The world is hooked on oil. Total oil consumption is 92,086,000 barrels a day. (that is 92million)

But what is the total reserve in the ground ?

It is: 1700.1 Thousand Million barrels. That is : 1,700,100,000,000 to be precise.

That is broken down by these regions:

13.7% in North America
19.4% in South and Central America
9.1% in Europe and Eurasia
47.7% in The Middle East
7.6% in Africa
2.5% in Asia Pacific

Now using  92,086,000 barrels a day, with reserves of 1,700,100,000,000 barrels in the ground, that equates to 18,462 days which is 50 years if we consume at the constant rate of 92,086,000 barrels a day and no new reserves are found.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In November 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-
18-Nov-2015 2% Treasury Gilt 2025 £3,347.4600 Million
12-Nov-2015 4¼% Treasury Gilt 2039 £1,500.0000 Million
10-Nov-2015 0 1/8% Index-linked Treasury Gilt 2058 £769.8750 Million

When you add the cash raised:-

∑(£3,347.460 Million + £1,500.000 Million + £769.875 Million) =  £5,617.34 Million

£5,617.34 Million = £5.61734 Billion

On another way of looking at it, is in the 30 days in November, HM Government borrowed:-

£187 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2025, 2039 and 2058. All long term borrowings, we are mortgaging our futures, but at least “We Are In It Together…”

TIAA-CREF is the Teachers Insurance and Annuity Association – College Retirement Equities Fund of North America. TIAA–CREF was created in an Act of the New York State Legislation in 1918 as a stock life insurance company for the purpose of providing retirement pension income for academics in American academic institutions.

 https://www.tiaa-cref.org/public/about-us/investing/financial-investments

With £639 billion under management is one of the largest players in the investment management business.

In the UK it is estimated that well over £1 Billion worth of foreign coins (at least by conservative estimates) is sitting in UK homes, cupboard draws, doing nothing.

Fourex is a new platform that can convert this into UK Sterling (and Euro’s)

http://www.fourex.co.uk/

Just an amazing innovation, that now will free up potential cash that can go to charity or put back unto the UK economy

http://asadkarim.co.uk/?attachment_id=1336

Germany is one of the most prosperous countries in the world. Home to famous names such as Siemens, Audi, BWM and Daimler Benz to name just four. What is interesting to know is the levels of debt the German nation is carrying.

In total the debt is $3,369 Billion dollars.

That is broken down by:-

$1,471 by Financial Corporations
$141 by Businesses
$1,756 by The German Government

$3,369 Billion dollars = £2,216 Billion.

The TR Property Investment Trust is a £930million London Listed Investment Trust

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=13847&record_search=1&search_phrase=TR Property]

A yield of 2.6% in these near 0% interest rates.

10% of its holdings in UK Property
38% in UK Property Shares
52% in European Property Shares.

http://www.trproperty.com/

Started in 1905, listed today on the FTSE-250.

http://asadkarim.co.uk/?attachment_id=1325

Japan’s government spends more money that it earns in taxes and duties. It thus has to borrow huge quantities of cash to fund its operations.

The total debt of Japan’s national government is $8,362 Billion.

Now Japan’s annual GDP is $4,602 Billion.

Thus the Debt to GDP ratio:

$8,362 Billion / $4,602 Billion = 181%.

This is not sustainable for the long term.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In October 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

27-Oct-2015 2% Treasury Gilt 2025 £3,299.9700 Million
15-Oct-2015 0 1/8% Index-linked Treasury Gilt 2026 £1,500.0000 Million
06-Oct-2015 4½% Treasury Gilt 2034 £1,500.0000
01-Oct-2015 1½% Treasury Gilt 2021 £4,397.6500
When you add the cash raised:-

∑(£3,299.9700 Million + £1,500.0000 Million + £1,500.0000 Million + £4,397.6500) =  10,697.62 Million

£10,697.62 Million = £10.697 Billion

On another way of looking at it, is in the 30 days in September, HM Government borrowed:-

£345 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2021, 2025, 2026 and 2034. All long term borrowings, we are mortgaging our futures, but at least “We Are In It Together…”

The Henderson Far East Income Ltd is the London Listed £333m Investment Trust.

[https://www.henderson.com/ukpi/fund/201/henderson-far-east-income-limited]

It’s top 10 holdings are:-

3.0% Korea Electric Power
2.9% HKT Trust & HKT
2.7% SK Telecom
2.7% Macquarie Korea Infrastructure Fund
2.4% Macquarie Group
2.4% Capitaland Mall Trust
2.3% Mizuho Financial Group
2.3% Coal India
2.3% Bharti Infratel
2.3% Mapletree Greater China Commercial Trust
[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=12194&record_search=1&search_phrase=henderson]

6.3% Yield

Venezuela has 17.5% of the world crude oil reserves. That equates to 298.3 Thousand Million Barrels of Oil.

That means, with this level of natural resource wealth, Venezuela should be a very rich and prosperous country, like Oman or Norway.

What is the value of 298.3 Thousand Million Barrels of Oil ?

That is: 298.3 x 1000 x 1,000,000 = 298,300,000,000

What is the “crude value” of this ?

Crude Oil trades today at $47.54 a barrel.

Thus:-

298,300,000,000 x $47.54 = $14,181,182,000,000

That is £9,192,560,000 = £9.192 Trillion

That is about 6 times the UK’s Annual GDP. Yet Venezuela does not seem to the prosperity that the oil wealth should bring.

A way of looking at the debt of the United States of America is to get a break down of its outstanding loans. What organisations are borrowing money to fund operations and its value.

$15,614 Billion is borrowings from The USA’s Federal Government (US Treasury T Bonds) = US National Debt

$14,896 Billion is borrowings from The USA’s Financial Corporations

$5,232  Billion is borrowings from The USA’s Non-Financial Corporations (Regular Corporation)

Thus total debt is about £35,700 Billion = $37.7 TRILLION.

US GDP is about $17,348 Billion. Thus TOTAL Debt to GDP is about 200%.

In 1999 this paper was published:-

http://asadkarim.co.uk/wp-content/uploads/2015/10/70417.pdf

Everything over IP, written by myself and Peter Hovell. It was predicting the growth in IP Networks which now dominate our lives from Television on demand, smartphones to how we communicate on smartphones and tablets.

http://link.springer.com/journal/10550/17/2/page/1
This paper was re-published in 2006, in the 25th Year Edition of the British Telecommunications Technology Journal.

http://link.springer.com/journal/10550/25/3/page/1

What we never predicted was how technology could affect the economy. Imagine what could happen if Google do pioneer driverless cars ?
What will happen to the landscape, when it comes to the employment prospects for drivers ?

We just have the potential of mass automation that will destroy jobs, unless we take steps now to create new jobs and new opportunities.

CATCo Reinsurance Opportunities Fund, is managed by CATCo Investment Management Ltd.

http://www.catcoreoppsfund.com/

The investment objective of the Fund is to give its shareholders the opportunity to participate in the returns from investments linked to catastrophe reinsurance risks. The portfolio is diversified across a number of non-correlated global risk categories which limits the amount of capital at risk with respect to a single catastrophic event

A market capitalisation of £215m.

The performance is incredible.

http://markets.ft.com/research/Markets/Tearsheets/Summary?s=BMG1961Q2095:USD

Looking at the Bank of International Settlements website, one can see the scale of the debt that nations are carrying

http://www.bis.org/statistics/secstats.htm

Looking that the UK, the numbers are worrying.

http://www.bis.org/statistics/c1.pdf

$2,539 bn = £1,656 bn = UK Government Debt:
$2,739 bn = £1786 bn = UK Financial Corporations
$594 bn = £387 bn = Non-Financial Corporations

TOTAL = $5,877bn = £3,834bn

Large numbers…..that is growing each day with punishing interest.

The Ediston Property Investment Company is a £140m investment trust listed on the London Stock Exchange.

http://www.ediston.com/about-us/

The investment company owns hard physical assets, of buildings and land.
These are assets are:-

Merchant Square, Merchant City, Glasgow
Jarman Square, Hemel Hempstead
No. 1 Pinesgate, Bath
Gallagher Shopping Park, Port Glasgow, Strathclyde
Phoenix, Station Hill, Reading
Pallion Retail Park, Sunderland

and many more in its overall portfolio.

A dividend yield of 0.9%

http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=35869764&action=

The AXA Framlington Biotech Fund is an incredible fund that invests in the health and bio tech sector.

[http://retail.axa-im.co.uk/funds/axa-framlington/axa-framlington-biotech-fund-r-gbp-413/performance]

Year on year performance is amazing.

The Top Ten Holdings are:-

Gilead Sciences
Celgene
Amgen
Biogen Idec
Vertex Pharmaceuticals
Illumina
Alexion Pharmaceuticals
BioMarin Pharmaceutical
Salix Pharmaceuticals
Incyte USA

Today the fund is worth £360m

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In September 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-
16-Sep-2015 2% Treasury Gilt 2025           £3,250.0000 Million
08-Sep-2015 3½% Treasury Gilt 2045        £2,000.0000 Million
02-Sep-2015 1½% Treasury Gilt 2021        £3,750.0000 Million
When you add the cash raised:-

∑(£3,250.0000 Million + £2,000.0000 Million + £3,750.0000 Million) =  £9,000.00 Million

£9,000.00 Million = £9.0 Billion

On another way of looking at it, is in the 30 days in September, HM Government borrowed:-

£300 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2021, 2021 & 2045. All long term borrowings, we are mortgaging our futures, but at least “We Are In It Together…”

The Chinese economy is the 2nd largest economy in the world.
They are the largest producer of electricity in the world.

China generates 5649 Terawatt/Hours a year.
This accounts for 24% of total global electricity production.

The UK generates 335 Terawatt/Hours which is 1.4% of total global electricity production.

To put this into context, the UK’s annual production of electricity equates to a tiny 6% of China annual production. This now shows the size of the Chinese economy.

The B in BRICS stands for Brazil.

No surprising that the state oil company Petrobas is one of the largest oil companies in the world. Brazil accounts for 2.9% of world production, and produce 2,346,000 barrels of oil per day.

What is worth of the Brazilian Economy ?

2,346,000 barrels of oil, oil is worth per barrel $48.37 so this equates to $113,476,020 which is £74,709,300.

Yes £74million a day is the “Crude Oil” value to Brazil.

The Temple Bar Investment Trust is a London Listed £700m investment trust. Managed by Investec Fund Managers, founded in 1926.

http://www.templebarinvestments.co.uk/

HSBC Holdings Plc 7.3%
GlaxoSmithKline Plc 6.3%
Royal Dutch Shell Plc B 6.3%
BP Plc 5.4%
Grafton Group Plc-UTS 4.8%
Royal Bank Of Scotland Group Plc 4.0%
Lloyds Banking Group PLC 3.7%
British American Tobacco 3.4%
Direct Line Insurance Group PLC 2.8%
BT Group Plc 2.6%

The top ten account for 46.6% of the £700m fund. Very positive to see that The Temple Bar Investment Trust PLC, is holding investments in high quality companies like the world’s leading media and telecommunications corporation, www.btplc.com.

http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10323&record_search=1&search_phrase=temple

It gives a yield of 3.7% which is quite generous in these 0.5% times.

It is currently running at a discount of 3% meaning one is buying assets of £1.00 for just £0.97

http://asadkarim.co.uk/?attachment_id=1276

At 6months old, Ayana Karim.

The rapid growth in Peer to Peer lending is creating new ways to buy properties.

Property Partner is a new scheme that allows investors to buy a stake in a UK property that is on rent. Giving the investor to collect a rental income.

https://www.propertypartner.co/

This is a clever mechanism for investors to reduce risk by spreading the risk across a portfolio of properties, that are managed by Property Partner.

Double digit income is what is currently achieved.

The world’s only super power is the USA. A measure of a nation’s economic might is the amount of Electricity the country produces.

The UK produces 335 TW/h (TeraWatt/Hours)

The USA produces 5202 TW/h (TeraWatt/Hours)

That is over 15 times more than the UK

The USA produces 18.3% of the world’s electricity, the UK makes produces 1.4% of the world’s electricity.

VPC Specialty Lending Investments is a newly London Listed Investment vehicle from the Victoria Park Capital of the USA.

[http://vpcspecialtylending.com/]

This investment fund is based on lending to Small and Medium Enterprises, the funds are generates from loans from Peer to Peer platforms, such as AssetzCapital

[www.assetzcapital.co.uk]

It is really an investment fund for income seeking investors.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=39482532]

The yield in credible.

[http://vpcspecialtylending.com/vpc-pdf/vsl_newsletter_july-15/]

Yes 8.1%

Not entirely surprising as it is generating business loans, that command a higher level of debt interest.

The latest evolution in Peer to Peer lending has come from the P2P pioneer AssetzCapital

www.assetzcapital.co.uk

The Quick Access Account

https://www.assetzcapital.co.uk/our-investor-accounts/qa-account/

The Quick Access Account offers 3.75% on money invested in high quality loans.
The capital is also backed by a Provision Fund to give even greater security.

The Advance Frontier Markets Fund is a £87m London Listed Investment trust.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=232655]

It is effectively a fund of funds that investments is what could be seen as high risk markets.

85% if the fund is made up of 20 investments:-

VinaCapital Vietnam Opportunity Fund
Sustainable Capital Nigeria Fund
Sustainable Capital Africa Consumer Fund
PineBridge Sub-Saharan Fund
Africa Emerging Markets Fund
BofAML Fondul Proprietatea Romania
Ashmore Middle East Equity Fund
Africa Opportunity Fund
Advance Copernico Argentina Equity Fund
PXP Vietnam Fund
SCM Vietnam Fund
SCM Africa Fund
Sturgeon Central Asia Equity Fund
iShares MSCI Frontier 100 ETF
Qatar Investment Fund PLC
EFG Hermes – Saudi Arabia Equity Fund
MENA Alchemy Fund
Picic Growth Fund Pakistan
DB MSCI Bangladesh
MSCI Pakistan
Avaron Emerging Europe Fund Estonia

Very interesting to see who are the major shareholders in The Advance Frontier Markets Fund are:-

Lazard Asset Management LLC who own 15.93%
Universities Superannuation Scheme Limited who own 9.81%
South Yorkshire Pensions Authority who own 7.32%
Wells Capital Management, Inc. who own 5.07%
1607 Capital Partners, LLC who own 5.04%
MAM Funds plc who own 4.99%
British Airways Pension Investment Management Limited who own 3.88%
Investec Asset Management Limited who own 3.69%

The United Arab Emirates, a geographically small collection of states such as Dubai, Abu Dhabi etc., and yet it holds 5.8% of world’s oil.
Home to one of the largest investment companies, the Abu Dhabi Investment Authority, the nation’s sovereign wealth fund. It has cleverly used it oil’s wealth to build this investment fund.

Today, the UAE has proven reserves of 97.8 Thousand Million Barrels of Crude Oil.

What is that worth ?

97.8 Thousand Million Barrels = 97.8 x 1000, 1,000,000 = 97,800,000,000

Now crude oil today is trading at $47.74 =£31.00

Thus:-

97,800,000,000 x £31.00 = £3,031,800,000,000

£3,031 Billion = £3.03 Trillion.
That is about 200% of the UK annual GDP.

The TwentyFour Select Monthly Income Fund is a London Listed investment trust that pays a monthly income.

[http://www.twentyfouram.com/funds-and-services/twentyfour-select-monthly-income-fund]

A £141m investment fund, that is paying a dividend yield of over 3%.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=26656574&action=]

The actual gross yield is incredible, at over 7%

It holds quite non-liquid credit instruments, but these holdings offer a generous return:-

NWIDE 10.25% 06/29/49 (Nationwide Building Society PIBS) that pays 10.25%.
COVBS 6.375% 12/29/49 (Coventry Building Society PIBS) that pays 6.375%.

A very nice little fund that offers an amazing income.

For year and years foreign exchange is been controlled by banks. Perhaps one has to question if customers are getting the best rates.

Now as the internet offers greater connectivity, we are seeing new ways of exchange. It was 20 years ago that EBay came onto the Internet to transforming buying and selling.
Now we see a new way of currency exchange:

www.weswap.com

This is just a way of connecting people and exchanging money between these connecting parties. So put it simply, rather than buying currency from a bank “we swap2 changes your money directly with other people abroad.

We Swap call it Social Currency.

It is best explained like this:-

Asad Karim (.co.uk) is going to Germany on business. He needs to exchange his pounds into Euros. Yousaf Hafeez is coming from Germany to the UK. Yousaf needs to exchange his Euros into Pounds. Now with We Swap these two guys can swap their money. Simple.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In August 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-
20-Aug-2015 4¼% Treasury Stock 2036 £1,644.0950 Million
11-Aug-2015 0 1/8% Index-linked Treasury Gilt 2058 £681.9000 Million
04-Aug-2015 2% Treasury Gilt 2025 £3,000.0000 Million

When you add the cash raised:-

∑(£1,644.0950 Million + £681.9000 Million + £3,000.0000 Million) =  £5,326.00
Million

£5,326.00 Million = £5.326 Billion

On another way of looking at it, is in the 31 days in August, HM Government borrowed:-

£171 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2025, 2036 & 2058. All long term borrowings, we are mortgaging our futures, but at least “We Are In It Together…”

The HM Treasury backs National Savings and Investments

www.nsandi.com

Premium Bonds are the flagship product that offers the opportunity to win from £25 to £1,000,000 each month.

No interest is paid on the bonds held, instead the holders are offered the chance to win a “cut of the interest pot” and that pot is divided into prizes.

The Odds of winning are 26,000 to 1. (=1/26,000)

The number of prizes that are on offer: Sept 2015 are 2,131,445

With these two figures supplied by National Savings and Investments, one can calculate the total cash invested in Premium Bonds:-

Total Number of Prizes = (Total number of eligible bonds) / (odds for the draw)

Thus:

Total Number of eligible Bonds =  (Total Number of Prizes)  / (odds for the draw)

Thus total number of eligible bonds = (2,131,455) / (1/26,000)

= £55,157,570,000

That is £55 billion. Yes, £55 Billion invested by UK savers in Premium Bonds.

The Cambridge University Endowment Fund looks after the University’s long term investments.

[http://www.admin.cam.ac.uk/reporter/2014-15/special/06/06-FMI-2014-SectionN.pdf]

With £2,292 Million under management, that is £2.29 billion. (in 1990 it was £250 million)

The Cambridge University Endowment Fund long run objective is to achieve or exceed an average annual rate of total return (i.e. income and net capital gains), net of all costs and before distributions are taken into account, equal to RPI plus 5.25%,

Spread over 6 assets classes:

Public equity £1,451.0 million
Private investment £223.7 million
Absolute return £264.8 million
Credit £73.2 million
Real assets £241.1 million
Fixed interest/cash £38.2 million

8 Fund managers look after this portfolio.

Over the six years since 30 June 2008, the fund has an annualised return of 8.6%.

The income from its investments are incredible.

Net capital gains £202.7m
Dividends £16.6m
Rent £7.1m
Interest £2.1m

Total income £228.5m

Not bad when you consider it started in 1958 with £4.5m and today is £2,292m. Acorns and Oak trees springs to mind.

The UK has proven oil reserves of about 3,000 million barrels of oil. To put this number into context, the UK “owns” about 0.2% of world reserves

It is useful to know today’s value of the UK oils reserves.

3,000 x 1,000,000 = 3,000,000,000 barrels of oil

The price of Crude Oil is $48.55 a barrel.

Thus:-

3,000,000,000 x $48.55 = $145,650,000,000
That is £93,179,000,000

Or to simply say £93 Billion is the value of the oil in the ground in the UK

UK Mortgages Limited is a £262m investment fund. It was only recently launched in July 2015

It invests in a portfolio of good quality UK residential mortgages.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=41993839&record_search=1&search_phrase=UK mortgages]

Managed by Twenty Four Asset Management
[http://www.twentyfouram.com/]

It aims to deliver an investment yield of over 7%, and pay this dividend each quarter.

The reasons for this investment being an attractive offer to income seeking investors is that high quality mortgages are seen as a safe investment for the following reasons:-

-Secured lending against important personal asset (one’s home, people will pay the mortgage and go without other things, rather than loosing homes home)

-Very low default rates and lower loss rates relative to other forms
of debt
-Annual loss rate during 2008 credit crunch always below 0.2%
-Repossession process is transparent and predictable
-Loss only incurred firstly after default and then only if property
recovery is lower than value of mortgage loan

So one can see the potential upside on this fund.

Getting low cost exposure to international markets has never been simpler.

Investors want access to sectors such as:-
Financials, Consumer Goods, Industrials, Healthcare, Technology, Consumer Services, Oil and Gas, Basic Materials, Telecommunications (shares in world class players like BT Group PLC) Property and Utilities.

Also with this, investors want exposure to countries such as:-
The United States, Japan, Switzerland, Germany Canada, France, Australia, South Korea and The Netherlands.

These needs can be easily captured in ONE fund:

The Legal and General International Index Fund.

[http://i.legalandgeneral.com/consumer/investments/products-and-funds/index-tracker/investments-productsandfunds-indextracker-fund-internationalindex.jsp]

This fund gives exposure to these markets by tracking the performance of the FTSE World ex UK Index.

A £587 million fund. Its top 10 holdings are:-

Apple 2.12% of the fund
Exxon Mobil Corp 1.03% of the fund
Microsoft Corp 0.95% of the fund
Wells Fargo & Co 0.85% of the fund
Johnson & Johnson 0.79% of the fund
General Electric Co 0.79% of the fund
JPMorgan Chase & Co 0.74% of the fund
Nestle S.A. 0.68% of the fund
Novartis AG0.65% of the fund
Procter & Gamble Co 0.63% of the fund

Peer to Peer lending is becoming more and more high profile. As investors are looking for a new asset class with better returns, and also as banks shrink balance sheets, financing for Small and Medium Enterprises is getting harder and harder.

Thus we are seeing a real growth in peer to peer lending for businesses, and a high profile operation is Assetz Capital.

They have just launched a new fund called the Great British Business Account (GBBA)

https://www.assetzcapital.co.uk/our-investor-accounts/gb-account/

Yes, a return of 7% and back by a provision fund. Like any investment, there is a risk to one’s capital, but with Assetz Capital they take security on loans generates, and with this fund, an upfront provision fund has been set up to provide added security.

The UK has a very large energy industry. Electricity is a primary resource.

in 2014 the UK power generators (power stations) produced 335 TeraWatts hours of electricity.

335 TeraWatts Hours= 335,000,000 MegaWatts hours

Now to put a monetary value on this is quite simple. The average price for a delivered megawatt hour is about £100 per MegaWatt hour.
Yes £100 MW/h

Thus:-

335,000,000 Megawatts x £100 = £33,500,000,000

Yes, that is £33,500 million = £33.5 Billion.

That is equivalent to 2.23% of UK GDP.

On Wed 5th August 2015, the FTSE 100 insurance giant, Legal and General [www.legalandgeneral.com] published their half yearly results.

[http://www.legalandgeneralgroup.com/media-centre/press-releases/2015/grouppressrelease-2015halfyear-operatingprofitup18netcashup11roe19.html]

Legal and General a pioneer in low cost index tracking funds is now a massive player in the asset management industry.

The results are incredible.

Assets Under Management stand at £714.6 Billion.

To put that figure into context that is about 50% of the UK Annual GDP.

It’s major shareholders are:

Blackrock, Inc 5.1% holding

AXA 4.3% holding

The Capital Group Companies 5.0% holding

http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=10055&action=

A yield of over 4% on the stock for a company that effectively owns over 5% of every UK listed company.

As Iran is accepted back into the world community, this nation of incredible history has a huge untapped economic potential that could become a regional super power.

If one looks beyond the 1979 revolution, Iran’s history is amazing. The brilliance of Omar Khayyam is an example of the rich heritage.

[https://en.wikipedia.org/wiki/Omar_Khayy%C3%A1m]

Today’s Iran’s riches are based on its raw materials.

Reading the BP Statistical Review of World Energy

[http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf]

one can see the potential of Iran.

Proven Oil Reserves of 157.8 million barrels of oil, that is 9.3% to the world’s total reserves.

So if all the oil was extracted and sold today what would it be worth ?

157.8 thousand million barrels = 157,800,000,000 barrels

Crude oil today is worth $53.06 = £34.01

Thus:

157,800,000,000 barrels x £34.01 = £5,367,223,076,923

Yes, £5.367 Trillion. That is about 4 times the size of the UK annual GDP.

One can see the potential value of Iranian oil.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In July 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

15-Jul-2015 0 1/8% Index-linked Treasury Gilt 2026 £1,500 Million
07-Jul-2015 3½% Treasury Gilt 2045  £1,924.9690 Million
02-Jul-2015 2% Treasury Gilt 2020 £4,124.5670 Million

When you add the cash raised:-

∑(£1,500 Million + £1,924.9690 Million + £4,124.5670 Million) =  £7,549.536 Million

£7,549.536 Million = £7.549536  Billion

On another way of looking at it, is in the 31 days in July, HM Government borrowed:-

£243 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2020, 2026 & 2045. All long term borrowings, we are mortgaging our futures, but at least “We Are In It Together…”

Today, Fri 31st July, Lloyds Banking Group [http://www.lloydsbankinggroup.com/] is going to pay a dividend of £0.0075.
Yes, 0.75p per share.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=10056&action=]

A dividend yield of 0.9%.

How much cash will this dividend cost Lloyds Banking Group ?

[http://www.lloydsbankinggroup.com/investors/share-price-info/detailed-share-price/]

71454.656 million shares in circulation.

Thus: 71454.656 x 1,000,000 x £0.0075 = £535,909,920

Yes, £535 million is the cash payment that Lloyds will make to the shareholders.

Just to remind us, HM government owns 14.98% of the Bank:

[http://hsprod.investis.com/servlet/HsPublic?context=ir.access&ir_option=RNS_NEWS&item=2133305960955904&ir_client_id=1503]

So HM Government will get £80.2 million from the dividend.

The Wellcome Trust is a global charitable foundation dedicated to improving health by supporting bright minds in science, the humanities and social sciences, and public engagement.

www.wellcome.ac.uk

Sir Henry Wellcome (1853-1936), was the founder of the The Wellcome Trust. Today, its annual spend on research increased from an average of £28 million in the 1980s to £650 million in 2007.

Total public equities £9,546m
Long/short hedge funds £1,073m
Cash £639m
Absolute return & buy-out £2,532m
Growth & venture £3,579m
Property & infrastructure £2,011m

The Trust’s £18.0 billion investment portfolio provides the income for its funding. In 2014 Trust’s spend on medical and scientific research was £674 million based on its investment income. Long-termism is fundamental to the thinking of the Wellcome Trust. Directly held investments now account for 42% of its investment portfolio. A landmark transaction this year was the purchase of Farmcare from the Cooperative Group Ltd, which at a stroke made it the largest lowland arable farmer in the UK.

It holds £2 billion in property investments, of which  is made up of residential interests of £1.2 billion, focused in super-prime London, such as the South Kensington estate. They hold 1,720 apartments in South Kensington, which is generating a “a nice little earner from the rent”.

Apple the computing pioneer has an incredible balance sheet.

[http://files.shareholder.com/downloads/AAPL/485763627x0x789040/ED3853DA-2E3F-448D-ADB4-34816C375F5D/2014_Form_10_K_As_Filed.PDF]

Looking at the 2014 annual report, on page 24 one can see the cash holds:

$155,239 million = $155.2 billion

Today that figure is actually $178 billion = £114 Billion.

That is approximately the about the same as how much the UK Government borrows each financial year to finance the budget deficit.

Norway is one of the world’s richest nations.
The reason for its huge wealth is down to its oil and the careful investment management of the money.

Norway set up a fund to manage its oil wealth, it is called the Government Pension Fund Global, sometimes known as Norway’s Sovereign Wealth Fund. It started this fund, in 1995, that is only 20 years ago.

http://www.nbim.no/en/the-fund/

The figures are incredible.

Over 7000 Billion Norwegian Krona = £560 Billion Pounds.

That is about 35% of the total annual GDP of the UK.

60% is held in Equities
35% in Bonds
5% in Property

Caledonia Investments is a £1.3 Billion London listed Investment Trust.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=10152]

Its juicy dividend is 2.1% in these near Zero interest rate times.

[http://www.caledonia.com/]

it’s wealth comes from the Cayzer family who built their wealth from shipping and protected there wealth by creating the Caledonia Investment Trust, which today is 48.5% owned by the Cayzer family.

The top ten holdings are:

Capital Today China (Private equity fund)
Park Holidays (Caravan parks operator)
Cobehold (Investment company)
TGE Marine (LNG engineering)
AG Barr (Soft drinks)
Bristow Group (Helicopter services)
The Sloane Club (Residential club)
Choice Care Group (Care homes provider)
Close Brothers (Financial services)
Polar Capital (Fund manager)

The top ten holdings equate to £664m.

Also the share price of Caledonia Investments is running at a discount, of about 14%. This means you are buying £1 worth of assets for 86p.

Not a household name, but Aerion Fund Management is the former investment arm of British Gas, that used to manage the pension contributions of the workers of British Gas, and then after many de-mergers and acquisitions at British Gas (British Gas, Lattice Group, Transco…..) the investment arm has become the fund management arm of the National Grid pension fund.

http://www.aerionfm.com/

The total funds under management amounted to £17.3 billion.

6 asset classes are where the monies are invested:

7% in Alternatives
7% in Property
18% in Equities
3% in Private Equity
1 % in Cash
64% in Bonds

As one can see nearly 2/3rd of the fund are in fixed income (bonds). Which one can understand, when the fund has to pay out each month to the former workers (pensioners) of National Grid and British Gas, it needs investments that pay out a fixed income, thus bonds.

The FTSE-100 is the flagship index of the largest UK Companies.
Famous names like HSBC, BP and BT the most dynamic telecommunications group in the world, to name just three from the one hundred that make up the FTSE-100.

A fund that invests in the FTSE-100 in the Legal & General FTSE-100 Tracker:

[http://i.legalandgeneral.com/consumer/investments/products-and-funds/index-tracker/investments-productsandfunds-indextracker-fund-uk100.jsp]

This fund has £280million invested in the UK’s top 100 firms.

What is interesting to see, in the climate of 0.5% interest rates, by investing ones money in this fund, you get a yield of about 2.5%.

The top ten holdings are:

HSBC Holdings 7.09% of the fund
BP 4.73% of the fund
Royal Dutch Shell ‘A (Dutch listing)’ 4.34% of the fund
GlaxoSmithKline 4.09% of the fund
British American Tobacco 3.9% of the fund
AstraZeneca 3.45% of the fund
Vodafone 3.25% of the fund
Royal Dutch Shell ‘B’ 3.21% of the fund
Diageo 2.70% of the fund
Lloyds Banking Group 2.46% of the fund

What you see is that that the FTSE-100 is dominated by HSBC what makes up 7% of the index then the two Shell’s (one company, two classes of shares for Dutch tax reasons), and Shell is (4.34% + 3.21%) and then followed by BP that makes up 4.73%.

These 9 companies make up 39.22% of the FTSE-100. Yes, 9 companies account for nearly 40% of all the index.

The former industrial and chemical giant, and a former member of the FTSE-100 was Imperial Chemical Industries, known as ICI.

Today ICI has vanished but its legacy lives on, in the name of AstraZeneca, the pharmaceuticals are of ICI that was spun out from by its demerger to create Zeneca and the rest of the business was sold to Ineos and the remaining business such as Dulux, Polycell and Hammerite was sold to the Dutch chemicals company AzkoNobel.

The pension fund is still supporting former workers of ICI.

http://www.icipensionfund.org.uk

With assets of £8,602million  = £8.602 Billion.

The fund has to support:

417 Contributing members
47,586 Pensioners
9,816 Deferred pensioners

The £8.6 billion is managed by these fund managers:-

Alinda Capital Partners LLC
Ashmore Management Company Limited
BlackRock Advisors (UK) Limited
Genesis Investment Management LLP
Insight Investment Management (Global) Limited
Intermediate Capital Managers Limited
M&G Investment Management Limited
PIMCO Europe Limited
Rogge Global Partners Plc

The money is split across these asset classes:-

Liability linked Investments
Developed Market Equities
Emerging Market Bonds
High-Yield & Other Global Bonds
Leveraged Loans
Emerging Market Currencies
Infrastructure
Property

What is very interesting when one reads the small print of the pension fund of ICI, when ICI was bought, AkzoNobel guaranteed all ICI’s pension obligations.

The Kuwait Investment Authority is the investment arm of the government of Kuwait.It is the world’s first and oldest sovereign wealth fund

http://www.kia.gov.kw/En/Pages/default.aspx

The Kuwait Investment Authority was founded in 1953 to manage the money and income from the Kuwait Government’s financial surpluses after the discovery of oil.
It is thought too hold over £192 Billion  = US$300 billion of assets, and is thus is one of the largest Sovereign Wealth Funds in the World.

The wealth of Kuwait comes from it’s oil exports.

By looking at the BP Statistical Review of Energy

[http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy.html]

Kuwait  produces 3,126,000 barrels of oil a day.

Thus, with oil at $60.55 per barrel = £38.79.

3,126,000 x £38.79 = £121,266,292

Yes, Kuwait’s crude oil generates £121million a day. One can now see where the money flows into the Kuwait Investment Authority for it investment operations.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In June 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

11-Jun-2015 3½% Treasury Gilt 2045 £2,199.9520 Million
09-Jun-2015 1/8% Index-linked Treasury Gilt 2024 £900.0000 Million
02-Jun-2015 2% Treasury Gilt 2025 £3,250.0000 Million

When you add the cash raised:-

∑(£2,199.9520 Million + £900 Million + £3,250 Million) =  £6,349.95 Million

£6,349.95 Million = £6.3495  Billion

On another way of looking at it, is in the 30 days in June, HM Government borrowed:-

£211 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2024, 2025 & 2045. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…”

Lindsell Train Investment Trust PLC is a £100m investment trust, run by Lindsell Train.
[http://www.lindselltrain.com/]

Its holdings are:-

Lindsell Train Limited
Barr (AG)
Diageo
Lindsell Train Japanese Equity Fund
Unilever
Nintendo
London Stock Exchange
Pearson
Heineken
2.5% Consolidated Loan Stock
Reed Elsevier
eBay
Treasury 2.5%
Finsbury Growth & Income Trust
Lindsell Train Global Equity LLC
Mondelez International
Kraft Foods

Interesting to see the investment trust also owns a large percentage of the fund manager itself. Thus has “skin in the game”.

A yield of 1.3%

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=31089]

Interesting to see who are the major shareholders:-

Rathbone Investment Management Limited
Brewin Dolphin Limited
Hargreaves Lansdown Asset Management Ltd
Alliance Trust plc
Mr N Train
Mr M Lindsell
Finsbury Growth & Income Trust PLC
Mr D Caldecott
Troy Asset Management Limited

Mr. Train and Mr. Lindsell both significant shareholders, again showing they are putting their money where there mouth is. Putting their own money into the fund, so their personal wealth is tied up in the future prospects of the fund.

From the CEGB: The Central Electricity Generating Board under the stewardship of Lord Marshall, today, the UK has a very fragmented market.

Electricity demand is about 350 Tera Watt hours = 350TW/h of demand per year. This is broken down into 7 large groups who use the energy, who are:

The Energy Industry
Industrial Use
Transport
Public Sector
Commercial
Agriculture
Consumers

Interesting fact that the energy sector uses 25TW/h (7% of total power), but then when one thinks of Hydroelectric, huge quantities of electricity is needed to pump water into the higher lake after the power station has produced the power. Or other sectors like oil refineries use massive amounts of power too, so that 7% figure is easy to comprehend.

There are about 9 fuel type sectors that make up the power:

Coal
Oil Biomass
Natural Gas (Combined Cycle Gas Turbines)
Hydro-Electric
Solar
Nuclear
Wind
Liquid Natural Gas (Gas Turbine and Open Cycle Gas Turbine (GT and OCGT))

The UK is very unusual in terms of the large amount of international ownership in the industry.
We have E.ON & RWE npower are German companies, then we have EDF Energy which is a subsidiary of Electricité de France and Scottish Power is part of the Spanish company Iberdrola.
The UK has only a few UK owned companies, Centrica (British Gas), Drax Power and Scottish & Southern Electric to name just 3 of the largest.

Who are the UK generators that feed The National Grid:-

RWE npower
E.On
Scottish & Southern
Scottish Power
GDF Suez
EDF Energy
Centrica
Drax Power
Eggborough
Immingham CHP (Conoco Phillips)
Macquarie Investment Funds (Baglan Bay and Sutton Bridge)

A very interesting sector, and if you want more information talk to Tom Martin !!

Nigeria, the largest economy in Africa. It is country of great diversity and culture. Its oil reserves are huge.

From the BP Statistical Review of World Energy:-

[http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy.html]

One can see Nigeria’s oil wealth. It has 37.1 thousand million barrels of oil in its proven reserves.

What is that worth ?

One Barrel of oil is today worth $63.05 = £40.11

So 37,100,000,000 barrels x £40.11 = £1,488,081,000,000

That is a large number, = £1,488 Biion = £1.48 trillion, that is equivalent to the whole of UK’s annual GDP.

The United States Central Bank is known as the US Federal Reserve, often called the US Fed.

[http://www.federalreserve.gov/]

Since the onset of the Global Financial Crisis, the a little reported fact in the main stream media is the growth in the size of the Federal Reserve Balance Sheet.
This has been driven by the bailouts, the Federal Reserve buying securities such as mortgage back securities and of course quantative easing, buying US Treasury T-Bonds

[http://www.federalreserve.gov/monetarypolicy/bst_fedsbalancesheet.htm]

By reading page 12 here:

[http://www.federalreserve.gov/monetarypolicy/files/quarterly_balance_sheet_developments_report_201505.pdf]

One can immediately see the size of the US Federal Reserve Balance Sheet.

A more up to date version is here:-

[http://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab9]

Yes, total assets of $4,451,663 MILLION.

That is NOT a typo, that is $4,451 Billion = $4.451 Trillion

The US Annual GDP is about £16.77 trillion

Thus the US Federal Reserve Balance Sheet Assets = 26% of US GDP.

The Allianz Technology Trust PLC is a UK-listed investment trust that aims to achieve long-term capital growth for its shareholders by investing in technology stocks worldwide.

Its Top 10 holdings are:-

7.9% in Microsoft
5.2% in Palo Alto Networks
5.0% in Apple
4.3% in Amazon
4.1% in Splunk
4.0% in ServiceNow
2.9% in Visa
2.9% in Netflix
2.5% in Western Digital
2.3% in SunPower

This gives a total investment of 41.1% in these 10 firms.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=11984&record_search=1&search_phrase=att]

Interesting to see the share price of about £6.20 and the assets have a total value of £6.47 per share. This means the fund is trading at a discount. Or another way of look at it, is that you can buy assets worth 647p for only £620p.

HM Government has now signalled the sale of its majority stake in The Royal Bank of Scotland plc. The UK Tax payer owns over 80% of the bank, via the state investment company UK Financial Investments.

In 2008, as the height of the financial crisis, the UK government had to immediately pump in £45bn to keep the bank afloat.

The RBS balance sheet in 2008 was:-

Total assets £2,401,652m
Yes, £2,401 billion = £2.4 Trillion. That was larger than the UK GDP in 2008.

The RBS balance sheet in 2014 was:-

Total assets £1,050,763m
Yes, £1.050 billion = £1.05 Trillion.

One can see in the 7 years since the financial crisis that RBS balance sheet has more than halved, via all the disposals that have taken place.

The Woodford Patient Capital Trust is the latest investment trust launched by Neil Woodford, the revered fund manager who made his name at Invesco Perpetual before setting up his own fund management company Woodford Funds

[https://woodfordfunds.com/]

The latest fund, Patient Capital is a £900m investment trust

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=41149626&action=]

One of its first investments was Sphere Medical PLC.

[http://www.spheremedical.com/]

A £25 million AIM listed company.

Time will tell on the investment performance of The Woodford Patient Capital Trust.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In May 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

27-May-2015 1/8% Index-linked Treasury Gilt 2058 £745.3830 Million
21-May-2015 4¾% Treasury Gilt 2030 £1,750.00 Million
14-May-2015 2% Treasury Gilt 2020 £4,098.8140 Million

When you add the cash raised:-

∑(£745.3830 Million + £1,750.00 Milion + £4,098.8140 Million) =  £6,594.20 Million

£6,594.20 Million = £6.594 Billion

On another way of looking at it, is in the 31 days in May, HM Government borrowed:-

£212 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2020, 2030 & 2058. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…”

The Annual Report makings interesting reading of Barclays PLC

[http://www.barclays.com/barclays-investor-relations/results-and-reports/annual-reports.html]

The three largest shareholders are:-

Qatar Holding LLC 6.65%
BlackRock, Incc  5.02%
The Capital Group Companies Inc 4.96%

The balance sheet is large….

Total assets £1,357,906 Million. That is £1.357 Trillion. (about 89% of the UK GDP).
Cash and balances at central banks £39,695 Million (£39 Billion)
Customer accounts £427,704 million (£427 billion are deposits from customers)
Loans and advances to customers £427,767 million (£427 billion are loans to customers)
Trading portfolio assets £114,717 million (The banks trading assets from its day to day trading operations)
Derivative financial instruments £439,909 million (yes, £439 billion in derivatives)
What is incredible is the amount of derivatives on the balance sheet, larger than the actual deposits from customers. The assets of Barclays are nearly the size of the total annual output (89%) of UK GDP. Our banks are too big to fail.

The UK is suffering from massive house price inflation.

The total value of UK homes is worth £5.75 trillion. That is over 2.5 times UK GDP.

London homes aloneare worth £1.485bn, that is nearly 100% of annual UK GDP.

The reality is that their is more demand for housing than supply, which is driving up prices. Also with such low interest rates, the demand from buy to let investors means, houses are being bought by investors for rental income, this reducing the numbers of houses for sale.

Nigel Wilson, the CEO of Legal and General one of the largest UK asset management houses [www.legalandgeneralgroup.com] has written a very powerful artice in The Telegraph to explain the situation.

[http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/11641911/Its-not-just-first-time-buyers-who-need-help-in-todays-housing-market.html]

Until the UK builds more houses, the situation will not get better. This needs political will.

The Witan Pacific Investment Trust is a £175m investment fund listed on the London Stock Exchange. Its aim is to provide shareholders with a portfolio of equity investments in the Asia Pacific region with the aim of outperforming the MSCI AC Asia Pacific Free Index

[http://www.witanpacific.com/]

Three fund managers look after the portfolio:-
Aberdeen Asset Management 44.9%
Matthews 44.4%
GaveKal 10.7%

The largest holdings are:

Japan Tobacco 2.8%
Taiwan Semiconductor 2.2%
China Mobile 2.0%
Toyota Motor 1.8%
HSBC 1.7%
AIA 1.7%
Oversea-Chinese Banking Corp 1.7%
Singapore Tech Engineering 1.6%
Pigeon Corporation 1.4%
Samsung Electronics 1.4%

A dividend yield of 1.7%

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=11837&record_search=1&search_phrase=witan]

The bond purchasing programme undertaken by the Bank of England, spent £325,000 million, yes £325 Billion. This is known as the Quantative Easing Programme.

What is rarely reported in the media is the long term consequences of the programme. So the Bank of England created £325 billion of new money, used this cash to buy assets from the clearing banks, such as UK Government Gilts (UK Government Bonds), High Quality Corporate Bonds. These assets are bought by the Bank of England, the clearing banks then get relieved of these assets of their balance sheet, and in return get newly created cash from the Bank of England.

It is hoped that this fresh new cash is then pushed into the economy by creating loans for businesses, individuals and mortgages.

However has £325bn then injected into the economy ?

It is likely to be a figure much higher, perhaps 3 times that of £325bn. Why ?

Simple, the money multiplier. The £325bn that hits the balance sheet of the clearing banks, is lent out. This cash then hits other banks, and that gets re-lent. It is the foundation of our banking system, Fractional Reserve Banking, so in reality, perhaps the Quantative Easing Programme that created £325 bn could have created over £1 Trillion in credit.

We see rising assets prices in UK Housing, UK Shares. Is there a link ? Definitely Maybe.

The US Federal Government, runs a budget deficit, it spends more than it earns.
To fund this gap, it issues T-Bonds (Treasury Bonds), debt issued by the US Treasury to bridge the gap between income and expenditure.

The US National Debt is huge.

[http://www.usdebtclock.org/]

As you can see over $18 TRILLION is owed by the US Federal Government.

Over $6 Trillion is owned by foreign investors. What this means is that foreign investors are the creditors to the US Government.
So when you look at the $6 Trillion, this is over 30% of total US National Debt is held by foreign investors.

China owns the biggest chunk of U.S. foreign debt at $1.3 trillion, followed by Japan at $1.2 trillion. Just these top two creditors constitute a huge portion of US Debt.

Each day in the news we hear that Greece faces problems meeting its debt repayments to its creditors.

What is the amount it owes ?

The country is 323 billion euros in debt (£235 billion) – more than 175% of its GDP. That is €323 Billion

Its creditors are:

€20 billion The European Central Bank
€25 billion Spain
€32 billion IMF
€34 billion Other Eurozone Nations
€37 billion Italy
€42 billion France
56 billion Germany.

Total of €323 Billion = £235 billion

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In April 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

29-Apr-2015 2% Treasury Gilt 2025  £3,000 Million
21-Apr-2015  3½% Treasury Gilt 2045  £1,924.980 Million
16-Apr-2015 0 5/8% Index-linked Treasury Gilt 2040  £1,283.940 Million
08-Apr-2015 2% Treasury Gilt 2020  £4,010 Million

When you add the cash raised:-

∑(£3,000 Million + £1,924.980 Million + £1,283.940 Million + £4,010 Million) =  £10,218.920 Million.

£10,218.920 Million. = £10.2 Billion

On another way of looking at it, is in the 30 days in April, HM Government borrowed:-

£340 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2020, 2025, 2040 and 2045. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…”

We see today that raising cash for corporates is done by debt issuance (bond issues) and currently this is the preferred method of company financing. Effectively due to the tax treatment of debt companies are given incentives to borrow instead of building strength on the balance sheet.

Apple issued bonds to finance a share buy back. Cynically speaking by undertaking a share buyback it reduces the numbers of shares on issue, and thus boosts the earnings per share.

Job creation 20  years ago during the telecoms and technology boom was financed by Equity raising, of course these new start ups had little hard assets to issues bonds but one thing for sure, the equity raising of the 1990’s had massive job creation.

Finally, when one looks at all the debt financed private equity deals, one has too accept once the company is acquired by a private equity fund, what then happens is massive cost cutting to meet debt repayments, or asset selling to repay the debt pile and in both cases, these actions can destroy jobs.

Perhaps wealth creation is better at creating wealth and prosperity by equity fund raising.

Governments and Corporates raise cash to fund their activities via the process of issuing bonds. It is just another term for borrowing money, and thus getting into debt.

The Debt Market is vast. The global bond market is worth £59 Trillion ($90 US Dollars).

This debt is accruing interest to the creditors, such as fixed income investors like pension funds or ibsurance companies.

£59 Trillion is a lot of debt.

The UK has a structural debt. The current general election campaign is not talking about hard figures.

This is the reality. In 2015/16 the UK will borrow nearly £80 billion pounds and pay in interest on the total UK National Debt the grand total of £46 billion pounds.

That interest payments adds zero value or benefit to the economy, it is the creditors to the UK Government who get the benefit.

The Bankers Investment Trust is a £700m London listed investment fund, managed by Henderson Global Investors. It was established in 1888.

[https://www.henderson.com/ukpi/fund/168/the-bankers-investment-trust-plc]

It pays a 2.3% yield on the shares

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10127&record_search=1&search_phrase=bank]

Its largest holdings are in:-

BP
Catlin Group
Walt Disney Co
Delphi Automotive PLC
Galliford Try Plc
Apple, Inc.
British American Tobacco
Sports Direct International Plc
Itv Plc
BorgWarner, Inc.

With over 100 years of previous performance, it is an incredible little fund.

The Monks Investment Trust PLC is a £947m London listed investment trust.

Managed by Ballie Gifford from Edinburgh,

[http://www.bailliegifford.com/individual-investor/fund-selector/monks-investment-trust.aspx]

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=10244]

A major shareholder is Investec Wealth Management

Launched in 1929, today it’s investment is global:-

United Kingdom 16.5%
Europe 14.7%
North America 34.5%
Japan 9.4%
Developed Asia 2.5%
Emerging Markets 10.5%
Fixed Interest 7.1%
Net Liquid Assets 4.8%

Its top 10 holdings are:-

Holdings % of Total Assets
1 US Treasury 0.625% 4.7%
2 IP Group 3.9%
3 Anthem 2.2%
4 Restaurant Brands International 2.2%
5 Taiwan Semiconductor Manufacturing 2.1%
6 Alnylam Pharmaceuticals 2.0%
7 Visa 1.8%
8 The Priceline Group 1.7%
9 First Republic Bank 1.7%
10 Martin Marietta Materials 1.7%

This makes up 24.0% of the portfolio.

On the 8th April 2015, Shell 8 April 2015, announced the takeover for BG plc. The cost to Royal Dutch Shell is £47 billion

[http://www.shell.com/global/aboutshell/investor/news-and-library/2015/recommended-cash-and-share-offer-for-bg-group-plc.html]

To put things into context, Royal Dutch Shell plc one has to understand the size of Shell.
Royal Dutch Shell’s share capital is made up of two types of shares: Shell A and Shell B

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=133655&record_search=1&search_phrase=shell]

Shell A is worth £78 Billion

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=133755&record_search=1&search_phrase=shell]

Shell B is worth £50 Billion

BG Group is the exploration and production arm of the 1986 new floated British Gas

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10017&record_search=1&search_phrase=BG]

BG plc is worth £40 Billion

Anglo American PLC, is the London listed mining giant, that is the majority shareholder in the diamond producer De Beers.

It is based in South Africa, and produces gold, platinum, diamonds, coal, base and ferrous metals, industrial minerals to timber and coal.

http://www.angloamerican.com/

Paying 5.7% yield, it is an incredible payment to shareholders.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10001&record_search=1&search_phrase=aa]

Interesting to see that the giant money manager BlackRock owns over 5%.

[http://otp.investis.com/clients/uk/anglo-american/rns/regulatory-story.aspx?cid=49&newsid=501699]

in 2014 its outstanding debt was £12,871 million (£12.8 billion).

[http://www.angloamerican.com/investors/fixed-income-investors/credit-ratings-and-ratios]

At first glance, this seems high, but then one has to consider its revenues.

[http://www.angloamerican.com/investors/financial-results-centre/key-financial-information]

Total revenues of £30,988m (£30.9 billion), so with such huge cash flow, servicing debt on £12.8 billion is not that difficult.

A massive company with a diversified portfolio of raw materials.

Today, Monday 6th April the UK liberates defined contribution pension schemes. What this means is that funds that were destined to buy annunities can now be used by the pension investors for whatever they want to do.

So how much money is currently in pension funds?

1,800 billion pounds. That figure is larger than the annual GDP of the UK wbich is 1,500 billion pounds.

The F&C Global Smaller Companies investment trust, is a £500m listed investment fund, that gives exposure to smaller companies all over the world.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=11839&record_search=1&search_phrase=FC]

A fund, that has paid a dividend that has grown in 44 years in a row.

[http://www.fandc.com/fandc-global-smaller-companies/]

Its top ten holdings are:-

Aberdeen Global Japanese Smaller Companies
M&G Japan Smaller Companies Fund
Manulife Global Asian Smaller Companies
Scottish Oriental Smaller Cos Investment Trust
Aberdeen Global Asian Smaller Companies
Utilico Emerging Markets
Intl FCStone
Wellcare Health Plans
Microsemi
Mercury Systems

The portfolio is broken down:-

North America 40.2%
UK 28.3%
Continental Europe 11.3%
Rest of World 10.6%
Japan 8.0%
Cash & Fixed Interest 1.6%

A great little fund.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In March 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

19-Mar-2015 2% Treasury Gilt 2025  £3,024.8740  million
12-Mar-2015 1 1/8% Index-linked Treasury Gilt 2037  £933.2100 million
10-Mar-2015 3½% Treasury Gilt 2068  £1,649.9850 million
03-Mar-2015 2% Treasury Gilt 2020  £3,500.0000 million

When you add the cash raised:-

∑(£3,024.8740  million + £933.2100 million + £1,649.9850 million + £3,500.0000 million) =  £9,108.07 Million.

£9,108.07 Million = £9.108 Billion

On another way of looking at it, is in the 31 days in March, HM Government borrowed:-

£293 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2020, 2034 and 2045. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…”

The revered name in British engineering is Derby based Rolls Royce.
A member of the FTSE-100. [www.rollsroyce.com]

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10072&record_search=1&search_phrase=RR]

With a market capitalisation of £17.5 billion. The annual report makes interesting reading

[http://www.rolls-royce.com/investors/financial-results/annual-report.aspx#yr-2014-annual-report]

Order book £73,674 m (yes £73 billion)
Employeed of 54,100
Total assets on the balance sheet of £22,224 m
In 2014, they applied for 600 patents.

The major shareholders are:

Invesco Limited 4.99%
Harbor International Fund 4.02%
The Capital Group Companies, Inc 4.99%
Aberdeen Asset Managers Limited 5.16%
They offer a yield of 2.4% in these 0.5% times

Ayana Karim Pictures:-

http://asadkarim.co.uk/?attachment_id=1091
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http://asadkarim.co.uk/?attachment_id=1079

Ayana Karim: Monday 23rd March 2015

The UK Government like the USA and other major G8 economies, spends more than it brings in as income from taxation. This has resulted in a massive structural debt, over 80% of debt to GDP.

Even though we see unemployment beginning to fall, the public accounts show that the government is still heavily borrowing, and dependent on the bond market to bridge the gap between its income and spending commitments. So how can this be when we have falling unemployment.

The reality is that many new jobs are now low skilled and low paid or zero hour contracts. This has resulted in the actual tax collected by government to be very small, so income into government from the improving labour market is not feeding into improving public finances. Until we face thus head on, the structural debt will continue to command punishing interest repayments (today at over £30 Billion a year) and we must accept that we actually need we high skills and high wages to create wealth and tax revenue, and that only comes from investment.

HSBC, The Hong Kong and Shanghai Banking Corporation has been making the headlines for all the wrong reasons.

[www.hsbc.com]

The financials are HSBC are useful to know:

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10048&record_search=1&search_phrase=hsbc]

Its Market Capitalisation is £107,879m
(£107 Billion).
The dividend yield is 6%.

An international bank, whose annual report makes interesting reading:-

[http://www.hsbc.com/investor-relations/investing-in-hsbc/latest-financial-information?WT.ac=HGHQ_Ir_h1.2_IMS_On]

Profit before tax was US$22.8bn =

The balance sheet size is vast.

Total reported assets were US$2.6 trillion = £1.76 Trillion = £1762 Billion.

Yes, that is larger than the Annual UK GDP. So the balance sheet assets are over 100% of the UK GDP.

The Worldwide Healtcare Trust is a £900m investment trust listed on the London Stock Exhange.

[http://www.worldwidewh.com/]

Investing in the global healthcare sector with the objective of achieving a high level of capital growth.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=12000&action=]

Managed by OrbiMed

Its top 10 investments are:

HCA
Bristol-Myers Squibb
Biogen Idec
Gilead Sciences
Amgen
AbbVie
Regeneron Pharmaceuticals
Actavis
Merck & Co
Ono Pharmaceutical

This makes up about 31% of the entire fund. Total holdings are 64 investments.

The UK has a diverse mix of energy supply.

http://www.gridwatch.templar.co.uk/

The above is the status of National Grid.

The UK’s energy production is based on these sources:

• Gas: 40.4%
• Coal: 32.3%
• Nuclear: 17.6%
• Wind: 2.9%
• Hydroelectric: 1.7%
• Bio-Energy: 3.4%
• Imports: 0.7%
• Oil: 1.5%

Interesting to see the dependence on Gas.

Legal & General PLC [www.legalandgeneralgroup.com] is a major player in the UK Financial Industry.
A member of the FTSE-100.
A £16 Billion company.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=10055&action=]

On 4th March 2015 it published its 2014 results. The numbers are incredible.

[http://files.shareholder.com/downloads/LGEN/1718128473x0x813527/C4270F74-53C4-42C2-BC63-37E169FB365E/2014_Year_end_FINAL_03032015.pdf]

Assets under management = £709 billion
(UK GDP is £1500 billion, so L&G plc have assets under management that is equivalent to 47% of the UK GDP).

A dividend yield of 4%.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In Feb 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 2 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

11-Feb-2015 3½% Treasury Gilt 2045 £1,750.000 Million
04-Feb-2015 0 1/8% Index-linked Treasury Gilt 2024 £1,200.000 Million

When you add the cash raised:-

∑(£1,750.000 Million + £1,200.000 Million ) = £2,950.00 Million

£2,950.00 Million = £2.975 Billion

On another way of looking at it, is in the 28 days in Feb, HM Government borrowed:-

£105 million each day for the 28 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2024 and 2045. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…”

The UK Government spends about £2 Billion a week on the NHS. This equates to £104 Billion a year.

UK GDP is about £1500 Billion (1.5 Trillion).

Thus we spend 6.93% of our national income on health. This is actually quite a low ratio.

In these low interest rate times, where can you find 7% for your cash ?
Simple. Green investment opportunities.

[https://www.assetzcapital.co.uk/green-account/]

Assetz Capital the world leading Peer to Peer investment platform of business loans as the Green Energy Income Account.

The fund even as a Provision Fund to protect the money of investors.

7%……

The Green Energy Income Account diversifies the money invested across green investment funds again to maximise exposure across different investments and to reduce risk.

7% in a 0.5% base rate climate where we are now even seeing deflation.

RBS is The Royal Bank of Scotland and NatWest, as well as through a number of other well-known brands including Citizens, Charter One, Ulster Bank and Coutts.

We are only a few months away from The Royal Bank of Scotland publishing the 2014 annual report.

[http://investors.rbs.com/2013-at-a-glance/download-centre.aspx]

Here was can see the 2013 annual report. Some salient facts are found there:

Page 174.

Cash and balances at central banks £82,659 million. (yes £82 Billion)
Loans and advances to customers £440,722 million
Derivatives £288,039 million
Total assets: £1,027,878 million (yes that is over £1 trillion, about 67% of UK annual GDP)
Customer deposits £414,396million  (yes £414 Billion of customer cash in accounts)

The size of the bank’s balance sheet is vast.

The economics of renewables will have the ability to creates more jobs than other sources of energy. Most of these will be created in the struggling manufacturing sector. Clear to see, the making of new substations, wind turbines and solar cells for example which will pioneer the new energy future by investment that allows manufacturers to retool and adopt new technologies and methods.

E2V was formerly EEV of Chelmsford, (English Electric Valves)

http://www.e2v.com/

For a period it was a part of the UK’s General Electric Company, (GEC), known as Marconi Applied technologies, and then in 2002 a well thought out management buyout supported by 3i following the collapse of the renamed GEC as Marconi plc due to the poor leadership of Lord Simpson.

In in 2004 the company floated on the London Stock Exchange.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=104140&action=]

A £405m valued company, today is a UK plc success story in high technology in the areas of aerospace, defence, space, medicine and security.

A dividend yield of 2.4% for a technology company, this is incredible. A major investor is RIT Capital Partners plc (The Rothschild Family) whose wealth is managed by RIT Capital Partners.

The Renewables Infrastructure Group (TRIG) is listed investment company seeking to produce long-term, stable dividends, by investing in a portfolio of 29 predominantly operational assets which generate electricity from renewable sources, with a particular focus on onshore wind farms and solar photo voltaics parks.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=11834937&record_search=1&search_phrase=trig]

A £426m investment fund.

Managed by Infra Red Capital Partners, [www.ircp.com] a major shareholder in The Renewables Infrastructure Group is Investec Wealth & Investment Limited.

As the UK economy moves from a fossil fuel based electricity producer, we seeing massive investment in green technology, and remember, the fuel for renewables is free.

The Legal and General Worldwide Trust, is designed to give worldwide exposure and access to a range of Legal & General funds in a single investment vehicle while offering long-term growth potential.

[http://www.fundslibrary.co.uk/fundslibrary.dataretrieval/documents.aspx?user=landgdoc&type=custom_field.www_landg_co_uk.factsheet_UTD&sedol=B032C40]

A £102million fund, its top 10 holdings are:

Legal & General UK Smaller Companies Trust 15.13% of the fund
Legal & General UK Index Trust 9.62% of the fund
Legal & General Dynamic Bond Trust 8.70% of the fund
Legal & General US Index Trust 7.82% of the fund
Legal & General European Trust 7.18% of the fund
Legal & General UK Alpha Trust 6.97% of the fund
Legal & General European Index Trust 6.46% of the fund
Legal & General North American Trust 5.92% of the fund
Legal & General Pacific Growth Trust 5.82% of the fund
Legal & General Japan Index Trust 5.73% of the fund

As one can see it gives international exposure to global markets and indices.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In January 2015, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

06-Jan-2015 2¾% Treasury Gilt 2024  £3,024.940 million
07-Jan-2015 0 1/8% Index-linked Treasury Gilt 2044 £1,040.780 million
15-Jan-2015 4½% Treasury Gilt 2034 £1,889.840 million
20-Jan-2015 2% Treasury Gilt 2020 £3,750.000 million

When you add the cash raised:-

∑(£3,024.940 million + £1,040.780 million + £1,889.840 million + £3,750.000 million) = £9,705.56 Million

£9,705.56 Million = £9,705.56 Billion

On another way of looking at it, is in the 31 days in Jan 2015, HM Government borrowed:-

£313 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2020, 2024 2034 and 2044. All long term borrowings, we are mortgaging our futures, but at least “we are in it together….”

This is an economic hypothesis that show a potential relationship between government tax revenue (income) and the rates of general taxation in the economy.

What it simply means is this:-

Punitive tax rates may not generate much additional tax revenue for the government if people respond in ways that result in less taxable income.

So for example if the country raises ist tax rates so high, people may stop working, as it is not worth the effort as the government will effectively take all their income in a form a taxation. Or individuals will resort to tax avoidance strategies to hide their wealth. Thus zero or little tax revenue.

Like wise, if taxes are super low, then people work harder, but then government makes no gain on this hard work and productivity boost, as the taxation rate is so low.

Thus it makes it hard for governments to the right balance on taxation. The curve itself is linked to Arthur Laffer, but Laffer himself has pointed this work to the academtic work from the 14th century Arab Muslim social philosopher Ibn Khaldun

http://en.wikipedia.org/wiki/Ibn_Khaldun

Flowing water is a valuable renewable energy source, and the most modern hydroelectric power stations are capable of converting at least 90% of their energy into electricity. (The other 10% is lost as noise of the flowing water, friction creates heat as the water flows down the pipes).

The Committee on Climate Change which advises the HM Government estimates that hydroelectric power could theoretically contribute up to 8 billion kilowatt-hours (kWh) of electricity per year to the UK’s energy needs.

Hydroelectric power stations in the United Kingdom accounted for 1.65 GW of installed electrical generating capacity, being 1.8% of the UK’s total generating capacity and 18% of UK’s renewable energy generating capacity.

The reality is that storing electricity is actually quite hard, you can have chemical storage, such as a battery, or converting Potential Energy to Kinetic Energy. This is the essence of Hydro Electric.

Large-scale hydroelectric power stations need to dam valleys to create reservoirs in which to store water. For the installation to include pumped storage – a technology that improves the reliability of the power station by storing energy for later use – two reservoirs must be situated close together, but at different heights.

Not many sites in the UK meet these conditions. Most of those that do are in the Scottish Highlands and are already home to large-scale hydropower schemes. These schemes generate about 1.4% of the electricity used in the UK, but due to the lack of other suitable sites, this figure is unlikely to increase significantly.

This is a non-exhaustive list of UK Hydro Electric Sites:-

Clachan
Cruachan Dam
Dinorwig Power Station
Errochty
Ffestiniog Power Station
Glendoe Hydro Scheme
Glenlee
Glenmoriston
Inverawe
Kendoon
Lochaber
Maentwrog Site
Rannoch
Rheidol
Sloy
Tongland
Tummel
Aigas Power Station
Bonnington
Carsfad
Cashlie Power Station
Cassley Power Station
Ceannacroc Power Station
Culligran Power Station Unit 2
Dinas Power Station
Dolgarrog High-Head Power Station
Dolgarrog Low-Head Power Station
Earlstoun
Finlarig
Grudie Bridge
Invergarry Power Station
Kilmorack
Kinlochleven Hydro Power Station
Livishie Power Station
Mossford Power Station
Nant
Orrin
Orrin Power Station
Pitlochry Power Station
Quoich Power Station
Shin Power Station
St Fillans
Torr Achilty Power Station
Achanalt
Alt na-Lairgie
Ardverikie
Beeston Weir
Black Rock
Braevallich Hydro Station
Broken Cross Muir Hydro
Callop
Carnoch
Chliostair Power Station
Chonais
Cuaich
Cuileig Power Station
Culligran Comp Set
CWM Rheidol Hydro Dam
Dalchonzie
Deanie
Douglas Water Power Station
Drumjohn Power Station
East Aberchalder
Elan Valley
Eredine Hydro Project
Falls Of Unich
Fasnakyle Power Station
Foyers Fall Power Station
Foyers
Franklaw Hydro at Franklaw Water Treatment
Garrogie Power Station
Gaur
Glenn Dubh Hydro
Inverar Hydro
Inverbroom
Inverfarigaig
Inverlael
Kerry Falls
Kielder Power Station
Kilmelford Power Station
Kingairloch Hydro
Lairg
Lednock
Little Loch Roag
Llyn Brianne
Llyn Celyn
Loch Dubh
Loch Eilde Mor
Loch Ericht Power Station
Loch Gair
Loch Turret WTW
Lochay Compensation Generator
Lochiel Estate
Lubreoch Power Station
Lussa
Maldie Burn
Mary Tavy Power Station
Mucomir
Mullardoch Tunnel
Nostie Bridge
River E Power Station
Siadar
Sron Mor Power Station
Stonebyres Power Station
Storr Lochs
Striven Power Station
Trossachs
Urlar Hydro
Victoria Falls Station

Yes, 109 sites in the UK

The Riverstone Energy Investment Company [http://www.riverstonerel.com/] is listed on the London Stock Exchange.
A £690m investment fund, that is focussed on energy and power-focused private investments. Founded in 2000. Riverstone conducts buyout and growth capital investments in the exploration and production, midstream, oilfield services, power and renewable sectors of the energy industry.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=16480172]

Its top ten holdings make up 59% of the investments

Corp.
Canadian Non-Operated Resources
CanEra III
Castex Energy
Eagle Energy Exploration
Fieldwood Energy
Liberty Resources II
Origo Exploration
Riverstone Credit Opportunities
Rock Oil Holdings
Sierra Oil and Gas

As global energy demand continues to be on an upward trajectory, that growth is relatively slow in depressed markets of Europe, future growth is being driven by emerging economies – led by China and India – according to the latest edition of the BP Energy Outlook 2035.

[http://www.bp.com/en/global/corporate/about-bp/energy-economics/energy-outlook/outlook-to-2035.html]

What BP reveals is that global energy consumption is expected to rise by 41% from 2012 to 2035 – compared to 52% over the last twenty years and 30% over the last ten. 95% of the growth in demand is expected to come from the emerging economies, while energy use in the advanced economies of North America, Europe and Asia as a group is expected to grow only very slowly – and begin to decline in the later years of the forecast period.

The major use of fossil fuels are now converging, with oil, natural gas and coal each expected to make up around 27% of the total mix by 2035 and the remaining share coming from nuclear, hydroelectricity and renewables. Amongst fossil fuels, gas is growing fastest, increasingly being used as a cleaner alternative to coal for power generation as well as in other sectors.

The name Petronas is the state owned Malaysian Oil giant, that we see as the major sponsor of the UK’s Lewis Hamilton

[http://www.mercedesamgf1.com/en/]

Petronas is a giant.

[http://www.petronas.com.my/]

One just has to look at Malaysia’s oil production. Today the south east Asian nation produces 657,000 barrels of crude oil a day.

With crude oil at $48 a barrel which equates to £31.73 a barrel.

657,000 barrels of crude oil x £31.73 = £20,846,610

That is £20million a day from Malaysia’s crude reserves.

However, with the falling price of crude oil, countries like Malaysia whose economy is quite dependent on oil exports as a source of income, the falling price of the commodity, means its income stream is falling.

https://www.youtube.com/watch?v=-0kcet4aPpQ
Money, get away
Get a good job with more pay and your O.K.
Money it’s a gas
Grab that cash with both hands and make a stash
New car, caviar, four star daydream,
Think I’ll buy me a football team
Money get back
I’m all right Jack keep your hands off my stack.
Money it’s a hit
Don’t give me that do goody good bullshit
I’m in the hi-fidelity first class traveling set
And I think I need a Lear jet
Money it’s a crime
Share it fairly but don’t take a slice of my pie
Money so they say
Is the root of all evil today
But if you ask for a rise it’s no surprise that they’re
giving none away

“HuHuh! I was in the right!”
“Yes, absolutely in the right!”
“I certainly was in the right!”
“You was definitely in the right. That geezer was cruising for a bruising!”
“Yeah!”
“Why does anyone do anything?”
“I don’t know, I was really drunk at the time!”
“I was just telling him, he couldn’t get into number 2. He was asking
why he wasn’t coming up on freely, after I was yelling and
screaming and telling him why he wasn’t coming up on freely.
It came as a heavy blow, but we sorted the matter out”

The Aberforth Smaller Companies Investment Trust is a £1bn investment fund that specialises in the small companies domain.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10856&record_search=1&search_phrase=aberforth]

It was launched, and floated on the London Stock Exchange, on 10 December 1990, managed by Aberforth parters,

[http://www.aberforth.co.uk/]

[http://www.aberforth.co.uk/aberforth-smaller-companies-trust/aberforth-smaller-companies-trust.htm]

1 JD Sports Fashion £40,013,000 3.5% of the fund (Retailing – sports goods & clothing)
2 QinetiQ Group £32,300,000 2.8% (R&D and consulting services)
3 Vesuvius 3£0,316,000 2.7% (Metal flow engineering)
4 FirstGroup £28,204,000 2.5% (Bus & rail operator)
5 RPC Group £28,073,000 2.5% of the fund (Plastic packaging)
6 St. Modwen Properties £27,942,000 2.5% of the fund (Property – investment & development)
7 e2v technologies £27,624,000 2.4% of the fund (Electronic components & subsystems)
8 Shanks Group £26,532,000 2.3% of the fund (Waste services)
9 Spirit Pub Company £24,972,000 2.2% of the fund (Managed pub operator)
10 Flybe Group £24,856,000 2.2% of the fund (Airline)

Top Ten Investments are worth £290,832,000 which equtes to 25.6% of the whole fund.

What is interesting is that the management team are major holders in the fund, so have a vest interest in the success of the fund, and also the fund yields 2.2% to investors.

The bond and stock market for a long time has allowed companies, investment funds and individuals to raise money on the world’s capital markets. This investment mechanism that has allowed the creation of jobs and prosperity.

Now the on-set of high frequency trading, buying and selling shares in micro seconds has been best described by Charlie Munger, vice chairman of Warren Buffett’s Berkshire Hathaway as “bunch of rats admitted to a granary”

[http://en.wikipedia.org/wiki/Charlie_Munger]

These high frequency traders are effectively abusing the market, entering a market for self-gain, and actually delivering very little for the market. Yes perhaps liquidity is added, but it seems incredible to think owning a share in a company for a few seconds adds any intrinsic value or brings any benefit to the company whose shares are being traded.

A great quote from Jurassic Park, “just because you could, you never asked if you should“, and this is the question that has to be asked in the capital markets where these high frequency traders are legal and able to use technology to make money, but are actually damaging the real abilities of the market to raise funds and generate investment.

The Ecofin Water & Power Opportunities plc is an investment trust listed on the London Stock Exchange

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=133342&action=]

An investment vehicle that is primarily invested in the equity and equity-related securities of utility and utility-related companies. It’s top 10 investments are:

Lonestar Resources USA Energy 7.8% of the fund
Williams Companies US Energy 4.0% of the fund
NextEra Energy US Power 3.9% of the fund
E.ON Germany Power 3.6% of the fund
General Electric US Infrastructure 3.5% of the fund
SSE UK Power 3.1% of the fund
Exelon US Power 2.5% of the fund
National Grid UK Power/Regulated 2.5% of the fund
NRG Energy US Power 2.4% of the fund
Union Pacific US Infrastructure 2.4% of the fund

The top 10 holdings make up 35% of the total investment fund.

The yield is over 4%.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In December 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

11-Dec-2014  0¾% Index-linked Treasury Gilt 2034 £812.370 million
09-Dec-2014 3½% Treasury Gilt 2045 £1,924.985 million
02-Dec-2014 2% Treasury Gilt 2020 £3,750.000 million

When you add the cash raised:-

∑(£812.370 million + £1,924.985 million + £3,750.000 million) = £6,487.36 Million

£6,487.36 Million = £6.487 Billion

On another way of looking at it, is in the 31 days in December, HM Government borrowed:-

£209 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2020, 2034 and 2045. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…..”

With the dawn of the new year, one has to look at the bigger picture. Investment is a waiting game, and a brilliant quote from Warren Buffett of Berkshire Hathaway:-

“Games are won by players who focus on the playing field –- not by those whose eyes are glued to the scoreboard”

What Warren Buffett is effectively saying, is to focus on the long term, and not the short term fluctuations of the share price movements.

15 years ago to the day, the 30th of December 1999 the UK’s flagship index FTSE-100 closed at an all-time high of 6930.2

Today the FTSE is at about 6594.91.

Going back and looking at the FTSE-100 in December 1999, we were coming to the peak of the Telecoms and Technology Bubble. Looking back this it was a purely speculative bubble. Remember those days, when companies made little profit, burnt cash with little regard for shareholders and were given crazy valuations ?

Remember these iconic names:-

Baltimore Technologies
PSION PLC
Thus
Energis
GEC

Justin Urquart Stewart who at the time was the face of Barclays Stockbrokers (now at Seven Investment Management fame) called the FTSE-100 an “Drug related Financial Call Centre” due to index been driven by Pharmaceutical, Telecoms and Financial companies.

Today the FTSE is a very different index, dominated by the giant five, HSBC, BP, Shell, GlaxoSmithKline and Vodafone, with BHP Biliton and Rio Tinto in close pursuit.

An unbelievable fact in the UK, is the massive divide between rich and poor:

The wealthest 2,500 people in the UK have the combined wealth of the bottom 8,000,000. Yes the poorest 8 million.

What this tells us, is that the UK is following the pattern of a growing divide in wealth equality. We see this in The USA and also in India were the gap between the rich and poor is getting wider. This is very bad for social cohesion and for generating opportunities of all citizens.

In the media, one sees each day the Russian Rouble depreciating in value against the international currencies.

The facts are clear.

On Friday 21st March 2014 €1 = 49 Roubles.
On Friday 19th Dec 2014 €1 = 79 Roubles.

The crash in value is incredible, and the issue is that Russian companies that had borrowed from banks in foreign currencies are now having to pay huge amounts to meet the same loan repayments. This simple examples shows:-

March 21st 2014, a Russian company borrows €100 from an European Bank. It then has €100 which it then converted into Roubles, and thus became 4900 Russian Roubles.

Now say on Monday 22nd Dec, the European Bank calls in the €100 loan. Now the Russian company needs 7900 Roubles to pay the debt back. The currency movement, has resulted in the loan ballooning from 4900 Roubles to 7900 Roubles.

The elephant in the room, is that the Russian economy has been based on Oil and Gas exports, and all that money has never been used to diversify the economy away from oil and gas. Thus it is evident to see that the Russian economy is totally dependent on these natural resource / energy exports as when one looks at the fundamentals, when was the last time anyone you know bought a Russian made mobile phone, a car, a washing machine, a television, an Android Tablet ?

The slump in oil prices has resulted in major financial stress for the Russian economy. Its exports are not bringing in the income, and the over dependence on this commodity is now resulting in this situation.

On Friday 19th Dec BP plc paid its Quarter 3 Dividend. BP paid to its shareholders, £0.063769 per share (6.3p per share).

With the oil price under pressure, due to the down turn in the global economy, new shale oil and gas reserves coming on line, the oil price has been in decline for months, which has manifested itself with cheaper petrol and diesel prices at the pumps.

Already BP has warned of $1bn of restructuring charges over the coming year on Wed 10th Dec, as turmoil in the crude market continued with prices dropping to a fresh five-year low.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10022&record_search=1&search_phrase=BP]

However look at the yield of BP plc.

Yes, over 6%.

The River and Mercantile UK Micro Cap Investment Company Limited (RAMMIC) is a newly floated investment company.

[http://microcap.riverandmercantile.com/]
It is a currently a £50million investment fund, that will invest in micro-cap companies listed on the London Stock Exchange. It plans to invest in companies with a market value of £100 million or less in a concentrated portfolio of 30-50 stocks on either the AIM market, which specialises in smaller companies or the main market of the London Stock Exchange

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=36464569]

The risk of investing is smaller companies compared to “blue chips” is that smaller companies are a much higher risk to the very nature of the business, however the higher the risk the greater the reward.

Cohort is an AIM listed £100m company that specialises in Defence, Security and Regulated Markets. It is a pure play technology company, with the executive team from BAE Systems.

http://www.cohortplc.com/

The major shareholders are:-

10% Marlborough Fund Managers Ltd
0.871% Cazenove Capital Management Limited
11.050% Schroder Investment Management Limited

This little company has the ethos a parent company running central functions, and the subsidiary companies then doing the day job.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=177046]

A technology company, and still able to pay a dividend of 1.8%

The RIT Capital Partners Investment Trust is worth over £2bn.

[http://www.ritcap.com/]

RIT Capital Partners traces its origins back to the earlier Rothschild Investment Trust, which was originally associated with the family bank, N. M. Rothschild & Sons. Today, Lord Rothschild remains as Chairman. He and his family are the largest shareholders with a holding of 18%.

Thus one can see that some of the wealth of the Rothschild’s is tied up in the RIT Capital Partners Investment Trust.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10281&record_search=1&search_phrase=RIT]

Its investments are spread over many asset classes.

Quoted Equity – Long
Quoted Equity – Hedged
Private Investments – Direct
Private Investments – Funds
Absolute Return & Credit
Real Assets
Currency

A long term investment fund, that manages the wealth of the family but also offers the same level of investment exposure to international markets.

The term peak oil comes from the thought that the quantity of crude oil is ultimately fixed. The production of crude oil into components such as petrol, diesel etc. etc. then must inevitably reach a peak and then it is from this peak where it has to go into decline.

Peak oil has its origins from the work of M. King Hubbert, a geologist working for Shell in the 1950s. In the mid 1950’s he published a prediction of US crude oil would peak in about 1970. That was a very accurate calculation.

However the US discovered massive oil reserves in Alaska, and this created a massive new source of oil. Then in the past 5 years US Shale Gas has bought new reserves on lines. So perhaps we hit peak oil too early ?

Well since 2009, the trend of declining US crude oil production reversed, and since then the US output has surged upwards until in 2013, production was higher than any year since 1988-89.

Perhaps Peak Oil has been hit, but then again, perhaps we may find new reserves. Only time will tell.

Last week the UK Chancellor of the Exchequer made the 2014-15 HM Government Autumn Statement.

[https://www.gov.uk/government/publications/autumn-statement-documents]

Again, the main headline, is the UK Government, is spending more than it receives in taxes.

So for 2014-15 tax year, HM Government will have to borrow £91.3bn (yes billion) to meet all spending  commitments. Or another way of looking at it, the government will spend on top of its income, (tax revenues) £91.3bn. That money comes from issuing Gilts (UK Government Bonds) to investors to bridge the gap.

But this is only for this current tax year. Looking forward, the same is yet to come, more spending funded from more borrowings.

2015-16 the budget deficit is projected to be £75.9bn
2016-17 the budget deficit is projected to be £40.9bn
2017-18 the budget deficit is projected to be £14.5bn

and it is projected by 2018-19 before reaching a £4bn surplus (yes, spending less than income)

So looking at the figures. For the current tax year and the next 3 years ahead, the national debt will increase

£91.3bn + £75.9bn + £40.9bn + £14.5bn = £222.6 billion.

The interest payments on the UK National Debt is now a very large item that has to be paid by HM Government, something that is rarely discussed by the politicians.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In November 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

20-Nov-2014 0 5/8% Index-linked Treasury Gilt 2042  £3,951.9800 Million
13-Nov-2014 2¾% Treasury Gilt 2024  £3,299.9600 Million
04-Nov-2014 0½% Index-linked Treasury Gilt 2050  £869.9250 Million

When you add the cash raised:-

∑(£3,951.9800 Million + £3,299.9600 Million + £869.9250 Million) = £8,121.87 million

£8,121.87 million = £8.121 Billion

On another way of looking at it, is in the 30 days in November, HM Government borrowed:-

£270 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2024, 2042 and 2050. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…”

The power of the Internet and the ability to find information has resulted in a revolution in investors at home can access the world of capital markets and investment funds.

There are various sites now that allow investors at home buy investment products without the need to pay a professional advisor for investment advice.

Take a look at these sites:

https://www.axaselfinvestor.co.uk/
http://www.youinvest.co.uk/
http://www.nutmeg.com/
http://www.fundsnetwork.co.uk
http://www.hl.co.uk/

They offer the ability access funds from the leading investment houses as an execution service and online management way to manage one own investment funds. This is allowing investors at home, to choose funds with all the risks and opportunities that self-decision making creates.

The internet changes everything.

1,687,300,000,000 is the massive number that is the total number of barrels of oil that are in the ground. This number is known as the proven reserves of oil.

The 12 nations that make up OPEC have the lion’s shares of this.

Algeria                  12,200,000,000
Angola                  12,700,000,000
Ecuador                 8,400,000,000
Iran                        157,000,000,000
Iraq                        150,000,000,000
Kuwait                  101,500,000,000
Libya                      48,500,000,000
Nigeria                  37,100,000,000
Qatar                     25,200,000,000
Saudi Arabia       265,900,000,000
UAE                       97,800,000,000
Venezuela          297,600,000,000

Total:                   1,213,900,000,000

So OPEC’s 1,213,900,000,000 out of the total of 1,687,300,000,000:
1,213,900,000,000 / 1,687,300,000,000 = 71%.

Thus OPEC “own” 71% of the world’s oil reserves. That is the real big oil.

The Brunner Investment Trust was formed from the Brunner family’s interest in the sale of Brunner, Mond & Co, the largest of the four companies which came to form ICI in 1926.
ICI (Imperial Chemical Industries), demerged to form Zeneca (which is now the AstraZeneca plc), and the remaining part was slimmed down ICI that moved from bulk chemicals to speciality chemicals, that then was acquired by the Dutch Akzo Nobel.

http://www.brunner.co.uk/

The Top Ten Holdings are:

3.4% Royal Dutch Shell “B” Shares
3.0% HSBC
2.5% GlaxoSmithKline
2.4% BP
2.2% Microsoft
2.1% Vodafone
1.9% Roche
1.8% Monsanto
1.7% AbbVie
1.7% Xchanging

Top Ten equates to 22.7% of the total investment.

The Trust has been managed since inception by Kleinwort Benson which is now Allianz Global Investors. Investors in the Brunner Investment Trust who have not only received 42 years of dividend payments, but have enjoyed a rising dividend over the same period.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=11174&record_search=1&search_phrase=bru]

A yield of 2.7%

The UK National Grid [www.nationalgrid.com]is the company that moves power from the power stations into the network known as The National Grid. The electricity is then distributed to end users via the local distribution network operators (DNO’s).

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=51261&record_search=1&search_phrase=ng]

A £35billion company, a member of the FTSE-100

Equity investors are getting a 4.5% yield on the investment.

With a company with such massive cash flows (selling electricity has that benefit…), it is able to issue massive amounts of debt.

[http://investors.nationalgrid.com/~/media/Images/N/National-Grid-IR/content-images/graph-debt-info-highres-new.jpg]

The total level of Debt is just over £21bn, with bonds maturing over an average of 12 years.
So few short term cash calls for debt repayment. 65% issued in US Dollars and 35% issued in UK Sterling.

OPG Power Ventures plc is the London listed power company, that is generating electricity in India.

[http://www.opgpower.com/]

A £376m company, it is a non-trivial business, that is generating power in the emerging economic super power of India.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=1698767]

The principal business of the Company is developing, owning and operating power stations in India. The electricity generated from OPG Power Ventures power plants is sold principally to public sector undertakings and heavy industrial companies in India or in the short-term market.

The investment arm of the UK insurance giant UK Prudential, M&G Investment Management own 12.5% of OPG Power Ventures plc.

When you look at the fundamentals of India, the currency has fallen from £1 to 80 Rupees to £1 to 100 Rupees, this 20% devaluation means, Indian investment is now very attractive, as things are 20% cheaper when spending in a foreign currency.
More importantly, India needs infrastructure investment, to meet the demands of the growing middle class.

The Internet of Things is something that is attracting a lot of coverage in the technology and mainstream press.

In essence it describes how real world objects can be connected to the internet. Imagine that, a household boiler connected to the internet. One could command and control the central heating, so you come home, and your house is warm, as 45mins earlier you used the internet via the web or smartphone app to allow the heating to be activated.
[https://www.hivehome.com/]

It’s here all ready.

The ability to bring greater control of everyday items has vast potential

[http://share.cisco.com/internet-of-things.html]

Cisco think this market could be worth US$19 Trillion (that is over 100% of annual GDP) by 2020 (that is less than 6 years away…). Cisco expect that the number of connected devices are to hit 25 Billion by the end of 2015 (that is 14 months away…) and that will balloon to 50 billion by 2020.

The efficiencies that being to control things remotely will bring huge economic benefits to the world.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In October 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

21-Oct-2014 2¾% Treasury Gilt 2024  £3,000.000 million
16-Oct-2014 0 1/8% Index-linked Treasury Gilt 2024  £1,400.000 million
07-Oct-2014 3½% Treasury Gilt 2045  £2,473.537 million
01-Oct-2014 2% Treasury Gilt 2020  £4,399.890 million

When you add the cash raised:-

∑(£3,000.000 million + £1,400.000 million + £2,473.537 million +£4,399.890 million ) = £11,273.43 million

£11,273.43 million = £11.273 Billion

On another way of looking at it, is in the 30 days in October, HM Government borrowed:-

£375 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2024, 2045 and 2020. All long term borrowings, we are mortgaging our futures, but at least “we are in it together….”

The Bank of Japan last week announced another round of Quantative Easing.

[https://www.boj.or.jp/en/announcements/release_2014/rel141031e.pdf]

The announcement on the 31st October is incredible.

“…….effective from November 4, 2014. In principle, the Bank will announce the “Outline of Outright Purchases of Japanese Government Bonds” on the last business day of every month. The next announcement will be on November 28, 2014.
1. Amount to be Purchased Approximately 8-12 trillion yen per month in principle….”

Yes you read that correct.

What this means is that The Bank of Japan will now from November buy 8-12 Trillion Yen of (Japanese Government Bonds) JGB each month, but the government only actually issues (sells) about 5 Trillion Yen of Bonds a month.  No one will ever say but what is happening is pure debt monetisation.

[1 Trillion = 1,000,000,000,000]

so 8 Trillion YEN = 8,000,000,000,000 YEN = £44,567,200,341 GBP

That is forty-four billion, five hundred sixty-seven million, two hundred thousand, three hundred forty-one.

= £44 Billion = £44,000 Million.

So each month the Bank of Japan will spend £44 Billion = 8 Trillion YEN each month on buying Japanese Government Bonds (JGB’s)

To put things into context the Gross Domestic Product (GDP) is £3.06 Trillion.

So if the Bank of Japan executes this plan for say 6 months, this calculates:-

£44 Billion x 6 months = £264 Billion.

In 6 months of Bank of Japan purchases that equate to £264 Billion is equivalent to 8% of Annual GDP.

these numbers are huge. What will the Bank of Japan do with all these bonds that is owns ?

It will never be able release them on the open bond market, as it will flood the market and the prices of existing bonds will slump. The end game of this global policy of flooding the market with cheap capital is impossible to predict, but what are the unintended consequences ?

OPEC is the the Organisation of the Petroleum Exporting Countries was set up in 1960. It has 12 member countries that are known as a cartel when it comes to oil production. These countries are:-

Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates & Venezuela

The daily oil production in barrels per day:-

Algeria                  1,667,000
Angola                  1,784,000
Ecuador                505,000
Iran                        3,680,000
Iraq                        3,115,000
Kuwait                  3,127,000
Libya                      1,509,000
Nigeria                 2,417,000
Qatar                     1,966,000
Saudi Arabia       11,530,000
UAE                       3,380,000
Venezuela          2,725,000

This totals:            37,405,000  barrels per day from OPEC

Now global total oil production is 91,331,000 barrels per day

Thus:-

37,405,000 / 91,331,000 = 40%

OPEC accounts for just over 40% of Global Oil Production. This really is Big Oil.

The UK energy giant, BP [www.bp.com] is one of the world “oil majors” has an energy economics team, that produce the high revered annual Statistical Review of World Energy.

[http://www.bp.com/en/global/corporate/about-bp/energy-economics.html]

This is quite a large document, but is full of interesting facts.

Based on the figures from BP that are known to be used by wider industry one can see the world total of proven Crude Oil reserves are:-

1,687,300,000,000 barrels of crude.

[One trillion, six hundred eighty-seven billion, three hundred million barrels of crude]

Now today, the world consumes:-
91,331,000 barrels of crude per day.

[Ninety one million, three hundred and thirty one thousand barrels of crude per day]

So one can calculate based on current consumption the length of time before crude oil runs out:

1,687,300,000,000 / 91,331,000 = 18474.5 days.

18474 days / 365 to give us years = 50.6 years.

So based on some ball park figures we have just over 50 years left on crude oil reserves.

Now my calculations do not factor in new reserves being found, or consumption of crude falling and new sources of energy such as solar and hydrogen which of course will alter crude oil demand, or even people following the wise example of Dean Lawford and driving a hybrid Lexus, but based on current circumstances, 50 years based on demand today, and with China, India and other Emerging Markets and Frontier Markets all getting wealthier the demand of oil is still on an upward trajectory.

The accounting scandal that has engulfed Tesco PLC is very complex. A hole of £263million that was due to an accounting overstatement.

One has to keep things in context, and by looking at the finances, one can see the scale of Tesco.

[http://www.tescoplc.com/index.asp?pageid=188&newsid=1074]

Sales of £34 billion that was a drop of 4.4% year on year.
What is interesting is the profits at Tesco Bank, that was £102 million, while the actual UK stores delivered total profit of £499 million

The annual report gives a more granular breakdown
[http://www.tescoplc.com/files/pdf/reports/ar14/download_annual_report.pdf]

page 71 is the balance sheet.

The liabilities are the interesting items

£10,595 million of Trade and other payables. This is what Tesco owes to its trade suppliers, from gas and electric to the goods on the shelves that it gets on credit from its suppliers. These are short term liabilities where Tesco has to pay its suppliers within perhaps 30-90 days.

£9,303 million on financial borrowings, such as loans and bonds issued.

£3,193 million in pension liabilities

Now with the deterioration in trading (sales) at Tesco it means that its credit status is potentially under threat, and one can see that it has vast sales of over £34 billion, but with debts totalling over £20 billion, Tesco has to do something to return to strong profitability, to meet all its liabilities.

Algeria on the North Coast of Africa, has large oil and gas reserves. The land mass of Algeria makes it one of the largest countries in the world.

With a troubled political past, today it  has some level of stability.

As the demand for oil intensifies, countries with oil could potentially enjoy great wealth. Sonatrach is the Algerian state oil producers, and is the largest company in Africa.

[http://www.sonatrach.com/]

Algeria today produces 1,667,000 barrels of oil per day.

With oil at $86.54 = £53.96, one can calculate the value of Algerian Oil Production per day.

1,667,000 barrels of oil per day x £53.96 = £89,951,320

That is £89 million a day.

The Foreign & Colonial Investment Trust was Launched in 1868, the Trust was the first ever investment trust, allowing small investors access to the stock market. Since then it has since gone on build a track record where it has increased its dividend each year since 1971, this is an impressive track record. Its aim is to generate long-term growth and income by investing primarily in an international portfolio of listed equities. The Trust is highly diversified and cautiously managed, with exposure to around over 500 individual companies from around the world.

http://www.fandc.com/foreign-and-colonial-investment-trust/

Its top 10 holdings are:-

Private Equity Pantheon Europe Fund V: 2.18%
Private Equity HarbourVest V Direct Fund: 1.52%
Private Equity Dover Street VII: 1.20%
Private Equity Pantheon Europe Fund III:1.17%
Financials Utilico Emerging Markets: 1.02%
Buyout HarbourVest Partners VIII: 1.02%
Buyout HarbourVest Partners VII Buyout: 1.00%
Oil and Gas BP: 0.97%
Private Equity Dover Street VI: 0.91%
Private Equity Pantheon Asia Fund IV: 0.90%

http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=10192&action=

A £2,140.09m (£2.1 Bn investment fund)

It’s total holdings are listed here:

http://www.fandc.com/documents/fcit-portfolio-valuation/

The United Kingdom’s appetite for oil is large. Not entirely surprising when you know that there are 34.5 million cars in the UK today.

The UK consumes 1,468,000 barrels of crude oil a day. (1.4 million a day).

So what is the cost of this daily oil ?

Crude oil is $92.12 a barrel which is £57.65 a barrel.
1,468,000 x £57.65 = £84,630,200

So we see that the UK spends £84million a day on crude oil that we see in our petrol, diesel and other hydro-carbon products that we consume

In the media is a news that Bill Gross, the highly acclaimed bond fund manager is leaving Pacific Investment Management Corporation [www.pimco.com] to join Janus Capital.

[http://www.bbc.co.uk/news/business-29495997]

The Pimco Total Return Fund that was run by Bill Gross and currently has over US$200bn under management

[http://www.google.co.uk/finance?cid=246009576812464]

Nearly 19% of the $200bn is held in US Treasury 10 Year Bonds. One way of looking at major investment is total faith in the US Treasury’s ability to repay its debts.
(that is $40bn exposure).

What is curious, is that in the past 16 months $68 billion has been pulled out of the fund, a sign that the fund has not been performing, and more importantly with Bill Gross (aka The Bond King) leaving, almost certainly more money will be withdrawn.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In September 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

11-Sep-2014 3½% Treasury Gilt 2045  £2,199.870 million
09-Sep-2014 0¼% Index-linked Treasury Gilt 2052 £854.050 million
02-Sep-2014 2% Treasury Gilt 2020 £4,177.520 million

When you add the cash raised:-

∑(£2,199.870 million + £854.050 million + £4,177.520 million) = £7,231.44 million 

£7,231.44 million = £7.231 Billion

On another way of looking at it, is in the 30 days in September, HM Government borrowed:-

£241 million each day for the 30 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2020, 2045 and 2052. All long term borrowings, we are mortgaging our futures, but at least “we are in it together….”

Canada holds 10.4% of the world’s proven oil reserves.

This is 173,900 Million barrels. That is 173.9 Billion barrels.

Yes, it is vast.

What is potential value of this black gold ?

Today (Mon 29th Sept 2014) is $97.70 a barrel.
That is £60.10 per barrel.

So at £60.10 and you have buried 173.9 Billion barrels in Canada one can work out the value.

173.9 Billion x £60.10 = £10,451,390,000,000

Yes, that is £10 Trillion which is over 6 times the UK annual GDP.

Land Securities is the FTSE-100 property giant.

[http://www.landsecurities.com/]

Worth over £8bn it is a major real estate developer and premier landlord in the UK major cities

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10054&record_search=1&search_phrase=land]

A major investor in London in the London property sector:

[http://www.landsecuritieslondon.com/]

Just by looking at the financials it’s dividend yield is nearly 3% and back by a set of solid hard assets such as premier property.

Naomi Klein is a Canadian whose is a key critic of corporate greed.
[http://en.wikipedia.org/wiki/Naomi_Klein]

In her latest book “This Changes Everything: Capitalism vs The Climate”

[http://www.amazon.co.uk/This-Changes-Everything-Capitalism-Climate/dp/1846145058/ref=sr_1_1?ie=UTF8&qid=1411455395&sr=8-1&keywords=this+changes+everything]

Without spoiling the overall read, the book effectively is saying that the world’s political and economic corporations and institutions are preventing everyone from meeting the challenge of global warming and climate change. Naomi blames the failure of capitalism for the world’s problems.

An excellent read.

Today China consumes 10,221,000 barrels of oil day.
This is one of the largest consumer nations of oil, with the USA in No.1 position “drinking” 18,555,000 barrels of oil.

China’s consumption is 11.7% of global crude oil consumption.
What is the financial value of this ?

Brent Crude today is worth US$ 101.52 per barrel.

10,221,000 barrels of oil day x US$ 101.52 = US$ 1,037,635,920 per day (that is US$ 1 billion dollars per day) = £635,366,000 per day = £635 million per day.

So as China gets richer, the more money it will be spending on crude oil.

With the referendum date coming close on Thursday on Sept 18th 2014, the result is too close to call. But with news coming each day such as The Royal Bank of Scotland relocating to London, the investment giant, Standard Life also saying moving to England, the stakes are high.

One also needs to see the latest news from the UK telecoms companies.

[http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/11094328/Telecoms-bosses-warn-of-increased-costs-if-Scotland-secedes.html]

The cost of doing business is bound to increase, that ultimately is paid for the by the end user consumer. So let us examine telecoms in more detail.

Looking at say Virgin Media, the cost of looking after a customer in rural Scotland compared to looking after a customer in an English town like Ipswich, there is a massive difference.
Firstly, the length of the line in Scotland will be longer than say in Ipswich, that is just simple geography. So looking after the network in Scotland means more cost, due to a larger physical length of network and of course network components. That means for example Virgin Media’s costs of looking after a Scottish customer is very likely to be more expensive. This could mean the cost for telecoms services in Scotland could be higher than say in Ipswich in England.

Also will Scotland need a new telecoms regulator ?
Currently we have Ofcom for the UK, but now does the Scottish government need to set up a new government department ? Who will pay for it ? The customers and industry end up paying and thus more cost.

Where do these costs stop ?
Will the Scottish government open up say 190 embassies in the 190 or so countries in the world ? Who will pay for this ? Ahhhh, the Scottish tax payer. Just imagine the cost of setting up 190 new embassies, and the cost of all the diplomats, cars, embassy accommodation, ambassadors to hire and the housing, and flights back to Edinburgh. It is going to be billions.

And of course, they claim to want to use the £Sterling. Ahhhh, the central bank will be in a potential foreign country, England. So that means Scottish economic policy will be driven from London. Clearly the cost of doing business in Scotland will rise when the actually monetary policy will be controlled from London.

The Bilfinger Berger Global Infrastructure Fund

[http://www.bb-gi.com/]

is a listed Infrastructure Investment vehicle that is worth £528.14m.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=2641081]

Investing in solid “hard” infrastructure assets, it’s aim is to invest in 35 infrastructure PFI/PPP assets in the UK, Continental Europe, Australia, Canada and the USA and offer a yield of 5.5% per annum to investors in the fund.

Mainly investing in schools, hospitals, prisons and certain roads it is holding assets that are physical assets were an income can be derived against.
We can see in a low interest rate environment, the search for a decent dividend is exceptionally hard, and a fund like the Bilfinger Berger Global Infrastructure Fund offers access to a steady income stream.

When one thinks of India, one does not automatically think that India is an oil producer.

However, India produces 894,000 barrels of oil a day, which equates to about 1% of worldwide oil production

So what is the value of this crude ?

Oil trades at about US$ 101.52 per barrel.

Thus:-

894,000 barrels of oil a day x US$ 101.52 per barrel = $90,758,880

Yes that is $90 million = £55 million a day.

This is very important natural resource to a country that has to subsidise the cost of oil.

The largest consumer nation of Nuclear energy is the USA.

The United States of America accounts for 32.7% of global nuclear energy consumption. That is equivalent of 183.2 Million tonnes of oil.
France is the next largest consumer is 17.2% of nuclear energy consumption. That is equivalent of 96.3 Million tonnes of oil.

In total North America accounts for 36.9% global nuclear energy consumption and Europe & Eurasia account for 47.6% global nuclear energy consumption.

What is interesting to see is that how outside Europe, Russia and North America, little nuclear energy is consumed, (and thus produced).

However with oil reserves dwindling, one can assume Nuclear Energy will become a key energy factor in the global supply game of energy.

The Invesco Perpetual High Income Fund is a £12,400 million (£12.4 billion) investment fund that is was formerly run by Neil Woodford, and is now under the management of Mark Barnett.

The fund aims to achieve a high level of income, together with capital growth.

Its top 10 holdings are:-

AstraZeneca 5.71%
British American Tobacco 5.71%
Roche 5.29%
GlaxoSmithKline 5.23%
Imperial Tobacco 4.99%
BAE Systems 4.93%
BT 4.71%
Reynolds American 4.37%
Rolls-Royce 3.71%
Capita 3.61%

The total top 10 holdings make up 48.26% of the fund.

One can see it holds high quality stocks that give a decent dividend.

GlaxoSmithKline, the UK’s largest health and pharma company. A dividend yield of over 5%.
[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=10042]

BT the UK’s premier phone and media company is delivering a dividend yield of over 2.5%. [http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10025&record_search=1&search_phrase=BT]

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In August  2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

27-Aug-2014 05/8% Index-linked Treasury Gilt 2040 £968.165 million
21-Aug-2014 2¾% Treasury Gilt 2024 £3,568.100 million
12-Aug-2014 4¾% Treasury Gilt 2030 £2,429.980 million
06-Aug-2014 0 1/8% Index-linked Treasury Gilt 2019 £1,539.592 million

When you add the cash raised:-

∑(£968.165 million  +£3,568.100 million +£2,429.980 million +£1,539.592 million) = £8,505.84 million

£8,505.84 million = £8.5 Billion

On another way of looking at it, is in the 31 days in August, HM Government borrowed:-

£274 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2040, 2024 2030 and 2019. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…”

The latest book by the former Wall Street trader and now financial commentator Michael Lewis is called Flas Boys.
[http://www.play.com/Books/Books/4-/60801888/Flash-Boys/Product.html?searchstring=Flash+Boys&searchsource=0&searchtype=allproducts&urlrefer=search]

Without spoiling the book, it is about the growth in High Frequency Traders (Robots). The book revolves are the good guy Brad Katsuyama, a  trader at the RBC (Royal Bank of Canada), who worked out that the high-frequency guys were effectively hijacking his orders by effectively front running his orders. Using low latency high speed fibre-optic cables that link superfast computer servers to brokers, these high frequency traders intercepted and bought his orders, selling the shares back to him at a higher price, and pocketing the margin. Thus an decent trader is unable to get best prices.

The effect of this is most serious, as long term investors like pension funds unable to get best prices for clients, when you have High Frequency Traders just in the market for micro seconds to make a margin. One has to really ask the economic benefit of a robot owning a share or bonds for a few micro seconds.

A good place to see the size of the US National Debt is the famous US Debt clock that is located on Sixth Avenue in Manhattan, New York City.

[http://www.usdebtclock.org/]

How large is the US National Debt ?

It is $17,682 Billion = $17 Trillion = £10.25 Trillion.

This is literally a sum of all the outstanding US Treasury Bonds outstanding, issued by the US Federal Government. This number is now over 100% of the US Annual GDP.

Another way of looking at it, is to divide it across the US population.
319 million is the US population.

$17,682 Billion = $17,682,000 million.

Thus:

$17,682,000 million / 319 million = $55,000 dollars per person in the US.
[=£33,000 per person in the US]

The scale of the US national debt is colossal.

The Balance of Payments is sometimes known as the UK Current Account.
What this is the actual difference between imports and exports.

So for the first quarter of 2014, (April, May & June 2014) the the current account was a deficit of £18,500 Million = £18.5 Billion.

That means the UK imported more goods than it exported to a tune of £18.5 Billion.

[http://www.ons.gov.uk/ons/dcp171778_368808.pdf]

As the economy rebalances, one has to see the UK regaining some lead in exports. With the devaluation in Sterling, the UK as the ability to export itself out of recovery. Look at our Coal and Oil reserves. Jaguar Land Rover, a world class product. Take Astra Zeneca and Glaxo SmithKline workd class pharma. Weir Pumps the leader in industrial pumps. Edwards High Vacuum International, precision engineering. McLaren the main player in Formula 1. Ineos the UK chemical giant with Sodium and Chlorine production.

Bluefield Solar Income Fund

The Bluefield Solar Income Fund in a London Listed investment fund, specialising in the Solar Energy Sector.
[http://www.bluefieldsif.com/]

A £150m investment vehicle.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=11141510&action=]

This fund, is a newly listed investment fund that started trading in April 2014 is planning to be an equity instrument that pays a healthy dividend to its investors.

The listed investment vehicle Peer to Peer Global Investments is a £217m investment fund.

[http://www.p2pgi.com/]

The objective is to deliver a dividend income and capital growth through investments, directly and indirectly from loans that are originated through online peer-to-peer (P2P) platforms

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=31528630]

By getting access to loans that have come from the Funding Circle, RateSetter, Zopa and Crossflow Payments the potential yield could be as high as 8%.

As peer to peer lending becomes more mainstream, the idea of being able to create loans and help more enterprises get access to credit is a very appealing proposition. As small firms prefer debt finance, the ability to by-pass the banks can only be a good thing. As more and more platforms try and compete to give funding for small businesses, greater access to capital is helping re-balance the economy.

It is easy to blame the banks for not willing to lend, but one has to remember that many peer to peer lenders have just noticed and opportunity to make money from banks by under cutting them as the banks are under pressure from regulators to hold more capital and reduce their balance sheets, retreat from some areas of lending. Peer to Peer lending is filling in that critical gap

On the 6th August (last week) Vodafone PLC paid the final 2014 dividend. This payment was £0.0747 [7.47p].

Now, the total voting rights of Vodafone PLC is 26,497,615,161.

[http://otp.investis.com/clients/uk/vodafone1/rns/regulatory-story.aspx?cid=221&newsid=436685]

This number is the effective numbers of shares that are available in Vodafone PLC.

So with this number, one can work out how much cash was paid to shareholders on August 6th 2014.

26,497,615,161 x £0.0747= £1,979,371,852.53.

That is £1,979 million = £1.97 Billion to the shareholders.

A nice dividend that rewards the long term shareholders in this premier mobile phone company.

The Artemis Alpha Trust PLC is a £125 million investment trust, managed by Artemis Fund Managers.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=13105&record_search=1&search_phrase=artemis alpha]

Its top 10 holdings are:

The Hut Group, Internet Retailer: 4.5%
Polar Capital Holdings, Financial Services: 4.2%
All the World’s Entertainment, Media: 3.5%
Skyepharma, Pharmaceuticals & Biotechnology: 3.3%
Reaction Engines, Aerospace & Defence: 2.9%
Brewin Dolphin, Financial Services: 2.7%
Emis Group, Medical Software Provider: 2.7%
Gift Library.com, General Retailers: 2.7%
Metapack, Industrial Transportation: 2.6%
Africa Oil, Oil & Gas Exploration: 2.5%

What is interesting is that this little company has had some good money from wise investments in smalll oil exploration companies, such as Hurricane Energy.

[http://www.hurricaneenergy.com/]

The political crisis in Libya is getting worse.

[http://www.theguardian.com/world/2014/aug/03/royal-navy-libya-rescue-uk-nationals-tripoli]

The tragedy of Libya is that this country has massive mineral wealth.

Just take the oil reserves and its oil production.

Libya has proven oil reserves of 48,000,000,000 barrels of oil.
That is 48,000 million barrels of oil or 48 Billion barrels of oil.

Crude oil today is worth $104.66 a barrel. Thus the oil reserves of Libya are worth

48,000,000,000 x $104.66 = $5,023,680,000,000

That is $5 Trillion = £2.985 Trillion = £2,985 Billion. (that is about 200% of UK annual GDP).

Today Libya oil produces 1,509,000 barrels of oil a day.
That is worth:

1,509,000 x $104.66 = $157,931,940 = £93,855,700, yes £93 Million a day.

It is a real pity that with an income stream of £93 Million a day just from oil, Libya should be a wealthy country, with the EU as a massive customer, just across the water, and yet we see today that Libya is in much a political mess.

The Witan Investment Trust is an investment trust company listed on the London FTSE-250 Index.

[http://www.witan.com/]

Founded in 1909, to manage the estate of the first Lord Faringdon Alexander Henderson today it has assets of £1,501 million (£1.5 Billion)

It’s top 10 holdings are:-

2.0% Reed Elsevier
1.6% Diageo
1.5% London Stock Exchange
1.4% Unilever
1.2% Comcast
1.2% Daily Mail & General Trust
1.2% Pearson
1.2% BP
1.1% Princess Private Equity
1.0% Sage.

The fund is managed by many fund managers:-

Veritas, Pzena, MFS, Tweedy Browne, Lansdowne Partners, Artemis, Heronbridge, Lindsell Train, Marathon, Trilogy, Matthews and Witan’s Executive team.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10348&record_search=1&search_phrase=witan]

A 2% yield on this fund, that offers exposure to international markets.

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In July 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-

22-Jul-2014 2¾% Treasury Gilt 2024  £3,567.2500 million
17-Jul-2014 1/8% Index-linked Treasury Gilt 2024  £1,628.4850 million
08-Jul-2014 4% Treasury Gilt 2060  £1,924.9850 million
01-Jul-2014 1¾% Treasury Gilt 2019  £4,000.0000 million

When you add the cash raised:-

∑(£3,567.2500 million  + £1,628.4850 million + £1,924.9850 million + £4,000.0000 million) =

£11,120.72 million

£11,120.72 million = £11.120 Billion

On another way of looking at it, is in the 31 days in July, HM Government borrowed:-

£358 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2019, 2024 and 2060. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…..”

Resolution is a FTSE-100 company that is specialising on consolidating the life insurance sector.

[www.resolution.gg]

The owner of Friends Life (formerly known as Friends Provident) run by Clive Cowdery, this second investment venture, after creating the first Resolution that was sold to Phoenix Life, now the new Resolution, again consolidating life funds, it now owns Friends Provident, AXA Sun Life Holdings UK that it bought from AXA of France and it bought Bupa Health Assurance. Its public name is Friends Life

http://www.friendslife.com/

With over £10 Billion in revenues and £111 Billion of assets under management it is a larger player in the investment management and life assurance sector.

[http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=1901686]

The dividend yield is over 6%. Yes, in a climate of 0.5% interest rates, the yield is over 6%. Incredible.