Indholdsfortegnelse for 1104 i MoneyWeek

“If you really want to survive this, you need to beat inflation – not be beaten by it” This week we learnt something I suspect most of us already knew: inflation is high and rising. UK data for April has the consumer prices index (CPI) rising at an annual rate of 9%, a 40-year high. Measured by the retail prices index (which CPI replaced) it’s 11.1%. It was last 11% in February 1982, having breached 11% for the first time since January 1952 in January 1974. In short, 11% really doesn’t happen very often. However, here is something that has never happened: 11% RPI and 1% bank rate. In early 1974, the rate was 12.7%. If you’d had cash in the bank, you’d have made a real return (ie, beat…

Three Hong Kong burglars who stole a HK$2.3bn (£230m) scroll written by Mao Zedong and sold it for just HK$200 (£20) have been jailed for two and half years, says the South China Morning Post. Ho Yik-chiu, Ng Wing-lun and Hui Ping-kei, who took artworks valued at a total of HK$5bn (£500m) from the apartment of a collector in 2020, had no idea of the value of their haul. El Salvadorian president Nayib Bukele’s bets on cryptocurrency are backfiring badly, says The Wall Street Journal. Bukele made bitcoin legal tender, spent $200m on rolling out bitcoin ATMs and e-wallets, and bought 2,301 bitcoin that are now worth $74m, down from the $103m he paid. El Salvador’s bonds due in January are trading at 80 cents on the dollar, indicating a…

Authorities in Hong Kong have spent US$1.49bn defending the Hong Kong dollar’s peg to the US dollar. It is the first time in three years that the Hong Kong Monetary Authority (HKMA) has intervened to support the currency. The Hong Kong dollar has been pegged to the dollar since 1983, trading in a narrow band between 7.75 and 7.85. This doesn’t mean the peg is set to break, says Matthew Brooker on Bloomberg. Those betting against it should recall how it “withstood speculative attacks during the 1997-1998 Asian financial crisis”. The HKMA operates a currency board system in which the monetary base contracts as the exchange rate falls. This automatically pushes up interest rates (to 20% during the Asian crisis) and brings the system back into balance. At present, “there’s…

Tech stocks are coming back down to earth. The Nasdaq 100 index of America’s biggest tech giants gained 85% between the start of 2020 and the end of 2021 as lockdowns boosted demand for e-commerce, distance working tools and home entertainment. Over the same period the S&P 500 Energy sector lost 6%. However, that pattern has reversed sharply since the start of the year as energy prices soar and big tech wobbles. The result is that since the start of the pandemic an investor who bought an energy exchange-traded fund (ETF) such as the iShares S&P 500 Energy Sector ETF would have received a total return of almost 50% after fees, beating the 41% total return from a tech tracker such as the iShares Nasdaq 100 ETF.…

• Ryanair’s Michael O’Leary says it’s “impractical, if not impossible” to give useful profits guidance for this year”, says Alistair Osborne in The Times. Still, he’s “so confident of a getaway summer that he’s laying on 115% of pre-Covid-19 capacity”. In any case, Ryanair looks “better placed than rivals” to benefit from an upsurge. It did not sack pilots and cabin crew during the pandemic, so it can avoid the rehiring problems plaguing rivals. It’s not awash with debt and it locked in 80% of this year’s fuel needs at much lower prices. This adds up to a very “formidable competitive position”. • London is the “underdog” to New York in the battle to host the return of chip designer Arm to the stock exchange, but “there is no convincing…

CVC Capital Partners, Europe’s biggest private-equity firm, is postponing plans for an initial public offering (IPO) until later this year or early 2023 as a result of recent market turmoil, says the Financial Times. CVC, which manages roughly $120bn in assets, had been planning to carry out a multibillion euro float of around 10% of its business on the Amsterdam stock exchange in June. The firm plans to use a structure where the listed business would receive only the predictable fee income that it gets from managing its private-equity funds. The lucrative but lumpy performance fees that CVC receives for buying and selling companies for the funds would remain in private hands.…

It has been a terrible year for the technology stocks that were the big winners from lockdown and were meant to be at the core of any investment portfolio. The Nasdaq is already down by 28% since January and is deep into bear territory. Between them the major technology companies have lost almost $3trn in market value. Apple and Microsoft have both lost half a billion each; Alphabet, the parent of Google, has lost $400bn, as have Tesla, Meta – as Facebook now calls itself – and Amazon. Netflix is down by 60% since the start of the year and the once high-flying exercise bike maker Peloton is down by 80%. It is carnage. It is easy enough to understand why. As the Federal Reserve starts steadily raising interest rates…

Here at MoneyWeek, we’ve long believed that one of the most important factors driving long-term returns is the price you pay in the first place. Buy an asset when it’s cheap and you can expect to get better returns than when an asset is expensive. This explains our mild bias towards “value” stocks (those that look cheap based on various “fundamental” valuation ratios such as price/ book value – see below), as opposed to “growth” stocks (those that look expensive on most measures, but promise rampant growth well into the future – as long as everything works out). “Value stocks are still cheap relative to their growth counterparts” It’s no secret that the past decade or so has been brutal for value investors. In the low-interest rate, money-printing era that…

Income investors are in a quandary. Rising interest rates make many conventional bonds a difficult sell. Why invest in an asset class that will clearly fall in value as rates rise? And that’s ignoring the fact that real yields are already in deeply negative territory (see page 17). Rising rates also put pressure on investments further up the yield ladder. If UK ten-year government gilts now yield over 2% and US Treasuries over 3%, why invest in a riskier asset if the yield is just 4%-4.5%? The direction of travel for bonds is now obvious and I wouldn’t be surprised if the headline ten-year rate might shoot past 3.5%-4% in the UK and 5% in the US before the current rates cycle peaks. Feeling the heat So income-oriented funds in…

Springtime for German arms makers Andreas Wagner The Sunday Times Nobody in Germany “wants to say it out loud”, but Vladmir Putin’s war has been “good for business”, says Andreas Wagner. Most Nato countries are upping their defence spending; none more so than Germany. At the outset, chancellor Olaf Scholz “vowed instantly” to invest €100m, increasing the country’s defence budget from 1.4% of GDP to at least 2%. Profits at weapons manufacturers Heckler & Koch and Rheinmetall – which makes ammunition, tanks and trucks – are already surging. “There are concerns about this new era of German rearmament, however.” As author and peace activist Jurgen Grasslin points out, Germany will now have the third largest military budget in the world. Other areas, such as education and healthcare, could suffer,…

The front cover of The Economist on 23 April showed a picture of Benjamin Franklin with his hand covering half his face in horror, topped with the headline “The Fed that failed”. So it seems. The US Federal Reserve’s preferred measure of inflation – the personal consumption expenditures (PCE) price index – has surged to 6.6%. On the consumer price index (CPI) measure, inflation has hit 8.5%. The comparable UK number is 9%, but expected to go higher, while inflation in the eurozone is running at 7.5%. Yet long-term followers of The Economist’s covers know that it has a reputation as one of the world’s most reliable contrary indicators. Is it time to wonder if the inflation panic, far from becoming embedded, is peaking and will soon fade rapidly? Forgetting…

Of the six big pharma firms with the highest proportions of orphan drug sales, only AstraZeneca (LSE: AZN) and Takeda (TSE: 4502) give separate rare disease sections in their pipelines, while Bristol-Myers Squibb (NYSE: BMY) has the highest proportion of sales coming from rare disease drugs. BMS is strong in oncology and also cardiovascular and rare diseases following its Celgene acquisition and has 50 compounds in development. However, although Celgene’s Revlimid for multiple myeloma is projected still to be the second best-selling orphan drug of 2024, with sales of $7.1bn, it faces generic competition from this year, while BMS’s Opdivo cancer immunotherapy faces strong competition from Merck’s Keytruda. AstraZeneca has 12 orphan drugs in phase III clinical trials or filed for approval (most from Alexion), while Takeda has six in…

High street banks are being criticised for failing to pass on rises in the base rate to their savings customers. The Bank of England base rate is now 1% but most high street instant access savings accounts are still paying a pitiful 0.1%. HSBC, NatWest, Lloyds and Santander are all paying 0.1% on their easy access accounts, while Barclays pays just 0.01% on its Everyday Saver. “It is unethical the way that high street banks are allowed to treat their customers with such scornful disdain,” says Anna Bowes in The Mail on Sunday. “Barclays stands out as particularly despicable for not passing on any savings this year.” However, you don’t have to put up with these woeful rates. Several challenger banks are offering far better returns. For example, Chase is…

• Giving your small business a funny or witty name could boost its sales by almost a third, a new study claims. Research conducted by insurance firm Simply Business found 28% of consumers would be more likely to shop at a small business that has a witty name, while 64% would be more likely to notice such a business. Simply Business has launched a competition to find the wittiest small business name in the UK, offering a prize of £2,500 to the winner. Early contenders include Rough Around The Hedges, a gardening business based in Surrey, and Pane In the Glass, a Norfolk-based glazier. • Could your business benefit from some management training? The government’s Help to Grow scheme is a 12-week course that is 90% subsidised, and offers management…

As you might expect, the past fortnight hasn’t been very good for my long tips. Construction firm Morgan Sindall fell from 2,155p to 1,972p, below the stop loss level of 2,100p, which means that the position was closed out at 2,100p. Airtel Africa dipped from 146p to 141p, while National Express also declined from 251p to 248p. Supermarket J Sainsbury went up from 237p to 245p, while both ASOS and Domino’s Pizza Group remain below the level at which you should start going long. Counting Morgan Sindall, my long tips are making a profit of £2,365, down from £2,650. However, the declining market that hit my long tips has been good news for my six short positions, which all moved in my favour. Cinema chain AMC fell from $15.26 to…

Howard Marks was born in New York City in 1946 and went on to study finance and Japanese studies at the Wharton School of the University of Pennsylvania, then for an MBA at the University of Chicago Booth School of Business. Between 1969 and 1985 he worked for Citigroup, rising to vice-president. He then joined TCW Partners and ran a fund focusing on distressed debt, ie, bonds in firms that were either bankrupt or close to it. In 1995 he left TCW with several of his colleagues and founded Oaktree Capital Management, which specialises in bonds and private equity. What was the investment? Marks persuaded his partners to get Oaktree to raise an additional $10.9bn in capital in early 2008, believing that the global financial crisis was making distressed debt…

Going… The “infamous invisible” grey football shirt worn by Manchester United “legend” Eric Cantona during the 1995-1996 Premier League season is heading for sale with Graham Budd Auctions on 24 May, says the Mail Online. The side ditched the away shirts after losing four out of five games while wearing it, with the players complaining they couldn’t pick each other out on the pitch as the grey shirts blended in with the crowds. While losing to Southampton, manager Alex Ferguson ordered his side to change into their third-choice blue and white strip, incurring a fine and losing the match anyway. But it paid off in the end – United went on to win the league title. The long-sleeved XXL-sized Umbro shirt bears the name of the French footballer and the…

The news that McDonald’s is to sell its 847 Russian outlets and leave the country after more than 30 years is “the final nail in the coffin of the Golden Arches theory”, says Ross Clark in The Spectator. In 1996, New York Times columnist Thomas Friedman argued that two countries that both had McDonald’s franchises would never go to war, because the presence of the burger chain signified that these societies had become too consumerist to risk economic stability for a war. At the time, “it was a lovely idea, born of the age of liberal-democratic triumphalism”, albeit obviously nonsense: there were McDonald’s branches in Belgrade when Nato bombed Serbia in 1999. Now we can clearly see the real lesson is that McDonald’s won’t hang around once a country goes…

Cryptocurrencies have gone “into a full meltdown… in a sell-off that graphically illustrated the risks of the experimental and unregulated digital currencies”, says The New York Times. Bitcoin prices slumped as low as $26,000 at the end of last week, down 60% since a peak in November. The overall cryptocurrency market has seen its market capitalisation slashed from $2.9trn at last year’s peak to about $1.2trn now. The sell-off was triggered by the meltdown of stablecoin TerraUSD. A stablecoin is a cryptocurrency whose value is pegged, typically to the US dollar. “There are basically two kinds of stablecoins: asset-backed and algorithmic,” says Jack Denton in Barron’s. Some stablecoins – such as Tether, the biggest – back up their value with collateral. By contrast, algorithmic stablecoins such as TerraUSD “aim to…

“We’re headed into yet another recession and I have the sense that the excesses of our time can only be resolved with another dramatic institutional failure… My guess is that we’ll see the unexpected failure of a private equity firm, sick with hidden leverage, and with no central bank willing to take sole responsibility for the mess… the global private equity companies are in it for the fees. They are asset-gathering, not cutting bureaucracy and rationalising product lines. The private equity companies have developed bureaucracies of their own and the founders are no longer hungry outsiders… They have become a small group of self-dealing oligarchs… A recession is a time to clean away excess borrowing and the unaccountable over-mighty. These days, those would be among the private equity companies and…

Japanese tech conglomerate SoftBank reported a loss of ¥1.71trn (£10.5bn) for the year ending in March, resulting from huge investment losses of about ¥3.5tn (£21.9bn) in its flagship Vision Fund. The markdowns in the fund were prompted by the rout in technology shares over the past few months, says Ben Martin in The Times. The regulatory clampdown on tech companies in China, where SoftBank has a large number of investments, played a major role: shares in transport app Didi have plummeted by almost 70% since the start of the year. However, SoftBank’s misfiring bets go beyond Beijing: investments in South Korean e-commerce firm Coupang and the Southeast Asian taxi, food and payments app Grab have suffered similar falls. It’s worse than it looks The bad results mean that almost half…

Three to buy Adobe Shares Software firm Adobe has consistently strong financial performance, exposure to structurally growing markets and a powerful balance sheet. The company is a dominant player in the production of digital content, through programs such as Photoshop and InDesign, and controls 50% of the creative software market. Its tools are also likely to make it “a key creative force in building the metaverse”. Sales have grown from $9bn in 2018 to $15.8bn in 2021, with 92% from recurring subscriptions. “Once the global economy and markets are able to find some stability, Adobe will once again win the recognition the business richly deserves.” $376.91 Next The Telegraph This retailer’s shares have fallen amid concerns about the impact of the cost of living crisis. But it has the financial…

Hopes that Sweden and Finland could be quickly admitted into Nato were thrown into doubt when Nato member Turkey, which has a veto, said it would block their applications, say Richard Milne and Laura Pitel in the Financial Times. The security alliance had hoped to formally begin accession talks on Wednesday – its secretary general, Jens Stoltenberg predicted that the first stage of the application could be approved within weeks. Turkey’s opposition makes that unlikely. The country’s president, Recep Tayyip Erdogan, objects to Sweden and Finland joining as both countries have given shelter to members of groups that Ankara considers “terrorist”, say Bruno Waterfield and Oliver Moody in The Times. These groups include the Kurdistan Workers Party (PKK), the Syrian Kurdish YPG, as well as followers of Fethullah Gulen, whom…

• Bakery chain Greggs is facing a shareholder revolt over its executives’ high pay and bonuses, says The Guardian, despite dodging repayment of £87m in government furlough support received in 2020. Chief executive Roger Whiteside (pictured) took home bonuses worth double his basic salary of £575,209, taking his total pay to £1.9m. That’s 79 times the earnings of the average employee. Finance chief Richard Hutton trousered a pay rise of 11.4% in 2021, followed by a 3.5% increase this year to £393,300. • Tesco’s CEO Ken Murphy collected a remuneration package worth £4.7m last year, 224 times the total pay and benefits of the median member of staff at Tesco, which was £21,217, says Sky News. Murphy was paid a basic salary of £1.5m, plus £3.2m of bonuses for supporting…

Book value is also known as shareholders’ equity or net asset value (NAV). It is the value of all of a company’s assets, less all of its liabilities (debts). It can be found on the balance sheet in a company’s annual report. Book value is sometimes used as an estimate of what a company would be worth if all of its assets were sold for their balance-sheet values. It’s often used in this way to value firms such as banks, housebuilders and insurers. When you know the book value, you can get an idea of how cheap or expensive a share is by dividing the share price by the book value per share (hence the price/book – or p/b – ratio). A p/b of below one means that – technically…

Saint-Gobain, one of France’s oldest industrial firms, is under pressure from investor Bluebell Capital to restructure its business and replace its chair in response to what the activist calls “underwhelming performance”, says the Financial Times. Bluebell – which holds a stake of 0.5% in Saint-Gobain – wants the firm to spin-off, list or sell its distribution operations and focus on building materials. Government pressure to improve the energy efficiency of buildings should offer “significant opportunities” for building-materials firms, says Bluebell. Saint-Gobain’s margins have been weak for many years, while its share price has also lagged behind peers, including Swiss firm Sika, which it previously tried to buy.…

“I never thought I’d sell out the Hammersmith Apollo… then you do one night and it sells out. And that’s exciting.Then you do three and four, and it turns to ten. And you’re like: ‘Whoa, man, I’m happy with that.’ Then you do the O2… you’re like: ‘Wow, bloody hell man, this is just going all right. Yeah, I think I’ll keep at this, man!’” Comedian Mo Gilligan, quoted in The Guardian “Just after I’d left [TV show] Gladiators… I lost a house deposit of £30,000 and didn’t even care. I put down the deposit then decided to go to America, forgetting about the house I’d made an offer on. I’d just signed a TV deal for loads of money to be Action Man, so I just let it go.”…

“The US market will lose its premium rating” In recent decades, we have lived through an era of optimisation, which was enthusiastically embraced by American executives, in particular. Under the banner of delivering shareholder value, companies contracted out manufacturing to suppliers on the other side of the world, ran down inventories – operating instead on a “just-in-time” basis – and replaced equity funding with debt. Optimisation boosted the components that determine return on equity (ROE): corporate profit margins, asset turns and leverage. US public firms boasted the highest returns in the world, reporting a 17% ROE last year, compared with just 9% for Japanese firms. However, as Nassim Nicholas Taleb pointed out in his 2012 book Antifragile, the pursuit of optimisation creates instability. Thus, in recent years, we’ve witnessed a…

As the cost of living bites, many of us are looking for ways to make cutbacks. But is that the most effective way to balance your household budget? “Forget buying Tesco value baked beans, putting on an extra jumper or demanding government handouts – the single best way to combat rises in the cost of living is to expand your income,” says James Coney in The Sunday Times. “In short, go and get a pay rise.” Most people are far more inclined to curb their spending than try to increase their income, according to a recent survey by Ipsos Mori. When asked what they would do if price rises meant they could no longer afford their lifestyle 49% said they would cut back on heating and electricity and 37% were…

Should small business owners continue to let staff work from home in the wake of the pandemic? Senior government figures, including the prime minister, appear to think it’s a bad idea and are urging people to get back to the office. They’ve even backed away from previous promises to give employees a legal right to request flexible working. However, just because you’re not going to have to offer employees this benefit doesn’t mean you shouldn’t do so. “There is evidence that flexible working boosts output” For many small businesses, flexible working makes lots of sense. There are several good business arguments for a permanent shift to this model. Above all, there is a growing body of evidence that flexible working policies boost output. One landmark study of 16,000 workers conducted…

The current market turbulence has provided some opportunities to revisit some tips that have previously proved profitable for this column. One of these is JD Sports, which nearly doubled in value when I tipped it for much of 2019. Since then, the firm has experienced a roller-coaster ride. During the initial days of the pandemic it lost two-thirds of its value, but then quadrupled, leading to a five for one stock split last November. However, in the last six months it has slumped again, nearly halving in price, so it is now cheaper than when I recommended closing the position in November 2019. There are some logical reasons why investors are wary of the company. Rising prices and potential supply-chain problems in China threaten margins, while many worry that consumers…

Last year ended on a high note for US stocks, which were in their third year of double-digit returns. Large caps were up over 20% and the S&P 500 was up over 100% over three years. However, 2022 has presented a more challenging environment. While pandemic-related risks have reduced, new headwinds such as inflation, rising interest rates and geopolitical tensions are affecting investors’ sentiment. US equity markets have responded by rotating favour between value and growth. Except for the first quarter of 2021, when value outperformed, growth was the clear winner. Yet today, value stocks are once again outperforming as investors try to shield themselves from rising inflation and geopolitical instability. We expect markets to continue this relay, passing the baton between value and growth. “Focus on high-quality businesses with…

2021 Château La Mascaronne, Rosé, Côtes de Provence, France (£81.00, per six bottles in bond, laywheeler.com) There are few properties in the south of France as breathtakingly beautiful as La Mascaronne. There are 60 hectares of organically farmed vines here, and they form one contiguous plot surrounded by oak and olive trees on all sides. Michel Reybier, owner of Château Cos d’Estournel, a 2ème Cru in Saint-Estèphe, and the elite La Réserve hotels in London, Paris, Geneva, Zurich and Ramatuelle, bought this exquisite estate in 2020, and I raved about his inaugural vintage last year. On the whole, 2021 is not as lush a vintage as 2020, and lesser wines feel a little skinny and undernourished. However, the top estates have brought a singular definition and elegance to their creations,…

Shot Sage Blue Marilyn (1964), a “lurid” print portrait of Marilyn Monroe by Andy Warhol, sold for $195m after fees last week at Christie’s in New York, making it the most expensive contemporary artwork sold at auction, says Will Pavia in The Times. It is the second-most expensive artwork anywhere, after Salvator Mundi (c.1500), a painting attributed to Leonardo da Vinci, which sold for $450m in 2017, and it also set an auction record for a US artist. Christie’s had billed the Marilyn as a masterpiece and rumours swirled that it might go for as much as $400m. “This is the sort of silly money that an (in principle) infinitely reproducible print can attract,” says Rachel Campbell-Johnston in the same paper. It’s all about trophy status. “Warhol’s pictures, so empty…

• The party’s over, says Clemmie Moodie in The Sun. In June 2006, “a gaggle of slightly orange, stiletto-heeled young women are dancing on tables, arms flailing, and nailing shots of Sambuca in Baden-Baden’s Garibaldi’s bar” – the term “wag” (footballers’ wives and girlfriends) was then born. “I spent night after exhausting night trailing in the wake of these pampered, preening glamazonians” – among whom was a young Coleen Rooney (pictured). These women, with their “grotesque spending habits and love of Veuve Clicquot, became an unlikely cultural phenomenon”. But today, as Rooney and fellow wag Rebekah Vardy go at it “hammer and tongs” in the High Court, racking up millions in legal fees over who did or didn’t plant stories in The Sun, it’s time to say enough. Mrs Justice…

The average American family is now spending $3,000 more per year for food and fuel, according to analyst Ed Yardeni. That is, households have $3,000 less to spend on other consumer goods and services, which are also seeing rapid price rises. There are some 400 Ph.D. economists on the Fed payroll. Did any of them foresee the obvious consequences of printing up trillions of dollars’ worth of new money? Apparently not. Did any of them mention that it would make most Americans poorer? “The Fed has tossed a glass of water on the conflagration it started” But wait. Their job is not to speak truth to the powerful Fed governors, but to protect them from it. Armed with jackass theories and overblown conceits, they stand guard at the temple door.…

Pub owner David Gorton found a 364-year-old coin worth an estimated £12,500 under the floorboards during renovation work, says The Sun. Gorton, who runs the Grade II-listed Old Cottage pub in Margate, initially thought he had vacuumed up an old penny, but later discovered that it was an Oliver Cromwell silver shilling dating back to 1658. Rock band Coldplay (singer Chris Martin pictured, right) have already grossed $40m in ticket sales for its world tour, despite pricing tickets at least 25% lower than any major peer, says Bloomberg. The group is charging an average of $77.80, roughly the same as on the last tour five years ago, which has helped sell more tickets than any other act over the last two months.…

Renault has ended its majority ownership of Russian car brand Lada, says Bloomberg. The French carmaker will sell its 68% holding in AvtoVaz, Lada’s parent company, for a symbolic one rouble to the state-run Central Research and Development Automobile and Engine Institute. The deal marks the end of a relationship that began when Renault took control of Lada for $1bn in 2007. The firm has retained an option to buy back the businesses within the next six years, but will take a €2.2bn writedown as a result of the sale. The exit carries one financial benefit: Renault was still paying 45,000 workers in the country, even though production had halted, says Lex in the Financial Times. But there’s no getting around the fact that this will be painful for Renault.…

TC Energy “may be just the antidote investors need to cope with the current global turmoil”, says John Heinzl in The Globe and Mail. The firm gets 75% of its earnings from natural gas pipelines in North America, with the rest from liquids pipelines and power generation. Around 95% of earnings are from regulated industries or long-term contracts, ensuring stability. The shares yield about 5% and the dividend has gone up every year for 22 consecutive years. Investments in new pipeline and nuclear power should keep payouts growing at 3%-5% per year. (Canada withholds 25% tax on dividends, which reduces to 15% under the UK-Canada tax treaty if your broker accepts the NR301 tax-relief form.)…

Beijing has imposed a “de facto international travel ban” that prevents citizens from going overseas for “non-essential” reasons as it “ramps up” enforcement of its zero-Covid policy, says Jessie Yeung on CNN. There is speculation that officials are cracking down because growing numbers are trying to leave after two years of draconian controls that have included citywide lockdowns, mass testing and mandatory quarantine. At present, an estimated 220 million people are in full or partial lockdown in 32 cities. The administration says the ban is necessary to “reduce the risk of infection”, but Beijing may simply not want its citizens to leave. China has a long history of isolation and outbound travel was “heavily restricted” until the early 2000s when incomes were rising and the rules were relaxed. According to…

With the American mid-term elections less than six months away, the bookmakers and the betting exchanges are gradually adding new markets on specific contests, rather than just on who will win overall control of the House or Senate. Chief among them is Smarkets, which has markets on a large number of individual Senate seats (including some intra-party primaries) and on five gubernatorial contests in Georgia, Texas, Michigan, Pennsylvania and Florida (although the markets on Michigan and Pennsylvania have seen relatively little activity so far). In terms of betting value, I’d go with Ladbrokes’ market on the contest in New York. True, the odds on incumbent Kathy Hochul (pictured) winning the Democratic nomination are too short at 1/33 (97%) to recommend. But the 1/8 (89%) on the Democrats retaining control of…

The bosses of North Sea oil and gas companies have received “bumper payouts”, boosted by the recovery of prices following the pandemic, despite growing calls for a windfall tax, says The Guardian. As the war in Ukraine lifted energy prices, oil giants saw huge returns and climbing share prices, which have elevated pay for executives. The chief executive officers of the ten largest North Sea operators received a combined £54.4m in their last financial year, up from £29.4m in the previous period. The chief executive of the North Sea’s largest operator, Harbour Energy’s Linda Cook, landed a £4.6m “golden hello” bonus on top of her usual £6m salary. BP’s CEO Bernard Looney, who has said that high prices have turned his company into a “cash machine” as profits more than…

“The [Federal Reserve] wants to be viewed as a conscientious inflation fighter, but the extremely negative real Fed funds rate says otherwise,” writes Richard Bernstein, founder of Richard Bernstein Advisors, in the Financial Times. The “real” Fed funds rate is the difference between the US central bank’s target interest rate and inflation. When it is positive (ie, interest rates are higher than inflation), that should be “enough to slow nominal growth”. For example, in the early 1980s, under Paul Volcker (pictured below), the last Fed governor to battle severe inflation, the real rate peaked at “more than 10%”. Today, however, with inflation at a 40-year high, “the real Fed funds rate is now negative to a degree... far beyond historic averages” – sitting at negative 7.5% versus a 50-year average…

■ Investors are selling many of the funds that are most likely to beat the market in the long term, says Lauren Almeida in The Telegraph. Outflows from funds that invest in small and medium-sized British companies were substantial in recent weeks, according to data from fund platform Calastone. UK-focused funds had net outflows of £836m in April, with two-fifths of that coming from small and mid-cap funds – a much larger proportion than their share of assets under management. That reflects both the market turmoil and the grim outlook for the UK in particular – the Bank of England says that rising energy prices and the cost of living crisis could push the economy into recession later this year. Yet while small firms are often more exposed to economic…

A “rare disease” is – by definition – something that only affects a small number of people. We can even put a specific number on this: the US considers a rare disease to be one that afflicts less than 200,000 and the EU uses a similar benchmark of 250,000. However, while each rare disease is uncommon, there are a relatively large number of different diseases that qualify – around 7,000. That means an estimated 25 million to 30 million Americans have a rare disease – although many will be undiagnosed because most doctors may never have seen patients having one of the rarer diseases. However, diagnosis is only the first part of the problem when it comes to tackling some of these conditions. Providing effective treatments can be an even…

• Annuity rates are increasing at the “fastest pace in more than 30 years”, says Jessica Beard in The Daily Telegraph. For over a decade annuities have been a tough sell, because low rates have meant people would have to hand over large amounts of their pension fund to secure a small, guaranteed income. But now these policies have “staged a comeback, as payouts jump from all-time lows”, due to increases in the Bank of England’s base rate and the knock-on rise in government bond yields. A new annuity bought with a £100,000 lump sum “now pays out £13,000 more on average over the course of a retirement than one bought last year”. • “Savers could bag up to £2,000 cashback by moving their pension or Isa,” says Imogen Tew…

Many small business owners have never had to worry about rising interest rates, because the cost of borrowing has remained at historic lows since the financial crisis of 2008. But now we are entering a new era. The Bank of England expects interest rates to rise from 0.75% today to 3% by 2023 to combat inflation. That’s still low by historical standards, but higher rates will affect small businesses in all sorts of ways. Most obviously, if your business has debts such as credit-card borrowing or a business loan, and this isn’t arranged at a fixed rate, its monthly repayments are now set to increase. It is therefore important to check what rates you’re paying – and whether now is the time to switch to a more competitive deal. Moreover,…

A large salary and soaring share options aren’t the only rewards that business leaders can receive for doing their job well. Titles, awards and other honours also frequently come with financial success. For example, in the 2021 New Years’ Honour List around 10% of UK honours were given in recognition for services to business and the economy. Even in countries that don’t have a formal awards system, many business publications and organisations hold annual awards ceremonies for those who they feel have done an outstanding job. However, while the awards may leave the executives with a glow of satisfaction, some people argue that they are a signal to sell. Since titles and awards are usually given on the basis of past performance, rather than future potential, they may signal that…

The finest violins in the world were made by Antonio Stradivari and Giuseppe Guarneri in the 18th century, as any violinist worth their salt will tell you. The Italian luthiers were contemporaries and both lived and worked in Cremona, Italy, the preeminent centre of violin-making. When touting one of their instruments for sale, auctioneers naturally reach for the superlative gold standard everybody recognises from the art world – the great Leonardo da Vinci. And so we have it: next month, there is not one, but two violins heading for auction, with both French auction house Aguttes and specialists Tarisio proudly proclaiming theirs to be the “da Vinci” of violins in their respective June sales. First up, on 3 June at Aguttes, just outside Paris, is a “Del Gesu” violin, made…

£3.6bn How much the Church of England says it will spend in its 12,500 parishes over the next nine years, representing a 30% increase in funding, says The Guardian. The money will support good works such as food banks and environmental work. €265m The cost to Dijon of building the Cité de la Gastronomie, a vast centre exhibiting the grandeur of Gallic cuisine, with restaurants and a 3,000-bottle wine cellar. Dijon, along with Tours, Lyon and Paris, is vying to be the unofficial culinary capital of France. $400,000 The value of a 0.54-carat “fancy vivid” purplish pink diamond from the legendary Argyle mine in Australia. The valuation is based on the offering of 2,000 shares at $200 each as part of a new coloured diamonds fractional ownership scheme being launched…