Indholdsfortegnelse for Issue 1276 i MoneyWeek

It turns out that diamonds aren’t forever, says Brian O’Connell for Quartz. Data from the Zimnisky Global Rough Diamond Price Index shows that prices have dropped 30% over the past three years. The industry is being upended by lab-grown synthetics, which trade for up to 85% less than the price of a natural stone of the same size and quality. Cost-of-living pressures are only heightening the appeal of artificial gems. The diamond industry faces particularly intense tariff pressure, says Jinjoo Lee in The Wall Street Journal. Trump’s 50% tariffs on India, the country that cuts and polishes most of the world’s supply, threatens to widen the price gap between natural and artificial diamonds all the more. But in the topsy-turvy world of luxury products, that might prove a blessing. It…

Food prices in the United Kingdom rose 4.2% in the year to August. Chocolate, coffee and butter prices have increased by almost a fifth over the past 12 months as bad weather makes for unreliable harvests, says Irina Anghel on Bloomberg. Some London restaurants have reportedly switched to using olive oil instead of pricier butter. Beef and veal prices surged an eye-watering 24% in the year to July, as food and energy costs eat into global herd sizes. In the UK, food prices rose 37% over the five-year period from July 2020, say Amy Walker and Mitchell Labiak for the BBC. That compares with a modest 4.4% increase in the prior five-year period. Blame high demand, tightening supply and increased labour costs.…

Last week’s report from chipmaker Nvidia was deemed “the first test” of investors’ appetite since the “mass AI-stock sell-off” in August, says Johana Bhuiyan in the Guardian, and the results proved to be mixed. On the one hand, Nvidia announced it had set a fresh sales record for its AI chips in the second quarter. What’s more, adjusted earnings per share also outperformed. However, despite the company claiming that production of the latest superchip is going at “full speed” with “extraordinary” demand, and the board approving $60bn in additional stock buybacks, shares in the company actually declined. This suggests investors’ worries of an “AI bubble” have not been alleviated. A “monster quarter” and a “jaw-dropping” $60bn share buyback produced a “mild stock dip” because the market “is looking past the…

Stada is aiming for an initial public offering (IPO) this autumn after postponing listing plans in April owing to geopolitical uncertainty and market volatility triggered by US president Trump’s tariff policies, says The Wall Street Journal. CEO Peter Goldschmidt said the German pharmaceutical company will go public “provided the general conditions are right”, but did not reveal where. The private equity-backed company recently reaffirmed its full-year expectations for adjusted earnings of between €930m and €990m, after disclosing that its exposure to the US and its tariffs is limited. First-half sales rose 6% to €2.12bn, while adjusted earnings grew 5% to €481m.…

The Reform UK party may only have four MPs, but as its noisy and visible summer shows, it is already seeking to portray itself as a government in waiting, says The Times. Labour’s poll ratings are at their lowest ebb in six years, with a recent poll putting support for Reform at 33%, well ahead of Labour on 18% and the Tories on 17%. Labour’s decision to treat Reform, not the Tories, as the opposition – it has been talking about leader Nigel Farage “non-stop” in recent days – is partly opportunistic, says Adam Wooldridge in Bloomberg. Given its “dismal record”, its best chance of winning the next election is to “define itself as the best defence against barbarism”. But the “transition to the big leagues is not smooth”. It…

In a briefing to reporters last week, Sam Altman, the founder of ChatGPT maker OpenAI, mused that the valuations of AI companies were being driven way too high. “When bubbles happen, smart people get overexcited about a kernel of truth,” he said. “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes.” That matters. Altman is the poster boy for the AI boom. ChatGPT has become by far the best-known brand in the emerging industry. Earlier this year it raised another $40bn in funding, at a valuation of $300bn, more than double the size of the UK’s largest firm and the largest sum ever raised by a private technology company. Altman is not alone. Earlier this year, the chairman of China’s tech…

A special purpose acquisition company (Spac) is a company that lists on the stock exchange without any business of its own. Instead, its sole purpose is to raise money to buy an existing company. Spacs are also known as blank-cheque companies in the US, while in the UK, they are commonly called cash shells. Investors can buy shares in the Spac during the initial public offering (IPO) – in the US, the offer price is almost always $10 per share. They may also get other securities (warrants and rights) that allow them to buy additional shares in the Spac at a pre-determined price in the future. Once listed, the Spac generally has a fixed period of time to find a deal – in the US, two years is typical. If…

“It’s literally like having the economy run by Baldrick.” Kirstie Allsopp (pictured), presenter of property shows on television, on chancellor Rachel Reeves’ rumoured plan to impose national insurance on rental income, quoted in The Mail on Sunday “I’m sure they’re wrong, but I… was paid extremely well. I feel extremely fortunate.” Former deputy prime minister Nick Clegg on reports he earned £100m when working at Meta, quoted in The Guardian “They say money can’t buy you happiness, but it can reduce stress and anxiety, help you live longer and allow you to do more fun stuff, which sounds suspiciously like happiness to me.” Comedian Geoff Norcott, quoted in The Times “The AI revolution will make the mediocrity crisis even worse. Artificial intelligence is mediocrity memeified, magnified and mummified.” Bloomberg columnist…

thecritic.co.uk Science fiction has long warned about intelligent computers taking over the world, says Robert Hutton. But it didn’t prepare us for what we’ve got: computers that “just make stuff up”. Barely a week goes by without someone sharing a story of an AI chatbot providing false information – lawyers who have used AI citing non-existent cases in court, for example. The problem is that most people do not understand what AI is. All AI chatbots are capable of doing is generate plausible sentences based on calculations of what the next word in a sentence is likely to be. That is in itself an amazing achievement. But plausible sentences are not accurate ones. If we understand that, fine. But a lot of people don’t. The situation is reminiscent of an…

The proposed merger between the Hansa and Ocean Wilsons investment trusts – which are both effectively controlled by the Salomon family – is “deeply flawed and unfair”, says US value investor Arnhold, which holds a stake of roughly 3.1% in Ocean Wilsons. Under the deal, investors in Ocean Wilsons will receive shares in Hansa in a ratio determined by the two trusts’ respective NAVs. Arnhold argues that this is “destructive to shareholders of Ocean Wilsons” since Hansa trades at a large discount to NAV. They would be better off if Ocean Wilsons were liquidated and the cash returned to them, says Arnhold, which is urging shareholders to vote against the plan on 12 September. Hansa has called the criticisms “inaccurate and misleading”.…

AVI Global Trust (LSE: AGT) invests in lots of family-owned companies, as analyst Wilfrid Craigie believes they fit the fund’s mandate of “investing in durable, growing businesses at deeply discounted valuations”. The trust’s top five holdings include Vivendi (controlled by the Bolloré family), News Corp (Murdoch family), and D’Ieteren Group (D’Ieteren family). The AVI Global Trust, run by Joe Bauernfreund (see page 30), has outperformed comparable investment trusts over the last one, three and five years, and trades at a discount of 6.4% to net asset value. The ongoing expense ratio is just 0.87%. Craigie thinks D’Ieteren Group (Brussels: DIE) is “a real crown jewel”. Even after more than doubling its revenue and growing its adjusted earnings fivefold from 2019 to 2024, it trades at only 12.6 times 2026 earnings,…

The rise of artificial intelligence (AI) has made it incredibly easy for criminals to attack computer systems. Defending against these attacks is now at the front of mind for many of the world’s businesses and consumers. Indeed, a quick online search for the word “cyberattack” shows the scale of the problem. At the end of August, US AI company Anthropic said its technology had been “weaponised” by hackers “to commit large-scale theft and extortion of personal data”. It said its tools had been used to hack 17 organisations, including government bodies. And that’s just one headline. So it’s no surprise an arms race has developed between cybercriminals and security experts. Okta (Nasdaq: OKTA) is one of the businesses in the vanguard. The US firm offers a platform that enhances security…

Millions of households will pay more for their energy this autumn as the latest energy price cap kicks in, propelling bills 2% higher from 1 October 2025, writes Daniel Hilton. The price cap is set every three months by energy regulator Ofgem, and determines the maximum you will pay for your energy if you are on a standard variable tariff. The latest price cap for the period 1 October to 31 December 2025 has now been set, and means a typical household on a dual tariff using direct debit will pay around £1,755, up £35 from the current July to September cap. The energy price cap does not set a limit on your total energy bill – that will depend on how much energy your household consumes. Instead, the cap…

More British businesses selling to US customers now face additional costs, as the latest phase of US president Trump’s tariffs regime takes effect. Last Friday, the US dropped its so-called “de minimis” exemption, which previously saw low-value parcels shipped to the US from many countries, including the UK, excluded from most taxes and duties. The shift means that packages valued at less than $800 will now face the same trade tariffs as more costly goods. In the case of sales made by UK exporters, that’s 10%. The new rules are also expected to prompt shipping companies and logistics providers to raise their prices as they take on new responsibilities for handling duties and taxes. A UK exporter selling $100 worth of goods to the US could now face an additional…

Dominic Frisby Penguin Business, £22 The rise and rise of bitcoin has pushed gold out of the limelight and has robbed the yellow metal of its status as the asset of choice for those convinced the global economy is going to collapse (or who just want a hedge against inflation). Over the past few years, however, gold has been making something of a comeback, nearly doubling (in dollar terms) in the last two years. Few people have covered the precious metal for longer and in more detail than regular MoneyWeek contributor Dominic Frisby. He also put on a successful show about it at the Edinburgh Fringe in 2023. In The Secret History of Gold: Myth, Money, Politics & Power, Frisby takes us on a whirlwind tour of humanity’s relationship with…

This year’s “unusually good run” for beleaguered British shares shows “there is life in the old dog yet”, says Katie Martin in the Financial Times. True, the FTSE 100’s 10% year-to-date gain isn’t sending anyone’s portfolio into the stratosphere. But it beats the 6% rise on the Stoxx Europe 600 index. Meanwhile, America’s S&P 500 is broadly flat in sterling terms this year because of the falling value of the dollar. Fading financial centre The City of London has fallen a long way from the hegemonic position that it occupied at the dawn of the 20th century, when its stock exchange was worth “as much as the New York and Paris” bourses combined, says The Guardian. Even local investors have seemingly given up, with just 6% of UK pension scheme…

Last week, chipmaker Intel formally received $5.7bn in cash following its previously announced decision to sell 10% of itself to the US government, says Rebecca Szkutak in TechCrunch. It also revealed for the first time that the deal will control Intel’s ability to make key business decisions about its “floundering” foundry (chip-manufacturing) business. Intel will have to give the US government an additional 5% stake in the overall company if it sells more than half of its stake in the unit. There have hitherto been calls from analysts, board members and investors alike to spin out the “struggling” foundry arm, which reported an operating-income loss of $3.2bn during the second quarter and has been “a source of strife for the semiconductor business”. In theory, the deal doesn’t make much sense…

Five to buy Angling Direct Investors’ Chronicle Fishing-tackle retailer Angling Direct has 55 shops in Britain, a digital platform and an app, which has boosted loyalty programme membership to 500,000. Half-year UK shop and online sales rose, but the European business lagged the home market, although sales still increased. The company has ample cash to support its organic and acquisition-led growth strategy. Angling Direct is trading on a “harsh” valuation, given that cash profit is forecast to increase by a third next year, thanks to new shop openings, and the European business is expected to break even. 49p Amcomri This is Money Engineering group Amcomri buys small engineering businesses that are either in financial distress or looking for new owners. It sealed a new deal recently, and others are in…

● “That’s the Financial Conduct Authority (FCA) for you: turn up when the forest has already been razed to the ground,” says Alistair Osborne in The Times. The regulator is investigating power producer Drax, which has received more than £6.5bn in taxpayer subsidies since 2012, over statements about the sourcing of the wood pellets it burns at its Yorkshire plant. The inquiry details are “pretty vague”, but analysts at Jefferies believe the FCA may explore issues similar to those raised by Ofgem, which forced Drax to pay £25m for some “technical” reporting “failures”. While the FCA doesn’t have jurisdiction over subsidy contracts, the probe puts Drax “in the spotlight” before a new deal is finalised in 2027. “Has the company been deliberately barking up the wrong tree? It’s in the…

Former Facebook executive Chamath Palihapitiya is launching another special purpose acquisition company (Spac) despite a track record that has “incinerated billions of investor dollars”, as the Financial Times puts it. The self-styled “Spac King” and figurehead for the 2020-2021 mania for blank-cheque companies is looking to raise up to $250m for his “American Exceptionalism Acquisition Corp”. “I got calls from many Wall Street and Crypto Titans… They all want in and their vote matters a lot to me,” Palihapitiya wrote on X back in June, in response to a social media poll in which nearly 58,000 respondents overwhelmingly urged him not to try again. “Maybe this time it will go better? Who knows. The risks are clear, though. The last time wasn’t a success by any means.” It is unclear…

project-syndicate.org European regulators tend to be too scared of downside risks, so they overregulate and stifle innovation, while their US counterparts tend to be more laissez faire, says Raghuram Rajan. AI is a case in point. The EU enacted the world’s first comprehensive AI regulation in 2024, establishing strict safeguards. EU firms have little presence in the industry. Those “leading the charge” are rather US-based firms, that for now at least face little in the way of red tape and regulation. The US approach brings its own risks. A whole system might blow up because of a rogue product – think subprime mortgages. Each approach comes with trade-offs. But the world might benefit from having the two different approaches. US chatbots can thrive in a relatively unregulated environment, experimenting and…

● The six-month bidding war between Tritax Big Box Reit and Blackstone for Warehouse Reit has ended with Tritax withdrawing its offer shortly after the Takeover Panel said it would hold an auction to resolve the contest. Blackstone’s 115p per share bid (including a final dividend) had been accepted by 35.6% of shareholders as of 29 August. The offer requires 50% acceptance by 10 September to become unconditional. ● Investors in Gore Street Energy Storage have voted against a proposal by activist investor RM Funds to oust its chair and another member of the board. However, the battery energy-storage fund has appointed one new director and plans to add another next year to refresh the board as it battles investor anger over a weak share price, a large discount to…

Energy regulator Ofgem gave people an unwelcome surprise last week, announcing that the cap on household energy prices will increase by more than expected next month. But for small and medium-sized enterprises (SMEs), the announcement was potentially even more disappointing. There is no cap on the bills that energy providers can charge corporate customers, which leaves them much more exposed to the factors driving up prices. One recent survey found that four in ten now see energy prices as the biggest business challenge over the next 12 months. The smallest firms are often the most vulnerable; two-thirds of businesses making less than £10,000 a year are paying between £1,000 and £1,500 for energy annually. However, while small businesses are excluded from the protection Ofgem offers consumers, they’re not powerless. A…

This summer, Asset Value Investors celebrates 40 years as the manager of AVI Global Trust. Over this time, we have pursued the same distinctive bottom-up approach to global equities, focused on parts of the market that are overlooked, under-researched and prone to mispricing. We aim to buy durable, growing businesses, trading at discounted valuations, where there is some form of event or catalyst to unlock and grow value. One such example that embodies this is Vivendi (Paris: VIV), the French holding company controlled by Vincent Bolloré, which trades at a 39% discount to our estimated net asset value (NAV). In late 2024, the historic sprawling media conglomerate was split into four separately listed businesses: Canal+, Havas, Louis Hachette and Vivendi. The last piece – Vivendi – remained home to a…

£275, in bond per bottle for pre-order, farrvintners.com, laywheelertrading.com The two merchants noted (see left) are the first to stick their hands up to sell this spectacular and highly desirable Champagne, and I am sure others will join the throng. That said, any punters desperate to lodge this epic wine in their cellars will undoubtedly stop at nothing to track Charlie down, given its sheer scale of flavour and grandeur in the glass. This is only the second iteration since the revival of this special Champagne Charlie cuvée. You can read about the first on my website, which includes a history lesson on the legend of Charles Heidsieck. This is a stellar wine, and this Mise En Cave 2020 version is richer, showier and more flamboyant than the 2017 release.…

“[US investment scam losses] have… surged in recent years… If I had to pick an underlying fundamental cause I’d argue it’s… occurring for the same reason that the internet is such a cesspool of bad behaviour – we just don’t care about other people because there’s no interpersonal relationship in more and more of our business dealings. Why do grown men and women go on the internet and treat people a way they would never ever treat someone in real life? Because there’s no accountability… But this is the same reason scams are becoming so much more pronounced. We’re all distancing ourselves from one another. As our relationships with our phones and AI improve, our relationships with real people decline… I wish it was going to get better, but I…

In the latest “megadeal” by food groups “trying to stay a step ahead of changes in demand”, Keurig Dr Pepper said it would acquire the European coffee company JDE Peet’s for $18bn, says The New York Times. Keurig Dr Pepper will combine its coffee business with JDE Peet’s and spin it into a new company, which would include brands like Dr Pepper, Snapple and 7up. The deal effectively undoes the multibillion-dollar combination of Keurig and Dr Pepper announced in 2018, which aimed to create a beverage giant with the capacity to distribute hot and cold drinks to customers. The coffee industry has since slowed sharply, turning it into a drag for Keurig Dr Pepper. The market has already given the deal the thumbs-down, at least where Keurig Dr Pepper is…

Shares in FirstCash Holdings have risen 33% this year, reaching a record high, after the US pawnbroker posted strong second-quarter earnings, says Barron’s. There is ample scope for further gains. The largest pawnbroker in the US and Mexico – and now Britain, following its acquisition of H&T Group – is capitalising on demand from customers with low credit scores, a result of stricter bank lending amid weak labour markets and high interest rates. Furthermore, FirstCash’s expansion into technology-driven lending with lease-to-own and “buy now, pay later” options has proved fruitful. The stock’s valuation is “a steal”; it deserves a premium rating.…

Indonesia’s most violent protests in decades have left at least six dead, with “rallies over lavish perks for lawmakers” descending into riots after police officers ran over a young delivery driver, reports France 24. Southeast Asia’s biggest economy recorded a “surge in growth” in the second quarter due to growing manufacturing and export demand, but most citizens are not feeling the effects. Lay-offs are up 30% on last year, and a cost-of-living crisis has led to a sharp rise in people living below the poverty line. President Prabowo Subianto gave a televised briefing from the presidential palace on Sunday alongside political party leaders, in which he pledged to “listen and act on people’s concerns”, says Soraya Permatasari in Bloomberg. He promised a moratorium on overseas trips by lawmakers and said…

There have been two big developments in gold recently. The first is that the metal itself is reaching new highs: this week it passed $3,500 per ounce for the first time. The other is that gold mining stocks are outperforming gold, which is something we have not really seen in this cycle. Gold miners are a geared play on gold. When gold goes up, they rise higher; when it goes down, they fall further. This is because they have operational leverage: relatively high fixed costs means that they make weak profits when gold prices are depressed, but higher prices can translate into a strong increase in margins. Of course, this depends on input costs not going up too much, but recent trends have been positive. Gold miners have been seeing…

The US is turning Chinese Gillian TettFinancial Times “Free-market evangelists might spin in their graves” at recent moves by the US government, says Gillian Tett. Wall Street broker turned US commerce secretary Howard Lutnik last week defended the government’s purchase of a 10% stake in chipmaker Intel, and suggested it might also buy stakes in the likes of Lockheed Martin, a firm heavily reliant on military contracts. It has also bought a 15% stake in rare-earths producer MP Materials, while providing it with a guaranteed price floor. Other commodity groups are lobbying for similar support. It may be that with China controlling most of the mining and processing of rare earths, the White House is “deeply worried about national security in general, and rare earths in particular”, but it is…

bloomberg.com/opinion When we think about technological advances, what tends to come to mind are such things as the internet, smartphones and AI, says Javier Blas. But recent years have seen a dramatic and overlooked “productivity revolution” in farming. Over the past century, crop yields have exploded. In 1975, rice farmers around the world harvested an average of 2.4 metric tonnes per hectare. By 2000, the yield was 3.8 tonnes. Today, it’s 4.7 tonnes. Other crops, from corn to soybean to wheat, have also seen massive gains. Without this boon, food prices would be significantly higher, and larger swathes of the world would regularly go hungry, with implications for political stability. These gains can be sustained and extended. The key is ensuring farmers have plentiful access to credit, so they can…

The sale after 17 years of the last of the government’s stake in NatWest has led some to claim that this was good news for the banking sector. The stock overhang has been removed and the sale has got the state off its back, they say. Don’t count on it. Instead, this could herald open season for the government on the UK’s banks, meaning higher taxes, more regulation and the endorsement of new crackpot compensation schemes dreamed up by disgruntled consumers and grievance-chasing lawyers. More insidious still is the cunning plan by Reform to save £35bn by the Bank of England (BoE) ceasing to pay interest on deposits held at the central bank by UK lenders. This proposal is so deluded that, almost inevitably, the government will adopt it. The…

● HM Revenue & Customs (HMRC) is cracking down on claims for higher-rate pension tax relief to keep more revenue, says Charlotte Gifford in The Telegraph. From this week it will no longer accept requests for pension tax relief over the phone. All claims will need to be done via letter or online. The move is designed to help make it harder to lodge false claims. You can save up to £60,000 a year into your pension and benefit from tax relief. Basic-rate 20% relief is applied automatically, but anyone who pays the higher or additional rate of income tax needs to claim the extra relief through self-assessment. A recent investigation by HMRC found that approximately a third of claims for more than £10,000 of relief were “for an incorrect…

● Has your small business investigated “vibe coding”? It’s a way to develop new software and apps even if you have no idea how to write computer code. You use a generative AI (GenAI) model, telling it what you want to develop in plain English; the model then codes on your behalf. Fans of vibe coding say GenAI can democratise software development, to the benefit of individuals and SMEs without access to technology. The potential is underlined by the $4bn valuation ascribed to Swedish start-up Lovable, reflecting the firm’s growing sales of AI agents that help users to vibe code. ● Small businesses’ embrace of “embedded finance” continues to grow, a new survey from PYMNTS suggests, with 37% of firms now looking for payments providers able to offer such services.…