Indholdsfortegnelse for Issue 1249 i MoneyWeek

Aluminium prices have hit a nine-month high as US buyers rush to stock up ahead of tariffs. New 25% import taxes on steel and aluminium will take effect next month, creating a headache for US producers of cars, aircraft and drinks cans. Futures prices have hit $2,730 a tonne. US imports topped 580,000 tonnes in January, 25% higher than the recent January average, report Camilla Hodgson and Leslie Hook in the Financial Times. While prices on the London Metal Exchange have risen, the real pressure has been in the “Midwest Premium” (the extra paid by US importers) which has hit 39 cents per pound, a three-year high. Well over half of aluminium used in America is imported, says Kirk Maltais in The Wall Street Journal; 60%-70% of imports come from…

Stockpicker Warren Buffett is “increasingly picking cash”, says Karen Langley in The Wall Street Journal. Cash and Treasury bill holdings at Buffett’s Berkshire Hathaway investment company reached $321.4bn at the end of last year, the highest level as a percentage of assets since at least 1998. Buffett’s strategy is to buy “large, high-quality businesses” at good prices, but with US stockmarkets trading at historically elevated valuations, such opportunities are increasingly hard to find, and Berkshire has been holding back. Buffett insists he is still happy to invest in America. It isn’t like I’m on hunger strike, he says. Still, it’s hard to avoid the conclusion that the world’s most famous investor thinks many stocks are not reasonably priced at the moment.…

Running-shoe giant Nike has lost more than half its market value since its 2021 peak. But the stock bounced last week on the news of Nike’s “new celebrity alliance” with reality-TV star Kim Kardashian, says Lex in the Financial Times. Nike will team up with Kardashian’s Skims underwear and “athleisure” brand to create a new label, NikeSkims. While Nike’s previous ambassadors have been “modern gladiators such as… Roger Federer”, Skims “has quickly become a formidable business”, eclipsing $1bn in annual sales. The tie-up may help Nike win new fans among those “who just want to scroll their phones while wearing tracksuit bottoms“. Kardashian “excels at shifting products”, says Laura Craik in The Telegraph. Her “fairy dust” can also help Nike “reclaim its cultural relevance” while helping Nike win female customers,…

Mixue Group plans to raise HK$3.45bn (£350m) in an initial public offering (IPO) in Hong Kong that could value China’s largest bubble tea company at $9.8bn, says Reuters. The group expects to sell 17.1 million shares for HK$202.5 (£20.50) each, with the stock to begin trading on 3 March. Mixue had planned to raise about $1bn but reduced the sum as it was “not in desperate need of cash”. Known for its Snow King mascot, it owns 45,000 stores in China and 11 other countries through franchises, selling low-cost fruit and tea drinks, coffee and ice cream that are popular with young people. Mixue said it sold 7.1 billion drinks in the nine months ended September.…

Apple users in the UK no longer have access to its highest level of cloud data security, Advanced Data Protection (ADP) for iCloud, a move widely seen as an “effort to avoid complying with a request from the British government for Apple to provide a technical ‘back door’ to access user data”, says Clare Duffy on CNN. Earlier this month, the Home Office demanded access to fully encrypted material following an amendment to the 2016 Investigatory Powers Act, often referred to as the “Snoopers’ Charter”. ADP protects iCloud data with end-to-end encryption, which means that the data can only be decrypted by its owner, and only on their trusted devices. Apple can now be asked to share all UK user date with law enforcement, provided they have a warrant, says…

Growth has stagnated and is falling on a per capita basis. Job vacancies are in free fall. Inflation is rising again, making it harder for the Bank of England to cut interest rates, and taxes are still going up. You might think the state of the British economy could not get much worse. You would be wrong. In The Wasteland, T.S. Eliot says that “April is the cruellest month”. It certainly looks like it will be for chancellor Rachel Reeves. Companies face four blows. First, the rise in employers’ national insurance (NI) will come into effect. We have already seen a sharp fall in job vacancies, and plenty of big companies have said they will have to make redundancies to cope with the extra tax. And that is before it…

“Narrow markets are the exception and not the rule,” says Richard Bernstein, the veteran investment strategist whose macro-focused firm now oversees $16bn. Just 30% of S&P 500 stocks beat the overall index in 2023, and even fewer in 2024. That put us in the narrowest bull market since the technology bubble of 1998-1999, which in turn was the narrowest market since the Nifty 50 boom in high-priced growth stocks in the early 1970s. Some analysts argue that we could be in “a new paradigm… during which only the biggest and most highly capitalised companies will outperform”, writes Bernstein in a recent note. Yet “such prolonged narrow leadership would be counter to history and even suggests a breakdown in capitalism”, which relies on competition and innovation. Extremely narrow leadership suggests a…

insider.iea.org.uk Competition is an important part of the case for free markets, says Kristian Niemietz. “Even socialists like competition in sports”, so why not have it for the provision of goods and services too? This is all right as far as it goes but it can lead to fallacious thinking. Market competition and the kind we enjoy in sports are of a completely different kind. In sports, competition is the whole point, and we contrive a “level playing field” so as to make the spectacle enjoyable. But in market competition, we don’t care whether the game is fair or not as long as the end result is superior products for consumers. Spain has an unfair advantage when it comes to producing wine over Britain, but no one suggests hobbling Spanish…

■ Shareholders in Henderson Opportunities have voted in favour of plans to wind up the UK all-cap trust, weeks after rejecting activist investor Saba Capital’s proposal to take control. Investors who did not elect to take cash will be rolled over into the open-ended Janus Henderson UK Equity Income & Growth fund. Keystone Positive Change, another trust unsuccessfully targeted by Saba, will ask shareholders to vote next month on a plan to wind up with a cash exit or a roll-over into the open-ended Baillie Gifford Positive Change fund. And small-cap technology trust Herald, which also saw off Saba, has urged shareholders to vote to approve the trust’s continuation at its annual general meeting on 24 March. Saba has a 29.1% stake in Herald and could try to block the…

Vertex Pharmaceuticals (Nasdaq: VRTX) specialises in treatments for rare diseases. It has eight approved medicines on the market. Seven of these are medicines for various types of cystic fibrosis (CF), a disease for which Vertex is the only drug company with approvals from America’s Food and Drug Administration (FDA). It has been developing new CF drugs for 20 years and aims to offer treatments for every possible CF variant. It was the first company to receive FDA approval, in December 2023, for Casgevy – a genome-edited cell therapy for sickle-cell disease and another blood disorder, beta thalassaemia. These are serious illnesses requiring continuing treatment. CF is a life-shortening, genetic disease causing thick mucus to build up in the lungs, pancreas and digestive system. There are 94,000 CF patients in the…

Traditional savings accounts are attracting bigger tax bills owing to rising interest rates. The interest you earn is subject to income tax, with basic-rate taxpayers getting a £1,000 personal savings allowance (PSA), higher-rate taxpayers £500, and additional-rate taxpayers nothing. This makes tax-free cash individual savings accounts (Isas) more attractive, but the government may cut the £20,000 savings limit to encourage savers to invest their money instead. Still, there is more than one way to keep your savings returns tax-free. The simplest option remains a cash Isa. Opt for an instant-access or fixed-rate account depending on when you need your money. The best rates are still over 5%. Next, make the most of your and your partner’s PSA, as they can be combined. A basic-rate taxpayer can place roughly £19,750 in…

More than half of pension savers plan to alter their retirement plans amid changes to inheritance tax (IHT) rules, a new survey shows, prompting warnings that some could find themselves short of cash later in life. Research from Interactive Investor suggests that 54% of savers are now rethinking their retirement strategies following the government’s decision to bring pensions cash within the IHT net from April 2027. Currently, most unused money in pension funds can be passed on to heirs completely free of the tax, normally charged at 40% above estates worth more than £325,000. Most savers changing their plans say they will now try harder to use up their pension savings before their deaths, either by spending more of it or by making withdrawals and then giving the cash away…

Fidelity Emerging Markets Limited (FEML) makes use of an extended toolkit: the ability to increase gross exposure; to take both long and short positions in stocks; and to generate additional income and manage risk through options. By scouring the breadth of the market-cap spectrum for ideas and making use of our excellent team of global analysts, we identify overlooked companies across regions and industries. Here are three stocks we are especially excited about. “The bullish outlook for copper is due to the need for the red metal in the energy transition” A Latin American bargain Inter & Co (Nasdaq: INTR) is the holding company for Banco Inter, a Brazilian digital bank and super-app that has started to gain significant scale. With room for further fragmentation across retail banking in Brazil,…

Negotiation The Game Has Changed Max H. Bazerman Princeton University Press, £25 Whether you’re closing a multi-billion-dollar deal, asking for a pay rise or simply dividing up the household chores, there’s no getting away from negotiation. It’s a fact of life. The problem is that we’re constantly bombarded with seemingly contradictory advice – should you, as various gurus suggest, “make an extreme offer”, or “find a win-win solution”, or “split the difference”? In this book, Max H Bazerman, a professor of business administration at Harvard Business School, looks at the evidence from studies, and draws upon his own extensive experience, to sort through the advice on offer and hence discern in which circumstances that advice can be useful – and when it may blow up in your face. Bazerman concludes…

Producers Barbara Broccoli and Michael G. Wilson from the Broccoli family, which has controlled the Bond franchise since 1962, have given up creative control to Amazon MGM Studios for a reported $1bn. Fans fear it may lead to Bond’s decline, as arguably happened to Star Wars and Marvel after Disney used them to advance its corporate goals, says Yannis Tzioumakis in The Conversation. Disney expanded those franchises with multiple films and TV programmes, but this diluted the brands and caused complaints about quality and viewers’ fatigue. Amazon can “spend lavishly on production and top talent” and it could redefine the franchise for streaming. Bond was revitalised in 2006 with the debut of Daniel Craig (pictured) as 007 in Casino Royale, which incorporated product placement. But Amazon could link releases with…

Five to buy Cranswick The Telegraph Cranswick’s shares have returned 62% since July 2022, outpacing the FTSE 250 index. The food producer has a “solid” financial position, an “excellent” business model, and a “strong track record” of profit growth. It also boasts an upbeat outlook from expected interest-rate cuts. The shares are well positioned to generate further capital gains and outperform the market. Despite a price/earnings (p/e) ratio of 20, the stock is “good value for money on a long-term view”. 4,955p Tritax Big Box Reit The Times Tritax Big Box Reit grew its market value to £3.6bn by building or acquiring warehouses for companies like Amazon to rent. But a recent deal, buying 74 acres near Heathrow Airport to build a large data centre, could be a “game changer”.…

Raising money for a new investment trust is not easy in this market. There were no successful initial public offerings (IPOs) of trusts at all in 2024 and just two in 2023 (Ashoka WhiteOak Emerging Markets and the UK micro-cap Onward Opportunities, both of which have done well). That makes the arrival of Achilles Investment Company (LSE: AIC) this week notable for two reasons. First, it quickly raised a solid £54m. Second, its strategy is closely linked to one of the issues that is causing such an existential crisis in the closed-ended fund market. Achilles is an activist trust that aims to capitalise on some of the large discounts to net asset value (NAV) that have opened up, especially in the alternative-assets sectors (eg, infrastructure and renewables, property and private…

China gains ground in space race Jeff Huggins Nikkei Asia China’s recent announcement that it has matched a major Western breakthrough by developing a technique for preserving the resilience of the laser beam as it passes through the Earth’s atmosphere may or may not be true, but either way, there are “good reasons for thinking that China is gaining ground in space”, says Jeff Huggins. Known advances include its successful landing of the Chang’e-6 spacecraft on the far side of the moon last year. Such developments have serious implications because “the line separating space and defence” is hazy. “Cyber-teams and drone operators prosecute wars from thousands of miles away”; satellites facilitate navigation, connectivity and identification of enemy targets; and “space-to-ground optical communications” use a very narrow laser beam that is…

project-syndicate.org India, despite its “vast potential”, has long been overlooked by the West, says Ana Palacio. No more. A “fundamental global realignment is now underway”. Both the US and Europe see India as “vital to the future of their strategic priorities”. India, for its part, is skilled at “navigating precarious moments in world affairs”, something it mastered during the Cold War. It has a “massive and relatively young” population, a booming economy – it is expected to overtake Japan and Germany to become the world’s third largest by 2030 – and is pursuing a more assertive, internationalist foreign policy, increasing its influence in both traditional and emerging global forums, including the G20, the Brics and the Quad alliance that seeks to counterbalance the rise of China. Indian prime minister Narendra…

Shares in Greencoat UK Wind (LSE: UKW) have slumped 25% since the beginning of 2024, wiping out five years of gains. Taking dividends into account, the trust has returned 0.5% per annum since February 2019, meaning that investors have lost money in real (inflation-adjusted) terms. This is a stunning reversal in fortunes for a trust that hit a net asset value (NAV) of more than £6.3bn at its peak, after raising just £260m in its 2013 initial public offering (IPO). Greencoat is the fifth-largest owner of wind farms in the UK, with just under 50 onshore and offshore wind farm investments across the UK. It generates revenue by selling green power to utility companies. The aim is to provide shareholders with a sustainable annual dividend that increases in line with…

If you’ve yet to try one of the UK’s “challenger” banks, the latest customer service scores could sway you. A poll has found that Chase UK is consumers’ top-rated bank in Britain. The bank, owned by JPMorgan, launched in the UK in 2021 and now has an 81% customer satisfaction rating. It is the first year that Chase has taken the top spot – previously rival challenger banks Monzo and Starling have had the highest approval ratings. Challenger banks have topped the survey for the past five years. Chase’s current account often tops tables as one of the best options. It offers 1% cashback on your debit card spending for the first year (up to £15 a month). You can also open a linked savings account paying 3% interest. There…

Savers with large pension funds breathed a sigh of relief last year when the then Conservative government axed the lifetime allowance (LTA). The LTA imposed swingeing tax charges on pension funds worth more than a certain amount, causing all sorts of problems and unforeseen consequences; its abolition was therefore widely welcomed. However, pension advisers remain concerned about one hangover from the LTA still in place that has the potential to catch savers out. One big attraction of private pension saving is that you are entitled to take 25% of your pension fund as tax-free cash, either as a single lump sum or through a series of withdrawals. However, many savers don’t realise there is a limit on how much cash you can take, set with reference to the former LTA.…

“US sports gambling is now worth about $150bn per year. Why do sports fan and gambling junkies keep coming back to throw good money at games? The key is this: despite evidence from their recent track records, gamblers retain a misplaced sense of optimism. They ignore many of the mathematical truths about wagering and maintain numerous false expectations. Generally, gamblers believe they have an edge, despite their losses showing them they do not. They deny (at least to themselves) the advantage held by the house and claim to be doing this for entertainment purposes. Investors share many of the same foibles: overconfidence in their own abilities, ignoring the advantages of simply being the house (indexing) instead of trying to beat the house (alpha). It is an old but true story.…

Shares in John Wood Group, which specialises in oilfield services, soared by 40% on Monday after Dubai’s engineering group, Sidara, re-entered talks to buy the embattled company, says Alex Singleton in The Telegraph. Negotiations six months ago failed. But Sidara has now been brought back to the table by Wood’s “low valuation”, with the stock down 75% in a year. A review by Deloitte has found that “profits from Wood Group’s projects division may have been overstated in 2023 and prior years”, while the firm also admitted that its chief financial officer (CFO) had resigned after exaggerating his qualifications. “Few UK-listed companies have goofed up quite so spectacularly,” says Alistair Osborne in the Times. It let two cash bids “slip through its fingers at the point of due diligence”, including…

Freshpet makes refrigerated food for dogs and cats and is “reaping profits” from consumers splurging on their pets, says Barron’s. Recent volatility in the stock provides a “good opportunity”. The US company controls 95% of bricks-and-mortar sales of fresh pet food in the US and generated nearly $1bn in revenue in 2024 thanks to its broad distribution network, manufacturing capability and repeat sales. Analysts expect revenue to increase 20% annually for the next three years and earnings to more than triple. The shares trade at a premium because the company has consistently delivered 20%-plus top-line growth while most consumer staples stocks have softened.…

President Xi Jinping’s summit with China’s leading entrepreneurs last week signalled his support for the private sector, “pushing the Hong Kong stockmarket to its highest point in three years”, says Li Yuan in The New York Times. But “how much confidence could the business community derive from the sudden friendliness of a leader” known for his distrust of the private sector? Pre-Covid, Xi tried to “rein in” China’s tech entrepreneurs and financiers with a regulatory crackdown that erased some $2trn in market value, says Richard Spencer in The Times. Alibaba founder Jack Ma was prevented from floating a spin-off company in 2020 and vanished from public view. At the summit, Ma (alongside DeepSeek founder Liang Wenfeng) shook hands with Xi. The Chinese Communist Party (CCP) wants to jump on the…

● The rapid ousting of Hein Schumacher as CEO of Unilever does not follow the usual script of a board taking ages to remove a floundering boss, says Nils Pratley in The Guardian. He had been in the job for just 18 months and progress had been okay. So this seems to be “an unusual case of the board simply deciding that the chief financial officer could do a better job” and promoting him. The board says it was “impressed” with Fernando Fernandez’s “decisive and results-oriented approach and his ability to drive change at speed”, implying that “Schumacher wasn’t driving fast enough” for the directors. There is a fair argument that Schumacher’s “growth action plan” wasn’t fully convincing, so the board was entitled to judge that a better candidate was…

“If a businessman makes a mistake, he suffers the consequences. If a bureaucrat makes a mistake, you suffer the consequences.” Ayn Rand (pictured), quoted on X “Looking back at it, you just think it was maybe naive to think that was possible.” Richard Walker, boss of supermarket Iceland, on voting for Brexit because he liked the idea of a “global free-trade market” and saw the EU as a “protection racket”, quoted in the Financial Times “I’m not wild about holidays. They always seem a ludicrously expensive way of proving there’s no place like home.” Author Jilly Cooper, quoted on BBC Countryfile “[I wish I’d known] about pensions sooner. It’s a way of shielding earnings from the government, but legal.” Comic Katherine Ryan, in The Sunday Times “It’s not a principle until…

theatlantic.com For decades, America’s young voters leaned left, says Derek Thompson. Donald Trump changed all that. And America’s “rightward lurch” is mirrored across Europe, including in France, Germany, Finland and beyond. What explains this? It’s hard to say for sure, but a potential driver of the global right turn was the Covid pandemic. Political science tells us that pandemics are more likely to reduce than build trust in the authorities. One cross-country analysis from the Systemic Risk Centre at the London School of Economics, for example, found that people who experience epidemics between the ages of 18 and 25 have less confidence in their scientific and political leadership. This loss of trust persists for years, even decades, in part because political ideology solidifies at this age. Covid may also have…

British activist investor Palliser Capital is accusing Singapore’s second-largest bank, OCBC, of mistreating investors in the city-state’s largest life insurer as it tries to complete a full takeover. OCBC already owned 87% of Great Eastern when it launched a voluntary offer at S$25.60 (£15.10) per share last May. This was a 37% premium to the prevailing price, but below a valuation of S$28.87-S$36.19 provided by advisers EY. Palliser says the board was “highly complacent” in backing the offer and argues some members had conflicts of interest since they are former OCBC executives. It wants regulators to intervene to safeguard minority investors, who now account for 6% of the shares. This is below the exchange’s 10% minimum free float, meaning the shares are suspended.…

● “You could help your younger self buy a winning lottery ticket, or tell them to place a bet on Leicester City winning the Premier League in 2016, but no… the most popular advice you could pass on with a time machine is to start saving early,” says Ali Hussain in The Sunday Times. Research by life insurance group Aegon found that 48% of us would want to go back in time and tell ourselves to start saving. This suggests that financial planning isn’t just about building wealth, Tom Mathar from Aegon told the paper. “It’s also about making better trade-offs throughout life.” ● A surprising number of Britons choose to leave money to donkey sanctuaries in their wills. In 2023, the Donkey Sanctuary – based in Devon – received…

● The number of pension pots in the UK has reached 20 million, according to the Institute for Fiscal Studies, which says half these funds contain less than £1,000. The data highlights one downside of the UK’s auto-enrolment system, which requires employers to start a pension for almost all workers joining their organisations. As people move from one job to another, they build up many small pots of pensions, which can be uneconomic and easy to lose track of. If you’ve got several of these pots, think about consolidating them into a single account. ● The state pension alone will be large enough to drag people into the income-tax net from April 2026, Deutsche Bank reveals. The bank’s forecasts suggest that the state pension will rise to £12,631 next year,…

As a “growing chorus of bankers and politicians around the world” demand that financial-crisis-era regulations be rolled back, Nick Leeson (pictured), the former “rogue derivatives trader” who brought down Barings Bank, is “starting to get worried”, say William Shaw and Caroline Hepker on Bloomberg. This month marks the 30th anniversary of the collapse of Barings as a result of Leeson’s trading losses, which he tried to cover up. He served about four years in a Singaporean prison. Leeson has since rebuilt his life, recovering from cancer and making a living as a private investigator and speaker on compliance at corporate events. He now worries that the push to keep pace with Donald Trump’s deregulation drive could “open the door” to the kind of misdeeds for which he was convicted. Leeson…

2023 Saint-Péray, M. Chapoutier, northern Rhône, France £24.99, reduced to £19.99 each in a Mix Six, majestic.co.uk I have been preaching about the dangers of overindulging for four decades and, while friends and family might justifiably bellow “pot, kettle, black” in my general direction, one mantra has remained steadfast since the very first day I joined the wine trade back in 1987. It is simple, and it is a rule of life for just about every delectable vice imaginable. The three-word commandment I adhere to like glue is “fewer and finer”. I am sure hosts of MoneyWeek readers have consciously or subconsciously followed this tenet for eons. This week’s wine is a perfect case in point. Take pristine marsanne grapes, grown on the stunning limestone and granite hillsides of the…

Source Code My Beginnings Bill Gates Allen Lane, £25 One of the big questions that arises when reading about the rich and famous is to what extent their achievements were the result of nature and character, as opposed to nurture or sheer luck. Most business leaders naturally like to think that their success was solely down to their innate ability and good decisions. Others are inclined to the view that, in most cases, coming from the right background and being in the right place at the right time can be more important. Surprisingly, the first part of tech tycoon Bill Gates’s memoirs suggests that Gates thinks that the critics have a point. Gates spends a good chunk of his book, which focuses on the first 25 years of his life,…