain’s fortunes around with a five-year plan which, if it proves successful, could make buying shares in Morrisons at the current share price a lucrative opportunity.
Other companies which have fallen out of the FTSE 100 include the security group G4S and the engineering group, Meggitt, with Worldpay and Provident Financial taking their places.
Morrisons are currently trading down 0.20 percent at 151.00 pence per share. (0600GMT)
Wireless tracking company Starcom (AIM: STAR) is one of the biggest movers on the AIM market this morning, trading up over 75 percent after announcing a new supply agreement with Pinnacle Systems.
Starcom, who specialise in the development of wireless solutions for the remote tracking, monitoring and protection of assets and people, have committed to sell thousands of Helios units to Pinnacle, a market leader in road safety, fleet management and vehicle security systems in Eastern and Central Africa regions. The contract will be worth around $5.5 million over three years.
Avi Hartmann, CEO of Starcom, commented, “This is our largest contract to date and we are delighted to be working with Pinnacle Systems on this major supply and support agreement. We are working hard to win and fulfil similar large high value contracts currently under discussion.”
Starcom are currently trading up 91.11 percent at 4.30 pence per share. (0806GMT)
