Market Snapshot: December set to start with gains, as Dow futures jump 300 points after selloff

Stock futures were pointing to a solid bounce for Wall Street, following yet another selloff, this time triggered by expectations for faster Federal Reserve tapering as well as worries surrounding the omicron variant of coronavirus.

How are stock-index futures trading?
  • S&P 500 futures
    ES00,
    +1.14%

    rose 1.2% to 4,621.75

  • Dow Jones Industrial Average futures
    YM00,
    +0.86%

    climbed 317 points, or 0.9%, to 34,775

  • Nasdaq-100 futures
    NQ00,
    +1.31%

    jumped 1.4% to 16,379

On Tuesday, the Dow industrials
DJIA,
-1.86%

dropped 652.22 points, or 1.9%, to 34,483.72. The S&P 500
SPX,
-1.90%

fell 88.27 points, or 1.9%, to 4,567, while the Nasdaq Composite 
COMP,
-1.55%

declined 245.14 points, or 1.6%, to 15,537.69. The Russell 2000 index 
RUT,
-1.92%

slid 1.9% to 2,198.91, just shy of a close of 2,198.47 that would have put it in correction territory, defined as a fall of at least 10% from a recent peak.

What’s driving the markets?

Volatility has stalked global assets since South African scientists announced the discovery of a new and potentially more contagious variant of coronavirus on Friday. Strocks sank Tuesday after Moderna 
MRNA,
-4.36%

CEO Stéphane Bancel expressed doubt that current vaccines will offer enough protection for vaccinated individuals from the omicron variant.

Read: ‘Don’t freak out’: Omicron is bound to disrupt supply chains. The question is, how bad will it be?

The second whammy for stocks came after Federal Reserve Chairman Jerome Powell spoke of speeding up the tapering process, given a “very strong” economy and “high” inflation pressures. He made the comments to the Senate Banking Committee on Tuesday where he appeared alongside Treasury Secretary Janet Yellen.

While Wednesday pointed to a more positive session, analysts said the market will remain laser focused on updates over the omicron variant, with data expected over the next two weeks or so.

“While Powell decided to retire the phrase transitory when discussing inflation, the fact is that this latest variant runs the risk of ensuring this current hawkish tone is in itself somewhat temporary in nature,” said Joshua Mahony, senior market analyst at IG, in a note to clients.

“With the risk of future lockdowns and economic closures, comments from the Fed and BoE should be taken with a pinch of salt given how much they could change once we find out the full extent of this variant,” said Mahony.

The U.S. is reportedly set to announce further travel restrictions this week, among them a requirement that all incoming air travelers be tested for COVID within a day of their flight. Details are being finalized ahead of a planned speech from President Joe Biden on Thursday, where he is expected to detail the country’s plan to control the pandemic this winter.

November payrolls data will be released on Friday, with the ADP private-sector payroll report due Wednesday at 8:15 a.m. Eastern Time, followed by the November Institute for Supply Management manufacturing index and October construction spending, both at 10 a.m.

Powell and Treasury Secretary Janet Yellen will make a second Capitol Hill appearance together on Wednesday and the Fed’s Beige Book of economic conditions coming at 2 p.m. Eastern.

Crude oil was also rebounding strongly from a sharp selloff on Tuesday. January West Texas Intermediate crude climbed 4.8% to $69.31 a barrel, while global benchmark Brent
BRN00,
+4.64%

jumped 4.8% to $72.52 a barrel. Goldman Sachs strategists said the oil market reaction has been “excessive” in relation to the omicron variant.

How are other assets trading?

Is Apple stock a buy now as Omicron fears grow?

It was an unusual day for the markets yesterday as most US stocks declined. Big Tech companies didn’t escape the drop, with Alphabet (Google’s parent company) falling 2.5%, and Meta (previously Facebook) slipping 4%. Apple (NASDAQ: AAPL) bucked the trend though. In fact, Apple stock rallied over 3% on the day.

NerdWallet: Will your insurance cover these winter home disasters?

This article is reprinted by permission from NerdWallet

Whether it’s tumbling temperatures or a blackout blizzard, winter weather can wreak havoc on a home. But you can avoid a disaster with some preventive action.

Here are four common types of winter-related home damage and how you can prevent them, plus how home insurance works if you can’t.

1. Burst water pipes

If your kitchen faucet isn’t working on a cold winter morning, you could have a frozen water pipe. Frozen pipes can burst and cause accidental water damage, which can be expensive to repair.

To prevent burst pipes, let your faucets drip on the coldest days, which will keep pipe water from freezing. Use sleeves or newspaper to cover pipes in spaces exposed to the chilliest temperatures, like basements and attics. If a pipe does freeze, shut off your water immediately, then use a heated pad or hair dryer to thaw the frozen water.

But don’t fret if a pipe bursts. “Almost all [home] insurance policies will cover the resulting damage from a burst pipe,” says Steve Wilson, senior underwriting manager at Hippo Insurance. Once you pay your deductible, your home insurance will pay out up to your policy’s limits. Your dwelling coverage will cover home repair costs, while your personal property coverage will pay for damaged belongings.

Keep in mind that in order for an accidental water damage claim to be approved, homeowners are expected to take steps to lower the risk of it happening, such as maintaining the home’s temperature at a minimum of 55 degrees during cold weather. If water damage does occur, homeowners need to take action to mitigate further damage, like turning off the water valve.

Also see: No matter your age, here’s how to tell if your finances are on the right track

2. Ice dams on the roof

An “ice dam” forms on a roof when snow melts and refreezes near the gutters or roof edges. When the ice begins to melt again, the water can seep under roof shingles, which can lead to mold and leakage. And the subsequent icicles hanging from your roof might be enchanting, but a heavy icicle could rip off a gutter.

An ice dam can cost you plenty.


istock

Your homeowners insurance likely covers damage caused by ice dams, but some extra care could prevent it entirely. Ensure your attic is sufficiently insulated by sealing spots where warm air could leak up from your living areas. This will keep your roof cold, which helps prevent an ice dam from forming. Have a professional inspect your roof to see if solutions like heat cables and rubberized shingles can keep ice dams from forming in the first place. You should also keep all gutters clear of debris so melted snow can drain properly.

Don’t climb up on your roof to scrape off snow. Doing so can damage the shingles and weaken your roof over time.

Don’t miss: I was mistakenly added to the deed on my father-in-law’s house. What are the consequences for my family?

3. Fallen tree branches

Large tree branches that extend over a home could pose a problem in the winter. “We’ll get tree limbs that will break and fall on homes, or fall on fences … because of the weight of ice,” says John Merkle, manager of property claims at Country Financial.

If an icy branch does fall, your insurance policy’s dwelling coverage should cover necessary repairs to the home, while your other structures coverage will pay for things like a damaged fence or shed.

Merkle recommends trimming your trees regularly to avoid the problem altogether. In fact, an insurer might deny a claim if the damage is deemed to be from a lack of maintenance over time.

4. House fires

House fires are a common cause of winter insurance claims, as people light candles and their fireplaces. These tips can help prevent unwelcome flames:

  • If you lose power, use flashlights instead of candles, and turn off all electric appliances.

  • Keep Christmas trees hydrated so they don’t dry out and become fire hazards.

  • Never use your stove to heat your home.

  • Keep portable heating devices at least 3 feet away from anything flammable and unplug them while you sleep.

  • Install a glass or metal screen in front of your fireplace, and have a professional chimney sweep clean it once a year.

Your home insurance will pay for fire damage as long as the fire wasn’t intentional. If you need to stay somewhere else because of smoke or reconstruction, your insurance policy’s loss of use coverage can help pay for hotel bills and additional living expenses. Keep any receipts in case your insurer needs a record of what was spent.

Know your insurance limits and exclusions

Talk to your insurance agent or company about what is and isn’t covered in your home policy so you’re prepared if disaster strikes. You can also check the declarations page provided by your insurer for a list of what is covered and the exclusions section of your policy for anything that’s not.

Read next: Dreading holiday shopping? Here’s how to stay out of debt while buying gifts

Another thing to check? Your personal property limits. Certain items, like jewelry or antiques, could have lower limits than other belongings. If you own a lot of valuables, you may need additional coverage.

More From NerdWallet

Ben Moore writes for NerdWallet. Email: bmoore@nerdwallet.com.

NerdWallet: How to avoid long lines at the airport—without paying for it

This article is reprinted by permission from NerdWallet

Long airport lines during a holiday travel season that coincide with a pandemic are ruthless. That is, for most people. But you are not most people.

You’ve turned to the Nerds, and we know not only how to avoid lines at airport security, but how to avoid paying for the privilege.

Apply for TSA PreCheck

TSA PreCheck is one of a few government-run trusted traveler programs, designed to allow members to use expedited security lanes at more than 200 U.S. airports. With TSA PreCheck, you can speed through security without removing your shoes, laptops, belts or jacket.

How to get (and pay for) TSA PreCheck

To get PreCheck, you’ll start by submitting an online application before moving on to an in-person appointment at a Transportation Security Administration Enrollment Center. If approved, you’ll get a Known Traveler Number, which you’ll then enter whenever you book a flight. That typically gets you the TSA PreCheck logo on your boarding pass, allowing you to enter the expedited TSA PreCheck line.

TSA PreCheck typically costs $85 and is good for five years, but there’s a good chance you might not even have to fork over $85 for it. There are more than a dozen credit cards that cover the TSA PreCheck application fee as a member benefit. While most of these cards have annual fees, the benefits can generally outweigh the costs for most semi-frequent travelers, especially if you were going to pay the $85 application fee out of pocket anyway.

See: A guide to travel rewards for not-so-frequent flyers and the budget-minded

Apply for Global Entry

Global Entry is everything that TSA PreCheck is and more. If you have Global Entry, you’ll automatically also get TSA PreCheck and all of its benefits. On top of that, you’ll get to avoid the general customs line when returning to the U.S. from abroad.

With Global Entry, you simply scan your passport or U.S. permanent resident card at a Global Entry kiosk, complete the customs declaration form, scan your fingerprints and move onward onto U.S. soil. This can be a major time saver when the customs line is long at busy airports or during high-volume travel periods.

How to get (and pay for) Global Entry

Global Entry is more powerful than PreCheck, but the application process is also longer and more expensive. To get Global Entry, you’ll start by submitting an online application upon which you’ll likely receive conditional approval. The next step is scheduling an interview at a Global Entry Enrollment Center, which is typically found at international U.S. airports. The challenge is finding appointment availability, so avoid being picky about timing and snatch one up immediately. It is not unusual for appointments to be booked several months in advance.

The Global Entry fee is a heftier $100, but many of the credit cards that cover TSA PreCheck will also offer to cover Global Entry. However, many of these credit cards will cover one, but not both, so it’s almost always a better idea to apply for Global Entry versus simply TSA PreCheck, especially if you have any international travel plans in the next five years.

Apply for Clear (maybe)

If Global Entry and TSA PreCheck are the pizza party, then Clear is the box of pineapple pizza. Some people sing its praises, and others just don’t get it.

See: The best way to deal with Thanksgiving leftovers? Turn them into pizza toppings

Clear uses biometric data (either a fingerprint or iris scan) to identify you rather than manually checking your photo identification, allowing you to cut the line and go straight to bag screening.

But unlike the former two programs that put you through a completely different security screening process than everyone else, Clear doesn’t actually get you into any special airport security lines. It simply gets you to the front of the screening line.

If you don’t have TSA PreCheck, then Clear can be immensely helpful in cutting the general security line. But for most travelers, it likely makes more sense to have TSA PreCheck if you can only choose, or afford, one.

If you have both TSA PreCheck and Clear, then you not only go through the TSA PreCheck lane but get to cut the PreCheck line — if there is one. TSA PreCheck lines are typically short. In September 2021, 96% of TSA PreCheck passengers waited less than five minutes, according to the TSA.

Don’t miss: WHO warns world leaders against knee-jerk reaction to coronavirus variant from South Africa as U.K. and EU impose travel bans

Then again, if you’re one of the 4% who finds yourself in a line longer than that, then you might benefit from Clear, especially at large airports like New York-JFK where PreCheck lines can still involve a wait.

Clear is somewhat limited, with availability at only about 50 U.S. airports, making this program more worthwhile if your home airport is served by Clear. Clear is also used in some stadiums and venues, which could prove to be a valuable benefit for frequent concertgoers or sports fans if your local stadium or arena also uses it.

How to get (and pay for) Clear

A Clear Plus membership is $179 a year. Members of certain airline loyalty programs get discounts on Clear memberships, and some credit cards offer full or partial statement credits to cover the cost.

Purchase upgraded airfare with priority lane access

Some airlines allow you to purchase upgraded tickets that get you access to exclusive security lanes. You won’t find these at every airport or with every airline, but they can be worth paying for during busy times like the holidays.

For example, United’s
UAL,
-0.66%

Premier Access speeds you through not just airport security because of its exclusive security lanes, but also grants you access to dedicated airport check-in lines and priority boarding. Prices start at $15 per ticket.

Southwest’s
LUV,
-0.31%

version is called the Fly By Lane, which grants you direct access to the front of the ticket counter and security checkpoints at select airports. Get it by purchasing a Business Select Fare, which is essentially the Southwest version of first class, or by holding either A-List or A-List Preferred Southwest elite status.

Check with your airline to see if it offers similar expedited security access.

Also see: Where to find the cheap airfares

The bottom line

If time is money, then you can be saving it. Whether it’s membership to security clearance programs or a higher class of airfare, it’s possible to pay money to skip the line. But if you hold certain elite status or credit cards, you might be entitled to such line-skipping privileges — and skip paying for them, as well.

More From NerdWallet

Sally French writes for NerdWallet. Email: sfrench@nerdwallet.com. Twitter: @SAFmedia.

Next Avenue: Did we learn anything from the pandemic? ‘If it doesn’t turn the tide on nursing homes, then shame on us.’

This article is reprinted by permission from NextAvenue.org.

In October, 150 people stood in the rain to celebrate the groundbreaking of an innovative elder housing project on rural Key Peninsula in western Washington state. For the first time, older people who are no longer able to live at home there can still remain in their community. The nonprofit Mustard Seed Project is building three Green House homes, two for assisted living and one for memory care. Almost one-third of the studio apartments will be for low-income people who are on Medicaid.

Founded in 2006, the Mustard Seed Project helps people age in place, with transportation, home repairs, friendly visits, yard cleanup and information and referrals. “The missing piece was supportive housing,” says Executive Director Eric Blegen.  

This rural community may be on the cutting edge of the future of elder care: creating supportive services to help older people remain independent; nurturing close-knit communities and developing small long-term care homes, rather than large hospital-like institutions, with well-trained staff, all offered in a way that won’t break the bank.

Read: The nursing home crisis is ‘worse than ever’

The beauty of small nursing homes

For more than 20 years, nursing home reform advocates have called for new models to replace the traditional, dreaded institutions. This demand was amplified when the pandemic ripped through nursing homes. As of October 10, 2021, more than 138,000 nursing home residents and more than 2,100 staff members had died from COVID-19, a number widely believed to be an undercount.

Some smaller nursing homes, notably the Green House model, did much better than others at protecting their residents. One 2020 (pre-vaccine) study in the Journal of the American Medical Directors Association concluded: “Nontraditional Green House/small NHs [nursing homes] have better outcomes than traditional NHs in numerous areas; evidence now demonstrates they have lower rates of COVID-19 and COVID-19 mortality than other NHs as well. As such, they are an especially promising model as NHs are reinvented post-COVID.”

Susan Ryan, senior director of The Green House Project, says, “Interest in the model is at an all-time high. Media has been through the roof. Green Houses offered such a bright counternarrative to what we were seeing in nursing homes.”           

She ticks off the model’s advantages: Every resident has a private bedroom and bathroom. Smaller autonomously functioning homes greatly reduce the number of employees coming into contact with residents. Green Houses use “universal workers” (called “Shahbaz”) who provide direct care, meals and household management, rather than having dining, laundry and housekeeping staff cycle through. Nursing staff is consistent throughout the week. 

“So many things about the model afforded the good COVID data,” says Ryan. “And you can’t underestimate the physical environment and getting outside.” 

Green Houses, which usually serve 10 to 12 residents, typically are single-story, with yards and patios its residents may freely access.

“We’ve shown that we have a model that performs really well in the worst of times,” Ryan says.

See: Nursing home occupancy dropped significantly in the wake of COVID-19

Incentivizing change

The first Green Houses went up in Tupelo, Miss., in 2003. Today there are 360 in 32 states, a tiny number compared with the 15,000 nursing homes nationwide. Despite considerable evidence that Green House and other small-home models have better clinical outcomes and higher resident, family and staff satisfaction, change has been sluggish.

Also see: 90% of people want to grow old in their own home — what’s the real cost of doing so?

One reason, says John Ponthie, managing member of the management consultant Southern Administrative Services who serves on the Green House Project board, is that 90% of Green Houses are operated by nonprofits, while almost two-thirds of nursing homes are for-profit.

For-profit owners have assumed that only nonprofits, which can raise construction capital through philanthropies, can afford to build Green Houses, he says.

While Ponthie had taken pride in running good-quality traditional nursing homes, from the first moment he set foot in the Green House in Tupelo, he knew that this was the future he wanted for long-term care. “I was stunned,” he says. “It’s too good to be true.”

He describes how everyday life is different in a small-home model. “At a Green House you’re part of the life of your loved one,” he says. “It doesn’t smell like it’s not supposed to smell — it smells like cornbread. Christmas is Christmas. You can get outside or go in the kitchen and have a Popsicle.”

Perhaps most important is the relationships.

“When you strip everything else, it’s all about this model’s ability to facilitate relationships between the elders and the caregivers,” says Ponthie. “You’ve got a commitment that goes well beyond your job tasks. There’s a relationship there, when it’s real and meaningful and rewarding. That is the difference, that is the magic.”

Ponthie’s company went on to develop and provide administrative services to 30 Green Houses on five campuses in Arkansas, with 23 more homes opening by April. Sixty percent of residents are on Medicaid. 

According to Ponthie, although the construction costs are higher than for a traditional model, once amortized over 30 years, the cost difference was “negligible.” Operating costs are also some 5% to 8% higher annually, “but given the staggering differential in quality of life and all the outcome differentials, it’s a pittance,” he says.

Because Medicaid covers the cost of most nursing home care, the federal government could better use its leverage to compel change, Ponthie and others argue. “I’d figure out the metrics and pay better providers with better outcomes and take [payments] away from those who aren’t,” he says. 

Those that build Green Houses or provide private rooms, for example, could get paid a higher rate from Medicaid, Ponthie adds.

The government could also offer more low-interest construction financing to build small homes, as the Mustard Seed Project did. It received a $7.8 million low-interest construction loan from a U.S. Department of Agriculture Rural Development program and raised $5.6 million through state and county government, foundations and the community for its Green Houses.

Related: ‘Caregivers are getting burned out by the pandemic’: Labor shortages are taking a huge toll on nursing homes

One obstacle to change is the entrance of bad-actor private-equity firms that buy up nursing homes and wring profits from them, often with dire results. A study by researchers at University of Pennsylvania and University of Chicago found “a robust decline in nursing staff, leading to greater decline in per-patient nursing staff availability” after private-equity purchase, even in the midst of the pandemic.

Barry Barkan, co-founder of The Live Oak Project (part of the national nonprofit Pioneer Network working to improve long-term care), agrees that change needs to be incentivized.

“We need to look towards creating tax advantages for those who are investing in good care, for investing in redesigning homes,” he says. “We need to have a system of regulation that is supporting positive innovation and coming down really, really hard on the bad actors.”

A future of fewer, better nursing homes?

The broader question, according to Robyn Stone, senior vice president of research at LeadingAge (a trade group representing nonprofit aging services providers and othes), is: “How does the nursing home in the 21st century fit into all of the other options out there? With the aid of technology and the expansion of home and community-based services, how many can remain in their own homes with some family support, some formal care and some technology?”

Creating high-quality elder care across the spectrum is enormously complex, she notes. It’s all well and good to push for small homes, but “what do you do with all the existing stock? Are you going to knock down old buildings and build small houses on expensive land? You really don’t have the space in urban areas to do that.”

One option is to create “neighborhoods” with homelike environments within large buildings.

“The most important thing in a nursing home is trained staff who know what they’re doing and know how to implement evidence-based practices around mobility, around preventing decubiti [pressure sores], around managing pain,” Stone says. “That is the challenge.”

With older people being able to extend the time they remain at home, adds Ponthie, moving towards fewer, better nursing homes may be the answer.

Getting from here to there

The Live Oak Project, which has been in the trenches for decades, promotes systemic culture change in institutional elder care. When COVID-19 hit, the group quickly got to work, developing an action plan for moving forward and lobbying key members of Congress.

Simply demanding more regulation isn’t the answer, Barkan says. Working at the grass roots and with government, he notes, the Live Oak Project seeks “to reimagine, redesign and transform the whole system of elder care from top to bottom and inside out.”

It’s first focusing on three main areas: growing and training the direct-care workforce, redesigning buildings from institution to home and creating an age-friendly culture. 

Among the Live Oak Project’s initiatives: a $55 billion Medicaid investment in better wages and benefits for full-time nursing home staff; $1 billion to beef up recruiting and training of direct-care workers; incentives to move from large institutions to small homes and the creation of a digital network through the U.S. government’s Administration for Community Living, aimed at sharing research and strategies for enhancing the well being of older adults.

Leaders of this effort are meeting with staff of key congressional committees to push for funding to be included in the Biden administration’s Build Back Better package. Regardless, Barkan says. “We have to be dug in for the long haul.”

Adds Ryan: “If [the pandemic] doesn’t turn the tide on nursing homes, then shame on us.”

Beth Baker is a longtime journalist whose articles have appeared in the Washington Post, AARP Bulletin, and Ms. Magazine. She is the author of “With a Little Help from Our Friends — Creating Community as We Grow Older” and “Old Age in a New Age — The Promise of Transformative Nursing Homes.”

This article is part of The Future of Elder Care, a Next Avenue initiative with support from The John A. Hartford Foundation.

This article is reprinted by permission from NextAvenue.org, © 2021 Twin Cities Public Television, Inc. All rights reserved.

More from Next Avenue:

: A bit excessive? Oil traders have priced in a three-month halt to global air travel, says Goldman Sachs

Japan, Israel and Morocco have each put a ban on international travel in the face of the discovery of the new, perhaps more contagious variant of coronavirus.

But the oil market has priced in a far steeper reduction to air travel. According to strategists at Goldman Sachs, the market has priced in what they say is a mammoth 7 million barrels of oil a day reduction in demand over the next three months, with no offsetting response in production from the OPEC+ oil cartel.

That’s the equivalent, say analysts led by Damien Courvalin, of “not a single plane flying around the world for three months.” It’s also equivalent to a lockdown half as intense as the second quarter of 2020, shortly after the new coronavirus that causes COVID-19 first started affecting countries outside of China.

Not surprisingly, these analysts view the reaction as excessive. Their view is that a new variant, combined with the global release of reserves, represents only a $5 per barrel downside to its $85 forecast for the next few months.

“In fact, there’s still potential for offsetting bullish developments via the lack of progress in Iranian negotiations (where we had expected a supply ramp up beginning in 2Q22). OPEC+ freezing its production hike for one month when it meets on Thursday as well as the current ramp-up in gas-to-oil substitution could in fact offset nearly half of the combined negative hits of this new COVID variant and SPR releases in the base scenario,” they said.

Crude futures
CL.1,
+4.23%

rallied nearly $3 per barrel on Wednesday morning but still were trading below $70, after trading as high as $84.97 earlier in the month.

Natural-gas futures
NG00,
-3.66%
,
by contrast, fell 4%.

The UK has 50,000 mortgage prisoners: are you one of them?

Image source: Getty Images


The long-awaited ‘Mortgage Prisoner Review’ from the Financial Conduct Authority (FCA) has revealed the UK officially has 47,000 mortgage prisoners. This means nearly 50,000 Brits are unable to switch to a cheaper mortgage due to stricter affordability checks.

The UK’s ongoing Mortgage Prisoner situation has attracted growing attention in recent years, with some consumer groups campaigning for more help for affected homeowners.

So how can you determine whether you’re a mortgage prisoner? And why do some say the FCA’s official 47,000 figure is inaccurate? Let’s take a look.

What is a mortgage prisoner?

A mortgage prisoner is a homeowner who is trapped on an expensive mortgage and unable to switch to a cheaper deal. Many mortgage prisoners took out their mortgages prior to the 2008 financial crash when lending rules were far more lenient.

How can you tell if you’re a mortgage prisoner?

You may be a mortgage prisoner if all of the following apply:

  • You’re currently paying a mortgage
  • You have a good repayment history
  • You’re unable to switch to a cheaper deal

Many existing mortgage prisoners find themselves in their current situation due to stricter lending affordability rules introduced in 2014.

As a result of the changes, those who passed their lender’s affordability checks prior to 2014, may not pass the updated criteria when they wish to remortgage. Because of this, some lenders refuse new mortgages to existing mortgage holders. This can happen even if a homeowner has a stellar repayment record.

Being unable to switch to a cheaper deal can be hugely frustrating. This often isn’t helped by the fact that open market mortgage rates are currently at rock-bottom levels.

What is being done to help mortgage prisoners?

Not enough is being done, according to many consumer groups. That being said, it’s worth knowing that the FCA has introduced some provisions that allow lenders to carry out a ‘modified affordability assessment’. This gives lenders the power to waive some of the new stricter checks, meaning some prisoners can move to a cheaper deal.

However, lenders are under no obligation to undertake this assessment, which many feel is unfair. Often, lenders will avoid carrying out this assessment if mortgage holders have little equity in their homes.

What did the Mortgage Prisoner Review reveal?

The FCA’s Mortgage Prisoner Review says 47,000 homeowners can classify themselves as mortgage prisoners. However, the report has come under fire, given that the data ignored 34,000 people behind on their mortgage payments.

The FCA justified this by saying these mortgage holders wouldn’t be able to switch deals even if lending rules were relaxed. However, Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, suggests this is poor reasoning given that many prisoners are behind on their repayments because they are unable to switch.

She explains: “Almost 50,000 mortgage prisoners are still stranded on horrendously expensive mortgages, according to FCA figures, but the real number of people trapped is closer to 100,000, and they face a nightmare Catch 22.

“Prisoners are trapped in a vicious circle. They’re often paying a far higher interest rate than everyone else, and while the average rate of 4.3% is bad enough, 3% of them are paying over 5%.”

Coles goes on to explain that some mortgage prisoners face an even tougher challenge to chop away at their balance. She explains: “If every penny is going on your existing mortgage, it’s harder to pay down a big outstanding interest-only balance.

“Likewise, if it absorbs a major chunk of your income, you run the risk of missing payments. And both of these things make you more likely to remain a prisoner for even longer.”

Coles also added that age could also be a factor for many being unable to switch. She explains: “Almost twice as many people with inactive lenders are over the age of 56 (35.3%), and almost four times as many are aged 76 or over (2.1%).

“Having big outstanding balances at a later age makes the task of finding an alternative to switch to even harder.”

Are you looking for a mortgage?

If you’re fortunate not to be a mortgage prisoner yourself, do take a look at The Motley Fool’s top-rated mortgage deals.

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Futures Movers: Volatile action continues for oil, which rebounds ahead of supply data, OPEC meeting

Volatile action continued for crude oil on Wednesday, with prices swinging higher on the heels of a sharp selloff, and the worst month of trading since March 2020 due to renewed COVID-19 worries.

West Texas Intermediate crude for January delivery 
CL00,
+4.23%

CLF22,
+4.23%

climbed $2.88, or 4.1%, to $68.90 a barrel. The contract slumped $3.77, or 5.4%, to settle at $66.18 a barrel on the New York Mercantile on Tuesday.

November marked the biggest monthly declines for front-month WTI — down 21% — and Brent crude — off 16% — since March 2020, the start of the COVID-19 pandemic as per the World Health Organization. The following month, WTI crashed below zero dollars a barrel.

February Brent crude
BRN00,
+4.42%

BRNG22,
+4.42%

climbed $2.84, or 4.1%, to $72.08 a barrel. That followed a loss of nearly 5.5% to $69.23 a barrel for the global benchmark on Tuesday.

Along with other global assets, the commodity has been on a roller coaster since Friday’s announcement of the new omicron variant of coronavirus by South African scientists. Oil slumped Friday, rebounded Monday, then fell again on Tuesday after Moderna
MRNA,
-4.36%

CEO Stéphane Bancel cast doubt on the ability of current vaccines to fight the new variant.

Oil fell along with other assets on Tuesday after Federal Reserve Chair Jerome Powell said it makes sense for the central bank to speed up the taper of asset purchases, in testimony in front of the Senate Banking Committee.

The omicron variant has now been detected in several countries. Some believe worries about how the variant will affect travel and activity could pressure on OPEC+ — made up of the Organization of the Petroleum Exporting Countries and its allies, including Russia — to pause monthly increases in oil production that would have lifted output by another 400,000 barrels a day in January.

Read: U.S. expected to toughen COVID testing requirement for international travelers

Also a factor for oil, prices began rising late Tuesday after the American Petroleum Institute reportedly showed on Tuesday that U.S. crude supplies fell by 747,000 barrels for the week ended Nov. 26, along with weekly inventory increases of 2.2 million barrels for gasoline and 800,000 barrels for distillates.

Inventory data from the Energy Information Administration will be released Wednesday, with an S&P Global Platts survey of analysts forecasting a drop in crude inventories of 2.7 million barrels.

OPEC is scheduled to hold technical meetings via videoconference on Wednesday and Thursday, ahead of the OPEC and non-OPEC ministerial meeting, also planned for Thursday.

Read: OPEC+ has excuse to pause oil production increases after COVID variant sparks crude plunge

Weighing in on recent price action, Goldman Sachs strategists said in a note Tuesday that the selloff has “far overshot” any likely impact of the new variant on demand.

Elsewhere, February gasoline
RBF22,
+4.03%

rose 3.7% to $2.013 a gallon, after the now-expired December contract slid 4.7% to $1.98 a gallon, ending almost 20% lower for the month. January heating oil
HOF22,
+4.11%

rose 3.7% to $2.136 a gallon, after the now-expired December contract slid 4.1% to $2.064 a gallon, for a monthly decline of over 17%.

January natural gas 
NGF22,
-3.66%

bucked a higher trend for energy contracts, falling 3.6% to $4.399 per million British thermal units. The contract slid 5.9% Tuesday, and lost 16% for the month.

What could Carnival shares be worth in five years?

Carnival (LSE: CCL) shares have been one of the biggest losers of the past 18 months. The company’s revenues plunged to near zero as the pandemic grounded the cruise industry last year. Investors did not waste any time jumping ship. 

Since the beginning of 2020, the stock has plunged by nearly 70%, and since the beginning of 2018, the stock is off 80%. 

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But with the world slowly starting to move on from the worst of the pandemic, the outlook for Carnival is looking up. Over the next couple of years, the stock should begin to reflect the firm’s improving operating performance.

Recovery in progress 

While the pandemic is still raging in many regions of the world, testing and vaccination programmes have helped most industries open up. That includes the cruise industry. 

Carnival’s revenues totalled $546m, up 1,666% year-on-year for the quarter to the end of August. That is a far cry from the near $5bn a quarter in revenues the group reported before the crisis. But it is a start.  

The company’s future depends on what course the pandemic takes over the next five years. 

In the best-case scenario, the coronavirus will become less infectious, allowing the world to return to normal. However, in the worst case, the virus may continue to mutate into more infectious and damaging strains. 

If it is the latter, I think Carnival will struggle to return to its former glory. There will likely continue to be a market for cruise holidays, but with strict testing and vaccination requirements. This could put a lot of consumers off. 

I believe the most likely outcome is somewhere in the middle. The pandemic may continue to affect demand for cruise holidays in 2022 and 2023. But consumers should continue to return, although it will take some years for revenues to return to pre-pandemic levels. 

The outlook for Carnival shares 

The most important benchmark for Carnival will be a return to profit. Last quarter, the group reported a loss of $2.8bn on sales of $564m. These numbers suggest when sales return to around $3.5bn, the firm will be back in the black. Clearly, there is a long way to go before the company hits this target. 

Nevertheless, if the group can hit this target in the next five years, I think the stock is worth at least book value. In theory, any corporation that is not losing money deserves to trade at or above book value. Carnival’s book value per share, according to the company’s latest figures, is 986p. This implies the stock looks expensive at current levels. 

If Carnival can return to profit faster, the stock could be worth more than this target within half a decade. I think that is a big ask, especially considering all of the uncertainty surrounding the pandemic. 

As such, I am not going to be buying the stock for my portfolio today. I think there is just too much uncertainty surrounding the outlook for the business. 


Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should I buy this exchange traded fund focused on renewable energy stocks?

Renewable energy stocks have grown in popularity over the last few years. And following the COP26 summit, I’m looking at whether I should invest in the sector.

Why I’m looking at renewable energy stocks

There’s a compelling investment case for renewable energy stocks. Not only is this an ‘ethical’ sector, but this area is likely to benefit from widespread government support over the next decade.

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

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According to an IEA report, though $750bn should be spent globally on clean energy technologies in 2021, spending would have to increase significantly to meet the 1.5% cap on temperature rises. This level of investment is likely to mean that this sector should enjoy substantial gains over the coming years.

What I’m looking at

I could invest in individual renewable energy stocks, but I like the idea of using an exchange traded fund (ETF). This allows me to invest in several companies while holding just one share.

The one I’m considering is iSHARES Global Clean Energy UCITS ETF (LSE: INRG). This ETF aims to track the performance of the S&P Global Clean Energy Index. It’s designed to measure the performance of companies in global clean energy-related businesses from both developed and emerging countries, while also taking into account the carbon footprint of these companies.

Looking at the fundamentals, this ETF is large at over $6bn, established (launched in 2007) and has good trading volume. I think the ongoing charge of 0.65% is reasonable.

Presently the ETF has 76 holdings. 44% is in US companies, while Chinese firms account for around 4.5% and investment in UK entities presently stands at just under 4%. I like the fact this ETF is diversified in terms of countries and companies. If any individual company fails or there are certain country-specific problems, the ETF should hold up pretty well. It also pays a small dividend, which currently stands at 0.73%.

Am I going to invest?

Year-to-date performance hasn’t been good, however. Currently, the fund is down around 15% this year and is about flat over a 12-month period.

The subdued 12-month performance could be due to a variety of reasons. Some of the US companies in this fund have most likely suffered because of bad weather affecting their output and hence their earnings (for example, in Texas). Also, the energy supply squeeze all around the world at the moment may have seen money move into more traditional energy companies.

However, over the last five years, the fund is up around 180%. I take this as an affirmation of the long-term credibility of this ETF.

Although some investors may feel differently, overall, I think that this ETF might be one of the best ways for me to invest in renewable energy stocks. I believe this sector can perform strongly over the coming decades and am upbeat about this ETF. For this reason, I will be seriously considering adding iShares Global Clean Energy UCITS ETF to my portfolio.

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Niki Jerath does not own shares in iSHARES Global Clean Energy UCITS ETF. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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