Indholdsfortegnelse for Issue 1008 i MoneyWeek

“Believers in Tesla’s potential have made fortunes. Non-believers still think it’s nuts” Bet you wish you held shares in Tesla (see page 5). Or if you do (as most of our readers will, via their holding in the Scottish Mortgage investment trust), I bet you wish you held more shares in Tesla. They have risen fourfold this year and an extraordinary 80-fold since listing ten years ago. Believers in Tesla’s potential have made fortunes. Non-believers still think the whole thing is nuts. But nuts or not, it might go higher. Chris Andrew of Clarmond compares the firm to JDS Uniphase, a “semi-conductor optical visionary” stock wildly popular in 1999. It rose five times in the year it joined the S&P 500 (as it is rumoured Tesla will this year) and…

Recent homebuyers are calling on the government to backdate last week’s change to stamp duty that moved the threshold up to £500,000, says Adam Williams in The Daily Telegraph. Those who bought just before the change could have paid up to £15,000 more in stamp duty than those who buy now. Illegal raves are making life hell for residents of One West India Quay, aluxury block in London’s Canary Wharf, says Martina Lees in The Times. Leaseholders have complained about the issue to freeholder and Monaco-based billionaire John Christodoulou for several years, but things came to a head on 28 May when, at the height of lockdown, up to 200 people crammed into a £1.5m flat.…

By Singapore standards, last Friday’s election delivered a surprising result, writes Hannah Beech in The New York Times. The ruling People’s Action Party won again, but by a “narrower margin than usual”. With only 27 deaths for a population of 5.8 million, the virus is not the problem, says William Pesek in Nikkei Asian Review. But as one of the world’s “most cosmopolitan city-states”, Singapore looks vulnerable to the rising forces of deglobalisation. The electorate is dissatisfied with high living costs, while an economic model supported by “cheap, imported labour” has stoked social tensions. With neighbours Indonesia and Vietnam developing fast, Singapore is starting to look like “an expensive enclave in a more affordable neighbourhood”. A small and open economy, Singapore has been battered by the collapse of global trade.…

Chinese information security firm QuantumCTek closed 924% above its issue price on its first day of trading last Thursday, achieving the largest first-day leap in the history of China’s stockmarkets, says Naomi Xu Elegant in Fortune. It floated on the Star Board, Shanghai’s version of the Nasdaq exchange. The share-price surge gave the company a market value of $4.2bn. A benign backdrop helped propel the shares upwards; the Shanghai Stock Exchange Composite Index has reached a two-year high amid optimism about the economy’s recovery from the virus. The group’s line of work is also appealing. It specialises in quantum communication, which is supposed to be “unhackable”.…

Online retailer Ocado has declared that it has seen “unprecedented demand” for online grocery shopping in the UK “with a 27% leap in sales over the last six months”, says Jim Armitage in the Evening Standard. Ocado’s CEO, Tim Steiner, has said that the firm has not only seen “years of growth” in the online grocery market condensed into a “matter of months”, but he also predicts that consumers “won’t be going back” to shopping in physical stores. Ocado has clearly done well from the “exceptional trading conditions”, with sales up by 40% year-on-year at the end of the reporting period, says Andrea Felsted on Bloomberg. However, its shortage of capacity “prevented it from fully capturing demand” at the peak of the crisis, while the online arms of traditional retailers…

At the start of the year, the consensus was that while Donald Trump would probably lose the US presidential election, Republicans were likely to cling onto the Senate. This was because they started this cycle with 53 seats, so if they limited their losses to two seats they would keep control. However, Trump’s poor polling figures seem to be having an impact on the Senate contests, with most experts now believing that the Democrats will end up controlling both branches of Congress. At the moment Betfair have a Republican majority at 3.3 (30.3%), Democrat majority at 3.1 (32%) and no majority at 2.46. (40.6%). However, it’s important to note that Betfair’s rules state that to get a majority a party must have more than 51 seats and this excludes independents…

If it was in the FTSE, it would be one of the top ten companies, slightly behind Diageo and just ahead of BP. If it was in Germany’s DAX it would be in seventh place, and on France’s CAC 40 it would rank ninth. In the last week, the videoconferencing company Zoom has raced past $75bn in market value. From less than $70 at the start to the year, the shares are now worth more than $260. Despite the occasional wobble, it shows little sign of slowing down. By the end of the summer it might be worth more than $100bn. The company has come from virtually nowhere to become one of the biggest tech brands in the world. The number of installed users on its platform has grown seven-fold…

The coronavirus crisis has been painful for everybody, but value-focused fund managers have particular reason to feel miserable. After a decade in which growth strategies (those that look for companies with higher earnings growth) generally beat value approaches (investing in companies that look cheap on metrics such as price/earnings, price/book or dividend yield), value investors expected to be rewarded in the next bear market. Overpriced growth stocks would be crushed, cheap ones would shine and their patience would be rewarded. To say that this has not happened is an understatement. The gulf between value and growth this year is staggering. Using indices compiled by MSCI, growth stocks beat value ones in America by 28 percentage points in the six months to the end of June. In Europe, Japan and Asia…

Over the last few years more and more market commentators have noticed a concentration effect whereby a small number of very successful businesses are becoming more powerful in terms of market share, which in turns leads to higher share prices. Backing these businesses has been a profitable trade for active fund managers. For investors with a more passive inclination the choice in this context has historically been more limited, but that is now changing. In recent years a few new exchange-traded funds (ETFs) have tried screening national or global markets for a more focused collection of large, highly profitable businesses where the competitive advantage is defensible. Borrowing from Buffett An enduring competitive advantage is known as a “moat”. A company with a wide moat can keep competitors at bay for…

Covid will help shadow banks grow Jon Sindreu The Wall Street Journal The pandemic could help to “complete the transformation of shadow banking” (non-banks engaging in banking activities), says Jon Sindreu. Investment giant Apollo Global Management says it is launching a $12bn platform that will make loans of around $1bn; an early sign that direct lending is “expanding beyond its middle-market niche” to large firms. The timing may look strange, given the 43% fall in direct-lending fundraising from 12 months earlier, but the move could be “tactical”. Apollo is “filling a lending gap” left by the current woes of traded debt markets. While a Covid-related wave of corporate defaults “could hit many upstart direct lenders”, it could also “reinforce the role of the biggest players”. Direct lending is now the…

project-syndicate.org Trump’s America resembles the late USSR, says Harold James. Soviet citizens would joke that anyone calling Leonid Brezhnev an idiot risked prison, not for insulting the leader but for revealing “state secrets”. In 2020, the US president calls for former ally John Bolton to “go to jail”. His crime? Writing abook detailing just how “deeply incompetent” his old boss is. Who today respects America more now than they did before this “annus horribilis” of pandemic and protest? Declining trust in US governance means less confidence in the dollar, the world’s reserve currency. America’s triumph in the Cold War was built on the greenback’s dominance. Yet recently America has overplayed its hand, deploying the mighty weapon of dollar financial sanctions against too many enemies at once. That has encouraged the…

The crisis has led to a boom in pet sales, with lockdown prompting many of us to decide that we could do with one to keep us company. Pets4Homes, the free pet classified-advertisements site, says it rehomed 2,000 pets per day during lockdown. If you got a pet the chances are you paid a lot for it. With demand fast outstripping supply, prices have rocketed, with the average cost of a puppy doubling to £1,400. Cocker spaniels saw the biggest price rise. A puppy would have set you back by an average £2,109 in June, triple the cost 12 months earlier. The price of cats also shot up by almost a third during lockdown. People were parting with almost £400 on average for a kitten. “The average cat costs its…

Small and medium-sized enterprises (SMEs) planning to recruit or retain workers as the pandemic eases may now be eligible for support, courtesy of chancellor Rishi Sunak’s mini-Budget last week. It offered firms a range of cash payments if they retain staff and bring in new apprentices. The money could alter the judgements you make about staffing in the months ahead. Your first decision is how to manage the withdrawal of the Job Retention Scheme, which is being phased out between now and the end of October. The cost of continuing to employ staff on furlough is set to increase steadily until then as the state tries to wean businesses off the support. But at the end of January 2021, you’ll receive a £1,000 bonus for every member of staff you…

The rapid recovery of equity and credit markets has surprised most investors and commentators. It is due to the extreme measures implemented by central banks and governments to support their financial markets and stimulate their economies. This has allowed prices for risk assets to become detached from underlying trends in the global economy. This is not a new phenomenon. For about 30 years central banks have become increasingly active in financial markets. Central bank activism has been instrumental in suppressing financial market volatility. This has made financial assets seem less risky than they otherwise would be, driving prices higher and encouraging excessive accumulation of debt. Why consumer prices haven’t taken off... Central banks have successfully inflated asset prices, but all their interest-rate cuts and money printing have not – yet–…

Marston’s (LSE: MARS) is a brewery, pub, and hotel operator. It was known as Wolverhampton & Dudley Breweries until 2007, when it rebranded. Marston’s stock price slipped by 9% at the beginning of July after it revealed a £40m hit to sales as a result of the pandemic, says Camellia Ramleh on AskTraders. For its half-year results ending 28 March, the company recorded pre-tax profits of £9.4m, a 72% year-on-year decline. Marston’s has furloughed 13,000 staff, cut managers’ pay and suspended dividends. The stock has slid by 61% in 12 months.…

Northern Ireland Enjoy secluded relaxation on this gorgeous stretch of golden sand at White Park Bay, on the North Antrim coast, says The Sun. It forms a white arc between two headlands on the coast and is “rarely busy”. The National Trust owns the beach, which is backed by ancient sand dunes that provide a rich habitat for a vast range of birds. The birds are not the only residents, however. “If you are lucky, you might even spot the cows who roam the dunes with the job of keeping the grass short.” Recently, thousands of exoskeletons of transparent sea cucumbers were spotted at the west end of White Park Bay. They are an unusual sight in Ireland as they tend to live in very deep waters. Stay at Hagans…

2019 Le Sabbie dell’Etna, Etna Bianco, Firriato, Sicily, Italy (£12.99, 63 branches of Waitrose; £13.02, drinksandco.co.uk) Etna wine is very much en vogue. It is popping up everywhere and you inevitably have to pay up for the privilege of drinking wines from this north-east corner of Sicily, grown in the surrounds of the great volcano. I am not as enamoured of these wines as many, but I understand their appeal. It is the lava-rich soils that give the whites and reds such a notable flavour. The intense minerality is unmistakable and it brings with it a dry, grainy, raspy and somewhat peculiar sensation on the back of the palate. It’s like lobbing a few pumice stones into your glass! Etnan whites and reds are usually made from somewhat lacklustre indigenous…

By Morgan Housel Harriman House (£14.99) Over the last few decades it has become increasingly clear how our psychology and behaviour play a key role in shaping the financial decisions that we make. This book by finance writer Morgan Housel discusses how our values, experiences and quirks can lead to poor financial decisions. Some of Housel’s advice, such as the importance of sustained investment and diversification, can be found in many other personal finance guides. However, Housel has the knack of finding anecdotes that are so memorable and striking that they not only illustrate a concept, but also ensure that it sticks long enough in the reader’s mind to have an impact. Rather than just saying that too much leverage is a bad idea, for instance, Housel tells the story…

£40bn How much the migration of one million Hongkongers, three million of whom have been offered a path to UK citizenship, would contribute to the British economy, according to the Centre for Economic and Business Research (CEBR), a consultancy. 100m The cost in Saudi riyals (£21m) of building the Salam veterinary hospital, the world’s largest hospital for camels. It opened last week in Buraidah, in the northern Qassim province of Saudi Arabia, and has room for 4,000 patients. $74trn The combined net worth of all those with investable assets of at least $1m at the end of 2019, an increase of 8.7% from 2018, according to Capgemini SE’s World Wealth Report 2020. The US had the most millionaires at 5.9 million. €335,000 The average price of a house in the…

Espinoza in the Financial Times. The ruling “deals a big blow to competition commissioner Margrethe Vestager’s efforts to crack down on low-tax regimes in the bloc”. Vestager (pictured) ruled in 2016 that Ireland had to claim back €13bn worth of corporate taxes plus interest after accusing the country of giving Apple a preferential tax arrangement not available to other firms, one that allowed the tech giant to pay under 1% in corporate taxes. Apple consistently denied the allegations and both Ireland and the company appealed the judgment. This week the EU’s second-highest court ruled that the European Commission failed to show “to the requisite legal standard” that there was an economic advantage for tech giant.…

Who says markets are rational? asks John Authers on Bloomberg. Academics tell us that the market dispassionately crunches data to determine prices, but psychology still matters. On Monday America’s S&P 500 broke through the level at which it started the year before falling back. Whenever stocks enter positive territory for a year that has seen so much go wrong, even market bulls seem to start looking “for reasons to sell”. This rally may have found a “hard ceiling”. This week saw the start of the US second quarter earnings season, giving investors an opportunity to gauge the damage wrought by lockdowns, says Michael Wursthorn in The Wall Street Journal. Analysts expect S&P 500 earnings to have fallen by 45% on a year before. The V-shaped recovery has legs... This earnings…

“Chain restaurants from Bella Italia to Byron [are] on the brink of collapse after the shutdown... [The brands] had been backed by the sharpest suits of the private-equity scene. [They] have poured £6bn into the UK’s casual-dining market since 2014 in search of winning formats, driving valuations and rents sky-high while loading every deal (almost 70 of them) with debt aimed at maximising bang for investors’ equity buck. Now many of the chains are looking at ‘pre-pack’ insolvency or ‘company voluntary arrangements’... painful news for creditors, banks and the taxman. ‘We’ve seen this coming for ages,’ one restaurateur tells me. ‘The private equity boys just followed each other like sheep. This has much less to do with Covid-19 than you might think.’... we’re witnessing the aftermath of a plague of…

Three to buy Driver Group The Mail on Sunday A “vanity skyscraper” project in the Gulf is over budget, an Australian offshore oil rig is months behind schedule. Who do you call? This building resolution specialist helps sort out the disputes that arise when complex infrastructure projects go awry. Founded 42 years ago, its consultants are known for their “smart, forensic” approach to establishing what went wrong and how to move forward. New government infrastructure plans should bring it plenty of new work in the years ahead. Buy. 63p Volution Shares This ventilation products supplier is that rarest of things: a business well-positioned for the post-pandemic world trading at a reasonable price. A leading player in markets across northern Europe and New Zealand, Volution provides ventilation systems and ducts in…

• Trading desks may be notorious for getting banks into trouble, says John Foley on Breakingviews, but they also “keep them out of it”. With US lenders putting aside billions of dollars to cover bad loans amid an economic slump, their “armies of traders” are helping to cover the resulting losses. JP Morgan had to put $8.9bn aside in the second quarter to account for potential losses on “soured” mortgages and car loans. But it earned almost $10bn of trading revenue, a record quarterly sum. Similarly, a 68% jump in fixed-income trading profits has also helped reduce Citigroup’s losses. By contrast, Wells Fargo’s lack of a trading division means that it has had to declare a $2.4bn quarterly loss, “only its third this century”. It could get worse: Wells Fargo…

• India’s richest man, Mukesh Ambani (pictured), “has had a rollercoaster 2020”, cutting business deals and seeing “wild swings” in his personal wealth, says Bloomberg. But thanks to the price of the shares in his conglomerate, Reliance Industries, more than doubling since March, Ambani’s paper wealth has risen to $68.3bn, according to the Bloomberg Billionaires Index. The shares soared after Facebook, Silver Lake and others invested around $15bn in the company’s digital arm. That saw Ambani enter “the exclusive club of the world’s top ten richest people” as its only Asian member. • Mark Sedwill, who announced his departure as cabinet secretary last month, is to receive a £248,189 “golden goodbye” as compensation for loss of office – raising questions about whether his resignation was really voluntary. Sedwill had been…

The price/earnings (p/e) ratio is a popular measure for assessing whether a share is cheap. It’s a simple to calculate – you just divide the share price by earnings per share. A low number (eg, below ten) suggests that you aren’t paying much for each £1 of earnings, while a high number indicates a stock may be expensive (unless it’s growing rapidly). The p/e ratio has one obvious weakness. Using just one year of profits means a stock – particularly one in a cyclical business, such as mining – can look cheap because profits happen to be peaking at that point and are set to plunge when business turns back down in line with the economic cycle. An analyst looking at a single company may be able to assess whether…

Nine months after his “empire collapsed”, Neil Woodford has a new job, says Dylan Lobo in Wealth Manager: an advisory post with specialist fund manager Juno Capital “to offer insight into the creation of a portfolio” of unlisted healthcare investments. Woodford will not officially join the firm or manage client assets. The news has raised eyebrows given that his propensity for unquoted healthcare assets played a key role in sinking his fund, as Imogen Tew and David Thorpe note in FT Adviser. These illiquid assets still have £220m of investors’ money trapped in them. Investors in the Woodford Equity Income fund have received £2.3bn of payments so far; the fund was worth £3.7bn when it was suspended last year.…

“I’m cancel-proof in the sense that I’ve got enough money.” Comedian Ricky Gervais (pictured) is not concerned about being sacked for causing offence, quoted in The Sunday Times “I bought a diamond ring and announced that I would be married to myself. Then about four months later I got engaged! It was a purchase I somewhat regretted.” Singer Ellie Goulding on her biggest extravagance, quoted in the Financial Times “Only a very few people at the top are paid enough to keep up the sort of appearances the industry demands. The rest are just as likely to be travelling home from A-list parties on the night bus, and carrying £1,500 handbags but eating beans on toast until pay day.” Journalist and writer Harriet Walker on keeping up appearances in the…

fs.blog “What’s your biggest weakness? Where do you see yourself in five years’ time?” Such is the mind-numbingly predictable ritual of the modern job interview. Afterwards, the interviewer usually makes a gut-instinct decision about who to hire. Yet this wildly subjective methodology is a bad way of finding the best people. Everyone thinks they have good intuition, but the data says otherwise. One study showed people were worse at predicting a student’s future grades after reading a profile and interviewing them compared with reading aprofile alone. Interviews introduce a lot of useless “noise” – information that seems significant but is just a distraction. One of the biggest bits of noise is charm. The traditional interview is an ideal environment for the charismatic – fine if you are recruiting a sales…

Almost two million people bought bikes during lockdown, meaning that there are now 20 million cyclists in the UK, says Kenza Bryan in The Sunday Times. Many people bought one to avoid public transport. But if you’ve got new wheels, have you insured them? New bikes cost an average of £300. Some cost thousands. Yet almost half of cyclists are underinsured. Start with your home insurance. Check your existing policy to see if it covers bikes. If so, make sure yours doesn’t exceed the single-item limit – the maximum that can be claimed for one item. “Single item limits are usually between £1,000 and £2,000, so if you have recently purchased something [very valuable] it may need to be named separately on the policy,” says Simon Stanney, a director at…

More than one million small and medium-sized enterprises (SMEs) have now taken out Bounce Back loans. The news underlines the popularity of this element of the government’s Covid-19 support for businesses. SMEs that have yet to borrow should consider doing so. The scheme offers loans of up to £50,000 to any business that has suffered some form of detrimental impact during the pandemic. In practice, that is likely to be almost every business. The loans are available from 11 private sector banks, with the government guaranteeing the debt if borrowers default, and carry an interest rate of just 2.5% a year. A firm pays no interest or charges in the first 12 months. Many businesses have therefore taken Bounce Back loans to provide themselves with a safety net. With so…

The wave of Covid-induced dividend cuts is forcing many British investors to reevaluate their saving strategies. According to stockbroker AJ Bell, total dividend payments for 2020 are on course to be the lowest in six years –£63bn –with cuts estimated at £31.6bn. With £26.5bn – more than 80% – of the cuts coming from FTSE 100 firms, the current crisis has reminded investors of the importance of diversification. Historically, savers have relied on the blue-chip index, but there are plenty of income-generating small caps with more consistent payout policies. Many investors assume that smaller companies are always more vulnerable to economic difficulties, but we look for companies dominant in niche markets that are relatively insulated from macro dynamics. Investors’ instinctive aversion to smaller companies means they can be neglected and…

When Boohoo, the Manchester-based fast-fashion sensation, floated in 2014, the FT observed how business in the old “Cottonopolis” had changed. Although the former mill district in the city’s northern quarter was still “a centre for the rag trade”, fortunes once made “by making clothes” were “now made from selling them”. No-one better exemplified this shift than Mahmud Kamani – an entrepreneur who “grew up on these streets” and went on to disrupt the British high-street with his online emporium. The firm’s “explosive growth” – on the back of its PrettyLittleThing and Nasty Gal brands, plus some clever Instagram marketing – has defied the “doom and gloom” engulfing many rivals, says Business Insider: in the past five years, it has gone from £195m in sales to £1.2bn, making a billionaire of…

• Chancellor Rishi Sunak has had no hesitation in putting our money where his mouth is, says Richard Littlejohn in the Daily Mail. “Thirty billion quid here, £100bn there, £25bn somewhere else. It soon begins to add up to real money.” Will he be damned for frittering away the hundreds of billions of pounds we don’t have? “Could go either way.” His supporters could turn on him in a heartbeat. Still, “Dishi’s on a mission to feed the world”. He followed up his extension of the free school-meals scheme with a £10-off, all-you-can-eat deal aimed at encouraging people back into restaurants. “If Bob Geldof had been given access to the kind of cash Dishi’s throwing at his coronavirus recovery plan, he could have fed the world twice over and still…

Thousands of Virgin Atlantic employees’ jobs have been saved by a rescue deal worth £1.2bn, says the BBC. Sir Richard Branson’s Virgin Group will inject £200m and additional funds will be provided by investors and creditors. The airline is cutting 3,500 staff, but the remaining 6,500 jobs should be secure thanks to the rescue deal. The refinancing covers the next five years and “paved the way” for the rebuilding of Virgin’s balance sheet and return to profitability in 2022. Despite being cancelled due to coronavirus, Wimbledon isn’t leaving tennis players such as Serena Williams (pictured) in the lurch, says the Associated Press. The All England Club will pay out £10m in prize money to 620 players. The 256 players who would have competed in the main draw will each receive…

The trend towards healthy eating looks likely to endure for years, says Der Aktionaer, not least because younger people seem especially keen on it. Around 45% of millennials say they are concerned with the quality of their food. The pandemic, meanwhile, has prompted more people to cook at home. They may do so more often in future asmany restaurants will go under. All this helps explain why America’s Hain Celestial, whose organic and vegan products range from face creams to plant-based milk, recently raised its adjusted earnings before interest, taxes, depreciation and amortisation forecast for the year to 30 June 2020. It is pencilling in a rise of 15%-21% to $190m-$200m.…

Shares Japanese technology conglomerate SoftBank Group Corporation is “exploring” either selling or floating British chip designer Arm Holdings, which it bought four years ago for $32bn, say Dana Cimilluca and Cara Lombardo in The Wall Street Journal. The review is at an “early stage”, so it is possible that SoftBank will “ultimately choose to do nothing”. However, a sale would help it raise cash to “mollify” activist investor Elliott Management, which has been “agitating for changes at the company”. This money could be used to buy back its own shares, which trade at a “steep discount relative to net asset value”. Good luck getting much cash for Arm Holdings, says Alec Macfarlane on Breakingviews. While SoftBank’s CEO, Masayoshi Son, once called Arm Holdings his “most important acquisition”, he may struggle…

After a “polarising” battle for Poland’s presidency, nationalist Andrzej Duda was narrowly re-elected, beating the centre-right Rafal Trzaskowski by 51.03% to 48.97%, says the Financial Times. The close result means that the “deep political and societal faultlines” revealed during the campaign are “unlikely to go away”. Even asDuda was trying to “appear conciliatory” other figures from the ruling Law and Justice party were quick to float ideas that could provide the ammunition for the “next round of political infighting in Poland”. These include a further overhaul of the judiciary and new rules on foreign media ownership, which some claim could be used a pretext “to shut down criticism”. If Law and Justice go down this path, it could cost Poland dearly, says The Daily Telegraph. Its policies are already splitting…

Big tech bosses are now taking home far more than Wall Street bosses, notes Bloomberg. Tesla founder Elon Musk was the highest-paid executive in the US in 2019 with $595.3m, Apple’s Tim Cook followed with $133.8m, and Tom Rutledge of Charter Communications got $117m. The only financial executive in the top ten is Blackstone’s Jonathan Gray, who is sixth, with $107.6m. “While excessive compensation might be most dangerous at Wall Street firms because of the systemic risk [in banking]... corporate America encourages many types of socially and environmentally damaging behaviour,” Sarah Anderson of the Institute for Policy Studies think tank tells Bloomberg. “Tech… has largely gotten a pass.” That might change if millions of Americans who are losing their jobs as a result of Covid-19 start to notice that tech…

Rob Arnott, founder, Research Affiliates Markets are “skating on a knife edge”, says Rob Arnott, the smart-beta pioneer whose firm advises on around $145bn in assets. Stocks could still head higher, driven by US retail traders speculating with their stimulus cheques instead of spending them and the belief that “there is no alternative” to buying shares when interest rates are so low, he tells Bloomberg. But “we’re in a bubble – or at least certain names are in a bubble” and that bubble must eventually burst. The US stockmarket is very expensive by historical standards, on a Cape ratio (see box) of 29, he tells Financial Advisor. Even if valuations remain higher than their long-term average, real returns from here might be as low as 0.5% per year over the…

■ Standard Life Aberdeen, Britain’s largest listed asset manager, has dumped almost all of its stock in Boohoo and criticised the fashion group’s response to allegations of poor working conditions in its supply chain, says Attracta Mooney in the Financial Times. Standard Life Aberdeen, which was Boohoo’s third-largest independent shareholder, said Boohoo reacted inadequately in “scope, timeliness and gravity” following a Sunday Times investigation that revealed factory workers were paid below minimum wage. Its investment in Boohoo had come under fire in recent days, with many wondering why funds it brands “responsible” – keeping an eye on environmental, social and governance issues – owned shares in the fast fashion brand. Worries about the factory conditions that go with fast fashion are nothing new, says Alistair Osborne in The Times. “Did…

voxeu.org The crisis has illuminated some key differences between US and European capitalism, say Philippe Aghion, Helene Maghin and André Sapir. US unemployment has soared, hitting nearly 15% in April. Thanks to furlough schemes, German unemployment is 6.3%. Health insurance in the US is often tied to employment, so those laid off risk losing coverage. Europe offers universal healthcare. Yet Europe’s “cuddly” capitalism has its own flaws. The EU invests almost 1% less of GDP than the US in research and development. The US boasts far more patents per million inhabitants. The pandemic has forced US policymakers to revisit their model, with new income measures designed to prevent an even worse spike in poverty. Europeans should in turn recognise that the “rigidities” in their economies act as a brake on…

The Visegrád Group is an alliance of four central European states sharing common values and economic interests: Poland, the Czech Republic, Hungary and Slovakia. The group was created in Visegrád, Hungary, in 1991, to strengthen military, cultural, economic and energy cooperation among its members, including pursuing membership of Nato and the EU. The choice of name refers to the congress of Visegrád in 1335 between John I of Bohemia (in what is now the Czech Republic), Charles I of Hungary and Kazimierz III of Poland. Their main purpose was to settle the dispute over the Polish throne limiting the armed conflicts, encouraging diplomatic custom and to create new commercial routes to bypass the Habsburg empire in Vienna. All four countries joined the EU at the same time in May 2004…

■ The state-pension triple-lock survived the chancellor’s mini-Budget last week, “but pensioners should brace themselves for pain in the autumn”, says Jessica Beard in The Sunday Telegraph. The triple-lock guarantees that the state pension will rise every year by the highest of wage growth, inflation or 2.5%. But many experts believe that it can’t continue in its current form; rumours are rife that the government is set to scrap it as it is becoming unaffordable. “If the policy were safe, Rishi Sunak would have used his statement as a chance to deliver the good news,” Tom Selby of pension provider AJ Bell told The Daily Telegraph. ■ A rail watchdog is calling for reforms of season tickets to allow more flexibility for commuters who don’t travel every day. “Changing work…

• Ministers seeking to support small businesses continue to trial some novel ideas. Small business minister Paul Scully has unveiled an initiative offering free one-to-one business advice for small businesses planning for economic recovery. The scheme, managed by Enterprise Nation, the independent group that promotes small and medium-sized enterprises, will run until the end of the year. Thousands of advisers have signed up to offer free advice on a wide range of business challenges. Register your interest at enterprisenation.com. • Another potential freebie worth considering isGoogle’s offer of £800 worth of free advertising to small businesses that have advertised on its platform in the past. The credits can be used at any time before the end of the year on search, display and YouTube advertising. To qualify for the deal,…

Petropavlovsk (LSE: POG) is a Russian gold miner listed in London. It is a member of the FTSE 250 mid-cap index. The group’s share price has risen steadily in the past few months as the global crisis, along with fears of a future jump in inflation, has given the yellow metal a boost. The miner reported an impressive 71% jump in year-on-year gold production in the first three months of the year, up from a 22% rise for 2019 as a whole, when sales climbed by 48% to $742m. News of a boardroom coup in late June did little to dent the market’s enthusiasm. The shares have gained 189% in a year.…

Anthony “Tino” De Angelis was born in 1915 in the Bronx. After leaving school to work for a butcher in a meat market, he joined a large meat processor, the Adolf Gobel company. He worked his way up to become its president in 1949, but the company was soon forced into bankruptcy as a result of a scandal in 1952 that involved overcharging the US government $31,000 ($274,000 today) for substandard food. De Angelis quickly moved on to start another business, the Allied Crude Vegetable Oil Refining Corporation, which he set up in 1955. What was the scam? De Angelis decided to corner the market for soybean oil, buying up huge amounts of the physical commodity, as well as soybean futures, in order to profit from any price rises. To…

The Year 1000: When Explorers Connected the World — and Globalisation Began By Valerie Hansen Viking (£20) Most people believe that “it wasn’t until the late 1400s and 1500s that the world became interconnected” and that globalisation only developed in the 20th century, says Christiane Bird in The New York Times. However, Yale history professor Valerie Hansen argues in her book The Year 1000: When Explorers Connected the World — and Globalisation Began that the Europeans “were only using existing trade routes” and by the time they ventured forth, globalisation “was already well under way”. She makes the case that the foundations of today’s global economy were “shaped by the interactions of the world in the year 1000”. Hansen has certainly gathered a “wealth of examples” to make her general…

Freedom to glory… and when that fails, to wealth, vice, corruption… and finally, barbarism. That was how the 19th-century English poet, Lord Byron, described the cycle of empires. Our rough guess is that the “freedom” stage came to an end for America at the beginning of the 20th century. Its empire builders and big-mouth messiahs were already getting the better of it. The glory stage was next. But it was short-lived. It probably peaked in World War II. As the glory failed, the pursuit of wealth became paramount. For the first three decades after World War II, American industries turned out some of the best products in the world. “The Dow is now worth 14 ounces of gold, a 67% loss in 20 years” In 1968, a student could earn…