Black Gold?

As we move forward now into our fourth week of lockdown, we are seeing around 50% of the world population in some form of curfew. The spread in some areas has started to reduce and, in some part, death rates have reduced.

This does not get past the fact thatover 2 million people have been touched by this virus in such a short space of time.

China and the surrounding neighbours are getting back some normality and this can be seen with a sharp upturn in productively and flights now leaving Wuhan with the now infamous wet market reopened.

This I feel will still take a few weeks to fully settle and see these levels return back to the pre virus levels for them. We are notably a number of weeks behind this and with our new lockdown upon us it does start to focus the mind more on the what next?

This year was all geared to be around Environmental, Social & Governance (ESG) at the heart of the investment world. This now it seems for the short term has been put on the back burner as there is bigger news.

The virus lockdown has done more for the environment in a matter of weeks than any politician has done over a number of years.

One focus would have been oil and the impact on the environment of the carbon footprint.

It was said that as a world economy we no longer are reliant upon oil and its time was done.

Looking toward the recent oil price crash, I beg to differ right now as this remains to be the indicator for health in the world economy seeing as the price falls added to the market falls.

As we all move toward being carbon neutral the idea is that we are using less with it being replaced by electric vehicles, alternative energy sources and innovation in industry to replace the demand.

What we can see from recent events is that the world is not quite ready to give up on oil just yet and it remains at the heart of industry and the financial sector. Until such time we see demand go up and production go down, then the depressed price we are seeing will remain.

Trumps announcement that the war between the Saudi’s and Russia will settle soon saw the oil price bounce by 20% in a day, however it still remains well below pre virus levels. The deal struck recently “should” see this stabilise but as with all these things time will be needed here.

The telling part is that oil storage facilities are at capacity and this means that if demand does not turn on where will it all be stored?

As per my last update, eyes remain East and when we see productivity there increase, so will demand, it should start the world economy ticking once more. Note the developed Western world is now about 3 months behind this curve.

We will of course continue to monitor the situation and provide guidance and advice if so, required with all investment matters.

The 6th April brought us the new tax year; this means that all allowances have been renewed.

There is very little to report on this front seeing as the personal allowance has remained the same along with the 20% and 40% tax brackets. There are few small changes but nothing that warrants being covered here.

Finally, with the low interest rates, we have not seen the saving rates fall to far, but this has been the same for mortgages as the two do move in tandem.

At the front are Kent Reliance for Cash ISA’s at 1.15% and Marcus Bank for savings at 1.30%. Both are online only and as I may have said before I prefer monthly interest versions and instant access.  May I add this is subject to change at any time, without notice.  

I’m at my desk, my mobile is on and always happy to chat, so please feel free to call if you want to pass some time.

Best wishes and stay safe at home.