Indholdsfortegnelse for Issue 1273 i MoneyWeek

The US-centric nature of the world of equity investment often masks important trends or milestones elsewhere. Few noticed this week, for instance, that the Topix, Japan’s broad stockmarket index, reached a new record high above 3,000. Not hugely significant, you might think – stockmarkets spend most of their time going up, after all – until you check the date of the last all-time peak. It was in mid-December 1989. A 35-year gap between peaks is the sort of statistic that calls to mind Keynes’ joke about us all being dead in the long run. It is, first and foremost, a stark reminder that markets tend to move in long-term valuation cycles, and that if you buy when stocks are historically expensive, it will take you a long time to make…

Gold markets took a breather this week after a nasty bout of tariff panic briefly pushed US futures to a record high. The yellow metal lies at the heart of US president Donald Trump’s trade dispute with Switzerland, says Lisa O’Carroll in The Guardian. The Alpine nation exported more than $36bn of gold bars to the US during the first quarter, accounting for two-thirds of a sizeable trade surplus that Trump is intent on closing. Last week, US Customs authorities said they would apply Trump’s new 39% tariff on Switzerland to 1kg and 100-ounce cast bars, triggering fury among US gold investors. US gold futures hit an intraday record of $3,534/oz. About 70% of global gold refining occurs in Switzerland, where specialist foundries recast “larger” London bars into the smaller…

Trading fever in US copper has finally broken. US commodity dealers have spent the year rushing to import the vital industrial metal ahead of anticipated import tariffs from the Trump administration. Intense demand opened up a premium of more than 30% between copper futures on the US COMEX exchange and the London Metal Exchange, marking “one of the most profitable commodity trades in modern history”, Daniel Ghali of TD Securities tells Bloomberg. At the end of July the White House announced new 50% tariffs on copper pipes and wiring, but crucially excluded the rawer forms of the metal that are traded on international markets. That caused the US premium to vanish, with Comex futures plunging 22%.…

Firefly Aerospace’s shares soared 34% on their stockmarket debut in New York, valuing the US space-technology company at $8.5bn, says CNBC. It raised $868m from pricing its shares at $45, higher than the expected range. Firefly is the third space company to go public this year in the US, joining Voyager Technologies and Karman as rocket manufacturers gain more funding and US government contracts. Firefly counts major defence firms, such as Lockheed Martin and L3Harris, as clients, and recently received a $50m investment from Northrop Grumman. It has also won a $177m contract from Nasa, which funded Firefly’s mission to land its Blue Ghost spacecraft on the moon earlier this year.…

It looks set to be another difficult month for what remains of Britain’s industrial base. On Monday, we learned that the Ineosowned Olefins and Polymers (O&P) plant at Grangemouth, in Scotland, the largest in the UK, is at risk of closure. Its CEO warned that a mix of rising energy costs and carbon taxes meant the facility was not likely to be viable for much longer and its parent company couldn’t support it from profits made elsewhere forever. Ineos has already closed one refinery in Grangemouth. Hull-based Vivergo Fuels, owned by Associated British Foods, and Britain’s largest producer of bioethanol, has also said it may have to close in September. Last month, the Saudi Arabian firm Sabic, one of the world’s largest petrochemical manufacturers, said it would shut its Olefins…

Market timing refers to any strategy that involves trying to predict future price movements and shifting between different investments to take advantage of them. To take a simple example, if you believe that shares are likely to fall and bonds to rise over the next month, you would buy bonds and sell shares. You would only intend to hold these positions for as long as you think bonds will keep beating shares: as soon as you think the trend will reverse, you would buy shares and sell bonds. These predictions and trading decisions may be based on economic data: in the example above, you might believe that GDP growth will be much worse than expected and investors will dump shares because they fear a recession is coming. They could be…

“Everyone starts as a leftie and then wakes up at some point after ... either making money, working, trying to run a business, trying to buy a home, and then realise what [poor] ideas they all are – and then you go to the right.” Actress and singer Holly Valance (pictured), who raises money for Reform UK “I can pay my bills, I’m happy, I have a good balance. I love what I do. I don’t need to be a huge, monstrous pop star.” Jessie J, who has battled breast cancer and not released a single for four years, quoted in The Sunday Times “Songwriter, performer and rock legend.” Ozzy Osbourne’s occupation as recorded on his death certificate, quoted in The Sun “I think all insurance is a waste of…

centreforcities.org/blog “City breakers beware: tourist taxes could be on the horizon in England,” says Rob Johnson. Six city region mayors have called for powers to introduce them, as have local authorities in Bath and Cambridge. Many will be “looking expectantly toward the autumn Budget”. But why so much fuss over what will amount to small change in the grand scheme of things? The demand for tax-raising powers is not just about cities covering the costs of their tourist economy, but rather what it represents in the “potential pathway toward greater fiscal devolution and local growth”. Mayors want tourist taxes for the principle they represent – that gaining revenue-raising powers will “bake in growth incentives at the local-government level”. They would provide incentives for authorities to set sensible rates and reinvest…

US activist Engine Capital is urging life-sciences supplier Avantor to make major changes to reverse what it calls years of “extreme shareholder value destruction”. Avantor, which is one of the top three global distributors of lab equipment to life-science businesses, should either sell itself outright or overhaul its board, cut costs, sell non-core operations and increase share buybacks, says Engine, which has built a 3% stake in the $7.8bn firm. Shares in Avantor have fallen by almost half this year amid weaker demand after cuts in US government research funding. But its underperformance over the past five years and loss of market share to Thermo Fisher and Merck has mostly been “self-inflicted and driven by organisational dysfunction”, claims Engine.…

Help your family avoid overpaying inheritance tax (IHT) by writing a life-insurance policy into trust, writes Laura Miller. Nearly 7,500 families paid IHT on life-insurance policies in 2022-2023, according to HMRC, but many could have escaped a bill. A trust is a way of ring-fencing your assets. When a life-insurance policy is written in trust, the payout from the policy can be sent directly to your beneficiaries, rather than to your legal estate, so the 40% levy on the payout can be avoided. Using a trust can also mean a speedier payout in the event of a claim, as your beneficiaries won’t need to wait for probate. Putting life-insurance policies into trust is relatively straightforward, says Sean McCann, chartered financial planner at financial advice firm NFU Mutual. Just phone your…

The next decade will look very different from the last. Deglobalisation, demographic shifts, and a revival of industrial policy are reshaping the global economy, and with it the foundations of equity market returns. We look for structural change that the market hasn’t yet priced in, and back companies where that change is both material and overlooked. It could be a shift in industry dynamics, a regulatory inflection point, a step change in demand, or a case of productivity being unlocked – but it must be meaningful and misunderstood. Valuation is crucial and opportunity arises when the change we see is not priced in. We focus on “forgotten equities”: capital-intensive, predominately UK and European companies with strong cash flows, mispriced risk premia, and undervalued assets. That evolution reflects the changing face…

In 2018, the Financial Conduct Authority (FCA) sternly warned that “crypto-assets have no intrinsic value” and that investors in them “should therefore be prepared to lose all the value they have put in”. Now the regulator has had a change of heart. From 8 October, ordinary retail investors will be allowed to buy crypto exchange-traded notes (ETNs). Broadly similar to exchange-traded funds (ETFs), ETNs make it quicker and easier to gain exposure to assets such as bitcoin and ether. Londonlisted crypto ETNs have been authorised for institutional investors since March last year. Retail investors currently buy assets such as bitcoin via unregulated specialist exchanges, but inclusion on mainstream financial markets has been slow. As the FCA puts it on its website, there is thus “no safety net if things go…

Five to buy GSK The Telegraph Although GSK’s shares have declined 9% since last June, the pharmaceuticals giant has delivered a “worthwhile” income. GSK’s dividend is “highly affordable” and growing at a faster pace than inflation, while its yield is higher than the FTSE 100’s. The “cheap” share price compensates for geopolitical risks, and there is scope for a rerating as it bolsters its new drug pipeline. GSK’s capital growth and income-investing appeal offer significant long-term potential. 1,383p Pantheon Infrastructure The Times Pantheon Infrastructure has a diverse portfolio of unquoted assets, including Britain’s National Gas. Pantheon’s first-quarter net asset value (NAV) fell owing to a drop in the valuation of US electricity generator Calpine. But with Calpine’s sale imminent, Pantheon has nearly doubled its investment to £100m. Although there may…

● “Glencore is keeping its primary listing in London after all,” says Alistair Osborne in The Times. “You could wonder what all the fuss was about.” The miner and commodity trader reckons there isn’t “a value-accretive proposition” to move to the US, especially since it wouldn’t know until after moving whether it would get into the S&P 500 index. “Fail to get indexed and funds that required one would have to sell pronto, whacking the shares.” Of course, given that Glencore floated at 530p in 2011 and the shares are now “pootling along” at 285p, investors may wonder when the firm has “dug up any value accretion anyway”. The bull case may be that the market is looking at it the wrong way. ”Mining is a yo-yo business,” but Glencore…

“Asia is the one region enjoying a deflationary boom,” says economist Charles Gave of Gavekal Research. This should lead to a massive rerating of undervalued Asian markets as the region decouples from the US. “Historically, the main driver of Asian stockmarkets has been the dollar,” writes Gave on Citywire. Reliance on a dollar-centred financial system meant that a stronger dollar tended to bring higher debt-service costs, tighter domestic monetary policy, outflows from local currencies into dollar assets and higher food and energy prices. So stocks as well as debt markets only tended to perform well when the dollar was weak. However, these links to the dollar have begun to change. The “confidence-sapping effect of Western fiscal profligacy” makes US assets less appealing. China’s investments in its power grid mean it…

lawliberty.org Economists have long urged against retaliation in Donald Trump’s tariff wars, says Phillip Magness. Imposing your own tariffs in response to America’s amounts to economic self-harm – a tax on your own population. This is economic wisdom, but politically difficult for politicians who want to be seen to face down foreign bullying. The announcement of the US-EU trade deal angered European officials and the political press for seeming to surrender to Trump, forgetting the sound advice of the economists. There is also a subtler lesson relating to the legal and institutional dynamics at play. Trump’s tariffs sit on a shaky legal and political foundation. Tariffs remain unpopular in the US among voters and Trump has not secured a proper legislative agenda for what he is doing, using obscure emergency…

● Three more investment trusts targeted by activist Saba Capital have announced steps aimed at boosting demand for their shares. Utilico Emerging Markets will launch a tender for 25% of its capital if it lags the MSCI Emerging Markets index over the five years to 2030. It will also bring forward its continuation vote due in 2026 to next month, maintain its policy of annual dividend increases and keep buying back shares with the aim of keeping a single-digit discount. Bellevue Healthcare, which has seen a long spell of weak returns has launched a strategic review to “consider all options for the future of the company”. It will continue the zero-discount policy that has seen it buy back 40% of shares since April. River UK Micro Cap says that if…

● The freezing of tax thresholds, combined with higher interest rates, means tens of thousands more savers will breach their Personal Savings Allowance (PSA) and must pay income tax on their interest, says Madeleine Ross in The Telegraph. The 2025-2026 tax year will see 2.64 million savers face a tax bill, an increase of 120,000 on the previous year, says HMRC. Around 1.15 million basic-rate taxpayers will earn more than £1,000 of interest, putting them over their PSA. Meanwhile, one in eight higher-rate taxpayers will breach their £500 allowance and 45% of additional-rate taxpayers (who receive no PSA) will owe HMRC money from their interest. The average tax bill on savings will be £2,600, says AJ Bell. “HMRC is forecast to rake in more than £6bn from savers,” up from…

Make It Happen Written by James Graham Directed by Andrew Panton Premiered at the Edinburgh International Festival In Make It Happen, James Graham, renowned for “state of the nation” plays such as Dear England and Labour of Love, turns his focus to the dramatic rise and fall of the Royal Bank of Scotland. Running at the Edinburgh International Festival and directed by Andrew Panton, the play chronicles Fred Goodwin’s journey from taking over as CEO to his ambition-fuelled leadership that briefly made RBS the world’s largest bank. This dizzying ascent ends in a spectacular collapse, leaving taxpayers to foot a colossal £46bn bailout bill, with an eventual loss of £10.2bn. “The play merits a wider audience, has the potential to be a resounding success, and is definitely worth seeing” The…

“[In America] today, the euphoria surrounding growth, scale, and size is palpable… Every company wants to be classified as hyper-growth because doing so garners the highest valuations and attracts the most attention… The trouble… is that this has led to a dynamic akin to a ‘gavage’… the tube the French use to force-feed ducks to create foie gras. Today, venture capital firms are doing something similar… they are force-feeding companies with capital. In doing so, this is forcing companies to invest in areas outside their circle of competence, hire people to sell products that aren’t ready [to] ‘go to market’, and to lose discipline more broadly… If this forced-feeding… is causing companies to be less disciplined in how they allocate capital, there will… be a negative downstream effect on… venture…

If you didn’t have to faff with fiddly forms on your last visit to the doctor, thank Phreesia, says Barron’s. It specialises in automating patient administration processes; services range from scheduling appointments to managing medical payment systems. Phreesia has over 4,400 healthcare clients and has facilitated more than 170 million patient visits, roughly one in seven of the US total. Its finances are improving: witness four consecutive quarters of positive free cash flow and “solid” sales momentum. The firm is capitalising on several tailwinds, including rising healthcare spending and demand for more digital and personal medicine. The small-cap technology stock’s valuation looks “reasonable”.…

Of all the things that Donald Trump could claim are “rigged” against him, the number of jobs being added in the US economy is one of the oddest. Yes, there are real problems with statistics in many countries and the situation has got worse since the pandemic (see MoneyWeek issue 1242 for a look at some of Britain’s issues). Firing the head of the statistics agency, as Trump did last week, is unlikely to fix that, especially if the replacement is picked for loyalty to him. However, the 258,000 cut to estimated jobs added in May and June is completely in line with what you’d expect once in a while. Data like these are prone to big revisions, sometimes long after they are first reported. One difficulty in trying to…

US turns its back on science Jake Scott Quillette Scepticism about vaccines has a long history, says Jake Scott. In 1796, naysayers warned that Edward Jenner’s revolutionary method for preventing smallpox – a vaccine developed from cowpox pustules – would cause people to start looking like cows. Alas, US health secretary Robert F. Kennedy Jr’s rationale for closing down the government’s $500m mRNA vaccine research programme is “equally divorced from scientific reality”. He claims that mRNA vaccines “fail to protect effectively against upper respiratory infections”. In reality, they proved astonishingly effective in containing the Covid pandemic, saving up to 20 million lives worldwide. Full mRNA vaccination cut death rates by 98%, making these jabs vastly more effective than the flu vaccine, and dramatically more effective than many other forms of…

unherd.com Nations grow old without noticing, says Krzysztof Tyszka-Drozdowski. But European states must now face up to a “fundamental reality” – they have “become gerontocracies”. One in four EU citizens is of retirement age. Fewer young people reduces the likelihood of wars and revolutions, but also spells a “retreat from geopolitical ambition and a reconfiguration of the continent’s social model”. “What defines Europe today is not its dream of positioning itself between the US and China, but the hard fact that the EU makes up just 7% of the world’s population and 50% of its social spending.” Britain is no exception: “redistribution flows not from rich to poor, but from precarious youth to the asset-rich elderly”. It’s little surprise so many young people fear for the future, postponing raising a…

Terry Smith built a formidable reputation as an analyst and business executive before setting out to apply what he had learned to fund management. When he launched the Fundsmith Equity Fund in 2010, he wanted investors to be able to buy directly over the internet. He promised low fees, an easy-to-understand investment process, low portfolio turnover, no shadowing of indices and no attempt to time the market. Smith’s thesis was simple: “Buy good companies, don’t overpay, do nothing.” Fundsmith seeks to “only own shares that will compound in value over the years, investing in a limited number of high quality businesses with a sustainably high return on capital, strong cash generation and assets that are intangible and difficult to replicate”, says the highly-readable “owner’s manual” on his website. Such stocks…

The Lloyd’s of London insurance market is one of the City of London’s most interesting entities. Based at its iconic headquarters in the centre of the City, it’s often just referred to as Lloyd’s, and sits at the heart of the UK and indeed global insurance market. Lloyd’s isn’t an insurer itself. Instead, it’s an organisation that brings together all the parties in the market under one roof – the brokers, underwriters, capital providers and support staff. The Corporation of Lloyd’s regulates this market and its stakeholders. Over the last five years, this market has become increasingly profitable. The prices paid by insurance buyers, known as premiums, have in some cases more than doubled. While losses from major events such as hurricanes have also increased dramatically, companies have tightened their…

US president Donald Trump’s nominee to the Federal Reserve Board of Governors, Stephen Miran, has sought to reassure worriers that the US central bank’s independence will remain of “paramount importance”, reports Reuters. Miran (pictured), 42, currently chair of the White House Council of Economic Advisers, last year made the case for tightening presidential control of the Fed board and for a “complete overhaul” of Fed governance. If his nomination is approved by the Senate, Miran will become one of seven members on the Fed board now chaired by Jerome Powell, who Trump rails against for refusing to cut interest rates. Miran would hold the seat till 31 January while Trump and his advisers search for a successor to Powell, whose term as Fed chair ends next May. Which Stephen Miran…

2023 Chianti Classico, Terre di Cresci, Poggiotondo, Tuscany, Italy £28.90,noblegreenwines.co.uk;£21.60, vinvm.co.uk;£22.33,thefinewinecompany.co.uk World-famous wine consultant Alberto Antonini is based in Tuscany at his estate, Poggiotondo, where he makes glorious, exquisitely well-balanced Chiantis from organic grapes. I have found three stunning examples this week. My featured wine is sourced from the high-altitude area of Cresci, and it is aged in large, untoasted oak barrels. The result is a highly perfumed wine with a sour-cherry theme, stunning definition and a soothing, long, savoury finish. The tannins are present but refined, and it is drinking beautifully now, especially with epic Italian main courses. This is the expert’s choice from the Poggiotondo stable. Still, if you would like to ease your way in, 2023 Chianti Superiore Poggiotondo (£16.67, northandsouthwines.co.uk; £16.99, thefinewinecompany.co.uk; £18.20, shelvedwine.com) is a…

Since 1979 NewsRevue has gained a reputation for fast-paced topical satire delivered via musical numbers. Their latest fringe show doesn’t disappoint, with sketches on everything from Keir Starmer’s first year in office to Donald Trump’s health secretary, Robert F. Kennedy Jnr. A particular favourite was the skit about the breakdown in relations between Trump and Elon Musk. This is another enjoyable romp through current affairs and no part of the political spectrum is spared their barbs (9.30pm, Ballroom at Assembly Rooms, final performance 24 August). Shows about business or politics naturally tend to be aimed at older audiences, but one show the whole family will enjoy is Ancient Coins from Forgotten Kingdoms. Comedian and medievalist Mark Saltveit delves into the history of money and coinage, looking at everything from why…