Indholdsfortegnelse for 1105 i MoneyWeek

In his very good book on investing, Margin of Safety, Seth Klarman tells the story of a California speculative mania – in sardines. The fish had disappeared from their usual waters off Monterey, the shortage pushed up prices, and before long there was an enthusiastic trade under way in tinned sardines. The “you-can’tgo-wrong-with-sardines” story spread. Prices soared. Then one day a buyer (a hungry and clearly exceptionally price-insensitive one) decided to open a can and eat a sardine or two. He was fairly instantly unwell – and complained to his supplier. Why would you open the can?, asked the seller. “These are not eating sardines, they are trading sardines.” It is useful shorthand for when you are dividing the speculative from the real – and particularly useful in today’s markets.…

The Japanese town of Abu sent ¥46.3m (£287,000) in pandemic relief funds to a resident who gambled the entire sum away in a fortnight, says the Guardian. The town government was supposed to send ¥100,000 to 463 low-income households, but wired the entire amount to one account. The households that missed out have now been sent the amount they were due. Gabe Plotkin, the hedge-fund manager who lost around $7bn shorting stocks such as GameStop during last year’s meme-stock rally, is winding down his funds, says the Financial Times. Plotkin’s firm Melvin Capital Management had delivered annual returns of 30% per year between 2014 and 2021 and “was widely regarded among the best managers in the hedge-fund industry”.…

The stockmarket sell-off has spilled over into the US high-yield bond market, says Matt Wirz in The Wall Street Journal. High-yield bonds – also known as junk bonds – had held up well for much of this year, but that started to change around the end of April amid growing concern about an impending recession and the probable impact on defaults. Investors are now demanding an average of 4.4% in extra yield over Treasuries to lend to the sector, up from 2.8% at the start of the year. That is still well below the 11% peak of March 2020, but the direction of travel is clear. Bond prices fall when yields rise and the Bloomberg US Corporate High-Yield Bond index is now down by about 10% so far this year.…

Special purpose acquisition companies (Spacs) are listed shell firms that raise money to fund a merger with another company, providing the merger target with a simpler route to going public than a traditional initial public offering. Spacs have boomed in the US in recent years, raising $260bn since the start of the pandemic, says the Economist. Yet they have done little for investors. The De-Spac ETF, which tracks 25 of the biggest firms that recently listed through a Spac, has plummeted 50% so far this year, compared with a 27% fall in the Nasdaq Composite over the same period. “Almost half of the companies included in the De-Spac index are currently burning through cash fast enough to empty their coffers within two years.”…

• US regulators have forced European insurer Allianz to cough up $6bn in fines and compensation after it admitted to “defrauding pensioners” by downplaying the losses that clients would suffer in a market crash, says Aimee Donnellan on Breakingviews. The outcome will leave a “lasting scar”: it has been banned from providing advisory services in the US for ten years, forcing it to move $120bn in assets to rival Voya Financial in exchange for a 24% stake in the latter’s investment arm. What’s more, aside from the loss of assets, investors can no longer assume that losses in the fund-management arm are a risk solely for its clients rather than for Allianz’s own capital. Its business model is likely to come under scrutiny. It would be “naïve to assume this…

Saudi Aramco, the Saudi Arabian state-run oil firm, may cash in on high oil prices to carry out an initial public offering (IPO) of its trading arm, says Bloomberg. Aramco Trading could be worth more than $30bn and Aramco is considering selling a stake of about 30%, which would make it one of the biggest IPOs this year. Aramco is now the world’s most valuable company with a market capitalisation of more than $2trn. It already has several listed subsidiaries, including its chemicals arm, and is considering others, including an IPO of its Luberef refining unit that could raise $1bn. Saudi Arabia is one of the best-performing markets this year and roughly 70 companies have filed for IPOs.…

Most of the West has already started to wean itself off Russian oil, and may soon be able to switch off the gas pipelines as well. But although we may be able to do without Russia’s energy, food is a different matter. It is becoming increasingly clear that Vladimir Putin is weaponising food supplies as part of his war on the West. Very soon there may be widespread shortages. Both Russia and Ukraine were the world’s breadbaskets. Between them, the two countries supply 28% of globally traded wheat, 29% of barley, 15% of maize, and 75% of sunflower oil. Add it all up and it comes to 12% of all the calories traded around the world. That is now at real risk. Ukraine’s agricultural industry is being systematically destroyed by…

It’s easy to get parochial when thinking about house prices. Despite appearances, the British are not uniquely obsessed. Indeed, when it comes to high-risk overvalued housing, we’re not even near the top of the pile right now. A recent survey of the most vulnerable markets by The Economist had Britain ranked only 13th of 20 nations. Sweden, the Netherlands and New Zealand make up the top three, while Australia, Canada and the US are at five, seven and eight respectively. “The British are not uniquely property obsessed” The Economist looks at four key measures: price growth, the share of homes with a mortgage, the proportion of mortgages that are variable rate, and the overall indebtedness of households. Taking the average from the end of 2019 to the end of 2021,…

Clever tech is fuelling inflation John Thornhill Financial Times Algorithmic pricing is now commonplace, says John Thornhill. Combining a wide range of data from product inventories to competitors’ prices and the weather to find the “sweet spot” can increase bottom lines by as much as 10%. On the other hand the consumer, with access to price-comparison websites, has apparently never had it so good. It also seems logical that a retailer’s ability to respond to rivals’ price cuts should increase competition. Two academic papers, co-authored by Alexander MacKay of Harvard Business School, suggest otherwise. MacKay found that when a firm instantly matched its rivals’ price cuts, over time, prices rise. And since competitors with “inferior technology” have no incentive to lower prices, competition is weakened. At a time of…

When Schroders BSC Social Impact Trust (LSE: SBSI) launched in December 2020, the returns it was offering – 2% over the consumer price index (CPI) inflation rate over the long term – looked unattractive. But now, with the latest CPI figure at 9% and set to go higher, interest rates still at derisory levels and bond yields not much better, it looks more attractive. Furthermore, SBSI’s annualised rate of return has been a better than expected 7%. The trust raised £75m at launch, but performance and further issuance has increased assets to £90m. “Our aim is to get to £300m-£500m, which will bring the expense ratio down from 1.06%,” says manager Jeremy Rogers. Investing in good causes The trust is a joint venture between Schroders and Big Society Capital, where…

Tips on how to cut your bills to fight the cost of living crisis are coming thick and fast as inflation hits 9%. But which ones will actually have a serious impact on your household budget? As we said on this page last week, the single best way to tackle rising prices is by increasing your income. But if you can’t get a pay rise or a side income, or it isn’t enough to cover rising costs, there are some cost-cutting measures that can help too. Adjust your boiler and bills Turning down the water temperature on your boiler in the summer could cut between 6% and 7% off your gas bill, says The Sunday Times. You should set your boiler to 75 degrees Celsius for the best efficiency and…

The soaring cost of independent financial advice on transfers out of final salary pension schemes is causing mounting concern among pension experts, who warn that affordable advice is becoming increasingly difficult to find. Savers determined to transfer cash away from a final salary pension scheme will now face a bill running into thousands of pounds. The problem stems from the regulators’ efforts to protect savers. The Financial Conduct Authority’s (FCA) view is that given the guaranteed (and often very generous) benefits provided by final salary pension schemes, transferring to another type of arrangement is a bad idea for most people. Amid concern about the number of people making such transfers, the FCA now insists anyone seeking to move a pension worth more than £30,000 out of a final salary scheme…

Commodities have had a poor decade, but as we face possible stagflation, companies such as Shell (up by 45% year-to-date) and Glencore (up by 33%) have begun to benefit. Meanwhile, absolute-return hedge funds – those that try to deliver steady returns in all market conditions – have struggled to cope with central banks’ quantitative easing (QE) since the financial crisis, but could now do better as QE is withdrawn. Ocean Wilsons (LSE: OCN) is a small, relatively obscure UK-listed company that could benefit from both trends. This 180-year-old firm is something of an oddity, consisting of a 58% interest in Wilson Sons (a Brazilian ports and maritime services firm) and 100% ownership of an investment subsidiary (Ocean Wilsons Investments). Taking the former first, Wilson Sons was set up in the…

Oil and gas production firm Enquest (LSE: ENQ) has seen its shares soar on the back of positive full-year results published in March, says The Motley Fool. Enquest reported a 50% increase in revenues for the year to 31 December, while losses in 2020 turned into a $352m profit in 2021. Cash flow increased by almost 90%. The company, which operates in the UK North Sea and in Malaysia, also purchased two new undeveloped oil fields in the North Sea, as it looks to expand its operations. Enquest’s share price has increased by 97% over the last 12 months and is nearing all-time highs.…

Joseph “Chip” Skowron III was born in Cocoa, Florida, in 1968, and graduated with a medical degree from Vanderbilt University before doing a doctorate at Yale Medical School. Following a residency at Beth Israel Deaconess Medical Centre, where he published several papers, he left medicine to go into finance, working as a healthcare analyst for hedge funds SAC Capital Management and Millennium Partners. In 2003 he was hired by FrontPoint Partners to help build their healthcare funds. When Morgan Stanley took it over in 2006, Skowron became managing director. What was the trade? By 2006 Skowron was managing or co-managing six healthcare funds. That year he met Yves Benhamou, a consultant overseeing a clinical trial for Human Genome Science, one of the companies that FrontPoint held in its portfolio, through…

Preventable How a Pandemic Changed the World & How to Stop the Next One Devi Sridhar Viking, £20 In the summer of 2018, 18 months before the first public reports of what would become known as Covid-19, Devi Sridhar warned about a “pandemic looming on the horizon”, says Oliver Barnes in the Financial Times. She argued that the “biggest threat” was a Chinese farmer getting infected with a novel pathogen from an animal before boarding a plane bound for Britain. In this book, Sridhar takes readers on a “rapid world tour” to help us understand why countless Western nations with plentiful capacity, especially the UK and the US, “failed the pandemic test in 2020”, while “less obvious candidates rose to the challenge”. Her basic argument is that public-health officials and…

Hybe, the firm behind K-Pop stars BTS (pictured) is diversifying beyond music, says Nikkei Asia. Less than half its KRW1.26trn (£800m) in revenue now comes from albums and concerts, and areas such as licensing deals play a greater role. These include the BTS Meal, a McDonald’s special sold in 50 countries. Now it’s invested KRW500bn (£320m) in a blockchain start-up to develop non-fungible tokens (NFTs) and will launch a BTS game that includes microtransactions (in-game payments). However, 60%-70% of Hybe’s earnings are still linked to BTS, so the firm is racing to launch new groups before the oldest members of BTS have to suspend their performing careers to do compulsory military service at age 30.…

“Here we go again,” says Russ Mould of AJ Bell. “The bear market that is threatening to chew up a lot of the past few years’ gains… looks like so many other downturns that have gone before it.” Bull markets usually “crack at the periphery first and trouble then filters through to core assets”. The plunge in cryptocurrencies was “one early sign of trouble”. Enthusiasm for Spacs has also cooled (see page 5). Now the wider market is feeling the heat. Last Friday, Wall Street’s S&P 500 share index briefly entered bear-market territory after falling 20% from the record high it hit at the start of 2022. The index has fallen for seven weeks in a row, its worst such streak since the dotcom bubble imploded in 2001. The Dow…

“The theory behind ‘sell in May’ is that investors’ appetite for risk is seasonal. [As] the weather improves in the spring we become more optimistic… April has for years been the best month for equities… Such optimism… pushes prices too high with the result that returns are lacklustre in the following months… [Last year] this strategy was less successful… One possibility is that investors have wised up to the mistakes that caused them to underprice equities in the autumn and overprice them in the spring… Do we have strong theoretical reasons to expect the seasonal pattern of share prices to persist… I suspect so. Seasonal changes in our moods are thousands of years old, as we see in the contrast between traditional May Days… and Halloween…It’s not obvious to me…

One of the biggest tech deals in history is on the verge of being announced, with chipmaker Broadcom in talks to buy cloud-computing company VMware for around $50bn, says James Titcomb in the Daily Telegraph. The takeover of VMware – whose core product allows users to access remote versions of systems such as Windows – would be the latest in a string of acquisitions that have made Broadcom into one of the world’s largest technology companies. Broadcom has a mixed record on completing deals, says Dan Gallagher in The Wall Street Journal. US authorities scuppered its takeover of rival chipmaker Qualcomm in 2018, while its recent attempt to buy SAS Institute also fell victim to a “revolt” by employees worried about the potential loss of perks. However, it is likely…

Three to buy Moneysupermarket The Sunday Times Many consumers will turn to this comparison site to save money amid the rising cost of living, but the investment case is not as straightforward as it seems. Revenues from energy, which amounted to £70m in 2020, have fallen to nothing as high energy costs mean no cheap tariffs. Insurance has also been hurt by the regulator’s move to ban companies from offering cheaper deals to new customers. Still, the travel division is back at pre-pandemic levels, its money arm beat forecasts and the acquisition of cashback site Quidco has contributed £14m in revenues for the first quarter of the year “The stock seems to have been punished too far.” 176p Nestlé Investors’ Chronicle Food producers are “walking a tightrope” trying to manage…

US president Joe Biden appeared to overturn the decades-old policy of “strategic ambiguity” on Taiwan earlier this week by pledging to use military force to defend the territory if China invades, says the Financial Times. Until now, the US had recognised China’s claim on the islands through its “one-China” policy, while at the same time emphasising that any re-unification must take place peacefully, a policy aimed at discouraging Taiwan from formally declaring independence and a Chinese attack. Biden’s remarks have caused confusion by leaving open the possibility that US troops would get directly involved in any conflict. Almost immediately after Biden made the comments, White House officials tried to walk them back, insisting there had been no change in policy, says Katie Stallard in The New Statesman. Biden also reaffirmed…

• French football player Kylian Mbappé (pictured) has agreed a new three-year deal with France’s Paris St-Germain (PSG) football team, with a signing-on fee said to be around €100m and an annual salary of around €50m (although reported numbers vary). The Qatariowned club had previously paid €180m to sign him from Monaco in 2017. PSG made a loss of €224m during the 2020-2021 football season and spent upwards of €600m in players’ wages. • Richard Harpin, the founder and chief executive of home-repairs company HomeServe, and his wife Kate will receive a £495m windfall after selling their 12% stake in the business, says The Times. The Walsall-based company is being bought by Canadian investment firm Brookfield Asset Management for £4.1bn, in a cash offer of £12 a share. The offer…

High house prices are often blamed on a shortfall of supply. That is, prices are high because we aren’t building enough houses. However, a far more important driver of high prices is interest-rate policy. “UK house prices and three decades of decline in the risk-free real interest rate” is a working paper from the Bank of England written by David Miles and Victoria Monro and published in 2019. The authors conclude that the sharp rise in house prices relative to incomes between 1985 and 2018 “can be more than accounted for by the substantial decline in the real risk-free interest rate” (the yield on medium-term UK government debt, adjusted for inflation) during this time. What does that mean? The easiest way to think about it is to consider the impact…

“I would like to think I will bring my kids up to want to say the same thing to me. It would be a real measure of success if [my] kids grew up with that attitude.” Dragons’ Den star Sara Davies told her parents not to worry about leaving her an inheritance, quoted in the Daily Express “I don’t tend to blow money except if it’s on something big – because as the prime minister Harold Macmillan once said when asked what he was most afraid of: ‘Events, dear boy, events.’ You never know what might come at you out of a clear blue sky, so I like to have some money set aside for a rainy day.” Writer Gerald Seymour, in The Sunday Times “Pay your tax. Be straight.…

Hedge fund Third Point Capital is still pushing for oil giant Shell to restructure, six months after calling for the break up of the company, says The Wall Street Journal. The fund, which is run by activist investor Daniel Loeb, wants Shell to separate into one business focused on legacy fossil-fuel operations and another on renewables and liquefied natural gas. “Shell’s portfolio of disparate businesses ranging from deep-water oil to wind farms to gas stations to chemical plants is confusing and unmanageable,” says Loeb. Shell argues that its current strategy is supported by shareholders. The firm broke out profits from renewables for the first time last quarter, disclosing that they contributed $344m out of a total of $9.1bn in earnings.…

To say that 2022 hasn’t been a good year for technology stocks would be a bit of an understatement. Most of the leading names such as Apple, Amazon, Alphabet, Microsoft, Meta Platforms and Netflix have slumped. Netflix is now down nearly 75% from its peak. Lots more damage has been done outside the top names: the tech-heavy Nasdaq Composite index is down 30% from its highs and more than 45% of its constituents are down by 50% or greater. Still, the Nasdaq remains far higher than it was before the start of the pandemic – it’s up by about 25% since the beginning of 2020. This raises the question as to whether a longer-term technology bear market has only just begun, or whether this is just a blip in a…

A change of rules means families can now apply online for lasting power of attorney (LPA) agreements. LPAs allow relatives to make financial and medical decisions on behalf of elderly or vulnerable family members. The number of LPAs has soared to more than six million in recent years. The Ministry of Justice has said it hopes the change will cut the current five-month waiting times to get the key documents. LPAs provide “comfort and reassurance to millions of people that decisions will be made in their best interests should they lose capacity”, justice minister Thomas Pursglove told the Mail on Sunday. But pandemic-related waiting times of up to 20 weeks have seen some elderly people face “being evicted from care homes because their children were unable to sell their parents’…

The government’s decision to suspend the “triple lock” pension guarantee will cost older people thousands of pounds just as soaring inflation is hitting them hard, campaigners are warning. The triple lock guarantees that state pensions will rise each year in line with average earnings growth, consumer price inflation, or 2.5% – whichever produces the highest figure. But last September, when pension increases were set for April 2021, ministers opted to suspend the formula, arguing that wage inflation of 8.1% was a one-off discrepancy connected to the Covid-19 pandemic. Instead they used the price inflation figure of 3.1%. Since then, however, the latter has climbed steadily, hitting 9% in April, according to figures published last week. Under the adjusted formula, state pensions rose by £289 last month, rather than the £822…

Shares of German real-estate firm Adler (Frankfurt: ADL) plunged 45% in early May after auditor KPMG refused to sign off on its results and half the board resigned, says the Financial Times. The company announced a net loss of €1.2bn, after writing off €1bn from property development, and said that it would not be able to raise additional funds without violating bond covenants. The shares had previously fallen sharply in October after a short-seller published allegations – which Adler denies – questioning the valuation of its assets. The share price is down by 79% over the past 12 months.…

£28.12, thedrinkshop.com; coming soon to nzhouseofwine.co.uk, harveynichols.com, harrogatefine winecompany.com Akitu was established in Lake Wanaka two decades ago by Andrew Donaldson. Andrew planted 12 hectares of pinot noir, and his two red wines, A1 and A2, have climbed swiftly to the higher echelons of the New Zealand pinot ladder. The latest red wine releases, 2019 Akitu A2 Pinot Noir (about £33, from the four stockists listed) and 2019 Akitu A1 Pinot Noir (about £43, ditto) are the finest yet from this elite estate. Showing refinement and unshakable integrity, while A2 is designed for relatively early drinking, I feel that 2019 A1 is set to be a superstar given five more years in the cellar. But, this week, I have a less predictable treat for you – New Zealand’s finest “white”…

The race to live forever Peter Ward Melville House, £20 Nothing in life is more certain than death and taxes, it has been said. That hasn’t stopped an army of accountants and lawyers working hard to help people dodge the latter. Now some visionaries are trying to eliminate the former. Peter Ward looks at attempts by scientists and entrepreneurs to “hack” the human body not only to extend, but also ultimately eliminate the limits on human lifespan. Ward is generally sceptical about whether that could ever be achieved, and many of the stories he recounts support this view. The cryonics industry (built on the idea of freezing the recently deceased so they can be revived in the future to be cured of what caused their death) seems particularly populated with…

• Celebrity chef Jamie Oliver (pictured) is right to slam the government for its “U-turn on junk food”, says Saira Khan in the Daily Mirror. We have an “obesity pandemic” in this country and we need to “help people, especially children, make better food choices”. Boris Johnson had pledged to ban multi-buy supermarket deals on unhealthy products and junk-food advertising before the watershed with effect from next year. But Johnson “loves a U-turn” and these bans will now be delayed for at least a year. “He cites the cost-of-living crisis for his reasons,” but suggesting that people should stock up on cheap junk because healthy food is now too expensive is a “disgusting” explanation. It’s out of “touch and a clear indication that the nation’s health and that of the…

$375m The selling price of Donald Trump’s Trump International Hotel in Washington – a record price for a hotel in the US capital. The former US president will make a profit of around $100m after repaying a $170m mortgage from Deutsche Bank and deducting losses incurred during the pandemic. The hotel will be rebranded as Waldorf Astoria and run by Hilton. £500,000 What chancellor Rishi Sunak is to spend on focus groups and opinion polls between now and February 2023, says the Daily Mirror. Sunak will commission two focus groups and one poll per week from Deltapoll, at a cost of £9,805 a week. This will take the total amount the Treasury has spent on polling since June 2020 to £1.35m. £29.6m The size of the fortune that the Rolling…

A metal detectorist has unearthed a hoard of 748 gold and silver Roman and Iron Age coins in a Suffolk field, says BBC News. George Ridgway, who caught the treasure-hunting bug when he watched the Indiana Jones film series as a child, came across the first traces in 2019 and worked with archaeologists to uncover the full haul, which is being valued by the British Museum. A horse owned by hedge-fund manager Seth Klarman won the Preakness Stakes – the second leg of America’s Triple Crown – on Klarman’s 65th birthday, says The New York Times. Early Voting (pictured) beat Epicenter – the same horse that lost to 80-1 long shot Rich Strike in the Kentucky Derby, the first leg of the Triple Crown, two weeks ago – to claim…

Shares in Kingfisher, the retail group that owns B&Q, have been boosted by news that the “cost of living crisis” hasn’t prevented “resilient demand” for DIY-related products, says Jasper Jolly in The Guardian. While sales were lower between February and April compared with last year, they are still close to the “elevated levels” seen during the pandemic, when DIY stores were one of the few outlets permitted to remain open, and 16% higher than during the same period three years ago. Not so fast, says Emma Powell in The Times. True, there are signs that some “lockdownera trends” are persisting, with “greater home working and an active housing market” helping Kingfisher to hold on to higher sales. However, while its shares have had a softer landing than other pandemic winners,…

Genco Shipping & Trading “has proved to be a port in the storm” in this turbulent market, says Nicholas Jasinski in Barron’s. The shares are up 42% so far in 2022, yet “investors may still underappreciate the company’s staying power”. Genco, which operates 44 dry-bulk carriers, focused on paying down debt and made only a small increase in its dividend during the “flush times” last year, unlike many rivals. It’s now increasing payouts and is on a forecast yield of 14%. That’s “probably close to a peak-cycle yield”, but the effort it’s put in to deleveraging and cutting finance costs should leave it in a position to keep paying some level of dividend when this cyclical industry turns down again.…

Time, the publication of “interim findings” in January, and the fact that the “juiciest contents” of Sue Gray’s long-awaited report had already been leaked, meant the final version felt “like being presented with a birthday cake with some of the slices already eaten”, says Camilla Tominey in The Daily Telegraph. The report “speaks” to Boris Johnson merely “popping in” to events briefly, as does the photograph of him toasting staff at a leaving party. Gray has “actually ended up watering down her conclusion” by acknowledging the changes that have already been made at No 10. “So Teflon Johnson lives to fight another day, although I doubt the Standards Committee investigation into whether he lied to parliament will prove as much of a cakewalk.” Tory MPs didn’t need any new information…

The betting exchange Smarkets is well known for offering a wide range of political markets. But as well as the more conventional markets on the outcome of elections, there are also a few on whether some specific event will take place. These range from whether 2022 will be the warmest year on record, through to whether Donald Trump will begin tweeting on Twitter again. One of the most interesting is on whether a windfall tax on the profits of energy companies will be announced before the start of July. With £1,738 matched on Smarkets, punters are clearly leaning in favour of the idea that a tax will indeed be imposed, with the odds on Yes being 1.36 (73.5%), compared with 3.15 (31.7%) for No. Whatever the benefits and costs of…

Staff at the UK’s Driver and Vehicle Licensing Agency (DVLA) have been paid nearly £2.2m in “performance payment” bonuses for the last financial year, despite an investigation showing that civil servants were doing no work while on full pay during that time, says The Times. The news comes amid growing criticism of the agency for long delays in processing applications. The backlog for issuing licences peaked at 1.6 million in September 2021 and has since been cut back to 800,000 after drafting in more staff. The DVLA has defended the payments as part of a “civil service-wide recognition scheme” for hard work and maintenance of “normal turn-around times” during the pandemic and disruptive industrial action, and claims that the bonuses were one-off payments mainly given to lower-paid staff among its…

“This bear is a different type of animal,” David Rosenberg, founder of Rosenberg Research & Associates, tells Michelle Makori of Kitco News. Normally, he says, the market copes well when the Federal Reserve starts to raise interest rates. But this time, markets stumbled almost as soon as rates started to rise. Why? There are two main reasons. Firstly, the Fed left it too long to act and so “the inflationary situation is out of control”. Secondly, inflation is being driven mostly by supply-chain disruptions, and the only way central banks can tackle that is by “crushing demand”. That, he says, is why “a recession is staring us in the face”. In fact, central bank efforts mean that, contrary to most people’s views, “inflation is gonna melt in the coming year”.…

■ The manager of the Scottish Mortgage investment trust has admitted that it was a mistake to reduce holdings in Western internet companies such as Meta Platforms and Alphabet rather than Chinese firms such as Alibaba and Tencent. Tom Slater, who is now sole lead manager of the growth-focused trust following the retirement of James Anderson in April, believes that the worst has passed in China, but that investors must recognise that they face new challenges after Beijing’s crackdown on internet companies caused shares to plunge. Key risks include “incorporating the low but increased chances of future US sanctions into their evaluation of Chinese investments” and considering “how the Chinese state may limit the upside in stock prices for breakthrough winners”, Slater writes in the trust’s annual report. Scottish Mortgage’s…

Meta Platforms (Nasdaq: FB) owns the social network Facebook as well as a range of related apps, most notably the messaging service WhatsApp and the picture-sharing website Instagram. The company is now using some of the money generated by Facebook, which is an “incredible cash cow” says James Penny of TAM, to invest in the metaverse (a vision of a network of virtual worlds facilitated by virtual reality (VR) and augmented reality (AR)). While this investment “could end up falling on its face”, there are early signs that it “could be this generation’s Facebook”. Facebook trades at only 13.6 times forecast 2023 earnings. Streaming service Netflix (Nasdaq: NFLX) has fallen a long way from its peak valuation due to concerns that the number of subscribers has peaked. However, there is…

• Rising inflation is causing families to open the Bank of Mum and Dad early, says The Sunday Times. A survey by Ssafa, the armed forces charity, found that 10% of parents aged over 50 who had adult children now intend to give away money earlier than previously planned. Of the 2,000 people surveyed, 15% said they would pass on some money to their children during the cost of living crisis. The amount worked out at an average of 9% of their estate. • “One in five tax refunds has been delayed as the tax authority attempts to crack down on a spate of fraudulent claims,” says The Daily Telegraph. HMRC reports that 20% of tax rebate requests are taking longer than the 15-day target for payment, due to increased…

• Pension-saving studies consistently highlight how women receive less money than men, but changes to state pensions are helping to close the gap, new data from insurer Canada Life shows. Men and women who retired before April 2016, when the state system was revamped, are currently receiving average state pensions of £172.64 and £145.87 a week respectively. However, for those in the new scheme the figures are £170.50 and £164.74 a week respectively. The data is positive, but there is still “much work to be done”, Andrew Tully, technical director at Canada Life, told the Daily Express. • More than 80,000 savers whose pensions are now looked after by a government-backed rescue scheme are unfairly losing out because of higher inflation, their representatives warn. The savers are now members of…

UK real-estate equities have delivered stellar performances over the past decade, outperforming many asset classes, including equities, corporate bonds and gilts. To help spot the real-estate beneficiaries of the next decade it pays to identify the enduring socio-economic megatrends that will continue to shape the investment landscape. We focus on five megatrends: ageing population, digitalisation, generation rent, urbanisation and – overarching all of these – climate change, which sets the scene for identifying potentially attractive investments. Climate change is likely to result in a bifurcation in investment returns, with the greenest buildings being viewed as the most prime investments. Rising demand for care homes Those aged over 85 make up the fastest-growing age cohort in the UK. This is fuelling an increase in demand for both GP surgeries and care…

Just Keep Buying Proven Ways to Save Money and Build Your Wealth Nick Maggiulli Harriman House, £14.99 Writing a book with the title “Just Keep Buying” seems a bold decision. For one thing, markets are currently falling. What’s more, the title implies that the book is based on just the one idea, removing the need to actually read it. Still, such a judgement would be premature. Finance blogger Nick Maggiulli has several provocative ideas that challenge conventional financial wisdom, which he argues tends to make the mistake of treating all investors the same, regardless of their income or changing needs over time. He argues, for example, that it is going to be impossible for those who have just graduated from university and are struggling to make ends meet to put…

The US Congress is always doing amazingly idiotic things, but it recently surpassed itself and approved Jerome Powell for another stint as capo di tutti capi at the Federal Reserve. We’re ready to forgive almost anything. Isaac forgave Abraham, after the latter nearly carved him up. But forgiving is one thing… asking the villain to take another stab at it is another. In the news recently was the story of a member of Congress who was caught watching pornography during a House session. The man denied the charge, but was condemned nevertheless and would have been taken behind the toolshed if there were one. There are some things you can do in public office. And some things you can’t. Looking at dirty pictures is out. But fumble, rob, cheat, lie,…