Indholdsfortegnelse for Issue 1283 i MoneyWeek

Gold succumbed to gravity this week. After a phenomenal surge – almost 30% in two months – it slipped by 6.3% on Tuesday, the biggest daily fall since 2013 (see page 4). Good. As gold bugs we like to see it do well, but we prefer stealthy, steady bull markets, as we have seen over most of the upswing that began in 2001. When newspapers start talking about the debasement trade, and flyers arrive through your letterbox urging you to cash in your gold to make some money, you start to feel that we could do with a breather. “When flyers arrive with your post urging you to cash in your gold, the market needs a breather” A nasty dip? So what next? According to a technical analyst on gold-eagle.com,…

The global aluminium market has been in a structural surplus for decades, says Andy Home for Reuters. Now traders are contemplating a future of shortages for the lightweight metal, which is used in everything from aeroplane construction to food cans. The 1990s brought a flood of cheap aluminium from behind the old Iron Curtain. Then Chinese supply rose from four million tonnes in 2002 to 43 million tonnes last year. But now China is capping output at 45 million tonnes, even as demand booms. Analysts at Citi say the metal is “sleepwalking into the biggest deficits in 20 years”. Futures prices recently hit a three-year high of $2,800 per tonne in London. Aluminium is rising in the wake of copper, whose price is up 20% this year, says Jinjoo Lee…

There is a record $7.7trn sitting in US money market funds, a cash equivalent. Wall Street bulls argue that this constitutes plentiful “dry powder” ready to be deployed into stocks to keep the rally running. The cash pile has tripled in eight years, but bulls are forgetting the impact of inflation, says entrepreneur and investor Eric Soda on Substack. Cash balances look large in absolute terms, but they haven’t grown nearly as fast when you compare them to stock values, which have soared. As a percentage of the US equity market, cash balances haven’t moved much recently and are in fact “near a record low”. Headlines that shout about “record cash on the sidelines” don't tell you that “everything else” has inflated higher as well.…

Kering, the owner of Gucci, is to sell its beauty division to L’Oréal for €4bn (£3.5bn), says Julia Kollewe in The Guardian. The deal will give the French beauty group L’Oréal Kering’s fragrance line, Creed Fragrances, as well as rights to develop fragrance and beauty products under Kering’s fashion labels Gucci, Bottega Veneta and Balenciaga under a 50-year exclusive licence. The deal is the “first big move” by Kering’s new CEO Luca de Meo. Kering has also been “battling declining growth at its largest brand”, Gucci, as demand from the key Chinese market has “slowed sharply” in recent years. No wonder de Meo jettisoned Kering’s beauty division, says Bloomberg’s Andrea Felsted. The “sale shores up Kering’s finances and provides breathing room until he can get Gucci, his biggest brand, firing…

Armoured-vehicle and munitions manufacturer Czechoslovak Group (CSG) is in early talks with prospective investors for a potential initial public offering (IPO) in Amsterdam in January 2026, says Bloomberg. The Czech defence company could raise more than €3bn and be valued at about €30bn in what could prove to be one of the biggest European flotations of the new year. CSG is also considering an additional listing in Prague. Defence stocks have boomed after European countries promised to increase military spending following Russia’s invasion of Ukraine. Franco-German tankmaker KNDS is considering an IPO next year.…

Xi Jinping “won’t exactly be quaking in his boots” after the announcement of the new rare-earths deal signed by Donald Trump and Australian prime minister Anthony Albanese on Monday, says Antony Currie in Breakingviews. Between them, the two leaders pledged around $4bn to supply the US with critical minerals amid its deepening trade war with China, which dominates global supply. Although there won’t be a “flood of new ore” any time soon, it is seen as a big strategic win for Australia, which has the world’s fourth-largest reserves of rare earths. The US and Australia will still rely on China for processing the materials into “something companies can use”, says Natalie Sherman on the BBC. Expanding processing capacity will require significant investment and, as Currie points out, there is a…

It is not just the London stock exchange that has been suffering a relentless decline. It is happening right across Europe’s main bourses. There was a 15% decline in initial public offerings (IPOs) across the continent in the first half of this year compared with 2024, according to accountants EY. Measured by revenues raised, the decline was 50%. The bulk of the IPO market is now in the US, China, India and the emerging stockmarkets in the Gulf. Europe is falling behind. Just as in London, firms have been leaving the markets, or have been taken over, and very few new companies have been coming through to replace them. German chancellor Friedrich Merz has a solution. “We need a kind of European stock exchange so that successful companies such as…

After the 2008 financial crisis, interest rates across the developed world were cut to near 0%. As a result, central banks experimented with ever more radical policies, from negative interest rates to quantitative easing (QE) – creating money to buy bonds and other assets. Many of these policies included elements of yield curve control (YCC). A yield curve compares the yield on bonds with the same credit quality, but different maturities (the maturity is the length of time before the bond repays its face value). So the US Treasury yield curve shows how interest rates vary across different maturities of US government debt. A healthy yield curve slopes upwards from left to right – in other words, a ten-year bond will yield more than a five-year one. Yield curve control…

“I have a tremendous amount of respect for AOC. I buy her T-shirts for $39.95, ‘Tax the Rich’... She has an 82% margin on that, proving that inside of every socialist is a capitalist trying to get out.” Canadian businessman and television personality Kevin O’Leary on leftist Democrat Congresswoman Alexandria Ocasio-Cortez (pictured), quoted on X “I was expecting to pay more income tax under Keir Starmer. I thought, stick a couple of per cent on me – I’m ready.” Pop star Mick Hucknall, in The Sunday Times “I did a lot of voiceover work back then – you could make a year’s salary by doing half-an-hour’s work. You have to be careful that you don’t become too addicted to such easy money.” Actor and TV presenter Griff Rhys Jones on…

theconversation.com You may remember “quiet quitting” – the trend post-pandemic for workers who were fed up with their jobs to stay in the post and do as little as possible, says Kathy Hartley. Now we’re seeing the rise of “revenge quitting” – aggrieved workers making a big, angry show of resigning, and spreading the performance around the world on social media. But you should calm down and think twice before doing so. A “dramatic exit” may damage your future career, especially if you work in a small industry where word travels fast. So rather than flounce out, consider “voice rather than exit” – that is, raise concerns with the HR department or trade-union representatives, or take back control by talking to your boss and explaining where your limits are. Employers…

Gold has risen more than 60% this year to over $4,300 per ounce. In doing so, it has transformed the outlook for the gold-mining industry after years plagued by post-pandemic supply chain snarl-ups, a lack of labour and the 2022 energy crisis. Last quarter, gold producers generated roughly 50% more free cash flow than consensus estimates, notes Jim Luke, who runs Schroders ISF Global Gold among other funds. Importantly for investors, most companies are not rushing to spend this windfall. Miners are still running their businesses using “conservative gold price assumptions” of around $2,500 to $2,800 per ounce, and letting cash build up on their balance sheets. In the first quarter of 2025, the sector moved from a net debt to a net cash position for the first time in…

● Next year’s increase in the state pension may be even larger than expected after the Office for National Statistics (ONS) upgraded its estimates of earnings growth. Under the triple-lock guarantee, the state pension increases each April in line with the highest of total earnings growth in the year from May to July of the previous year; the inflation rate in September of the previous year; or 2.5%. With inflation at 3.8% in September, the earnings figure is likely to be the relevant one, with the ONS raising its estimate of second-quarter growth from 4.7% to 4.8%. That would imply a new weekly pension of £241.30. ● Outsourcing company Capita has been fined £14m over a data breach that may have left millions of people – including members of more…

Fewer than ten years after dropping out of New York University and starting a prediction-based market platform from the bathroom of his Lower East Side apartment, Shayne Coplan, 27, has been “crowned the youngest current self-made billionaire”, says Marco Quiroz-Gutierrez in Fortune. Coplan (pictured) made his fortune “capitalising on Generation Z’s readiness to bet on anything”. His firm, Polymarket, which launched in 2020, had a simple premise: “Markets are the best way to source truth” – an idea he first started exploring when he came across economist Robin Hanson’s writings. Polymarket has enabled people to gamble on anything from who will win an election to the outcome of sporting events. This is the way to “harness the power of free markets” to forecast the future. Indeed, Polymarket is effectively a…

2022 Picardy, Pinot Noir, Pemberton, Western Australia £57, thecorkandbottle.co.uk; £45, soilandvine.co.uk When you think of truly great Australian red wines, you will no doubt come up with legions of shiraz, cabernet sauvignon and indeed blends. However, over the last decade, the emergence of world-class grenache and pinot noir has become a reality. At this time of year, I prepare the annual launch of my 100 Best Australian Wines Report, and on the subject of pinot, two great estates have returned to the UK with their finest releases to date. My featured Picardy has stealthily crept onto a few superb wine bar lists, with London’s Oak N4, Shoreditch Wine House, Joe’s Brasserie (Soil & Vine) and The Cork & Bottle all offering on- and off-sales. This legendary estate makes fabulously indulgent,…

With all that’s gone on in the last nine months, you might well have forgotten all about last year’s US presidential election, which is quite something given that it was so full of drama. The turning point was Joe Biden’s decision to abandon his bid for re-election after a disastrous performance in a debate. After a period of uncertainty, his vice-president, Kamala Harris, took over, and she ran with Donald Trump virtually neck-and-neck in the polls until election night. In this book Harris tells her story. Harris is considered by many pundits to be aiming for a possible return to politics in three years’ time. So it’s not surprising that there’s a definite sense here of her pulling her punches. Despite this, her frustration with what happened does come through…

“When you see one cockroach, there are probably more… Everyone should be forewarned,” says Jamie Dimon, CEO of JPMorgan Chase. The largest US bank by assets has been caught up in a growing imbroglio about dodgy loans after reporting a $170m loss linked to the failure of subprime vehicle lender Tricolor last month. Such credit “cockroaches” are multiplying. Car-parts supplier First Brands also failed in September. Last week, Wall Street took fright again after two US regional banks disclosed losses on loans linked to real-estate funds. Zions Bancorp announced a $50m loss on two loans; Western Alliance is suing a borrower for alleged fraud. The KBW index of US regional banks plunged 6.3% on the news, before steadying the following day after robust earnings from other banks in the sector.…

Taiwan Semiconductor Manufacturing Company (TSMC) has reported an unexpectedly large increase in third-quarter profits as demand for AI chips remained strong, says Dylan Butts on CNBC. The shares hit a new record peak on the news. Earnings per share and sales jumped 39% and 30.3% respectively year on year. TSMC is now so optimistic that it has raised its revenue growth forecast for the entire year to the mid-30% range, a big rise from July’s prediction of 30%. TSMC’s robust numbers are underpinned by its expertise in manufacturing microchips designed by other technology giants, which leaves it “well-placed to benefit from major technological shifts”, says Aarin Chiekrie of Hargreaves Lansdown. The rise of connected devices and data-heavy activities such the blockchain and self-driving cars is boosting demand for high-performance computing…

Five to buy Volution Group Investors’ Chronicle Volution has been boosted by its Australian acquisition, Fantech, and the supplier of ventilation products is eyeing other deals. Revenue and adjusted pre-tax profit both rose in the latest financial year, driven by a strong domestic market, gains in market share, and supportive regulatory changes. Analysts expect adjusted earnings per share to grow 7.6% to 35p. Volution’s “premium” share price is justified thanks to its high operating margin and return on invested capital. 638p Halma This is Money Halma consists of about 50 safety-equipment companies, such as water-analysis firm Palintest and Apollo Fire Detectors. Each company has its own board and is managed separately, but Halma’s financial firepower and specialists help them grow. Companies have to invest in safety equipment, whatever the state…

● Mike Schmidt, the now-departed chief financial officer of B&M European Value Retail, has overseen quite a howler, says Alistair Osborne in The Times. It turns out that a recent update to the group’s systems meant that overseas freight costs were not being recognised correctly. “How did he fail to spot that, instead of accounting for shipping costs, the system was assuming stuff just materialised beam-me-up-Scotty-style in the shops?” The result is a £40m cut to full-year guidance. This is B&M’s third profit warning this year and comes only a fortnight after CEO Tjeerd Jegen issued the latest one and launched his “Back to B&M Basics” plan. “Already he needs a new finance chief and far tighter accounting controls.” The “snafu” will shake the market’s confidence: “investors won’t relax” until…

Ken Griffin, founder and CEO, Citadel “We’re seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarise, or de-risk, their portfolios vis-à-vis US sovereign risk,” says Ken Griffin, founder of hedge- fund giant Citadel. “Gold is at record highs, and the appreciation in other dollar substitutes… like crypto, for example, is unbelievable.” Governments, central banks and investors around the world are saying “You know what? I now view gold as a harbour asset in a way that the dollar used to be viewed,” he tells Bloomberg. Foreigners are still buying US equities, but they are hedging the returns into their local currency. “So that is a bifurcation of ‘I’m going to bet on American business, but I want to immunise some of my…

thecritic.co.uk The soft-drinks industry is not happy at plans to hike the sugar tax, says Christopher Snowdon. And quite right too. The tax was introduced in 2018, and has not worked here, or anywhere it has been tried. The amount of sugar people consumed from soft drinks declined, but it had been declining for years. Obesity rates in children and adults went up. The only tangible effects were that our much-loved soft drinks no longer tasted so nice, and £250m a year was extracted from consumers. Our “vapid political class” naturally considers the tax to be a masterstroke and want to extend it. That will cost the industry a fortune as they reformulate products and see sales fall. Some bosses have warned of withholding investment and other “severe consequences”. But…

US activist investor Jana Partners is pushing medical-device firm Cooper Companies to consider a deal that would combine its contact lens division with Canadian rival Bausch & Lomb, says The Wall Street Journal. Jana argues Cooper’s two units – contact lenses and women’s health – lack synergies and believes there would be potential buyers for both businesses. The current strategy has created a complicated structure with poor capital allocation, including billions of dollars of acquisitions in women’s health that have weighed on margins, it claims. Bausch’s CEO Brent Saunders told the WSJ he backs the idea, saying it would strengthen competition with market leaders Johnson & Johnson and Alcon by creating a larger third-placed rival.…

In an era where digital communication dominates, the enduring appeal of a handwritten card might seem quaint. Yet, for Card Factory (LSE: CARD), the UK’s leading specialist retailer of greeting cards, gifts and celebration essentials, this personal touch is the cornerstone of a surprisingly resilient business. Despite the rise of online cards, enough customers still value the sentiment of a physical card to keep Card Factory’s model relevant. Combine this with low-priced products, a repeatable purchase cycle and a remarkable recovery from the pandemic, and you have a company that’s not only surviving, but flourishing. Despite these qualities, the shares look good value too; trading on a price-earnings (p/e) ratio of less than seven – a standout bargain even among the UK’s undervalued small-cap stocks. For investors, this could be…

Should a private pension be your primary savings vehicle when it comes to planning for retirement, or would an individual savings account (Isa) be a better option? There is no single right answer because everyone is different. But many financial advisers believe that changes to taxes on pensions are increasingly shifting the balance in favour of Isas. To pensions’ advantage is a higher annual allowance. You may put up to £60,000 into a private pension each year, although you can’t contribute more than you earn. Isas, by contrast, are limited to only £20,000 of annual investment. Pensions also have a slight edge on tax relief, particularly for higher-rate and additional-rate taxpayers. In both pensions and Isas, your savings grow free from all taxes, but in the former, you also get…

Federated Hermes Sustainable Global Equity invests across a diverse mix of growth, quality, and value companies, and across developed and emerging markets. It seeks out firms whose products, operations and activities contribute towards a more sustainable future. These companies are well placed to benefit from structural sustainability trends that are reshaping industries. One such trend is electrification, a powerful yet often overlooked investment theme. As industries shift from fossil fuels to electricity, demand is accelerating, unlocking exciting investment opportunities in areas ranging from transport and heating to mining and steelmaking. Importantly, electrification represents one of the easiest and most cost-effective ways to enhance energy efficiency and reduce emissions – especially when powered by renewables. Thanks to decades of innovation, the cost of core components such as batteries and power electronics…

In 1877, the tycoon Cornelius Vanderbilt died the richest man in America, leaving his family a fortune estimated as being greater than all the money held in the US Treasury at the time. Less than 50 years later his great-grandson Reginald Claypoole Vanderbilt died of liver disease caused by alcohol abuse, having squandered most of his money while the wealth of the rest of the family was greatly diminished. What this shows is that building wealth is hard, but keeping it is even harder. In The Art of Spending Money: Simple Choices for a Richer Life, Morgan Housel, author of the bestselling The Psychology of Money, looks at how to use money in the most worthwhile and enjoyable way. Apart from a brief summary at the very end, the book…

“The likelihood of any market crash must bear some relation to the frequency with which ‘crash’ and its synonyms have recently appeared in headlines… Right now, that word chart should certainly be giving investors pause for thought, if not yet telling them to head into the woods… There’s an AI bubble out there… and the big question… is not whether it will burst, but when. Jamie Dimon… [CEO] of JPMorgan Chase, predicts a six-months-to-two-years timeframe. The Bank of England’s governor Andrew Bailey warns that ‘asset valuations could now be at odds with the uncertain economic and geopolitical outlook, leaving markets susceptible to a disorderly adjustment’. That last phrase is almost as circumlocutory as the Duke of York’s use of ‘unbecoming’ in relation to Jeffrey Epstein. But the warning is clear…

On Monday, an outage at Amazon Web Services, Amazon’s cloud-computing arm, caused widespread global disruption. Millions of websites at firms ranging from airlines to streaming platforms and social-media sites were down for hours, says Danni Hewson of AJ Bell. Nonetheless, Amazon’s shares remained on the “front foot”, rising slightly. This isn’t surprising given that the incident highlights “how much of the internet relies on its services”, especially in an age “when pretty much everyone lives online”. That said, the incident “will inevitably raise questions about global vulnerabilities when so much of the world’s cloud-based infrastructure lies with such a small number of providers”. AWS has certainly come a long way since the last major outage eight years ago, says Lex in the Financial Times. Annual sales have grown from $20bn…

Shares in Swiss logistics giant Kuehne + Nagel (K+N) have slipped amid the post-pandemic dip in freight rates, say WirtschaftsWoche, while tariffs and protectionism are hampering globalisation, reducing growth in intercontinental container traffic. However, the ascendancy of nearshoring and onshoring has made the regional transportation of goods more important, and in this respect the group’s vast global network ensures plenty of business. K+N prioritises consulting and digital supply-chain management services, a business model requiring less capital than rivals such as DHL. It helps explain the free cash-flow yield of 6% for the year to 30 June and the current dividend yield of 4.7%.…

It isn’t clear what American interests are being advanced by Washington’s “conspicuous bailout” of the Argentine economy, says Ishaan Tharoor in The Washington Post. The “unusual move to initiate a $20bn currency swap with Argentina’s central bank is aimed at stabilising an Argentine peso that’s wobbling dangerously” amid concerns that libertarian resident Javier Milei, a close ally of Trump, might see his radical reform agenda “checked at the ballot box” in Sunday’s midterm elections. Washington is working on an additional $20bn in private-sector financing. Milei’s efforts have had “considerable success”, says The Economist. Inflation has fallen dramatically, poverty is at its lowest since 2018 and Milei has reined in public spending. Yet to do this, he has kept the peso artificially high. Defending the exchange rate has cost the country…

Sometimes an idea is so catchy that it doesn’t matter whether it’s true. The “debasement trade” – the claim that investors are starting to price in a severe surge in inflation that will erode the value of money – is a good example. We see it everywhere in headlines at the moment. Yet it’s impossible to see much evidence in markets. To begin with, we have to agree what is being debased. The US dollar is the favoured target. However, if you look at the dollar versus other major currencies, there is no sign of this happening. Yes, it is down since the start of the year, and still seems more likely to fall than rise against over the next few years if foreign sentiment towards US assets continues to…

Big Tech has taken a wrong turn Gary Marcus The New York Times Many of the firms racing to achieve artificial general intelligence are trying to do so by improving on generative AI systems such as ChatGPT, says Gary Marcus. But if the strengths of AI are “truly to be harnessed”, the industry should stop focusing on these “one-size-fits-all tools” and focus on “specialised AI tools engineered for particular problems”. They are often more effective. Take chess. If you ask the kind of AI that powers ChatGPT to play a game, it “struggles to play well and often makes illegal moves”. By contrast, specialist programs can easily beat even the most skilled humans. One of the greatest contributions of AI to date is AlphaFold, another specialist program developed to predict the…

spectator.co.uk When Friedrich Hayek won the Nobel Prize for economics, his acceptance speech, “The Pretence of Knowledge”, was an attack on economics itself, says Mani Basharzad. Elinor Ostrom, the first woman to win the prize, wasn’t even an economist, but was recognised for her work on managing common resources, which forced economists to rethink the so-called “tragedy of the commons” (the idea that commonly owned resources will be overexploited by individuals for short-term gain). That was the spirit of the Nobel back in the day – it “rewarded rebels” and outsiders. Since then, it has only handed gongs to the “good boys of academia” – those who “publish in the top journals, collect citations and perfect their h-index” (a measure of productivity and impact). The most recent winners, Joel Mokyr,…

● Private-equity firm Hg, which manages HgCapital Trust (HGT), is to sell treasury software firm GTreasury to crypto business Ripple for more than $1bn. The deal values HGT’s stake at £30m – 97% above its carrying value as of August. The holding is small, at roughly 1% of HGT’s net asset value (NAV), but this is a “highly successful exit” for an investment made just two years ago, and “should help provide comfort over valuations” in the wider portfolio, say analysts at Deutsche Numis. HGT trades at a smaller discount than its peer group, but this has still widened to about 10% recently. Meanwhile, Oakley Capital, the manager of Oakley Capital Investments (OCI), has sold its funds’ stake in atHome, a Luxembourg property and car website, at a price that…

Galliford Try Holdings (LSE: GFRD) is a British construction company worth £534m, with a diversified set of customers. In Scotland it operates as Morrison Construction. Galliford has changed markedly since 2020, when it sold its housing businesses to Bovis for £1bn and then invested in growth and the acquisition of several infrastructure businesses. These include Lintott, MCS Control Systems, Ham Baker Engineering (a company active in the water industry) and AVRS (which operates in the energy and nuclear sectors). Galliford serves a wide range of markets, including defence, education, facilities management, health and infrastructure; 91% of clients stem from the public and regulated sectors. Infrastructure is a priority for the government. Galliford intends to increase revenue to more than £2.2bn by 2030, from £1.77bn in 2024, and achieve divisional margins…

Could your small business make more use of the current tax laws to reduce its tax bill while simultaneously boosting your pension planning? There are more than five million small companies in the UK, with around two-thirds of them operating out of business premises. Yet only 3% of small-business owners use their pension plans to buy those premises. Both self-invested personal pensions (Sipps) and small self-administered schemes (SSASs) allow you to do exactly that, with some useful benefits. Your pension buys the property – it may even be able to secure a mortgage for the purchase – and then rents it out to your business. The rent can be offset against your business’s corporation tax bill, so that it pays less, and it provides a flow of tax-free income into…