Indholdsfortegnelse for Issue 999 i MoneyWeek

“House-price prospects depend on the outlook for employment and for mortgage lending” Moving house is a miserable process at the best of times. I can only imagine how stressful attempting such a move during the current coronavirus pandemic would be. So while there are plenty of worse positions to be in, I do feel sorry for the 450,000 people who are apparently either in a property-buying chain or waiting to rent a new home. The good news for them this week is that the housing market is now reopening, in England at least (at the time of writing). As long as everyone sticks to social-distancing rules, then estate agents can open, surveyors can value properties and removal firms can shift furniture. So if you were in the middle of a…

Colombian national airline Avianca filed for Chapter 11 bankruptcy protection after losing 80% of its income due to the Covid-19 crisis, says the BBC. “Avianca is facing the mostt challenging crisis in our hundred-year history,” said CEO Anko van derr Werff. With 20,000 staff on unpaid leave and 140 planes grounded, the company has been struggling since Colombia closed its airspace in March. America’s restaurant industry has shed 5.9 million jobs since the start of the virus outbreak, contributing to the worst overall labour numbers since the Great Depression, says Jenny Zhang on Eater. Job losses in the restaurant industry accounted for a quarter of all jobs lost in the US last month.…

Russia began easing its Covid-19 lockdown this week. The country has the world’s third-highest number of confirmed cases. New daily infections have been running at over 10,000 in recent days. A third of the Russian economy has “ground to a halt”, writes Jake Cordell for the Moscow Times, but the government cannot afford to turn on the fiscal taps. Russia needs oil at $42 a barrel to balance the budget, far away from current prices of around $30 a barrel. The “modest” rescue package will hardly cushion the pandemic blow. The limited stimulus is increasing the chances of a “prolonged economic downturn”, says Liam Peach for Capital Economics. The severity of the Russian outbreak means that restrictions remain tighter than in many other countries even after lockdown easing. Already discontent…

America’s monthly non-farm payrolls figures are a key economic indicator and widely watched by world markets. In the economic upswing of 2009-2020, the longest in US history, they tended to expand by around 200,000 a month. So it was shocking to see them shrink by 20.5 million in April as the lockdowns began to bite; in March they fell by 870,000. The unemployment rate surged to a post-1945 high of 14.7% in April. Every time there is a downturn, this chart makes an appearance. It compares the various postwar recessions’ impact on the labour market. The financial crisis saw the worst post-war employment recession, but the jobs slump was nothing compared with this one. In just two months US jobs have fallen 14% from their peak.…

So much for China angst, says Russell Flannery in Forbes. Shares in Kingsoft Cloud, the cloud-computing services company chaired by Chinese technology billionaire Lei Jun, “vaulted” by 40% on their Nasdaq debut last week. The Covid-19 pandemic has compounded geopolitical friction between the US and China, which had cast apall on previous Chinese listings in the US market. Yet Kingsoft Cloud closed at $23.84 last Friday, having floated at $17. The company raised $474m, ending the day with a valuation of $4.8bn. China is the world’s second-largest cloud computing market after the US, with spending rising 38% annually in the four years to 2019 to $23bn.…

PNC Financial, BlackRock’s top shareholder, has said that it will sell its 22% stake in the investment management company, which iscurrently worth $17bn, says the Financial Times. BlackRock’s share price has outperformed its listed US fund-management peers for years asthe company has “grown and diversified its revenues, in part by expanding into technology”. PNC’s stock price jumped by 6% as investors in the bank welcomed the “long awaited” move, which comes with “tax advantages” that may disappear in the near future. It will also allow it to bolster its balance sheet and “pursue potential acquisitions”. PNC may be leaving BlackRock for good, but the investment, which cost it just $240m in 1995, has already produced “a steady stream of fees and profits from the asset manager’s robust growth”, say Dawn…

Nearly £30m has now been matched on Betfair, but there’s been essentially no change in the market’s view of the coming US presidential election – punters still believe that Donald Trump has only a slightly worse than 50% chance of being re-elected. One interesting non-US market is on the date that Boris Johnson (pictured) will cease to be prime minister. Ladbrokes has him at 4/1 (20%) to depart this year, 8/1 (11.1%) to depart in 2021, 8/1 (11.1%) to leave in 2022 and 1/2 (66.7%) to leave in 2023 or later. David Cameron’s dramatic departure in 2016, followed by Theresa May’s implosion three years later, has conditioned punters to view political turmoil as the norm. There is also the possibility that the current crisis could yet end up being Boris’s…

There are two main ways for companies to return cash to shareholders. Dividends are the traditional method preferred by income investors. Share buybacks are the other and involve a company buying up its own shares. This is normally done by purchasing them in the open market, like any other investor. However, buybacks may also be done with a tender offer, in which shareholders who wish to sell can tender their shares to the company. This may be at a fixed price or the shareholders may submit a price at which they will sell. More rarely, a firm may agree privately with one shareholder to buy back shares they hold. When a company buys and cancels some of its own shares, existing shareholders own a greater proportion of the remaining ones.…

• Tesla boss Elon Musk’s incentives plan has put him in line for a $720m payout, says Yahoo Finance. The market capitalisation of the much-hyped electric-car brand has, on average, stayed above $100bn for the last six months, triggering the release of the stock options. Musk (pictured) cannot sell the shares for at least five years – not that he will mind. Musk, whose net worth is $39.4bn, already owns around a fifth of the listed company. Further awards in the scheme, which runs until 2028, beckon, up to a maximum of $650bn. • “Shareholders gave Ocado a bloody nose in a revolt against boardroom excess after chief executive Tim Steiner landed a £59m payday,” says the Daily Mail. Almost 30% of investors in the online supermarket voted against the…

The French business establishment has circled the wagons and seen off a bunch of marauding Anglo-Saxons. London-based activist hedge fund Amber Capital failed to win enough support to replace the board of Lagardere, amedia conglomerate, in a vote last week. The shares tumbled on the news, and “it’s not hard to see why”, says Bloomberg’s Chris Hughes. The vote “largely preserves a board that has overseen abysmal returns for investors”. The activist campaign of the past few months prompted a reaction from Lagardere’s allies, which rushed to help it preserve the status quo. Vivendi SA, the media conglomerate, took a big stake in the company last month; French media billionaire investor Marc Ladreit de Lacharrière followed suit.…

“I think women are too afraid to ask a lot of the time. I became one of the top-paid, highest-ranking female radio talk-show hosts. They wouldn’t have given it to me unless I had asked.” US radio star Michelle Visage (pictured), quoted in The Sunday Times “No. I’m a writer.” Lady Antonia Fraser’s response to being asked whether she has saved for her retirement, quoted in The Sunday Telegraph ”His first port of call is to go to the UK government to rescue an airline… owned by a Caribbean billionaire and Delta.” Ryanair’s chief executive Michael O’Leary on Richard Branson’s plea for a state bailout for his airline Virgin Atlantic, quoted in The Sunday Times “Starting my own business at 23. I think being naive and young helped – at…

Santander is to cut the interest rate on its popular 123 current account from 1% to 0.6% from 3 August. The rate had been 1.5% until last week. In three months customers holding the full balance (£20,000) “will have gone from earning up to £302 a year in interest to £120, but the bank will continue to charge... £5 a month”, says George Nixon for ThisisMoney. What’s more, this month Nationwide cut the rate on its FlexDirect account from 5% to 2% on balances up to £1,500. The 2% rate is still the highest on a current account. But you only get it if you pay in £1,000 a month and it drops to 0.25% after a year. The upshot? Stop trying to save and spend from the same account,…

■ Salary sacrifice schemes are a popular way for employees to make pension contributions tax-efficiently. Rather than making a direct pension contribution, the employee foregoes a portion of their pay, which the employer puts in the pension scheme instead. The reduced salary is then subject to less tax and national insurance for employee and employer alike. However, employees using salary sacrifice who have been furloughed under the government’s Coronavirus Job Retention Scheme are running into difficulties. Under the scheme, the state is paying employers’ minimum pension contributions aswell as staff salaries, but this doesn’t apply in the same way to salary sacrifice deals. State cash for wages is supposed to be paid directly to the employee, and the employer is not allowed to deduct the amount the employee would normally…

Offering ideas for UK income investments right now feels like the old story about the tourist in the countryside who asks a farmer for directions to a nearby market town. “If I were you, I wouldn’t start from here,” the farmer tells him. Nonetheless, we have to start from somewhere – and the obvious place is income-focused investment trusts with relatively decent revenue reserves. Investment trusts are allowed to hold back some of their income each year rather than paying it all out – and some choose to do this to build up a buffer that lets them maintain their dividend at times like these. For example, City of London (LSE: CTY) has said that it intends to raise its dividend for the 54th consecutive year and can dip into…

Despite the overall stockmarket upswing, the last few weeks have not been kind to my long tips. International Consolidated Airlines Group (which runs various airlines, including British Airways) fell from 247p to 182p thanks to the proposed 14-day quarantine on international arrivals to the UK. Energy giant Royal Dutch Shell has fallen from 1,509p to 1,318p owing to the first dividend cut since World War II. Television group ITV has declined from 76p to 73p. Only equipment rentals firm United Rentals bucked the trend by rising from $108 to $116. Overall, my four long positions are making total losses of £975. Sadly, the short tips haven’t done that well either, with two out of the three going in the wrong direction. Ride-sharing service Uber appreciated from $27.98 to $31.64; and…

FirstGroup (LSE: FGP) is a British multinational transport group based in Scotland. It operates passenger rail and bus services in the United Kingdom, Ireland, Canada and the US. The company recently drew £300m from an emergency lending scheme as the pandemic hit transport providers, notes Bethan Staton in the Financial Times. This comes on top of a series of cost-cutting measures, including pay cuts for senior management. The company’s share price reflects the uncertain outlook: it has fallen by 46% in the last year.…

Breitling’s bohemian chic It is fitting that Breitling, whose brand extols derring-do and pioneering adventuring in the face of adversity, has continued to plough on despite the challenges coronavirus has caused for the watch industry, says Johnny Davis in Esquire. The Breitling Superocean Heritage ’57 Capsule Collection – based on the brand’s original dive watch, the 1957 SuperOcean – is “a tribute to the laid-back lifestyle of the surfers of the 1950s and 1960s”. The 42mm watch is available with a classic black dial on a black vintage-inspired strap, but also in a colourful limited version – only 250 are being made. It is the “embodiment of pure bohemian chic” and is “surely one of 2020’s most notable releases”. £3,990, breitling.com A bespoke masterpiece If you’re looking to stay away…

The first stirrings are afoot in the art world as galleries and auction houses tentatively look to reopen their doors as the pandemic subsides, says Melanie Gerlis in the Financial Times. Gagosian, the world’s biggest commercial art gallery, will start the process with a show of German artist Georg Baselitz’s work in Hong Kong on 21 May. Sotheby’s chief executive Charles Stewart said the auction house’s staff in Europe and Asia would begin to return to work, noting also that it had made a total of $70m from holding 37 online sales since March. However, Perth-based WhiskyAuctioneer.com experienced the perils of doing so last month. Its online sale of 1,958 bottles of rare whisky had to be delayed due to a malicious cyberattack. The first phase of the auction, held earlier…

• “I have always loved Joanna Lumley, says Karren Brady in The Sun on Sunday. “But I never loved her more than when I saw the pictures of her standing cheerily in the OAP queue outside Sainsbury’s in Battersea last week,” waiting patiently to buy pasta, baked beans and loo roll. Lumley (pictured) “looked great – happy and friendly, and she oozes class”. Other celebrities, meanwhile, are “queuing up to tell us (from their distinctly privileged positions) how difficult their experience of lockdown is”. It’s not as if lockdown is easy on any of us. And yet, “lovely Joanna Lumley is queuing up with everyone else”. Were she to share her experience of the lockdown, no doubt she would be finding a way to look on the bright side. She…

41 The percentage fall in sales of Champagne in the third week of lockdown compared with the same week last year. Britons have “less to celebrate”, says market research firm Nielsen. Beer sales climbed 70% and cider sales rose by 89% year-on-year. 47.6bn The tourism revenue in Chinese renminbi (£5.4bn) generated by the 115 million domestic trips that were made during the five-day May Day break, according to government figures. A month earlier, just 43 million trips had been made during the three-day Qingming Festival memorial-day public holiday. 17 The weight in pounds of a 95% pure gold Ming-era seal that has been found by archaeologists at the site of a 1646 naval battle, near the Min River in southwest China. The seal bears the name of Shu Shi Zi…

Day traders investing with Interactive Brokers suffered some nasty shocks after oil’s first ever trip into negative price territory at the end of last month crashed the broker’s software, reports Matthew Leising on Bloomberg. Users of the platform were unable to view prices once oil fell below zero, meaning they were “flying blind”. Worse still, “the negative numbers also blew up the model Interactive Brokers used to calculate the amount of margin that customers needed to secure their accounts”. Asa result, traders inadvertently exposed themselves to incredible losses. One trader, Syed Shah, began the day with $77,000 in his account and took a punt on oil – at midnight, he “got the devastating news: he owed Interactive Brokers $9m”. Luckily for Shah and others, chairman and founder Thomas Peterffy (pictured)…

There are “dark rumblings” on Wall Street, says Randall Forsyth in Barron’s. The stockmarket rally continues but the economy is in “deep recession”, as illustrated by the 20.5 million US jobs lost in April (see page 5). The S&P 500 has bounced back by 30% since hitting a low on 23 March, with the FTSE 100 gaining 20%. America’s technology-heavy Nasdaq index has recouped all of its losses and is up for the year as a whole. A fool’s rally The rapid shift from “panic to optimism” in March came thanks to massive central-bank support, says The Economist. The US Federal Reserve’s unprecedented decision to buy corporate bonds has triggered a bonanza: corporates have issued $560bn in new debt over the past six weeks, twice the usual amount. US equities…

“Marcel Ospel, the former boss of UBS who has died… aged 70 was Switzerland’s Fred Goodwin... Back in 1995, Ospel [bought] Warburgs, the preeminent British investment bank… In the 2000s he went on, as Goodwin did at RBS, to build a world-scale financial conglomerate — but with a balance sheet increasingly bloated by toxic assets. And just as the former Sir Fred was shunned by Edinburgh society after the 2008 crash forced both banks into bailout humiliation, so Ospel became a hated man in his native land... he was forced to abandon his regular table at Zurich’s Kronenhalle restaurant after other lunchers complained… The jail sentences… for which their critics clamoured were never going to happen in either case [as]delusional risk-taking... is not a criminal offence. But for former members…

Three to buy AG Barr Shares The company behind Irn-Bru (Scotland’s favourite soft drink) has been hit by bar and restaurant closures but stands to gain when the recovery eventually comes. Its portfolio of well-known brands, which also include Strathmore water and Funkin cocktails, is a significant asset that commands customers’ loyalty. Prudent management has suspended the dividend, which may not return for several years. Thanks to its careful cash management, AG Barr should have enough liquidity even if lockdowns last into next year, making this a resilient, quality stock. 500p Calisen Group The Sunday Telegraph This smart-metering business was floated earlier this year by private equity group KKR at a £1.3bn valuation. The market crash has since knocked a quarter off the share price, presenting a buying opportunity for…

• Elon Musk has always been ready to tangle with anyone he feels has “threatened” Tesla, says Tim Higgins in The Wall Street Journal. However, his decision to announce that Tesla is resuming production at its main factory in California in defiance of local stay-at-home orders, is “brazen”. It also sets him apart from Facebook and Google, which have told employees that “they won’t be asked to return to offices for months”. Still, he has a point given that Tesla needs workers at its plant to make cars, whereas other tech companies’ staff can easily work from home. What’s more, Michigan has allowed rival car firms to resume production. • Given that one can “barely fly from New York to London”, jetting off to space may seem “even more fanciful”,…

Chinese officials have been worried that Donald Trump would follow up his two-year trade fight with a “financial war” and this week he fired the “first shot”, say Tom Mitchell and Don Weinland in the Financial Times. On Tuesday the US president ordered the main federal government pension fund not to invest in Chinese stocks. This is a clear signal that the administration views portfolio investment flows to China to be “just as undesirable as the migration of US supply chains to China and Chinese investment into the US”. This raises fears of a “more dramatic rupture” between the two countries, including the possible collapse of China’s “phase-one” trade deal with the US, agreed in January, under which China pledged to buy $200bn more of US goods and services than…

“The stock-market won’t wait for things to get better,” reckons Anthony Bolton, the former star manager who ran the Fidelity Special Situations fund for 28 years before retiring in 2007. So investors who are too bearish in a crisis like this risk missing out on the recovery. “‘The question you need to ask yourself is ‘am I happy to buy at today’s prices?’,” he tells Bloomberg. “There is this temptation always to keep waiting to get a better chance. But you might not [get one].” If you think that current valuations are attractive on a long-term view, it’s an “opportunity to buy”, regardless of the short-term economic outlook. Bolton began investing again at the end of March, he tells the Financial Times, after increasing his cash holdings last year because…

In no way do big institutions resist change more than in how they pay their bosses, says Clara Ferreira Marques on Bloomberg. For too long, executive pay packages have been “too generous, too opaque and too loosely linked to longterm goals”. Simpler, smaller packages with more non-financial components, such as a focus on environment, social and governance (ESG) criteria, “would mark a welcome shift”. Just blame the pandemic. After all, “the figures are stark”. Inflation-adjusted CEO pay at the biggest US companies climbed by 940% between 1978 and 2018, according to the Economic Policy Institute, a think tank. The US benchmark S&P 500 index rose by 700% over the same period. Workers’ wages, meanwhile, increased by around 12%. And only “a mere 9%” of FTSE All World companies link executive…

■ The famously bearish hedge fund manager Crispin Odey was caught out by the market rally in April, relinquishing some of the gains he made amid the market turmoil in March, say Tom Teodorczuk and David Ricketts in Financial News. Odey Asset Management’s Odey European fund, which he manages himself, fell by 9.5% in April and is down by 3.7% in 2020, a dramatic loss after a 21% increase in March. That month proved a rare positive interlude in a largely negative streak. Odey’s bearish stance during the long bull run before the coronavirus outbreak led to significant falls over the past few years; since 2015 the European fund has only produced one annual gain: a53% jump in 2018. However, the manager appears undaunted by the reversal over the past…

■ “Company bosses and senior executives who decide to waive a bonus or sacrifice pay to help their business survive... could trigger an unexpected tax bill,” warns Mark Atherton in The Times. Regulations to tackle tax avoidance state that anyone seeking salary sacrifice must have a formal written agreement with their employer. Otherwise HMRC “will collect the tax and national insurance due on the amount they were entitled to, rather than what they actually received”. ■ Lenders have granted almost 1.2 million payment holidays on credit cards and personal loans since the Covid-19 outbreak began, reports Kalyeena Makortoff in The Guardian. Banks have also offered to waive interest on overdrafts of up to £500 for 27 million customers, according to UK Finance. Anyone considering asking for a break should be…

Those filling their lockdown time with chores they’ve been putting off for years should add tracing old pensions to the list. New research suggests that millions of savers have lost track of pension money worth an average of £13,000.The Association of British Insurers (ABI) said pensions worth £19.4bn are going unclaimed simply because their owners once moved home and failed to notify their pension provider of their new address. The ABI’s members have 1.6 million pensions without a traceable owner. Anyone who thinks one of those pots may belong to them should check their records. Does every employer and private sector pension provider you have ever saved with know your current address? If it is possible you have lost touch with a provider – where you haven’t heard from it…

Since the US stockmarket collapsed two months ago, it has enjoyed a massive rally, with the benchmark S&P 500 index gaining 30% from the trough. As a result, shares in many companies are now trading close to their pre-crisis highs. One of these is Match Group (Nasdaq: MTCH), which owns aportfolio of dating websites, notably Tinder and Match.com. The stock has rallied by 70% and is now nearly 25% above its level in early March and a mere 15% below January’s record peak. Yet the company has been beset by regulatory and structural difficulties. Some of the regulatory ones are relatively minor. They include claims that it didn’t follow proper guidelines when sharing users’ data with third parties. However, others appear much more serious and could threaten Match’s “freemium” business…

In periods of heightened uncertainty, the value of a rigorous and disciplined investment process cannot be overstated. Decisions based on either the fear of missing out or on a “wait and see” approach are unlikely to lead to success. We focus on UK-listed small-cap stocks, seeking out those likely to benefit from structural growth and boasting high-quality earnings and cash generation. We aim to buy companies at adiscount to their “real world” value to a private equity or corporate buyer and to invest for the long term. This framework has helped us cut through the constant barrage of news about Covid-19 to identify opportunities where we believe the market is missing the broader long-term picture (even if there is short-term disruption). Clinigen will close the value gap “Teleradiology group Medica’s…

“I buy expensive suits – they just look cheap on me” On the walls of Berkshire Hathaway’s offices, framed front pages from days of market panic, such as the 1929 crash, “serve as a reminder not to succumb to the passions of the moment”, says The New Yorker. Warren Buffett’s “ability to divorce himself from emotion” has always been part of his genius as an investor. And he hasn’t lost his head now. But he does seem to have lost his edge (see page 17) and is the first to admit it. Asked last year which would be the better investment to put in a child’s account – a share in Berkshire Hathaway or a share in an S&P 500 tracker fund – Buffett didn’t hesitate, “I think the financial…

La Gitana, Manzanilla En Rama, Bodegas Hidalgo La Gitana, Sanlúcar de Barrameda, Spain £16.99, virginwines.co.uk; £16.95, reduced to £15.95 each as part of amixed case, leaandsandeman. co.uk; £65 per case of six bottles in bond (not including duty and VAT), clarionwines.co.uk; £130 per case of 12 bottles in bond (duty and VAT will be added and the minimum order is £500), farrvintners.com There are fewer “anniversary moments” in the wine trade these days. I remember, 30 or so years ago, when we used to get very excited about the arrival of the new vintage of Cloudy Bay sauvignon blanc. A few vintage Port declarations have been announced in the last week or so, but I doubt you heard any fanfare. The Champagne houses make it up as they go along,…

The authorities may or may not have “flattened the curve” of coronavirus infections. But they’ve surely squashed the US economy. This week, we scrape it up off the pavement to see just how flat it is. Another three million Americans are expected to have put in for unemployment benefits during the week ending 2May, following 3.839 million initial jobless claims in the prior week, reports Yahoo Finance. So far, over the past six weeks, more than 30 million Americans have filed unemployment insurance claims. More people have lost their jobs than in all the recessions since World War II put together. Those “temporary” job losses may be here to stay. “Plenty of layoffs that just a month ago were labelled ‘temporary’ are now tagged ‘indefinite’ or ‘permanent’,” reports Bloomberg. Even…

The grounding of flights and disruption of supply chains have hammered Thailand’s tourism- and export-dependent economy, says John Reed in the Financial Times. But one export remains unharmed by Covid-19. The durian, a large, spiky fruit (pictured) with creamy, fatty golden lobes that have an overpowering scent, is enjoying one of its strongest-ever selling seasons. Prices look set to rise 15% this year and over 100,000 tonnes are already on their way to China, the durian’s biggest market. eBay’s UK arm drew in more than 50,000 new sellers during April, as retailers flock to the site during lockdown, says Sarah Butler in The Guardian. Leisure is the key theme: sales of hot tubs jumped by 480%, while those of dumb-bells, bread-makers and brewing kits more than trebled.…

Covid-19 has had scant impact on Swiss pharmaceuticals giant Novartis, says Wirtschaftswoche. Neither vaccines nor treatments for infectious diseases are key areas for the group. Yet it still boasts what is widely considered the strongest pipeline in the industry. It comprises more than 200 research projects, of which 56 are in an advanced stage of research or have culminated in a treatment being approved by regulators. No fewer than 15 drugs raked in sales of more than $250m each in the first quarter, making them all potential blockbusters (defined asa drug that makes sales of $1bn a year). The stock also yields 3.5%. It is a “core holding” in a rock-solid currency.…

Telefonica and Liberty Global have agreed an “industry-defining deal”, say Rodrigo Orihuela and Thomas Seal on Bloomberg. They are creating Britain’s largest phone and internet operator by merging Telefonica’s 02 and Liberty’s Virgin Media to create a new company valued at £31bn. Both companies will have equal stakes in the venture, will name half of the board of directors, and can also appoint the firm’s chairman on a rotating two-year basis. Liberty will pay Telefonica a total of £8.2bn to reflect the difference in the current size of both companies. The joint venture between Liberty and Telefonica may seem like an “odd pairing” given that Liberty is run by an “anti-establishment financial innovator” while Telefonica “sits at the centre of Spain’s corporate establishment”, says Christopher Williams in The Daily Telegraph.…

In a “clear signal” that the coronavirus-hit economy will need “large-scale state support for much longer than originally anticipated”, chancellor Rishi Sunak has decided to extend the taxpayer-funded furlough scheme until the end of October, say Chris Giles and Delphine Strauss in the Financial Times. The scheme, which currently pays 80% of the wages (up to a cap of £2,500 per month) of those workers put on leave by their employers, will also be broadened from August to provide top-up payments to part-time workers. Employers will be expected to share the costs with the taxpayer from the late summer onwards. By keeping the scheme universal, Sunak has avoided the impression of favouring any particular industry or region, says Kate Andrews in The Spectator. The government hopes that allowing those receiving…

Most crises ultimately turn out to be outstanding times to invest. There are obvious exceptions to this rule: buying shares in St. Petersburg in 1917 or Shanghai in 1949 in the hope that the situation would improve did not work out. But assuming that the entire economic and political system in which you live is not going to be turned upside down – in which case the best investment may be some gold and a ticket to somewhere far afield – people usually look back in admiration at those who kept calm and bought at the bottom. There are two barriers to being one of these investors. The first is identifying when you’ve hit the bottom. The second – which is often underestimated – is the sheer psychological difficulty of…

Rewind a few weeks and most of us couldn’t spell epidemiologist, let alone name any. Now we all know who Neil Ferguson is. We are all familiar with the “R-rate”, herd immunity, isolate and trace, and other strategies for controlling the spread of diseases we hardly thought about before. It’s right that we should be. Covid-19 is a lethal disease that has already caused 30,000 deaths in the UK, 277,000 around the world, and has the potential to overwhelm societies if it is allowed to spread unchecked. To combat it, we need to listen to the scientists. This is not a time, to borrow a phrase from the Brexit debates, when we should have had enough of experts. Forecasts are mostly useless Yet we should not be blind to their…

In early 2018 many financial experts advocated a switch out of the supposedly overvalued US market, driven ever higher by the technology giants, into the languishing but cheap UK market with its tempting yield. So when Baillie Gifford launched its US Growth Trust (LSE: USA), it raised just £173m. Since then, the FTSE All-Share index has fallen by 20% while the S&P 500 has gained 5% (15% in sterling terms). BG US, now a £450m trust, has returned over 80%. Gary Robinson, its co-manager, remains as confident as ever about the outlook. “We are in a period of unprecedented change,” he says. “People are being forced to change habits and will find the new way better. The future is being pulled forward and the spread between winners and losers will…

Landlords awaken to a new world Luke Johnson The Times The coronavirus pandemic is “likely to mark a defining moment in the relationship between commercial landlords and their tenants”, says Luke Johnson. Historically, in our “crowded country” property owners have “held the upper hand”, enjoying unique privileges including payment three months in advance and acontractual right to upwards-only rent reviews. But as a result first of e-commerce and now Covid-19, the tide is turning. Without occupiers, property becomes a liability as landlords still have to pay rates and insurance – and the value of the properties plummets. Retail and leisure rents are likely to fall 25%-50% in the “new world of social distancing, consumer timidity and recession”. The office market will be affected too. The landlord/tenant contract should forthwith be…

In times of crisis there is always one group that can be relied upon to adapt fast: fraudsters. There are so many swindles emerging that some banks have launched advertising campaigns to urge customers to be vigilant. Some scammers have resorted to “old-school tactics to steal cash”, says Adam Williams in The Sunday Telegraph. “There has been a resurgence in fraudsters writing letters or cold-calling people since the coronavirus outbreak began.” Some conmen are also breaking lockdown rules and knocking on doors. “If someone you don’t know knocks on your door, check their ID and verify it by calling the company they are working for after finding the contact number for yourself,” says Kate Hobson of Citizens Advice in The Sunday Telegraph. “The authorities have seized 500,000 unusable face masks…

As companies scramble to cut costs, they may consider employee pension contributions a tempting target. While the law requires employers to pay at least 3% of staff remuneration into their pension scheme, many contribute significantly more. The accountancy giant Deloitte, for example, has begun consulting its 19,000-strong UK workforce on plans to reduce its contribution to their pension scheme from 12% of pay to just 4.5%, potentially for a period of 12 months. Other employers are likely to make similar proposals to staff. “The law requires firms to pay 3%, but many pay far more” However, employers can’t act unilaterally. Any firm with more than 50 employees has to consult the workforce for 60 days before making any changes to contributions (though this requirement has been dropped for furloughed staff).…

The outlook for income investors just keeps getting worse. Last week telecoms firm BT became the latest high-yielding British stock to suspend its dividend. A fortnight ago oil major Royal Dutch Shell reduced its payout by 66%, the first time it has cut since 1945. Taking these into account, UK firms have now reduced, suspended or cancelled around £40bn in dividends since the beginning of the coronavirus crisis – amounting to more than 40% of what they were expected to pay this year. Overall, dividends for 2020 could fall by 53% in a worst-case scenario, reckons Link Group, which looks after the shareholder register for many of the UK’s largest firms. Since those projections include £18bn in dividends paid before the coronavirus crisis peaked, the looming cash crunch for the…

When former US president Jimmy Carter announced in 2015 that he had skin cancer that had spread to his liver and brain, he thought he had just weeks to live. But the 90-year-old undertook immunotherapy, a ground-breaking treatment that fights cancer with patients’ own immune systems, using Keytruda, a drug from Merck (NYSE: MRK), the global pharmaceutical giant. Now, five years later, Jimmy Carter is clear of cancer and leading a healthy, active life. “The company also boasts promising diabetes treatments” In 2015 Keytruda was new and sanctioned only for skin melanoma, an increasingly common condition. Since then it has been approved to treat certain cancers in the lungs, head, neck, bladder, stomach, throat, kidney and cervix, as well as Hodgkin Lymphoma. It is, in short, a blockbuster. Some analysts…

Activist investors who buy stakes in listed firms with the aim of pressuring a company’s management into making changes have a controversial reputation; many see them as asset strippers. But there is some evidence that they can add value for shareholders, especially if managers have lost sight of the bottom line. Indeed, a 2008 study, by Alon Brav of Duke University, Wei Jiang of Columbia, Frank Partnoy of University of California Berkeley and Randall Thomas of Vanderbilt University, found that traders can make money in the short run by buying the shares of companies targeted by activists. In 511 cases of activist hedge funds buying significant stakes in listed companies between 2001 and 2006, the share price of the firms increased by an average of 7% in the 40 days…

Flutter Entertainment (LSE: FLTR), formerly Paddy Power Betfair, is a global sports-betting firm. It merged with a former rival last week to create an Irish-headquartered gambling giant with sales of €5bn a year, says Barry O’Halloran in The Irish Times. Credit-ratings agency Moody’s thinks the group will keep growing “at least in line with the online market”. Sport has been cancelled worldwide, limiting events to bet on, but horse racing, a mainstay of the betting business, continues behind closed doors in Australia and parts of the US. The stock has gained 57% in a year.…

Lee Bentley Farkas was born in Albuquerque, New Mexico. He dropped out of college to run the family insurance firm after his father died. After it floundered, he drifted for a period, before setting up a construction company in Ocala, Florida, which failed in 1989. In 1991 he bought a small mortgage company called Taylor, Bean & Whitaker (TBW) for $75,000, funded by a loan from the mother of a friend. Over the next 18 years he would transform TBW into one of the largest mortgage brokers in the US. By 2008, it was dealing with $35bn a year in mortgages. What was the scam? TBW originated the mortgages, then quickly resold them to various investors, relying on Colonial Bank, one of the largest banks in the region, to provide…

Going… Paul McCartney’s handwritten lyrics to the song Maxwell’s Silver Hammer, which appeared on The Beatles’ 1969 album Abbey Road, are to be sold next month with California-based Julien’s Auctions. The 20 lines, written on Apple Corps stationery, are expected to fetch $200,000 to $300,000. The custom-made blue electric Cloud guitar owned by Prince (pictured), from 1984, minus the strings, isalso appearing as part of the “Music Icons 2020” sale on 19 and 20 June. The guitar was featured in the 1984 film Purple Rain. It features the late singer’s love symbols on the neck and gold hardware, and comes with a Calzone purple guitar road case. It is expected to sell for up to $200,000. Gone… Online bidding for Bob Dylan’s handwritten lyrics for a song on his album…