Innehållsförteckning för Issue 968 från MoneyWeek

A few months ago in an article headlined “15 business and finance writers this billionaire always reads”, US columnist and asset manager Ken Fisher noted that he always reads me, for the simple reason that “Merryn Somerset Webb attacks virtually everything Ibelieve in”. Everyone likes a challenge. He will be surprised then to find that I agree with much of what he has written in a Financial Times article this week. Conventional monetary policy assumes, he says, that low interest rates (which make borrowing cheaper) will make people want to borrow more. But beyond a certain point that isn’t true. Very low rates kill the profitability of loans (by crunching the spread between the rate at which a bank can borrow and that at which it can lend – see…

France’s aerospace and defence group Safran is one of the companies affected by the grounding of Boeing’s 737 Max planes, says WirtschaftsWoche. But the company, whose products range from aircraft engines and interiors to missile-propulsion systems, also supplies Boeing’s rival Airbus, so it is guaranteed to profit from the secular growth of the global aviation market. Its high-tech systems will help it exploit the rising demand for quiet and energy-efficient engines, while a recent takeover will bolster its sales of aircraft cabins and cockpit equipment. Safran will also be involved in the construction of a Franco-German fighter jet. It’s “a long-term bet on Europe’s aviation and defence technology”.…

Hong Kong Exchanges and Clearing (HKEX) will have to put its plans for “creating a global capital markets operator” on ice after abandoning its £32bn offer for the London Stock Exchange (LSE), says the Financial Times. It continues to insist that there was a “compelling rationale” for the merger, but it has recognised that its “charm offensive” has failed to persuade either the LSE’s board or its investors. This was partly down to the “insufficient” amount of money that it was offering and the fact that HKEX’s offer depended on the LSE giving up its plans to buy trading and data group Refinitiv for $27bn. It’s no wonder the deal failed, says Alex Brummer in the Daily Mail. A merger with Hong Kong would have offered the LSE “a huge…

Extinction Rebellion (XR) deserves some credit for giving salience to the urgent issue of climate change, says The Times. However, even as ecowarriors bring parts of London to a standstill for two weeks, their demands make it hard to “avoid the judgment” that they “might not be the ones to provide persuasive answers”. Very true, says Benedict Spence in The Daily Telegraph. This “predominantly middle-class” movement is demanding the destruction of (crony) capitalism and a “powerful state apparatus to radically alter energy structures” to help the UK become carbon neutral by 2025. XR expect to be “given the OK” for this by its “citizens’ assemblies” which would replace the government. This is essentially the green movement, “buffed by PR”, being used as cover for radical far-Left politics. Moreover, its demands,…

President Trump has effectively “declared war” on the impeachment inquiry launched by the US House of Representatives, says The New York Times. The White House argues that speaker Nancy Pelosi’s decision to stop White House lawyers from cross-examining witnesses and bar Republicans from calling on additional testimonies effectively turns it into a “kangaroo court” designed “to overturn the results of the 2016 election”. Impeachment technically isn’t acriminal proceeding, “so the right of Mr. Trump to face his accuser doesn’t apply”, says The Wall Street Journal. Still, you’d think that annulling the 2016 vote of 63 million Americans is “significant enough” to require “witness transparency and a chance for both parties to test his knowledge and credibility”. However, the Democrats are still attempting “to keep secret the identity of the intelligence…

As a fund manager, Nick Train has one of the best longterm records around. However, even he makes mistakes, as he acknowledges in his latest monthly update to investors in the Lindsell Train UK Equity fund. Train has long been a backer of troubled educational publisher Pearson. However, so far his faith in the stock has been poorly rewarded. “Pearson delivered what has become almost a traditional profit warning in the third quarter of the academic year... We are mortified to consider how long we have persevered with this investment.” As Train notes, the stock has not resulted in a big loss for the fund. But the money could have been invested instead in better-performing stocks in the portfolio, asignificant “opportunity cost”. That said, he is hanging on – for…

Footballers at Tottenham Hotspur are feeling “overworked and underpaid”, reports the Daily Mail. They are “jealous” of the club chairman Daniel Levy’s salary – £6m a year. The squad feel underpaid compared with their rivals at the top of the Premier League table. Yet Harry Kane, the club’s top-earning player, is on around £200,000 a week including bonuses, The Daily Telegraph reported last year. That’s around £10.4m a year. Dele Alli is on around £100,000 a week, says The Times, and goalkeeper Hugo Lloris is on a similar amount. Bottom of the first team squad is Kyle Walker-Peters, who is on just £1.04m, says Spotrac, a sports finance website. The average pay at the club is around £4.25m. Players at Liverpool earn an average of £4.92m, those at Manchester City…

conversableeconomist. blogspot.com Are wages rising, falling, or have they remained stagnant? The answer is yes, says Timothy Taylor. Anew essay from the Brookings Institution points out that the answer you get depends on the choices you make when you try to measure them. If you choose 1979 as a starting point, for example, a year just before recessions in the US in the early 1980s, wage growth will look worse than if you start in 1990. The answer will also vary depending on the measure of inflation you use, whether you are looking at average or median wages, and on whether you focus on men or women. If we begin in 1990, use the PCE measure of inflation, include men and women, and look at the 20th percentile of wages,…

■ Is it time to explore the market for Korean pop music? The flagship fund of Seoul’s hedge fund group AlpenRoute Asset Management has gained 81% in three years by investing in private companies such as Big Hit Entertainment, the outfit behind “K-pop” boy band BTS. Sales at Big Hit doubled last year as the band’s popularity soared, says Heejin Kim on Bloomberg. BTS were topping the charts two months after AlpenRoute invested in Big Hit. The Alpenroute Montblanc 4807 fund has been rewarded for looking beyond the stockmarket, which has performed poorly as the local economy has slowed. The local benchmark, the Kospi index, has slipped by over a fifth since January 2018. But while established companies have struggled, the start-up scene is thriving. In the past decade the…

When an electorate is polarised, it makes political sense to pick a side. As Margaret Thatcher once said: “Standing in the middle of the road is very dangerous – you get knocked down by the traffic from both sides”. The Labour party’s plunge in the polls should make that clear enough. By contrast, Prime Minister Boris Johnson has taken a persistent and commanding lead since he firmly committed to delivering Brexit by 31 October, “do or die”. But now it seems that his attempt at adeal is dead, shunned as too unworkable even to begin the formal negotiating process. That leaves only the option of leaving without a deal at all – which the Benn act seeks to postpone by forcing the prime minister to ask the European Union for…

The modern robotics market began in the car sector in the 1960s. Since then it has expanded relentlessly into ever more industries, fuelled by technical innovations such as exponential growth in computer processing power, electronic miniaturisation, increasingly refined sensors and controllers, new materials and more compact batteries. And robotics will remain a growth industry thanks to several secular trends, including cloud computing, autonomous driving, electric vehicles and precision medicine. Picking the winners We invest in companies that benefit from the growth of robotics, automation and artificial intelligence. But this is a substantial investment arena, which makes fundamental research key. We track 400 companies globally. Insights we gain from firms, meetings with brokers and trade shows each year help us narrow the field to a concentrated portfolio of between 40 and…

When he was growing up, Parker Schnabel viewed himself as “a pretty typical Alaskan kid”. He lived for hunting. “For about five years our family hardly had to buy any meat. I was pretty proud of that.” Then, in his teens, his attitude shifted, says The Times. “It was no longer deer and bears and moose” that drove Schnabel. “It was something more mysterious and compelling. It was gold.” Fans of the Discovery Channel reality show Gold Rush are no strangers to Schnabel’s standing as “a connoisseur of dirt”. He’s made $20m, consistently out-earning rivals, and now lays claim to being “one of the most successful gold mining bosses in the Klondike” as well as the star of Discovery’s most successful show. Schnabel got into both mining and reality television…

NV Bolé, Spumante Bianco, Emilia-Romagna, Italy £13.50, reduced to £12.83 each by the case of six bottles and £12.15 each by the case of 12 bottles, Great Western Wine, 01225-322810, greatwesternwine.co.uk I am always on the lookout for newly released wines and sometimes I stumble across completely zany, paradigm-shifting creations and I have to do a double-, and in this case a triple-take. Made from trebbiano with a 5% addition of local rarity famoso, this terrific sparkler uses a long and cool secondary fermentation in a tank, as opposed to a bottle, to get the wine to market as fresh and vibrant as possible. The result is a Proseccostyle fizz, but with an awful lot more to hang onto. The bottle is stunning, the label is energetically colourful and genuinely…

Who Dares Wins Britain, 1979–1982 By Dominic Sandbrook Allen Lane, £35 Dominic Sandbrook is one of the best-known practitioners of a certain type of post-war British economic history that puts the political narrative in a wider social context, says Charles Moore in The Spectator. His latest follows this pattern, contextualising the first three years of Margaret Thatcher’s premiership in terms of the “jolting” changes in popular culture and the economy that were at the same time “fiercely resisted and happily embraced”. The book is “scholarly, accessible, well written, witty and incisive”, and “fizzes with character and anecdote”, says Piers Brandon in The Sunday Times. It is an “unrivalled portrait” of the British society of this time and Sandbrook takes a nuanced view of Thatcher, dispelling “a number of popular myths…

Musician Pete Doherty has been banned from driving for six months and fined £9,200 after being caught speeding four times by the same camera in Kent, reports the Daily Mirror. Doherty, lead singer in The Libertines and Babyshambles, told Folkestone magistrates that he earned £10,000 a month. He said that a broken dashboard light meant he was unable to see the speedometer in his VW van. After sentencing, Doherty warned that he had “a feeling that I might be back in here soon”, mentioning that he had been stopped by police while riding an electric scooter along the seafront. In response, the chairman of the bench, Andrew Henderson, said the ban would include “this electric scooter you mentioned as well”. Good week for: Warner Bros’ latest film, Joker, has been…

Yes Bank “could use a helping hand”, says Una Galani on Breakingviews. Bad loans at the private-sector bank – the fourth-largest in India by assets – are rising and the lender needs fresh capital to plug the gap. But with its shares down by 80% this year, investors are reluctant to step forward. And India has “no up-to-date framework on how to deal with troubled financial institutions”, so it’s unclear how the policymakers will resolve the issue, even though it’s certain that “allowing Yes Bank to flail would be the worst decision”. Yes is “a particularly marked example”, but it is “not alone in its troubles”, says The Economist. “India’s banks are obviously faltering” as they deal with “the overhang from a splurge of bad lending years ago” – much…

“Dr. Copper has delivered a verdict and it is not good,” says Neil Hume in the Financial Times. The red metal is used in a wide array of industries, notably electronics and construction, so it is widely deemed a barometer of global activity. The price has slipped by a fifth this year and is now at a near-two-year low of around $5,600 a tonne. A gauge of US manufacturing has hit a decade-low, while its eurozone equivalent has fallen to a seven-year trough. Weakening demand has negated the impact of a 2% drop in mined supply this year. Longer term, however, the outlook for copper is auspicious: an electric car uses three times as much copper asa conventional one, while miners have struggled to find big, high-quality deposits.…

Another company has managed to raise more than $1bn through an initial public offering (IPO) in Hong Kong despite the torrid political backdrop. Following last month’s $5bn listing of the Asian unit of brewing giant Anheuser-Busch, Chinese sportswear group Topsports International has priced 930 million shares at $1.08, near the lower end of the previously indicated range, note Daniel Shane and Hudson Lockett in the Financial Times. With over 8,300 shops and 16% of the market, Topsports is the top sportswear retailer in China. It stocks brands including Adidas and Nike. Sales jumped by 22% to $4.5bn in the year to March 2019 while profits grew by a fifth to $ 300m.…

Bad news for workers at General Electric (GE). The company will be “freezing retirement benefits for 20,000 longtime employees” in order to cut billions from its pension deficit and debt pile, says Peter Wells in the Financial Times. In addition to ending the accumulation of extra benefits for members of its US final-salary scheme, GE will offer to buy out about 100,000 former employees who are members of the scheme but haven’t yet retired. This is CEO Larry Culp’s latest move in an ongoing effort to turn the group around. Transferring value from employees to shareholders in this way is a “bit awkward”, but also necessary, says John Foley for Breakingviews. Shareholders have already “suffered” through dividend cuts and a share-price drop of 30% since Culp took over, so the…

When Boris Johnson became prime minister this summer, his place in the history books would have been preying on his mind. If the bookmakers are to be believed, he could well go down in history as the prime minister with the shortest term in office. Originally, when the bookies started taking bets on his time in office you could get 3/1 (25%) on him setting a new record for brevity. Now the best that you can get is evens (50%) with Ladbrokes. At the time of writing, Johnson has been in office for 77 days, which is 42 days less than the 119 day-stint by George Canning, our shortest-serving prime minister. He succeeded Lord Liverpool in April 1827 before dying in August of the same year. This means that Johnson…

Here at MoneyWeek magazine, we are fans of so-called passive investing. Passive funds simply aim to track an underlying market – in other words, they’ll try to give you the same return as the market makes, less costs. Actively managed funds, by contrast, aim to beat the market. Clearly, the latter sounds like a much better option than the former. Surely we’d all prefer to beat the market – so why do we tend to favour passive over active? For two simple reasons. Firstly, passive funds are cheaper than active funds. Passive funds are effectively automated, whereas active funds need to employ an expensive fund manager to pick and choose stocks. Your cost of investing is one of the few things you can control. The less you spend on the…

The pay was fantastic. There were palatial offices in the smartest locations. Every Christmas there was a bonus with five, or sometimes even six, zeros on the end of it. The lunches were spectacular, and the expenses unlimited. You could make yourself a millionaire by mid-career. For a couple of generations at least there was no more desirable career than banking. They were the “masters of the universe” in Tom Wolfe’s memorable phase in The Bonfire of the Vanities, and they could bend the world to their will. But not any more. Since the financial crash of 2008 the status of the finance industry has slipped and slipped. There has probably never been a worse time to be a banker; the industry faces a downward spiral. A structural shift... Every…

Minimum wage hike is a major risk Tim Harford The Financial Times Chancellor Sajid Javid’s announcement of an increase in the minimum wage to two thirds of the median wage in 2024 may prove ill-advised, says Tim Harford. When the minimum wage was introduced in the late 1990s, only a few hundred thousand workers were paid it. Last year, the figure was two million. Had Javid’s new rule been in place, nearly five million would have had their wages set by the government rather than supply and demand. That represents a “massive expansion”. Additionally, most countries use a technocratic formula to set the minimum wage; both Javid and his predecessor George Osborne have politicised the issue. This is “unwise”. When benefits are immediate and costs , such as possible lay-offs…

econlib.org I was recently taken to task for saying that I hoped China would win its trade war with the US, says American economist Scott Sumner. How could I, a libertarian, support China’s murderous and illiberal regime? Why trade with a totalitarian empire like that? “The answer is simple.” History suggests that “trade makes people better, both at the individual and national level”. Countries that engage in international trade tend to be more peaceful than countries that do not. People in market economies tend to behave better than people in non-market economies. “If you want to bring peace and freedom to the world, trade is one of the best ways of doing so.” Of course, “history is complicated and there are exceptions to this generalisation”. But when it comes to…

As Byzantine intrigue makes the political outlook for the UK ever more uncertain, investors continue to pull money out of equities. In July, equity funds saw the highest level of net outflows from retail investors (£1.7bn) for three years, including £1.2bn from UK funds and £400m from Europe. Meanwhile, the better fund managers are just focusing on securing high returns whatever the challenges. Few have been more successful this year than HG Capital Trust (LSE: HGT), the listed technology-focused private equity fund with a market value approaching £1bn. The trust is the largest single investor in the £10bn of funds managed by HG, while HG’s investments in software, which boast a combined turnover of £4bn, make it the third-largest and one of the fastest-growing technology businesses in Europe. A powerful…

Whichever side of the Brexit debate you’re on, it’s been yet another week of confusing and depressing headlines. With the 31 October deadline looming, Prime Minister Boris Johnson was meant to be having a summit with the European Union (EU) at the end of next week. The hope was that we’d have some sort of deal agreed by then, which would avoid Johnson having to ask for an extension – or to challenge the legality of the Benn act, which could force him to do so. But at the time of writing (see page 8) the state of talks means it looks as though he might not even turn up. How did we get to this stage and, more importantly, what does it mean for your money? “There are two…

Next year Britain’s first child trust funds (CTFs) will start to mature. But millions of people may well have forgotten all about them. Child trust funds (CTFs) were available from 1 September 2002 to 2 January 2011. If your child was born in that period they will have received vouchers from the government to kickstart their savings. Every child received £250 (those in lower-income families got £500) to start their account, then another £250 or £500 at the age of seven. This sum was reduced to £50 in August 2010 before CTFs were abolished. Many parents and grandparents added money to the accounts too, so some teenagers will be able to access thousands of pounds when they turn 18 and their accounts mature. But around three million “might not realise…

If your business is spending more than ever on phone and broadband, now is the time to look around for a better deal. The average small and medium-sized enterprise (SME) will spend around £2,050 on telecoms services this year, according to a recent Consumer Intelligence report, up almost 33% on the £1,400 that regulator Ofcom said SMEs typically spent in 2016. For businesses increasingly dependent on technologies such as high-speed broadband, it’s also worrying that more than a third of SMEs describe their telecoms provider’s service as average or poor. For now, Ofcom’s data suggests that as few as one in ten SMEs change their telecoms provider each year. But the regulator has sought to encourage switching in recent years – for example, by banning providers imposing penalty charges on…

iEnergizer (LSE: IBPO) is an Aim-listed software and services outsourcing firm. It was founded in 2000 and now employs over 12,000 people around the world. An impressive year in which results exceeded expectations saw revenue rise by 11.8% to $174.1m and operating profit rise by 35.9% to $45.3m in the 12 months to the end of March. This excellent performance was accompanied by the first dividend in seven years. First half sales for 2018-2019 are again expected to beat forecasts. Shareholders have enjoyed a gain of over 250% in the past year.…

How did it begin? Born in 1846 in Stafford near Birmingham, Wright became a preacher before moving to Canada in 1870 and spending two decades promoting American mining companies. Facing multiple shareholder lawsuits, he returned home in 1889. In 1894 he set up the London and Globe Company, which focused on acquiring mines and shares in various mining companies. Touting the companies boosted their shares, allowing him to sell at a profit. He earned enough to be able to spend £250,000 (£28.4m in 2018) on buying Lea Park (now Witley Park) in Surrey in 1896, followed by an estimated £1.15m (£130.7m) on renovating it. What was the scam? Most of the companies that the London and Globe invested in were firms that Wright was promoting; the company also took punts…

Quit Like a Millionaire No Gimmicks, Luck, or Trust Fund Required By Kristy Shen and Bryce Leung Quercus, £12.99 FIRE (standing for financial independence, retire early) is a movement that originated in the US and this book is by two of its leaders. The idea is that if you live extremely frugally, save a large portion of your pay and invest the money in the stockmarket, you can accumulate enough to retire in your 40s, or even earlier. (The two authors were in their early 30s when they retired.) Quit Like a Millionaire by Kristy Shen and her husband Bryce Leung explains how anybody can achieve these goals and draws on Shen’s own experience (she was born in rural China and grew up in Canada). The opening third of the…

£35m The amount held in a British bank account that a court has ruled must be sent to the Indian descendants of the last nizam (king) of Hyderabad, Mir Osman Ali Khan. Khan deposited £1m in the account, held by the then Pakistan high commissioner, in 1948, only for India to annex his state later that year. Pakistan had refused to hand over the money. £100,000 The reward offered by insurer Fine Art Specie Adjusters for the safe return of an 18-carat gold toilet that was stolen from Blenheim Palace last month. The artwork, entitled America (2016), has been valued at £4.8m. $1.3bn The value of Scotch whisky exports to the US last year. From 18 October, the tipple will face a 25% tariff, along with other imported goods from…

“Bad economic data emerges, stockmarkets fall. Investors then predict an interest-rate cut, and stocks rise,” says John Foley on Breakingviews. That familiar pattern played out again last week in the US, when the S&P 500 closed higher even though the latest Institute for Supply Management (ISM) surveys suggested a contraction in the manufacturing sector and asharp slowdown in services. Yet while it’s not entirely a shock that US growth is slowing down after more than a decade of steady expansion, the market’s reaction “certainly looks too sanguine”. Most economists still don’t expect a recession: consensus forecasts are for around 2% annualised growth in the next two quarters. But what if the slowdown worsens? The push to impeach President Donald Trump means that odds of Democrats and Republicans co-operating on measures…

“Elon Musk has been mercifully quiet [of late]… but WeDontWork’s Adam Neumann [has] picked up the slack with his flailing efforts to bring his money-losing train wreck of a company public… Recent reporting [has] described Neumann as even more megalomaniacal than Musk, which is quite a feat though hardly conducive to... long-term business success… Neumann likes to muse about living forever [or] becoming… the first trillionaire… The fact that an individual who behaves like a total buffoon is indulged by institutional investors illustrates how detached from reality the so-called global elite has become and how inflated the current stockmarket bubble and particularly the tech market bubble has grown… groupthink... leads investors… to ignore not only its obvious absurdity, but also the dangers it poses to financial and societal stability.”…

Three to buy Alliance Pharma Shares Alliance’s “asset-light” business model, whereby it owns the product licences for over 90 pharmaceutical and healthcare products, but outsources the “capital intensive” activities such as manufacturing and logistics, is unique. It also makes the company “very cash generative”. Sales and profits have grown by 21% a year over the last five years. That makes the shares, on just 13.4 times next year’s earnings, “too cheap”. Buy. 71.6p Speedy Hire Investors Chronicle This tool-hire firm has weathered the collapse of Carillion and the “dark days of 2015” that saw two profit warnings, and is now in better shape than its competitors. It has invested in predictive analytics and artificial intelligence in order to allocate equipment around its network of depots more efficiently, which has driven…

• The appointment of Makoto Uchida as chief executive of Nissan means that the Nissan-Renault alliance, which “hit the skids” after the ousting of chairman Carlos Ghosn, “may soon be reinvigorated“, says Liam Proud for Breakingviews. Uchida’s “deep knowledge” of the benefits of collaboration will help deepen the cost-sharing relationship. Nissan urgently needs to cut costs: its margins are a sixth of rival Toyota’s. Uchida will also need to take measures to stop the fall in Nissan’s market share in China, America and Europe, which has caused a 13% fall in annual sales. • Unlike Wall Street, Apple’s smaller shareholders seem to be “excited” about the iPhone 11, which went on sale a fortnight ago, says Dan Gallagher in The Wall Street Journal: the stock has jumped by 38% since…

Passive funds (also known as index funds or trackers) aim to track the performance of a particular index, such as the FTSE 100 or S&P 500 (the main US stockmarket index). The funds may hold all of the stocks in the underlying index, or sometimes just arepresentative sample (this is known as “physical replication”), or alternatively they might replicate the performance of the index via buying derivatives (“synthetic replication”). The goal is to have aslow a tracking error (the difference between the performance of the index and the fund) as possible. A tracker that returned 5%, when the market only went up by 4%, would raise serious questions, even though it had beaten the market. Tracker funds can come in the form of open-ended funds (Oeics) or stock-exchange listed funds…

• Bob Dudley (pictured), the outgoing head of BP, could be in line for bonus payments of up to £40m, reports the BBC. Dudley has spent 40 years at the oil giant and has been chief executive for nine years. In that time he has received £95m in cash and shares. He has an outstanding award of bonus shares currently worth £40m, but he will only receive that amount if every performance target is hit. Dudley will be succeeded in March 2020 by Bernard Looney, currently head of BP’s Upstream division. • Healthcare company Sensyne Health paid its CEO and founder, former science minister Lord Drayson, a bonus of £850,000 after the company floated on the stockmarket. It also paid its chief financial officer, Lorrie Headley, a bonus of £200,000.…

“When Iwas doing cocaine in the late Seventies and early Eighties I thought I’d blown [all my money] and was broke. But [my manager] had put away a lot... for me; wouldn’t let me touch it until I got my senses back… It was $2m… if I’d had that money, that would have been a big party.” American rock singer Alice Cooper, 71, quoted in The Sunday Telegraph “It’s not an intellectually challenging business. It’s emotionally challenging... Fundamentally, we’re talking about agroup of 23-year-old millionaires kicking a piece of leather into a basket... Millions of people around the world invest their self-esteem in their ability to do that well.” Ivan Gazidis, chief executive of AC Milan, quoted in the Financial Times “You cannot justify my wages, so I don’t try.…

hbr.org We are living longer and having fewer children. That means we’re just going to have to work longer, say Josh Bersin and Tomas Chamorro-Premuzic. Yet companies still think of age as a disadvantage when hiring. They must get over this prejudice and bring older people back to work. The myth is that people over the age of 65 should retire. Yet research shows that travel, golf and sitting round the pool cannot replace the meaning we get from work. Those who work on into old age are less likely to suffer from depression and heart attacks and loneliness. Companies that hire older workers may miss out on the “raw mental horsepower” of the young, but they gain knowledge and expertise – the “main predictors of job performance”. Besides, many…

Neil Woodford’s Equity Income fund has slumped by 20% since 31 May, days before it was suspended. Its benchmark, the FTSE All Share, has been flat, while other funds in its category fell marginally. The Equity Income fund’s value has slipped to £2.93bn, so Woodford has now lost 75% of the assets he oversaw at the peak of his success in 2017, says Owen Walker in the Financial Times. The former star manager has incurred criticism for collecting over £8m in fees for the closed fund over the last four months. Meanwhile, his Patient Capital Trust is in trouble. The shares have fallen by 46% since the end of May and there may be more to come as the trust’s portfolio suffers further writedowns, and confidence in Woodford’s judgement dwindles…

While we’ve been debating Brexit the rest of the EU has not stood still. Specifically, thanks to outgoing European Central Bank (ECB) boss Mario Draghi, quiet but significant progress has been made towards further integration. The eurozone’s big problem has always been that its members are ill-suited to sharing a currency. For example, interest rates will generally be too high for Greece and too low for Germany. To offset that requires closer fiscal integration (ie, fiscal transfers between strong and weak economies), which also means closer political integration (if voters are to accept such transfers, one member can’t offer much better welfare benefits than the rest). As the Greek sovereign-debt crisis made clear, the risk was always that these internal contradictions would blow the eurozone apart, due to the risk…

The direction of travel is clear. Small businesses are going to have to get to grips with the shift towards a cashless society. Even the Big Issue has just announced that its sellers will soon be using contactless payments devices; many potential buyers of the magazine no longer carry cash. However, many small enterprises – around half, according to one estimate – aren’t prepared to take non-cash payments. The good news is that going cashless has never been so easy. Thanks to new technologies and fierce competition between new entrants to the financial services market, small firms for which electronic-payments systems would once have been economically unviable now have lots of options. The best card readers The simplest of these is to choose one of the growing number of card…

Burford Capital (LSE: BUR) is a third-party litigation funding firm that until recently was flying high. Last year saw a 24% rise in net profits to £328m. But US hedge fund Muddy Waters has accused it of “egregiously misrepresenting” its return on investments, while poor corporate governance has also been a problem, says The Times. Burford has now launched a High Court action of its own, claiming that its recent sudden share-price fall was the result of “market manipulation”, and “actionable misconduct”. The stock has fallen by 56% in the last year.…

By Tom Wright and Bradley Hope Scribe (£9.99) The 1MDB scandal, involving the theft and misuse of at least $3.5bn of dollars from Malaysia’s sovereign wealth fund, is one of the biggest financial scandals to hit Asia. It has already brought down former prime minister Najib Razak. In Billion Dollar Whale, Wall Street Journal reporters Tom Wright and Bradley Hope give a detailed account of the imbroglio. The main mastermind of the scam was Jho Low, the Gatsby-like financier who is currently a fugitive from justice. Although Low came from a wealthy family his desire to be feted by the rich and famous led him to devise a scheme that would enable him to fund a jet-setter lifestyle lavish enough to impress Hollywood celebrities. Ironically some of the money ended…

A crazy person, according to G.K. Chesterton, is one who has nothing left other than his power of reason. If you’ve ever spoken to a lunatic, you’ll know what he meant. “The aliens come all the time. I kill them with my zapper.” “Oh… I’ve never seen any aliens.” “Of course not, I kill them all.” Insane people have an answer for everything. In the words of Democratic presidential candidate Elizabeth Warren, they’ve “got a plan for that”. Those plans worry us. “Insane people have an answer for everything. They’ve ‘got a plan for that’” In 1969, an average person could work 225 hours and earn enough to buy shares in all 30 Dow firms. Today, he has to work 1,125 hours. He has become poorer. Yet some economists, such…