Indholdsfortegnelse for 1034 i MoneyWeek

“Is the US stock market a bubble? Wrong question. Of course it’s a bubble” Is the US stockmarket a bubble? That’s the question everyone wants answered right now (see page 16). It is the wrong question. Of course it’s a bubble. Choose any valuation metric you like in the US and it will tell you so. Yardeni Research puts the ratio of S&P 500 total market capitalisation to S&P 500 forward sales (an adapted version of the “Warren Buffett indicator” –see page 16) at a record 2.54 times at the end of December, versus 1.88 at the beginning of 2000. A bubble. A full 53% of S&P stocks had forward price/earnings ratios of over 20 times in the first week of January – it was a little higher in June…

French foie gras farmers face huge losses following the third outbreak of bird flu in five years, says Adam Sage in The Times. More than 700,000 birds have been culled so far, according to French radio station RFI. Some fear a repeat of 2016-17, when bird flu cost the industry €350m. Around £10m has vanished from a casino in South Korea in what police are treating as a suspected heist, says James Hookway in The Wall Street Journal. Authorities are searching for a female employee who left to go on holiday at the end of last year and never returned. They assume that she had accomplices as even iff the cash was made up of South Korea’s largest denomination notes (50,000 won), the money would have weighed at least 280kg.…

Brent crude reached $56.75 a barrel this week, its highest level since last February. Saudi Arabia’s announcement last week that it will cut output by one million barrels per day (mbpd) from February gave crude its best week in four months; Brent is already up by more than 8% since the start of the year. Saudi Arabia and Russia, the two-leading producers in the Opec+ cartel, have spent much of the past year squabbling about how to respond to the Covid-19 crisis, says Oilprice.com. The Saudis have consistently favoured supply cuts in order to keep prices high, while the Russians argue that strategy will just hand profits over to US shale producers (who operate independently of Opec+). Saudi Arabia’s unilateral cut ends the group’s focus on sharing output curbs equally,…

Over the past five years British stocks, tracked by the MSCI UK index, have fallen marginally, while the MSCI indices for Europe ex-UK and the US have risen by 35% and 88% respectively, notes Pantheon Macroeconomics. Investors have not valued British stocks as highly as their American or European counterparts since 2016: the forward price/ earnings ratio for the MSCI UK is just 14.5. The last-minute Brexit deal bodes well for a catch-up by UK stocks since it removes some uncertainty. Reflation and a consequent steepening of the yield curve, meanwhile, should boost British banks: financial services comprise almost a fifth of the UK index, but just 15% and 10% of the European and US ones respectively.…

• Dr. Martens lace-up boots became “a symbol of British counterculture from the 1960s and fashionable footwear in the 1990s”, says Lex in the Financial Times. Private-equity group Permira has used that legacy to “boost profits and sales”. It is now seeking to cash out by listing the brand. “Buoyant stockmarkets” also suggest that it could achieve a valuation as high as £4bn. But can the good times last? Outsourcing production may have degraded the quality of the iconic boot. And Dr. Martens “are as susceptible to cyclical gyrations as any other pop-culture token”. • “Boardgame sensation” Games Workshop has reported “blockbuster sales and profits” this year, says Jim Armitage in the Evening Standard. The closure of 529 shops worldwide looked bound to hurt it, as the in-store experience of…

As Joe Biden prepares to enter the White House next week, there are concerns that the storming of the Capitol (see above) marks “the beginning of a new dark chapter in American history”, says The Washington Post. Polls suggest that millions of Trump voters still believe, against all evidence, that Joe Biden was not legitimately elected. A significant number sympathise with the rioters. Worse, some seem willing to take matters into their own hands, with calls for “violent retribution” continuing to spread on conservative websites such as Newsmax and social-media apps such asGab and Parler. More “extremist violence” can’t be ruled out. There are worries that 4,000 armed self-styled “patriots” could descend on DC to disrupt Biden’s inauguration, say David Charter and Henry Zeffman in The Times. Indeed, at least…

High street fast-fashion retailer H&M has launched the Looop machine, a gadget that recycles old clothes by shredding them down to fibres to make yarn for new garments. The machine creates a garment of the customer’s choice, whether a woman’s top, man’s jumper, knitted poncho, scarf, child’s sweater or baby blanket, says Louise Eccles in The Times. So far, only one H&M store, in Stockholm, has the machine. Each garment made by the machine, which offers “a glimpse of fashion’s future,” costs 150 krona (£13) a pop and has proved so popular it is booked until Easter. It takes approximately ten hours to make an entirely new item, and the machine is fussy: it only accepts natural fibres, which must be mixed with new, white cotton to make garments strong…

• Former US Federal Reserve chair Janet Yellen (pictured), who is set to take over as president-elect Joe Biden’s Treasury secretary subject to Senate confirmation, earned around $7.2m in speaking fees over the past two years from major corporations and Wall Street banks, says The New York Times. Her speaking appearances included nine for investment bank Citi, for which she was paid $992,000, according to disclosed documents. • Simon and Bobby Arora, the billionaire brothers behind discount retailer B&M, handed themselves a £30m payout after the fast-growing business reported booming sales in the run-up to Christmas, says The Guardian. The latest payment, which forms part of a £200m special dividend payment to shareholders, follows a £44m payout to the brothers two months ago, and another big payout last spring. In…

SPAC stands for “special purpose acquisition company”. A SPAC is listed on the stock exchange like a normal business. However, a SPAC doesn’t have any business operations of its own. Instead, its sole purpose in listing is to raise money to buy an existing company. SPACs are thus also known as “blank cheque companies” in the US. In the UK, they’d more commonly be described as “cash shells”. Investors in the SPAC pay $10 per unit. That buys a share in the SPAC, plus other securities (“warrants” and “rights”) whose future value will depend mostly on the value of any deal the SPAC does. Once it has listed, the SPAC generally has two years to find a deal. If it doesn’t then it has to return the cash to shareholders.…

“Not totally skint, but... I’ve had trouble generating income this year. Selling [merchandise] has always been the business part of my show-business career.” Songwriter Billy Bragg (pictured), who recently put a poster up for sale for £40, quoted in The Times. He says selling merchandise on auction sites is helping to keep musicians afloat “The American economist Herb Stein famously remarked that if something can’t go on forever, then it will stop... [the] rejoinder by fellow economist Rudi Dornbusch [is]: ‘Yes, but it will go on a lot longer than you anticipate.’” Financial Times columnist John Plender “The actor’s life is feasts and famines … whenever I was out of work as an actor I’d get another job… If young actors wait tables they should consider it part of their…

economist.com/1843 Denied the joy of being out on the town, lockdown drinkers may find that alcohol begins to seem “less pleasingly indulgent” than it did, says Henry Hitchings. But though young people especially are less interested in getting drunk, people still yearn for the social ritual of drinking. Enter “a new wave of entrepreneurs seeking to reinvent social occasions and the liquids used to grease their wheels”. Many alcohol-free spirits are now available and, when served with mixers or as a cocktail, they prove “unexpectedly pleasant to linger over” and can “command the respect” we tend to reserve for drinks such as whisky or gin. In Britain there are now “more than 50 upstart products available”. In 2020, sales of low-alcohol spirits rose by 20% in value on the previous…

The term “resource curse” refers to the observation that countries with abundant natural resources also tend to be less economically developed than those with scarcer resources. The term was first used by UK economist Richard Auty in 1993, but the concept is hundreds of years old. There are several potential explanations. Some debate whether the idea of a “resource curse” is even valid, or whether it is more specific to individual countries and arises from a combination of problems rather than simply plentiful commodities. But it’s not hard to find examples. Many Gulf nations, Latin American states and African countries are overly reliant on oil or other valuable but volatile resources. The theory goes that if a country has plentiful supplies of a given commodity, then it will invest too…

My long tips have fared well in the last few weeks, with four of them rising. Media group ITV climbed to 110p, builder Bellway to 2,970p, transport company National Express to 258p and pub group Mitchells & Butlers to 238p. The only exception was Norwegian Cruise Lines, which has fallen to $24.14. Overall, all five long positions are making money. They are earning a total of £4,936, up from £3,825 at the end of last year. My short tips, however, have been a mixed bag, with three of them going in my favour but two of them rising. Online insurer eHealth slipped to $70.36 and online furniture retailer Wayfair fell too; it is now trading at $259. Social network Twitter is down to $48. However, electric-truck company Nikola rose to…

The tax-return deadline of 31 January is looming, but millions of us still haven’t filed our self-assessment forms for the financial year between 6 April 2019 and 5 April 2020. And this year, thanks to the fallout from Covid-19, the process could prove particularly protracted. “Each year about 11 million people have to complete a self-assessment tax return,” says Rupert Jones in The Guardian. “There were still 5.4 million taxpayers who hadn’t filed by 31 December 2019 and 5.5 million who were yet to file by 31 December 2018.” So, if you’ve yet to sit down and work out what you owe the taxman, you are not alone. However, this year, for once, the tax authorities are being understanding. HMRC says it will aim to be lenient with those affected…

Self-employed workers hit financially by the Covid-19 crisis have until 29 January to apply for the latest iteration of the Self-Employment Income Support Scheme (SEISS). But hundreds of thousands will miss out on the SEISS unless the government extends it. This round offers grants worth 80% of your average monthly trading profits, paid in a single instalment to cover three months’ worth, but capped at £7,500. Crucially, to make a claim, you must have been eligible for previous rounds of the SEISS (even if you didn’t claim). That means you must have earned the majority of your income from self-employment in the 2018-2019 tax year; recorded a profit of less than £50,000; and drawn down this profit as income rather than company dividends. Excluded UK, a group that represents people…

Ferrexpo (LSE: FXPO) is an iron-ore miner and processor headquartered in Switzerland; its assets are in Ukraine. The company announced the payment of a special interim dividend this week, while its strong balance sheet has also impressed investors, says Michele Maatouk on Sharecast. The rising price of iron ore has generated strong cash flow, which has helped the group reduce its debt. The stock hit a 33-month high after the announcement and could soon reach its highest level since 2012 if this run continues, says Rajan Dhall on Kitco. It has gained 129% in 12 months.…

The United Wireless Telegraph Company was originally formed in 1906 by stock promoter Abraham White out of the remnants of the Amalgamated Wireless Securities Company. It then took over for $1 the assets of American DeForest Wireless Telegraph Company, a bankrupt communications firm that had been set up by another promoter, Christopher Columbus Wilson. The takeover enabled Wilson to keep the firm’s assets out of the hands of DeForest’s many creditors. But by early 1907 the two promoters had a falling out. Wilson organised a boardroom coup that led to him taking over as president of United Wireless. What was the scam? Wilson initially boasted to investors that he had secured an agreement to merge with rival Marconi to create an international monopoly in the emerging field of radio communications.…

The Barbarians were at the gates… then, they crashed through! The forces of law and order seemed to take a holiday last week, allowing clownish protesters to run riot in the Capitol. But while the nation’s eyes were fixed on the mob, more important news was coming in from Georgia, where election results meant Republicans had lost control of the Senate. “When out of power, Republicans go back to the old religion of tight money” When they are in control, Republicans are just as bad – or worse than – Democrats. Ronald Reagan, George Bush II, and Donald Trump were the biggest spenders of recent history. But when out of power, Republicans go back to the ol’ time religion of small government, tight money and balanced budgets. Tea Party conservatives,…

Artificial intelligence tycoon Mike Lynch (pictured) is facing extradition to the US over fraud charges, says James Cook in The Daily Telegraph, with a hearing in February. The case stems from 2011, when the billionaire sold his software firm Autonomy to US group HP for $11bn. HP wrote off almost its entire value a year after buying it, accusing Lynch of “presiding over amulti-billion dollar fraud”. Lynch denies all allegations, and the UK’s Serious Fraud Office dropped the case in 2015. Ex-cabinet ministers including Sir Vince Cable and David Davis have now signed an open letter to The Times arguing that Britain must not allow the extradition to happen, and that the UK has “surrendered sovereignty” over its justice system for “too long”.…

Is bitcoin “fool’s gold” or the new gold? asks James Dean in The Times. The cryptocurrency hit a new record high of $42,000 late last week, only to plunge by more than 20% over the weekend. Yet at around $34,500 in the middle of this week, bitcoin has still rocketed since October, when it cost $11,000. A poor payment option Once the preserve of “basement-dwelling libertarians” who hoped to upend the financial system, today bitcoin is close to becoming a mainstream investment, says The Economist. It turned out to be poor payment option: the network can only handle a few transactions per second. Instead, the new hope is that it could emulate gold as a store of value that sits beyond the reach of government mismanagement. Younger investors appear to…

Six to buy Associated British Foods The Sunday Telegraph This food conglomerate is best known for its ownership of clothing chain Primark, which accounts for about 47% of group activity. Renewed lockdowns have forced stores to close, but past experience shows customers simply purchase more items on reopening to compensate. The ingredients and grocery arms – which include Twinings tea – are well-diversified and defensive. That provides a steady anchor while Primark makes a play for post-pandemic high-street dominance as rivals go to the wall. 2,219p Beazley Investors Chronicle This Lloyd’s of London insurer had a tricky 2020 as claims for cancelled conferences and other pandemic expenses prompted a dividend suspension and a near-$300m cash call from investors. Yet Beazley now has the liquidity it needs to see…

Last year was a horror story on the high street. The British Retail Consortium says retail sales suffered their “biggest decline in 25 years” in 2020, says Richard Parrington in The Guardian. While total sales only fell by 0.3%, in itself “the worst performance since records began in 1995”, this masks a “dramatic collapse” in some sectors. Sales of food bought from shops increased, owing to the closure of restaurants and pubs, but “sales of all other products fell 5% from a year earlier”. Sales of non-food items in shops, as opposed to online, collapsed by 24%. One retailer that has done particularly badly is Marks & Spencer, says Ashley Armstrong in The Times. Not only did the company announce its “first loss in its 94-year history” last November, but…

This week’s Scotch Egging (the term used when discussing whether someone has precisely followed the government’s rather vague Covid-19 rules) is a row over whether Boris Johnson’s bike ride around the Olympic Park was really “local”, given that the park is seven miles from Downing Street, says John Ashmore on CapX. In a “similar vein”, on Monday we learned that Derbyshire Police had fined two women £200 each for driving five miles to walk around a reservoir with a “picnic” (peppermint tea). “Over-emphasising these kinds of trivial pseudo-infractions carries a number of non-trivial risks.” Firstly, it suggests that outdoor activities are much riskier than they are; secondly, they distract from much more important issues – such as why it has taken more than nine months to require negative Covid-19 tests…

One way or another, Donald Trump will leave the White House next week. But the manner in which he will do so is uncertain enough for Ladbrokes to offer 1/10 (90.9%) on him completing his term without being either impeached or removed. Although I’m willing to back some short-value bets, Trump’s recent dangerous and unstable behaviour means that the chances of him doing something that gets him immediately ejected are large enough to make the bet not worth the risk. Moving from America across the Atlantic,  Smarkets is running a market on who will be the first leader to depart out of Germany’s Angela Merkel (pictured), Britain’s Boris Johnson, France’s Emmanuel Macron, Italy’s Giuseppe Conte and Spain’s Pedro Sanchez. Merkel, who has been German chancellor for over 15 years (outlasting…

“Many of the world’s top law firms have capped a tumultuous year with big bonuses for junior lawyers and an end to austerity measures imposed during the height of the global pandemic,” says Kate Beioley in the Financial Times. Some junior staff have received bonuses of up to $100,000. They come on top of “special bonuses” that top-tier American firms announced in the autumn to recognise associates’ work during the Covid-19 crisis, taking total bonus packages up to $140,000 for some. “Financially, 2020 has turned out to be a splendid year for revenue and profits after a heart-stopping spring,” Bruce MacEwen, president of law firm consultancy Adam Smith Esquire, tells the FT. There was, he says, “a whiff of ‘We dare you to match this’ in the air”, putting pressure…

Every year events prove that forecasting is futile and 2020 was no exception, says Bill Miller, chairman and chief investment officer of Miller Value Partners, in his latest quarterly letter to investors. It’s far better to understand what is going on today than to make guesses about the future, says Miller, who made his name at Legg Mason when his fund beat the S&P 500 for 15 years in a row from 1991 to 2005. Today “we are in a bull market in stocks that began in March 2009 and that shows no sign of ending”. Valuations are high, but “not as high as they look”, given a supportive Federal Reserve and a strong recovery from coronavirus. Markets may even be underestimating the rebound’s likely strength. If growth beats hopes,…

capx.co “Rewilding” is the idea that ecosystems can be revived by “allowing nature to take the driving seat”, says Andrew Allum. Once biodiversity is restored, the result is “greater productivity and resilience”. It can work for economies too. We should “allow businesses to grow, compete, eat each other and die in a wild, productive, beautiful and rich way”. Allowing firms, not people, to fight it out in this Darwinian way can actually protect the most vulnerable in society because we will be better able to afford safety nets, infrastructure and public services, and the firms that employ people will be “stronger and more resilient”. Rewilding demands policy change. The government should make it easier to start a business – “London, the British region with the highest productivity, highest wages and…

A good general African exchange-traded fund (ETF) is the Xtrackers MSCI Africa Top 50 Swap UCITS ETF (LSE: XMAF). It invests in the 50 largest African companies. While South African firms dominate (as you might expect given the relative size of South Africa’s market), firms from other countries account for just under half of the portfolio. The largest holdings include media group Naspers, Safaricom Telecommunications, miner AngloGold Ashanti and FirstRand Bank. The ETF has a forward price/earnings (p/e) ratio of only six and a dividend yield of 3.8%. The ongoing charge is 0.65%. If you want to invest in South Africa only, consider the iShares MSCI South Africa UCITS ETF (LSE: SRSA). This tracks the South African market, which is on a cyclically adjusted p/e ratio (Cape) of 15, below…

Last year was a good one for the US stockmarket: the benchmark S&P 500 index shrugged off the effects of Covid-19 and finished the year up by 16%. Technology stocks did even better thanks to constant money printing by the Federal Reserve; interest from first-time investors using “free” trading apps, such as Robinhood; and a belief that the pandemic would result in major economic changes. One tech stock that has done very well from this boom is the food-delivery app DoorDash (NYSE: DASH). It nearly doubled on its first day of trading in early December, rising to $190 from its initial price of $102. Even today it is trading at $156, a jump of 50%, giving the group a value of nearly $50bn. However, as I’ve pointed out in the…

■ If you cancelled a trip at the start of lockdown you may be running out of time to use your flight vouchers. “When holidays were cancelled last year, most airlines gave travellers vouchers for the value of their flights,” as Katherine Denham points out in The Sunday Times. “Many of these vouchers for the big airlines had to be used to book a trip within 12 months, although the journey itself could be after that date.” The problem is with many of those vouchers issued in March and April last year, the deadline to book another trip is fast approaching. “With a third national lockdown in the UK and travel again restricted, many who took vouchers are complaining that they will never be able to use them.” British Airways…

• British small businesses that export products to European Union countries are running into a double whammy of Brexit-related problems despite hopes that the last-minute trade deal agreed between the two sides paved the way for frictionless trading from 1 January. One issue is the additional paperwork now required for products to clear customs when they enter the EU. Widespread confusion over the detail of the paperwork that exporters must complete has seen many shipments held up at the border, with EU customs staff refusing to let transporters through. Logistics providers such as DPD have now suspended deliveries to the EU on behalf of UK businesses because so many shipments are being held up. The problem also affects exports from mainland Britain to Northern Ireland, which are treated in a…

AMC Entertainment Holdings (NYSE: AMC) is the world’s largest cinema chain. Since early December the company has been attempting to raise $750m in new shares to see it through to the end of this year after business was “crippled” by the pandemic, says Sarah Whitten on CNBC. It has managed to raise just $200m so far and owing to its size it does not qualify for grants from the coronavirus relief package. Though it is operating 400 of its 600 theatres, it is doing so at limited capacity and shorter hours. The shares have plummeted by 72% over the past year.…

$13trn The combined value of the debt owed by the world’s 11 biggest economies that is coming due this year – 51% more than in 2020, says Bloomberg. The US will need to refinance $7.7trn of debt, Japan $2.9trn and China $577bn. Britain’s share is $186bn. £31,461 The annual median wage for full time workers in Britain. FTSE 100 bosses had earned that much by 17.30 on Wednesday of last week, three working days into 2021, says the High Pay Centre. However, they had to work 34 hours for their pay – one more than last year. $1trn The market value of cryptocurrencies last Thursday after the value of a single bitcoin passed $38,000. Bitcoin accounts for about two-thirds of the market by value, followed by Ether with around 13%,…

DIY companies and their investors have enjoyed booming business during lockdown, with two of the biggest players in the sector reporting strong results this week. Howdens Joinery raised its profit forecasts for the year for the second time in two months, while B&Q and Screwfix-owner Kingfisher reported that sales between 1 November and 9 January had risen by 16.9% compared to the same period in 2019, reports Ali Mitib in The Times. Schroder UK Public Private (SUPP), formerly Woodford Patient Capital Trust, saw its shares jump this week, says Gavin Lumsden on CityWire. The trust is set to make at least £65m after selling one of its portfolio companies, cancer therapist Kymab, for $1.1bn to pharma giant Sanofi. The holding in Kymab was originally bought while the trust was still…

“Morgan Stanley’s Mike Wilson... points out that 92% of the stocks in the S&P 500... are... above their 200-day moving averages... if history holds, Morgan Stanley expects this metric to turn lower, ‘which can happen via price corrections or moving averages rising as prices stall’. Here, Bank of America (BoA) also chimes in, and observes that ‘this rare event’ – when 90%+ of stocks trade above the 200DMA – ‘has happened only five times using weekly data going back to 1974’. However, the prior four overbought peaks (2009, 2004, 1983 and 1975) each happened coming out of aUS economic recession’ [so BoA remains bullish]. Yet according to Wilson... after the percentage of S&P 500 stocks above 200-day moving averages [reach] current levels or higher, forward returns on a five-day, one-month…

Airlines encountered serious turbulence last year, leaving shares in British Airways’s owner IAG down by more than 40% from their pre-pandemic level. There is no guarantee that the industry will bounce back quickly, but this “solvent, sensible” business has room to grow when it does (158p). This year’s travel renaissance could underwhelm. Instead of airlines, perhaps coach business National Express could prove just the ticket (242p). Lloyd’s of London underwriter Lancashire Holdings boasts a “fine record” and could benefit from upward pressure on premiums this year (726p). The return to the office will be a tentative one in 2021. That will benefit serviced office provider IWG, whose short-term lettings could appeal to firms needing space but wary of getting locked into “long leases” (356p). Last year was a vintage one…

Twitter shares fell by an eighth after its decision to close President Trump’s account, says Simon Duke in The Times. While the ban was followed by other social networks, including Facebook, experts believe that Twitter will be hit hardest, as it “will lose one of the biggest drivers of traffic to its platform”. Trump’s Twitter following rose sixfold to 88 million during his tenure. Trump has lent a “huge helping hand” to Twitter’s popularity and business, thanks to his decision to tweet throughout his presidency, says Robert Cyran on Breakingviews.com. Not only did a “substantial chunk of users” follow the US president, but “an even larger number” also saw what he tweeted or the responses to his remarks. Still, several celebrities “have a larger number of followers”, while social-media platforms…

The UK will this week start taking advantage of its new freedom from regulation by Brussels to allow trading in Swiss shares in the City of London again. Buying and selling Swiss shares had been banned within the EU as part of a ridiculously high-handed attempt by the EU to impose its rules on the country (a foretaste, incidentally, of what the UK may face over the next few years). It didn’t make a huge amount of difference, as it happens. If you wanted to buy shares in Nestlé and Roche – as you probably should, come to think of it, since they are great companies – it just meant you had to route the trade through a Swiss exchange rather than completing it in Paris or Frankfurt. As so…

Last week, Tesla’s founder Elon Musk (see page 29) sent a two-word message on social-media site Twitter: “Use Signal”. It referred to an encrypted messaging service. But by the start of this week, a tiny unrelated medical devices firm – Signal Advance – had seen its value surge by more than 5,100%, reports Bloomberg. Mistaken identity is not unheard of in markets, but a 50-fold gain in three days for an unknown stock suggests that right now investors are far more afraid of missing out than they are of any downside. “The S&P 500 is now as expensive as it was in the tech bubble” No wonder Jeremy Grantham, a respected market historian and co-founder of US asset manager GMO, is now convinced we’re in “a fully fledged epic bubble”.…

Old Lady is playing a savvy game Philip Aldrick The Times In 1997, Labour granted the Bank of England independence and gave it the remit to keep inflation at 2% (which it has), says Philip Aldrick. But confidence in the Bank may be faltering. During the pandemic, “almost every penny of debt issued by the government to cover the cost of lockdown was matched by a penny of QE [quantitative easing]” – that is, it is doing something suspiciously like “Zimbabwe-style monetary financing”. Technically, the Bank cannot buy government bonds directly from the state, but there are workarounds. In an FT survey, most of the 18 biggest investors said the Bank was “deliberately matching QE to government issuance to absorb the debt and keep the Treasury’s borrowing costs low”. If…

project-syndicate.org During profound crises, old certainties begin to look like a “house of cards”, says Yanis Varoufakis. They “shock us into recognising how unsafe our assumptions are”. We used to think, for example, that globalisation had defanged national governments. Once the pandemic struck, governments that once quaked before the bond markets “grew claws and bared sharpened teeth”. We used to think that there was no magic money tree. Suddenly, there is “oodles” of cash and huge deficits don’t matter anymore. Perhaps the biggest secret revealed in 2020, though, is that although 2020 was a bumper year for capitalists, “capitalism is no more”. How can capitalists flourish as capitalism end? “Easily.” As Adam Smith showed, because profit-seeking individuals have no regard for anyone else, they end up serving society as an…

Last year was another excellent one for investment trusts. JPMorgan notes that 2020 saw the largest-ever outperformance of the FTSE All-Share by investment companies. And this century the FTSE Equity Investment Instruments index has generated a total return of 300.2% versus 131.7% from the FTSE All-Share. This is a reminder that exchange-traded funds and unit trusts have their place. But if you are looking for real active fund management and the opportunity to invest in more specialised strategies, there is still nothing better than listed closed-end funds. Are there any bargains left? So which ones look promising now? There are few raging bargains out there. Iwould suggest some property trusts. The first is Phoenix Spree Deutschland (LSE: PSDL), a specialist investor in Berlin residential property trading at a 30% discount…

In the last trading column, I talked about five lessons I’d learned from 2020. Here are some resolutions for 2021. 1. Produce more short ideas Markets are at record highs, with prominent short-sellers wondering if short-selling has a future. As a contrarian, I think this suggests that the market is due a fall. While I have tried to maintain a balanced portfolio, I do tend to have slightly more longs than shorts. 2. Ensure that short tips have cooled off before tipping them Seemingly overpriced shares can become even more expensive. It therefore makes sense to wait until they are at least 20% down from their 52-week high, or trading below their 50-day moving average, before betting that they will fall. 3. Make sure that long tips have positive momentum…

For small businesses struggling to cope with the latest lockdown, new financial assistance from the government is limited. But help is still available from the schemes set up the first time around. Chancellor Rishi Sunak’s headline announcement last week was a new lockdown grant scheme aimed at retail, hospitality and leisure businesses. In England, this scheme, administered through local authorities, pays grants of up to £9,000 to companies in the sectors forced to close, with the exact amount depending on the rateable value of your business premises. There will be similar payments in Scotland, Wales and Northern Ireland. Start with your local council To check whether you are eligible, contact your local authority, though it should be making payments automatically rather than requiring applications. Firms outside the retail, hospitality and…

Retail e-commerce sales worldwide amounted to $3.53trn in 2019, and are poised to reach $7trn by 2024. To put this in perspective, Germany’s GDP in 2019 was €3.5trn ($4.2trn), and it is no secret that since Covid-19 online sales have gone up while the GDP of almost every country has gone down. Will e-commerce continue to gain momentum? The odds are that it will, especially in terms of online sales growth as a percentage of total worldwide sales. Optimising your portfolio Modern portfolio theory comprises a mathematical framework for assembling a portfolio of assets such that the expected return is maximised for a given level of risk. It was formulated by Harry Markowitz, who was revered in academia and disliked by savvy stockpickers such as Warren Buffett. That is because,…

2019 Zwillingslauser, Grüner Veltliner, Winzerhof Sax, Kamptal, Austria  £13.50, Stone, Vine & Sun, 01962-712351, stonevine.co.uk Grüner veltliner is a fabulous white grape and many of us are familiar with its charms. Not long ago you could only find this cheeky grape on trips to Austria, but nowadays most supermarkets stock budget versions and it is fair to say that they rarely let you down if you are after competently made, dry, perky white wines with a little more flavour intrigue than your average sauvignon blanc or chenin blanc. If you climb to the top of the Grüner ladder the wines are often rich and heady and, although gastronomically and intellectually challenging, they are not particularly refreshing. In between the £8 high-street offerings and Hirtzberger (my favourite estate) at around the…

• Give up any notion of doing Dry January, says Virginia Blackburn in the Daily Express. “It was always nutty to pick a freezing, grey month to lay off the pink champagne.” As Dean Martin (pictured) said, “Just imagine waking up and knowing this was as good as it was going to get all day”. And forget about using the latest lockdown to write a masterpiece. You are not Shakespeare. Instead, lighten up. No matter that the shops are shut. Go into your wardrobe and relive your youth. And if you can’t stand your old clothes, sell them online. “Might as well have a clear out and make a bit of money into the bargain: just think of all the treats you’ll be able to afford come spring, when we’re…