Indholdsfortegnelse for Issue 1010 i MoneyWeek

We’ve been boring MoneyWeek readers for years about the importance of holding gold. It should have, I said in 2002, a natural place in your portfolio as a “financial hedge in troubled times”. It was trading at $320 an ounce then. It’s now around $1,950. Not bad for what the naysayers dismiss as a “pet rock”. You’ll have things in your portfolio that have made you more in the last 18 years. But gold has certainly proved its worth in these troubled times (see page 4). Will it go higher? You don’t have to look far to see why it might. There is Covid-19 itself, and the possibility of the much-discussed second wave which Boris Johnson thinks he sees signs of in Europe. There is the response to the virus…

The head of the Russian Orthodox Church ordered a prominent prioress to part ways with her Mercedes-Benz, says The Times. Big-spending Mother Superior Feofaniya (pictured), head of the Pokrovsky Monastery in Moscow, drew criticism after Russian media discovered she was driving a black Mercedes worth £100,000. Patriarch Kirill reiterated that money donated to the monastery must only be used for social and charitable activities. Britons have been warned not to book a foreign holiday unless it’s with “money they can afford to lose”, says the Daily Mail. Travel insurance policies will not cover changes in local lockdowns or to official travel advice. The news comes after the Foreign Office abruptly changed travel advice for journeys to Spain, warning against “all but essential” travel to the mainland and its surrounding islands.…

When US oil futures plunged below zero in April the country’s shale industry was knocked sideways. More than 100,000 US energy jobs have disappeared since the pandemic began and rig counts fell by 73% in the year to 17 July. A dearth of supply helped Brent crude rally by 120% since the April low. Trading above $43 a barrel this week, oil is still down by 33% this year. US oil output bottomed out in the second week of June, say Derek Brower and Myles McCormick in the Financial Times, but better prices are now encouraging higher output, with US production up “by 1.2 million barrels a day over the past six weeks”. As Alexandre Ramos-Peon of Rystad Energy puts it: “It’s a slow, slow recovery, but it’s happening”. America…

America’s benchmark S&P 500 index has fallen by 1% in 2020. That is hardly a scintillating return, but it would have been considerably worse if the index were not spearheaded by ten “mega-cap growth stocks”, as John Mauldin points out in his Thoughts from The Frontline newsletter. Microsoft, Apple, Amazon, Google, Facebook, Visa, Mastercard, Netflix, Nvidia and Adobe have collectively risen by 35% this year; the other 490 stocks in the index have declined by more than 10%. Apple, Amazon and Microsoft jointly comprise a staggering 16% of the S&P 500 and are worth $5trn, a sum that eclipses Germany’s entire economy and almost matches Japan’s GDP. History suggests that such a lack of breadth bodes ill for a market.…

China’s “red hot”initial public offerings (IPO) market produced at least 24 new billionaires from 118 listings in the first half of this year, say Venus Feng and Pei Yi Mak on Bloomberg. Shanghai has become the world’s top venue for IPOs as bullishness over the economic recovery has spread and a herd of retail investors, encouraged by the authorities, have poured into the market looking for a quick buck. This year’s 118 flotations raised around $20bn, over twice the amount in the first half of 2019. The combined wealth of the new billionaires was $70bn as of mid-July. Most of them are in the healthcare and technology sectors, which were big winners during the pandemic.…

International Consolidated Airlines Group (IAG), which owns British Airways, is considering going “cap in hand” to investors, says Oliver Gill in The Daily Telegraph. A €2.75bn (£2.5bn) rights issue is one way it could boost its cash reserves. Other options include a share placing with major institutional investors or issuing loans that can be converted into shares. IAG has already sold £750m of Avios loyalty points for future flights to American Express. Meanwhile, trade unions Unite and GMB are angry because BA, which announced 12,000 redundancies in April, has refused to rule out asking staff to re-apply for their jobs. A “jumbo-sized” rights issue and “painful” job cuts are drastic measures that have already been factored into IAG’s share price and led to BA being called a “national disgrace”, says…

With the economy in its deepest recession in a century, and with a second wave of Covid-19 still a real possibility, it is understandable that many companies are simply battening down the hatches and hoping to get through the crisis intact. Sometimes survival is the best you can hope for. Yet a moment of crisis can also be one of opportunity. Markets have suddenly been thrown wide open for the first time in a decade or more, with the epidemic changing the way everyone works and buys things. Many assets are available at fire-sale prices. And lots of struggling sectors need to be rescued. An astute tycoon, or an ambitious company, can strike deals that would have been impossible six months ago. A few have started to make their move.…

The two biggest uncertainties facing investors are when we will have an effective vaccine or treatment for Covid-19 and whether the economic recovery will be V-shaped or resemble some other increasingly contorted letter of the alphabet. Although these questions are obviously related, they are not entirely the same. The world will not get back to normal until the coronavirus is no longer a major problem, either because we’ve solved it medically or because enough people have caught it and got over it. But the scale of the economic shutdown that we’ve seen in the last few months is so great that unless activity snaps back as far as it can in the meantime, we risk a vicious cycle of business failures and rising unemployment that condemns us to many years…

I’m frequently asked why I am so enthusiastic about investment trusts as opposed to unit trusts or exchange-traded funds (ETFs). I hold all three types of fund, but investment trusts are my favourite. Their discounts to net asset value (NAV) and lower fees are key, but one reason stands out above all: independent boards of non-executive directors, who are paid to look out for investors’ best interests as opposed to the fund manager’s. Most of the time these non-execs, or NEDs (I am a NED on a number of boards) work very hard to ensure investors get a fair deal. That might mean ditching an underperforming manager, running a fund down if it is no longer profitable or just having a frank discussion about fees. A broken relationship Unfortunately, sometimes,…

“I thought I’d just go to California for a year, get a tan and earn some money.” Actor Patrick Stewart (right) on signing up to Star Trek: The Next Generation. The series lasted for six years “Money is made by sitting, not trading. It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!” Jesse Livermore, quoted on Goldzeus.com “I had a fair shot at the welterweight belt, Itook a few on the chin and I’m still in the game – so I couldn’t be happier. I could have made more money. But I couldn’t give a damn about being more famous.” Actor Dermot Mulroney on why he isn’t a bigger star, despite being described in the 1990s as…

entrepreneur.com All too often the digital messages we send each other at work are misinterpreted, says Ryan Jenkins. Send someone an email saying “great work” and many will think you’re being sarcastic. The emoji can help. Ever since the “face with tears of joy” emoji became the Oxford Dictionary’s word of the year, emoji use has become ubiquitous. This is because they are useful, helping to convey the emotional tone of a message, when that isn’t clear from what is written. “OK”, for examplee, could suggest acceptance, apathy, submission or passive aggressiveness. “OK” with a smiley face is more easily interpreted as positive acceptance. The proper use of emojis can also help people form closer relationships and understand one another, and close the generation gap – the emerging generations tend…

Visa (NYSE: V), the card giant processing hundreds of millions of payments a day, isn’t a bank or a lender. It simply uses its technology to help banks, their billions of customers and some 50 million merchants connect and settle their transactions. Its global network has been decades in the making and can’t easily be copied – a significant barrier against new entrants. It follows fintech developments closely and it buys and supports other businesses in the sector to keep itself at the sharp end of innovation. Asecure business with big profit margins, Visa has a solid long-term growth outlook. We also like (Mastercard NYSE: MA). Its recent results have been a little subdued, but we expect growth to accelerate. Like Visa, Mastercard should be a beneficiary of the so-called…

Hundreds of thousands of small businesses should hear in September whether their insurers are legally bound to pay out on business interruption policies in light of the Covid-19 pandemic. The High Court last week began hearing a test case brought by the Financial Conduct Authority (FCA), the City regulator, against eight insurers, which will establish the legal meaning of 17 different policy wordings in business interruption policies. The FCA believes the ruling will apply to around 50 insurers with some 370,000 policyholders. Many insurers have argued that business interruption insurance was never meant to cover businesses damaged by a pandemic such as Covid-19. Instead, according to them, the insurance is meant to provide short-term help when a natural disaster, such as flooding, prevents a business from operating as normal. However,…

This 15th-century, eight-bedroomed manor house is set in 42 acres of grounds on the edge of Windsor Forest and was described by architectural historian Sir Nikolaus Pevsner as “the most refined and most sophisticated timber-framed mansion in England”. The house was built for Sir John Norreys, the keeper of King Henry VI’s wardrobe, between 1446 and 1456. Period features include 15th-century glass, a 15th-century stone fireplace, a Jacobean staircase and 17th-century panelling. The grounds include a riding track, tennis court and swimming pool. Can you guess the price? Answer at the side of this box.…

Moderna (Nasdaq: MRNA) is an American biotechnology group. Shares in the company jumped by 11% on Monday after the company announced new funding worth up to $472m and the start of the phase-three trial (the final stage of clinical trials) of its coronavirus vaccine, says Carmen Reinicke on Business Insider. Moderna is seen as the frontrunner in the race to develop a Covid-19 vaccine, notes Forbes, and it aims to supply over one billion doses globally throughout 2021 if the treatment proves effective. Shares are up 466% in the last 12 months.…

Billy McFarland was born in New York City in 1991. At the age of 13 he founded an online company selling web space to mainly adult websites. By the time he finished high school he claimed to have founded two other companies. He briefly attended Bucknell University before dropping out to raise venture-capital funding to develop a social-media site where friends could share music and videos. He then set up Magnises, an invitation-only club based on a charge card, offering invitations to exclusive events. Despite receiving funding from energy tycoon Aubrey McClendon, McFarland became bored with the venture and founded Fyre Media instead. What was the scam? Fyre Media was based on a website that would make it easier to book artists and celebrities for events. The firm made less…

Twilight of Democracy The Seductive Lure of Authoritarianism By Anne Applebaum Allen Lane, £16.99 The rise of populism is producing a “pandemic of authoritarianism” that has “infected democracies around the globe”, says Bill Kellner in The New York Times. The favoured explanations for this, however –“economic distress, fear of terrorism, the pressures of immigration” – fall short. Many of the countries in which populists flourish are prosperous, as are their supporters. Twilight of Democracy by Anne Applebaum, a liberal British journalist and the wife of a former Polish foreign minister, looks at why many middle-class people in advanced Western democracies have, in her view, suddenly “lost faith in democracy”. She draws on everything from the rise of Vox in Spain to the success of Trump and her book is “part…

£630m The losses the cultural sector is estimated to have racked up during the lockdown, according to the digital, culture, media and sport committee. Andrew Lloyd Webber’s Really Useful Group production company said it was losing £6m a week in box-office ticket sales. £5.8bn How much university tuition fee income is paid by overseas students every year, of which £2.1bn comes from Chinese students, a report from the Onward think tank has found. Liverpool, Sheffield and Glasgow universities rely on Chinese students for 28% of fee income. 1.3bn The amount in Kenyan shillings (£9.5m) that a court in Kenya has paid out in compensation to a community led by Phyllis Omido. Omido, who has been dubbed “Africa’s Erin Brockovich”, sued a battery smelting plant for poisoning members of Owino Uhuru,…

Fat cats – at least those in former communist countries – might have a harder time hiding their underhand dealings, if new research is taken on board. A study by Pavlo Blavatskyy of the Montpellier Business School, published in the journal Economics of Transition and Institutional Change, found a direct link between corruption in post-Soviet states and the weight of their politicians. An algorithm estimated the weight of 299 cabinet ministers using their photographs. In short, the heftier the average cabinet member, the more corrupt the country, reports Tom Parfitt in The Times. Uzbekistan, whose average minister had an estimated average body mass index (BMI) of 35.5, reported a corruption perceptions index of 22 (where a lower number means greater corruption). That compares to 71 for Estonia, whose average minister…

That “sound you hear is thousands of gold bugs cheering”, says Tracy Alloway on Bloomberg. On Monday the precious metal finally surpassed its 2011 peak of $1,923.70 an ounce to set a new all-time high in dollar terms. In sterling, the yellow metal has long eclipsed its 2011 levels and was trading above £1,500/oz this week, marking a gain of 29% in 2020. Falling real interest rates Gold arouses strong emotions, says Russ Mould of AJ Bell. Bulls love the protection it offers against “unforeseeable disasters”; critics deride it as a “barbarous relic”. The bugs are in the ascendant now, and there is no shortage of things to worry about. Global instability; a possible descent into a deep recession and deflation; and the prospect of more quantitative easing and a…

Three to buy Focusrite Shares This audio specialist has been enjoying a lockdown boom. A world leader in the hardware and software used to record, mix and edit sound, Focusrite used to sell mainly to the music industry. Yet emerging demand from podcasting, game streaming and online education means that there is more opportunity than ever in this sector. The group enjoys large gross margins, particularly in its software operations. A price/ earnings ratio of 26 is justified by auspicious long-term growth prospects. 687p CareTech Holdings The Mail on Sunday Founded in 1993, Caretech today runs more than 500 social-care facilities, looking after children and young adults with complex conditions ranging from autism to anorexia. Staff-to-patient ratios are high and many employees have been with the business for years; indeed,…

• The decision of Royal Bank of Scotland to abandon its historic name in favour of NatWest Group is a “pointless rebranding exercise”, says Ben Marlow in The Daily Telegraph. Neither shareholders, buffeted by a slump in the stock, nor customers, who have seen “hundreds of branches close”, care what name it trades under. What’s more, taxpayers’ losses continue to mount. Covid-19 is set to delay the sale of the state’s majority stake by at least another five years, adding up to £11.4bn to the national debt. While CEO Alison Rose (pictured) hopes the rebranding will start a “new era”, that would require more than a “lick of paint”. • Top luxury brands have been treated as “safe-haven stocks” during the current pandemic, says Carol Ryan in The Wall Street…

President Donald Trump’s decision to deploy agents from the Department of Homeland Security (DHS) to quell unrest in Portland, a Democrat-run city in the Pacific northwest, has sent “shockwaves” through the US presidential election campaign, says Laura Pullman in The Sunday Times. Trump argues he is merely using his authority to instruct federal troops to protect federal property, such asthe courthouse, which protestors have been vandalising. Critics argue that the decision to draw on the resources of the DHS, originally set up to counter terrorism, risks turning it, as one of its first bosses claims, into the “president’s personal militia”. Trump is mulling further deployments in New York, Philadelphia and Detroit, all also led by Democrat mayors. Still, something had to be done, says The Wall Street Journal. The protestors…

• Larry Fink (pictured), CEO of the world’s largest asset manager, BlackRock, sold 41,706 shares, worth $24.2m, in the business he leads, bringing his sales for this year to $74.4m. His latest sale, completed on 21 July at an average price of $580.29, according to a regulatory filing, was worth around 5% of his stake in BlackRock. In the wider US corporate sector, executive sellers in their own businesses now outnumber insider buyers by five to one – only twice in the past three decades has the sell-buy ratio been higher than now, says Bloomberg. • Walgreens Boots Alliance’s boss Stefano Pessina is to step down as head of the company that owns the chains of chemists Walgreens in the US and Boots in Britain. Pessina will stay on at…

An economic indicator is any statistic that allows us to analyse how the economy is performing or is likely to perform in future. Indicators are often used for monitoring the business cycle – ie, the shorter-term shifts in economic growth around its long-term trend caused by periods of boom (in which the economy is expanding) and recession (in which it is contracting). A single business cycle is a period of time that includes a boom followed a recession. Identifying the point when the boom is turning to bust should be extremely useful for investors – but this is very difficult to do consistently. Indicators are classified in three main ways. They may be procyclical (increase or decrease in line with the wider economy), countercyclical (move in the opposite direction to…

Hedge-fund fees were shrinking before the pandemic ripped through global markets; “now, they’re in terminal decline”, says Bloomberg. The $3trn sector has realised it needs to overhaul its notoriously high fees radically if it wants to survive. The typical arrangement is a 2% annual management fee and a 20% slice of profits (the performance fee). One London hedge fund is forgoing performance fees; in Hong Kong a fund group is offering to cover all losses; and renowned investor Kyle Bass has told clients he’ll charge his usual cut of profits only if he earns triple-digit returns. Impressive returns in the 1990s, along with “celebrity managers”, such as George Soros, helped hedge funds justify exorbitant prices, but “mediocre” performance since the 2008 financial crash “has sparked an investor mutiny”. In this…

conservativehome.com The government recently appointed Richard Hughes of the left-leaning Resolution Foundation as chairman of the Office for Budget Responsibility. It’s telling that no economist from conservative institutions was considered for the role, says Ryan Bourne. This is a symptom of a “deeper malaise” among conservatives – an “absence of an animating economic agenda”. Given the majority government, this is a missed opportunity. Boris Johnson tells us he is against austerity and for “levelling up”, but he has no clear economic story. Could he tell us why, for example, he expects more infrastructure investment and NHS spending to transform fortunes when New Labour’s efforts failed? Back in the mid-1970s, Sir John Hoskyns and others undertook detailed analyses of the UK’s economic problems, drawing on the insights of Hayek, Friedman and…

With average interest rates on savings accounts falling to under 1% for the first time, promises of 8% returns are bound to attract attention. But don’t be fooled into placing your cash in high-risk mini-bonds. A mini-bond is a high-risk form of corporate debt. You lend your money to a company in return for a fixed interest-rate and the promise you’ll get your money back at the end of the term. The interest rates are attractive – typically around 8% – but you are taking a big risk with your cash. If the business goes bust, you are unlikely to get your money back. This is something investors in restaurant group Chilango are just discovering. More than 1,000 people bought £5.8m of its mini-bonds. The investments were dubbed “burrito bonds”…

Even the smallest businesses registered for VAT will have to move to HM Revenue & Customs’ Making Tax Digital system from April 2022, the government has announced. At present only companies with income above £85,000 a year are required to comply with Making Tax Digital, but HMRC has now said it will extend the system to all businesses over the next two years. Under Making Tax Digital, businesses required to file VAT returns must do so electronically, using specialist accounting software or some other form of link to HMRC’s systems. While many businesses have been submitting VAT returns online for years, Making Tax Digital takes electronic filing a step further, requiring businesses to invest in new software and get used to using it. The extension of Making Tax Digital had…

Cove Spring, the Caribbean villa that hosted the Duke and Duchess of Sussex, is on sale for £20m, says Amira Hashish in the Evening Standard. The villa –“perched atop a coral cliff, overlooking the calm blue waters” – has a loyal celebrity following. Harry first visited in 2010 and loved it so much he returned years later with his wife; Simon Cowell once used it as a judges’ house in The X Factor. It has seven suites in the main house, a guest house with three suites, and room for 20 guests. The villa also comes with large patios, a pool area, a cinema room, gym, spa, private beach and 24-hour security – “hence the A-list appeal”. It is for sale through onecaribbean estates.com.…

JD Wetherspoon (LSE: JDW) operates pubs throughout Britain and Ireland. Though the share price has gained 12% in the last three months, this is “minimal compensation” for the stock’s under-performance over the last year, as Simply Wall St points out. It has slipped by more than 40% in that period, “well below the market return”. The group had to furlough almost all its staff this spring and net debt looks high. The hospitality industry is also “the most obvious victim” of a second virus spike, says Marianna Hunt in The Daily Telegraph.…

Winemaker Olga Fusari pulled off a perfect tightrope routine when she made this wonderful wine. Ornellaia is famous for making one of the most expensive and collectable of all Super-Tuscan reds, but this 2018 vintage of its unusual white blend is athriller. Made from 83% sauvignon blanc, 11% vermentino and 6% viognier, this is a full-bodied white wine. It not only tastes amazing, but also carries with it a sense of true vinous skill and innate balance. The 2018 was, if you look at the climatic conditions, a rather rainy vintage, at least for the first half of the year. Rainy years often give rise to dilute crops, but the sun shone in the second half of the summer and cool nights ensued, so this wine has fleshiness, levity and…

• Financier Amanda Staveley (pictured) was described by former Barclays banker Stephen Jones as “‘thick as s*** with large breasts’”, says Amanda Platell in the Daily Mail. “She was also called ‘a tart’ who slept with clients and a ‘dolly bird’ by his colleagues.” The remarks were confirmed in the transcripts of two telephone calls from 2008 that were released last week as part of a court trial between Barclays and Staveley’s company, PCP Capital Partners. Jones had apologised and quit as the head of trade body UK Finance last month. Staveley accepted Jones’s apology, adding she was saddened he had resigned. “Despite having to put up with these chauvinists, the gorgeous blonde is not suing the bank over sexism, but over a bonus she believes she was denied. Proof…

If you haven’t been invited to a vegan barbecue or sipped a rum cocktail with friends, you’re missing out on the biggest food and drink trends of the season, says The Times. According to Waitrose, rum sales have risen by 53% over the last 12 weeks, turning it into the spirit of the summer, while demand for vegan barbecue food has soared by 80% so far this year. MacKenzie Scott, Amazon boss Jeff Bezos’s ex-wife, has donated $1.7bn to 116 charities, including historically black US colleges, climate change groups and health organisations, says the BBC. MacKenzie is the second-richest woman in the world, having received a 4% stake of the internet retail giant after divorcing Bezos last year. She has pledged to donate the majority of her fortune to charity.…

“When an empire is decaying, it’s the stuff insiders no longer notice that is the killer…. the legalised corruption, the revolving door between politics and business… the US tax code is 10,000 pages long, layer upon layer of sweetheart exemptions, favours and quid pro quos… market economies… have ossified under our very noses. The rules are so advantageous for insiders that new businesses can’t get a look in, clogging up innovation. Of Europe’s 100 most valuable companies, none was formed in the past 40 years... In America, incumbents are staying ever longer in the main indices. As for start-up rates, they are falling in 16 out of 18 Western economies. Now consider [this] by way of explanation: in 1971 Washington had 175 registered lobbying firms. By 2013 this had exploded…

Electric vehicles use much more copper than conventional ones, while the advent of 5G wireless communication technology will boost the need for copper cables. In the short term, demand in China, the biggest user of the red metal, is on the rise and supply has been squeezed by falling production in South America. Akey beneficiary of the appreciating price of copper is German mid-cap Aurubis, Europe’s top copper producer (offerings range from specialised wiring to copper sheets for industry) and the world’s biggest copper recycler. Revenue is set to climb by 11.5% in the year to the end of September, while the stock looks very cheap on just 0.2 times sales.…

Goldman Sachs will pay $3.9bn (£3.3bn) to the Malaysian government to settle a “long-running” investigation into its role in raising $6.5bn of bonds for the “scandal-hit” 1MDB fund in 2013, says Michael O’Dwyer in The Daily Telegraph. The fund was set up by Malaysian businessman Jho Low and then prime minister Najib Razak to finance infrastructure projects in Malaysia, but as much as $4.5bn was allegedly “siphoned off” in order to fund the “lavish lifestyles” of some of Kuala Lumpur’s most influential families. Goldman Sachs’s investment banking unit was paid $600m in fees for its dealings with 1MDB. The deal represents a major setback for Goldman Sachs, which had previously argued that members of the former Malaysian government and 1MDB lied to it “about how proceeds from the bond sales…

Boris Johnson has warned of a “second wave” of coronavirus in Europe as he justified a 14-day quarantine on travellers from Spain and hinted at further action, as at least 11 European countries currently enjoying quarantine-free travel have recorded higher infection rates in recent days. Why do these rates matter? asks Ross Clark in The Daily Telegraph. Count deaths or hospital admissions, but not infection rates. First, we are only detecting a small fraction of cases; by some estimates, as many as 70%-80% of cases are asymptomatic. Second, at a global level there is a “growing discrepancy between the graph of infections and the graph of deaths”. The World Health Organisation warns that the pandemic is accelerating, with no evidence that it follows seasonal variations, and that calling it a…

With £51m now matched on Betfair on the contest for the White House, the odds on President Donald Trump and Democratic challenger Joe Biden are essentially unchanged at 2.78 and 1.63 respectively. With Biden’s decision about his running mate expected in the next fortnight, senator Kamala Harris and former National Security Adviser Susan Rice are the two favourites in that £1.1m market. Harris would bring youth to the ticket and complement Biden’s centrist outlook, but don’t bet any more on her if you’ve already taken my advice to bet on her being on the bottom of the ticket. Instead, turn your attention to Australian politics. In late August the Northern Territory goes to the polls to elect a new state government. Bet365 has the Australian Labor Party at 4/6 (60%)…

Mark Thurston, CEO of HS2, was paid £660,000 for last year, according to the annual report. A£36,000 bonus and a base salary increase of around £14,000 meant the CEO’s salary was similar to the previous year when he earned £656,000, thanks to a£46,000 bonus, says Zak Garner-Purkis on Construction News. During the time covered by the report, chairman Allan Cook admitted the controversial high-speed rail project was unlikely to be delivered within its £56bn budget, or delivered on time, with the first phase finished by 2026. The report also revealed that chief financial officer Michael Bradley earned a £16,000 bonus on his £270,000 pay packet, while Cook, who works three days a week, took home £266,000. Thurston and Bradley have both agreed to forgo performance-related bonuses for the financial year…

“There is no margin for error in either equities or fixed income” after the surprising resilience of the US market this year, Abby Joseph Cohen, the long-serving strategist at Goldman Sachs, tells Barron’s. Cohen has been known for consistent bullishness on stocks during most of her four-decade career at the investment bank, but sounds more cautious today. Much of the recent strength is simply due to the Federal Reserve “using monetary policy … to backstop the equity market”, she suggests. Investors are willing to look past a difficult year in the hope of better times by the end of 2021, but “valuation models suggest that the good news is already priced into the S&P500”. Goldman Sachs’s analysts have a 12-month target of 3,100 for the S&P 500, so the index…

Zambia is the canary in the mine Avantika Chilkoti and Gabriele Steinhauser The Wall Street Journal Less than a decade ago, Zambia was “a model in Wall Street’s rush to issue debt for the world’s poorest nations”, replacing governments as its biggest creditor, say Avantika Chilkoti and Gabriele Steinhauser. Today, Zambia is struggling to pay back more than $11bn in loans and the world is gearing up for a huge battle over developing-country debt. Different groups of creditors are at loggerheads: asset managers and hedge funds point fingers at China, which has lent heavily to poor countries. Western governments don’t want to “bail out Beijing or private investors”. What happens in Zambia, whose government debt is set to exceed 100% of GDP this year (debt levels in sub-Saharan Africa’s poorest…

bloomberg.com/opinion Which country has done the most to end the scourge of Covid-19? I would nominate Britain, says Tyler Cowen. The “most important factor” in the global response to the pandemic has to be “progress on the biomedical front”, and on that score the UK leads the world. A cheap steroid known as dexamethasone was the first drug shown to reduce death rates and the trials proving its effectiveness came from the UK. The drug is now a part of treatment regimens around the world. The global race to find a safe and effective vaccine is also led by the UK. The lead contender so far was developed by the British-Swedish drug company AstraZeneca in association with Oxford University. Large-scale trials are still needed, but how did the UK get…

For millions of self-employed people, 31 July is a landmark date. It’s the day by which they must make their second payment on account (an estimated semi-annual payment) for the tax year that ended on the previous 5 April. This year, however, special rules apply, with the government offering an extension to reflect the fact that many self-employed people are struggling financially amid the Covid-19 pandemic. “Filing your 2019-2020 tax return early will give you clarity” This is important if you’re having problems with this week’s bill. You may simply not have the cash to pay what you owe, or you may be able to pay but worried doing so will cause cash flow problems over the coming weeks and months. In which case, here are your options. The first…

Amid the sweeping prophecies that life will never be the same post-pandemic, it is refreshing to hear a more cautious view. “I am a slight sceptic of the widespread assumption of ‘a new normal’,” says Mat Oakley, head of pan-European commercial property research at Savills. “We see such forecasts in every crisis; change will happen more slowly.” “Commercial property is a simple asset class,” he says. “In an expansion, we need more space. Currently, we are in a thumping great recession, but I expect a not-quite V-shaped recovery in which GDP recovers quickly but unemployment doesn’t return to 2019 levels for five years.” Property investment, now past the nadir, was 43% below the five-year average in the first half of 2020. But it was 51% down in 2008 and “the…

The ability to navigate unpredictable environments while at the same time preparing for what the future holds is of paramount importance if a business is to be successful. Among the many opportunities that European equities offer investors, there are specific characteristics that we believe will determine the success of a business model, such as profitability and reinvestments for growth. We exclude companies that do not adhere to principles consistent with sustainable and responsible investment, which helps us discover businesses that have the long term in mind. Moreover, there are attractive themes for investors to take into consideration at present, such as what we call the “renewables megatrend”. A tailwind from Denmark “Sanofi is now less risky, with no major patent expirations until 2023” Denmark’s Orsted (Copenhagen: ORSTED) is a leading…

Angrynomics By Eric Lonergan and Mark Blyth Agenda, £12.99 From the Yellow Vest revolt in France to the rise of Trump and the current unrest in the US, anger seems to have infected our politics. Hedge-fund manager Eric Lonergan and professor Mark Blyth of Brown University argue that the origins of this anger lie in what they see as flaws in the economic settlement that has prevailed since the 1980s. Modest incremental reform will not be enough to rescue us from this anger, they say – the only solution is radical change, which they outline in five dialogues. At the core of their manifesto for change is a massive programme of borrowing and money printing by governments and central banks. Some of this would go to finance “green infrastructure projects”.…

We’re back in Argentina, where, for reasons that remain obscure, lockdown rules are among the strictest in the world. As the economy collapses, the government prints more money. But the charm of the pampas is that people are used to crises. They know they can’t trust their government or its money. “Relief programmes are quoted in dollars, but the money is fake” Back in the US, the same things are happening, but the people are complacent. They live in a bubble. “It can’t happen here,” they say to themselves. But when you think you can just tap a few keys of a computer to create real money, you’re ready to believe anything. You may, for example, think that it is okay to shut down your whole economy. Why not? You…