Indholdsfortegnelse for Issue 944 i MoneyWeek

US trainers retailer Foot Locker appears to have found its feet after a turbulent year, says Jack Hough in Barron’s. That was largely due to some rare “fashion misses” by key customer Nike, but things are now back on track. More popular Nike trainers helped boost sales by an annual 10% in the three months to the end of January. Analysts are pencilling in an 11% rise in earnings per share for Foot Locker this year, while the group’s gradual shift from basic retail outlets to “experience-based stores” looks promising. These large venues offer city-specific shoe designs and treats such as visits by athletes and musicians, along with collection points for goods ordered online. The stock yields 2.5%.…

Two months after Kraft Heinz “shocked” investors by announcing an annual loss, slashing its dividend and revealing an investigation by America’s securities watchdog, the world’s fifth-largest food and drinks producer has unveiled a new chief executive officer (CEO), reports James Dean in The Times. Miguel Patricio, the former chief marketing officer at Anheuser-Busch Inbev, will replace Bernado Hees, who has been in the job for the past four years. This change comes as the shares in the company have fallen 57% since the merger between Kraft and Heinz in 2015. It’s high time Kraft Heinz made “a new start”, says Amanda Gomez on Breakingviews. In addition to a new CEO, Kraft Heinz should also recruit more external directors to diversify a board that is “neither as varied in sector experience…

The proposed HS2 high-speed rail line is “hanging by a thread”, says Simon Jenkins in The Guardian. Treasury secretary Liz Truss has reportedly made it a candidate for autumn’s public spending review, declaring her determination to “junk the white elephants”. The estimated costs of HS2 have risen from £56bn to more than £100bn. So far, £4bn has been spent on “preparatory work” including £600m on a “consultancy gravy train”. Cancellation would not only release land for development, it would also enable Truss to “press go on HS3”, the alternative Northern Powerhouse rail project, producing “instant ecstasy” among leaders of northern city councils. Is that so, says Michael Savage in The Observer. Henri Murison of the Northern Powerhouse Partnership, a think tank, said that ditching HS2 would “send a very negative…

Volodymyr Zelensky was previously famous as a comedian who played “a character from a TV series, who becomes president by chance”; now he gets to play the role for real, says Katya Gorchinskaya in The Guardian. His victory in Sunday’s Ukrainian presidential election, despite having “zero political experience”, was born from deep anger at “the rule of old political elites” and years of IMF-backed austerity. Expectations of the new president run high, with polls suggesting that many Ukrainians expect him to “reduce the cost of utility bills; strip immunity from prosecution from MPs, judges and the president himself ; and start or speed up the investigation of major corruption cases”. Good luck with that, say Daryna Krasnolutska and Volodymyr Verbyany for Bloomberg. When he’s formally sworn in next month, Zelensky…

Despite the jitters that hit global markets late last year, 2018 was a good deal for mergers and acquisitions (M&A). In total, $4.1trnworth of deals were done last year, the third-highest sum ever, and second only to 2015 and 2007, notes investment bank JP Morgan Chase. That looks likely to continue this year. The idea of M&A ramping up is something that tends to get investors excited – we all like the idea that a company we own might get sucked into a bidding war. But investors in acquisitive companies should beware: a painful hangover often follows an M&A party, in the form of goodwill writedowns. “Goodwill represents how much you overpaid for a deal” You can read a full definition below, but put simply, “goodwill” is a figure on…

The fund industry, despite its seeming simplicity, has never been a low-cost one. And right now, a section of it seems to be getting more expensive than ever. In private equity, what is known as the “carried interest” for the partners in the fund has traditionally been 20%. In simple terms, they get a fifth of any profits the fund makes on its investments. They usually charge 2% of the funds under management as well to cover basic costs. In the last year, however, a group of leading private-equity funds, including big names such as Carlyle and Bain Capital, have raised the share of profits that go to the partners from 20% to 30%. The hedgies make their move Something similar has happened among the hedge funds. Traditionally, they had…

Japan is fed up with its tourists Eri Sugiura Nikkei Asian Review Japan’s tourist boom has been a mixed blessing, says Eri Sugiura. In 2018, foreign visitor arrivals jumped 8.7% to 31.19 million from the previous year and tourist spending hit a record $40.1bn, quadrupling from 2012. However, per-capita spending is slipping and “grassroots opposition to the rising number of tourists appears to be at odds with the government’s policy of cultivating the industry”. In 2017, Kyoto hosted 53.6 million visitors, dwarfing its population of 1.5 million and making historical sites seem more like theme parks. The city’s 1,300-year-old Nishiki Market has become so choked with strolling tourists that it is no longer practical for locals to use it for their shopping, hurting local businesses. The challenge is to spread…

stumblingandmumbling.typepad.com Rising house prices are a cultural and economic menace, says Chris Dillow. They encourage high debt, which is destabilising. They divert spending towards rent and mortgage payments and away from new goods and services, reducing dynamism and innovation. They encourage long commutes, which cuts productivity. Some have argued that the Bank of England should target a level of house-price growth to clamp down on this. Yet if the Bank limited mortgage availability to curb prices, the result might be more lending by overseas or shadow banks, or other negative unintended consequences. The broader point is that there is no single magic-bullet policy. How should we raise productivity, for example? Better infrastructure, more vocational training, stronger competition policy, more open international trade, encouraging financing for research and development, shifting tax…

Now that interest-rate rises in the US and the UK are looking less likely, we find ourselves in a good environment for well-managed income-producing assets. It’s against this backdrop that I want to discuss the real-estate investment trust Regional Reit (LSE: RGL), which invests in regionally diversified property. It represents potentially good value. RGL’s current dividend yield is well above the market average, and its portfolio should benefit from a resolution to Brexit as businesses expand. My hunch is that the current discount to net asset value (NAV, the value of the underlying portfolio) – roughly 7% – could tighten to 4% or even 3% as more value-orientated investors buy the stock. In the meantime, investors should be picking up a 7.5% yield with the possibility of a 3% increase…

A few weeks ago, the government revealed an industry pledge that commits signatories to doing away with onerous ground-rent clauses within leasehold agreements. Among those who have signed up to the pledge are housebuilders Taylor Wimpey and Barratt Homes. The government has been under pressure over the past few years to tackle the problem of unfair leasehold agreements. Generally, leasehold ownership is used in blocks of flats owned by one freeholder, in order to allow for the centralised upkeep of communal areas, financed by service charges paid by each leaseholder. Ground rent is part of the contractual agreement between the leaseholder and freeholder, but no services are provided in return, and it is often set at zero. Problems emerged when developers began selling new-build houses on a leasehold basis. This…

A London-based architect is preparing for a future with scarce resources by working out how people can grow their own homes. Maria Vergopoulou’s “Cocoon BioFloss” design, submitted to a competition organised by architecture publication Dezeen and carmaker Mini, imagines clusters of pod-like houses made from thin bioplastic fibres. The material could be harvested from organic matter such as sunflowers, potatoes and apples, which could be grown on site and then wrapped around wire frames to create a shell. When the house gets damaged, it can be composted. Her design lost out to houses that resist rising river levels and houses that fly.…

The small-business ombudsman scheme launched by the government 18 months ago finally seems to be hitting its stride. Paul Uppal, the Small Business Commissioner appointed in December 2017 to help small enterprises tackle late payments, has presided over a near-tenfold increase in recoveries over the past six months. Research published by Funding Options, the online funding advice platform, suggests the Small Business Commissioner has recovered £3.1m in unpaid invoices for small businesses over the past half-year. That compares with just £380,000 in the previous six-month period. Unlike statutory schemes such as the Financial Ombudsman Service, the Small Business Commissioner’s recommendations are non-binding. Still, the service provides small businesses with a potentially influential source of support when they are unable to resolve late payment problems for themselves. Research published last month…

The idea of investing in Quartix (Aim: QTX) may not seem appealing at first glance. But dig a bit deeper and the opportunity becomes clear. The company supplies vehicle tracking systems to businesses operating fleets of vans and to insurance companies tracking young drivers. The fleet business has grown every year since chief executive Andy Walters founded the company in 2001, but the insurance division is contracting. Quartix is spending money to establish itself in largely unproven markets in the USA and Europe, but there is a cloud on the far horizon. In the coming decades vehicles will do an increasing amount of driving themselves, perhaps reducing the need for a system that makes sure drivers go where they are supposed to and drive safely and efficiently. So there are…

The high street may be ailing, but some retailers are thriving. Shares in JD Sports (LSE: JD.) have almost doubled in five months, and there should be further to go. Sales grew by 50% in the year to early February, compared with an “already impressive” third in the previous 12 months, as Investors Chronicle points out. The chain grew its UK presence by five stores to a total of 23, but “the real growth story” is overseas. Global markets accounted for 78 of the 83 shop openings. Solid sales at its US acquisition bode well for that market.…

Robert Maxwell was born Jan Ludvik Hoch in modern day Ukraine (then part of Czechoslovakia) in 1923. He escaped to France during World War II and made his way to Britain, where he joined the British  Army. After buying the rights to distribute German academic papers, he took over a small academic publisher, which later became Pergamon Press. During the 1980s he aggressively expanded his business empire, with the result that, by the end of the decade, he owned a string of companies, including Macmillan Publishers, the Daily Mirror and New York Daily News. What was the scam? Having taken on large amounts of debt, and following the launch of a string of expensive failures, Maxwell was reduced to shunting money between his companies to give the impression they were…

Shortly after I reviewed Fuji’s X-T3 mirrorless camera a few weeks ago, it released the X-T30: a smaller, budget version of the main model. It shares many of the same features as its bigger brother, including the sensor and the excellent autofocus system. What’s more, the slimmed down size means that you can easily fit the body into a trouser pocket or inside a jacket. Even if you add one of Fuji’s smaller lenses, such as the 35mm F2, you can just about squeeze it into a pocket. Those who decide to carry it around their neck or shoulder will appreciate that the X-T30’s body is 156g lighter than that of the X-T3, which will make things a lot more comfortable after a long day’s shooting. Mirrorless cameras have a…

Appeasing Hitler Chamberlain, Churchill and the Road to War Tim Bouverie Bodley Head, £20 The policy of appeasing Hitler during the 1930s “became so discredited after 1940” that the term appeasement is now never used except as a criticism, says David Aaronovich in The Times. Revisionist historians, however, are now starting to portray Chamberlain as “a maligned super-pragmatist” who used appeasement as a tool to gain time for Britain “to re-arm against the coming storm”. Appeasing Hitler attempts to return to a more traditional interpretation. It argues that at “almost every point, the policy of appeasement strengthened Nazi Germany and the Axis far more than it helped Britain or its allies”. The author “rises superbly” to the challenge of telling the complex story of appeasement, says Andrew Rawnsley in The…

• Businessman Hans Vriens has launched a herbal drink he claims will help you get a good night’s sleep, says Jane Moore in The Sun. Interestingly, Vriens used to be a director at Red Bull North America, the company behind the energy drink that “gives you wings”, which is the antithesis of his new herbal beverage product, called “Snoooze”. “In the case of Red Bull, we gave them the energy to party through the night,” Vriens said in an interview. “In the case of Snoooze, we give them the energy the next day.” Or is this just another “example of profitable hypocrisy”, alongside a beauty industry that “sells make-up to young girls who want to look older while flogging anti-ageing products to women who want to look younger, and a…

“I’ve done a stupid thing”, Silva Moro told her sister in a Whatsapp message in 2016.“I put a strudel in the oven to cook where €40,000 was hidden”. The story emerged in a court in Padua, Italy, last week. Moro’s partner, Alberto Vazzoler, an Italian businessman on trial for money laundering and tax evasion, had apparently forgotten to tell her about his stash of “hot” money, says The Times. In 1999, Vazzoler started Dublin-based Net Fraternity, which rewarded internet users for looking at online adverts, but it went bust in 2010. Nevertheless, Vazzoler has homes in Monte Carlo, Jesolo and Padua, as well as yachts and luxury cars. He is accused of laundering €46m across Europe, channelling the funds to tax havens. Good week for: Elton John and husband David…

Only 9% of German wealth is invested in shares and investment funds, according to the Bundesbank. “Germans like fixed interest rates, and are willing to sacrifice higher returns for that security,” Kay Bommer, general manager at the German Investor Relations Verband, told Reuters. Apart from being famously risk averse, many Germans burnt their fingers badly in the late 1990s. Close to two million people bought into the “heavily advertised but ultimately ill-fated flotation of state-owned Deutsche Telekom in 1996,” Tobias Buck points out in the Financial Times. When the dotcom bubble burst, they suffered heavy losses. “This did a lot of damage to the reputation of the stockmarket,” Martin Weber, a professor of economics at the University of Mannheim told the FT. But now the lousy returns on savings accounts…

Ever since last summer, the Chinese government has been insisting that it has the outbreak of African swine fever under control, says the Financial Times. But “the crisis is now undeniable”, and the world’s biggest producer and consumer of pork is shaking the global market. The number of pigs in China, around 450 million, is set to shrink by a third by the end of 2019 as the incurable disease rages. US pork sales to China have hit a record high despite a 62% tariff imposed on the products amid the trade war. Dwindling supply will propel Chinese prices up by 70% year-on-year in the second half, reckon analysts, while lean hog futures traded in Chicago, a key global benchmark, have just rocketed to a two-year high around 90 US…

There are finally signs of life in the Dubai initial public offering (IPO) market. Following a 17-month hiatus, three flotations are now looking likely, according to Dubai Financial Market, which operates Dubai’s stock exchange. The companies in question are reportedly in the industrials, oil and gas and healthcare sectors. A fall in oil prices in recent years has reduced the appeal and liquidity of regional markets, notes Filipe Pacheco on Bloomberg. Companies from the United Arab Emirates seem popular elsewhere, however, judging by the successful recent flotation in London of Dubai-based payments processor Network International.…

The cannabis sector’s urge to merge shows no sign of abating. Canada’s Canopy Growth Corp., headed by Bruce Linton (pictured), has agreed to buy Acreage Holdings, one of the biggest US marijuana growers, in a $3.4bn deal, notes Kimberly Chin in The Wall Street Journal. But the tie-up comes with a twist: it depends on cannabis production and sales being legalised by the US federal government. Canopy will pay $300m upfront in cash, with the rest in shares once legalisation occurs. If it doesn’t arrive within the next 90 months the deal will automatically be called off. This “non-takeover takeover” is a “smart workaround” for Canopy’s shareholders, since it’s risking just 2% of its $15bn market capitalisation, says John Foley on Breakingviews. However, even though Acreage’s shareholders receive a 42%…

With the Mueller report now published (see right), it’s a good time to look at what the betting exchanges are saying about President Donald Trump (pictured) and the odds that he will face impeachment. And for the moment it’s looking bad for those who think that he’ll be forced out of office within the next eight months. While the main exit-date market on Betfair has seen a lot of activity, with a total of £1.3m wagered, you can now get 14.5 (6.9%) on Trump leaving office this year and only 1.07 (93.4%) on him surviving until at least next year. Interestingly, punters are also very sceptical that he’ll go the way of President Richard Nixon, as you can get 4.7 (21.2%) that he’ll be impeached during his first term in…

Goodwill is an intangible asset, which means it can be found on a company’s balance sheet in its annual accounts. It is generated as the result of an acquisition. When one company buys another, it will typically pay a premium to the “fair value” (which is essentially an adjusted version of book value – the value of a company’s assets minus its liabilities). Goodwill is the difference between the acquired company’s fair value and the actual price paid. Say Company A buys Company B for £10m. The fair value of Company B’s assets is £8m. The “excess” £2m paid is then listed in Company A’s balance sheet as “goodwill”. What does this difference represent? The value of certain intangible assets such as patents or intellectual property can be estimated, and…

• Abigail Disney criticised as “insane” the $65.7m the company her grandfather co-founded paid its CEO, Robert Iger, last year. The media heiress (pictured) said that such levels of pay were having “a corrosive effect on society”, reports the Financial Times. Iger has performed “brilliantly”, she says, but the pay gap at Disney “so violates our innate sense of fairness it is impossible not to wince”. In response, the company, which narrowly lost a non-binding shareholder vote on pay last year, said Iger’s pay was 90% performance-based, and that he had delivered “exceptional value”. • Debenhams, the high-street retailer that earlier this month collapsed into administration, announced last Thursday the departure of its chief executive, Sergio Bucher. The former Amazon executive is to be handed a £700,000 pay-off, despite having…

“Working-class parents can’t say, ‘Here is 60 quid’, every time their kid needs to go to an audition.” Actress Vicky McCLure (pictured) on actors from privileged backgrounds having an unfair advantage, quoted in The Sunday Times “In the ‘90s, when our economy collapsed, we lost everything. My mum started to do all of these crazy businesses. She was selling cosmetics and I would attend seminars on how to sell your product even though you knew they were useless.” Nadya Tolokonnikova, 29, Russian pop singer and political prisoner, quoted in The Observer “The peculiar evil is this, that the less money you have, the less inclined you feel to spend it on wholesome food. A millionaire may enjoy breakfasting on orange juice and Ryvita biscuits; an unemployed man doesn’t… when you…

econlib.org Money has little effect on happiness, says Bryan Caplan. Epicurus said it and modern empirical psychology confirms it. So why do we have so much trouble accepting this? One reason is that the fact that money doesn’t buy us happiness clashes with the obvious fact that it can do. We just tend to spend poorly. Here are five ways of “turning cash into smiles”. 1. Buy your way out of chores you can’t or don’t want to do by hiring other people to do them for you. Start with cleaning, laundry, car repairs, sorting out your taxes and childcare. 2. The leading source of happiness is pleasant social interaction. So spend money to get more of it without wasting hours preparing for it (see 1). 3. If you live…

Activist fund Crystal Amber has threatened to oust the chairman of troubled tech incubator Allied Minds, says Peter Evans in The Sunday Times. Allied Minds, which commercialises intellectual property developed by American universities, has seen its share price fall sharply since 2014, when the current chairman took over. Crystal Amber is pushing for a breakup of the company and an overhaul of its pay policy. Allied is set to present its full-year results today, with chief executive Jill Smith (pictured) under pressure to show how the portfolio will realise any value.…

This property would make an ideal woodland retreat. It offers the rare chance to buy a Paragraph-55 development project, which affords planning permission for a new property to be built in the countryside, based on an outstanding design with significant architectural merit. The house, which has a curved design and is raised on stilts, has yet to be built. It will have floor-to-ceiling windows, five bedrooms, and is surrounded by sustainable woodland that will help provide fuel. But can you guess the asking price? Answer on the side of this box.…

“I have two boys, ten and 13, and they won’t have enough food to eat in a few years’ time.” So said a climate-change protestor to Richard Madeley on Good Morning Britain earlier this week. Madeley looked mildly bemused. Probably for good reason. Right now the planet has no shortage of food. According to the United Nations Food and Agriculture Organisation, around 10% of the world’s population is malnourished in some way (though this figure has halved in the last 20 years). But that malnutrition, sadly, reflects more of a distribution problem than a production problem. An estimate from the Boston Consulting Group (BCG) in 2018 suggested that around one third of the food produced globally ends up wasted: 1.6 billion tonnes with a value of around $1.6trn. That’s partly…

There are, according to Benjamin Disraeli, three kinds of lies: “lies, damned lies and statistics”. Yet popular opinion treats the release of every item of economic data, often rushed out prematurely and prone to multiple subsequent revisions, with a reverence that no serious economist would condone. Economic statistics are then routinely weaponised for political ends, a task made easier by the frequent contradictions between different sets of data. The most fundamental of economic statistics is the measurement of national economic output, generally referred to as GDP (Gross domestic product), and its rate of change. But, as Professor Diane Coyle of Cambridge University points out, “economists have been cheerfully downloading GDP and other national accounts figures without giving much thought to the statistical niceties”. She suggests that GDP data increasingly provides…

• What does your business do? We build powerful YouTube creator campaigns with world-leading, courageous brands. By creatively pairing these companies with YouTube channels, we facilitate compelling storytelling at scale and help brands access disparate audiences, including people who don’t often engage with advertisements. We are the only neutral influencer marketing agency in the UK specialising in YouTube. We don’t manage talent, but we source the best creators for every campaign. • What’s been your greatest achievement? I’m so proud of how far we’ve come so quickly. We’re only a team of six with an average age of 24, but we work with some of the world’s leading brands. It’s hard to pick one highlight, but arranging the first YouTube creator to fly with the Red Arrows was incredible. •…

A biotech with a promising new antibiotic has just declared bankruptcy. Achaogen’s (Nasdaq: AKAO) drug plazomicin was approved last June for urinary tract infections caused by resistant bacteria. However, with few resources behind it (a reflection of scant interest from big pharma) the group had severe trouble selling enough pills to stay afloat, while it hardly helps antibiotic developers that existing, often cheaper, treatments still meet much of the demand. The news has fuelled calls for governments to produce new incentives to encourage antibiotic development.…

I strolled around a huge tasting the other day and was particularly enthused when I hit the Artadi table. These are always great wines and, of the eight bottles, all red, all fascinating, and topping out at an eye-watering £200, my favourite, the highest scoring and most delicious, was Viñas de Gain. It also happened to be the least expensive of the bunch, too. This is a sensational Spanish red and, in one bottle, it sums up everything I love about tempranillo. Made from organically grown grapes, sourced from select 20- to 30-year-old vineyards, it gets treated to 12 months in posh French oak, and this adds gloss and bravado to proceedings. While I love what American oak does to great Rioja, I cannot abide the Benylin and stale floor…

It was a sad day in Paris. In the holy week of Christendom, one of its most sacred and beautiful monuments caught fire. And when dawn came, Parisians found Notre Dame disfigured, but still standing. Its oak beams, dating from the 12th century, were charred and still smoking. Its roof had caved in. Adolf Hitler had tried to destroy Notre Dame. He sent the order to his man on the scene, General Dietrich von Choltitz, to blow up all the city’s monuments, its bridges, its railroad stations – everything. He wanted the city levelled. He knew the Allies would take Paris soon (they were advancing toward it from Normandy), but Hitler insisted that Paris be “complete rubble” when they arrived. On 24 August 1944, Hitler telephoned von Choltitz. “Is Paris…

“China is the dog and the rest of the world economy is its tail,” says John Authers on Bloomberg. The global economy breathed a sigh of relief when the Chinese economy, the world’s second largest, grew by 6.4% year-on-year in the first quarter of 2019, slightly better than expected and the same pace as in the previous three months. Factory output went up by 8.5% in March, and retail sales expanded by 8.7%. “China’s Communist rulers continue to keep up their end of a compact made with the populace ever since the Tiananmen Square massacre of 1989: no democracy, in return for sustained economic growth of more than 6% per year,” says Authers. The current round of stimulus shows just how determined policymakers are to bolster growth as the country…

“You can talk about cutting expenses all you want, but it’s income that builds wealth. So when I hear a blogger say they saved 70% of their after-tax income and then I find out they made easily more than $200k, their “sacrifice” is a bit hollow... to get wealthy you need to earn a high income and just keep buying stocks… Unfortunately, the sad truth is that most Americans will never be able to do this. They will never earn enough money to invest and get rich… 54% of US households don’t own any stocks and 69% of working Americans save 10% of their income or less (with 21% of working Americans saving nothing at all). This is why the personal finance industry loves the “cut your lattes and get…

Three to buy Ceres Power The Mail on Sunday Fuel cells have been “around for years”, but uptake has been limited because many require “expensive materials” such as platinum to function. Ceres Power’s cells are made from ordinary steel and use hydrogen or natural gas to generate electricity and heat. That makes them more environmentally friendly, cost-effective and efficient. The group is loss-making for now, but sales are growing fast and it has partnered with Germany’s Bosch and other big businesses in Asia and America. 175p Ocean Outdoor Shares This digital outdoor advertising specialist is already the fourth-largest player in the UK market, where it sells advertising space in prominent locations. Outdoor marketing looks a good bet at a time when big businesses are worried about being associated with online…

• News that Chinese investment group Fosun may buy tour operator Thomas Cook will “be a relief to investors”, says Lex in the Financial Times: the shares have lost more than 90% in ten years. The group “led Brits into the era of cheap Mediterranean package holidays” in the 1960s. But in the 2000s it failed to move with the times, opening too many travel agencies and neglecting “growing digital competition”. Still, the takeover makes sense given that Fosun already owns 17% of the company and the newly prosperous Chinese people are “avid travellers”. • Yet more bad news for Carlos Ghosn (pictured). The former Nissan CEO has been charged with channelling $5m that should have gone to Nissan Motor Co. into his personal accounts, say Jie Ma and Lisa…

“Investors’ latest love affair with equity markets may continue this year,” writes Nouriel Roubini on Project Syndicate. China’s growth appears to be stabilising. Brexit is becoming less of a headline issue (for global markets, at least). And central banks, most notably the Federal Reserve, have turned dovish in the face of market jitters. But don’t get carried away by talk of a “market melt-up” (see page 4), warns Roubini, who earned the nickname “Dr Doom” for his repeated warnings in advance of the 2008 financial crisis. Markets “tend to undergo manic-depressive cycles”, whereby overexuberant investors produce bull markets or even “outright bubbles”. But as sure as night follows day, the same overoptimistic investors will inevitably be pushed by “some negative shock” into being “far too pessimistic”. And the bad news…

Fund managers in Britain have paid politicians hundreds of thousands of pounds for speeches and advice over the past year as investors sought clarity over Brexit, says the Financial Times. Money has flowed to both Remain and Leave camps – Boris Johnson, Iain Duncan Smith, David Davis, John Redwood, Damian Green and Ken Clarke have all been paid for their insights. The payments come on top of their £79,468 MPs’ salaries. Since April 2018, asset managers have spent at least £126,000 in fees to speakers and more than £110,000 for advice. Johnson pocketed the biggest payment – £94,507 – from New York-based GoldenTree Asset Management for a speech last November. “It is hard to see what these politicians add,” Mick McAteer of the Financial Inclusion Centre, told the FT. “Investment…

adamsmith.org/blog Ineos, the petrochemicals and energy giant, owned by Britain’s wealthiest man and one of two companies with the right to undertake “fracking” in England, has threatened to walk away from its operations unless regulations are loosened, reports The Daily Telegraph. The unconventional method of oil extraction must be halted under current rules if tremors of 0.5 or more on the Richter scale are triggered as a result. Ineos wants that revised to a more “sensible” level. Ineos is right to complain. The British Geological Survey lists earthquakes over that 0.5 limit that took place in the first 15 days of this month. Two were felt by no human being whatsoever. None were due to fracking. But what Ineos may have missed is that those who put the limit in…

The Securities and Exchange Commission, the US financial regulator, has given its blessing to a new type of exchange-traded fund (ETF), says Crystal Kim in Barron’s. This kind allows for active management and doesn’t reveal its holdings every day. New Jersey-based Precidian Investments has just been given the green light for its ActiveShares “nontransparent” ETF; nine other fund managers want to use the model. ETFs are virtually all passive instruments, aiming to track a market’s performance rather than beat it. These cheap securities have won a lot of business over the past few years as they are simple and cost less than actively managed funds. Active managers “have been haemorrhaging cash for the last decade”, Ben Johnson of Morningstar told the Financial Times.”They’ll try anything to turn the tide.” Funds…

If your child is struggling to find affordable accommodation in London, you might want to ask if they’ve considered choosing somewhere with less space or privacy. Property developer Vivahouse is trying to sell the idea of “co-living”, whereby people live in its prefabricated pods in an empty office block or shopping centre. According to Vivahouse, this is “accommodation redefined for today’s urban, nomadic and experience-centric resident”. For £1,200 a month, you can reserve a “private module” in Vivahouse Soho from May this year. Each module, or “pod”, within the building is small enough to be transported inside a standard service lift, and contains a double bed, bedside table, and built-in wardrobe. You also get access to a shared bathroom. There is one shower for every three modules, and you can…

The agri-tech business is still dominated by start-ups and small companies, but there are some listed firms, both big and small, worth looking at. Two suggested by analysts at Amundi are livestock genetics company Genus (LSE: GNS) and Eco Animal Health Group (Aim: EAH), a livestock pharmaceutical group that produces an antibiotic to treat a range of specific enteric and respiratory diseases in pigs and poultry. Both could see short-term pain from the African swine fever outbreak, but over the long term they will benefit from the reduction in the number of “backyard pigs” in China and the shift towards China’s huge levels of pork consumption being catered for by professional pork producers. For those interested in wearables for cows there is Avon Rubber (LSE: AVON), which makes military respiratory…

When you go on holiday, you want to spend your money on sightseeing and eating and drinking, not on fees incurred for using your credit or debit cards abroad. Fortunately, there are cards on the market that let you avoid these charges. Firstly, be aware of the kind of charges you would normally pay. Expect to pay a foreign-usage fee, where your credit- or debit-card provider will add a “load” of up to 3% of the transaction, as well as fees for using your cards to take out cash from an ATM. Many credit cards will also charge you interest on the cash you withdraw from the moment you withdraw it until you pay off your balance. On top of that, some debit-card providers – such as Halifax, RBS, NatWest,…

HM Revenue & Customs’ (HMRC) new “making tax digital” system went live for VAT returns on 1 April. But if you’ve yet to sign up and find a software provider, don’t despair. Time is certainly tight. The new system requires almost all businesses with sales above the VAT threshold, currently £85,000, to file their quarterly VAT returns electronically through a compliant software package. This means you must have software up and running in time for your next quarterly filing deadline. However, while the Federation of Small Businesses says the average small firm will incur costs of £564 preparing for the new system, there are ways to keep the bill down. HMRC’s list of 200 compliant software providers, available on its website, includes 11 free options, plus dozens more that cost…

Where can tomorrow’s industries be found on the stockmarket? Today’s sectors represent past success; future consumers’ needs will be met by new technology and business structures. Some of these emerging areas will already be listed on the stockmarket, but typically in small and medium-sized firms that are easily overlooked. For some, the edge is in technology, but more often change comes from disruptive business models using capital differently, or offering innovative customer services. “Overseas pension funds consider student housing appealing” Once a few businesses have listed in a subsector, analyst research and interest from investors gradually builds up. It becomes easier to see a pattern to the change. Then each additional listing adds credibility to the subsector. This can lead to a re-rating as investors gain a clearer picture of…

The Silk Road Trap Jonathan Holslag Polity Press, £14.99 We hear a lot about American complaints that China isn’t playing by the rules of global trade, but Europe has much more cause to be bitter. Jonathan Holslag argues that over the last 20 years Beijing has repeatedly outmanoeuvred Brussels by getting Europe to open its markets in return for vague promises that the Chinese will do the same. Needless to say, those promises from the People’s Republic have never come close to being fulfilled. China still imposes a huge number of restrictions on imports from Europe, as well as on investment by European firms into China, which are required to share intellectual property if they want to take part in projects. At the same time, China heavily subsidises its domestic…

£785m The record-high total of pet insurance payouts in Britain last year, according to the Association of British Insurers (ABI), despite the number of claims actually falling from slightly more than a million in 2017 to 990,000. The average claim rose by £36, or 4.8%, to £793. £599m How much has been spent by the publicly owned HS2 company on buying up 902 properties between 2011 to the end of last year, The Times reports through a Freedom of Information request. The first part of the 330-mile rail route, between London and Birmingham, is expected to be completed by 2026. $2.95m The asking price for the skeleton of a 68-million-year-old juvenile Tyrannosaurus rex on online action site Ebay. The fossilised remains were dug up on private land in the US…