Finimize - 💔 Investors are dumping the UK

Russia has a secret | The UK has a grand plan |

Hi Reader, here's what you need to know for September 7th in 3:10 minutes.

🍋 Finimized with a lemon water at Gran Caffe Ciorfito in Naples, Italy (☀️ 28°C / 83°F)

Today's big stories

  1. Russia is seemingly bracing for a deep and long recession, but only in private
  2. How to keep calm and find opportunities, even as the UK faces an economic crisis – Read Now
  3. The UK’s new prime minister laid out plans to help Brits with their energy bills

Russia Has A Brave Face And Shaky Hands

Russia Has A Brave Face And Shaky Hands

What’s Going On Here?

Reports out this week suggest Russia’s hiding a scary economic outlook behind a strained smile.

What Does This Mean?

Russian officials would have you believe their sanction-loaded economy is doing just fine and dandy, but the cold, hard paperwork tells a different tale. A (seemingly not very) confidential document warns sanctions could cause a long recession, especially if more countries join Europe – Russia’s main export market – in boycotting the country’s goods and energy (tweet this). What’s more, Russia can’t even import replacement parts for its western equipment, which’ll stunt its growth by forcing it to rely on less advanced alternatives from Asia instead. That’s the brawn gone, and the brains might follow: the report also estimates that 200,000 tech specialists could flee to unsanctioned soil by 2025. No wonder, then, that two of the report’s three scenarios show the economy shrinking even faster next year to bottom out 12% lower than in 2021. What’s more, they predict the economy could take over a decade to recover.

Why Should I Care?

Zooming in: Cross your fingers.
Plucky Russia’s still shooting for its “target scenario”, which would see its economy bounce back pretty quickly. There’s hope: the report suggests measures that could give the economy a leg up. Not much hope, though: the country’s already tried many of those steps over the last decade, and they couldn’t stop its economy stagnating before sanctions came in – let alone in an environment like today’s.

The bigger picture: Heavy metal.
Russia’s metal producers are really taking a beating: they’re already losing nearly $6 billion a year as restrictions take their toll, and metal prices are slipping lower as countries cut their hauls in the face of a global recession. That’s not great for anyone: copper and steel are now languishing about 30% and 50% below their highs from earlier this year, and their multi-purpose bragging rights tend to mean they reflect global economic health pretty well.

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Analyst Take

The UK’s In A Tough Spot. Can You Make It Work For Your Portfolio?

The UK’s In A Tough Spot. Can You Make It Work For Your Portfolio?

By Russell Burns, Analyst

Investors spent August dumping the UK’s currency and its bonds.

They’ve been feeling anxious about the country’s grim economic outlook: it’s facing staggeringly high inflation, a crushing energy conundrum, soaring debt costs, and a looming recession.

But with every crisis, there are opportunities for you to make money.

And that’s today’s Insight: how to invest now, even as the UK faces an economic crisis.

Read or listen to the Insight here

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Brits Win, Energy Companies Win Bigger

Brits Win, Energy Companies Win Bigger

What’s Going On Here?

The UK’s new prime minister drafted plans this week to help Brits with mounting energy bills.

What Does This Mean?

The UK energy price cap – which limits how much suppliers can charge their cash-strapped customers – is due to jump 80% in October. At least the prime minister – newly appointed on Tuesday – was quick to draft plans that fix the typical British household’s annual energy bills around the current level of £1,970 ($2,300), effectively doing away with the existing price regime. Energy suppliers would charge households a reduced rate instead, with the government paying the difference between their new income and what they'd have made before – a move estimated to cost £130 billion ($150 billion) over just 18 months. And since that also means energy companies can skirt the once-touted windfall taxes on their massive profits, you’d be forgiven for forgetting everyday Brits were the intended winners here.

Why Should I Care?

The bigger picture: We can’t have anything nice.
The idyllic plan has some serious downsides. For one, the government’s likely to borrow the cash to fund the plan, adding to its £2.3 trillion ($2.7 trillion) of national debt – the cost of which is only increasing with interest rates. And for another, analysts believe some shifty energy sellers could hike their prices for suppliers because they know the government will have to pay, increasing costs even more as a result. That’ll be why some economists doubt the grand plan can be sustained beyond winter, and believe it could all end up in higher taxes in the long term to pay it all off.

For markets: Show me the money.
Businesses can hardly wait: the plan should fatten up customers’ wallets, meaning they’re more able to splash the cash during the money-making holiday shopping season. So maybe that’s why the UK's FTSE 250 index rose 2% after the news, with domestically-focused retailers like Marks & Spencer and Greggs notching 5% and 7% jumps respectively.

Copy to share story: https://www.finimize.com/wp/news/brits-win-energy-companies-win-bigger/

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💬 Quote of the day

“I divide all readers into two classes: those who read to remember and those who read to forget.”

– William Lyon Phelps (an American author, critic, and scholar)
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🌍 Finimize Live

🎉 Coming Up In The Next Week…

All events in UK time.

🇬🇧 In-Person Ladies Investing Meet-Up: 6.30pm, September 7th
⚡️ What’s Driving The European Energy Crisis?: 5pm, September 12th

👀 And After That…

📚 How To Do Your Due Diligence For Web3 Projects: 4pm, September 16th
💰 Building Crypto Wealth In A Bear Market: 12pm, September 20th
😎 Three Industries That Can Thrive During Recessions: 5pm, September 21st
🎨 How To Hedge Against Inflation With Fine Art: 5pm, September 22nd
🇺🇸 What’s Next For The US Economy?: 1pm, September 29th

🎯 On Our Radar

  1. You’re being watched. Literally every time you open an app.
  2. Someone’s speaking their truth. Shockingly, child acting might not actually be good for the child.
  3. Corn is having a moment. The humble veg was inspiring chefs way before its TikTok fame.
  4. Make mealtimes more enjoyable. All you need is Wikipedia.
  5. Your brain does more than you think. Turns out it even speaks to the fat in your body.
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