Indholdsfortegnelse for Issue 1004 i MoneyWeek

“An awful lot of people want an awful lot of things from the public purse this summer” An awful lot of people want an awful lot of things from the public purse this summer. The UK’s job-furlough scheme to run beyond October (that’s mostly Nicola Sturgeon). Some kind of “one-off final payment” to help workers in vulnerable sectors to find work. A new industrial strategy that offers tax incentives to growth businesses. Immediate tax breaks for start-ups. A new scheme to support directors of limited companies who (because they pay themselves via dividends) aren’t included in any other schemes. A bailout for actors (see page 12). A rise in out-of-work benefits for the newly unemployed. Yet more money for the still-failing NHS (see page 18). VAT cuts. National insurance holidays.…

Prince Joachim of Belgium (pictured) was fined €10,400 by Spanish authorities for attending a lockdown party in the country after which he tested positive for Covid-19, says The Brussels Times. The 28-year-old prince was handed the maximum fine after he flew to Madrid and attended the party in Córdoba. Spanish authorities said he failed to observe the obligatory 14-day quarantine after arrival. The American beer industry stands to lose $800m to $1bn, as thousands of gallons have gone out of date during the coronavirus lockdown, says Naureen S. Malik on Bloomberg. Some firms plan to turn the leftover beer into natural gas for electricity production, or even into hand sanitiser, but much of it “will simply be decanted and dumped”.…

What to do with piles of diamonds, asks Thomas Biesheuvel on Bloomberg. Diamond giants De Beers and Alrosa have “barely sold any rough diamonds since February” after refusing to cut prices in response to the pandemic. So gemstones have been piling up. Industry specialist Gemdax thinks that the industry’s top five producers are sitting on $3.5bn of excess inventory. By January 2021 that could hit $4.5bn, “about one-third of annual rough-diamond production”. The preference for stockpiles over price cuts is a familiar tactic in the luxury goods industry. Historically, the likes of Burberry have gone so far as to burn “excess inventory” rather than offer discounts, lest they sully their reputations for luxury, writes Greg Petro on Forbes. Consultants Bain & Co. forecast a 20%-35% global contraction in demand for…

The recent stampede into the US stockmarket by neophyte retail investors, many of whom have been attracted by the platform Robinhood’s commission-free trading, “has led to some absurd situations”, says John Authers on Bloomberg. In the past three weeks they have propelled the stock of bankrupt car rental group Hertz from $0.56 to $5.53. The firm decided to exploit the surge by offering up to $500m in new shares, “every penny of which will probably have to go to pay off creditors”. The stock surge, accompanied by a fourfold jump in Robinhood accounts, collapsed like a soufflé early this week when the realisation that shareholders will probably end up with nothing finally sank in.…

A crisis-induced “dry spell” for initial public offerings (IPOs) in Hong Kong ended in early June, says Julia Fioretti on Bloomberg. Last week China’s online retailer JD.com raised $3.9bn a few days after tech giant NetEase raked in $2.7bn. This week three firms began testing the waters. E-cigarette device maker Smoore International Holdings, the property management arm of Zhenro Properties Group and Shenzhen Hepalink Pharmaceutical Group have met investors to discuss listings. With $10.12bn raised this year, Hong Kong is not yet back among the top three global exchanges for IPOs, but it now “has a fighting chance” of eclipsing Shanghai and New York.…

Last week Sony released a preview of its new PS5 games console, due in shops before Christmas, says Matthew Field in The Daily Telegraph. Sony is hoping for“blockbuster” sales and a leg-up in the two decades-old battle for dominance with Microsoft, which will launch a competing machine in the late autumn, the Xbox Series X (pictured). This comes as lockdown has “supercharged” the gaming market, with reported sales of Sony’s PS4 console and Microsoft’s Xbox One more than trebling in the first half of the year. Both companies’ new offerings seem highly advanced compared with the current generation, says Dan Gallagher in The Wall Street Journal. They boast faster processors, better graphics and more storage. Still, the ”harsh” global backdrop may persuade cash-strapped consumers to stick with “cheaper options” such…

Bookmakers like to offer unusual or “joke” bets alongside their more serious offerings, such as Paddy Power’s 500/1 on Donald Trump painting the White House gold. Usually these are designed to attract the unwary or generate publicity, and generally offer poor value – but occasionally they present a great opportunity. An example is Betfair Sportsbook’s offer on the identity of Time magazine’s Person of the Year for 2020. Every year, from 1927, Time has selected a Person of the Year for its cover. Sometimes the winner has been a group (as in “American women” in 1975). The winner in 2006, if you hadn’t heard already, was “You” (in honour of  “your” contribution to Wikipedia and other social-media sites). Usually, however, the winner is a notable world leader. Every American president…

Shoppers return: After 12 weeks of lockdown people returned to the shops this week –mostly masked and two metres apart. Footfall was better than expected on Monday, notes the Financial Times: in England it was down by just over 33% compared with the same Monday last year, according to Springboard, a consultancy. UK footfall had fallen by 80% year-on-year at the height of the lockdown in April. This may fuel hopes of a quick recovery from the plunge in GDP in the second quarter; in April alone the economy shrank by a fifth. It is now the same size as it was in 2002. Although the April labour market figures suggest that the crisis has hardly affected employment rates at all, bigger rises are likely to occur later in the…

When it launched in 1995, the Alternative Investment Market, now known as Aim, was designed to be a slightly less regulated version of the main London Stock Exchange (LSE). The City had already dabbled in different forms of junior listing, with fewer rules; the new exchange was designed to build on that. In the 25 years since it launched, a lot of companies have listed their shares on it and it has some real stars. The fashion retailers Boohoo and Asos, and the drinks company Fever-Tree, are all major success stories. Yet few companies are still raising capital on Aim. Last year there were just 11 listings on the market, down from 35 in 2018. Aim was meant to be the British Nasdaq – home to companies such as Netflix,…

When Aim reached its 20th anniversary in 2015, most investors were not reaching for the Champagne. Nearly three quarters of firms listed on the London Stock Exchange’s market for growth companies had lost money for shareholders, according to research at the time by Elroy Dimson and Paul Marsh of London Business School. Almost one in three firms lost 95% or more of their initial value. Overall, the FTSE Aim All-Share index was down by around 20% since inception, at a time when the FTSE 100 had almost doubled. “Just 10% of firms are up by as much as the Aim index” The subsequent five years have been better. The FTSE Aim All-Share has returned 21% (including dividends), while the FTSE 100 has returned 6.4%. It’s true that success has been…

Stockmarkets’ stumble last week fuelled fears of another sharp setback. So it’s perhaps worth revisiting the initial outbreak of turbulence in March to gauge what type of fund managed to provide some downside protection. The short answer is: not much at all bar some technology-focused funds. Pretty much every asset class plummeted. Nonetheless, interestingly, one strategy does appear to have provided some comfort: investing in environmental, social and governance (ESG, see page 15 for a full definition) funds. They slipped during the sell-off, but their relative outperformance was striking. The evidence piles up MSCI runs a hugely popular index of world stocks, the MSCI ACWI index, which also features a variation called the ESG Leaders index. This has been outperforming the main index for years, but by 16 March that…

The NHS will get an upgrade Ed Conway The Times The curtailment of normal service by the NHS has enabled those pondering its future to “peer into the engine and see which parts need an upgrade”, says Ed Conway. Some new habits – such as remote appointments – may stick. GPs are also now much more likely to be convinced of the benefits of digitised patient records. Some of the world’s “most productive companies”, such as Rolls-Royce, have already provided a glimpse of the possibilities afforded by data collection; creating “digital twins” means you can “simulate the consequences of decisions before they are taken”. The value of a computer model that would allow us to “control, decipher and predict the behaviour” of a “vast, complex organisation” like the NHS is…

ehsthelongrun.net This year marks the tricentennary of the South Sea bubble, often held up as a cautionary tale for investors, says William Quinn. In 1720, the British government offloaded its debt onto the South Sea Company. The company issued shares, some of which would be bought using government annuities. The government thereby reduced its debt burden; the company took its opportunity to be a rival to the Bank of England. To lure investors to buy the shares, the company’s directors, with the implicit support of the government, engineered a bubble. When that burst, the South Sea directors were ruined. Almost as interesting as the scheme itself, however, is how it is remembered. A century later it was considered an economic disaster – yet participation was too low for systemic effects.…

The new robot waiter serving tea and coffee at a cafe in Daejeon, South Korea, last month was unfazed by its customers’ face masks. Covid-19 could have no effect on its whirring gears and circuits. “Here is your Rooibos almond tea latte, please enjoy,” it said, smiling, to the masked customer who reached up to take it. The hot beverage had been made moments before by the waiter’s colleague, arobotic-arm “barista”. Customers send their orders to the robotic-arm via a touch-screen and the drinks are brought to the table by the robot waiter. The system is called Storant and was developed by Korean “smart factory solution provider” Vision Semicon. “Robots are fun and it was easy, because you don’t have to pick up your order,” Lee Chae-mi, a customer in…

Businesses judged to have breached the terms of government rescue schemes during the Covid-19 pandemic could face unprecedented demands for tax penalties under a planned crackdown – and even criminal prosecution. Firms are being warned to be meticulous about record-keeping amid increasing fears that HM Revenue & Customs will aggressively claw back financial support. HMRC will initially focus on the Job Retention Scheme (JRS), through which the state has picked up the wage costs of millions of workers furloughed by their employers, and the Self Employment Income Support Scheme (SEISS), which has so far offered grants of up to £7,500 to self-employed workers hit by crisis. New legislation due to come into force next month will give businesses 30 days to declare any mistakes they have made when applying for…

US electric-vehicle maker Tesla (Nasdaq: TSLA) impressed the markets with a first-quarter profit of $16m, despite Covid-19 related factory closures. Shares in the company passed $1,000 on 10 June, making the group worth $190bn; it has eclipsed Toyota to become the world’s most valuable car company and is also worth more than Fiat Chrysler, Ford, General Motors and Honda put together. The latest share-price surge came after rumours about work on a “million-mile” battery began circulating. The stocks has almost quintupled in a year.…

Nevin Shapiro was born in Brooklyn, New York, in 1969, and grew up in Miami. He dropped out of the University of Southern Florida after a fight during an American football game and went on to work at Atlantic Wholesale, agrocery diverting business, which made money by buying cheap groceries in one part of the country and re-selling them elsewhere for a profit. In 1997, Shapiro’s stepfather, Richard Armand Adam, was charged in Canada with business fraud and accused of stealing $6m by collecting fees on loans that never materialised. He served six years in Canadian prisons. In 1998, his stepson struck out on his own, opening his own grocery diverting business. What was the scam? Shapiro claimed investors could make large risk-free returns of 10%-26% a year by lending…

City on Fire The Fight for Hong Kong By Antony Dapiran Scribe, £9.99 China’s attempt to force through a controversial security law against the wishes of Hong Kong’s population and its brutal crackdown on the subsequent protests have captured “international attention”, says Sue-Lin Wong in the Financial Times. City on Fire, by Antony Dapiran, a “veteran Hong Kong-watcher” with more than two decades of experience as a corporate lawyer, attempts to explain what is going on. Dapiran’s “relentless on-the-ground reporting” of the struggles to preserve Hong Kong’s freedom and autonomy is instructive, and he puts them in the context of the city’s wider “political, economic and social undercurrents”. He tells an “extraordinary tale of identity and tear gas, violence and enchantment, creativity and desperation”, says Bron Sibree in the South…

£9m How much the Ministry of Defence has “wasted” paying rent on demolished properties, funding management consultants “to do nothing” after forgetting to cancel a rolling contract and making other “fruitless payments” in the three years to 2019, according to The Times. £1bn The cost to Premier League football clubs this season stemming from the suspension of play due to the coronavirus pandemic, accountancy firm Deloitte estimates in its annual review of football finance. £6.1bn The collective personal debt accrued by the 4.6 million people in Britain who have had their finances affected by the pandemic and who are in debt, according to a survey of 3,796 adults carried out by the charity StepChange at the end of May. 31 The percentage of students in Britain who think their courses…

Chancellor Rishi Sunak is considering suspending the triple lock on increases in the state pension as it’s estimated it could cost the government up to £20bn in the wake of the coronavirus crisis, says Steven Swinford in The Times. The state pension bill is currently around £100bn. Ministers are concerned that pensioner incomes could rise by as much as a fifth in 2022 because of an “artificial dip” in wages caused by the government’s furlough scheme, which is currently paying nine million people 80% of their wages. Once it ends, average wages will increase sharply by comparison in 2021, forcing the Treasury to pay equally large increases to pensioners the following year. The policy was introduced by David Cameron in 2010, when the Conservatives committed to raising the state pension…

Stocks can go down as well up, says The New York Times. Markets have been rallying almost continuously since the March bottom, but last week brought a reminder that gains can quickly turn into losses. Global markets registered their worst day in months on Thursday, with America’s S&P 500 tumbling 5.9% and the Dow Jones index down 7%. The FTSE 100 shed almost 4%. Signs of a revival in Covid-19 are tempering the “exuberance”, says Randall Forsyth for Barron’s. Case numbers are rising in 20 US states and there are signs of a new outbreak in China (see page 11). Even this relentlessly optimistic rally would be unlikely to survive a second wave. Robinhood to the rescue Markets staged a patchy recovery during the first part of this week, but…

Three to buy Goldman Sachs Group Barron’s While “Main Street” retail banks contend with shaky consumer confidence and ultra-low interest rates, the trading arms of investment banks help them to profit from loose monetary policy. Surging corporate debt issuance is good for the underwriting operation and merger activity may pick up later this year. Unpredictable earnings and the Malaysian 1MDB scandal remain problems, but the business appears well-placed to profit from the current market environment. $200 Harworth Group The Daily Telegraph Struggling high streets and empty offices mean that real-estate companies are firmly out of fashion, but that has created some bargains. This land and property regeneration group trades on a reasonable 35% discount to net asset value. Harworth invests in about 100 residential, industrial and logistics sites across the…

• Airlines are taking off, says Frank Holmes in Forbes. Last week shares in American Airlines surged by an “unbelievable” 41% after it said it would increase flights by 74% in July. More planes are returning to the skies, with the number of parked passenger aircraft “dropping below 50% of all fleets in the US, Europe and China”. And the US Department of Homeland Security says daily US passenger numbers have risen to 441,000 from a low of 87,500. Investors such as Warren Buffett, who dumped all their airlines shares because of Covid-19, may have been premature. • Ebay has produced the “least successful reputation management exercise in corporate history”, says Lex in the Financial Times. Six former executives and staff are accused of mounting a “bizarre harassment campaign”, involving…

• Fund managers Nick Train and Michael Lindsell of Lindsell Train are celebrating a bumper rise in profits by sharing £31m in dividends between them, says Daniel Grote on citywire.co.uk. Pre-tax profits at the firm they co-founded rose by 33% to £73.7m, driving a record dividend to shareholders of £43.2m – of which £10.4m went to the Lindsell Train Investment Trust, which owns just under a quarter of the business. Both men have put money into the business in the last year, with Train buying £3.5m of shares in the firm’s Finsbury Growth & Income (FGT) investment trust, while Lindsell bought £794,570 worth. • Bosses at betting shop operator GVC, which owns the Ladbrokes and Coral brands, have given themselves shares worth almost £5m, despite furloughing 14,000 staff, says Lily…

Environmental, social and governance (ESG) investing – and similar approaches such as socially responsible investing (SRI) – aim to make money while avoiding firms viewed as having a negative impact on the world and encouraging those that have a positive impact. Traditionally, ethical approaches to investing mostly focused on not buying any companies in businesses that the investor dislikes (known as exclusionary screening). This often included vice stocks, such as tobacco, gambling or alcohol. Some investors might aim to invest more in industries that they view as beneficial (such as renewable energy), although this was less common. However, as demand for ethical investing has become greater, this has evolved to include approaches where the investor takes into account whether a firm is trying to follow the highest standards they can…

Cevian Capital, Europe’s biggest activist investor, has bought a “significant stake” in Pearson, the struggling educational publisher, says Alex Barker in the Financial Times. Cevian, a Swedish group managing funds worth €12bn, has bought 5.4% of Pearson. It expects a new CEO to fulfil the company’s “full potential”. Pearson is in a “wrenching transition” towards digital products and has suffered seven profit warnings in the seven-year tenure of the outgoing chief executive John Fallon. The stock jumped by 13% on the news. Cevian has previously targeted Nordea, Thyssenkrupp, and Danske Bank. It tripled its investment in Danske Bank, selling the stake just before the group became involved in a €200bn money-laundering scandal.…

“God, I hope you don’t, because whenever somebody burns a Potter book the royalties vanish from my bank account.” Harry Potter author J.K. Rowling (pictured), responding to a Twitter user who threatened to burn her books “I don’t think anyone should live in a house that big. I used to always think, it doesn’t matter how big the house is, you can only sit on one couch and you can only watch one TV…. when you see this property, it’s insane. It always reminded me of Disneyland…” Sam Palmer, fiancé of Petra Ecclestone, on living in the Formula One heiress’s $85m mansion, which she sold last year, quoted in the Daily Mail “We have a majority of 80, you can hire whoever you want. You can spend any amount of…

capx.co The UK’s policy of putting foreign visitors in quarantine will hurt many businesses, but perhaps none more so than the £24bn sports industry, says Roland Grant. Lockdown restrictions have already caused “economic havoc” and Formula One is “in the firing line”. The British Grand Prix at Silverstone would normally attract around 200,000 visitors and provide an economic boost of £29m to the surrounding area. The quarantine policy will make it “near-impossible” for teams based outside the UK to take part. Cancelling it would threaten thousands of jobs. In “Motorsport Valley”, an area stretching from Northamptonshire to Surrey, 4,300 firms employ 41,000 people, creating a combined turnover of £9bn per year. Without a British Grand Prix, these firms – and the UK’s position as world leader in the industry –…

For a company to get ahead in robotics and AI, it needs to be big. As Susskind says in A World Without Work, “it costs an enormous amount to develop many of the new technologies”. Successful companies require “huge amounts of data, world-leading software, and extraordinarily powerful hardware”. In other words, we’re talking about “Big Tech” – the likes of Alphabet (Nasdaq: GOOGL), Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN), Facebook (Nasdaq: FB), Microsoft (Nasdaq: MSFT) and China’s Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (Hong Kong: 0700). All of these giants have the platforms needed to build up vast amounts of data and many are actively investing in AI. Google, for example, snapped up AlphaGo’s British creator, DeepMind, in 2014 for around $500m. Susskind believes that the advantages of…

When someone dies their estate is valued for inheritance tax (IHT) purposes on the basis of what it was worth on the day they died. If IHT is owed, then it must be paid within six months. But if assets are sold for less than that initial value within 12 months you can claim an IHT refund. Research from NFU Mutual shows that 1,851 families reclaimed overpaid IHT on shares in 2019-2020, compared to just 858 in the 2017-2018 tax year. “These figures show that more people are becoming aware they can reclaim overpaid IHT,” says Sean McCann, a chartered financial planner at NFU Mutual in The Sunday Times. “After recent falls in the stockmarket it’s likely that many more bereaved families will be able to benefit.” IHT is levied…

• A test case on whether insurers offering business interruption cover will have to pay out to businesses hit by the crisis could take place next month. The Financial Conduct Authority (FCA, the City regulator) has now published details of the High Court claim it is making against top insurers. Many firms forced to close premises or suspend trading have been dismayed to see their insurers refusing to pay out on business interruption claims. The insurance industry says such policies do not cover pandemics. In practice, every insurer’s business interruption cover varies. The FCA hopes to establish basic principles on when – and how – insurers should be required to cough up. • Small and medium-sized businesses with staff who have been forced to take time off work because of…

Luckin Coffee (Nasdaq: LK) is a Chinese coffee-house chain. It recently became embroiled in a fraud scandal that has caused its share price to plunge by 78% from this time last year. The Nasdaq exchange suspended the stock in April and looks set to de-list it after the company admitted it had fabricated transactions amounting to ¥2.2bn (£246m). Chairman Lu Zhengyao allegedly instructed colleagues to commit accounting fraud in a series of emails. Balance-sheet manipulation by senior executives appears to date back to mid-2019.…

• Shopaholics can rejoice that non-essential stores reopened their doors this week, says Ruth Sunderland in the Daily Mail. But retailers will not “spring magically into life” with the gradual lifting of lockdown. Coronavirus will be “a catalyst for deeper change to city centres and the retail industry”. Physical shopping has been reduced to “a fraught trip to the supermarket, queuing up outside with the other masked and gloved customers for an anxious tour of the aisles”. Where before people “mooched happily” around a high street or shopping centre ,“they are now faced with an obstacle course… How will they get there? What will they do for refreshments? Will they be able to go to the loo?” Not exactly the retail therapy British shoppers have come to know and love.…

Football fans rejoice, the Premier League is back this week as the season resumes after a three month coronavirus-driven pause. Fans on big screens, specific cameras for players to celebrate to and the option of artificial crowd noise are some of the “broadcast enhancements” being implemented, says Laura Scott on BBC Sport. Accountants Deloitte estimates the suspension has cost clubs £1bn in revenue, says The Guardian. Bosses at many FTSE-listed companies are back on full pay after taking a pay cut due to the pandemic’s effect on business, says the Financial Times. Foxtons, Persimmon, Severn Trent, Burberry and Bakkavor are among the companies to reinstate full salaries, a decision that has attracted scrutiny from investor groups and high-pay campaigners, “particularly after the UK revealed the largest drop in gross domestic…

“We [examined] inflation dynamics during the Great Lockdown using scanner data covering millions of [UK] transactions... there was a significant and widespread spike in inflation. First, aggregate month-to-month inflation was 2.4% in the first month of lockdown, a rate over ten times higher than in preceding months. Over half of this increase stems from reduced frequency of promotions. Consumers’ purchasing power was further eroded by a reduction in product variety, leading to a further 0.85% increase in the effective cost of living. Second, 96% of households have experienced inflation in 2020, while in prior years around half of households experienced deflation. Third, there was inflation in most product categories… Only 13% experienced deflation... stagflation should not be ruled out.” Xavier Jaravel, London School of Economics, and Martin O’Connell, Institute for…

Three key trends in IT are cloud computing, digitisation and data processing, says WirtschaftsWoche, and both the public and private sectors are spending heavily on them worldwide. That’s excellent news for Germany’s Allgeier, one of the country’s leading IT services companies. It has 11,000 clients, including half of the 30 blue chips in Germany’s DAX index. Sales have expanded by an annual average of 15% in the past five years and are likely to eclipse €800m this year; the bottom line has risen eightfold to €18m in the same period. Its internet-security division has profited from the virus-induced shift towards working from home, which has prompted firms to beef up their cyber defences.…

BP has announced that it will slash $17.5bn off the value of its oil and gas assets as it takes a “downbeat” view of longer-term oil prices in the wake of the pandemic, says Anjli Raval in the Financial Times. The company now thinks that Covid-19 will not only have a “lasting impact” on the global economy but will also “accelerate the transition towards cleaner energies”. As a result it is cutting the long-term price assumption for crude oil and natural gas by over a quarter to $55 a barrel in the case of Brent Crude, and to $2.90 per million British thermal units for gas. BP’s move is long overdue, says Nils Pratley in The Guardian. The recent plunge in crude left BP’s assumption that long-term prices would be…

Back in March, New Zealand imposed one the “world’s toughest lockdowns”, which was designed to “eliminate” rather than contain the virus, says Bernard Lagan in The Times. This approach appears to have been vindicated – last week it became the first country in the world to remove all virus-related domestic restrictions when scientists declared it to be virus-free. A quarantine remains in place for visitors from abroad, but shops, restaurants and cafes will resume “almost normal operations” and limits on public gatherings have been removed. Two arrivals from the UK, allowed to leave quarantine early, “spoiled” New Zealand’s run of virus-free days, but New Zealand’s leader Jacinda Ardern deserves credit for limiting Covid-19’s toll in New Zealand to “just 1,504 cases and 22 deaths”, says Ross Clark in The Daily…

The famous American-born investor Sir John Templeton once declared that the four most expensive words in English are “this time it’s different”. At first glance, it might seem that in the case of Covid-19, the phrase is warranted. After all, a whole slew of industries are being badly disrupted – airlines, cruise lines, retailing, shared office space, cinemas – forcing investors to think through the investment implications. Then again, the cynic might suggest that Covid-19 will just reinforce trends that were already emerging, but perhaps less evident before the crisis. This alternative view is perhaps best expressed by controversial French novelist Michel Houellebecq. Asked recently what might change in modern society after Covid-19, the infamous pessimist responded that he believes the world will be just the same – only worse.…

As the coronavirus pandemic took hold, many CEOs said they would forgo their salaries to share the pain, say Fan Fei and Andrew Edgecliffe-Johnson in the Financial Times. One such CEO was Edward Stack of Dick’s Sporting Goods, who temporarily gave up his $1.1m package. But soon after, he was awarded 950,000 stock options, worth up to $31m, which he can exercise over the next four years. Stack is not alone. Mark Hoplamazian, head of hotel group Hyatt, sacrificed $925,000 in salary, but could reap $17m in stock options. And AMC Entertainment cut top executives’ pay and bonuses by 15% for three years, but awarded CEO Adam Aron 1.5 million share-equivalent grants that could be worth up to $33m. Stock options now make up 67% of the typical CEO’s pay,…

Running a £20bn fund doesn’t guarantee good treatment from the companies you invest in, as Terry Smith, the manager of the Fundsmith Equity Fund, has found. When Amadeus, the Spanish company that provides booking software for airlines and other travel providers, raised €1.5bn to help see it through the coronavirus crisis by issuing new shares and convertible bonds at the start of April, Fundsmith wasn’t asked to take part in the fundraising, Smith tells Sky News. Small investors are used to their pre-emption rights – the principle that existing shareholders should have first refusal when companies issue new shares – being ignored. But most people would have expected a fund as large as Fundsmith to be included: it’s Amadeus’s fifth-largest shareholder and has been invested for seven years, says Smith.…

■ Young people saving for retirement are opting for lower-cost tracker funds that simply follow an index and often beat professional stockpickers, says Ali Hussain in The Sunday Times. Between late March and the end of May, around 37% of pension fund investment made by under 30s went into tracker funds, compared with 22% made by the over-60s. This is the latest sign that actively managed funds are “failing to impress” the new generation of savers. You can see why they’re sceptical. The fund industry is “reeling” after reports showed that as many as half of its actively managed products do not beat their benchmark index. It may be that younger investors are put off by an “industry dominated by men in suits who can charge as much as 5%…

marginalrevolution.com America has fewer police than the world average and spends relatively less on police and more on prisons than any European country. This is backwards, says Alex Tabarrok, but consistent with a doctrine that states that an optimal punishment system combines a low probability of being punished with a harsh punishment if caught. I prefer the “good parenting” theory, which isthat “optimal punishments are quick, clear and consistent, and, because of that, need not be harsh”. Increasing the number of police on the streets would increase capture rates and deter crime, and cut the prison population. A2010 study shows that this would justify doubling the number of police on the streets. That, along with other research, suggests that a 10% increase in police numbers would reduce crime by 3%…

Businesses that have borrowed relatively modest sums through the government-backed Coronavirus Business Interruption Loan Scheme (CBILS) could dramatically reduce their interest costs by switching to the Bounce Back loans facility. Ministers launched the Bounce Back scheme several weeks into the Covid-19 crisis, responding to criticisms that smaller businesses were struggling to access cash through CBILS. By then, however, many businesses had secured finance through the original scheme. Both schemes are administered through the banks, with the state underwriting the loans. Crucially, however, Bounce Back loans come with an interest rate set by the government at 2.5% a year, while with CBILS, lenders set their own rates; many are charging 6% a year or more. The maximum Bounce Back loan is £50,000, so for businesses that have borrowed less than this…

Let’s agree the identity of a handful of great companies from around the world. I know there’s always room for debate about such qualitative matters and you and I might disagree about the qualities that constitute greatness. But if Itable these (all held in Lindsell Train portfolios): Diageo, Kao Corporation (Japan’s Unilever), Heineken, Walt Disney and Unilever itself, I think anyone – after due consideration of these companies’ histories and prospects –would agree they are all great businesses. “Our strategy isn’t original or clever, but it has worked for 20 years” What is more – and this is important – if you’d produced the same list ten or even 20 years ago, they’d have been acknowledged as great businesses then too. They weren’t difficult to spot in 2000 or today.…

2018 Oxney Organic, Chardonnay, East Sussex, England £20, oxneyestate.com, brooksteedbottle jugdeptltd.selz.com Before I talk about my featured bottle I must mention another Oxney wine, which is sensational – 2016 Oxney Organic, Limited Release Classic Rosé (£40). Only 500 bottles were made of this epic wine and, while neither this nor my featured chardonnay are on the Oxney website, at the time of writing, Kristin Syltevik, the mind behind this peerless property, assures me that they will both appear soon. Kristin gave me a list of indie retailers who will stock these two brand new wines, but only one confirmed that they did. Anyway, this sparkler is packed with sensational freshness and vitality and it has a wondrous, amaro twist of acidity that runs the length of the palate. Reticent and…

“Defund the police!”. Protesters in America want to cut the gendarmes’ budget. Here on the back page, we’re all for it. Defund the Federal Reserve, while you’re at it. And the Pentagon. The Department of Education. The FBI. The CIA. Congress. You see where we’re going with this, don’t you? Drain The Swamp! “The feds are overfed. And that’s not going to change anytime soon” The feds are overfed. Even in the middle of World War II, the US state spent only 40% of GDP. In the second quarter of this year, the US is borrowing and spending 61% of GDP. Spending for the calendar year could run at about $8trn. In May, GDP was running at about a $16trn annual rate. It’s unlikely the feds’ part of that will…