Member Info for MY21

BP warns oil prices will be lower for longer as its profits plunge tumble: BP’s Chief Executive has warned that oil prices will be “lower for longer” as he revealed that falling prices and a further multibillion-dollar charge relating to the Gulf of Mexico disaster had fuelled a $6.3 billion (£4 billion) loss for the second quarter

Commuting to London saves £450,000: The daily commute may be a miserable grind but those prepared to suffer two hours a day on Britain’s railways are saving themselves almost half a million pounds on house prices

Shawbrook’s pretax profits leap in tough environment: Certain parts of the property market have become bumpier, according to Shawbrook, the challenger bank.

Chinese turmoil takes its toll on oil prices: Oil traded close to its lowest level in nearly six months amid fears over signs of a serious Chinese stock market rout

UK GDP advanced as expected in 2Q 2015 The preliminary gross domestic product (GDP) in the UK registered a rise of 0.70% on a quarterly basis in 2Q 2015, compared to a rise of 0.40% in the prior quarter. Market anticipation was for GDP to climb 0.70%.

At 0330GMT today, Brent crude oil one month futures contract is trading 0.32% or $0.17 lower at $53.13 per barrel, ahead of the Energy Information Administration weekly oil inventory data, scheduled to be released later today. Yesterday, the contract declined 0.32% or $0.17, to settle at its lowest level since 30 January at $53.30 per barrel, amid concerns raised by constant glut in global oil supply. Meanwhile, API data revealed that US crude oil supply declined 1.9 million barrels for the week ending 24 July.

Low oil price and rising dollar hit Pemex Mexico’s national oil company records 11th consecutive quarterly loss

Proactive Investors is very encouraging as he sets out the rationale behind the name change whilst fleshing out the new strategy of the company going forward.

Britain in the red: property debt grows to £1trillion amid warning over interest rate rise: Britain’s property debt has hit an eye-watering £1trillion and experts have warned that many homeowners could struggle when interest rates rise

Construction-sector recovery at risk from skills shortage, say building firms: A shortage of bricklayers, carpenters and site Managers threatens to derail the construction sector’s recovery, an industry group has warned after fresh evidence of recruitment struggles at building companies

Hold Hiscox in the calm before the storm: The whole point of insurance is to protect against unpredictable risks, and so it’s only right that the Hiscox team are scanning the horizon for the next big claim. Robert Childs, the firm’s Chairman, warned that “a prevailing mood of suspicion and scepticism towards the financial services industry” could mean that the state support that kept the wheels on the sector in the aftermath of 9/11 might not be repeated in future. The FTSE 250 company wrote 12% more premiums in the period, totalling almost £1.1 billion, and group pretax profits rose 8.4% to £135.1 million. The interim dividend rose 6.7% to 8p per share, although the firm cautioned that next year’s Solvency II capital requirements for insurers, along with the looming hurricane season, could swerve into the path of its returns policy. Hiscox is one of the most diversified and well-run in the business, but it is liable to fall to earth along with the rest of the market once claims rise. Hold, for as long as you think the sector can outrun Mother Nature. Hiscox at 890.5p -40.5p. Questor says “Hold.”

Number of people hunting for a house hits 11-year high: The number of people hunting for a new home has hit an 11-year high, according to new figures released on Monday

Merlin’s fragility: Visitors are always looking for new thrills and attractions. This is offset by strong cash generation. However, when times are bad, maintaining a strict balance between capex, depreciation, revenues and cash is much trickier. That is clear in Merlin Entertainments’ warning on Monday. Earnings before tax, interest, depreciation and amortisation from its theme park division will, it seems, be about £45 million shy of expectations for the full year. This follows the accident at Alton Towers in June that left people badly injured. Merlin’s attractions in the U.K., which range from Madame Tussauds to Legoland, were already wobbling slightly as the strong pound stopped overseas tourists visiting the U.K. and lured Britons abroad. Then it had to close Alton Towers following the accident as well as rides at other theme parks. Worse, the accident occurred just as Merlin had staffed up for the short summer season and was preparing to go all out to promote its theme parks. That didn’t happen and visitor numbers plunged. It is hard to be certain, though. Rival SeaWorld in the U.S. is still struggling under the adverse publicity following a documentary in 2013 on the treatment of its captive orcas. The problem for Merlin is not just the immediate effect of having to close the theme park down and the hit to profits this year. It also has to restore the faith of visitors in Alton Towers while offering them bigger and better thrills without spills. And that will be in the teeth of the British weather and whatever currency headwinds blow next year.

Reckitt’s Boss is nicely focused on raising revenues and margins: Reckitt Benckiser, which boasts of how its health and hygiene products benefited from pestilence and disease in the first half, has a strange grasp of the word “nice”. But no, the group describes its target for operating margin expansion in the second half as simply “nice”. It smacks of obfuscation by a company that has been cutting costs aggressively and managed to boost revenues and operating margins, the latter by 1.6 percentage points in the first half. That is on top of sharp margin growth last year. However, “nice”, according to the English dictionary, primarily means punctilious, precise, fastidious and hard to please. Its colloquial meaning is agreeable. And Rakesh Kapoor, Reckitt’s courteous Chief Executive, is very precise about the need to keep the company sharp and focused. He wants the company to be the most competitive in the world, continuing to pump up revenues and profitability while ensuring the business remains fast on its feet and resists a natural urge to slow down as it gets bigger

Ryanair: fuel tanks: Behavioural economists, such as Daniel Kahneman, believe that most of us get more satisfaction from avoiding financial losses than from pocketing any gains. It would seem airlines such as Ryanair feel the same way. Like most airlines, fuel is a big part of the cost base. For Ryanair, no. As fuel accounts for more than 40% of its costs, the company wants to know how much it will need for fuel each year. For other airlines, which have higher costs elsewhere (such as staffing), fuel is less than a third of operating costs. So profits are less sensitive to oil price movements. On the other hand, Ryanair has more to gain as oil prices decline. For this year, fuel is hedged at $91 (against a market price of about $50). For next year, 70% of its fuel is hedged at $66 a barrel. So next year’s fuel costs will be lower than this year’s, regardless of what happens to the market price. Good news, then. That fact did not impress the market on Monday when it announced its first-quarter results. Ryanair’s shares fell 2%, partly because management voiced its worries about airline fares in the months ahead. Indeed, falling fuel prices in the past have led to lower revenues, believes RBC.

UK balance of firms reporting total order book above normal ease surprisingly in July Confederation of British Industry has reported that, in July, the balance of firms reporting total order book above normal eased unexpectedly to a level of -10.00 in the UK, compared to market expectations of an advance to a level of -6.00. In the prior month, the balance of firms reporting total order book above normal had registered a level of -7.00

At 0330GMT today, Brent crude oil one month futures contract is trading 0.73% or $0.39 lower at $53.08 per barrel, ahead of the American Petroleum Institute weekly oil inventory data, scheduled to be released later today. Yesterday, the contract declined 2.11% or $1.15, to settle at its lowest level since 16 March at $53.47 per barrel, amid concerns from Chinese stock market rout and rise in the number of active oil rigs in the US.

Anglo American: self-help: Anglo American’s $3 billion half year loss was down to grim commodity prices and capital expenditure commitments made in easier times. The miner’s $3.5 billion pretax write-down — on its flagship Minas-Rio iron ore mine in Brazil and Australian coal assets — may not be the last if commodities continue to slide. The shares fell 4% on Friday. Anglo also slashed an extra $1 billion off its planned capex to the end of 2016, the bulk of it this year when total outlay will decline to $4.5 billion. But Mr Cutifani needs to keep existing assets ticking over; capex cuts can only go so far. Just as well that Anglo’s latest capex peak was last year. It helps too that its balance sheet is in better shape than in the last crisis. Net debt is a manageable two times forecast full year earnings before interest, tax, depreciation and amortisation. But even regardless of the Chinese slowdown, Anglo needs to build up its financial flexibility. Planned asset sales will take time. Declaring an interim dividend sits uneasily with its broader retrenchment. If prices slide further, its final payout should be axed. Anglo’s asset quality is not in doubt, nor its commitment to fix itself. But when the cycle turns, miners with strong balance sheets benefit most. Anglo needs to put itself in that position.

GlaxoSmithKline: dose of reality: Last year was especially tough for the U.K. pharma group. GSK was embroiled in a bribery scandal in China, issued a profits warning and suspended share buybacks. Its shares have underperformed the sector for several years. Returns on capital have halved over the past decade. Sales are the same as they were in 2006. The stock yields almost 6% and GSK has pledged to hold payouts until 2017 — but dividend cover is thin and some fear a cut in coming years. Selling the consumer businesses, which include toothpaste and Horlicks, looks unlikely in the short term, and anyway would not fix the main problem: the pharma division. Here, GSK faces falling sales from asthma drug Advair in particular, and can offer little clarity on what might replace those revenues. It could buy more products, but valuations are frothy and GSK already has more drugs in the pipeline than peers. At half year results next week, and the R&D day in the autumn, there needs to be evidence that the pipeline drugs are worth waiting for.

London prices force new buyers to outskirts: First-time housebuyers have all but disappeared from central London as sky-high prices are forcing them to look elsewhere