Indholdsfortegnelse for Issue 1009 i MoneyWeek

Amateur traders who rushed to place leveraged bets on markets during the coronavirus crisis are suffering heavier losses on the online trading platforms than they were at the start of the year, say Ben Martin and George Greenwood in The Times. The proportion of losing customers of CMC Markets rose from 70% at the start of the year to 79%, while the loss rate at IG Group increased from 68% to 76%, and at Plus500 from 76.4% to 80.5%. In a further blow to investors still trapped in the failed Woodford Equity Income fund, former holding Synairgen saw its share price soar by 420% six weeks after it was sold in a cut-price deal, says Daniel Grote on CityWire. The Aim-listed stock surged on the news of positive results from…

The US Federal Reserve might be ready to push inflation above the 2% target, reports Tim Duy on Bloomberg. The last decade brought low unemployment and low inflation, weakening faith in the “Phillips curve”, which posits a trade-off between the tightness of the labour market and price stability. Several Fed policymakers have recently suggested that instead of trying to use the curve to predict future inflation, the Fed should simply keep money easy until actual inflation overshoots the 2% target. US inflation has practically disappeared in the slump, but the vast monetary stimulus unleashed to fight the pandemic has raised the spectre of higher inflation when the recovery arrives. The Fed’s balance sheet has grown from about $4trn at the start of the year to $7trn today because of pandemic-related…

When the pandemic began, anyone suggesting that the red metal would be back to its pre-Covid-19 level by now “would have faced a very tough sell”, says Capital Economics. But at $6,400 a tonne it is 10% above where it started the year and has been the best-performing industrial metal so far. Speculators have jumped on the bandwagon, but the fundamentals are also auspicious. A post-Covid-19 infrastructure spending splurge in China, which consumes around half of the world’s supply, is one key factor, while lockdowns in South America are causing a sharp drop in mined supply. As demand recovers the market “will slip into a deficit”. The upshot? Expect copper to cost $7,200 by the end of 2021.…

Shares in Canada’s Dye & Durham, a provider of cloud-based software for legal professionals, almost doubled when they made their debut in Toronto last Friday, says Doug Alexander on Bloomberg. The stock finished up 97% from its C$7.50 (£4.40) initial public offering (IPO) price, propelling the group’s market value to C$612m (£357m). The listing, which raised C$150m (£88m), was the most successful for a larger Canadian IPO in nearly three decades. “The timing for the IPO couldn’t have been better,” says Alexander. Tech stocks have surged in the US and Canada this year as investors have flocked to the sector, one of the big winners in the pandemic.…

Norway’s Adevinta has bought eBay’s classified advertisements business for $9.2bn (£7.1bn), says Michael Cogley in The Daily Telegraph – creating the world’s biggest online classifieds group. While Adevinta will pay $2.5bn of the purchase price in cash, the rest will come in the form of shares, making eBay Adevinta’s largest shareholder with a 44% stake. The hope is that by adding eBay Classified’s 12 brands in 13 countries to Adevinta’s 35 products in 15 countries, the Norwegian giant will be able to find savings of between $150m and $185m in “annual synergies”. The deal already seems to be paying off, say Richard Milne and Arash Massoudi in the Financial Times. Shares in Adevinta “rose by more than a third” shortly after it was announced, which for eBay lifted the paper…

The coronavirus is hitting the economy hard. Unemployment is already starting to rise and, once the furlough scheme comes to an end, huge numbers of people are likely to lose their jobs. What is not so widely appreciated is that women will suffer most. Why? Shops that were already teetering on the edge are collapsing into insolvency and those that remain are cutting back on staff. Overall, 58% of the people working in retail are women. Lots of workplaces in the hospitality industry too may never open their doors again, where 56% of staff are female, often working in more junior roles where jobs will be cut first. The same is true of hairdressers and beauty salons. A disaster for the economy A study from the International Monetary Fund last…

Is gold set to hit fresh records? Citigroup’s analysts this week said “it is only a matter of time” before the yellow metal surpasses its 2011 dollar high of just over $1,920 an ounce. The investment bank also reckons there’s a 30% chance that gold will go above the $2,000 mark within the next five months. Yet gold is already at, or near, all-time highs in almost any currency you care to mention. Given all this, you might be wondering (particularly as a sterling investor): can gold really go much higher from here? “Governments need inflation to erode away public debt” To answer that, we need to look at what drives the gold price. Many investors think that gold is an inflation hedge, but that’s not the whole story. What…

Investment trusts’ average discount to net asset value (NAV) is 6%. But there are plenty of trusts with double-digit discounts. Often, this is the result of persistent poor performance. Sometimes the sector is out of fashion. But occasionally it is because professional investors struggle to pigeon-hole it. The Henderson Opportunities Trust (LSE: HOT), of which I was a director until March, is one of these. With net assets of £80m, it is the smallest of three trusts managed by James Henderson and Laura Foll. It invests right across the UK market and is benchmarked against the All-Share index. When smaller companies are doing well, it outperforms but when they lag, as they had last year , this tends to get left behind. For most professional investors, this characteristic, and the…

Hydrogen can free us from China Daniel Hannan The Daily Telegraph “Never mind Huawei. A greater menace is posed by our looming dependence on China for electric cars,” says Daniel Hannan. China makes 73% of the world’s electric-vehicle batteries and controls the production of the African rare-earth minerals that go into them. A planned new battery megafactory in Wales will be a drop in the ocean. Happily, there is an alternative: hydrogen. Vehicles can be powered by it; homes heated with it. There are two ways to generate it. “Blue hydrogen” is made from natural gas and, while not carbon free, is cleaner than most fuels. “Green hydrogen” is made by using surplus energy produced by wind and solar. Britain is “enormously well-placed in both regards”. We already have gas…

ftalphaville.ft.com In the debate over whether inflation will return to developed economies, something is overlooked, says Rui Soares. The examples of Venezuela, Zimbabwe and Weimar Germany are often invoked, and these did indeed suffer inflation rates above 100%, but like every other historic episode of high inflation, they all experienced not just aggressive expansionary monetary policies but also significant currency depreciations. They all saw their currencies devalue by at least 80% against the dollar. This meant that excessive domestic demand could not be met by additional imports at stable prices, triggering inflationary pressures. So if you believe that “coronavirus-fighting expansionary monetary and fiscal policy” will lead to high inflation, you’re assuming there’ll be synchronised currency devaluation across developed nations –in America, the eurozone, Japan, Britain and Switzerland. That seems a…

“Regular dividends for the UK will be down around 40% year-on-year in 2020” The coronavirus-induced collapse in dividends has highlighted ahuge problem with the UK stockmarket for investors that rely on it for income. A relatively small number of sectors and stocks have become a very large component of total dividends: banks, insurers, energy and resources together accounted for more than half of UK dividends a year ago, according to data from Link Group, which maintains the shareholder register for many large UK firms. With companies large and small cutting payouts to preserve cash, the headline figure for 2020 is set to be grim. Regular dividends will be down by around 40% year on year – possibly almost 50% if you include special dividends, which were obviously much more prevalent…

With interest rates at historic lows savers have been suffering. But the government has now thrown them a lifeline by boosting the National Savings & Investments (NS&I) deposit limit. NS&I is state-owned and backed by the Treasury. This means your money is 100% guaranteed by the government. With deposit limits of up to £2m on some accounts this makes it an excellent choice if you want to lock away large sums of money safely. The added attraction of NS&I at present is that it is offering three of the five top-paying savings accounts on the market. However, this has caused a surge in deposits, which creates a problem. Because it is government-backed, NS&I isn’t allowed to take in too much money. So, every year a cap is put in place…

The transfer values paid to savers switching out of their employers’ final-salary pension schemes have hit an all-time high, stoking fears that people may be encouraged to give up valuable guaranteed retirement benefits. Specialist consultant XPS Pensions Group says a 64-year-old entitled to a £10,000 annual pension for life could currently expect to receive £260,800 if they transferred their benefits to a defined-contribution scheme such as a personal pension plan. That represents an increase of more than 15% since March. The higher transfer values reflect changing actuarial assumptions, notably expectations of higher long-term inflation. But many savers may be tempted to make the wrong decision. In June, says XPS, the annualised equivalent of 1.05% of all members eligible for a transfer left their final-salary scheme – the highest figure since…

Crude oil has rallied since oil futures briefly turned negative at the height of the crisis, but is this good or bad for stocks? Some argue that higher oil prices should be negative for the stockmarket since rising energy prices will feed through into higher bills for firms, squeezing profit margins. What’s more, higher energy prices may also signal rising inflation, increasing pressure on central banks to raise interest rates, which will in turn increase the price of borrowing as well as reduce consumer demand. Higher inflation may also boost wages. However, others say that the relationship is a little more complex than a simple inverse relationship between stocks and oil prices. Although rising prices may suggest that inflation is starting to pick up, falling oil prices might be a…

CMC Markets (LSE: CMCX) is an online trading platform. The stock surged last week after the group, which pioneered internet trading technology, announced that its pre-tax profit in the year to 31 March 2020 rocketed to £98.7m from £6.3m the year before, says Nigel Frith on AskTraders. Volatile markets are excellent news for trading platforms, while lockdown has also prompted bored punters to bet more. Trading activity doubled in the first quarter from the same period in the previous year. The shares have gained 235% in the past 12 months.…

Joseph Nacchio was born in Brooklyn in 1949. After graduating from New York University in 1970, he went to interview for a job at Procter and Gamble, but ended up joining AT&T as an engineer after accidentally walking into the wrong interview room. By the 1980s he had risen to the position of chief engineer for AT&T’s long-distance network, and was sent to the Massachusetts Institute of Technology for management training, eventually taking over control of the division. Passed over for the top job at AT&T, he became CEO of rival telecommunications firm Qwest in 1997. What was the scam? Nacchio set unrealistic revenue and earnings forecasts in order to boost Qwest’s share price, and engaged in various accounting tricks so that it could appear to meet them. These included…

Going… A huge online auction of some of the best-known film props from Hollywood history is set to take place on 26 and 27 August with the Prop Store. The 11-foot Nostromo space ship model, used in Alien (1979), has been given the highest valuation of the 850 items. It is expected to sell for up to $500,000. Other recognisable memorabilia include the Darth Vader costume from the original Star Wars film (1977 – $250,000), the Ra staff headpiece from adventure film Indiana Jones and the Raiders of the Lost Ark (1981 – $200,000), and Tomcat fighter pilot Pete “Maverick” Mitchell’s helmet ($70,000) from 1986 blockbuster Top Gun, starring Tom Cruise (pictured). The sale is expected to make around $6m in total. Gone Entertainment and celebrity memorabilia belonging to the…

The 82-year-old former king of Spain (pictured) could face trial for money laundering after allegations that a secret Swiss bank account was used to pay for his Tahitian holiday, says Isambard Wilkinson in The Times. According to online newspaper El Confidencial, around £26,000 was transferred from aSwiss account to pay for Juan Carlos’s trip to Tahiti in January 2016. The money is said to have come from the Zagatka foundation, founded by his cousin Álvaro de Orleans y Borbón. The foundation is being investigated by Swiss authorities who are looking into multimillion-euro payments into offshore accounts linked to Carlos, plus a €65m payment to his former mistress. Public prosecutors in Spain are waiting to see if the money for his holiday is linked to illegal funds – if so, it…

The European Union’s recovery plan will “change the bloc forever”, says Bernd Riegert for Deutsche Welle. Just months ago, talk of joint debt issuance was “unthinkable”, yet this week national leaders agreed to just that as part of a historic €750bn recovery fund. The plan will see the European Commission borrow on international markets and distribute the funds to the states hardest hit by the pandemic, with €390bn in grants and €360bn in loans. Italy is in line for about €209bn of aid, including €82bn of grants. Spain, Greece and Portugal are also likely to receive substantial help. The Dutch government won an “emergency brake” to ensure that the funds are tied to economic reforms. A step towards fiscal union This rescue package “breaks through the fortifications” that have long…

“Cadbury claims that it is saving British waistlines by shrinking its chocolate bars. By the end of next year a Double Decker sold in a multipack will contain no more than 200 calories — much the same as a handful of carrots. The confectioner... appears to be cleaving to its Quaker roots. Yet... list prices will remain at more calorific levels. Shrinkflation, the stealth inflation brought about by offering consumers less for their money, is not new. British statisticians turned up more than 2,500 examples over a five-year shopping spree from 2012 to 2017... Yorkie, from Swiss group Nestlé’s pantry, weighed in at 58g in the 1970s and grew as large as 70g... It is now a modest 46g. Mondelez’s Toblerone put more space between its distinctive triangular blocks in…

Three to buy GSK Investors Chronicle GSK’s multi-faceted fight against Covid-19 – developing a vaccine, repurposing existing medicines, and supporting the UK’s diagnostics infrastructure – has “underscored the breadth of its operations and its dominance in multiple arenas”. Its pipeline is strong too, with 37 medicines and 15 vaccines in development, which should drive future growth. A forward price/earnings ratio of 13 seems “undemanding” considering its diversified revenues, research and development focus and generous dividend. 1,771p Inspecs The Daily Telegraph This Aim-listed company designs, makes and distributes eyewear frames for well-known opticians including Specsavers and Vision Express as well as other retailers such as Next and Walmart. Covid-19 has had some effect, but it “will not stop people needing to get their vision corrected” and the company’s vertically-integrated model will…

• Lockheed Martin’s latest results show that it is “one of the few corporations to thrive during the coronavirus crisis”, says Jon Sindreu in The Wall Street Journal. Despite production problems caused by the pandemic, sales jumped to an unexpectedly high $16.2bn in the second quarter. In spite of this, Lockheed has suffered from the fact that shares in defence companies have “severely underperformed” the S&P 500 since June, as investors move toward “riskier stocks with more upside”. There are also concerns that much of Lockheed’s pitch to investors depends on the F-35 fighter (pictured), a trillion-dollar programme that has become “infamous” for “delays, expense overruns and technical problems”. Still, a “record backlog” of more than $150bn in orders, “higher net margins” than its rivals and a “cheaper valuation” mean…

Until recently, predictions that there would be a vaccine for Covid-19 by the end of the year were met with scepticism, says The Economist. Now, encouraging early-stage trial results from several research teams, including one from Oxford, suggest that this is indeed looking increasingly likely. With final-stage trials beginning around the world, there is a possibility that regulators will grant early approval on an emergency basis by September. With the US government alone spending “more than $13bn” on research and manufacturing, there’s a good chance that Americans could start to get it “well before the November election”. That would be a feat of “astonishing human brilliance”, says Polly Toynbee in The Guardian. Even if one is approved, however, its rollout could be undermined by the “usual human bad behaviour” –…

• Amazon founder and boss Jeff Bezos (pictured) added $13bn to his fortune on Monday in what is believed to be the biggest-ever jump in wealth in a single day for an individual, says Hasan Chowdhury in The Daily Telegraph. On Monday, the price of Amazon’s shares rose by 8% on optimism that the rise of online shopping seen during the pandemic is here to stay and as analysts forecast sustained growth. Its shares have climbed 73% this year to a valuation of $1.6trn. Bezos owns around 11% of the business. • London-listed airline Wizz Air is facing a shareholder rebellion over its decision to pay its boss, Jozsef Varadi, a €532,714 bonus for the 12 months to the end of March despite net profits being €281.1m, below the €294m…

A “real” interest rate is simply an interest rate that has been adjusted to take inflation into account. (A “nominal” interest rate is one that has not been adjusted for inflation). This matters because inflation reduces the value of any future stream of income. Take a bank account into which you plan to place £1,000. If inflation is running at 1% then a 2% nominal interest rate looks quite respectable – your savings will have more purchasing power a year from now. However, if inflation is running at 3%, your savings will have less purchasing power when you withdraw them in a year’s time, even though the £1,000 will have grown (in nominal terms) to £1,020. Of course, the advertised rate will be the nominal one, not the real one.…

Swedish activist investor Cevian increased its stake in education-publishing group Pearson to 7% from 5.4% in June, says Christopher Williams in The Daily Telegraph. Europe’s biggest activist investor has been agitating for a shake-up for some time. Pearson continues its long search for a chief executive to replace John Fallon, who announced his retirement in 2019 after seven profit warnings. The company has failed to adjust to the growing emphasis on digital activity in its sector. Cevian has “sought to influence the board by sharing its analysis of the company’s failings”. It isn’t alone, says Jamie Nimmo in The Mail on Sunday. Analysts predict a“tidal wave” of activism to dislodge bosses who have failed to respond to Covid-19…

“We started off with a strain in California and it went really great; I sold out of the weed. We’re now starting another strain with a farmer in Colorado. So, yeah, it’s going well. In fact, I think I’m selling more weed than I am albums.” Country music star Margo Price (pictured) on setting up a cannabis company with musician Willie Nelson, quoted in The Sunday Times “We eventually managed to get a council flat and sometimes my girlfriend used to go and babysit for the people next door. One evening she wanted to read the kids a bedtime story, but the only printed matter she could find in the whole house was an Argos catalogue. And I’ve always remembered that because, to me, that is poverty. Whereas you can…

economist.com/1843 Restaurants are reopening their doors, but social-distancing rules remain in place and the threat of future lockdowns “looms” over a troubled industry, says Henry Hitchings. The crisis has led many of us to wonder: why do restaurants matter? Why do we spend large sums of money to dine among strangers? It’s clearly not just about the food. The best restaurants are “hotspots of glamour”, with an “air of vitality and fun”. Dining becomes “theatre, a minutely choreographed performance. And the customer is the star”. Restaurants are, as the word suggests, restorative; they are revivifying and provide an atmosphere of cosiness and a place of retreat from the workaday world. For a time it looked as though restaurants might become “shuttered relics of the world of yesterday. Now there are…

Direct investment in corporate bonds is difficult for individual investors because most bonds trade in large minimum amounts. The London Stock Exchange runs a platform called the order book for retail bonds (Orb), on which a selection of corporate bonds are issued and trade in sizes suitable for most individual investors. But a look at current yields shows the challenge investors face in trying to get a higher income from bonds. Your choice among low-risk issuers ranges from less than 1% to lend to various utility companies for two or three years, up to about 2.9% on an HSBC bond that doesn’t mature for 13 years. You’re taking on quite a lot of interest rate and inflation risk on a bond that long, without much more immediate income than you’d…

We have now had a hint at one way the chancellor, Rishi Sunak, may be considering recouping some of the money he has spent on the crisis. He has ordered a review of capital gains tax (CGT). The Office of Tax Simplification has been tasked with assessing CGT rates, relief and exemptions. The fear is that the tax is on its way up. CGT is levied if you sell an asset for a profit. “Mostly it applies to gains made on property and shares, but also applies to things such as artworks,” says Patrick Collinson in The Guardian. CGT is charged on the profit you make. If you are a basic-rate income taxpayer, the CGT rate is 18% on second homes and buy-to-let properties and 10% on other assets. Higher…

Alice’s first day at Tweedle Asset Management was going to be a busy one. She was escorted around the offices by a young staffer named Otto. Their first visit was to the bond team. Fixed income was Alice’s keenest interest. “Do you hold bonds for income?” she asked eagerly. Everyone laughed. “Are you dreaming?” the desk head replied rudely. “The coupon is subtracted from the principal, not paid out. If it’s income you want, you should take out a Danish mortgage, they pay very well.”“But why own a bond, if it doesn’t pay interest?” Alice asked. “As long as yields continue declining, even at negative rates we hold bonds for capital gains. If you want dividends, go ask the equity folks.” “I see,” said Alice doubtfully, hoping that stock-market investors…

Despite the overall market largely treading water over the past fortnight, four of my five long tips have declined, though mostly by relatively small amounts. International Consolidated Airlines Group fell from 225p to 223p; energy giant Royal Dutch Shell from 1,314p to 1,288p. Television group ITV declined from 70p to 65p and pub chain JD Wetherspoon slipped from 1,002p to 940p, despite revised rules on social-distancing. However, equipment company United Rentals bucked the losing trend by rising from $151 to $157. My two short tips went in opposite directions. Insurance broker eHealth appreciated from $104 to $111. By contrast, electric-truck manufacturer Nikola fell from $49 to $39 after it announced that it was going to issue additional shares in order to raise money, with insiders also reducing their stake in…

Groupon (Nasdaq: GRPN) is a global online marketplace that connects subscribers with local sellers by offering activities, travel and services at a discounted price. Despite rallying along with the wider market, the stock has lost 82% of its value since 2017, says Forbes. This is partly due to the 22% decline in revenues from 2017 to 2019, while in the same period the company swung from a profit of $14m in 2017 to a loss of $22m in 2019. This year’s consumption slump is making matters worse; 44% of the workforce is being made redundant. The shares have slipped by 76.3% in a year.…

2019 Blackbook Winery, Controversy Pinot Meunier, Coombe Bottom Vineyard, Sussex £18, blackbookwinery.com Winemaker Sergio Verrillo makes his wines in Battersea, right next door to where I make my Jukes Cordialities. The other day, we swapped tasting samples. I gave him a tasting box of my drinks for him to sample and he gave me a “cleanskin” bottle upon which he wrote the words 2019 PM Controversy in white marker. The label you can see in the picture accompanying this column is a mock-up asthis wine was unlabelled when I first tasted it and ten days ago, before this very issue was printed, it had yet to be labelled. So, this week I have a genuine scoop for you. Only 80 cases of Controversy were made and so there is a chance…

At the beginning of July, the lucky winners of an online prize draw were invited to spend £1,800 on a pair of new Air Jordan 1 OG Dior trainers (pictured below). “Even by the hype standards of the sneakerhead world, the buzz around the luxury take on basketball’s most iconic hi-top… [broke] pre-pandemic decibel records,” says Jess Cartner-Morley in The Guardian. Fans were obsessing over nothing less than the coming together of “two blue-chip bloodlines of sportswear and luxury”. In terms of collectable fashion, this was “a royal wedding”. So, it was no surprise that, come the big day, shoppers queued round the block in the early morning pouring rain in London to get their eager hands on one of 13,000 pairs available worldwide. At the time of writing, one…

• “Vardygate” is the story of our age, says Elizabeth Day in The Mail on Sunday. To recap, last October, Coleen Rooney (wife of footballer Wayne Rooney) publicly accused Rebekah Vardy (pictured – wife of footballer Jamie Vardy) of leaking stories about her to the press. Fast-forward nine months and the whole thing has landed in the High Court in the form of a £1m defamation case. It “encapsulates” the society we live in, one “where our lives are played out on social media and where a young woman can become that nebulous thing – an influencer”; a society where “nurses struggle but Premier League footballers are rewarded with multimillion-pound salaries”. At least the sheer level of pettiness is entertaining. After all, “there’s so much scary stuff happening now that…

It is the best of times and the worst of times. The last quarter was the best for the Dow Jones in 33 years. And the Nasdaq hit a lunatic new high. There must have been a full moon. At the same time, we passed an all-time monthly record in federal deficits. If monthly deficits were to continue at June’s rate, the deficit for the year would be a sizzling $7.6trn. “If you can keep your head while all around you are losing theirs, you’ll lose money” That’s not all. Earlier this month Donald Trump claimed that Democratic challenger Joe Biden (pictured) had “plagiarised” his economic programme, after Biden unveiled his “Buy American” plan. Trump was flattered someone would want to imitate him. A more thoughtful man might have wondered…

£33,864 The minimum salary that will make the average Briton happy, according to fintech company Raisin UK, using data from the Office for National Statistics and the Happy Planet Index from the New Economics Foundation. The average salary in the UK is £29,009. 77 The percentage of the world’s richest families that had met or exceeded their financial targets in the year to May, despite the market crash in March, a survey of 121 family offices by Swiss bank UBS has shown. The average family surveyed was worth $1.6bn. According to the Institute for Fiscal Studies, households in the poorest fifth – as measured by their pre-crisis income – have been hit hardest in the crisis, with a fall in their median household earnings of around 15% (or around £160…

Spanish professional golfer Jon Rahm (pictured) became world number one this weekend, taking home $1.7m after winning the Memorial Tournament, says Golf Channel. Rahm, 25, “wiped away a tear of joy” after replacing Rory McIlroy as number one, saying: “How many people get to achieve a life-long dream in their mid-twenties?” Cassette tapes are making a comeback, says The Times, with Britons expected to buy more than 100,000 tapes this year for the first time since 2003, when Dido’s Life For Rent was the UK’s best-selling album. Figures show 65,000 cassettes were bought in the first six months of 2020, double the sales of 2019. The revival follows a boom in vinyl, which enjoyed its 12th consecutive year of growth with 4.3 million albums sold in the UK last year.…

The pandemic will have no impact on the inexorable rise of wind power, says Wirtschaftswoche. The sector has consolidated amid dwindling subsidies and is now increasingly competitive; it is also crucial to our efforts to combat climate change. That makes Denmark’s Vestas Wind Systems, the world’s leading producer of wind turbines, worth a look. It has accounted for 17% of the world’s installations since 1979. Orders rose by 10% in the first quarter to a record €34bn. Its service business, covering spare parts and maintenance, boasts an operating margin of 26% and comprises a fifth of sales –a higher proportion than at rival operators. The balance sheet is swimming in liquidity.…

AstraZeneca has said it hopes to start distributing Oxford University’s Covid-19 vaccine by the end of 2020, says Samuel Lovett in The Independent. Preliminary trial results revealed that it induces a “strong immune response within humans” and “appears to be safe”. More detailed results for this vaccine are expected to be available between September and November. Meanwhile, the company has struck deals with the UK, France, Germany and the US to deliver supplies of the vaccine, and will start manufacturing it even before trials finish, with the aim of making two billion doses. The results may be positive enough to continue with trials, but they “weren’t enough to convince the market”, says Bloomberg. AstraZeneca’s shares fell back early this week. Good news had been “widely expected”, while there are also…

Hopes of post-Brexit trade deals with the EU and the US are fast fading. UK and EU negotiators began the latest round of negotiations on Monday, but “remain deadlocked on the stumbling blocks of fishing rights, so-called level-playing-field guarantees, governance of the deal, and the role of the European Court of Justice”, say James Crisp and Gordon Rayner in The Daily Telegraph. The current talks between David Frost, the UK’s chief negotiator, and the EU’s Michel Barnier is due to end on Thursday, with “no expectation on either side of a breakthrough”. As a result, the working assumption is that Britain, which is seeking a “zero-tariff, zero-quota trade deal”, will default to World Trade Organisation terms when the transition period ends on 31 December. That means tariffs and red tape…

As Donald Trump’s approval ratings plumb new depths, as he trails challenger Joe Biden in the polls, punters continue to desert the current incumbent. With £49m now matched on Betfair, Trump’s odds to win the US presidency have lengthened to 2.88 (34.7%), with his chances of re-election the lowest that they have been since March 2019. Biden’s odds have tightened to 1.63 (61.3%), giving him the highest chance of winning that he has enjoyed in the campaign. I continue to believe that even these odds underestimate Biden’s support, though don’t bet any more money if you’ve already bet. Another leader up for re-election, and one who is in a much better position than Trump, is New Zealand’s Jacinda Ardern (pictured). With the general election less than two months away, Betfair…

Nearly 900,000 public-sector workers are to receive inflation-busting pay rises. The money to fund the pay increases of 3.1% for teachers and 2.8% for dentists and most doctors will come from existing departmental budgets, the Treasury said. Police, prison officers and National Crime Agency staff in England and Wales will be given a 2.5% rise in pay, while members of the armed forces will see their pay boosted by 2%. The judiciary and senior civil servants across Britain will also get an extra 2%. Pay for nurses and junior doctors will not be affected as both groups have negotiated separate agreements. Social-care workers not employed in the private sector may also miss out as their pay comes from local authorities. With the extra money to come from “budgets [that] are…

China “wants to put gold back at the centre of the global payments system”, argues Charles Gave, chairman of investment research provider Gavekal. This is one of the driving forces behind its recent move to take control in Hong Kong. Since 2005, the US has increasingly “weaponised” the dollar, using its position as the global reserve currency to exclude both nations and individuals from the global financial system. In response, China has steadily been building “a renminbi-based international payments system” based in Hong Kong and backed by its laws – thus the “new national security law” is partly driven by China’s goal of securing “national financial security”. Sceptics argue “that the Chinese Communist Party will never open the country’s capital account” (allowing the free movement of renminbi around the globe).…

■ “Terry Smith and Nick Train watch out: there may be a new star fund manager on the block,” says Mark Atherton in The Times. Stephen Yiu’s (pictured) Blue Whale Growth fund lies seventh out of 168 in the global equity sector with a return of 69.3% over the past three years, ahead of Smith’s Fundsmith Equity’s 47.8% and Train’s Lindsell Train Global Equity funds’ 41.2%. Yiu’s “big break” came after billionaire Peter Hargreaves put £25m into the Blue Whale fund. It now holds 25 stocks, two-thirds of which are in the technology sector. Yiu does not use analysis by brokers but relies entirely on his team of researchers: “If you’re going to run a portfolio as small as ours… you need your own research. That is what gives you…

aier.org Old arguments are being dusted off in the wake of the coronavirus crisis, says Nicolás Cachanosky. The economy is broken and can’t be relied upon to fix itself. We must therefore follow Keynes and guide economies back to health with the “savvy hand” of the state. Hayek’s warnings about such an approach still apply. The knowledge embedded in prices is decentralised and tacit. Such knowledge cannot be replicated by governments. And as governments try to manage the economy without the requisite knowledge, things go wrong. This can lead governments to insist that they know best, doubling down on their plans and encroaching on liberty. There is also some evidence that following Hayek would improve our ability to cope with the next crisis. Arecent study by Christian Bjørnskov looks at…

I always enjoyed company visits as a fund manager. They were a valuable reminder that I was investing in businesses rather than bits of paper and an opportunity to gain insights. Occasionally they were a priceless crash-course in getting to know a company, an industry and how a business should be run. One of those was atrip to Epsom in the early 1990s to see Berkeley Homes, the housebuilder co-founded by Tony Pidgley, who sadly died recently. Berkeley was then a small company specialising in upmarket houses. Pidgley, a Barnardo’s boy who left school at 15, had started his housing career at Crest Nicholson. He told us that in the 1970s housing slump he had been sent to Kent as their star salesman to shift a new development of 12…

■ “Buy-to-let landlords have swooped to take advantage of the stamp duty giveaway,” says Melissa Lawford in The Daily Telegraph. Since the chancellor announced a stamp duty holiday earlier this month there has been an 18% jump in enquiries from buy-to-let investors, says property website Zoopla. “In the parts of the country where landlords can expect the biggest savings, agents report much bigger surges.” Properties worth up to £500,000 are free from stamp duty in England and Northern Ireland until 31 March 2021. ■ Be on your guard: conmen are making hay during this crisis. “Scams involving conmen impersonating figures in authority doubled last month while total fraud complaints rose by a third,” says Kenza Bryan in The Sunday Times. Identity scams involve a criminal calling you and pretending to…

The crisis has given many technology stocks a big boost. One of the biggest turnarounds has occurred at Peloton (Nasdaq: PTON), which makes expensive exercise bikes that come with streamed workout lessons. In late 2019 a disastrous advertising campaign had left it widely mocked, with many speculating that it was only the latest in a string of overhyped stocks. However, the pandemic and the subsequent closure of gyms has created huge demand for home-exercise equipment, propelling Peloton’s stock from $25 at the start of the year to a peak of $68. Peloton may have done well during the crisis, with the company’s management talking about “holiday-like demand”, but its future looks more uncertain, especially with countries around the world (including the UK) starting to reopen gyms as part of a…

Digitalisation is a multi-decade investment theme – a megatrend ushering in the unparalleled adoption of digital products and services. The theme encompasses everything from social media and cloud-computing to machine learning and digital commerce. The coronavirus crisis, which is bringing firms’ digital capabilities to the fore, will accelerate these developments. The cost of bandwidth, computing and storage has been falling for decades. As a result, the barriers to digital innovation have collapsed. With an array of digital tools and services at their disposal, entrepreneurs are embarking on a frenzy of creative destruction, challenging the old industrial economic order. “Zendesk’s chatbots for e-commerce websites are being widely adopted” Technology investing is commonly perceived to be a one-horse race, with the FAANGs expected to dominate the world, but this could not be…