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At this time of year most people are busy stocking up on their favourite tipple and mentally preparing to tune out annoying relatives over the Christmas meal. At MoneyWeek we focus on tuning out the annual round of forecasts for stockmarkets and economies, which, as J.K. Galbraith liked to joke, “make astrology look respectable”. The pundits have no idea what will happen in the near future (they missed the financial crisis, remember) and the ups and downs of 2025 aren’t important for long-term investors in any case. So instead of paying any attention to them, grab a drink and look for signs that your assessment of the medium-term developments affecting your portfolio is broadly on track. “Treasuries are signalling that inflation is sticky and interest rates are too low” A…

“US financials have been out of fashion with investors for much of the past two decades... Now, however, a number of factors are contributing to the sector outperforming the broader market. Joe Biden’s administration buried banks under an avalanche of regulation. Although it is uncertain just when the Republicans’ rescue attempt will arrive, the direction of travel is certainly towards looser capital requirements, which could create a bonanza of stock buybacks. If this is a new heyday for US banks, can we expect something similar on the European side of the pond? The reality is complex. The problem with being caught in America’s slipstream is that, while your European Volkswagen hatchback might speed up, it will never overtake the Chevrolet Corvette in front. Bank valuations as a whole may be…

The French broadcaster and film producer Canal+, which is behind the Paddington films, has suffered a “disappointing debut” on the London Stock Exchange, says Mike Sheen in This is Money. The shares plunged on their first day, leaving the group’s market value at half the £5bn its parent company, the French media giant Vivendi, had been hoping to achieve. The other two companies that Vivendi has spun out in recent years, advertising group Havas and book publisher Louis Hachette, did much better when they floated. The break-up of Vivendi “marks the shrinking of a company that has its roots in France in the 19th century”, says the Financial Times. Owner Vincent Bolloré has “long complained” that Canal+, like the other two divisions, was “undervalued” as part of the conglomerate. However,…

Spin-offs often do better than the overall stockmarket, says WirtschaftsWoche. Enter America’s Knife River, a building-materials group specialising in aggregates. The shares have trebled since the group began trading in June 2023, while the S&P 500 index has gained just 44%. And the outlook remains auspicious. The group is well placed to benefit from the drive to upgrade and extend America’s infrastructure. Its assets include 50 asphalt plants, 110 ready-mix concrete facilities and one billion tonnes of aggregate such as gravel and sand, the prices of which have gained an annual average of 4.7% for 50 years. The market is fragmented, so Knife River can grow through acquisitions, too.…

Chancellor Olaf Scholz lost a vote of no confidence in the German parliament on Monday, paving the way for national elections pencilled in for 23 February, says Kate Connolly in The Guardian. His likely successor, leader of the opposition centre-right Christian Democratic Union (CDU), Friedrich Merz, used a parliamentary debate ahead of the vote to launch “scathing attacks” on the “very people with whom he will probably have to govern,” says James Angelos in Politico. He accused the heads of Scholz’s SDP and the Greens of having “humiliated” Germany and caused its “economic decline”; a sign that the next coalition “may be as contentious and ideologically incompatible” as the last. Merz’s CDU and its sister party, the Christian Social Union (CSU), are ahead in the polls by a large margin,…

Most parts of the market that were badly hit during the pandemic have now recovered. Commercial property is an exception. Office and retail real estate investment trusts (Reits) are trading below where they were at the start of 2020, and even below where they had recovered to in 2021/2022 before interest-rate rises started to bite. Logistics Reits, which boomed as e-commerce took off, have also given back most or all of their gains. This is true across most countries and sectors, with a few exceptions – some major US Reits have rebounded better and certain niches, such as data centres, are doing very well – but the UK looks particularly adrift. While lower-quality assets are in trouble, rents seem to be holding up well for higher-end ones. Dividends have rebounded…

Migration has its downsides Larry ElliottThe Guardian According to the Office for Budget Responsibility, by the end of this parliament, the UK population will have risen by four million in eight years, says Larry Elliott. It is argued that we need migrants. The birthrate is falling, millions are on long-term sick leave and we need to staff the NHS and build the promised 1.5 million new homes. Yet the houses are needed, in part, for incomers. Nor has net migration made Britain “markedly more prosperous”. GDP per capita has barely risen in 15 years and abundant foreign labour may have discouraged business investment. At present, we don’t even have a plan to train our domestic workforce in the skills we need. Yet as the case of Steve Fothergill shows, highlighting…

capx.co The government “finally looks set to bring in a form of digital ID,” nearly 20 years after Tony Blair first attempted to introduce mandatory ID cards, only to be “thwarted by Whitehall bureaucrats and civil liberties campaigners”, says Josh Coupland. The ground was being prepared for years. Labour “won over the Whitehall bureaucrats”. The previous government oversaw a large-scale digitalisation of government functions. And the civil liberties campaigners, although still against, are faced with a reality where individuals already share huge amounts of private data with companies across the internet and have given up on cash in favour of smartphone-based apps. Digital ID cards are already here – Yoti’s CitizenCard, available free to all UK citizens, can be used for criminal record checks and to prove a right to…

Elon Musk’s SpaceX became the most valuable private company in the world last week when it launched its latest share buyback. The company and its investors plan to spend $1.25bn repurchasing shares from employees at $185 a share, according to Bloomberg. The price was a staggering 65% jump from the $112 per share paid in September, the last time employees were offered the chance to sell their shares. SpaceX had planned to offer $135 per share, but thanks to a “Trump bump”, it is raising the valuation. Musk’s relationship with president-elect Donald Trump has paid off handsomely for the world’s richest man, as investors have rushed to back parts of his empire. Shares in Tesla have roared higher by 60% since Trump’s election in November, and Musk’s artificial intelligence start-up,…

Today I want to look at what I can only describe as a stealth bull market: natural gas. The price is creeping up, and few are talking about it. Natural gas is a bit like silver: if it can disappoint, it will. So we begin this piece with that reminder. Natural gas has broken the soul of many a wiser man than me. On the other hand, the next five years look pretty positive. It’s obvious that the world is going to go nuclear now, and that small modular reactors (SMRs) are going to provide the power artificial intelligence so badly needs. However, it will be a good five years before they come on stream, so what is going to provide the power in the interim? The answer is natural…

Outside of an employer’s pension scheme, getting a better deal on your individual arrangements is one of the best ways to boost your pensions savings. Selfinvested personal pensions (Sipps) are an excellent option: they provide you with access to an incredibly wide range of assets, you can manage your money online, and you qualify for all the usual tax reliefs on contributions. Look for the best possible deal on Sipps. You will want a plan that is simple and convenient to manage with an online platform that is easy to use and offers support and resources, such as investment research. But focus on charges too. First, look at the charge made for the Sipp itself – often called an administration fee or a platform charge. Some providers charge flat fees,…

MoneyWeek is launching a Christmas Charity Appeal this year, and we have chosen YoungMinds, the youth mental health charity. Young people often struggle with their psychological health, and since the pandemic, which had an especially deleterious impact on them, there has been widespread coverage of a mental health emergency in children and young adults. Mental health problems can stem from the everyday pressures of life, but there is a particularly close link to anxiety over finances. Around 90% of young people worry about earning enough money, and 44% say they are always or often worried about buying their own house; 40% of children under 16 also worry about having sufficient money. Many young people struggle to access support when they need it, which is where YoungMinds comes in. A donation…

The “most serious threat to macroeconomic and financial stability” today comes from government debt, says Claudio Borio of the Bank for International Settlements (BIS). The BIS is worried that spendthrift governments could be heading for a “wake-up moment”, when bond yields (and hence state borrowing costs) suddenly spike higher, says Tim Wallace in The Telegraph. The UK experienced one such shock in 2022. A similar “blow-up” in US Treasury bonds would produce global ripple effects. At 122% of GDP, US public debt is much higher than the average of 83% across the OECD club of rich countries, says Jean-Pierre Landau of Sciences Po. Even the latter figure is “unprecedented in peace time”. Such debt loads have been made possible by historically low interest rates over the past three decades, but…

Donald Trump’s tariff plans serve as a reminder that free trade is far from the historical norm, say Jim Reid and Mallika Sachdeva of Deutsche Bank. For much of the 19th century the US imposed steep tariffs on foreign imports. Support for tariffs was “core” to Abraham Lincoln’s party and Washington used customs duties to protect growing steel, textile and railway industries. In an era before income tax, tariffs accounted for 50% of US federal government revenue. The US is far from the only industrial power to have used tariffs to protect “infant industries”. Britain’s industrial revolution was enabled in part by protection of the wool and shipping industries. Imperial Germany and Meiji Japan also industrialised behind tariff barriers.…

Shares in entertainment giant Warner Bros. Discovery (WBD) jumped by 15% after it said it will restructure into two divisions, one focused on the legacy cable TV business and the other on streaming and studios, says Joe Flint in The Wall Street Journal. The unit that houses the Max and Discovery+ streaming services will be combined with another division that includes its Warner Bros. movie and TV production operations. The other division “would sit alongside the legacy cable unit, which includes networks such as TNT, CNN, TBS, Food Network and HGTV”. These changes come as WBD “seeks to persuade Wall Street that it is “set up to compete with other entertainment-industry giants and deep-pocketed streaming rivals such as Netflix, Apple and Amazon”. The extent of the surge in the share…

Memory chip specialist Kioxia set the price of its delayed initial public offering (IPO) in the middle of its marketed range at ¥1,455 (£7.52), raising ¥120bn (£620.3m), says Nikkei Asia. This gave the group a valuation of ¥784bn (£4bn) on its debut on the Tokyo Stock Exchange this week. Top shareholder Bain Capital scrapped plans for Kioxia’s IPO in October after realising the expected valuation would not reach the ¥1.5trn target. The listing had also been postponed in August 2020 owing to uncertainty over the semiconductor market amid rising US-China tensions. Kioxia was formed when parent company Toshiba spun off its memory business in 2017.…

Keir Starmer’s government “hailed” the UK becoming the first European nation to join an Indo-Pacific trade bloc on Sunday, despite criticising the deal for having only a “very small” impact less than two years ago, says Millie Cooke in The Independent. When the former Conservative trade minister, Kemi Badenoch, signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in 2023, Starmer said that the deal would boost UK GDP by around 0.08% in the long-term, in stark contrast to the 4% “hit” to GDP of Brexit calculated by the Office for Budget Responsibility. Britain becomes the 12th member of the club, comprising Australia, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, Vietnam, Brunei and Malaysia. While the UK already had free-trade deals with all but Brunei and Malaysia, CPTPP…

Just 12 months ago, the UK’s economy was experiencing a steady recovery. Inflation was coming down, output was expanding. On some measures, Britain was the fastest growing economy in Europe, and performing better than most of our peers in the G7, with an expansion over the first six months of 1.2%. The Labour government could have built on that and delivered on its promise of creating the fastest-expanding major economy in the world. Instead, it is presiding over an accelerating downturn. Output fell 0.1% in October, following on from a 0.1% decline in September. We now look set for a full quarter of shrinking output. It is not hard to understand why. Nervousness over what chancellor Rachel Reeves would announce in her first Budget was already hitting business and consumer…

The simplest way to measure the value of a company is to use its stockmarket capitalisation – the value of all its outstanding shares. However, this may not always provide a useful reflection of all the claims that different groups of investors have on a business. For example, a company may be heavily funded with debt rather than equity. Conversely, it may have a lot of unused cash on its balance sheet offsetting some of that debt. It might also have preferred stock in issue (securities that rank above ordinary shares, but below debt), or some of its subsidiaries may be partly owned by other investors (known as minority interests). These last two factors are usually less significant compared with debt and cash, but could be important in some situations.…

“I once wore a sequin jacket to a film premiere and the woman behind was very annoying, tapping my shoulder and asking where it was from. Then she was feeling the collar to see the label. I turned around and said: ‘Please don’t do that.’ She said: ‘I have to know where you got your jacket,’ and I replied: ‘Asda.’ It was the truth!” Novelist Lynda La Plante (pictured), quoted in The Sunday Times “Lottery: a tax on people who are bad at maths.” US writer Ambrose Bierce, quoted in The Courier-Times “Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires.” Attributed to US novelist John Steinbeck, quoted on Substack “We don’t mind paying our footballers, top-rate footballers, extraordinary amounts…

unherd.com “MAGA diehards” are putting their money where their mouth is, says Frederick Kaufman. PublicSquare, the US’s first “anti-woke” online marketplace, which sells among other things Trump-themed Christmas trinkets, saw its market value soar by 270% in a day when Donald Trump Jnr joined the board of directors. Investors are following suit. Omeed Malik, of venture-capital firm 1789 Capital, is ignoring leftist ESG criteria in favour of “EIG” – entrepreneurship, innovation and growth. The American Conservative Values ETF has around $100m in assets and is imploring investors to “take action with your wallet” against woke liberalism. The Azoria Meritocracy ETF, set to begin trading in 2025, is a self-proclaimed “S&P 500 fund without the woke sh*t”. But the right is making the equal and opposite mistake of the woke left.…

Starboard Value is urging bitcoin miner Riot Platforms to convert some of its facilities into capacity for large data-centre users, says The Wall Street Journal. Demand for these has grown as the artificial-intelligence boom gobbles up computing power and storage. Starboard argues that Riot would do better by pivoting to meeting this need, like Core Scientific, another listed bitcoin miner, which has been working with Nvidia-backed start-up CoreWeave to provide power infrastructure for the latter. Shares in crypto companies and the price of bitcoin have rallied since November on expectations of crypto-friendly regulations under Donald Trump, but Riot is still down 25% this year, in part due to a failed attempt to pursue a merger with Bitfarms, another miner.…

The UK has one of the most mature solar markets in the world with around 16GW currently deployed across the country. The government has a target to quadruple this to 70GW by 2035, illustrating strong support for solar as a source of low-carbon power and energy security. The latter has become a priority following Russia’s invasion of Ukraine. Although solar power is a cheap source of energy when the sun is shining, the price that generators receive is often tied to the natural gas price. This means that renewable-energy companies benefited when the price of gas more than doubled from the start of 2022 to August that year, following the invasion of Ukraine. However, since then the gas price has returned to close to its long-term average, and shares in…

● The UK’s final-salary schemes are £133bn short of the assets they need to make the pension promises they have made. The warning comes from the Pension Protection Fund (PPF), which has slashed its calculations on the value of pension-scheme assets. Last year, the PPF said schemes were £150bn in surplus. Pension experts say members of final-salary schemes should not be unduly alarmed; much of the shift is down to changes in how the PPF makes its calculation. But where employers are seeking to take assets back from pension schemes, trustees may now want to take a harder line. ● Is the UK’s state pension really a “Ponzi scheme”, as several commentators have claimed in high-profile interventions in recent weeks? Well, it’s true that there is no fund in place…

The UK market is a renowned destination for dividend seekers, boasting a yield of just under 4%, which eclipses that of many other markets. However, the reliability of these payouts is not guaranteed. Five of the top eight dividend payers have cut their dividends in the past 15 years, with one company reducing its payout three times. Furthermore, 40% of the dividends in the index stem from cyclical sectors, which are susceptible to fluctuations in interest rates and commodity prices. Our trust aims to provide a solid return in capital and income by investing in stocks with resilient and growing dividends. This strategy results in a concentrated portfolio of 36 firms that diverges significantly from the FTSE All-Share. We target high-quality companies, have a 20% allocation to leading European firms…

Co-op, £9.50 Why, oh why, do we only seem to drink port at Christmas and at no other time? Some of the finest value wines on Earth emanate from the vertiginous slopes of the Douro Valley. I have tasted all the usual suspects and have the three finest for you this week. One is super-cheap, one medium-priced and one flashy, plus a thrilling sweet sherry, too. My chosen cheapie is Co-op’s mind-bendingly yummy ruby. This velvety-smooth, bright and succulent wine packs in admirable complexity and balance among the ebullient ripe fruit. Morrisons’ The Best Ten-Year-Old Tawny Port (£15) is a glorious, nutty, figgy tawny with great appeal and spice. It tastes like a hybrid between a fruity, dry Madeira, a fabulous old amontillado sherry and a nutty, sultana-soaked port. Look…

Europe’s “Franco-German engine” is “kaput”, say Jon Henley and Deborah Cole in The Observer. French president Emmanuel Macron has just appointed his fourth prime minister of the year following the collapse of Michel Barnier’s short-lived administration. Across the Rhine, Olaf Scholz’s fractious coalition lost a no-confidence vote this week, leaving Germany heading for early elections (see also page 8). “We are quite pessimistic about the economic and financial outlook for the eurozone,” says Hubert de Barochez of Capital Economics. Manufacturing remains under “intense pressure” amid tepid Chinese demand. Donald Trump’s tariff threats only add to the uncertainty – German stocks were “among the worst affected in 2018” during Trump’s first trade war. An economic turnaround requires strong government action, but in Paris and Berlin, executives are mired in dysfunction. It’s…

Five to buy J Sainsbury The TelegraphJ Sainsbury’s share price has been volatile since September, but half-year sales and operating profit increased, while market share grew. The supermarket giant is benefiting from improved household finances, real wage growth, and subsiding inflation. The stock’s low valuation and generous 4.8% dividend yield also bode well. Sainsbury’s can deliver share price gains and outperform the FTSE 100 index. 273p Tesco The Times“Tesco has been on a tear this year”, with the shares up 27% thanks to sales growth, profit upgrades and buybacks. The stock has undergone a “remarkable” rerating in the past two years under CEO Ken Murphy, who has focused on value, loyalty schemes, customers’ convenience and efficiency savings. Tesco has upgraded its full-year profit outlook and its premium products are doing…

Ottawa More trouble for Trudeau: Chrystia Freeland, Canada’s deputy prime minister and finance minister, resigned over growing tensions with prime minister Justin Trudeau, say Ilya Gridneff and Zehra Munir in the Financial Times. Dominic LeBlanc, the public safety minister, was appointed the new finance minister. Freeland said Trudeau had attempted to move her into a different cabinet position and that she was “at odds” with him “about the best path forward” for the country following Donald Trump’s election in the US. Canada “faces a grave challenge” from the Trump administration “pursuing a policy of aggressive economic nationalism, including a threat of 25% tariffs”, and Canada should push back against his “America First” ideology, Freeland said. Trudeau met Trump at his Mar-a-Lago estate last month to discuss the tariff threat. Freeland’s…

● Currys’ interim results “might not sound particularly electrifying”, says Kristy Dorsey in The Herald. Sales rose by a modest 1% to £3.29bn, while the pre-tax loss narrowed to £10m from £44m a year ago. However, the electrical retailer’s “strong progress” is still “partially masked by a particularly weak consumer market in the Nordics”. CEO Alex Baldock pointed to “big improvements” in both e-commerce and bricks-and-mortar shops in the UK. He is upbeat about 2025, even though a £32m hit from the higher minimum wage and national insurance increases will make “some price rises inevitable”. With the shares now above 90p, Currys “is looking justified in having turned down a 62p-per-share takeover bid earlier this year from US private-equity group Elliott”. ● “Most companies know what to do with a…

“Mid- and small-cap companies can often grow faster and longer than their big-cap brethren simply because their starting point is so much smaller,” says Will Danoff, who oversees the $155bn Contrafund at Fidelity in the US – the largest fund run by a single manager. Danoff has returned 41% this year, says Bloomberg, putting him on course for his best performance since 1991 in his first full year in charge. Since 1990, Danoff has delivered a total return of 8,870%, more than double the S&P 500 index. Lately, he’s made large profits from big bets on US tech giants Meta and Nvidia, which account for about 25% of Contrafund’s assets. Some analysts worry that his recent performance has depended heavily on those concentrated positions and a setback for tech stocks…

fee.org Fifty years ago, Friedrich Hayek won the Nobel prize for his pioneering work on the theory of money and economic fluctuations, and his analysis of the interdependence of economic, social and instutional phenomena, says Peter Jacobsen. His work still holds lessons for us today – most especially, in relation to the importance of humility. Hayek argued there shouldn’t really be a Nobel prize at all, as it bestows disproportionate authority on those awarded it. His work generally was also largely about recognising the limits of individual minds. Central economic planning, he showed, requires planners to make decisions based on knowledge that they do not have and cannot acquire. Markets bring together and coordinate the actors in society that do have the knowledge. The argument remains relevant today as political…

■ Greencoat UK Wind is changing how its management fee is calculated to be more shareholder-friendly, says Trustnet. At present, the Schroders-run renewables trust has a management fee of 0.9% of NAV value, but from 1 January the fee will be calculated on the lower of NAV and market capitalisation. Since the trust is trading on a 19% discount to NAV, this should mean a significant saving for investors, amounting to £5.5m per year at the current NAV and market cap, say analysts at Deutsche Numis. Only 4% of trusts levy fees on this basis, according to data from the Association of Investment Companies. Greencoat is the first infrastructure fund to revise its fees, but is unlikely to be the last, reckons Deutsche Numis. “Given the prevalence of discounts across…

Businesses that can serially acquire small, privately owned companies while maintaining a disciplined approach are rare. Well-known ones have delivered tremendous returns for early investors, and continue to look like good investments even though they are much larger today. Of the three that are constituents of the FTSE 100 today, DCC is both a shrewd operator that has delivered very good returns and is also notably cheap. Bunzl continues to operate well and is now a global business. Complexity and size don’t appear to have dampened its ability to find good acquisitions. However, it is well-known and liked by investors, and as such appears fully valued. The architect of Diploma’s strategy retired from the business in 2018 and the sailing has been less smooth since. His immediate successor left the…

Will 2025 be the year when you get on top of your pension planning? There are lots of very simple steps you can take to give your retirement planning a real shot in the arm. Here are six quick wins. 1. Consolidate your pension plans Too many savers have multiple small pots of pensions cash – typically because they’ve changed jobs regularly – that are difficult to keep track of and liable to perform poorly, particularly as charges mount up. Moving all those pots into a single pension plan could make a huge difference. You can pick an existing plan (the pension that offers the lowest fees with the best investment returns), or an entirely new scheme, such as a low-cost self-invested personal pension you can manage online. But note…

Companies enjoying double-digit revenue and profit increases, a diversified set of customers in growing markets and dividend yields of around 3.5% are always worth a look. One interesting example is Singapore Technologies Engineering (Singapore: S63), or STE, a company worth S$14bn (£8.2bn), with businesses in defence and public security (DPS); commercial aerospace (CA); and urban solutions and satellite communications, or satcom (USS). DPS is the largest division, making up 44% of revenue in the first nine months of 2024, followed by CA with 40% and USS with 16%. Strong revenue growth Revenue growth rates for the period follow the same order, with DPS up 18%, CA up 16% and USS up only 0.3%. Sales for the whole group gained 14.3% to S$8.3bn for the nine months. The fourth quarter is…

The MAGA king-maker When Elon Musk threw in his lot with Donald Trump, “pumping money into the campaign and using X to megaphone MAGA views”, it was a turning point in the US election campaign, says Al-Jazeera. Subsequent victory has united the world’s most powerful man with the world’s richest. Markets have been celebrating a promised beanfeast of tax cuts and deregulation. The South African-born entrepreneur has already done very nicely financially from the “bromance”. Shares in Tesla, having gained some 92.4% in three months, are now in “record territory”, notes MarketWatch. His privately held space and satellite company SpaceX, meanwhile, has doubled in value to $350bn in a year. Musk’s personal wealth has mushroomed to $439.4bn, according to Forbes. There’s probably more to come as his “bet for the…