Indholdsfortegnelse for Issue 995 i MoneyWeek

Tea lovers could soon struggle to find their next brew as the coronavirus lockdowns in India and Kenya threaten global tea supplies, say Benjamin Parkin and Emiko Terazono in the Financial Times. In India, production in the top growing regions of Assam and Darjeeling has ground to a halt. The first flush (the name for the first spring buds of the year) in Darjeeling, known asthe “champagne” of tea, has already been lost. A deadly pathogen affecting olive trees in Europe could cost olive-oil manufacturers over €20bn, says Matt McGrath for the BBC. The Xylella fastidiosa pathogen has killed “swathes” of trees in Italy and is a threat to plantations in Spain and Greece. The disease could increase the cost of the cupboard staple for consumers. Italy has seen a60%…

“A US housing crisis is coming,” says Danielle DiMartino Booth on Bloomberg. The American mortgage market was at the centre of the 2007 financial crisis, but house prices are now up by 117% from their pre-crisis peak. This time the problem is not “rampant speculation or subprime mortgage fraud”. Instead a wave of forced sellers could crash prices once social-distancing restrictions are lifted. Heavy losses in the stockmarket could precipitate a “silver tsunami” as older homeowners are forced to downsize early. Yet surging unemployment means there will be few buyers to meet the supply surge. Massive state intervention should provide a backstop to the residential mortgage market, says The Economist. The Federal Reserve will buy unlimited amounts of mortgage-backed securities. Yet the same cannot be said of commercial property, where…

Throughout 2020 the British economy will contract by about 6.5%, estimates Deutsche Bank, with GDP declining by 13.2% in the second quarter before rebounding. Awful as this sounds, it’s nothing compared with some of the output falls in previous centuries. Bank of England data for England stretching back to the 13th century suggests that the second-worst annual fall came in 1349, at the height of the Black Death. The worst, in 1629, came at the end of the Anglo-Spanish War, when the country’s finances were in appalling shape. The huge declines reflect the volatile nature of growth before central banks arrived to smooth out cycles; the largely agrarian economy was also heavily dependent on clement weather.…

WeDoctor, one of China’s biggest online healthcare start-ups, has opted to use Citigroup asa sponsor for its initial public offering (IPO) in Hong Kong this year rather than Credit Suisse. The Swiss bank was named in a lawsuit relating to accounting irregularities at Chinese coffee chain Luckin Coffee. WeDoctor aims to raise at least $500m and could rake in as much as $1bn. Healthcare IPOs are likely to do far better than those involving firms in sectors that have been hit by the virus, such as aviation or retail. The group’s offerings range from insurance policies and medical supplies to online appointment-booking and clinics. It connects 360,000 doctors with 210 million registered users.…

Centrica, which owns British Gas, has promoted finance director Chris O’Shea (pictured) to CEO, says Camilla Canocchi on This Is Money. O’Shea has replaced Iain Conn, who was criticised for a tenure that saw “the exodus of three million customers” as Centrica struggled with the advance of smaller competitors such as Ovo Energy, Bulb and Octopus. Falling energy prices, along with a government-imposed cap on energy bills, have also led to a series of profit warnings, culminating in total losses of £1.1bn in 2019. O’Shea may have been confirmed in the top job, but he faces a “baptism of fire” as the company has been hit by the pandemic, which has “left customers struggling to pay bills”, says Emily Gosden in The Times. In the past two weeks he has…

Bernie Sanders, Joe Biden’s last standing rival, may have abandoned his campaign for the Democratic nomination and former president Barack Obama has endorsed his former vice-president for the US presidential election in November. However, many punters still have lingering doubts that Biden (pictured) will be the Democratic nominee. Indeed, you can still get 1.09 (91.7%) with Betfair on him winning the nomination. While anything can happen in politics, the chance of Biden suddenly withdrawing are much lower than the 8% that this implies, though if you’ve already taken my advice to bet on him, I wouldn’t put down any more money. One short-odds bet that I would definitely recommend is Paddy Power’s 1/10 (90.9%) on the Republicans to win Utah. Utah is one of the  most solidly Republican states in…

Book value is also known as shareholders’ equity or net asset value (NAV). It is the value of all of a company’s assets, less all of its liabilities (debts) and can be found on the balance sheet in a company’s annual report. Book value is sometimes used as an estimate of what a company would be worth if all of its assets were sold for their balance-sheet values. It’s often used as a way to value firms such as banks, housebuilders, and insurers. When you know the book value, you can get an idea of how cheap or expensive a share is by dividing the share price by the book value per share (hence the price/book, or p/b, value ratio). A p/b of below one means that – technically speaking…

• Online auctioneer eBay has appointed Jamie Iannone as its new chief executive officer. Iannone (pictured) previously served as chief operating officer at Walmart. Like his predecessor, Devin Wenig, who left in September after clashing with the board, Iannone can expect a$1m salary, says EcommerceBytes. Add-ons took Wenig’s total pay to $18.2m in 2018, including $15.5m from stock awards. Iannone was vice-president at eBay for eight years until 2009. • Nationwide boss Joe Garner has been the first to respond to the Bank of England’s call for the financial sector’s chief executives to take a pay cut, says the Daily Mail. He has volunteered to surrender a fifth of his basic pay and pension for the coming financial year and he has waved off any performance-linked bonus for the year…

Things are going from bad to worse for Neil Woodford’s protégé Mark Barnett, says Mark Atherton in The Times. Barnett has been sacked from two investment trusts, Perpetual Income and Growth and the Edinburgh Trust, in four months. Now his stewardship of Invesco’s £4.6bn High Income fund and £2.1bn Income fund is under scrutiny. The former has lost 29.7% over five years, placing it 198th out of the 203 funds in its sector. Investors withdrew £2bn from the High Income fund and £818m from the Income fund over the 12 months to the start of March. Like Woodford, Barnett has been plagued by concerns about the level of liquidity in his funds, which saw them downgraded by Morningstar. It would be useful to see how he’s investing, says James Coney…

“It’s definitely not a burden, it’s been very handy. A tall person in a dress gives you a brand identity.” Artist Grayson Perry (pictured) on his cross-dressing, quoted in The Times “I think I must have wanted it for reasons other than sensible things to do with control and money and that kind of thing. I definitely remember wanting to be famous for the sake of the attention.” Comedian and actor Robert Webb, quoted in The Sunday Times “If you think people were upset about bailing out banks where the CEOs were making $50m a year, how are they going to feel about bailing out private-equity firms where the CEOs make $500m a year?” An anonymous investor on the US bailouts, quoted in the Financial Times “I gave the rights…

lrb.co.uk/blog The government tells us we should only leave the house to shop for “basic necessities”, says Jo Glanville. But what counts? The police and local councils thought Easter eggs do not. In Plymouth, the police declared cigarettes and alcohol verboten. In my local Boots, the cosmetics racks are covered up. The pandemic has “unleashed arash of puritanical dictums”. The true nature of necessities was brought home to me while researching a documentary on the liberation of the Belsen Nazi concentration camp. A delivery of sanitary towels quickly disappeared –women snapped them up to use as shoulder pads. Alcohol was considered the only thing that kept the liberating medical team from going insane. Women with nothing but a blanket to cover their shoulders were transformed by a delivery of lipstick.…

The MoneyWeek investment trust portfolio currently has six constituent trusts: Personal Assets (LSE: PNL); Scottish Mortgage (LSE: SMT); Caledonia (LSE: CLDN); RIT (LSE: RCP); Temple Bar (LSE: TMPL) and Law Debenture (LSE: LWDB), writes Merryn Somerset Webb. You’ll be wondering how it has weathered the virus storm. The answer is not as well as it would have without Temple Bar. Most of the trusts have held up brilliantly – better than I could have expected. Personal Assets and Scottish Mortgage are both up over the last 12 months, while Caledonia, Law Debenture and RIT are down between 7% and 10%. Scottish Mortgage has even achieved a positive three-month return, thanks to the fact that, as Numis’ analysts put it, “many of the technology-focused businesses [it holds] are considered best equipped…

Savers withdrawing retirement income directly from their pension funds via income drawdown plans could face difficulties accessing cash if they have investments in commercial property funds, according to financial advisers. Several fund managers have “gated” their property funds in recent weeks, banning savers from withdrawing money from the funds. The moves follow uncertainty about what the underlying property in the vehicles is worth amid the volatility caused by the Covid-19 pandemic. With many income drawdown pension savers investing in property funds as a core holding, the restrictions mean a key part of their portfolio will temporarily be unavailable as a source of regular income. Even worse, some drawdown plans are set up in such a way as to make all withdrawals impossible if any part of the portfolio is suffering…

Spring may have sprung, but “the traditional ‘spring selling season’ in the housing market has been all but forgotten”, reports James Pickford in the Financial Times. The Covid-19 lockdown means estate agents, prospective buyers and surveyors are all barred from visiting properties “bringing the homebuying process very largely to a halt across the UK”. So, what can you still do? Here we answer a few pressing questions about the current situation in the housing market. Are all transactions banned? The government has said that anyone wanting to move house should “delay the transaction where possible while the ‘stay-at-home’ measures are in place,” says Pickford. It is impossible to carry out physical viewings or surveys during the lockdown, but you can instruct agents, solicitors and apply for a mortgage so you…

I always advocate putting stop-losses on your positions since they can save you alot of money if markets suddenly go against you – as happened to our longs during the crash last month. However, the downside of stop-losses is that short-term market turbulence can force you to exit bets that offer good long-term potential. While I still think that the pros of stop-losses outweigh the cons, the recent market rally means that I am re-examining United Rentals (NYSE: URI), one of the tips that was automatically closed out during the recent implosion. I tipped United Rentals in February for two main reasons: firstly, it was cheap relative to earnings, especially compared with the overall US market (which was extremely expensive at that time). I also felt that because it was…

Avon Rubber, aformer tyre maker, now produces milking equipment for the dairy industry and personal protection gear for the military. The latter division accounts for around 75% of sales. The group has been in the spotlight because its masks can be used to guard against the Covid-19 virus, but it has also just secured a $20m order for body armour from the US military. The contract could be worth up to $333m (£300m) over the next three years. Avon turned over £179m in the year to October 2019. The shares have more than doubled over the past 12 months.…

Ronnie Ewton was born in May 1942 in Nashville, Tennessee, and went on to attend Castle Heights Military Academy and Georgetown College (Kentucky). After graduating he went on to sell life insurance before becoming a salesman for various brokerages, including at least two that later collapsed in dubious circumstances. He then founded ESM Government Securities in 1976, with former pool hustler Bob Seneca and George Mead. ESM was nominally a specialist in buying American government bonds and then reselling them to cities and financial institutions. Seneca persuaded his partners to let the firm place large trades in the bond market. What was the scam? ESM placed large bets that interest rates would fall. When they instead started to rise, ESM bled money, including $2.3m on one trade alone, wiping out…

Take a PE lesson Since launching last month “PE With Joe” has amassed 32 million streams on YouTube, says Mel Evans in Metro, as families welcome the celebrity fitness trainer into their living rooms to keep them fit during the pandemic. Joe Wicks (pictured), also known as The Body Coach, is hosting free workouts aimed at children live on his YouTube channel. No equipment is necessary, just tune in for a 30-minute workout at 9am Mondays through Fridays, says Victoria Woollaston in Wired. If you have a smart TV, Chromecast or Amazon Fire, or a set-top box with the YouTube channel, you can stream the videos to your living room through your TV. Otherwise, use a smartphone or tablet. All workouts are also available on the Youtube channel later if…

Going… A letter written by nurse Florence Nightingale 121 years ago, addressed to “the Aylesbury Dairy Co.”, is to go up for sale as part of Derbyshire-based Hansons Auctioneers’ Spring Fine Art and Library Auction, currently postponed due to coronavirus. In the letter, dated 6 March 1899, Nightingale asks: “Would you be so very good as to send me at once 6 eggs, if possible, laid this morning (or less than 6 if laid this morning) with the dark brown shells, for a gentleman very ill indeed, who fancies them – and to supply me with the same every morning for the gentleman who likes your eggs, &takes hardly anything.” The letter, discovered in a box of old papers, is expected to sell for up to £600. Gone… A sale…

• The conditions in which our “celebrity friends” choose to self-isolate “are not akin to the cramped flats some of us are holed up in”, says Virginia Blackburn in the Daily Express. Take Alesha Dixon (pictured), for example. Earlier this month, the British singer and Britain’s Got Talent television show judge was criticised by some fans for posting pictures on social media of her and her family sunbathing in what looked like a park. It was actually her own huge garden. As for David and Victoria Beckham, they have “thoughtfully shared snaps of their Cotswold abode, complete with hot tub, pool and tennis court”. Meanwhile, not to be outdone, singer Ed Sheeran is confined in an estate that’s so big it’s been named Sheeranville. “All together now: my pool is…

A grey pick-up truck appeared at the kitchen door of our ranch in Argentina this week, somewhat to our surprise as the only way to cross the river from the outside world to get to our ranch is via a footbridge. “How did you get here?” we asked. “I drove across the river. It didn’t look so bad, so I just decided to try.” “It makes me feel a little sad,” said my wife, Elizabeth. “It was so nice being isolated… with only the footbridge.” Crossing the footbridge brought us to our own little refuge, where we could shelter at home without having to worry about the virus, neighbours, or the outside world. It was idyllic. Like happy island castaways, we’re sorry to see the rescue ship. “Like happy island…

Table tennis, marbles and the “esoteric” world of Swedish trotting are suddenly the focus of gamblers the world over as traditional betting sports have disappeared because of coronavirus, say Alice Hancock and Samuel Agini in the Financial Times. Trotting, where a jockey is pulled behind the horse in a small cart around “obscure” Swedish racetracks, is no longer the niche sport it used to be. With Sweden bucking the trend of strict lockdowns across Europe, trotting races in the country have gone global with gamblers. Swedish bookmaker ATG, which in normal conditions bags average international weekly revenues of SKr48m (£3.8m), has reported a 465% jump in international revenues for trotting since the pandemic erupted. Meanwhile, GVC, owner of the bookmaker Ladbrokes Coral, said table tennis had become its fifth-biggest sport…

“The short, violent oil war of 2020” is over, says Noah Rothman in Commentary magazine. Producers led by Saudi Arabia and Russia launched an all-out contest for market share last month, triggering a supply surge amid historic virus-induced demand destruction. Yet with prices plunging to 18-year lows of $23 a barrel the pain proved too great. Producers in Opec, the oil exporters’ cartel, along with Russia (“Opec+”) have now agreed to restrict output by ten million barrels per day (mbpd) from next month, about 10% of global supply. Norway, Canada, Brazil and the United States should deliver five million mbpd in additional cuts. Too little, too late Crude prices barely budged at the start of the week despite the historic scale of the cuts, say Myra Saefong and Barbara Kollmeyer…

Three to buy B&M European Value Retail The Sunday Telegraph “Sluggish pre-Christmas trading” is a distant memory for this discount chain, which remains open as 70% of its range is designated as essential items. Business is hardly booming amid the lockdown, but the company is better placed than rivals to “bounce back” later in the year, thanks to the continuing physical presence of its shops. Brave investors will find the group’s combination of a solid balance sheet, “good management and momentum” make it worth “putting in your basket”. 300p Microsoft Shares If the coronavirus really does “change the workplace forever” then businesses will need even more of the IT services that Microsoft provides. Most promising are cloud services, which generated $16.1bn in profit in 2019 and are its fastest-growing division.…

• The decision by Anheuser-Busch InBev to halve its proposed final dividend is a “sensible move” that should save it around $1.1bn, says Andrea Felsted on Bloomberg. However, the fact that it has had to do this at all shows how badly it is being hit by the crisis. The closure of pubs, restaurants and clubs has severely dented sales of its premium brands. Anheuser-Busch InBev’s dependence on emerging markets, which accounted for 60% of pre-crisis earnings, means that the recent decline of the Brazilian real and Mexican peso will also hit the bottom line. Rivals such as Heineken and Carlsberg look “better placed to weather” Covid-19. • The collapse in Chinese car sales resulting from the crisis seems to have “snuffed out” Renault’s bid to become a mainstream brand…

“If Covid-19 testing were universal, the fatality rate would be less than 0.2%,” says Michael Burry, the hedge fund manager who made a fortune betting on rising US mortgage defaults during the global financial crisis. “There is no justification for sweeping government policies, lacking any and all nuance, that destroy the lives, jobs and businesses of the other 99.8%.” Burry, whose hugely profitable trades were chronicled in the book and film The Big Short, has kept a low profile since closing his fund in 2008 to focus on his own investments. But last month, he began posting regularly on Twitter about the coronavirus pandemic and what he sees as the “unconscionable” economic effects of efforts to tackle it. Instead of a shutdown, Burry – who trained as a doctor but…

An extra £10,000 each has been put at the disposal of MPs to help cover expenses while working from home, say Emanuele Midolo and Esther Webber in The Times. MPs can use the money to buy laptops and printers for themselves and their staff, as well as to cover electricity and phone bills. The money, which comes on top of the existing office budget of around £26,000 a year, will be available until next March. The Independent Parliamentary Standards Authority, the expenses regulator, has also relaxed the rules on what evidence MPs must provide for spending, suspended the 90-day window for claims and increased credit limits on MPs’ payment cards. “Politicians should take care to use the cash properly and avoid it being seen as a personal equipment slush fund,”…

■ Asset managers across Europe suffered their worst month of outflows since the financial crisis in March, says Michael O’Dwyer in The Daily Telegraph. The virus-induced market slump sent share indices in Europe tumbling by between 12% and 22%. Money managers suffered outflows equal to 3.1% of assets under management, as much as the previous nine months combined. The rate of outflows has now slowed. However, once the lockdown ends and the outlook improves, shell-shocked investors may be loath to put money back into funds. London-listed Ashmore, which specialises in risky emerging markets, suffered the worst withdrawals, with customers redeeming £2.2bn, a tenth of assets under management. Customers also called in billions from Jupiter, Standard Life Aberdeen and France’s Amundi. ■ Mark Spitznagel’s (pictured) $4.3bn Universa Investments fund has waited…

collaborativefund.com/blog Between 2007 and 2012, half of all housebuilders in America went out of business. Most of the survivors laid off workers. In total, 2.3 million lost their jobs. When demand for new homes returned around 2012, then surged around 2015, housebuilders faced a problem, says Morgan Housel – those fired workers had moved on and could not be rehired. That held back recovery. Asmore than 17 million Americans file for unemployment benefits in the wake of the coronavirus crisis, might we see a similar thing happen again? As a CEO of a small business told me, “Anyone who thinks you can flip a switch and restart a business after it’s been shut down for two months has never operated a business”. Another big question is over inequality. The contrasting…

Members of generous final-salary workplace pension schemes could see their guaranteed benefits jeopardised by the Covid-19 pandemic. Many such schemes are in deficit: they lack the money to make good on all the pension promises made to employees . In the short term, the outlook has improved. The Pensions Regulator has now given employers longer to make up this shortfall since many firms are suffering from the pandemic. This will help employers squeezed by the virus. But it will mean that pension schemes operate with larger holes in their finances for longer. And if the business fails to recover, it may leave the pension scheme short of the funds it needs to pay pensions, both to those already retired and to future pensioners. A regulatory gamble In such circumstances, the…

Don’t pay over the odds for your broadband. “Millions of broadband customers may be paying £100 or more a year too much… after Ofcom relaxed the rules around how firms deal with contracts coming to an end,” says Sam Meadows in The Sunday Telegraph. Providers were due to start sending notifications to customers before the end of their contracts to remind them to negotiate a better deal or switch. But Ofcom has said that during the pandemic it won’t take action against those failing to warn customers that their contract is coming to an end. No wonder, then, that several broadband firms – including Virgin Media and BT – aren’t bothering to send out the letters. “Two million homes will face hidden price rises over the next 12 weeks,” Alexander…

The oil market is made up of several different types of crude oil, depending on where the oil is drilled and its chemical composition. However, the two types primarily used as global benchmarks are West Texas Intermediate (WTI) and Brent Crude. Brent crude is oil that comes from the North Sea and is traded on London’s Intercontinental Exchange; West Texas Intermediate oil comes from Cushing, Oklahoma and is traded on the New York Mercantile Exchange. Since both types of oil are chemically similar and the oil market is globalised (especially since the ban on US oil exports was lifted in 2016) the prices of both types of oil tend to follow each other closely, with a longterm correlation of around 90%. However, there is usually a small difference in price…

Chesapeake Energy ”will not survive 2020”, says Ian Cooper in Investor Place. It borrowed heavily in order to finance a major expansion of its shale oil projects but the latest slump in the oil price means it is highly unlikely to earn enough money to reduce its debt. In the fourth quarter of 2019 it lost $346m, compared with earnings of $576m ayear earlier. Sales slipped by 31% to $1.93bn. The overall debt pile is worth $9bn. Chesapeake has hired restructuring advisers but it is hard to see what they can do to revive the group. The shares have slid by 94% in a year.…

2018 Dolcetto d’Alba, Massolino, Piemonte, Italy £19.95, leaandsandeman.co.uk , slurp.co.uk , oldbridgewine.co.uk I am currently putting the finishing touches to my 2020 Piemonte Report and although this huge body of tasting notes focuses on the nebbiolo grape, most notably featuring the greatest Barolos and Barbarescos in this epic region, I have also included a handful of elite barberas and dolcetto, from the top estates, too.I adore the dolcetto grape – if Piemontese nebbiolo is as sensual and regal as the finest Burgundian pinot noir, then dolcetto has the immediate-drinking, cheerful and uplifting attitude of Beaujolais! Franco Massolino presides over one of the superstar wineries in the region and he makes a densely fruited dolcetto from his vineyards in Serralunga d’Alba. He recalls,…

7 The percentage of working hours worldwide that will be cut in the second quarter of 2020 owing to the coronavirus pandemic, says the International Labour Organisation, a UN agency. That is the equivalent of losing 195 million full-time workers. 580 The percentage week-on-week increase in digital download sales of Vera Lynn’s wartime classic We’ll Meet Again, according to the Official Charts Company. The Queen quoted the song’s title in her address to the nation earlier this month. $35m How much Lady Gaga, apop singer, and Global Citizen, an online activist group, raised in seven days for the World Health Organisation (WHO). The American singer is also helping to organise “One World: Together At Home”, a televised and online-steamed music concert on 19 April (UK time) in support of the…

With millions of people stuck at home, sales of the latest video games have smashed records, says Eustance Huang in CNBC. Nintendo’s latest version of its Animal Crossing franchise (pictured) sold over 1.8 million copies in its first three days in Japan, while in the UK it sold more copies in its first week on sale than the launch sales of all previous games in the series combined. Locked down Britons have turned to booze, with the sales of alcohol outpacing those of groceries over the past month, says Andrew Ellson in The Times. Alcohol sales jumped by 22% in March as people stockpiled in preparation for being stuck at home. Some supermarkets ran out of beer – “in some cases, only bottles of the beer Corona were left on…

There were more signs early this week that Europe had got to grips with Covid-19. Daily case growth in continental western Europe (except Italy) slowed to 2.3%, a new low, says Pantheon Macroeconomics, while the absolute number of new cases per day has fallen by 50% from the peak. Deaths in Germany are falling and are about to slip sharply in Switzerland too. New cases and deaths in Canada seemed to have peaked, while “Australia has essentially beaten” the virus. Daily case numbers are set to decline to the low double-digits and the overall death toll should not eclipse 100. Meanwhile, the Shanghai Composite index hit a four-week high, as did the MSCI Asia ex-Japan index. China’s exports fell by just 6.6% year-on-year in March, an unexpectedly good performance, and…

The coronavirus outbreak bodes well for Germany’s Geratherm Medical, says WirtschaftsWoche. It produces a machine that measures lung function, which was enjoying an uptick in orders even before Covid-19’s impact on the respiratory system propelled demand sharply upwards. Geratherm is also a pioneer when it comes to thermometers and has developed one that uses infra-red technology to gauge someone’s temperature without touching them. The firm is the sole producer of several medical instruments, while patents help fend off potential competitors. Both sales, which reached €20m last year, and earnings look set to soar. This promising small cap also yields 3.5%.…

Japanese conglomerate SoftBank, the “world’s largest technology investor”, has admitted that it expects to suffer its “first loss for 15 years”, says Louisa Clarence-Smith in The Times. It is pencilling in an operating loss of $12.5bn in the year to 31 March thanks to the coronavirus outbreak and “ill-judged investments”. Its $100bn Vision Fund, which is backed by Saudi Arabia’s sovereign wealth fund, lost $16.7bn in the company’s latest fiscal year owing to a “string of bad bets on start-ups”. The most high-profile of these mistakes has been the $10bn invested in WeWork, the serviced-offices group, which had to abandon an attempt to list on the Nasdaq exchange last September. That forced SoftBank to write down the value of its investment drastically. WeWork, which had its value written down from…

The debate over whether and how to end the various lockdown and stay-at-home measures that have been set up across the US is leading to confrontation between the states and the federal government, say Maeve Reston and Stephen Collinson on CNN. President Donald Trump declared that his “authority is total” when it comes to ordering the country to get moving again; many state governors counter that the Constitution gives them the final say. In an “implied challenge” to Trump’s plans, two blocs of eastern and western states have banded together to co-ordinate an exit strategy. Trump is on “shaky legal ground” and he will look hypocritical if he tries to overrule the states, says Kadhim Shubber in the Financial Times. Until now the president had put the onus on states…

I’m always sceptical of trying to decide whether we’re near the bottom of a bear market based on valuations. Market history suggests that turning points are more about psychology than how cheap stocks are in an absolute sense. But there is one valuation indicator that I think is worth a bit of attention: the price/book ratio for the MSCI Asia ex Japan. This has a good record of finding exceptional times to invest in emerging Asia. “A strategy of buying when the AxJ is below 1.5 has worked well” The AxJ, as it’s widely known, has changed quite a bit over the years. Go back far enough and it was essentially Hong Kong and Singapore. Then Korea and Taiwan played a growing role. Today it’s about 45% in mainland China,…

Airlines. Retailers. Landlords and startups. As the coronavirus crisis unfolds and as the economy remains on lockdown, the chancellor is getting fresh demands for cash just about every day. The latest to join the queue? Universities. According to Universities UK, the trade body representing the sector, they will need a total of at least £2bn of extra help to get through the next few months. But hold on. The government is surely right to take extraordinary measures to stop most businesses from collapsing, but not every institution in trouble should automatically be rescued – and at least a couple of universities should be on that list. A rare British success story It is not hard to understand why some of the universities are now facing a cash crunch. First, and…

Exchange-traded funds (ETFs) have, by and large, had a good crisis. These baskets of securities (versions range from equities and bonds to futures and commodities) track an underlying index and are traded like shares on a stock exchange. They have mostly replicated the ups and downs of the major indices faithfully. Many corporate-bond ETFs, however, haven’t. The concern here has long been that although corporate-bond ETFs are highly liquid and hence easy to trade in and out of, the actual bonds held in the portfolios are a good deal less liquid. So investors might find it easier to sell the liquid assets (the ETFs) rather than the less liquid underlying assets, opening up pricing mismatches. A gap emerges Consider the Vanguard Total Bond Market Index Fund ETF (BND), a hugely…

Our farmers need a helping hand Jamie Blackett The Daily Telegraph Covid-19 is starting to have a deleterious effect on our food-supply chains, says Jamie Blackett. Dairy farmers are discarding milk because tankers aren’t collecting and cattle aren’t being slaughtered because of the exodus of workers. Demand is strong, but in normal times 20% of food is eaten away from home. This presents supermarkets with an opportunity as well as a challenge. But as they nudge their prices up, farmers, paradoxically, are getting less – a knock-on effect of the closure of the catering industry. Households don’t buy expensive restaurant cuts of meat; dairy processors can’t suddenly switch from catering bags of milk to cartons. Defra, the government agency responsible, has failed to address such supply-chain issues and been too…

project-syndicate.org The coronavirus pandemic represents a watershed moment that will radically alter the world. At least, that’s what many are arguing, says Dani Rodrik. But if you look at different countries’ and states’ reactions to this predictable (and predicted) crisis, you’ll see nothing much has changed – they have just become “more extreme versions” of themselves. China’s brutal authoritarian response, South Korea and Singapore’s efficient competence, America’s bumbling, self-aggrandising reaction –all very predictable. “Momentous events engender their own kind of ‘confirmation bias’” – we see our own world view affirmed and signs of the emergence of the kind of future we have long wished for. So, leftists who want more government think the crisis justifies their belief. Those who are sceptical about government decry its incompetence. Those who seek stronger…

Amid all the questions about Covid-19 – when will the lockdown be over? How quickly will we discover a vaccine? Will there be second waves or mutations? – we know two things for sure. One is that the scale of the economic downturn caused by both the pandemic and the measures to contain it is unprecedented in the modern era. The precise figures are unimportant – we all know that forecasts are virtually always wrong – but to give a sense of just how bad things are, the International Monetary Fund (IMF) reckons that global economic output will fall by 3% for the whole of 2020 (for perspective, it fell by just 0.1% in 2009, during the global financial crisis). Meanwhile, in the UK the Office for Budget Responsibility –…

HM Revenue and Customs has decided to suspend investigations into individuals and companies during the Covid-19 crisis, it announced this week. It has been asked to establish and oversee the government’s furlough schemes. Ensuring that embattled companies and self-employed workers get their money quickly will use up most of its capacity. Nonetheless, as tax will still be due when the crisis ends, companies and people under scrutiny have been warned to use the lull to get their affairs in order rather than wait until the crisis eases. Having to deal with a tax enquiry at the same time as trying to manage and revive a business postlockdown “could be potentially devastating”, as Fiona Fernie of tax and advisory group Blick Rothenberg told Wealth Manager’s Loukia Gyftopoulou. Don’t be lulled into…

The lockdown may have dramatically reduced what we can do in our day-to-day lives, but it has given us several financial chores we can tackle from our sofas. Firstly, consider your energy bill. The chances are your heating has been on more than usual during lockdown. Your electricity usage has probably shot up too. So make sure you aren’t paying more than you need to. “If you are one of the millions on a default tariff, you could switch to the cheapest fixed-rate deal for both gas and electricity and save about £412 a year on energy,” says Katherine Denham in The Sunday Times. Where to start Shopping around for the best deal is simple. Find your most recent bill and head to a comparison website. Tap in your details…

The portfolio has undergone huge change during the market meltdown and recovery of the past few weeks. However, the last fortnight has brought some stability, with both of the long tips rising as the market continues to rally on hopes that some of the restrictions could be eased in the next few weeks. International Consolidated Airlines Group went up from 200p to 247p. Oil giant Royal Dutch Shell climbed from 1,300p to 1,509p, thanks to several agreements between the world’s major oil producers to cut production by 10% in order to bolster the price of crude oil. As you might expect, given the general rise in the market over the last fortnight, all of my three short tips also appreciated. However, the gains were smaller than the hefty increases in…

Looking beyond immediate uncertainty can be challenging. The Covid-19 virus is causing considerable volatility across markets and social-distancing policies have had significant short-term effects. Nevertheless, we remain optimistic about the outlook for medium-sized British companies over the long-term. UK mid-caps provide investors with a means to access some of the country’s finest businesses earlier in their growth trajectory; by the time a stock becomes a member of the blue-chip FTSE 100 index, it is often mature and grows only slowly. While the FTSE250 mid-cap index can be more volatile in the short term, attractive growth opportunities remain and there are many examples of companies where we feel the market may have overreacted. Our focus remains on identifying companies that not only have the potential to be long-term winners but could…