Indholdsfortegnelse for 1181 i MoneyWeek

“Stocks [recently] enjoyed their best [week] of the year... Rather than facing the reality of... higher interest rates for longer and... a weakening economy... investors decided to bid up already expensive stock prices... they also tossed aside... the significant likelihood of a disruptive [US] government shutdown starting in two weeks... years of out-of-control borrowing threatens... growth... As America hurtles toward an... ugly... 2024 election, the chaos in Congress continues... equity investors also ignored more signs of an economic slowdown...The [US] index of Leading Economic Indicators has declined for 18 months in a row... [the] odds [of a] recession are now 70%... In an extraordinarily high-risk environment, chasing stock returns when short-term Treasuries offer decent riskless returns seems extremely unwise... Buy 5%Treasuries and gold and save yourself.”…

Shares in BT Group rose by 6% last week thanks to a 30% jump in interim pre-tax profits to £1.1bn, says Katie Prescott in The Times. The group also managed to install fibre broadband in a record 860,000 premises in the quarter. The group raised prices by 14.4% for most customers, but profits were also boosted by “a cost-cutting drive” that has already axed 7,000 jobs. This should help BT deal with the increasing costs of labour and energy, as well as “the expense of having to strip its network of components from Huawei”. These “half-decent” results can’t hide the fact that the company’s financial performance has “not been pretty” under outgoing CEO Philip Jansen, says Nils Pratley in The Guardian. While he may have hoped to turn the company…

Vestis, a neglected division of a larger entity until it was spun off a few weeks ago, has “ample room for growth”, says Barron’s. More than 50% of sales stem from supplying companies with workplace goods, such as floor mats, cleaning products and first-aid kits; it also has a uniform-rental business, in which 92% of the revenue is recurring. The group is the second-largest player in a highly fragmented market and the average customer uses between 30% and 40% of the firm’s offerings, so there is ample scope for cross-selling. A forward price/earnings (p/e) ratio of 16 compared with 35 for the industry leader compensates for the group’s relatively high leverage.…

Politics & economics Rishi Sunak has said the Metropolitan Police will be held “accountable” for the pro-Palestinian march on Armistice Day after the force refused to ban it, says Fiona Hamilton in The Times. Talks between Sunak, who called the march “provocative and disrespectful”, and Met commissioner Mark Rowley are ongoing after Rowley said the threshold for an outright ban, which requires a risk of “serious disorder”, had not been met. Rowley added that many of the 100,000 people expected to attend were “pacifists” who had a right to protest against Israel’s bombing of Gaza, which has killed 10,000 civilians, according to Hamas estimates. “Each attempt to cast this movement as menacing is really a refusal to try to understand what is going on,” says Nesrine Malik in The Guardian.…

As war unfolds in Palestine and Ukraine, China is “asserting itself more and more” in its claim on Taiwan, says George Allison in The Telegraph. It recently sent an aircraft carrier through the main gateway between the western Pacific Ocean and the South China Sea, placing China’s naval forces between Taiwan and any help that might arrive in the event of war. Beijing’s increasing aggressiveness is “causing palpable unease” among neighbouring Western allies. A confrontation could come sooner than many think, says Hal Brands on Bloomberg. A trigger could be Taiwan’s presidential election in January – China will be eager to send the winner a message, perhaps by ramping up “aggressive activities” designed to “exhaust Taiwan’s military and reduce its physical space”, or even by launching an invasion. With China…

French vineyards won’t have to worry about cheaper Aussie merlots squeezing them off the shelves at Carrefour. Italian mozzarella makers won’t have to fret about southern hemisphere rivals. After years of talks, a bid to agree a free-trade deal between the EU and Australia has collapsed. “I came to Osaka with the intention to finalise a free-trade agreement,” said the Australian trade minister Don Farrell. “Unfortunately we have not been able to make progress.” There was just too wide a gulf between the two sides on agricultural exports and the EU was unwilling to lower the steep tariffs it puts on Australian food. There is little chance of talks reopening again. Australia and Europe will still trade with each other, but there will be cumbersome tariffs and quotas in the…

Alpha is the amount of value an investor adds or takes away from an investment portfolio. In other words, it measures how their stock- or asset-picking skills affect the portfolio, above and beyond any returns that are simply down to what you’d expect from the performance of the market as a whole. Alpha can be looked at in two main ways. The first is simply to compare the portfolio’s performance with a benchmark index. So the returns on a portfolio of UK shares might be compared with the returns on the FTSE All-Share index over a given time period. If a fund manager’s portfolio has returned 15% compared with 10% for the benchmark, then the manager has generated positive alpha of 5% on this simple measure. Of course, the manager…

noahpinion.blog There is much talk that the West is losing support in the “global south”, says Noah Smith. The term loosely groups together developing economies. But the idea that states as diverse as China (a dynamic manufacturing base), Middle Eastern petroleum exporters and African commodity producers share common interests doesn’t pass muster. Instead, there are really four distinct “global souths”. Firstly, industrialised economies such as Turkey, Malaysia and China, which are “on the cusp of developed status”. Secondly, still poor but rapidly industrialising nations such as India, Bangladesh and Vietnam. Thirdly, we have upper-middle income “resource exporters”, largely in the Middle East and Latin America, as well as South Africa. Finally, there are poor countries such as Ethiopia, Sudan and Pakistan, which are “plagued by war and/or poor governance”. Continued…

The problem for investors interested in this sector is that many agritech companies are early stage start-ups rather than listed companies. It therefore makes sense to invest in a specialised venture capital company such as Agronomics (LSE: ANIC), which has a portfolio of over 20 cultivated-meat companies. It trades at a discount of 40% to its net asset value (NAV). A broader alternative is the Sarasin Food & Agriculture Opportunities UCITS Fund. Run by Jeneiv Shah and Colm Harney, it invests in companies from around the world with exposure to food and agriculture. Most of its holdings are in the US, Europe and the UK. The largest include US agribusiness giant Bunge Limited, fish farmer Mowi ASA and food-service company Compass. Sarasin Food & Agriculture has an ongoing charge of…

It has been a good fortnight for my long tips, with six out of seven rising. IT services group Computacenter went up from 2,562p to 2,608p, broker Clarksons advanced from 2,530p to 2,660p and outsourcer Mitie increased from 97p to 101p. Luxury brand Watches of Switzerland also jumped, from 495p to 569p, while kitchen supplier Howden Joinery rose from 637p to 642p and recruitment agency SThree appreciated from 340p to 383p. The only exception was discount retailer B&M, which fell from 545p to 534p. My long tips are now making an overall loss of £346, compared with £879 two weeks ago. My short tips were more mixed, with three out of seven going in my favour. Electric car-charging company EVgo fell from $2.32 to $2.29, payroll company Paycom declined from…

Home insurance premiums are on the rise. The cost of protecting your home is expected to rise by 36% over the next two years, according to accountancy firm EY, with an increase of 17% this year. Insurance firms point out that the huge increase in premiums is due to supply-chain difficulties, which have “driven up construction costs for fire and flood-damaged homes”, says Martha Muir in the Financial Times. On top of this, major weather events are becoming increasingly common – and mean more claims for insurers to cover. Last year three named storms – Dudley, Eunice and Franklin – caused 170,000 properties to make insurance claims costing £473m. As a result, premiums are on the rise for all of us, but particularly for those who live somewhere likely to…

For many years, lifestyle funds were a popular option with savers in stakeholder, personal and many defined-contribution workplace pension plans. The funds invest your money relatively aggressively while you’re younger, channelling your contributions into equities with the aim of building as large a pension fund as possible. Then, five to ten years before you’re due to retire, your provider automatically begins to switch your money into assets conventionally considered less risky: bonds and gilts, in particular. When you finish work, your fund will be almost entirely invested in these assets. The principle of a lifestyle fund is that savers closing in on retirement should not be exposed to the risk of a sudden drop in the value of their fund, since they won’t have time to make up the shortfall.…

For much of his reign as one of Europe’s biggest property kings, René Benko – the Austrian billionaire known to some as the “Austrogarch” – was cloaked with a “sense of invulnerability”, says the Financial Times. That veil has now been whisked away. After a fraught year of unravelling, the financial crisis engulfing his €23bn (£20bn) Signa Group reached a climax last week when Benko was ousted by investors looking to salvage what they can from a property portfolio whose prestige, he once boasted, was matched only by those of the Pope and the British royal family, but which has now been felled by a cash crunch. Uncertainty relating to Signa’s projects now haunts Europe. In Hamburg, work on a €700m project to create the third-tallest tower in Germany has…

Regular readers will know that I am somewhat obsessed with the wines from Valli, and their Gibbston cuvée is often my favourite. Last month, I led a masterclass of these wines with winemaker Jen Parr, and by all accounts it went down exceptionally well, because the entire UK allocation sold out in a couple of days. I can report that while every “bottle” was snapped up, one wine merchant has a very handsome cache of half bottles. My featured wine is a phenomenal vintage – hauntingly perfumed, ripe, silky and beautifully detailed on the mid-palate and then extraordinarily long on the finish. Victoria Stephens-Clarkson, master of wine, attended the Valli masterclass, and afterwards she told me about her fantastic business, which specialises uniquely in half bottles: The Little Fine Wine…

The lawyers are winning again in yet another sordid celebrity trial, says Camilla Long in The Sunday Times. Chase Robinson, the former assistant of Robert De Niro (pictured), is suing the actor for $12m, claiming discrimination and harassment. De Niro is counter-suing her for $6m. It has fast become “one of those delicious cases in which we are dragged through every greasy, minute detail… from executive ‘back scratches’... to dirty sheets… martinis Ubered to [De Niro] from Nobu, sexual jokes, phone calls while weeing… plus catfight meltdowns: we learnt how De Niro’s girlfriend, Tiffany Chen, a martial arts expert 35 years his junior, wrote that Robinson was ‘a b****’ who ‘needs to get in her f****** place’”. Why do celebrities do it? De Niro even claims Robinson stole 4.5 million…

UK house prices rose last month, but analysts predict more pain ahead. House prices had fallen for six consecutive months as rising interest rates squeezed buyers, says Julia Kollewe in The Guardian. But they staged a 1.1% month-on-month rally in October, according to Halifax. Prices remained down 3.2% for the year to October, but that also marked an improvement from the 4.5% annual decline to September. The Halifax figures echo similar data from Nationwide, which reported last week that UK house prices rose 0.9% on the month in October. The upturn may reflect low transaction volumes. Prospective sellers are “taking a cautious attitude, leading to a low supply of homes for sale”, says Kim Kinnaird of Halifax Mortgages. “This is likely to have strengthened prices in the short term, rather…

Shares in online fast-fashion group Asos plunged by 11% last week after pre-tax losses “ballooned” almost tenfold to £300m in the year to 3 September, says Laura Onita in the Financial Times. Sales dropped from £3.9bn to £3.5bn, and there is “more pain ahead”. Sales are set to slide by between 5% and 15% this financial year as Asos “grapples with high levels of stock and slowing demand amid the cost-of-living squeeze”. It hopes to return to profit next year but its plans have been criticised as “vague” by analysts. The fall in sales shouldn’t be surprising given shoppers are “clearly struggling”, says Aarin Chiekrie at Hargreaves Lansdown. Still, there are some “very early signs” that the new focus on profitability is “bearing fruit”. For example, “profit per order was…

Hong Kong’s market for initial public offerings (IPOs) remains in a slump, says CNBC. The city’s IPO market has seen a 65% decline in the number of listings in the first nine months of 2023 compared with the same period last year; 44 flotations have raised HK$24.6bn (£2.6bn), 15% less than in 2022. Confidence has yet to return to a market that lost 15% in 2022, making it one of the world’s worst-performing. Investors have been rattled by the impact of the territory’s strict lockdowns and the lacklustre economic recoveries in the Chinese and global economies. The Stock Exchange of Hong Kong is hoping to bolster morale by making it easier for fast-growing small firms to list.…

Next weekend will see the second round of the Argentine presidential election – the run-off between current minister of the economy Sergio Massa and libertarian economist Javier Milei. With £281,203 matched on Betfair, Milei is a narrow favourite at 1.87 (53.4%), while Massa is at evens (50%). Ladbrokes also has Milei as favourite at 8/11 (57.8%), though it is offering slightly more generous odds on a Massa victory than Betfair, at 11/10 (47.6%). To say that the betting on the election has been volatile is a bit of an understatement. Thanks to a strong showing in the non-binding August primaries, Milei had come from nowhere to become the strong favourite to win the presidency. However, his underwhelming performance in the first round of the actual voting, when he came second…

● Unilever’s new CEO is just “tinkering around the edges”, says Andrea Felsted on Bloomberg. Hein Schumacher announced “a far-reaching review of the company’s portfolio, which spans beauty, personal care and food”. Instead, he’s aiming to get better results from what he has by focusing on the top 30 brands, which account of 70% of sales. There will be some selective pruning: US personal care unit Suave has been sold, as has a majority stake in Dollar Shave Club, bought for a reported $16bn in 2016. Several other non-core and under-performing brands are likely to go. But none of this tackles “the thorny issue of whether Dove soap and Magnum ice cream even belong in the same company”. If Schumacher’s tweaks don’t work, investors will push him to consider more…

History tells us that as interest rates go up and the financial system comes under more pressure, something always breaks, says Jeremy Grantham, the co-founder and chief investment strategist of asset manager GMO. This time, rates have gone up much faster than usual, but other than a few wobbles such as the collapse of a few regional banks in the US, it has not yet resulted in any major crises. Still investors shouldn’t be that complacent about this. “Each cycle is different… but you always have a surprise.” The one thing that is very unlikely is the soft landing that the consensus expects, he tells Bloomberg. “Every bubble has been greeted with a chorus of soft landing and there has never been one.” That’s bad news for the expensive US…

stumblingandmumbling.typepad.com While Britain has some excellent companies, we also have “a long tail of extremely badly managed firms”, says Chris Dillow. This is, after all, the nation that gave the world David Brent. In a functioning capitalist system, badly managed companies are supposed to be driven out of the market by well-managed ones. Why doesn’t this happen? In the case of utilities and transport, the fault lies with unduly weak regulation. Water companies, for example, have been allowed to pollute our waterways while inflicting large price increases on households. In other sectors, we need to roll back barriers such as “lack of finance” for new businesses and “restrictive intellectual property laws” that prevent new entrants from shaking up inefficient industries. More broadly, management culture needs to change. Senior management was…

Dividends had fallen out of favour until recently. Technology companies tended to look down on them because they saw them as a sign that a company’s growth had peaked, while boards increasingly preferred to return money to shareholders through buybacks. During the pandemic many cash-strapped firms stopped paying dividends altogether, arguing that the need to conserve cash amid the economic uncertainty was more important. However, they are still an important symbol that a company is doing well enough to generate cash consistently – something particularly important as investors can now get a decent return from a savings account. So, when a company that has stopped paying its dividends starts doing so again, it pays to take note. One company that recently announced the resumption of its payout was the budget…

Savers have had a good year, with rising interest rates meaning they are finally beginning to make a decent return after more than a decade of near-zero yields. However, that could mean the taxman comes for a cut. After years of low interest rates many people have forgotten that if you earn enough interest you have to pay income tax. We all have a personal savings allowance (PSA). This is how much interest you can earn on your cash savings before income tax is due. Basic-rate taxpayers get a PSA of £1,000 per tax year. For higher-rate taxpayers the PSA is halved to £500, while additional-rate taxpayers get no PSA. If you are a basic-rate taxpayer signing up for the current top one-year savings account paying 6.05% (from Union Bank…

● Cash-strapped savers stopping pension contributions in order to make ends meet will, on average, be more than £100 a month worse off each month in retirement, new analysis suggests. Personal finance research analyst Defaqto warns that as many as 17% of savers have reduced or stopped their pension contributions in the face of the cost-of-living crisis . Missing out on employer’s contributions and investment growth will cost them an average of £112 in lost pension income. ● The UK has one of the ten best pension systems in the world, according to a ranking just published by employee benefits consultant Mercer. The analysis may surprise some savers, with the UK’s state pension system often faring poorly in international comparisons, but Mercer says that taking private pensions into account, the…

As “the boy wonder of crypto”, Sam Bankman-Fried (pictured) “got richer faster than almost anyone in history, amassing an estimated $26bn in personal wealth”, appearing on countless magazine covers, and rubbing shoulders with the rich and powerful, says the BBC. SBF, as he is known, was never shy about it: he wanted to get rich. “An overachieving child born to two overachieving parents,” SBF studied at MIT and fell under the spell of “effective altruism”, the idea that making as much money as you can so you can give it away is the best way to be charitable. At the age of 25, he founded Alameda Research to exploit arbitrage opportunities in cryptocurrencies. In 2019, he founded FTX, an exchange for the digital tokens. Within months, the volume of daily…

“The global monetary policy tightening cycle looks done now,” Henry Cook of MUFG tells Bloomberg. Major central banks including the US Federal Reserve and the European Central Bank have opted to pause interest-rate hikes at recent meetings. Last week the Bank of England held rates at 5.25% for the second meeting in a row. The Lady doth protest too much Policymakers at “the Old Lady of Threadneedle Street” took great pains to stress that a pause doesn’t mean that rate cuts are imminent, says Paul Dales of Capital Economics. Some market commentators were left wondering whether the “Lady doth protest too much”. Huw Pill, the bank’s chief economist, has previously told markets to expect a “Table Mountain” scenario that sees rates held high and steady for some time. With UK…

WeWork is no longer working. The office-space provider has filed for bankruptcy – “capping a tumultuous period that saw... a failed initial public offering, Covid-19 lockdowns, a blank-cheque merger and slow return-to-office trends”, say Ethan M Steinberg and Amelia Pollard on Bloomberg. The firm, valued at $47bn in 2019, listed $19bn of liabilities and $15bn of assets in its bankruptcy petition. This is a sorry end for a company that “promised nothing short of a revolution in the way companies worked”, says Edward Helmore in The Guardian. WeWork “spent heavily to acquire a mass of long-term leases in some of the world’s most expensive real-estate markets”, which were then turned into smaller spaces for short-term tenants (whom it called members) along with “beer on tap, free coffee and other employee-friendly…

Five to buy InterContinental Hotels The Telegraph This hotels and resorts business owns brands including Holiday Inn and Crowne Plaza. Revenue per available room is now up almost 13% on pre-pandemic levels, while a 43% growth rate in China suggests that its post-Covid reopening is progressing rapidly. With 292,000 new rooms in the pipeline globally there should be plenty more to come. The group has a healthy geographical spread and better diversification across price categories than many listed peers. The premium rating is justified by “stunning” long-term growth potential. 5,810p Marston’s Interactive Investor This small-cap hospitality business runs 1,440 pubs in predominantly suburban locations. The shares are down a fifth this year, with weak consumer sentiment compounding worries about steep levels of debt. Still, the pub property portfolio has plenty…

Bond yields have ticked down recently as investors conclude that central banks have finished hiking. Whether this is right remains to be seen, but my long-standing view is that central banks are always too quick to cut and too slow to hike and so I’d guess that markets are probably correct. However, this has little immediate impact on the MoneyWeek asset-allocation strategy that I’ve been reviewing on this page in the last few weeks, since we try not to forecast too much: our goal is to have a portfolio fit for all likely outcomes. With that in mind, the 2%-2.5% real yield on inflation-linked bonds still looks better than conventional bonds (see issue 1178). Governmentbacked linkers are an unusually generous gift to investors since they promise to pay you back…

We need to get a grip on tech Will HuttonThe Observer “Insane wealth is disorienting,” says Will Hutton. Research shows that the rich are more likely to be greedy and cheat. If aiming to be “effective altruists”, as Elon Musk and Sam Bankman-Fried (SBF) are, they can “even better justify ignoring rules”. The “tide went out on” crypto and exposed FTX founder SBF as a “mega-fraudster”, while Musk, who owes the bulk of his fortune to Tesla, was fined and disqualified as chairman over alleged stock-price manipulation. “Time needs to be called on all of this.” The Bletchley Park summit (see page 14) agreed a voluntary code for AI companies to disclose their models to governments, but this is “only a baby step” towards better public control of tech. Public…

theverge.com Online businesses have long focused on search engine optimisation (SEO): “making a... website, or content, more findable” in Google searches, says Mia Sato. Now the practice is spreading to physical businesses. In Texas there is a chain called “Affordable Dentist Near Me”. Massachusetts hosts a “Phone Repair Near Me”, while a “Psychic Near Me” operates in Chicago. Earlier this year, a restaurant opened in New York called “Thai Food Near Me”, a phrase that is searched almost a million times every month in the US. It remains unclear whether the naming trick actually boosts search results. Google says that factors such as location, reviews and ratings are more important. Yet while the name itself may not have helped search results, the Thai restaurant’s opening caused an avalanche of articles,…

“Worldwide demand for food is set to expand by 50% by 2050” Farming is hardly a glamorous industry. As someone whose maternal grandparents were farmers, I appreciate that it can be tough work, sometimes for relatively little reward. What’s more, farmers have a reputation for being “a conservative bunch who like to stick to traditional techniques and place great store on experience”, says Stephen Pickup, head of agriculture at Traditum Private Equity. Even the big agricultural companies “are not renowned for innovation, with many... effectively outsourcing their research and development (R&D) by acquiring small firms with new and promising technologies”. Nevertheless, many people believe that the sector is on the brink of an upheaval as big as the “green revolution” that took place after World War II, when the spread…

Our business is primarily about buying houses and flats – though we do have a busy rental search department in London. Why would the majority of our clients be interested in the rental market, in London but also anywhere in the country? To paraphrase Trotsky on the subject of war, you may not be interested in the rental market but the rental market is interested in you. Though you might own your own house, your children may be trying to find somewhere to live after leaving university. You might like the theatre, but where are the actors going to live? And the nurses in the hospital you might need to use? Or anyone without access to some capital, the starting point for any mortgage? As rents go up, disposable income…

One trading indicator that is very popular during moments of market uncertainty is the CBOE Volatility index, which is sometimes known as Vix or even called the “fear index”. Vix is calculated from the price of 30-day call and put options on S&P 500 futures traded on the Chicago Board Options Exchange. Call options give you the right, but not the obligation, to buy a specific asset at a set price at a set time, while put options give you the right to sell. In other words, it gauges the cost of taking out insurance against price moves in either direction: the greater the cost, the bigger the implied volatility. The index’s long-term average is around 21. However, while the formula for working out Vix is pretty straightforward, traders don’t…

As the clock ticks down towards a general election – and Labour’s lead in the opinion polls remains steady – financial advisers are becoming increasingly concerned about savers with large pension funds. Labour has promised to reverse the abolition of the lifetime allowance (LTA) on pension savings. In which case, could savers find themselves facing large tax charges? The short answer is that it is impossible to know at present. Labour has said very little about how it would implement its promise on the LTA. It is simply committed to undoing the Conservatives’ policy. Still, it is important to tread carefully. Until April 2023, most people with pension savings above £1,073,100 had to pay significant tax charges when they began to draw their benefits. The abolition of the LTA from…

“Sensors, satellites and drones are eclipsing binoculars and maps in modern warfare” The world has entered a new period of geopolitical instability. There is a growing list of either active or potential conflicts: Russian aggression in Europe; China and Taiwan; the US and Iran; and Israel’s current war with Hamas. Across the globe, countries are rearming for this more perilous world. In particular, European Nato members are ramping up military spending, reversing the post-Cold War decline in defence budgets. HANetf’s Future of Defence UCITS ETF (LSE: NATO) provides exposure to the companies generating revenue from defence and cyber-defence spending by Nato and its allies. Suppling crucial weapons to Ukraine One example of the NATO ETF’s holdings is BAE Systems (LSE: BA), the largest British defence manufacturer and supplier. This company…

Sustainable travel is all the rage. For most people, the idea of sustainable travel conjures up images of yoga retreats and camping in forests, drinking nothing but water and eating a “clean” diet. And this is the problem with the notion of travelling sustainably. We all need to be more careful about how we use the world’s valuable resources, but for many, sacrificing the creature comforts we’ve become used to is a step too far. It’s this idea that underpins the work of Angelos Michalopoulos and his family on the unspoilt Greek island of Ios (also known as Io or Nio). One of the Cyclades group of islands in the Aegean Sea, about an hour away by ferry from Santorini, Ios has managed to escape the overdevelopment that’s swamped other…