Alex Brummer

Power companies are the new banks as far as the public is concerned — but does that mean they’re not worth putting your money in? In any troubled marketplace there are always stocks to be picked, but current political turbulence makes that an unusually tough challenge in the UK energy sector. Much anger is currently directed at the  ‘big six’ energy groups — Centrica, Scottish & Southern (SSE), Scottish Power, E.on, RWE and EDF — and their pricing power in the domestic market. The recent round of tariff rises, ahead of the winter heating season and in the face of a moderating wholesale market, served to underline the suggestion that they are price-gouging.

What the Mark Carney era may offer is a little bit more predictability on monetary policy. Under Mervyn King the main guidance came from the Bank’s quarterly Inflation Report press conferences, MPC minutes, and speeches by committee members. Under the Bank’s new remit, set by the Chancellor in the March budget, it’s likely that Carney, like Bernanke, will seek to link interest rates and monetary policy directly to growth and jobs targets There will be subtle changes but no one, as economists at HSBC have noted, is expecting ‘shock and awe’. The big question for Carney is which indicators to use as targets. The runners are unemployment (as in the US), real GDP, or the measure preferred by many economists: nominal GDP.

If free and open markets are the Wild West, inhabited by roving bands of asset managers, hedge funds, investment bankers and random traders, then the sheriffs are the central bankers. A change of sheriff makes a real difference to trading conditions. The focus of London traders and analysts has already shifted to a new sheriff with the arrival of Mark Carney at the Bank of England next week, and much anticipation of his new tool of ‘forward guidance’, which he is expected to unveil in August. Central bankers, far more than politicians, have long held sway over financial markets. That influence is at its greatest at times of economic tumult. We have been sharply reminded of this during the period after the great panic of 2008 and the subsequent great recession.

The long period of dormancy for Britain’s housing market looks as if it is coming to an end — though there are huge regional differences. Central London remains exceptional, with the influx of overseas buyers into Kensington, Chelsea and adjoining neighbourhoods creating a microclimate of surging prices that has little to do with economic fundamentals — and has the political left salivating at the thought of a ‘mansion tax’ on properties worth £2 million-plus, even if that means turfing elderly widows out of family homes. Some five years on from the financial crisis that brought many lenders and house-builders to their knees, there are signs of a broadly based recovery.

Five years after the run on Northern Rock, four years after the epoch-making crash of Lehman Brothers, the clouds over Britain’s banking sector remain as dark as ever. We may have been the first country to recapitalise our banks when the crisis struck, but as the years have unfurled the sheer scale of the legacy of the ‘nice decade’ (1997-2007, ‘nice’ being the Bank of England governor Sir Mervyn King’s acronym for non-inflationary consistent expansion) has been revealed, and regulators have begun to wonder out loud whether further injections of capital may be needed before the repair job is completed. It is often forgotten just how big a role the wider financial sector plays in Britain’s economy.

The London Stock Exchange recently unveiled a glossy new guide to best practice in corporate governance for companies quoted on its platforms. This must be regarded as a timely exercise, given the increasing domination of the FTSE100 by natural resources groups with operations in the most exotic corners of the world. In its desire to be the world’s IPO capital, the City through the ages has offered a haven to overseas miners. There has been a tendency, however, to overlook their governance, environmental and social failings. In general, mining firms based in the great Anglo-Saxon democracies of the United States, Canada and Australia offer their workers a decent wage and reasonable housing, and adhere to environmental and safety standards.

It’s an irritating daily occurrence. The names of two or three people I barely know pop up in my inbox asking me to join their ‘professional network’, LinkedIn. Early on, I was tempted by the idea that being part of this family might widen my range of contacts, and perhaps also my story-gathering capacity. But then I realised that anything that had grown so big and amorphous was hardly likely to be a source of exclusive information. Nevertheless, social networks from LinkedIn to Facebook are the new investment fad. Having been wrong about Google when it first floated — my view was that legal disputes over content meant that it could never work — I hesitate to be dismissive about the current generation of tech giants.

Alex Brummer says blue chip stocks that pay a handsome stream of dividends are — usually — a reliable bet First, I have a serious confession to make. For as long as I can remember, my informal advice to any UK investor considering a share purchase — particularly during the volatile years of the ‘great panic’ followed by the ‘great recession’ — has been to buy BP. In a world ever more desperate for energy, the oil price had only one direction to travel over the long haul and that is upwards. BP looked particularly well placed to benefit because of its exposure (around 40 per cent of its income) to the United States and its uncanny knack for making discoveries in safe political neighbourhoods from the Gulf of Mexico to Alaska.