Indholdsfortegnelse for Issue 940 i MoneyWeek

In the UK this week there is no news except for news on Brexit. Unfortunately that rather means there isn’t much we can say on the matter. Indicative votes are underway as we go to press – so what will be happening when you get your MoneyWeek this week remains a mystery. We’ll return to the subject next week (assuming things are any clearer – perhaps read our review of Ivan Rogers’ new book on why they might not be on page 43). In the meantime we should point to the bits of good news around – see Matthew Lynn hailing the great jobs miracle on page 18, and Sarah Moore’s notes on the beginning of a reckoning for the overly-complacent, taxpayer-supported builders of the UK’s mostly substandard new-build houses…

In her first official engagement of the year Meghan Markle (pictured) wore diamond earrings that were “notable not for their sparkle but for their origin”, says Henry Sanderson in the Financial Times. They were grown in a laboratory rather than mined from the earth. Mainly sold in the US, synthetic diamonds tap into a “growing backlash against... blood diamonds” to fund wars, says Rachel Millard in The Times. The big miners have become rattled by the growth of synthetics, “particularly over the last decade, as the quality of stones has improved and manufacturing costs have started to fall,” Paul Zimnisky, an independent diamond industry analyst, told The New York Times. As they cost less to make they tend to be cheaper than mined diamonds. In addition, the rise in synthetic…

More and more people are producing more and more rubbish. Global population growth and the need for more recycling bodes extremely well for Norway’s Tomra Systems, a manufacturer of bottle deposit (also known as reverse vending) machines. In recent years Tomra has branched out into sensor-based technology for sorting or recycling different materials, says business magazine Der Aktionär; it is now used in industries including food distribution and mining. In the fourth quarter of 2018 sales jumped by 21% year-on-year to NOK2.5bn (£200m) while operating earnings soared by 32% to NOK396m ( £35m). Long-term investors should scoop up the shares on this weakness.…

“Bad news for Bayer,” says James Moore in The Independent. Last week, a California jury found that Monsanto, the US biotech that the German chemical giant bought for $66bn last year, had “acted with malice or oppression” by not being honest about the health risks of one of its products, a weedkiller called Roundup. The court has awarded a cancer victim $289m in damages. While Bayer is likely “to throw everything it can” at ensuring it wins on appeal, this is the second Roundup case that has gone against it. In addition to the potential legal liability, Bayer could lose billions of future sales of Roundup, one of the world’s most commonly used agro-chemicals. Bayer may believe that Roundup is safe and US courts will ultimately agree, says Tobias Buck…

The prime minister may have seen off a leadership threat last weekend, but it has become clear that her only hope of getting her deal passed – and honouring the referendum result – is by promising to resign, says Toby Young in The Spectator. She should remain at No 10 – in office, but not in power – until we’ve left the EU, and appoint Michael Gove deputy prime minister to “pilot” the agreement through parliament. Gove is better placed than, say, David Lidington or Jeremy Hunt, because he’s a Leaver and “the most enthusiastic supporter of May’s deal”. He is thus “better placed” to bring eurosceptic MPs round. He also has “more sway” with the Remainers because of his “willingness to compromise”. Finally, his “credentials as a Unionist, being…

With the indicative votes on Brexit due to take place just after we go to press, any Brexit-related odds are likely to be out of date by the time this reaches you. So I’ll turn my attention to the forthcoming mayoral election in the North of Tyne combined area, due to take place in May. The area, which was created by a 2018 devolution agreement, spans three local authorities: Newcastle Upon Tyne, North Tyneside and Northumberland, with an elected mayor taking responsibility for areas covering development, education and transport. There are four candidates: Labour’s Jamie Driscoll, Tory Charlie Hoult, Liberal Democrat John Appleby and independent John McCabe. The fight is considered to be a two-way contest between Driscoll, who made headlines when he defeated the current  leader of Newcastle City…

“Past performance is no guide to future performance.” That’s what the warning signs on marketing literature always tell you. And yet both professional and private investors have a hard time letting go of history when it comes to choosing which investments to buy. Studies in the past have already shown that institutional investors tend to buy funds that have a recent track record of beating their peers and selling the ones that don’t. And a more recent study from data provider Morningstar finds that the same is true for the likes of you and me. “Beating the market is hard – the average manager can’t do it” Starting in 1996, Morningstar looked at three-year rolling returns on a wide range of US equity funds, covering all styles of investing, up…

The British employment numbers are so consistently good that we almost take them for granted. This month unemployment fell to just 3.9%, the lowest level since 1975. The total number of people in work rose to an all-time high of 32.7 million. At the same time, wages rose by 3.4%, well ahead of inflation. There may be plenty of headwinds to contend with, from retail chains collapsing into bankruptcy, to uncertainty over Brexit, to a sudden slowdown in the rest of Europe. But through it all, the UK keeps on creating lots of new jobs. Workers of the world get busy working There are convincing explanations for that. We have a flexible labour market, relatively weak trade unions, and low taxes on employment – although we also have a rapidly…

Three cheers for big business Mene Ukueberuwa The Wall Street Journal The prevailing view is that big business is bad, says Mene Ukueberuwa. Robert Atkinson, founder of the Information Technology and Innovation Foundation, “vigorously” disagrees. Large companies “maximise the quality of services, conduct the research that creates value tomorrow, and create stable and improving conditions for employees”. Big firms can and do invest heavily in research and development to stay ahead. In labour-intensive fields such as retail and food services, earnings are better spent on attracting and retaining staff. Workers in firms with more than 100 employees make 54% more than employees of small firms. Instead of breaking up the tech giants, it would be better to “govern abuses”, particularly those relating to data security, the “greatest threat”. Small firms…

project-syndicate.org Capitalism is visibly sick and the virus of socialism is once again infecting the young, says Angus Deaton. What is the problem? According to a new book by Raghuram Rajan, a former governor of India’s central bank, it is not the failure of Leviathan (the state) nor of Behemoth (the market), but of community, which no longer serves as a check on either monster. The rot set in in the 1970s. Until then, the world had been busy recovering and rebuilding after World War II. After the 1970s, trend growth stalled, and governments had no idea how to address this beyond promising a return to the lost paradise on a raft of debt. In Europe, elites pursued continental unification, yet forgot to bring their citizens along. They have since…

Katie Potts left her job as an electronics analyst at SG Warburg 25 years ago to start her own investment fund. She had become disillusioned because her views on companies had been subordinated to the bank’s corporate agenda; she decided she preferred to invest in good companies rather than make excuses for bad ones. A successful strategy She soon raised £65m for the new Herald Investment Trust (LSE: HRI), which would buy smaller quoted companies in the communications, multimedia and technology sectors in the UK and Europe, at a time when sentiment was very positive. Rather than pay high prices, she parked much of the money in index-linked government bonds until valuations became more reasonable. This worked so well that Potts was able to raise another £30m in 1996, when…

Unlike most commentators, I know how the world is going to end. It will not be because of a nuclear winter, nor will it be from global warming. It will not be from overpopulation: fertility rates are falling faster than expected, so the world’s population may start to decline as soon as 2050. No, the end is going to be a sudden collapse in the world’s ecosystem caused by the unstoppable rise in global tourism. On a recent trip to several of the Canary Islands, I was again reminded how rapidly we have destroyed the things we love. Gran Canaria is utterly unlovable. Three quarters of the land is now a man-made wasteland of deserted farms, destroyed tree cover and chronic overdevelopment. With nearly five million visitors a year and…

The government’s decision to scrap childcare vouchers is proving to have been a clever one. New figures show that ditching the old vouchers in favour of a tax-free childcare programme has saved it more than £750m in the first year. “Take-up of the new scheme has been dire,” notes Sam Brodbeck in The Sunday Telegraph. Just £32m was spent on tax-free childcare in 2018, compared to the £390m the government forecast the scheme would cost. By contrast, childcare vouchers set the government back £792m in the 2017/2018 tax year. Even if take-up of the new scheme improves – it was mired in technical problems when first launched – the government is likely to continue to save money. “If you already claim vouchers, you can still receive up to £933 a…

Housebuilder Persimmon is to allow buyers to hold back 1.5% of the purchase price of their home until problems with their property are resolved. This comes after several years in which Persimmon, along with other major UK housebuilders such as Bovis Homes, have been widely criticised for selling new homes that are riddled with problems or delivered far behind schedule, as well as for the salaries they pay senior staff. Persimmon is the first UK housebuilder to offer buyers (or, more accurately, their solicitors) the opportunity to hold back some of the purchase price. It says it hopes this move will encourage others in the industry to follow suit. However, given the scale of the problem of quality in new-build housing, they could have done more. On average, people will…

• What does your business do? We provide small and convenient loans that offer better value and a much safer model than most overdrafts, credit cards and payday lending. You pay £6 a month to be a Creditspring member, which entitles you to draw down two interest-free loans of up to £250 per year if you need access to cash quickly. You could think of it as being like renting a financial safety net. • What’s been your greatest achievement? The most innovative thing we’ve done has been to take interest rates out of the equation – after conducting lots of focus groups, we just realised that very few people understand them. People think in terms of pounds and pence, not about percentages, so if you want to give people…

Petra Diamonds (LSE: PDL) is a diamond miner headquartered in Jersey, with operations in South Africa and Tanzania. A significant fall in the price of diamonds hit Petra hard, causing a loss of more than $200m in the year to 30 June 2018, compared with a profit of $20m in the previous year. It is also struggling to contain its debt, which it built up while developing its Cullinan mine in South Africa. The company recently appointed a new CEO, but is to retain founder Adonis Pouroulis as chairman despite a fifth of shareholders voting against him staying on. The share price has fallen by 66% in the last year.…

The Uninhabitable Earth Life After Warming David Wallace-Wells Allen Lane, £20 The scientific consensus is that man-made global warming (or climate change as it is more accurately known) is taking place, but many still argue that its impact will be so limited that it’s not worth taking the necessary steps to bring it under control. It is safe to say that journalist David Wallace-Wells does not fall into this camp. His latest book expands on a “widely read” magazine article he wrote two years ago that argued that “climate change is upon us and there are indeed scenarios of the future which, while uncertain, are grim”, as Roger Pielke points out in the Financial Times. For a relatively short book, The Uninhabitable Earth “covers a great deal of cursed ground…

• “Working women gave an eye-roll of solidarity” for Sophie Ellis-Bextor (pictured) when the singer said she was fed up with being asked about childcare, says Karren Brady in The Sun on Sunday. How many high-profile male artists, actors and writers would ever be asked the same question? But the frustrating truth of the matter is that organising childcare does tend to fall to women, and childcare costs are usually talked about in relation to the mother’s salary. “Many women need and want to return to the workplace – not least to make sure they retain their earning power in the face of the colossal life change that is becoming a mum. Sadly, high-quality affordable childcare is the biggest barrier to working mums returning to and growing their careers.” We…

Softbank founder Masayoshi Son – currently estimated to be worth around $24bn – missed out on buying an early stake in Amazon because he couldn’t find an extra $30m, reports Bloomberg. Son had offered to buy a 30% stake in Amazon for $100m, but chief executive Jeff Bezos wanted $130m. Son couldn’t come up with the extra cash, and so passed on the deal. With Amazon now worth around $860bn, it would have meant Son’s stake would be worth $260bn. “It’s a big mistake that I didn’t make that investment,” Son told the Milken Institute conference in Tokyo. “I just didn’t have enough cash. But... my vision was right.” Softbank has since built up a $100bn fund to make technology investments, says Bloomberg. Good week for: Britain’s trade commissioner and…

Emerging-market investors have turned their attention to Turkey again. The Turkish lira has slipped to an eight-month low against the US dollar; this follows a slump of 40% in the first eight months of last year. President Recep Tayyip Erdogan, Turkey’s increasingly authoriarian leader, has often accused foreign powers of orchestrating the currency crisis. Turkey has charged JPMorgan with “causing volatility” that prompted a run on the Turkish lira, says Carlotta Gall in The New York Times. In truth, the sell-off shows that factors driving last year’s currency crisis, such as geopolitical tensions and domestic policy, haven’t gone away, says Jason Tuvey on Capital Economics. Erdogan has picked another fight with the US, criticising Donald Trump’s intention to recognise the Golan Heights. Meanwhile, his habit of putting pressure on the…

When it comes to the precious metals group, gold, silver and palladium tend to hog the headlines. But another of the metals, having gained more than 30% this year, now costs at least twice as much as gold or palladium, notes Myra P Saefong in Barron’s: rhodium. The spot price has climbed to a ten-year high of $3,250 an ounce. The silvery-white metal is corrosion-resistant and used in vehicle catalytic converters. The latest boost to demand stems from Fiat, which needs to replace more than 800,000 catalytic converters in recalled vehicles. Supply, meanwhile, is extremely inelastic because rhodium is mined as a by-product of platinum; it rarely comprises more than 10% of the metal balance extracted from a mine. Prices should keep rising.…

Jeans maker Levi Strauss, which first went public in 1971, returned to the stockmarket last week. The initial public offering (IPO) was priced at $17 a share, reflecting a market value of $6.6bn,and had eclipsed $22 by the end of the week. But don’t get too excited, says Timothy Green on Motley Fool. Sales and operating income may have grown by 14% and 13% respectively last year, but “a single year doesn’t make a trend”. It’s far from clear that the group has worked out how to grow consistently: over the past 20 years sales have gone nowhere and operating profits have been “erratic”. That makes a price/earnings (p/e) ratio of 30 – or 20 if a one-off tax charge is ignored – a bit steep.…

Uber may be about to embark on its “blockbuster” initial public offering (IPO) that could value the company at more than $100bn, say Shannon Bond and Simeon Kerr in the Financial Times. But that hasn’t stopped it paying $3.1bn for Dubai-based rival Careem. Provided regulators agree to the tie-up, Uber will pay $1.4bn in cash and $1.7bn in shares for its strongest competitor in the region, with Careem to be run as a fully owned subsidiary of Uber. The news comes as Uber has been “spending heavily” in markets including the Middle East to “subsidise rides and win market share”. The deal should give a boost to the forthcoming Uber IPO, say Karen Kwok and Gina Chon for Breaking Views. Not only does it show that the group “is still…

Investment trusts are collective investment schemes. Similarly to open-ended investment companies (Oeics) or unit trusts, they allow investors to pool their money and invest in a wide range of companies, enabling them to spread their risk in a convenient way. However, there are some key differences between investment trusts (which are closed-end funds) and their open-ended peers. Investment trusts are listed companies whose business is to invest in other companies. This means that they raise an initial amount of capital when they go public. After that, if you want to invest in the investment trust, you have to buy the shares in the open market. This is different to an open-ended funds, where any new money results in the creation of new units (and any sale results in the redemption…

• Garth Ritchie, joint deputy chief executive of Deutsche Bank and head of its corporate and investment unit, has been the lucky recipient of his own personal Brexit dividend, says Steven Arons at Bloomberg. Ritchie’s pay for 2018 rose by €5.37m to $8.62m. That amount included €250,000 a month for work to prepare for Brexit. Ritchie (pictured) took over as sole head of the unit last year – since when profit has fallen by 48%, and revenue has dropped by 8%. • Richard Weil, chief executive of asset-management group Janus Henderson, has seen his pay increase by 26% since his appointment last year, writes Owen Walker in the Financial Times. Weil also received relocation expenses of more than $300,000 in 2018, despite moving from Denver to London two years previously…

“Women were paid about half what men were 50 years ago. Now it’s still lagging, but it should be right in about 400 years.” Technology pioneer Dame Stephanie Shirley (pictured), quoted in The Sunday Times “I’ve made money in my time and I’ve got a nice house, but I’m not like you, it doesn’t make me one of you.” Rock singer Paul Weller, 60, refuses to become middle-class, quoted in The Sunday Times “I’m not one of these winners who is going to say this win won’t change me... I’ll give it a damn good go.” Ade Goodchild, 58, a factory worker who won £71m in the EuroMillions lottery, quoted in The Times “It is always a little sad to see what the people rich enough to have everything actually…

theconversation.com Our economy relies on industrial principles of mass scale, never-ending growth and throwaway consumerism, say Maikel Kuijpers and co-authors. Could craft brewers point the way to a better future? Craft principles were cast aside as industries were modernised. In the Netherlands, for example, about 1,000 breweries existed at the start of the 19th century. Following the industrial revolution, 13 remained, all making the same beer. The rise of craft beer means there are now more than 300. This change was driven by an eclectic group of beer enthusiasts. These “crafty change-makers” face challenges, not least of which is that the big incumbent brewers are buying them up and “craft-washing” their own brands. But it would be a shame if they kill the craft revolution, since craft practices and values…

Activist investor Elliott Management has lost its latest battle with Hyundai Motor Group, says Eun-Young Jeong in The Wall Street Journal. The hedge fund “scored a victory” against the South Korean car giant last year when it called off a corporate restructuring that Elliott thought “lacked business rationale”. However, last Friday shareholders rejected Elliott’s proposals for a KRW7trn ($6.2bn) dividend payout, and voted in the companies’ board nominees, rather than the activists’. Elliott is expected to “seek a voice” in the carmaker’s coming restructuring, which is seen as part of an effort by the Chung family, which owns roughly 30% of shares in the company’s listed affiliates, to transfer ownership of Hyundai from father to son.…

Investors ought to be invested in the tidal wave of tourists from China. There are dozens of companies and more than 45,000 travel agents, many of which will fail. But Nasdaqlisted Ctrip.com International (Nasdaq: CTRP), with a market capitalisation of $29bn, is the big player, with a 40% share of online travel booking. It is the largest group in package tours, travel-related finance and airline ticketing, both for domestic and overseas travel. The stock is far from cheap and profit margins are thin, but it is a proven growth story. Less racy is Genting Singapore (SIngapore: GENS), one of only two Casino groups in the country, which is a popular destination for Chinese gamblers and tourists. Genting has a market cap of $14bn. Well regulated and managed, it should enjoy steady…

The 2018/2019 tax year is almost over. Before the clock strikes midnight on 5 April, make sure you use your £20,000 individual savings account (Isa) allowance. The best easy-access rate for cash savings is 1.5%, but this isn’t available to everyone. Santander’s e-Isa pays 1.5% but you need a Santander 123 World or Select account to qualify. Buckinghamshire BS pays 1.5% on its 180-day notice Isa, but it is only operated in-branch or by post, so you need to hurry to get your money in before the deadline. If you’re happy to lock your money away for longer, Charter Savings Bank pays 1.95% interest on its two-year fixed-rate Isa. This is an online account that accepts Isa transfers, but there is a minimum balance of £5,000. Note too that when…

Lorraine Kelly isn’t the most obvious hero for small businesses providing contracting services, but the television presenter’s victory in a landmark tax case is being widely celebrated. Kelly has succeeded in overturning demands for £1.2m of back taxes from HM Revenue & Customs (HMRC) after convincing the courts she isn’t an employee of ITV, but a contractor who is entitled to sell her “TV persona” to the broadcaster through her limited company. For businesses worried about the often tortuous IR35 tax rules introduced almost 20 years ago, that’s a big win. “The tug of war betwen HMRC and contractors endures” The ruling underlines how high the stakes can be for freelancers and contractors that set up small businesses in order to offer their services to customers. Since working in this…

Monks Investment Trust is a £1.7bn global fund that harnesses the stock picking capabilities of Baillie Gifford. Established in 1929, it consists of an actively managed worldwide equity portfolio of around 120 growth stocks. Stocks are picked on the basis of fundamental attractions, irrespective of location, resulting in a portfolio with an active share of around 90% (so nine-tenths of the portfolio differ from the benchmark index). The focus is on companies that can deliver above-average earnings growth of approximately 15% a year. Our core belief is that share prices ultimately follow earnings. A leader in classified ads Schibsted (Oslo: SCHA) owns a series of businesses around the world, though its heritage is in Scandinavia. Originally a print media outfit, this ambitious company has undergone a remarkable transformation with the…

Sir Charles Dunstone (pictured) was “one of a generation of public schoolboys” who struck gold with their entrepreneurial ventures in the 1990s, says The Sunday Times. Britain’s first telecoms billionaire founded the clunky-sounding Carphone Warehouse with just £6,000 in 1989, flogging new-fangled mobile phones from his flat on London’s Marylebone Road. The company grew rapidly and floated in 2000, valued at £1.7bn. Dunstone later launched a broadband operator, TalkTalk – “a brave attempt to tackle the might of BT with a budget offering”. Of late, though, both companies have been struggling. “The days of plain sailing are over” for Dunstone. “Remember those sunny days in 2014 when Carphone and Dixons announced their ‘genuine’ merger of equals?” asks Nils Pratley in The Guardian. Half a decade on, Carphone is “barely profitable”…

I am a fan of the wines from the legendary Niepoort portfolio, but I have always felt that the wines stopped just short of genuine excellence. Everything changed at the annual Wines of Portugal tasting, where a series of Niepoort wines left me reeling with delight. I have three for you. First, VV Branco, a white made from 100-year-old Maria Gomes and bical vines. On account of the high acid in these grapes, the wine undergoes malolactic fermentation in 1,000-litre foudres, which were sourced from the Mosel more than 60 years ago. With only 11.5% alcohol, a truly ethereal flavour and so much complexity and beauty in the glass, this is one of the lightest and most mesmerising white wines I have ever tasted. The 2015 Poeirinho, Bairrada (about £40,…

Early last week, global equities hit a five-month high. Then they had another growth scare. The US Federal Reserve warned that the US economy had slowed and said it would not raise interest rates this year. A gauge tracking Germany’s manufacturing sector slipped to its lowest level in six-and-a-half years. Also, the IHS Markit Purchasing Managers’ index also fell below 50, the level that separates expansion from contraction. The final element of the triple whammy was the inversion of the US yield curve. The FTSE 100 slipped by 2% and Asian markets fell slightly further last week, notching up their worst week since November. The yield curve plots the difference, or spread, between the yield on the ten-year US Treasury (government bond), and the yield on the three-month Treasury. It…

“A trigger for the Leave vote was a despair that Brussels was an over-interfering and dictatorial bureaucracy… we seem incapable of applying our critique of the European Union to our own constitutional arrangements. Most voters may feel we have a little more control over Westminster than over Brussels… There is a pressing need to switch powers away from central government and move them far closer to the people who feel their impact… the UK is… the most centralised economy in the democratic world… A century ago, local government was responsible for raising more than three quarters of its own funding; that now stands at a mere 20%. A huge transfer of tax, spending and regulatory powers to… smaller… flexible administrations at local level is… necessary… Local government should have the…

Three to buy Law Debenture The Mail on Sunday Founded in 1889, Law Debenture is a “business of two halves”. It combines an investment trust focusing on UK equities with a professional services business that helps companies with accounting and pension administration. Revenue from the professional services side frees up the money managers to take a long-term, “sometimes contrarian view”. The group has consistently outperformed and is an attractive long-term buy. 576p Ørsted Money Observer Clean energy will be a key future investment trend as concern over climate change prompts countries and industries to “wean themselves off oil and gas”. This Copenhagen-listed company, which is 50.1% owned by the Danish state and used to be known as Dong Energy, has moved on from hydrocarbons to become a leading player in…

• Ride-hailing app Lyft looks set to price its shares above the previously announced target range of $62 to $68 for its initial public offering (IPO), reflecting robust demand. This implies a market value of more than $23bn. Completely bonkers, says Len Sherman in Forbes.com. Lyft lost $1bn last year and still can’t “explain why it can become profitable when Uber can’t, despite Uber’s five times greater scale”. The whole ride-sharing model is flawed given “low barriers to entry... and regulatory and legal risk... another age of irrational exuberance” is here. • Apple may have pulled out all the stops in its “extravagant unveiling” of AppleTV+, its new video content streaming service, says Elizabeth Winkler in The Wall Street Journal. Yet it “looks a lot like” Amazon Prime: a mix…

Italy has become the first G7 nation to endorse the Belt and Road Initiative, China’s controversial series of global infrastructure investments, says Miles Johnson in the Financial Times. The two countries signed a non-binding declaration that endorsed the deal as well as “a number of agreements between companies in sectors including energy and steel” worth more than “several billion euros”. Italy’s endorsement has “caused consternation” in Washington and Brussels, “which have voiced concern about China using the initiative to gain influence or control over strategically important assets”. Italy is clearly hoping to get a share of the billions of dollars that have already been invested by Beijing across more than 60 countries, in disparate infrastructure projects including railways, roads and ports, says The Economist. Indeed, some experts believe the total…

The man who made his name by betting against the US housing market ahead of the subprime crash in 2008 now has Canada in his sites. Steve Eisman, whose hugely profitable short-selling was made famous by the Michael Lewis book (then film), The Big Short, is quick to tell the Financial Times that his bet against the Canadian market is not on the same scale as his historic short on the US. “This is not ‘The Big Short: Canada’. I’m not calling for a housing collapse.” Yet even just “a simple normalisation of credit” will have a big impact on Canada’s banking sector, which has grown rather too used to soaring property prices. Like many stubbornly overpriced housing markets across the globe, Canada’s has finally started to crack, with prices…

HM Revenue & Customs (HMRC) spent almost £350,000 on payments to “whistleblowers” last year, but refuses to divulge the number of payments or the circumstances that surrounded them, reports The Times. The revelation was made in response to a freedom of information request by barrister Jonathan Fisher QC, a specialist in financial and corporate crime. HMRC also paid more than £420,000 to whistleblowers in 2017, says Fisher, writing in Counsel magazine. He also requested information from the police and the National Crime Agency, but received no response. However, The Guardian reported in 2017 that 43 UK police forces collectively paid out £19.59m on whistleblowers and informants, says Fisher, but the mystery surrounding them demonstrates a “total absence of accountability, transparency and, potentially, legality”.…

conservativehome.com The government is to make it harder to watch pornography, says Rachel Wolf. Internet providers will face large fines if anyone under 18 accesses porn, and will therefore require credit-card details, a purchased “porn pass” from a newsagent, or use of a virtual private network (VPN) for access. As a parent, my instinctive response to this is that it is a good idea. I want to stop bad things happening to my children, and I worry about the effect online pornography may have on teenage boys’ views and behaviour. But does anyone really think this is going to work? Has a ban ever stopped teenagers getting their hands on illicit goods? Or is the government simply reaching for old tools to deal with social problems that we all know…

■ Increasingly, global capital flows are driven either in anticipation of decisions made by index managers, or in response to the actual changes they make to their indices, says John Plender in the Financial Times. And “we ignore this power at our peril”. Last year, for example, there were massive net inflows to Chinese markets as investors attempted to take advantage of the pending inclusion of Chinese securities in global indices that will be tracked by trillions of dollars. This is worrying because there is a lack of consistency, and in some cases transparency, in how indices are compiled, says Plender. Index managers have “enormous discretion” in changing the index. For example, the methodology for the S&P 500 changed at least eight times between 1 January 2015 and 30 April…

■ A million customers have seen their energy supplier collapse in the past year, says Sam Meadows in The Daily Telegraph. Yet Ofgem, the energy regulator, has approved every application to supply gas and electricity in the past three years. There are now calls for tighter regulations on entering the market. But in the meantime, every failed firm costs us all money. Ofgem says failed suppliers add £3.70 a year to everyone’s bill, but other estimates put the figure as high as £6.28. Yet firms that take on customers from failed suppliers are allowed under “supplier of last resort” rules to reclaim costs they would not otherwise have incurred, such as honouring credit balances. For example, Octopus Energy took on 100,000 customers when Iresa when bust, and reclaimed £13.8m in…

Freelancers and self-contractors do not have to set themselves up as limited companies. Many choose to operate as sole traders instead. There are pros and cons to both approaches. Limited companies enable you to take money out of the business through a combination of salary and dividend payments. With the latter not subject to national insurance, this can be a more tax-efficient set-up than working as a sole trader, but this isn’t always the case. A limited company also offers you protection from creditors because the debts are in the company’s name, rather than yours. However, sole trader status is simpler. You’ll manage your tax through the self-assessment system, with no need to file company accounts or complete corporation tax returns. You may be able to do without a professional…

Micro Focus International (LSE: MCRO) specialises in updating and maintaining old mainframe computer systems. This time last year, things weren’t looking good. The company had spent $8bn on Hewlett Packard Enterprise’s software business and was having trouble integrating it. Sales suffered, the chief executive left after just six months, and the share price halved in a matter of weeks. Since then, however, the group seems to have turned a corner. Investors who bought at the bottom have been rewarded with a share price rise of more than 100% in the last 12 months.…

Born in Edmonton, Canada, in 1941, Bernard Ebbers (pictured) ran a  motel chain before investing in a telephone company called Long Distance Discount Service. He was appointed its CEO in 1985 and would take over 60 communications companies before changing the firm’s name to WorldCom in 1995. In 1998 it took over MCI Communications, making it the second-largest telephone company in the world. At the peak of the tech bubble, WorldCom had a market cap of $186bn, giving Ebbers an estimated fortune of $1.4bn. How did the scam work? To fuel the expansion, Worldcom took on a lot of debt. In order to keep creditors willing to lend money, as well as to meet the expectations of Wall Street analysts, WorldCom’s management started fiddling the books to the tune of…

A Crisis of Beliefs Investor Psychology and Financial Fragility Nicola Gennaioli, Andrei Shleifer Princeton University Press, £24 Financial economists tend to believe in what is known as the “rational expectations hypothesis” (REH). Put simply, they assume that people automatically make optimal decisions after taking into account all available information. Such a simplification may be useful when building an economic model, and indeed it has a kernel of truth, but it flies in the face of the evidence that people can behave in quite irrational ways. In this book, academic economists Nicola Gennaioli and Andrei Shleifer examine the financial crisis of 2008-2009 to assess the REH’s shortcomings and to look at alternatives. They consider two questions. First, why did apparently intelligent and well-educated people overlook the problems with the financial system,…