Indholdsfortegnelse for 1101 i MoneyWeek

“It isn’t just central banks who get to choose which mistake to make: investors do too” I used to think the worst job in the world would be chancellor of the exchequer. I’ve changed my mind. At least as chancellor you pretty much always have the opportunity to do things you know will improve the nation’s financial security, or even make people’s lives better. That chancellors often don’t use those opportunities very well doesn’t mean they aren’t available. That is not the case if you are a modern central banker. The heads of the Bank of England and the Federal Reserve do get choices. It is just that none of them are good choices. Such leeway as they have consists entirely of choosing which mistake to make when it comes…

A social-media storm over a herbal remedy for Covid-19 has cost Chinese scientist Wu Yiling RMB13bn (£1.6bn), says Bloomberg. Shares in Wu’s firm had soared after the government endorsed its Lianhua Qingwen remedy, giving him a RMB39bn fortune. But they fell by a third after a high-profile poster questioned whether the drug works and called for securities regulators to investigate. Barack (pictured) and Michelle Obama and Spotify will not renew their podcast deal when it expires this year, says The Guardian. The Obamas signed a contract worth a rumoured $25m in 2019, but are said to be frustrated that exclusivity limits their audience size, while Spotify wanted the Obamas to appear personally in more than the 17 episodes they have made so far.…

As tech stocks sink, “many investors have… fled to safer pastures in consumer staples stocks”, says Kevin Curran on Seeking Alpha. Defensives such as Procter & Gamble or Unilever should offer steadier earnings than riskier tech stocks at a time when the economy is slowing. The case for consumer staples is straightforward, says Jacob Sonenshine in Barron’s. “It isn’t toothpaste or baking soda that consumers stop buying when they tighten their budgets.” In the US, the S&P 500 consumer staples sector jumped almost 10% between early March and 12 April, the start of the robust current earnings season. It now trades on a near 15% premium to the wider S&P 500 on a forward price-to-earnings basis. With investors keen to play defensively, staples look likely to stay in favour for…

Chinese government bonds used to yield substantially more than their US equivalents, say Rebecca Feng and Clarence Leong in The Wall Street Journal. That made the yuan-denominated instruments a big draw. Foreigners now hold an estimated $560bn in Chinese public and private sector debt. But US bond yields are rising as the Federal Reserve begins to hike interest rates. In China, by contrast, the central bank is gradually easing policy in response to a slowing economy, which has caused local bond yields to fall. Foreign investors have responded to the narrowing yield gap by selling a net $15bn of Chinese bonds in March, the highest outflow on record. That’s likely to continue until US inflation drops and Chinese growth picks up.…

• ”Just Eat Takeaway’s US adventure now looks like a terrible mistake,” says Nils Pratley in The Guardian. After CEO Jitse Groen put together a merger between the UK’s Just Eat and the Netherlands’ Takeaway in 2020, he then added on US operator Grubhub in a $7.3bn all-paper deal. But with the share price down 70% from its highs, investors such as Cat Rock – “which was gungho for Grubhub at the time” now think Groen should give up and focus on Europe. Still, there are few obvious buyers and valuations have plummeted in a sector where nobody is making real profits. “Netflix’s woes look mild by comparison.” • Luxury brands have shrugged off the pandemic and inflation, but they are still subject to “fickle tastes in fashion”, says Carol…

China National Offshore Oil Corporation (CNOOC) has debuted in Shanghai as China’s largest stockmarket listing so far this year, says the Financial Times. The shares closed 28% above the IPO price, having been up 44% at one point. CNOOC, the smallest of China’s three major state-run oil firms, is also listed in Hong Kong and was previously listed in New York, until being forced to delist in October due to a Trump administration order banning US investment in companies deemed to be part of China’s “military-industrial complex”. The firm is reported to be considering selling assets in Canada, the UK and the US, due to fears that it might be hit by Western sanctions, reports Reuters.…

People have been warning about inflation taking off ever since central banks started printing money on a vast scale in the wake of the financial crash of 2008-2009. This year it finally happened. In the UK, prices are already rising by more than 7% a year, the fastest rate in three decades. And that is mild compared with much of the rest of the world. In the US, it has reached 8.5%; in Spain it is above 9%; and in Lithuania an alarming 16%. There are lots of explanations for that. The pandemic and global lockdowns restricted production and played havoc with supply chains. Governments printed money on an unprecedented scale to support their economies. And, on top of all that, the war in Ukraine has sent the price of…

Netflix’s disappointing results (see page 6) have proved costly for hedge fund manager Bill Ackman. Earlier this year, Ackman built a $1.1bn stake in the streaming giant, which had just endured another big sell-off, via his Pershing Square investment vehicle. Ackman wrote that “many of our best investments have emerged when other investors, whose time horizons are short term, discard great companies at prices that look extraordinarily attractive when one has a long-term horizon.” Yet now he’s dumped the lot, at a loss of roughly $400m. It’s only human to find this amusing. Even in the hedge fund world, three months is not “long term”. But in many ways this is a textbook trade – with some very useful lessons for the active investors among us. “Even professional investors get…

The rich world’s savings glut Gillian Tett Financial Times Kyiv’s attempt to crowdsource donations for fighter jets from the world’s super-rich suggests that a “sidebar” on page 62 of the IMF’s World Economic Outlook report – the “Saving Glut of the Rich” – deserves more attention, says Gillian Tett. It points out that a “substantial rise” in savings among the very richest Americans since the 1990s has coincided with rising indebtedness among the poor and rising income inequality – a trend which is global. Since the rich can’t possibly spend all their money, this glut has “almost certainly” contributed to the “secular decline of the natural rate of interest”. Years of quantitative easing (QE), which have raised the values of rich people’s assets, won’t have helped. There is plenty of…

bloomberg.com/opinion If you are under 45 and live in the US or Europe, the odds are that this past year has been your first real experience of inflation, says Allison Schrager. Life has now changed. When inflation is high, getting a pay rise becomes more critical and, with the decline of the unions, that’s something we’ll have to demand for ourselves. Companies will suffer too – they face higher costs for labour, rent and the goods they use, and will need to increase their prices more frequently, which risks alienating customers. This puts smaller firms at a disadvantage. Interest rates are likely to rise in an attempt to check inflation, which will hurt those with variable-rate mortgages. Saving and investing will become more challenging, as you will have to do…

Private equity trusts have produced some of the best returns in recent years, but investors remain sceptical. The average fall in shares in the first quarter was 9% and the average discount to net asset value (NAV) grew from 15% to 21%. The £2bn HgCapital Trust (LSE: HGT) is top of the performance table with a five-year return of 233%. Growth in NAV has compounded at 20% for the last ten years, yet the shares trade on a 7.5% discount. Hg was one of the few trusts to sail through the financial crisis unharmed. Its strong financial position then enabled it to buy businesses while competitors were forced sellers. It sold underperforming, peripheral investments to focus on its core speciality, software and services, investing mostly via the $30bn of funds…

“To conquer without risk is to triumph without glory,” as Pierre Corneille wrote in his classic tragicomedy Le Cid. Thus on Sunday, Emmanuel Macron won the French presidential election without any glory. The elections themselves have lost their traditional spark and sense of jousting. The final debate between Macron and Marine Le Pen was a debate between technical managers without a grand vision for France. Both want to write cheques that France can’t cash. And this second-round match up was simply what had been anticipated for years, despite brief bursts of speculation that another candidate – Éric Zemmour (far-right), Valérie Pécresse (centrist) or even Jean-Luc Mélenchon (far-left) – might edge out Le Pen. Still, the elections brought some surprises. First, the anti-establishment parties represented by Melenchon, Zemmour and Le Pen…

As the world opens up after the pandemic, many of us are planning our first foreign trips for several years. But if you are about to shop around for a travel insurance policy, brace yourself. Prices have rocketed in the past two years. The average cost of multi-trip travel insurance has risen 45% from £42 in March 2020 to £61 today, according to comparison site Compare the Market. The rise is supposedly down to the fact that insurance firms must factor in the cost of Covid-19 treatment. “One eye-watering quote for an older traveller with pre-existing health conditions taking a two-week trip to the US… came in at £451,” Rory Boland of Which Travel told The Sunday Times. “Treating Covid in a US hospital could cost up to $10,000 a…

As inflation continues to rise, it’s good to see that prices aren’t going through the roof everywhere. The launch last week of Dodl, a low-cost appbased service from stockbroker AJ Bell, marks the latest round in a price war between investment-platform providers – some welcome good news for savers and investors. AJ Bell expects some customers to use Dodl as a general investment account, but, as with rival platforms, it also offers individual savings accounts (Isas) and self-invested personal pensions (Sipps). So this could be a good way to get started with long-term saving and investment, including for retirement planning. Competing with Vanguard Dodl has an annual charge of 0.15%, with a monthly minimum of £1, and no additional charges for buying or selling investments on the platform. That’s excellent…

The remarkable thing about the franchise industry is that in theory it shouldn’t work, but in practice it does. For instance, there’s very little that can’t be copied in the restaurant sector: there’s hardly any legal protection against a competitor imitating designs, menus and themes. Yet Subway, McDonald’s, 7-Eleven, Dunkin’ Donuts and Domino’s Pizza are obviously successful franchise businesses. The way franchising works is that the franchisor licenses the brand and intellectual property to the franchisee, who trades as a small business. The franchisee operates using the back-office systems that the franchisor has set up and also enjoys support in the form of training and mentoring. The question is whether the benefits accrue to the franchisee, who works hard dealing with the day-to-day problems of running a small business, or…

Shares in oil and gas giant Shell (LSE: SHEL) have risen strongly this year as curbs on oil imports from Russia helped to push up energy prices, says UK Investor. Oil companies saw their shares drop sharply when the pandemic first struck and lockdowns stifled global demand. The arrival of the Omicron variant last year was a setback in their recovery. However, today’s inflationary pressures are now providing “an ideal environment for earnings growth”. Shell is now the largest company in the FTSE 100, with a market capitalisation of £168bn. The share price has risen by 31% over the last 12 months.…

Howie Hubler III was born in the town of Boonton in New Jersey and went on to study at Montclair State College before joining investment bank Morgan Stanley, specialising in trading mortgage-related bonds. Hubler’s team made consistent profits by buying up mortgages from third parties, pooling them to create bonds, and then reselling the bonds to the market. To minimise the risk of holding the bonds while they were processed and resold, Hubler persuaded other banks to sell credit default swaps (CDS), essentially insurance against the bonds going into default. What was the trade? Hubler’s success at this led Morgan Stanley in 2003 to put him in charge of a team that used CDS to bet against bonds believed to be going into default. This strategy worked so well that…

A Blue New Deal Why We Need a New Politics for the Ocean Chris Armstrong Yale University Press, £20 The oceans regulate the climate, provide us with food and produce at least half the world’s oxygen, says Simon Ings in New Scientist. We repay them by overharvesting their limited resources and polluting them with oil, plastics and noise. In A Blue New Deal, political theorist Chris Armstrong argues that the problem lies in the fact that “the institutions and laws that govern our oceans are too fragmented, too weak and too amenable to vested interests to protect the marine environment from further destruction”. They should be replaced by a new framework that governs our oceans “along principles of common management, benefit sharing and even technology transfer between rich and poor…

• Youthful pop stars such as Ed Sheeran and Calvin Harris are amassing fortunes, but Elton John (pictured) proves “it’s the oldies who are still golden when it comes to making money”, says Richard Eden in the Daily Mail. According to the legendary singer’s company accounts, he made “a staggering” £55m last year – more than £1m a week. Elton is currently on his “Farewell Yellow Brick Road” tour, which had to be postponed because of the pandemic. He apparently took an “astonishing” £60m financial hit in 2020 when Covid-19 forced him to drop the shows. Still, Elton isn’t the only golden oldie raking it in. The wealth of Paul McCartney is believed to have gone up by £20m, while The Rolling Stones’s biggest earners, Mick Jagger and Keith Richards,…

£400m The cost to the taxpayer of covering stays at quarantine hotels for travellers arriving in Britain from high-risk “red list” countries during the pandemic, including £100m in unpaid room bills and fraud, according to the National Audit Office. The government expected occupants to pay the bill, but the taxpayer was left on the hook for more than half of the £757m total bill. $125,000 The price for a six-hour round trip to the edge of the stratosphere in the world’s first “space lounge”, called Spaceship Neptune. Take off should be from Florida in 2024. Guests will be able to sip cocktails within a capsule attached to a giant balloon. £6.7bn The value of book sales last year in Britain, an annual rise of 5%, which the Publishers Association attributed…

Editor-in-chief: Merryn Somerset Webb Executive editor: John Stepek Editor: Andrew Van Sickle Acting editor: Cris Sholto Heaton Markets editor: Alexander Rankine Comment editor: Stuart Watkins Politics editor: Emily Hohler Wealth editor: Chris Carter Shares editor: Matthew Partridge Funds editor: Nicole García Mérida Digital editor:Ben Judge Digital shares editor: Rupert Hargreaves Web writer: Saloni Sardana Contributors: Bill Bonner, Ruth Jackson-Kirby, Max King, Jane Lewis, Matthew Lynn, David Prosser, Jasper Spires, David Stevenson, Simon Wilson Art director: Kevin Cook-Fielding Picture editor: Natasha Langan Chief sub-editor: Joanna Gibbs Account director: Abdul Ahad Group advertising director: Caroline Fenner (020-3890 3841) Chief customer officer: Abi Spooner Publisher: Denise Elliott Chief financial officer Penny Ladkin-Brand Non-executive chairman Richard Huntingford Chief executive Zillah Byng-Thorne…

Saudi princes have sold more than $600m of assets in the US and Europe since Mohammed bin Salman (pictured), the crown prince and de facto ruler, tightened the purse strings, says The Wall Street Journal. Members of the royal family had funnelled vast sums from Saudi Arabia’s oil wealth into artwork, real estate and yachts, but Mohammed bin Salman has curtailed their access to state funds. Many princes need cash to pay bills, but also want to avoid attracting attention with visible wealth. “Among the assets sold recently are a $155m British country estate, two yachts more than 200 feet long, and Mughal jewels gifted as wedding presents by a late king.” Sellers include Bandar bin Sultan, a former ambassador to the US, whose spokesman said he had sold his…

The last few weeks have been a “bloodbath” for bond investors, says Rachel Rickard Straus in The Mail on Sunday. Bonds are supposed to offer “a regular, safer income and a ballast against more volatile shares”. It hasn’t worked out that way. Global bond prices, as measured by the Bloomberg Global Aggregate index, are down 10% since the start of the year. Yields, which move inversely to prices, have spiked. “UK investors ditched £2.5bn of bond funds in February alone – the biggest outflow since the start of the pandemic”. As with so much else, the culprit is rising interest rates. “Bond issuers have to offer something even more enticing to investors than what they could get simply by putting their money in a low-risk, interest-paying account”. Higher yields mean…

“Listed company pay deals… are pretty much the same. It is group think on a giant scale… They are drawn up by a small number of remuneration consultants, who can charge big fees for peddling roughly the same scheme to a large number of clients. This herd mentality suits the heads of remuneration committees… They are able to say that they are doing the same as everyone else… It also suits the chief executives’ union, because it results in a steady ratcheting up of pay. Every new appointment is, of course, the best possible recruit so has to have his or her pay set towards the top of the range offered by rivals… companies argue that their remuneration schemes are carefully tailored to deliver pay only for performance… they are…

When Elon Musk said he would buy social network Twitter and take it private earlier this month, few took him seriously. Some even thought the Tesla founder “was making a joke about cannabis”, says Giulia Bottaro in The Daily Telegraph (420 is a slang term for cannabis; Musk, who has made similar jokes in the past, bid $54.20 a share). Yet now the Twitter board – after first trying to stymie his efforts by introducing a “poison pill” defence – has accepted his bid, meaning that Musk (subject to shareholder and regulatory approval) looks set to become one of the world’s “most powerful media barons”. Musk plans to fund the deal with $25.5bn in debt, including a margin loan of $12.5bn backed by his shares in Tesla, plus $21bn in…

Six to buy Anglo American Investors’ Chronicle This copper, platinum group metals (PGM) and potash mining giant is cheap, at only eight times forecast earnings for the next 12 months. The firm plans to expand copper production by 35% from 2021 levels by 2030. This should help to meet rising demand caused by the electrification of the global economy and could even make miners more acceptable to investors who focus on environmental, social and governance (ESG) issues. A scramble for non-Russian PGM supplies should also boost sales and margins. 4,148p Britvic The Telegraph The owner of the Tango, Robinsons’ and Purdey’s soft-drinks brands offers a potent mix of capital growth and income. The pandemic saw consumption in pubs decline, but the firm’s latest quarterly update reported year-on-year revenue growth of…

Sri Lanka is suffering its worst debt and economic crisis in decades, say Benjamin Parkin and Mahendra Ratnaweera in the Financial Times. A shortage of foreign exchange has left the government unable to pay off its loans or import basics such as food and medicine. The surge in global oil and gas prices, combined with a 60% drop in the rupee, has also led to shortages of petrol and cooking gas. The government has been forced to start talks on debt restructuring and assistance with the IMF, private creditors and countries such as India and China. Sri Lanka was hit particularly hard by the pandemic, which caused an economic meltdown by sapping revenue from tourism and remittances, says Kai Schultz on Bloomberg. But the ruling Rajapaksa family must share the…

• Standard Chartered plans to hike the pay of its chief executive, Bill Winters (pictured), by 19% to £4.7m for last year, and chief financial officer Andy Halford’s pay by 21% to almost £3m, says the Financial Times. Given the £46.5m penalty the bank received from the Prudential Regulation Authority in December for reporting failures, proxy advisor ISS has recommended shareholders reject the pay report at the shareholder meeting on Wednesday. Standard Chartered’s stock has fallen 49% since Winters took over in 2015. • Jeff Green, boss of US advertising-technology company Trade Desk, received a pay package last year valued by the company at $835m, says The Wall Street Journal. The bulk of the package takes the form of stock options which become exercisable in eight batches so long as…

Leverage (or “gearing”) refers to the extent to which debt rather than equity is used to fund an investment. The term can be applied to a business – that might issue bonds to help pay for the construction of a new factory or take out a mortgage to allow it to buy an office building – but equally for the use of borrowings by an investment trust or hedge fund to increase returns. Leverage is also known as gearing; the latter term is more common in the UK, while the former is preferred in the US. The extent of a company’s leverage can be measured through ratios such as debt/ equity. Let’s assume that a company has assets worth £100m and debt totalling £30m. Shareholders’ equity, which is equal to…

“If you’ve worked hard and you want something that’ll make you happy, buy it. Life is short.You’re not harming anyone. It’s important to enjoy the money you’ve earned; you can’t take it with you.” Candice Brown (pictured), a winner of the Great British Bake Off, quoted in The Sunday Times “It was so mind-numbingly dull. I just used to hate it. I was earning a lot of money at the time – about £150 a week or something. Back in the 1980s, for a teenager, that was a lot of money. And I could have taken that, and probably would have made a very good life in underwriting or whatever. But I would have been bored senseless.” Chat-show host Piers Morgan in Press Gazette “I hired Boris Johnson to be…

fee.org The left-dominated media is wringing its hands about what do about right-wing propaganda for children, says Kerry McDonald. An opinion piece for CNN worried that the Tuttle Twins children’s books, created by Connor Boyack to promote individual freedom, limited government and free markets to younger readers, would seal conservatives’ children off from the “broader culture” and indoctrinate them. Boyack finds that a bit rich, given that that is exactly what the left has been doing for decades. “Parents need to recognise that we’re in an ideological war,” he says, and “be intentional about exposing our children to sound ideas, true facts and a world view grounded in reality and principle”. But he welcomes the criticism from CNN and other outlets – not least because previous scandals have only served…

Software firm Zendesk may put itself up for sale under pressure from activist investor Jana Partners, says Reuters. The maker of helpdesk and ticketing software turned down a $16bn bid by a private-equity consortium in February. Later that month, shareholders overwhelmingly voted down Zendesk’s proposed $4bn deal to take over Momentive, which owns the SurveyMonkey online survey platform, after criticism from Jana and several large investors. Jana – which owns a 3% stake in Zendesk – has also called for shareholders to oppose the upcoming re-election of four directors, arguing that the company “has shown a reckless disregard for shareholders’ capital” and should either replace the board or engage with potential buyers.…

Defence companies Thales (Paris: HO) and Dassault (Paris: DSY) have seen their shares rise dramatically this year and the shares are now pricey. The world is investing heavily in weaponry, but Nato countries that plan to increase spending, such as Germany and Poland, tend to buy American fighters or weapons rather than French. Mining and metals firm Eramet (Paris: ERA), long seen as struggling, has also seen its value nearly double since the beginning of the year thanks to the commodity boom. Clean energy is probably a better place to look. Notwithstanding Renault’s (Paris: RNO) Russian disaster, note that the firm plans to spin off its electric arm (like Volvo with Polestar) in the hope of achieving a Tesla-like valuation. Furthermore, Macron promised more subsidies for the leasing of electric…

■ A row between Uber and some of its drivers is shining a light on how many Muslims feel unable to save for retirement because they do not have access to Sharia-compliant pensions. Trade unions representing Uber drivers say the ride-hailing app’s introduction of a pension scheme that does not offer a Sharia-compliant fund is letting down Muslim drivers, who account for a majority of its workforce. Union leaders have now threatened Uber with legal action. The row underlines the broader need to ensure Muslim savers and investors have access to pension plans that enable them to plan effectively for retirement. To comply with Sharia law, pension funds must not invest in companies involved in activities that contravene the principles of Islam. This will include businesses that produce or sell…

Musical instrument and equipment retailer Gear4Music (Aim: G4M) has reported a steep decline in profits, says Investors’ Chronicle. Half-year results to September 2021 showed turnover shrinking by 8% as the lockdown boom that drove a one-third increase in sales came to an end. Pre-tax profits fell by 66%. Revenue is still higher than before the pandemic, but the firm is struggling with post-Brexit trading agreements and disrupted supply chains. European and global sales fell 17% as distribution centres in Spain and Ireland dealt with logistical issues. The shares are down by 59% over the last 12 months.…

2019 Cirò Rosso, Gaglioppo, Santa Venere, Calabria, Italy £10.50, thewinesociety.com A handful of wineries in southern Italy make wines from the ultra-rare gaglioppo grape. I remember first encountering this variety when it joined cabernet sauvignon in a wine called Gravello from the famous Librandi winery. The flavour of the 1999 vintage is stuck in my taste memory forever. Duca Sanfelice, from the same estate, is solely made from this grape, and it is another stunner. Mainly found in the Cirò DOC, this grape makes very juicy, black-fruited reds with liquorice and spice details, and Santa Venere is the most impressive, inexpensive version I have ever tasted. Whenever I taste this grape, I write a note about barbecues after I have written “spices” and “plums” a fair few times. Smooth, pliable,…

One thing that must be troubling Pentagon observers is the loss of heavy tanks and the Russian ship, the Moskva. Experts are wondering whether this means that the tank and battleship are now as redundant in this war as the horse became in previous ones. We will pose a different question: is this how the empire dies? “If left unchecked, inflation leads to civil disorder, war and chaos” By our reckoning, the US empire peaked out in the 1960s. It diddle daddled until the late 1990s, and then, with the “war on terror”, began a serious dive to the downside. Since then, by almost every measure you can think of, the US has sunk. But empires do not go gracefully into that good night. They rage… and make things worse…

A Japanese court has ordered railway operator JR West to return ¥56 (33p) to the family of former train driver Hirofumi Wada, who was fined one minute’s wages in 2020 after causing a brief delay to a train, says NHK. Wada, who died of natural causes before the case was decided, had gone to the wrong platform. JR West says it has now changed its disciplinary procedures. A family in Massachusetts has been awarded $4.9m after their house was “terrorised” by golf balls, says The Boston Globe. The Tenczars claimed that shots from the 15th tee of the Indian Pond Country Club were a “continual bombardment” that regularly broke their windows. A jury awarded them $3.5m in damages for mental and emotional suffering, plus $1.4m in interest.…

Neflix’s shares crashed on Wednesday, with Bill Ackman’s hedge fund selling out (see page 14) as the streaming giant reported its first drop in paid subscriber numbers in over a decade, says Dan Gallagher in The Wall Street Journal. The share price has now fallen by about two-thirds from its mid-November peak, with investors fearing Netflix is “behind the curve”, evidenced by a change of approach to both password-sharing and advertising. The fact that one person for every two paying subscribers is a free rider is undoubtedly a major challenge for Netflix and its peers, who hope for “a world where every household subscribes to several services”, says Lex in the Financial Times. But the soaring cost of living will only force audiences to cut back harder – even the…

Rising crop prices are good news for agribusiness giant Bunge, which buys, transports, stores and processes soybeans, corn and grains, says Barron’s. That may sound surprising, since you’d expect higher input prices to eat into profits, but it’s more than able to pass these costs on. For example, soybean prices have risen 12% in the past year, but soy meal is up by 20% and soy oil by 40%. Yet Bunge is on a price/earnings (p/e) ratio of just 10.8 times forecast earnings, a discount to its average of 12.9 over the past five years. Archer Daniels Midland, its closest peer, is on a p/e of 17.3. Those forecasts look conservative as well. This is “a quality operator trading cheaply in a very favourable environment”.…

Beijing rapidly expanded its mass Covid-19 testing from one district to most of the city’s 22 million residents on Monday, adding to expectations of an imminent lockdown similar to Shanghai’s and prompting panic buying. Shanghai, which reported 51 Covid deaths on the same day, has “forced most of its 25 million citizens” to stay indoors for weeks despite reports of people running out of food and the sick and elderly being unable to access non-Covid-related medical care, says Nicola Smith in The Daily Telegraph. Beijing reported just 33 new cases on Monday, but officials insist the approach is necessary to avoid the many deaths seen in other countries prior to vaccination campaigns. The policy is having a heavy impact on the economy as well as morale. The news triggered a…

All things considered, it’s been a disastrous week for the prime minister. After initially appearing to have survived being fined by the police, the decision of the Commons to vote for an inquiry into whether he misled Parliament means that not only does the whole controversy continue to drag on, but many Conservative MPs also have little confidence in him. It’s probably not surprising, then, that with £784,695 matched on Betfair, the odds on him leaving this year are now only 2.22 (45%), the tightest they have been for weeks. My view is that Boris Johnson faces two problems. In the short run, his fate depends on Sue Gray’s report into lockdown breaking, as well as the judgment of the Committee on Standards. But even if he does manage to…

”Many companies stack the deck in ways that often help their executives get big annual bonuses no matter how the business performs,” say Michael Rapoport and Nicola White for Bloomberg Tax. Tricks include adjusting (or “double-adjusting”) and boosting the earnings figures used and lowering performance targets, so bonuses are more easily triggered. “Tinkering is legal, but often it’s poorly disclosed and hard for investors to see”, and corporate-governance advocates in the US are calling for more transparency. So, despite Warner Bros Discovery’s earnings falling almost 20% last year by some measures, the media giant paid its CEO, David Zaslav, $26.4m in performance-related bonuses. HCA Healthcare “disregarded” results to hand its chief, Sam Hazen, $3.5m. Coca-Cola declared that the pandemic made its pay targets unattainable. It gave its boss, James Quincey,…

“I think we are near peak inflation. Unless you have another surge [in the] price of energy… the base effects are somewhat favourable. We had some pretty big month-over-month prints in the middle of 2021 – I don’t think that is likely to recur,” says Jeffrey Gundlach, founder of investment firm DoubleLine. However, even if inflation peaks soon, “it’s going to be sticky, it’s going to be frustratingly elevated”. That makes it “almost laughable” that investors still imagine that the Federal Reserve, the US central bank, might get the inflation rate back down to its target of 2% any time soon – even though, judging by the two-year Treasury yield, the Federal Funds rate is set to rise to at least 2.5% in the near future, which implies that the…

compactmag.com Shanghai’s 26 million residents have been confined to their homes for more than two weeks, says Alex Gutentag. Authorities dispatch anyone who tests positive to quarantine. Many families are struggling to obtain food. Elderly people have been denied medical care. Young children have been separated from their parents. Robot dogs police the streets. This might seem like extreme Chinese authoritarianism,but in reality it is “a mirror held up to the West Covidian zealots”. A loud chorus of voices, including Britain’s Lancet and BMJ medical journals, constantly demanded ever harsher restrictions in the West, and held up China as a model. Are these people now looking at Shanghai and saying it will all be worth it if it “saves one life”? More than two years after the lie of “two…

■ “Frontier markets are a risky, niche proposition and not for everybody,” says Dave Baxter in Investors’ Chronicle. An investment in these economies – countries that for one reason or another don’t yet qualify for the emerging-market indices – may appeal to investors who “see the appeal of younger markets with their own secular growth story” and they “can at times power ahead when their ‘emerging’ counterparts struggle”. But be aware that frontier funds tend to “come with their own idiosyncrasies”. A dedicated frontier fund is often dominated by Vietnam, which makes up 30% of the MSCI Frontier Markets index, and also tends to feature “high levels of stock concentration”. Some funds respond to this by widening their mandate. BlackRock Frontiers Investment Trust has just 8.9% in Vietnam. Its two…

Thousands of people have been locked out of their tax accounts after HM Revenue & Customs (HMRC) changed the way it allows people to log in. Until last month, taxpayers could use the Gov.uk Verify service to access their HMRC account. This allowed users to confirm their identity using a British driving licence or credit records. However, HMRC has unexpectedly withdrawn from using that service – completely shutting out people who don’t have the necessary documents. Users now need to log in through the Government Gateway system. This requires you to hold two forms of identification from a list of accepted documents including a UK passport, recent payslip or tax credit statement. However, it does not accept a British driving licence as an acceptable form of ID (although Northern Ireland…

• The volume of savers breaching the annual and lifetime allowance pension contribution limits has hit an all-time high, new data from HM Revenue & Customs reveals. The number of taxpayers exceeding their annual allowance rose 24% in the 2019-2020 tax year, the most recent period for which HMRC has published figures, while breaches of the lifetime allowance rose 19%. With tax levies of up to 55% on the excess, the data underlines why savers must get to grips with the allowances, which catch out more people each year. • Will your pension last you a lifetime? The number of centenarians in the UK is set to grow 78% over the next 20 years, with more than 29,000 Britons aged at least 100 by 2041. The prediction, from financial planners…

We’ve seen many times in the past how structural shifts in consumer spending have a major impact on economies. Consumer spending accounts for 50%-60% of GDP, depending on the country, underlining the importance of the choices that consumers make about how they shop, bank, communicate, work, live and play. “Shifts in consumer spending have a major impact on economies” We are seeing the latest shift unfold as consumers increasingly demand cleaner products that shun harmful ingredients, additives and chemicals in those products they put in and on their bodies, in their homes and workplaces, or into the environment. Fuelling this shift are growing concerns over obesity, diabetes, added sugar, genetically modified organisms (GMOs) and artificial ingredients in food, personal care items, and other products, and rising awareness about our collective…