Indholdsfortegnelse for Issue 1284 i MoneyWeek

Are you tired of next month’s Budget yet? Governments fly so many kites these days it feels as though we have been through the whole thing twice in slow motion already. No wonder: last year the chancellor promised to kick-start growth and said she would not need to raise any more taxes. But higher interest rates and a reluctance to cut spending have resulted in borrowing eclipsing expectations, while the result of last year’s tax raid – mostly employers’ national insurance payments – has been to raise inflation and unnerve firms and consumers. “Governments are cowboy builders, making a mess and then saying only they can fix it” The planning problem Having caused more problems, the idea now is to solve them. Our governments are like cowboy builders, overcomplicating or…

“The smart money is piling back into hedge funds,” says Catherine Baab in Quartz. Hedge funds are private investment vehicles that deploy complex strategies such as short selling, options trading and leverage with the hope of generating market-beating returns. Given the greater risk involved, they are only accessible to institutional investors, and high net-worth individuals. Hedge fund assets have been treated with scepticism ever since their performance plunged in 2008. The rise of cheap “passive investments” during the 2010s meant few saw the point of paying up for hedge funds, which usually charge steep “2 and 20” fees – 2% of assets under management, plus 20% of any profits above a certain performance “hurdle rate”. Now the hedgies are back, with assets under management at a record $5trn, says Hedge…

Shares in Avidity Biosciences have soared after Swiss drug giant Novartis said it will buy the San Diego-based biotechnology group for $12bn, a 46% premium to last Friday’s price, say Dylan Tokar and Peter Loftus in The Wall Street Journal. Novartis hopes the acquisition will complement its portfolio and pipeline of treatments for genetic muscular disorders, especially muscular dystrophy, “a multibillion-dollar market”. Avidity is developing gene-based drugs that use an emerging technology to deliver RNA-treatment to muscles “older classes of drugs couldn’t reach or had trouble reaching”. Avidity “isn’t cheap”: per share, Novartis is paying nearly double the level the stock was on before talks of the deal were first reported in August, says Neil Unmack for Breakingviews. Still, at $72 per share, Novartis’s offer isn’t that far off the…

Argentinian president Javier Milei’s La Libertad Avanza (LLA) party defied predictions in last Sunday’s midterm elections, sweeping to victory with nearly 41% of the vote, taking 14 of 24 Senate seats and 64 of the contested 127 lower-house seats, says Ione Wells on the BBC. Prior to the vote, Milei’s position looked precarious as “markets floundered and the country headed towards a cash crunch after a landslide local election win for the opposition” suggested that citizens were “losing patience” with Milei’s “brutal cost-cutting” measures, says Isabel Debre in The Washington Post. During his two years in power, Milei has cut red tape, slashed the public payroll and deregulated the economy, taming inflation but also inflicting “painful job losses” and eroding the purchasing power of millions. On Monday, rallying markets and…

Sometimes I wonder if the world outside Silicon Valley really wants AI. Yes, the technological advances in this area are staggering. Watch AI tools and agents analyse information, write text, produce photorealistic images and video, and – perhaps most disconcertingly of all – directly operate other computer programmes via text and visual interfaces designed for humans. It is impossible not to be impressed. At the same time, many people say that AI is being forced on them (they notice the proliferation of AI functions that can’t be turned off in all the software we use), they feel no need or desire to try AI, and they think fears about the risks and social consequences are being ignored. None of this means that AI will not be useful or will not…

conservativehome.com The rise of Reform UK and the Greens is probably bad for democracy, says Henry Hill. That might seem “counter-intuitive”. Doesn’t it rather represent a “great democratic flourishing” as people fed up with the two main parties do something about it? Should not those of a “free-market disposition” cheer the fact that voters now have a greater range of choice? Perhaps. But there is a case to be made that democracy is “not about making choices, but decisions” – and that the two-party system is much better at that than a multi-party one. A choice is something a consumer makes – what cereal they most enjoy, where they want to go on holiday, and so on. A democratic decision is quite different in that it is imposed on a…

● Bluefield Solar Income Fund (BSIF) is considering a merger with its fund manager, Bluefield Partners, in pursuit of a “more integrated business model” that could improve its options for funding new projects. While a partnership with local government pension funds has helped provide some financing, higher interest rates and difficulty in raising fresh equity while trading at a discount to NAV will eventually mean it will need to sell development assets. This will “gradually starve the company of growth opportunities and confine BSIF to its current position… with returns delivered only in the form of income”. The board also set a target dividend of 9p for the coming year, up from 8.9p, but said that future dividends might be lower under the proposed merger, with more income retained for…

The soundtrack to Japanese politics was once “quiet, calm, ambient”, says The Economist. No longer. New prime minister Sanae Takaichi, a one-time heavy-metal drummer, is setting a new beat that is “brash, nationalistic and polarising”. Takaichi took office last week after securing support from the centre-right Japan Innovation Party. Her bid to become the country’s first female PM almost failed after Komeito, a centrist party, quit its long-time coalition arrangement with her governing LDP party earlier this month. The new partners are a better fit, sharing a desire to spend more on defence and assert Japan’s role on the world stage. The new government is going down well with voters, says Taishu Yuasa in Nikkei Asia. One poll gave her cabinet a 74% approval rating, the highest for any new…

“Is ‘three’ the new ‘two?’ [US] consumer prices notched another 3% year-on-year increase in September… No one in Washington seems bothered that this remains well above the Federal Reserve’s 2% inflation target… There’s always some excuse or explanation that politicians and Wall Street offer to say this is no big deal. One month it was healthcare costs, another month shelter, and so on. This month the blame goes to energy prices… But at some point you have to admit all these add up to a persistent inflation problem. At a 3% inflation rate, the value of a dollar today would be 73.74 cents in ten years… Meanwhile, for all the controversy over [Donald] Trump’s attempts to meddle with the Fed, he and [Fed chairman Jerome] Powell both seem to want…

NatWest’s stock has hit a 15-year high, says Bloomberg’s William Shaw. No wonder: it reported £2.18bn of operating profit for the three months to 30 September, up 30% year on year. NatWest now expects income excluding notable items to reach £16.3bn in 2025, up from previous guidance of above £16bn, while return on tangible equity will eclipse 18%, also an improvement from an earlier prediction. The rise in profits suggests that NatWest is “quickly becoming a dependable name again”, says Matt Britzman of Hargreaves Lansdown. The guidance upgrade was also “encouraging”, and there’s “probably still more in the tank”, thanks to robust growth in the mortgage business. There is scope for further progress in this area if interest rates decline as expected. Meanwhile, now that the government no longer has…

Amid all the speculation about how big the “black hole” in the public finances might be, and which taxes will have to go up to fill it, one point is easily missed about the Budget set for next month: that it is likely to be the last one Rachel Reeves delivers. With the economy stagnating, unemployment rising and the government dropping to 20% or less in many of the opinion polls, and to only 11% in the Caerphilly by-election last week, her position is looking more and more untenable. If prime minister Keir Starmer is ousted, then she will surely go as well. If he survives, Reeves is an easy scapegoat and she can be reshuffled out of office the next time the government needs a refresh. Either way, Reeves…

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.…

Trump’s socialism won’t work Editorial Bloomberg The US government’s role in the economy has become increasingly intrusive during recent administrations, but the current White House has “taken things to an extreme”, says Bloomberg. Citing the importance of national security, supply chains and domestic manufacturing, it has “helped itself to stakes in five companies and counting”. It now “doles out” nearly $200bn in direct subsidies a year. There may be social benefits, as with renewables, but it will likely lead to “misallocated resources, slower growth, less dynamism and more rent-seeking”. Instead of strengthening domestic industry, it will “favour incumbents over start-ups” and delay “reforms and restructurings”. Over time, it will “invite corruption, waste tax dollars and sap ambition”. In the same spirit, Donald Trump has raised the average effective tariff rate to…

frasernelson.substack.com Chancellor Rachel Reeves says that those with the broadest shoulders should pay their fair share of tax, says Fraser Nelson. But they do. The top 100 “super-taxpayers” pay almost as much as the North Sea oil industry. The top 0.1% pay more income tax than the entire bottom 50%. “It was not always thus.” In the 1970s, when the top rate was 98%, the top 1% paid a far lower share of tax than they did after Nigel Lawson cut the top rate to 40%. When Gordon Brown upped rates, it discouraged work so much that the richest earned less and this had a disproportionate effect on incomes. We may all hate bankers’ bonuses, but remember they are split 50/50 with the government, and that many among the rich…

It’s been a tough two decades for UK-listed firms. BP, Shell and HSBC have dropped out of the ranks of the world’s largest listed companies. Britain’s current largest firm, AstraZeneca, doesn’t even make the global top 40. At the same time, the reputation of British universities has gone in the opposite direction. “We now have more universities in the global top ten than we had 20 years ago,” as Robin Bagchi, chairman of the London Technology Club, points out. UK universities “continue to punch well above their weight in terms of producing world-leading research”, which is an important economic asset, says James Witter, head of Sarasin Bread Street. More than 2,000 active start-ups have been spun out of UK universities. Little wonder that a sovereign-wealth investor has said that British…

Japan’s politics are unstable (see page 4), the yen is trading at multi-decade lows against most major currencies, long-term government bond yields have soared, and inflation is picking up again. Yet corporate Japan is doing just fine. Stocks are regularly reaching new highs and seem likely to continue upwards. On a price/earnings ratio of about 16, the market’s valuation is at the top of its ten-year range but earnings growth is coming through strongly, says Masaki Taketsume, manager of the £370m Schroder Japan Trust (LSE: SJG). The consensus for 2026 is for an average gain of 10%. Rising interest rates, which are expected to reach nearly 2% over the next year, should benefit financials, he says. However, a weak yen means that exporters are expected to see most of the…

During the pandemic, profits across the global luxury sector jumped as consumers, unable to spend their disposable income elsewhere, splashed out on high-end purchases. This pulled forward a lot of demand, and over the following years, sales flagged. The S&P Global Luxury index of the 80 largest publicly traded companies engaged in the production or distribution of luxury goods jumped 65% between the beginning of 2020 and the end of 2022. From January 2023 to today, it’s added just 2% excluding dividends. LVMH (Paris: MC), the world’s largest luxury-goods group, managed to buck the trend until mid-2023, when industry headwinds finally started to affect the group. Revenue fell 2% in 2024 and net income slumped 17%. The decline continued in the first half of 2025. Revenue declined 4% in the…

Oobah Butler (pictured), a 34-year-old “prankster” from Birmingham, first came to fame in 2017 with a stunt in which he got the shed in his back garden ranked as the top-rated dining spot in London, says Will Pavia in The Times. That you could not get a reservation “only added to its appeal”. When he opened his shed to diners for one night only, and served microwaved meals, “everyone left delighted”. It was a “glorious joke”, and the laughs kept coming. Butler’s latest venture is a documentary for Channel 4, How I Made £1 Million in 90 Days, in which he seeks backers for the “world’s first ethical sweatshop”, exploiting child labourers to make a line of football shirts. In search of financing and other potential moneymaking ideas, he heads…

2024 Les Roches Blanches, Sauvignon Blanc, Château Roquefort, Bordeaux, France £13.75, reduced to £12.20 each by the case, Haynes, Hanson & Clark hhandc.co.uk & 020 7584 7927 Corney & Barrow, Les & Sandeman, Private Cellar, Tanners, Yapp Brothers and Haynes, Hanson & Clark hosted a wonderful tasting the other day. My featured merchant this week is HH&C, and you will know that this epic indie is no stranger to MoneyWeek, as the buyers have a knack of sniffing out incredible wines at unbelievably competitive prices. I have tasted an ocean of bland Sancerre and Pouilly-Fumé this season as the high street ramps up for Christmas. The lowest-priced, famous-name wines from the large-scale wineries that supply the multiples cannot hope to compete with the finest producers’ sauvignon blancs from other, less…

Given that Bitcoin was arguably the ultimate expression of a new-fangled digital cryptocurrency, it seems a bit odd – ironic, even – that anybody would go to the trouble of turning it into an old-fashioned physical currency. But that’s exactly what Mike Caldwell, a software developer from Utah, did in 2011. Caldwell created metallic round tokens that he etched with a Bitcoin address and a “key” (a password to access the bitcoin) that is hidden behind a hologram sticker. In the same way that a bearer bond is owned by whoever is holding the piece of paper, the bitcoin “contained” within the token is owned by whoever has it in their pocket. He called these tokens Casascius Coins – “Casas” being an acronym for “Call a spade a spade” and…

Shares in ITV slid last week after Liberty Global said it was selling around half its 10% stake in the London-listed media group, says Daniel Thomas in the Financial Times. Liberty Global has been ITV’s largest shareholder, owning a tenth of it since 2015, and has been seen as a potential buyer, or at least a “kingmaker” for a bidder. ITV’s share price has fallen 66% since 2015 due to intense competition from large US rivals such as Netflix and a “tougher advertising market in recent years”. In theory, Liberty Global halving its stake in ITV could be positive, as it “effectively removes a potential blocker if someone makes a takeover offer for the media group”, says AJ Bell’s Dan Coatsworth. But while various production companies, private equity and even…

Donald Trump doubled down on his feud with Canada this week, suspending trade talks, saying he would slap an additional 10% tariff on Canadian imports after Ontario aired an anti-tariff advert featuring Ronald Reagan. The US has already imposed a 35% levy on all Canadian goods, though most remain exempt under an existing agreement, says Max Matza on the BBC. Trump’s salvo landed just as Mark Carney was heading to Asia on his first trip as prime minister, aimed at insulating his country from the fallout of the trade war with the US, says Ian Austen in The New York Times. Carney has set an “ambitious goal” of doubling exports to other countries within a decade, and the Asean trade bloc is a key part of this strategy. Asean, which…

● “New York has crypto exchanges, data centres and makers of miracle drugs. London? Tinned tuna,” says Jennifer Hughes in the Financial Times. Princes, the 145-year-old food group listing this week, sells products that are “not generally associated with racy valuations and rapid growth”: tinned tuna, pasta, sauces and cooking oils. Management hope “investors will see beyond its stable of staples” and buy into the potential to create a consumer goods giant via acquisitions. Princes expects to raise up to £400m to invest in about 30 acquisitions that could double sales. The target valuation of £1.2bn implies an enterprise value of around 5.5 times analysts’ earnings estimates for 2026. That’s a “chunky” discount to the 7.5 times of rivals Premier Foods and Bakkavor, but it’s better to price “conservatively than…

“Takeovers can be lucrative, and trying to target the next one may seem like a smart strategy,” says Laura Foll of Janus Henderson, who co-manages several equity income funds, including Law Debenture. Yet if investors buy simply on rumours, they “may end up paying a ‘bid premium’ for deals that don’t happen”. Spotting likely deals in advance is not easy. “Most of this year’s announced takeover bids appear to have surprised the market,” writes Foll in the Financial Times. Offers are being made public earlier to prevent leaks and to meet compliance rules. What’s more, “companies receiving bids may have a vested interest in going public quickly to flush out other potential buyers”. One approach is simply to focus on firms that have the characteristics of a good takeover target,…

“Why are we not teaching kids about cashflow and profit and loss, and how to run a business? We need to show them how to do it.” Entrepreneur and television personality Sara Davies (pictured), quoted in The Times “The English critic would do well to acquaint himself with the inherent probity and strength of the American speculative machine. It is not built to prevent crises, but to survive them.” Winston Churchill on the Wall Street crash of 1929 and its aftermath. He was in New York on Black Tuesday “Money is an enemy of friendship.” Actress Su Pollard on why she doesn’t lend money to friends, quoted in The Sunday Times “Two things that seldom seem to go together are genius and common sense. When I try to think of people…

capx.co Tory leader Kemi Badenoch has claimed that the late Terry Pratchett is one of her favourite authors. That is a sign of “good taste and judgement”, says Steve Davies. As with all the best satire, much of the humour in his books comes from the way “apparently surreal and over-the-top narratives” actually mirror reality. This is particularly true when it comes to economics – or, as it is known in Pratchett’s Discworld universe, “echo-gnomics”. This, along with “the idiocies of bureaucracy, law enforcement and academia”, was one of Pratchett’s favourite subjects. In Guards! Guards! he presents the “Boots’ theory of poverty”, for example – that someone who skimps on cheap products pays more in the long run when they have to replace them. In Making Money, we learn that…

Companies such as Oxford Capital, Parkwalk Advisors, Foresight Group and AlbionVC all offer investors with deep pockets access to venture-capital trusts. Those of more modest means might like to consider IP Group (LSE: IPO), a listed FTSE 250 company that has been investing in spin-outs from UK universities for the last 25 years. Over this time it has supported around 500 companies, creating an estimated 10,000 jobs. At the moment the group has 62 firms in its portfolio, spanning “deep technology”, life sciences and clean-energy technology (cleantech). The stock trades at only seven times estimated 2026 earnings and at a sharp discount to the book value of its assets. One of IP Group’s most successful clean-technology investments was in fuel-cell and hydrogen-power technology company Ceres Power (LSE: CWR). Originally spun…

Activist investor Nelson Peltz has teamed up with venture capital firm General Catalyst in a $7bn bid for fund manager Janus Henderson. Peltz, who first unveiled a stake in Janus Henderson five years ago, controls 20% of the shares and is offering $46 a share to buy out the rest. Janus Henderson has struggled since the merger of US-based Janus and UK-based Henderson in 2017, in part because the rise of passive investing has made it harder for active managers to justify their fees. Peltz’s “behind-the-scenes agitation” – which included recruiting current CEO Ali Dibadj – have “failed to generate outsized returns”, and “it’s hard to see how taking the company private will beat the market”, says Jeffrey Goldfarb on Breakingviews.…

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Going… A hoard of gold and silver coins that were dug up by a couple weeding their garden in Hampshire in 2020 is heading for auction with David Guest Numismatics in Zurich on 5 November, says BBC News. Most of the 70 coins were struck in the 1530s, during the reign of Henry VIII, although a few date to the reign of Henry VI in the 1420s. Together, they would have been worth £26, five shillings and five-and-a-half pence at the time – a considerable sum, as a house in a rural area would have cost around £25, according to the auctioneer. The coins were returned to the family, having been officially examined and valued, as no museum was in a position to acquire them. The hoard is expected to…