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Investors tend not to believe anything until it is officially denied, so it was unwise of Germany’s chancellor, Olaf Scholz, to insist last week that all is well at Deutsche Bank. European Central Bank president Christine Lagarde’s claim that “the euro area banking sector is strong” also prompted people to wonder whether it really is. Alex assesses the eurozone’s banks on page 4. The upshot is that we remain, for now, where we were last week: not in a systemic crisis, but facing discrete yet potentially nasty blow-ups all over the financial system. This week the spotlight shifted to commercial property (see page 18). “Almost half of UK equity-income funds yield more than the 4.25% on the top fixed-rate Isa” Walking and chewing gum The key question for investors is…

“There’s a growing sense that Switzerland probably didn’t have a... solid legal foundation to wipe out Credit Suisse’s $16bn of AT1 [bonds]... this is [an] echo of what Greece did to its own creditors a decade ago... Back in 2012 Greece launched... a brutal haircut on almost €200bn of government debt... the Greek parliament voted to retroactively insert... clauses [that] bind all bondholders to anything a supermajority agrees to, thereby neutering any difficult creditors... the government can basically do whatever it wishes... bond investors have always direly proclaimed that an issuer will be exiled from capital markets for generations if they dare to fiddle with a single coupon payment. In reality, memories are remarkably short. Greece returned to the bond market just two years after its restructuring... UBS 2.0 [may]…

US payments giant Visa is a solid bet in difficult times, says Der Aktionär. It is the middleman between merchants and customers, and it takes a cut every time someone pays with a Visa card. With four billion of them in circulation, that happens very frequently. In the year to 30 September 2022 net income jumped by 27% to $16bn, and the post-pandemic bounce continued into the final quarter of 2022. Sales and profits are expected to keep rising at double-digit rates for the next few years. The group boasts an enduring competitive advantage as there are very few rivals beyond Mastercard in this sector, which has been likened to an oligopoly; Visa’s profit margin is 50%.…

As medical and non-medical NHS staff begin to vote in trade-union ballots on the government’s pay offer, paving the way to ending strike action, the long-running British Social Attitudes survey has revealed that public satisfaction with the NHS has fallen to its lowest level ever recorded. Last year, just 29% said they were satisfied with the NHS, down from a 2010 high of 70%, says the BBC’s Nick Triggle. The survey of more than 3,300 people revealed that overall dissatisfaction with the NHS has doubled since 2020 and now stands at 51%. Key areas of concern are accessing GP care (42%), dentistry (42%) and A&E (40%). Researchers said the survey paints a “troubling” picture of the NHS, warning of a “tipping point” from which it is hard to recover, says…

In a few days Finland is due to go to the polls in a general election. With £1,078 matched on Smarkets, the centre-left incumbent Sanna Marin is favourite to remain the Finnish prime minister at 1.57 (63.6%). Petteri Orpo, leader of the centre-right National Coalition Party, is in second place at 2.54 (39.4%). Riikka Purra, who heads the hard-right True Finns, is in third at 10.5 (9.5%) and Annika Saarikko of the Centre Party is at 12 (8.3%). Despite being forced to apologise 15 months ago for partying after testing positive for Covid, Marin is generally well-liked with relatively high approval ratings. This hasn’t prevented her Social Democrats trailing the National Coalition in the polls for more than 18 months. The gap has narrowed a lot over the past few…

With the blossoms on the trees, and the days getting longer again, it would be easy to forget that only a few months ago the UK, like much of the rest of Europe, was in the middle of the worst energy crisis since records began. The war in Ukraine and the closing of Russian gas pipelines sent energy prices through the roof. An overreliance on wind power made the supply of electricity vulnerable to whether there were any gales blowing in the North Sea. Running down gas storage facilities left the British government scrambling to buy whatever liquefied natural gas (LNG) it could find on the global market. The result? Soaring prices and a shortage of power. By October, there were plans for rolling blackouts if the grid was overloaded…

Duration is a measure of risk that is typically applied to bonds. It describes how sensitive a given bond is to movements in interest rates. Think of the relationship between bond prices and interest rates as being like a see-saw: when one side goes up, the other goes down. Modified duration (which can be found in the fact sheet of most bond funds) tells you the likely percentage change in a bond’s price in response to a one percentage point (100 basis points) change in interest rates. The higher the duration, the higher the “interest-rate risk” of the bond – that is, the larger the change in price for any given change in interest rates. So if a bond has a duration of ten, it indicates that a single percentage…

“[It’s] interesting what goes viral and what doesn’t. I partnered up with [YouTube and Instagram star] MDMotivator and we gave a car to a homeless guy but nobody’s heard that story. Then I gave a $5,000 tip to a waiter in Omaha, Nebraska, and that’s world news.” Singer and TikTok social-media star Jason Derulo (pictured), quoted in Metro “How heritable is intelligence? Nothing like as heritable as money.” Geneticist Steve Jones, quoted in The Guardian “The only function of economic forecasting is to make astrology look respectable.” US economist Ezra Solomon, quoted in the Financial Times “‘The poverty hangs over me like a Damoclean sword. I’m very compassionate about people in that situation. Those scars don’t leave you. You’ll carry them to your death.” Actor Brian Cox, whose family was…

bbc.com/worklife Taking a “digital detox” – a self-imposed break from all devices to reduce stress and reconnect with the real world – was until recently something many people did or yearned to do, says Sophia Epstein. Now, it’s all but impossible – digital devices are too entangled with our lives. We pay with our phones at shops, work on laptops and maintain relationships through apps. But don’t fret, there is an alternative. What’s important, as any Buddhist could tell you, is not renunciation for its own sake, but renunciation of “desirous attachment”. In other words, we should free ourselves from the belief that our digital devices will bring us happiness. Practise “digital mindfulness” instead: don’t worry about cutting out technology entirely, just be aware of your relationship with it, and…

Activist investor Elliott Management is making a bid for part of Cineworld, the struggling cinema chain, says Sky News. Elliott initially explored making an offer for the whole business, but is now focusing on the firm’s operations in Eastern Europe and Israel, which analysts value at around $500m. While Elliott is known as a high-profile and much-feared activist, it has made several private-equity investments in recent years, including book retailers Barnes & Noble and Waterstones, and fashion-accessories chain Claire’s. London-listed Cineworld filed for bankruptcy protection in the US last year and its market capitalisation now stands at just £31m, suggesting that markets think that the most likely outcome is a break-up and sale that leaves nothing for shareholders.…

Investors aren’t getting much exposure to Poland through generic MSCI Emerging Markets (EM) tracker funds. Last year’s expulsion of Russia from global indices has slashed central and Eastern Europe’s weighting, Charles Jillings of the Utilico Emerging Markets Trust tells Trustnet’s Matteo Anelli. Emerging Europe “went from 5.2% to just 2%, which severely misrepresents its real economic weight within... emerging and frontier markets”. The problem is that the region’s capital markets – especially those outside Poland – are so small and fragmented that they don’t typically draw much attention from big money managers. Russia’s expulsion means that Poland now dominates Eastern European trackers, with Polish shares accounting for 65% of the MSCI Emerging Markets Eastern Europe Index. Investors can top up their exposure to the region as a whole through the…

Passport Office workers across England, Scotland and Wales are planning to go on strike for five weeks from 3 April in a dispute over pay, pensions and job security. Around one in four of those working at the Passport Office will down tools during this time. Passport workers in Belfast are also set to strike from 7 April to 5 May. The Public and Commercial Services Union has warned that the strike is likely to have a “significant impact” on passport turnaround times. Based on typical applications over peak times, around one million will be sent off during the strike as families make holiday plans ahead of school summer holidays. The latest advice on the government website says that the passport turnaround time can be up to ten weeks. And…

Is “full” a downgrade on “super” when it comes to small companies’ capital allowances? At first sight, the answer is yes. Changes unveiled in the Budget earlier this month mean businesses will from now on qualify for a lower rate of tax relief when they invest for the future. However, there’s a twist to the tale. The headline measure here is the chancellor’s announcement that the “super deduction” scheme will come to an end on 31 March. This scheme currently enables businesses to reduce their taxable profits by 130% of the value of any qualifying investments they have made in plant, machinery and equipment when filing their corporation tax returns – and thus to pay less tax. In its place, from 1 April, “full expensing” will work on the same…

Biotechnology companies often specialise in different phases of the drug-development cycle. They range from start-ups concentrating on early stage innovative technologies to large firms selling multibillion-dollar treatments. We believe the companies in the middle of this range show the most promise. These firms have so-called “de-risked” drugs, which have just been approved by regulators and come through rigorous clinical trials. These drugs have therefore reached the market relatively recently and are treating patients. We call these “revenue growth” companies. These revenue-growth stocks are on the cusp of generating significant sales growth from freshly approved therapies, so they have strong earnings-growth potential. They lack the higher risk of earlier-stage firms and the sluggishness of the behemoths. These companies will either be attractive acquisition targets to pharmaceutical and biotechnology majors, or grow…

The pandemic has not “permanently dampened people’s spirits”, despite the devastation it wrought, says The Economist. Around 100,000 people in 127 countries were asked how they felt about their lives for this year’s World Happiness Report. The global average score for 2020-2022 was as high as in 2017-2019, before Covid. Finland was the happiest country surveyed for the sixth year in a row, and Afghanistan “the most glum”. The arrival of spring in the northern hemisphere last week also brought with it the start of the three-day World Happiness Summit, amid the “joyful surroundings” of Lake Como in northern Italy. “The realisation that affluence does not necessarily correlate to happiness has led to a growing scholarly interest in what does.” That “cheerfulness is serious business” was, however, already understood. The…

“We made it!” says Eddie van der Walt on Bloomberg. Europe has reached the end of its winter heating season “without running empty on gas”, defying Vladimir Putin’s efforts to trigger a big winter freeze. This week gas futures at the Dutch TTF hub, the European benchmark, were trading around €42 per megawatt hour, down by 85% since their record highs in August last year when panic about winter supplies prompted a rush for gas. Encouragingly, European storage facilities are still “more than 50% full as the drawdown ends”. That is 30% above normal levels for this time of year. Add in the opening of new liquefied natural gas terminals and the odds are good that “next winter is solved as well”. British wholesale gas prices have followed a similar…

The rise in corporation tax rates from 19% to 25% and the freezing of income tax thresholds until 2027-2028 are poised to push the UK tax burden to historic heights, says David Smith in The Sunday Times. By 2026 taxes as a percentage of GDP are projected to rise to 37.7%. That is far above the average level of 32.1% since 1948. Higher taxes are the consequence of greater government spending, which represents about 44% of UK GDP. The forecast rise looks set to push the UK tax burden above the average rate in the G7. However, it will still be lower than the level in the EU14 (the 14 western European members of the EU before its expansion to the east), where taxes represent almost 40% of GDP.…

Jakarta’s initial public offerings (IPO) market remains “red hot” despite global volatility, says the Financial Times. Harita Nickel, a division of Harita Group, an Indonesian conglomerate, has raised $660m after pricing its shares at the top end of its range, valuing the firm at $5.15bn. Glencore, the mining and commodity trading giant, Asian sovereign wealth funds, and international funds including Fidelity, were among the buyers. Indonesia boasts the world’s biggest reserves of nickel, which is crucial to the manufacture of electric vehicles (EV). The country is trying to develop domestic production facilities to exploit its nickel.…

● There is mounting evidence that the much-feared UK consumer crunch is not happening, says Andrea Felsted on Bloomberg. Take this week’s update from fashion and homeware retailer Next, usually viewed as the bellwether of the high street. CEO Simon Wolfson says that the firm is seeing “a ‘moderate’ tightening of belts among shoppers, as it had anticipated, but few signs of financial distress among customers who paid by credit”. Price pressures in the supply chain are easing. Next believes inflation in the autumn-winter season will be around 3%, down from the 6% it forecast in January. Wolfson is keeping sales and profits forecasts unchanged, which may disappoint some investors, but he is right to remain cautious, as new risks are emerging, such as the banking crisis. That explains why…

“The first thing that one has to do in the current environment is understand that the central bankers in the 1970s were not stupid,” says Richard Bernstein, who was the chief investment strategist at Merrill Lynch for more than 20 years before founding his own firm in 2009. “Fighting inflation is not easy.” There is a notion that because the US Federal Reserve and other central banks have raised interest rates, the worst is over and markets can go back to how they were. “History says it’s not quite the way it works.” The economy faces similar pressures and conflicts to those in the 1970s and the outcome is that the tightening cycle is not going to end soon, he tells Bloomberg. Inflation has probably peaked in the near term.…

unherd.com/thepost Dutch voters went to the polls earlier this month to elect their provincial councils and the country’s Senate, says Peter Franklin. The result was an even bigger victory than expected for the populist Farmer-Citizen Movement (BBB). It won 19% of the vote, leading a crowded field. The movement didn’t even exist four years ago. It has “come out of nowhere to redefine the political landscape”. That is a warning for the green movement. The BBB was formed in opposition to antipollution laws that threaten the livelihood of thousands of small farmers and follow in the wake of the gilets jaunes protests in France, which were sparked by rising fuel taxes. In Germany, support for the Greens is waning as a result of its proposal to accelerate the phasing out…

■ A series of disposals by real-estate investment trusts (Reits) shows that sellers are starting to face up to market realities, says Investors’ Chronicle. Tritax Big Box sold three warehouses for £125m, at what was probably a hefty discount to its June valuations. LondonMetric took an average 4.7% discount on a £34m mixed portfolio of assets, and probably a meaningful discount to March 2022 valuations on a £46m deal for three warehouses. Land Securities sold a City of London office at a 3.67% discount to its September valuation, while Capital & Regional accepted £58m for a Luton shopping centre after seeking £81m. The deals show that property is being marked down much faster than in 2008. Back then, it took a year for valuations to drop as much as they…

● Tesco’s Clubcard customers are suffering a nasty bout of inflation. The supermarket has slashed the value of the rewards available from other companies by 33%. After 14 June 2023, Clubcard vouchers will only be worth double their face value – rather than triple – when swapped through the website for treats ranging from theme parks and meals out to airport parking and ferry tickets. This follows a previous reduction in 2018, when the value of rewards vouchers fell from four to three times the Clubcard voucher’s face value. Customers who swap Clubcard vouchers for rewards codes before the deadline will have a year to use them, rather than the usual six months. ● Recent data from the Current Account Switch Service (CASS) shows that it processed 376,107 current-account switches…

● A survey by insurer Allianz Commercial has found that 19% of small businesses have reduced their cover in the past 12 months in the face of mounting financial pressure. But while insurance is an obvious source of potential savings, experts warn that cutting back on cover could leave small businesses vulnerable if they suffer a setback. And in some cases, insurance is a legal requirement. For example, any business with employees must have employers’ liability insurance. ● Small companies that offer short or zero-hours contracts will have to give staff the option of moving to more predictable working patterns under a change in the law expected to come into force in the next few months. Legislation will give workers who have been with an employer for 26 weeks or…

2020 Dalrymple, Pinot Noir, Pipers River, Tasmania, Australia £29.25, farehamwinecellar.co.uk; £29.70, vinvm.co.uk; £27.99, slywinesdirect.uk; £33.95, nywines.co.uk Hosting the London chapter of Pinot Noir Celebration Australia 2023 was a huge buzz. This deep dive into the glorious pinots from Down Under took place at the fantastic Michelin-one-star Trivet restaurant in London. The morning session was a ten-wine masterclass covering wines from Adelaide Hills, Tasmania, Geelong, Macedon Ranges, Yarra Valley, Gippsland and Mornington Peninsula, with non-stop comments and questions from the journalists, wine buyers, sommeliers, restaurateurs and bloggers. With wines from Curly Flat, Ocean Eight, Kooyong, Scotchmans Hill, Yering Station, Giant Steps, Fleet Wines, Shaw & Smith, Tapanappa, Ten Minutes by Tractor, Rob Dolan, Yabby Lake, Moorooduc, Tolopuddle, Mac Forbes, Paringa Estate and my featured Dalrymple, this was as indulgent and delicious…

Blue Blood Cazenove in the Age of Global Banking Robert Pickering Whitefox Publishing, £24.99 For almost 180 years, Cazenove & Co was “the City’s most respected stockbroking firm”, says Ian King in The Times. It was one of the few partnerships not to sell to a large bank after the Big Bang in 1986, and its “unrivalled clientele”, long rumoured to include Queen Elizabeth II, and “deliberately low profile”, gave it a “mystique enjoyed by none of its peers”. In 2005, however, the brokerage decided to break with tradition by forming a joint venture with the Wall Street investment bank JPMorgan, which then bought Cazenove outright four years later. Blue Blood, the memoir of Cazenove’s first chief executive, Robert Pickering, chronicles this “unexpected turn of events”. The book focuses…

“The market is on edge. It seems to just be looking for targets,” Tatjana Greil Castro of Muzinich & Co tells The Wall Street Journal. Late last week Deutsche Bank became the latest institution to be caught up in the banking turmoil, say the paper’s Patricia Kowsmann and Anna Hirtenstein. The shares plunged by 15% on 24 March. They pared losses early this week, but are still down by a fifth in a month. Commentators noted that, like the doomed Credit Suisse, Deutsche Bank has a long history of regulatory scandals, including “fines for facilitating money laundering in Russia”. Yet unlike the fallen Swiss giant, Deutsche Bank is profitable following a 2018 turnaround and “its big litigation woes are mostly behind it”. Vulnerable to a credit crunch While the weekend…

Four to buy Airtel Africa The Sunday Times This London-listed telecoms business provides mobile data, voice and banking services in 14 sub-Saharan African countries. Young populations and a growing middle class provide structural demand for the firm’s services, with the number of customers rising by 10% last year. “British telecoms giants... can only dream of” such growth. Fierce competition, currency fluctuations and “rocky politics” mean that this is “not one to bet your pension on”, but on 8.1 times 2023 earnings the shares are a risky buy. 105p Chemring Investors’ Chronicle This aerospace and defence company produces the sort of “pyrotechnic and ballistic subsystems” that Nato needs to address its munition shortages. Disposals have “all-but eliminated” the firm’s net debt, but on a forward price/earnings (p/e) multiple of 14.1, a…

The “largest strikes in decades” brought Germany’s transport network to a “near standstill” on Monday as staff working in airports, ports, railways, buses and subways walked out for 24 hours, say Antoinette Radford and Kathryn Armstrong on the BBC. The “mega strikes” are remarkable because it is “very rare for a dispute over pay to escalate so dramatically in Germany”. Two of the country’s largest unions, the train workers’ EVG and the public sector’s Verdi, have joined forces. Both are demanding higher wages to help with the rising cost of living and claiming that wage rises are a “matter of survival for many thousands of employees”. The strikes “are the latest in a series of industrial actions that have gripped big European economies” in response to high inflation, says Georgi…

After Silicon Valley Bank and Credit Suisse, investors are casting around for the next crisis and commercial real estate (CRE) is number one on the list. US real estate investment trusts (Reits) have tumbled. SL Green, the biggest New York office and shopping-centre Reit, is off by 37% in a month. Vornado, which has similar exposure, is down 27%. Boston Properties, the biggest listed developer nationally, is down 21%. While the US is the eye of the storm, other markets haven’t been spared. In the UK, British Land, Derwent, Great Portland, Landsec and Shaftesbury are all down by 14%-17%, for example. It’s a similar story or worse in Europe. The immediate fear is that a credit crunch might roll through the real estate market. The link here is strongest in…

Superprime crisis hits the banks Telis Demos The Wall Street Journal If the 2008 crisis featured “subprime” borrowers; the current “turmoil” features the opposite, says Telis Demos. Banks such as Silicon Valley Bank “catered to some of the wealthiest, most creditworthy clients”. After 2008, banking the rich – who bring lots of cash, pay big fees and seldom default – was seen as the better model. Rising interest rates, however, have led the “most flush depositors” to move their cash in search of higher yields (particularly those with uninsured deposits of $250,000-plus), while private businesses and start-ups are “burning more cash”. Banks are also “loaded up” on securities that are now yielding far less than market rates and can’t easily be sold, and sitting on lots of “jumbo mortgages”. The…

theguardian.com In the 1980s, South African libertarians set up a deregulated zone that they sold to the world as “Africa’s Switzerland”, says Quinn Slobodian. The idea was to create “homelands”, which supporters saw as a way for their populations to win freedom (and critics saw as a way of preserving white minority rule in an age of national liberation). Ciskei, on the Eastern Cape, set up its own airlines and stamps, and was conceived as an experiment to show the “power of markets, prices and incentives”. It created a system with a more lax set of regulations that were more favourable to investors, and the result was an economic boom. The experiment was hailed by libertarians in the West as a model for the world. The reality is that it…

F&C Investment Trust (LSE: FCIT) and Alliance Trust (LSE: ATST) are the long-standing giants of the investment trust sector, with assets of £5.4bn and £3.3bn respectively. Both invest globally and seek to offer a combination of capital growth and a reasonable but steadily increasing dividend. However, with well over a century of history – F&C was founded in 1868 and Alliance in 1888 – they have been slow to change and complacent about their immortality. Thus performance has been sluggish. Five-year investment returns are a little over 50%, about 10% behind the MSCI World index. F&C shows a ten-year record that is a more respectable 210%, 5.6% behind the MSCI World index. Going further back into its history would be interesting but perhaps less flattering. Longer-term returns for Alliance Trust…

Switching suppliers to snap up a fixed energy deal and save money is a distant memory for most of us, writes Sue Hayward. Now Ovo Energy has become the first supplier to bring back fixed-energy deals. It is offering its existing customers a new one-year fixed deal cheaper than the energy price guarantee (EPG). The new deal, open to its four million customers, is priced at £2,275 a year based on typical household use – £225 less than the EPG, which has frozen average bills at £2,500 a year until June. But Ovo Energy customers may not necessarily save money with the new deal. Some Ovo Energy customers may save a small amount of money by moving but then find themselves locked into a deal costing them hundreds of pounds…

Could the National Cyber Security Centre (NSCC) help you to reduce cybersecurity risk? A new campaign aims to help small firms bolster their defences against cyber criminals. State statistics suggest that more than a third of small businesses were hit by a cyberattack last year, but many are struggling to improve their cybersecurity. Surveys consistently reveal that small businesses are under-prepared. The NCSC is therefore launching the Cyber Action Plan, a free assessment tool that’s aimed at small and medium-sized enterprises. Businesses can access the tool online, complete a five-minute assessment, and then receive tailored advice on how to improve their cybersecurity. The scheme is aimed at users who lack technical knowledge and skills, reflecting the fact that many smaller organisations do not have cybersecurity specialists – many do not…

Joseph Kennedy was born in Boston in 1888 and graduated with a degree in economics from Harvard in 1912. After briefly working as a state bank examiner, he secured loans from friends and family to buy a stake in the Columbia Trust Bank, becoming its president aged just 25. In 1919, he joined stockbrokers Hayden, Stone & Co, before setting up his own investment company. In the 1920s and 1930s he became a successful speculator and movie mogul, and served as chairman of the Securities & Exchange Commission from 1934 to 1935. What was the trade? In 1928 work began on Chicago’s huge Merchandise Mart, the idea being to create a central marketplace where the city’s shops could buy their goods. But by the time it was completed two years…