Innehållsförteckning för Issue 953 från MoneyWeek

“When a company such as Facebook calls to be regulated, we should count our spoons” I went to watch one of the graduation ceremonies in St Andrews earlier this week. It’s a superb university. The traditions were fabulous: every student becomes a graduate at the moment of being tapped on the head with a cap that might or might not be made from the seat of John Knox’s breeches. The academics were charming. There was however, as is always the way in a scene of British perfection, a tiny underlying tension: gowngate. Like most universities, St Andrews has an official supplier of its gowns. Like many others it has been challenged by an upstart selling cheaper ones. St Andrews reckons Churchill Gowns, an Australian website, is guilty of pretending theirs…

“It isn’t just the sun that rises in the east”, says Ian Cowie in The Sunday Times. Dividend payouts are also on the up. Asia was once characterised by stingy yields, says Daniel Leussink on Reuters. Yet the median percentage of company earnings paid out in dividends rose to 33% in Asia-Pacific at the end of last year, comparable to the 34% ratio in the US and above Europe’s 27%. Many companies in Asia have become more mature, so cash generation and distributions are on the rise, Mike Kerley of the Henderson Far East Income trust told Cowie. Dividend payments in the region have grown by 221% over the past decade, far greater than the global average of 120% and Britain’s 89%. The top contributors to that growth have been…

“A cashless world is moving closer”, says Lex in the Financial Times. Facebook’s planned digital currency Libra could prove popular with consumers. People are embracing the convenience of contactless cards. Large-denomination notes are increasingly seen as the preserve of criminals, while emerging markets have “leapfrogged”traditional banks to set up mobile payment systems such as Kenya’s M-Pesa. Japan is still relatively cash orientated. Since the early 1990s, many years of rock-bottom interest rates and fears that banks could go bust have prompted people to take cash out of banks, says Je Hoon Lee in Japan Today. A cut in the inheritance tax threshold also encouraged moving into cash to escape detection.…

Trainline, the train- and bus-ticket sales app, made a successful debut on the London Stock Exchange (LSE) last Friday, with the stock jumping by a fifth. The initial public offering (IPO) valued the group at £1.7bn and raised £110m to fund expansion; the group already operates in 45 countries. Trainline’s arrival was “just the ticket for a jittery” IPO market, says Lex in the Financial Times. The LSE hosted 89 tech IPOs last year, the third-highest of any exchange, and Europe has seen 62% more tech firms float in the four years to 2018 than North America. But US tech IPOs remain far bigger on average: witness last week’s $20bn debut of corporate messaging-service Slack.…

Carrefour is “unloading” most of its operations in China, says Julie Wernau in The Wall Street Journal. After trying various tactics to bolster its performance, it has opted to sell an 80% stake in its Chinese division, comprising more than 200 stores, to local retailer Suning.com Co. for $700m. Carrefour’s Chinese sales fell by 5.9% to €4.1bn last year. A key problem has been that “big-box retailers are struggling to keep up with nimble delivery providers that are winning over shoppers”. Bricks and mortar stores are facing competition from internet retailers too, says Nisha Gopalan on Bloomberg, with one-fifth of all retail sales taking place online. Meanwhile, China’s economy is slowing and “foreign brands no longer have the cachet they once enjoyed – at least in low-end consumer goods”, a…

Bettor interest in the contest to decide who will become the next Conservative Party leader is at fever pitch – £11.8m has been wagered on the contest at Betfair alone. Despite the recent media storms, Boris Johnson still remains the firm favourite at 1.4 (89.2%) compared with 6 (16.7%) for Jeremy Hunt (pictured) 7.4 (13.5%). Bet 365 is offering slightly more generous odds of 1/5 (85.7%) on Johnson; the best odds that you can get on Hunt is 4/1 (20%) from Ladbrokes. In terms of the vote share, Ladbrokes is offering 20/1 (4.7%) on Johnson getting less than 40% of the vote, 5/1 (16.7%) on 40%-50%, 3/1 (25%) on 50%-60%, 7/4 (36.3%) on him  getting between 60%-70%, 3/1 (25%) on 70%- 80% and 12/1 (7.7%) on his getting more than…

Neil Woodford’s woes with liquidity (see box below) have hogged the limelight recently. But this week, another – albeit less well-known – fund manager experienced his own liquidity-related panic. London-based H2O Asset Management, owned by French bank Natixis, operates a range of funds, with more than €30bn in assets under management (AUM) as of the end of April. However, early last week, an investigation by Robert Smith and Cynthia O’Murchu of the FT Alphaville blog into the holdings of six of the funds (all open to retail investors), effectively sparked a run. “First Woodford, now this – is low liquidity a systemic issue?” Alphaville found that between them, the funds held about €1.4bn of “highly illiquid” bonds issued by firms owned by the “enigmatic and flamboyant German financier Lars Windhorst”,…

Last week, Donald Trump launched his campaign to win a second term as US president from 2020, with the slogan “Keep America Great”. The bookies are offering even money on his re-election, and in truth that seems too pessimistic. The economy has performed well with Trump at the helm, with strong growth, record employment rates, rising real wages, and a bullish stock-market. Very few presidents have failed to be re-elected with that kind of backdrop. At the same time, the Democrats are veering off to the left, with candidates competing with one another for who can come up with the most punishing tax increases. It is hard to believe the US is ready for that. Certainly, there may be an economic crash before the election next year. Or a major…

We are probably rather late in the stockmarket cycle. That means there are fewer opportunities to put cash into good-value stocks and funds. This is especially true for investment trusts, where the overall discount of listed funds is near an all-time low. By spring of this year, the average discount to net asset value (NAV, the value of the underlying portfolio) was 2%, compared to double digits after the financial crisis. But there are some exceptions. Safe-haven assets For defensive investors, I’d highlight the Ruffer Investment Company (LSE: RICA), which is trading at a 4.5% discount. The managers have a great record of preserving capital in volatile markets, but they’ve had a relatively poor run in recent years. However, alongside Capital Gearing (LSE: CGT) and Personal Assets (LSE: PNL), I…

We need more recessions Rana Foroohar Financial Times In July, America’s current economic expansion will become the longest one since 1854, the year business cycle records began, says Rana Foroohar. Unemployment is at a 49-year low. Asset prices are at near-record highs. Yet the Federal Reserve has signalled that it is prepared to cut rates due to “uncertainties” in the economic outlook. Disturbingly, it will therefore be working from a “historically low rate base” when the next recession comes. The length of this cycle is not unusual. The last four account for four of the six longest business cycles. “Optimists would say that less frequent recessions are a result of positive structural shifts and better policy choices”; the US shale industry has reduced the risk of oil price shocks, for…

adamsmith.org/blog If a government cuts taxes, it earns gratitude for a couple of years, then the new rate beds in and people just get used to paying less, says Madsen Pirie. So instead of cutting taxes, why not keep rates constant, but refund people annually in a lump sum? That would keep the gratitude coming every year – something a chancellor might find politically useful. It would, for example, be a more flexible system in that people wouldn’t mind so much receiving a lower rebate, if this were necessary, than they would stomach a tax increase. The rebate could perhaps be linked to the state of the national economy, or tweaked in innumerable ways, without much in the way of administrative costs. True, this just amounts to a “tax cut…

Financial scamming is becoming increasingly sophisticated. One of the most common ploys to look out for is “phishing”. This usually involves an email from what appears to be a legitimate source, such as HM Revenue & Customs or payments processor PayPal. These emails will usually tell you that your account has been locked or that you are entitled to a refund of some sort, and will prompt you to click on a link. It will direct you to a page asking for your details to correct the problem or process the refund. But this will be a fake website in the guise of the organisation the email professes to be from, and will use the data provided to steal your identity or your money. Alternatively, the email will ask you…

Savers who invest their pension contributions in the “default” funds offered by providers without checking the performance of these vehicles are jeopardising their financial futures, new research warns. The best-performing default fund run by the 20 largest pension providers has returned 11.9% a year over the past three years, compared with 3.4% for the worst performer, says the Tax Incentivised Savings Association (Tisa). Around 95% of members of defined contribution (DC) employer pension schemes opt for a default fund, rather than taking the time to explore what alternative investment options might be on offer. Many savers with personal pension arrangements do the same. The disparity of performance threatens to have a huge impact on returns. A saver earning £30,000 a year and investing in a pension fund with an annual…

Thanks to the wide range of Latin America-focused mining companies listed on Western exchanges, investors have plenty to choose from. For the most risk-averse the safest option is a UK-listed major. Fresnillo (LSE: FRES) is the world’s largest silver producer and Mexico’s second-largest gold miner. It boasts six world-class mines and last year silver and gold production hit record highs. The stock has fallen by 54% over the last two years as investors have fretted about low-ore grades in some of the old mines. Those fears are overdone. Fresnillo has below-industry average production costs, an excellent record of extending mines to boost output, and is prudently managed with no debt maturing before 2023. It’s a solid earner with a dividend of 2.1% and a relatively safe way to play Latin…

An eight-sided house in the grounds of an abbey that was once home to Jane Austen is on the market for £870,000, says Jack Newman on Mail Online. The Grade II-listed “Octagon” forms part of Stoneleigh Abbey in Warwickshire, which is thought to have inspired Austen’s novel Mansfield Park. The Abbey was originally founded in 1154, when Henry II granted the land to Cistercian monks. After the Dissolution of the Monasteries in the 1530s, the property fell into private ownership, and for 400 years belonged to Austen’s maternal family, the Leighs. Austen stayed in the abbey in 1806 when it belonged to her mother’s cousin.…

Investment trust savings schemes and, more recently, investment platforms such as Hargreaves Lansdown (HL) have been helpful resources for investors keen to put money aside on a regular basis and gain access to an array of assets for a reasonable price. But now fintechs are providing more and more competition. One in particular, Freetrade, is well worth a look. I’ve been road-testing this app-based service for six months and although there are some flaws I think it could be a great way of running, say, a child’s savings scheme through an individual savings account (Isa). A good selection of investment trusts Here are the key advantages: basic share dealing is free, mostly; the service works in a very simple way; and the choice of available single stocks, investment trusts and…

Growth investing, which focuses on finding firms that can grow their sales and profits at above-average rates for extended periods, is an established investment strategy that has done very well over the past decade. However, the difficulty of predicting firms’ future growth and the long-term focus the strategy involves, mean that traditional growth investing is difficult for traders. As a result, they concentrate on short-term events, such as a positive earnings surprise, or use price momentum (the increase in the price of a share) as a proxy for growth. Another way to incorporate growth into a trading strategy would be to look at the change in earnings per share over the past year. Research by US investor James O’Shaughnessy finds that there is some evidence to back up such an…

Telecom Plus (LSE: TEP) provides utility and telecoms services to residential and small-business customers under its Utility Warehouse brand. Its “discount club” operation, which eschews advertising and price-comparison sites, prefers to grow customer numbers via a network of 40,000-odd “partners” who recruit new ”members” and are paid a commission. It seems to be working. The number of customers grew by 4% in the year to 31 March, and it says that its churn rate of 12% is half the energy industry average. Pre-tax profits rose by 4.9% to £43m.…

Louis Jay Pearlman was born in 1954. His father owned a dry-cleaning business, and singer Art Garfunkel was a first cousin. After graduating in accounting, Pearlman founded a helicopter taxi service in New York, before moving into airship leasing. In the 1980s he set up a string of businesses using the Trans Continental moniker. But it was for his music label that he became most famous. Trans Continental Records launched the careers of several of America’s most famous boy bands in the 1990s, including the Backstreet Boys and ‘N Sync, featuring Justin Timberlake. What was the scam? The Backstreet Boys and ‘N Sync were phenomenally popular. Yet despite their success, they only received a fraction of their earnings as pay – $10,000 each in the case of ‘N Sync in…

£35bn The difference between what people collectively owed the taxman last year and what they actually paid, according to HMRC. The so-called “tax gap” is £2bn bigger than it was in 2017. €150m The cost of the Comet Interceptor mission, which will send a probe a million miles from Earth to analyse a comet entering our solar system. The European Space Agency mission will be led by the Mullard Space Science Laboratory at UCL. £500m How much has been lent by the government-funded Start Up Loans programme to entrepreneurs since 2012, when it was set up to boost lending to small firms. 150,000 The number of British businesses that do not yet have the paperwork in place to carry on exporting to the European Union in the event of a…

While cycling home from work in 2015, Robert Hazeldean collided with Gemma Brushett, who had walked out in front of him while looking at her phone. Both were knocked unconscious, with Brushett suffering a minor head injury; she sued for damages. Hazeldean represented himself in court and, crucially, failed to put in a counter-claim as he didn’t like “claim culture”. It was an expensive mistake. Last week the judge found that both parties were equally at fault, and ordered Hazeldean to pay Brushett £4,161.79 in damages. Not only that, he would be liable for Brushett’s costs of around £100,000 – an amount Hazeldean says is likely to bankrupt him. An online campaign to raise funds has so far raised £57,000, achieving more than double the original £21,300 “goal”. Good week…

“If the tech giants were normal firms they would be delivering dividends into my pension fund… They aren’t… The five FAANGs have collectively paid out just £47.8bn since 2014, all from Apple, on a combined market cap of £2.4trn. Russ Mould at AJ Bell says: ‘That is barely half the £91bn that the FTSE 100 is forecast by analysts to pay out this year alone. In addition, the five firms expected to be the biggest dividend payers in cash terms — BP, BAT, HSBC, GlaxoSmithKline and Shell — have paid dividends with a value of £151bn since 2014’... the big tech firms do run share buy-backs... but that’s of little help if you are seeking income. There is already a £1trn funding deficit in public sector pensions. The pension deficit…

Three to buy Keystone Law Investors Chronicle This legal platform uses its proprietary software to provide centralised administration and business support to self-employed lawyers in return for a cut of their fees. The platform model allows the business to add new users at limited cost, which makes for strong cash generation. A forward price/ earnings (p/e) ratio of 32 is steep, but earnings forecasts have been upgraded frequently and the positive momentum has “solid foundations”. 528p Marriott International Barron’s The world’s largest hotel operator boasts 1.3 million rooms and is expanding into “fast-growing regions”. Airbnb poses a threat, but the group has responded with a luxury strategy focused on selling travel “experiences”, such as tours and spa treatments that make it “more than a hotel company”. Marriott operates an asset-light…

• Plans for a new Amazon Professional Beauty Store to supply professional stylists and hairdressers have “smudged” shares in the cosmetics sector, notes Aaron Pressman in Fortune magazine. This mirrors the market reaction to Amazon’s “real and rumoured forays into healthcare plans, pharmacies, package delivery, banking, and of course, groceries”. Still, the beauty industry can take heart from the fact that Amazon’s past efforts to build its own smartphones, sell its own holidays, and flog high-end clothes and jewellery have shown that “it’s not always the winner”. • By deciding to buy Caesars Entertainment in a deal worth $17bn, the “once-obscure” Eldorado Resorts “appears to be yet another Las Vegas newcomer willing to take on long odds”, says the Financial Times. Investors should be aware that “the last time Caesars…

Put simply, liquidity refers to how easy it is to buy or sell an asset without moving the price against you. For example, property – both residential and commercial – is an illiquid asset. It takes a long time to buy or sell, trading costs (from stamp duty to surveys) are high, you can never be quite sure of the price you’ll get (or pay) until the deal has closed, and if you want to sell in a hurry, you’ll have to cut your price to well below the theoretical “market value”. On the other hand, shares in big, listed companies (“blue chips”) on the FTSE 100, for example, are very liquid. They are also “fungible” – ie, one share is the same as another, whereas each property is unique…

• Dany Cotton, the first female commissioner of the London Fire Brigade, is to retire from her £234,000-a-year post early at the age of 50, picking up a “generous pension” after 32 years of service, says The Times. Cotton took up the post six months before the Grenfell Tower fire, in which 72 people died. London mayor Sadiq Khan has called her “inspiring” and a “true role model”, but a lawyer for the Grenfell victims told the public inquiry that she was “not fit” to run the fire service. Cotton (pictured) says she “would not change anything” the fire brigade did that night. • Joe Garner, chief executive of Nationwide Building Society, received more than £500 a day in expenses in the last financial year, a total of £185,000, reports…

The activist fund which had been pushing for the removal of half the board of bus and rail operator First Group has been “defeated in a crunch vote”, says Alex Ralph in The Times. Coast Capital had labelled the company’s directors as “shades of super-destructive to extraordinarily underqualified”, and was pushing for First to exit the UK rail market. Although the group had indicated that it would wind down its British rail commitments and focus on American buses, Coast pushed ahead with Wednesday’s vote, as it had different ideas about what First’s priorities should be in the future. Yet despite signs Coast had gathered support from major shareholders, it failed to secure enough votes on the day. First did announce the departure of chairman Wolfhart Hauser though, who said it…

“In the lower tournaments you have to pay for the hotel and the aeroplane tickets. If you have a coach, you have to pay for the coach. Honestly, you lose more money than you earn. Then it gets really tough, because you start stressing out over that. Most people share a room to save money. It’s hard.” Tennis champion Naomi Osaka (pictured), quoted in The Times “Singing is a question of passion for me, not money. I could have retired a long time ago, but I need to sing – I would be dead already if I hadn’t continued.” Grammy-award winner Julio Iglesias, 75, quoted in The Times “I am the nearest thing to a monk – can you imagine a Jewish monk?” Businessman and celebrity Alan Sugar on his…

telegraph.co.uk All the talk will be about the headline acts, but this week’s Glastonbury festival is “a serious economic enterprise”, says James Hall. The “Glastonomics” of it all are staggering. The festival generates more than £100m a year for local businesses and charities. If it were a standalone country it would have a GDP more than double that of the Caribbean island of Montserrat. The company that runs the festival reported revenues of £44m over the year to 31 March 2018 and pre-tax profits of £1.77m. Total spending by punters and organisers alike amounts to something like £114m. And all for an event that only lasts five days of the year – or at least of most years. In 2006, Blacks Leisure issued a profit warning as there was to…

Thousands of pension savers may be spared an expensive tax bill now that HM Revenue & Customs (HMRC) has withdrawn its appeal in a landmark legal case. The dispute could have implications for as many as 12,000 savers who have breached the terms of protection they were granted against going over the lifetime allowance (LTA). Under the current LTA rules, anyone with total pension savings of more than £1,055,000 pays tax charges on the excess when cashing in their pension. But thousands are entitled to higher allowances, having applied to HMRC to protect their pensions from tax following reductions in the allowance, most recently in 2016. Crucially, however, some forms of this protection are only available to savers who agree to make no further pension contributions or accept any additional…

Pension-scheme membership hit a record high last year, with some 46 million Britons enrolled in at least one workplace scheme, new official figures reveal. But, the typical scheme member is only contributing 5% of pay to their pension, including their employer’s contribution, raising questions about whether they will have enough to retire on. On the one hand, the growth in pension-scheme membership under the auto-enrolment system introduced in 2012 represents a substantial success. The system requires all employers to offer staff a pension plan and pay into it on behalf of those who have not specifically opted out. Over time, the minimum contribution levels have been significantly increased. In April 2018, employers were ordered to pay at least 2% of salary while employees had to pay 3%. These minimums were…

Of all the issues highlighted by the implosion of the Woodford Equity Income Fund, liquidity is perhaps the most worrying. No one likes to feel they have been trapped by events outside their control. In the Neil Woodford saga there are two conflated issues. Firstly, the liquidity of the fund; secondly, the liquidity of some of the underlying firms. It is in the latter respect that some clarification of terms would be a good idea. “There is some real ambiguity in this area,” says Gervais Williams, senior executive director and fund manager at Miton. The term small cap can apply to a company that is worth £50m or more, or “some loss-making, privately owned businesses where valuations are completely speculative”. Moreover, companies can be illiquid in different ways depending on…

A five-bedroom villa in an exclusive, gated community close to Marbella’s with five-star facilities. The main house has a double-height living room with a wooden ceiling and tiled floors, and a spacious entertainment area with a games room, bar and dance floor. The villa and guest suites are connected by a courtyard, which includes a small, separate tower that provides additional guest quarters, and the terraces offer panoramic views over unspoilt countryside. But can you guess the asking price? See the side of this box for the answer.…

■ Use of digital payments is growing rapidly around the world, and nowhere more so than in India, says The Economist. The value of transactions has increased 50-fold in the last two years. It is expected to double from $64.8bn this year to $135.2bn by 2023, according to a study by trade association Assocham and consultancy PwC India, reports India’s The Week, with growth at an annual rate of 20.2%, ahead of China at 18.5% and the US at 8.6%. Paytm, India’s largest digital payments provider, boasts 371 million users, while Flipkart, the second-biggest, has 150 million. The switch to digital has been driven partly by government and central bank policy. A push by Prime Minister Narendra Modi in 2014 to open up the banking system to ordinary Indians saw…

The last fortnight has not been kind to my long tips. Three of my recommendations have appreciated slightly, with John Laing Group increasing from 380p to 389p, Hays from 153p to 162p and Superdry from 480p to 482p. Unfortunately, however, these gains have been negated by several declines. JD Sports has fallen from 611p to 592p, Safestore has gone down from 643p to 630p, and Bellway has fallen from 2,825p to 2,697p. To make matters worse, Kier has plunged from 161p to 114p, triggering the stop-loss at 119p. Counting the latter position, my long tips are making profits of only £167, down from £884. If my long tips have had a rough time, then at least there’s the consolation that my short tips haven’t done nearly so badly. Weis Markets…

Stobart Group (LSE: STOB) is an infrastructure and engineering company that operates as a mini-conglomerate. Its Stobart Energy division supplies wood to biomass power stations; the aviation division operates Southend airport; and Rail & Civils provides engineering to rail infrastructure companies. It has been in the news for all the wrong reasons, with a boardroom coup ending in acrimonious legal proceedings. The latest annual results revealed a loss of £42.1m and the company has cut its dividend. The share price slid by 50% in the last year.…

I released the first ever The Great New Zealand Pinot Noir Classification 15 years ago with my friend, Aussie wine writer Tyson Stelzer. We announced the release of the eighth edition this month and it is published free to view and download on my website for both friends and members. I came up with the idea for this classification because there was an enormous explosion of wineries making pinot noir in the early noughties and every bottle seemed to be priced around the £25 mark. I thought that this confusing mass of labels needed sorting out, so I devised a rolling, five-year average scoring system that converts the top estates in the country into a one- to five-star table. Only 120 estates out of the 512 who make pinot in…

Luca Pacioli’s Summa de Arithmetica (pictured) sold for $1.215m at Christie’s in New York earlier this month. The Franciscan friar published the book in Venice in November 1494. It was one of the first on algebra to be published in the West in the vernacular – Italian in this case. Summa de Arithmetica also contains a chapter explaining to European merchants the advantages of keeping their books in the new two-column Venetian style, a method that is today known as double-entry book-keeping. The book, one of 2,000 from the first print run, would have cost 119 soldi when hot off the press – not cheap, but not beyond the means of a wealthy Italian merchant.…

• Mark Zuckerberg (pictured) wants to democratise banking by launching a digital currency called Libra, says Ross Clark in The Sun. “But I’m not fooled. I think we all know what Facebook is really up to.” Libra will be yet another way “to harvest data about our financial habits, which it will then use for targeted marketing”. Collecting data on us is, after all, the sole reason for Facebook’s existence. “Facebook already knows who you are. Accept Libra and it will know what you are buying, who you’re paying and how much you have.” What role will the regulator play? It’s not as if the company has shown much willingness to be regulated so far. Will Facebook prevent criminals and terrorists from using Libra? “I’m sorry, but I’m sticking with…

For an asset often dismissed as a “barbarous relic”, gold is doing pretty well, says Randall Forsyth in Barron’s. It has hit a six-year high, breaching the $1,400 an ounce level not seen since August 2013. This marks a breakout from a trading range it has been stuck in since 2013, when it had fallen back from the record peak above $1,900 it reached in 2011. What’s more, because the dollar has been strong in recent years, gold is looking even better when priced in other currencies. Trading around £1,127 early this week, gold is now within striking distance of its £1,178 per ounce sterling all-time high. As Charlie Morris of Halkin Services notes, it has now made all-time highs in Australian dollars – reaching A$2,000 an ounce this week…

In 1981, Do & Co was a restaurant in the centre of Vienna. Today it’s a global catering group known for high-quality food that notched up annual sales of €860m in 2018; operating profits reached €7m. The group’s three divisions comprise restaurants and hotels; international event catering (including Formula One motor races); and airline meals. The latter category is the biggest, worth 60% of revenues. The long-term outlook for global aviation is encouraging as the world’s population gradually gets richer, says Focus Money, and analysts have been impressed by a new contract to provide meals for British Airways and Iberia. Berenberg Bank sees scope for the stock to gain a fifth.…

Yet another “pharmaceutical behemoth” looks set to emerge, says Chris Isidore on CNN. AbbVie has announced that it will buy Allergan for $63bn. The latter’s shares jumped nearly 30% on the news. Takeover activity in the sector has intensified recently, with Pfizer announcing an $1bn takeover of Array a few days ago. Earlier this year, Bristol-Myers Squibb offered $74bn for Celgene, though that deal has yet to be approved. There is strategic logic to the deal, says The Wall Street Journal. Buying Allergan would allow AbbVie to dominate the $8bn-plus market for Botox and other beauty drugs, along with several “popular eye treatments”. Along with “some overlap in treatments for brain, women’s health, stomach and other disorders”, the combination “would take AbbVie into the new realm of frown-line smoothing, eyelash…

Now that Brexit is no longer her problem, Prime Minister Theresa May has been making a flurry of spending pledges to shore up her legacy – which the chancellor, Philip Hammond, has been furiously resisting. He is right to do so, says The Times. May has “no business binding her chancellor, let alone the next one and her successor… to far-reaching and substantial spending pledges”, which include an extra £27bn over three years on schools and colleges, independent audits to ensure the effectiveness of a previously agreed additional £2.3bn for mental health provision and a promise to reduce Britain’s net carbon emissions to zero by 2050, which Hammond says will cost around £70bn a year. Hammond said in his October budget statement that the purse strings could finally be loosened…

When Iran shot down an unmanned US surveillance drone last week, President Trump came close to ordering retaliatory airstrikes, says Catherine Philp in The Times. He called them off “at the 11th hour”, saying the expected death toll would be a “disproportionate” response, and instead announced new sanctions on Iran’s supreme leader, Ayatollah Ali Khamenei, his inner circle and Revolutionary Guard commanders. Trump promised that “more would follow” if Iran didn’t mend its ways – it is accused of attacking ships in important oil trade routes and has admitted breaking the rules of a nuclear accord that Trump tore up. Stepping up the rhetoric later, Trump warned that Iran would face “obliteration” if it attacked the US military again. For its part, Iran has stated that Trump’s actions have “slammed…

“I think we’re probably already in a recession.” In his 2010 book, The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation, author and strategist A Gary Shilling correctly forecast a long stagnation following the 2008 crisis. Now, he tells Ed Harrison on Real Vision, “there’s just a whole host of economic indicators that are declining.” That said, we’re not facing anything to compare to previous “really outstanding crises”. There are lots of potential problems around: “corporate borrowing has been very heavy” in the US; and over-indebted emerging markets could also struggle given the strength of the US dollar, which “makes it much more expensive in terms of local currencies to pay for those dollar debts.” Finally, there are trade wars with China. Yet while any…

Jim Shannon, the Democratic Unionist Party MP for Strangford, is being investigated by the Independent Parliamentary Standards Authority (Ipsa), over his mileage claims for 2017-2018 and 2018-2019, reports The Daily Telegraph. Shannon claimed £51,000 travel costs in 2017-2018 – £4,250 a month. His total expenses for the last year came to £237,680, £90,000 more than the average MP’s claim. Last year, Shannon was ordered to repay almost £14,000 after an Ipsa investigation. SNP MPs Ian Blackford, Gavin Newlands and Drew Hendry were the next biggest claimants, drawing £232,982, £232,548 and £224,714 respectively; the top English MP was Labour’s Jess Phillips, MP for Birmingham Yardley, who racked up £219,005, including £22,232 on accommodation. The smallest claim was from Philip Hollobone, Conservative MP for Kettering, who claimed just £12,348.…

■ Neil Woodford’s Patient Capital wrote down more than 3% of its value in one day last week, says Jonathan Jones in The Daily Telegraph. The fund published a statement last Thursday which showed that the portfolio’s net asset value per share had fallen from 86.9p to 83.9p. It is the second time this year that the portfolio has been revalued down by more than 3% in a day, and the third time since it launched in 2015. The trust was quick to note that the revaluation was “not in connection with any sales by any other Woodford mandate”, and that valuation changes were “a characteristic of investing in early-stage companies”. Woodford’s Equity Income Fund owns 9% of the trust’s shares, following a deal it made earlier this year. “Disgruntled”…

theconversation.com Totnes – a small, historic market town in the southwest of England – has “garnered a reputation as a thriving hub for art, music and alternative lifestyles”, says Brendan Barrett. In many shop windows you will find stickers reading: “Totnes pound accepted here”. Sadly, the pound is no more, a victim of cashless payment methods. But other economic initiatives live on. A small town cannot rely on “anchor institutions” such as universities or hospitals as cash cows, as similar efforts in larger places have. Instead, Totnes has formed networks between many organisations that have formed to counter the impact of budget cuts on local health and services. Other projects work on building up the local economy – a shuttered Dairy Crest factory has been transformed into a business incubator,…

The government scrapped the wear and tear allowance, which allowed landlords to deduct up to 10% of net rent earned on letting out fully furnished property, in April 2016. However, you may be able to claim for the cost of replacing domestic items instead. If you let out a residential property, you may be able to claim back the cost of replacing movable furniture like beds or free-standing wardrobes; furnishings such as curtains, linens, carpets and floor coverings; household appliances like televisions, fridges and freezers; and kitchenware, such as cutlery. Unlike the wear and tear allowance, this relief applies to properties which are unfurnished, part furnished or fully furnished. However, you must actually buy the item; it is not an assumed outgoing. Note also that the initial cost of buying…

Latin American mining has captivated international investors for centuries. Tales of Birú, a magical gold-laden land that we now know as Peru, were enough to convince Spanish conquistador Francisco Pizarro to lead a risky expedition against the Incas. In the short-term the mission was an outstanding success: Pizarro ransomed Inca emperor Atahualpa for 13,000 pounds (lbs) of gold and twice as much silver. In today’s prices that is almost £2.4bn worth of gold, though the silver comes to a paltry £6m. Since then, investors have continued to scour the region looking for similar pots of gold. The mythical El Dorado, for example, first believed to be a king, then a kingdom, finally turned out to be a waste of time and money for the British, Spanish and German investors who…

Philip Green is “not a very nice person”, Richard Shepherd-Cross, manager of the real estate investment trust Custodian Reit (LSE: CREI) told Citywire earlier this month. Custodian was one of the landlords that voted against his retail group Arcadia’s ultimately successful company voluntary arrangement (CVA) proposal a few weeks ago. These arrangements give indebted companies time to restructure debts, and often involve forced rent reductions, which is bad news for their landlords. “Retail properties only comprise 12% of the portfolio” More and more retailers have had to resort to CVAs in recent years, prompting accusations that they’re using the mechanism merely to duck out of rental responsibilities. Indeed, “CVAs used to be the last roll of the dice, a compromise with creditors to save the business,” says Shepherd-Cross. “There was…

The great and the good of the global video-games sector were out in force in early June for their annual get-together in Los Angeles. The Electronic Entertainment Expo – or “E3” – draws a big crowd, showcasing the top games and product innovations. For investors trying to assess who will be the winners in an industry going through profound change, this year was especially important. E3 highlights the imagination and advances in the industry. Whether mobile-phone gaming, breakthroughs in virtual reality or tie-ins with films and popular culture, the future for gamers is exciting. Short-term turbulence “The market is expected to expand by 44% by 2022” Beneath the surface, though, the sector has faced problems. Mixed performances from established games and under-performing new ones have unsettled analysts. Activision Blizzard, which…

I enjoy nothing more than a good steak, but I know that veganism is the “in” thing. As my colleague Stuart Watkins pointed out last year, up to one in eight of the population now considers themselves vegetarian or vegan. The problem is that most people still want to enjoy the taste of meat, yet most meat substitute products have so far been awful. This has created a gap in the market for a meat substitute that actually tastes acceptable. Given this tremendous interest, it’s not surprising that the listing of food technology company Beyond Meat has not only avoided the fate of Uber and Lyft, which both flopped, but has also apparently succeeded beyond the wildest dreams of its promoters. It listed at $25 a share and reached $67…

Over the last five years classic value investors have had a torrid time. The MSCI World Value Index has underperformed its growth equivalent by 4% per year. Conventional wisdom has tied this trend to ever-lower long-term interest rates, which have kept the weakest businesses solvent and thus stopped the traditional capital cycle from buoying the strongest. This has weighed on returns in capital-intensive industries, which are where classic value stocks tend to be found. Meanwhile, major tech firms such as Amazon and Netflix seem capable of strong growth regardless of the economic backdrop. “Discount retailer Ross Stores should prove resilient to an economic downturn” So where should investors place their bets now? Rather than agonise over the choice between the two strategies at a time when the macroeconomic outlook is…

In the early 1980s, Dietrich Mateschitz was just another businessman in Thailand trying to drum up a market for toothpaste when he “popped open a small bottle of a syrupy concoction”. The drink, called Krating Daeng (Thai for red bull), was popular among truck drivers and blue-collar workers as a pick-me-up, says Maxim. It gave him his big idea. Some 30 years on, the Austrian billionaire from Salzburg is credited with starting a global drinks revolution. After securing the rights and launching “a carbonated and eminently more drinkable version” in his home country in 1987, Red Bull became the first of a new breed of energy drinks. The blue and silver cans so painstakingly designed by Mateschitz have shot from “niche” to ubiquitous: more than 6.3 billion were sold in…

Two fascinating collections have been in the news recently. The first belonged to Marceau Rivière, a French “traveller-collector” and writer of several books. His collection went up for sale at Soth by’s in Paris last week, but “was never intended to be a collection of masterpieces”, says Susan Moore in the Financial Times. Rather, its “integrity and its particular charm lie in being a record of a life spent beguiled by the peoples and material culture of Africa”. Rivière was just eight years old when a missionary arrived in his village in Normandy bearing slides of the Congo. He was “mesmerised”, says Moore. Then, aged 11, he kick d off his collection with a Dan/ Guere mask, bought from a rag-and-bone man and paid for in instalments from his pocket…

A Dan statue of a walking spoon, from the Rivière collection (see left), is “pure joy”, says Susan Moore in the Financial Times. It looks like something Walt Disney would have come up with for his 1940 animated film Fantasia, but the concept of a spoon/ ladle with legs, known as “megalumia”, is far older. Its purpose was ceremonial. Women would compete against one another to be the most generous in distributing food to the community, according to the auction catalogue note. The winner of the contest would be given the spoon and the title of wakede, meaning “queen of the feast” in the Dan language of the Ivory Coast, for her largesse at the table. It fetched €972,500, far surpassing its €600,000 upper estimate. From the Morris collection, a…

“There is, indeed, nothing in all this world that can match war for popularity. It is, to at least nine people out of ten, the supreme circus of circuses, the show beyond compare, it is Hollywood multiplied by ten thousand. It combines the excitements of a bullfight, a revival, a train wreck, and a lynching… It is the dizziest, gaudiest, grandest, damnedest sort of bust that the human mind can imagine.” “The world wants more claptrap. Soon it will want more gold too” So said HL Mencken. He was too polite to mention the money. And there is a lot of money in war. But it’s not like the old days. Before the modern era, you could make war, and if you were victorious, victori sunt spolia – you could…