Geoff Cutmore - Morning Thoughts

Stories From Berlin

I have just spent a very productive three days in Berlin working on another program. It is part of the long running series on energy, which we produce in conjunction with Shell. The topics were energy security, the prospects for a Russian led gas OPEC and how the world deals with the politics of nuclear energy. This is a particularly thorny issue for the Germans who intend to phase out the generation of electricity via nuclear means by 2020. Try and catch it when it goes to air on May 31st.

The sums don’t add up so far. If the IEA’s projections for energy consumption growth of around 1.6% a year through to 2030 are accurate there will be a gap in Germany’s ability to keep the lights on. Building more coal fired power stations will not work if the country is to meet targets for the reduction of CO2 production. The caveat is expenditure on technology for carbon capture and cleaner coal – but the costs of doing this are high. The program also sheds some interesting light on the intentions of the Russian government through energy diplomacy.

Great Squawkbox today. Andy Brough was on top form. The key message, Andy is concerned about the level of real inflation in the UK economy. He sees plenty of opportunity to make money in equities still, but suggests the prudent investor needs to watch central bankers – they will be the ones who bring the bull market to a close. His colleague at Schroders – small cap manager Gillian De Candole was on and gave us her three top picks : YIT a Finnish construction company ; DCC an Irish distribution company and Mariella Burani an Italian fashion group.

The underlying investment philosophy is: look for companies that are leaders in their fields to gain exposure to niche growth areas.

Happy hunting.

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