Monthly newsletter – July 2024

Clear Financial Advice

10 July 2024

 

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UK General Elections and their Impact on Stock Markets
The next UK election will take place on 4th July and whilst individuals may have their own preferred outcomes, investors will be wondering what outcome would be best for the markets and investment portfolios. Analysis from trading company IG shows how the FTSE all share performed before, during and after recent elections:

Whilst the results are mixed there are a few key takeaways as follows:

  1. Markets prefer predictable elections rather than close calls. Stock markets like certainty and if the latest polls are to be believed, the outcome of this election is not in doubt which may explain recent positive performance.
  2. Trends tend to continue after an election especially where the result was predictable. This seems to be the case in both falling and rising markets.
  3. Elections often cause short-term volatility but in the long-term only have a minor impact. We believe that for long-term investors it is important not to get distracted by short-term noise. Staying invested and focused on your long-term goals will help you achieve your desired results.
  4. To conclude, markets are driven by much more than short-term political changes. Economic cycles, geopolitical factors, world events and technological change all play a part in current and future market performance. Ongoing monitoring and a disciplined approach are key to long-term success.

Darren Fuller – Clear Senior Paraplanner.

A Mean Drive for Clean & Green
Annoyingly it is an accepted truth that we’re often forced to compromise to solve problems. Transport is as example.
Walking everywhere is exhausting. Humans are resourceful,  we started using horses to get from A to B. Unfortunately, that comparative speed meant compromise. In this case with sanitation (imagine the smell of manure in the big cities, and all the insects spreading diseases!). Fast forward. Cars came into circulation more widely – no more manure – but the comfort and cleanliness were favoured to the detriment of the environment (a different kind of emission!).Now riding over the horizon to solve the emission problem are herds of electric cars. The carbon emissions problem is no longer one humans can afford to compromise in favour of. But that comes at a price… the cycle continues.
But what about outside of the easy example of cars? Data is an excellent case study.As artificial intelligence grows meteorically, there is an insatiable thirst for data. The power demand for data centers is estimated to grow 160% by 2030.
But in Europe, increasing demand means the power needs of data centers in the region will equate the current total energy consumption of Portugal, Greece and the Netherlands combined! *

That’s a compromise (data over light and heat) that  most residents would sign up to.
However, there is a compromise the data centers can make. Location.
Fortunately, these centers are usually located in the middle of nowhere. Here’s one in Iceland, a country where the number of data centers is quickly growing:

Verne Global. Source: MIT Technology Review

That’s not ideal if you favour a Pret sandwich at lunchtime, but what that does offer is SPACE. Plenty of it. And space is exactly what you need for renewable energy production.

This has noticeably driven demand for energy originating from renewable sources:

Source: Bloomberg.
Amazon thrives on data. It was also by far the largest consumer of renewable energy last year, having bought more solar and wind power than the next three companies combined.
As we and therefore our needs evolve, demand for goods or services impacts the environment around us. Fortunately, data centers don’t make many ‘top 10 places to visit’ lists, so the compromise made in this case feels like one we can live with (…for now).* Source: Goldman Sachs

The Price of Climate Change
British people really are predictable, 9 out of 10 of us have talked about the weather in the past 6 hours.
The following should keep the conversation flowing:Have you noticed how expensive coffee is recently?According to the Telegraph, the price of a medium latte has risen by a third since 2021.
Growing coffee beans requires the right amount of heat, the right amount of rain, the right altitude… see where this is going?
Every few years, the temperature of the sea in the central-east equatorial Pacific goes up. This natural phenomenon, called El Niño, leads to rainfall in southern US and drought in the West Pacific. It affects mostly countries in Africa, Latin America, and South and South East Asia.

Source: NOAA.

Here’s the problem:

The largest producers of coffee beans are Brazil, Vietnam, Colombia, Indonesia… all in areas of potential impact.
Climate change is turning weather phenomena like El Niño much more dramatic. Rainfalls more frequently lead to flooding; droughts more frequently lead to wildfires.

Coffee beans have been severely affected by these conditions and droughts have notably hurt production in Vietnam and Indonesia this year.

As we have found out – painfully – in the past few years, when there is a supply and demand imbalance, it is reflected in the price.
And the price of Robusta coffee beans, which come predominantly from the Vietnam area, are great example of this in reality:

Robusta futures prices (USD). Source: Bloomberg/7IM.

Earlier this month, Robusta futures prices reached a 45-year high on the back of record-low inventories, based on a few factors, but a huge contributor of which was the worsening drought conditions in Vietnam.
Climate change is creating supply uncertainty for coffee drinkers. What we’re paying for our coffees perhaps serves as a small reminder of the price we’re paying for climate change.

The charity is being supported by a number of serving police officers based in Yorkshire who are undertaking the Three Peaks Challenge to raise funds.

On Sunday 28th July they will be hiking, overnight, the mountains of Pen-y-gent, Whernside and Ingleborough.  This is a gruelling 26 mile route, challenging enough during the day let alone at night!

Clear Minds is very grateful to these participants and wish them luck!

Please consider donating to back these guys using the following link or QR code:

Clear Minds

The charity is now working with 15 therapists and supporting 25 clients. All funds raise go directly to pay for counselling for those in long term therapy who find themselves in financial difficulties.

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