Innehållsförteckning för 1124 från MoneyWeek

In 2002, Warren Buffett warned that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal”. Nobody paid much attention at the time. Investment banks were busy constructing and selling an alphabet soup of derivatives. Mortgages were sliced and diced into mortgage-backed securities (MBS); car, credit-card and corporate loans were bunched into collateralised debt obligations (CDOs). The idea was that if “banks repackaged their loans, mixed them up and sold them to different people, it would diversify their exposure to risk”, as Gillian Tett of the Financial Times explained. “So instead of having a concentrated exposure to one type of risk, they’d be sharing that risk between them, making them stronger.” (They were also collecting fat fees from the repackaging process.) She likened the…

“For years, we have heard that ‘there is no alternative’ – TINA – to equities, and that thanks to the Fed, ‘cash is trash’. No longer. The Federal Reserve, in its belated attempt to fight inflation, has cranked up rates to the point where today there is an alternative to stocks: Bonds... the biggest story of 2022... has been the end of the bond bull market that dates back to 1981. It is a one-in-a-generation, perhaps even once-in-a-lifetime event... 2022 may not be 1981-1982, but for the first time in several years, bonds are attractive investment options. In addition to providing diversification versus equities... you now get paid for owning them... The ten-year Treasury bond [recently] kissed a 4% yield... high-grade corporates are yielding over 4%... More irony: Now that…

Shares in Capricorn Energy have jumped by 10% after it announced that it has ditched a merger with competitor Tullow Oil in favour of a deal with Israel’s natural-gas group NewMed Energy, says Shotaro Tani in the Financial Times. The deal is bad news for Tullow, which had previously said it was “fully committed” to a $1.4bn merger with Capricorn. But the move had provoked an angry reaction from Capricorn shareholders, with Legal & General Investment Management saying there was “no clear strategic rationale” for the Tullow tie-up. The deal is technically “not yet done”, as it needs to be approved by at least 75% of Capricorn shareholders, but it certainly looks as though the investors who managed to block the Tullow agreement have been vindicated, says Alistair Osborne in…

People cut back on spending in hard times, but they still like to spoil themselves with little treats, says Der Aktionär. US sales of lipstick and other small, reasonably priced beauty items rose after 9/11, and it was a similar story during the financial crisis. Enter Ulta Beauty, a cosmetics chain with a strong presence in its $100bn market. It operates 1,300 shops across the US, with a growing emphasis on outlets within other stores such as Target, a supermarket brand. It is also boosting traffic online: digital sales grew by an average of 35% a year between 2017 and 2021. Sales rose by 17% year-on-year to $2.3bn in the quarter to 30 July, while net income climbed by 18% to $296m.…

Politics & economics As power drains from the government, Labour is starting to look like an opposition that is “ready to govern”, says Camilla Cavendish in the Financial Times. This week Labour “stormed” into a 38-point lead over the Tories in the key ‘red wall’ seats, a “remarkable 23-point swing” in just two weeks, says Adam Forrest in The Independent. On average, Labour is polling 24 points ahead of the Tories. Keir Starmer has “finally found confidence to set out his vision for what he would do in power”, says Harry Yorke in The Sunday Times. In its first year, a Labour government would set up a state-owned Great British Energy company to invest in clean power, with the seed money coming from the £8bn announced for the…

It’s safe to say that the prediction that the Conservatives would have had at least one polling lead by the end of September wasn’t my greatest tip, especially since polls are now putting Labour as much as 32 percentage points ahead. Indeed, with £21,245 matched on Smarkets, punters put the odds of the Tories not having a single polling lead by the end of 2022 at 1.05 (95.2%), and I’d be inclined to agree with them, though the odds are too short for me to recommend. Punters are now so pessimistic about Liz Truss that they think she will depart Number 10 sooner than later. With £4,276 matched, Betfair has her at 1.65 (60.6%) not to lead the Conservatives into the next election, and 2.26 (44.2%) to be there when…

It was probably the shortest tax cut in history. A little more than a week after announcing the end of the 45% top rate of tax, chancellor Kwasi Kwarteng was forced into a humiliating U-turn. In reality, he had no choice. His mini-budget had been savaged by the markets, had put Labour 30 points ahead in the polls, and was likely to be defeated by Conservative backbenchers in the House of Commons. With this rapid U-turn, the government’s “growth plan” – using supply-side reforms to improve incentives, and to make the UK more competitive, enterprising and efficient – has taken a huge blow. Perhaps something can be salvaged from the project. Perhaps. But Kwarteng and prime minister Liz Truss will have to change their strategy. Here are three places they…

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) in 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…

“So far I’ve found it to be very time consuming, emotionally exhausting, financially idiotic and utterly addictive.” The actor Ryan Reynolds (pictured) on becoming the joint owner of Wrexham Association Football Club last year, quoted in The Guardian “I have a joke about trickle-down economics; 99% of you won’t... get it.” David Lammy, UK shadow secretary of state for foreign, commonwealth and development affairs, on Twitter “In my line of work, you might spend months earning nothing and then do a voice-over for an advert, which takes an hour and pays a few thousand pounds. It feels like wandering through a desert and seeing an oasis.” Actress Juliet Cowan, quoted in The Mail on Sunday “In 1992 my accountants failed to tell me about an important meeting I should have…

theatlantic.com Research shows that greater home internet use leads to less communication with family members and compounds “depression and loneliness”, says Arthur C. Brooks. Even seemingly interactive activities such as texting or messaging on social media are not harmless. “Text messages can’t convey emotion very well, because we can’t hear or see our interlocutors.” These technologies are “to in-person interactions what a black-and-white, pixelated version of the Mona Lisa is to the real thing: identifiable, but incapable of producing the same emotional effects”. The result is shallower and less nourishing relationships. Technology’s tendency to limit “real-life interaction” means it “must be managed”. Turn on “device options that tell you how long you are spending on social media and the internet, and limit yourself to an hour a day or less”.…

Twenty-one years ago, John Ralfe, then in charge of the £2.3bn Boots pension scheme, took the momentous decision to sell all the fund’s £1bn of equities and invest solely in UK government bonds. The advantages, he later explained, were that in doing so, he matched the assets of the fully funded defined-benefit scheme to its liabilities, reducing the risk for Boots’ management and shareholders of a future deficit that the company would have to make up. It also reduced the risk for the 72,000 members, lowered investment costs by 97% and, by selling early in the bear market, avoided large equity losses. Liability-driven investment (LDI) was born and other companies rushed to follow suit, especially those that were fully funded and closed to new employees. New staff were instead offered…

● Last week old paper £20 and £50 notes ceased to be legal tender. This means you can no longer use them in shops. “If you do find paper instead of polymer notes down the back of the sofa, you can take them to your bank for deposit into your account,” says David Brenchley in The Sunday Times. Some Post Offices and the Bank of England will exchange the old paper notes for the new plastic versions. The counter at the Bank of England is open from 9:30am to 3pm every Monday to Friday. Take proof of identity with you. “If you are exchanging the notes for someone else, you will need a signed letter of authority from the owner naming you” and clarifying how they would like to be…

● If your business has cash in a savings account, is it earning a decent rate of interest? Successive base rate increases from the Bank of England’s Monetary Committee have seen many savings providers raise the interest rates they offer over a broad range of products. But not all have done so, and some have been more generous than others. Companies are therefore at risk of missing out if they haven’t checked their rates recently. The best easy-access accounts currently offer businesses about 1.5% annual interest, according to comparison site Moneyfacts – rising to 4% if you’re prepared to tie up the cash for several years. ● HM Revenue & Customs has begun making new checks on claims made by companies for research and development (R&D) tax credits amid fears…

■ BlackRock, Columbia Threadneedle and Schroders are restricting redemptions from institutional open-ended property funds due to higher requests for withdrawals by pension schemes, says the Financial Times. Many UK pensions are major investors in property funds and have been cutting holdings as rising rates and slowing growth make the sector less attractive. Now, the liquidity crisis sparked by soaring gilt yields (see page 14) is forcing some schemes to reallocate assets more quickly, creating problems when they want to withdraw from funds that invest in hard-to-sell assets. Columbia Threadneedle will move from daily to monthly redemptions, while BlackRock and Schroders will defer some withdrawal requests – potentially until July 2023 in Schroders’ case. The restrictions echo previous crises such as the aftermath of the Brexit referendum and the beginning of…

The jittery markets have ensured that it has not been a good fortnight for my long tips, with four out of the six depreciating. Industrial and construction-equipment rental company Ashtead rose from 4,046p to 4,267p, while retailer Dunelm Group increased from 787p to 804p. However, Hays Recruitment fell from 118p to 106p, Pets at Home dipped from 301p to 280p and online streaming service Netflix declined from $243 to $239p. Retailer JD Sports fell below the 100p,the level at which I suggested you should close the position. Counting JD Sports, my long tips are making a loss of £1,577, up from a deficit of £863 a fortnight ago. Still, the silver lining is that all my six short tips fell. Remote-medicine group Teladoc slipped from $29.34 to $25.57, Chinese property…

Boohoo (Aim: BOO) has seen its share price crash following a cut to its full-year outlook, says The Daily Mail. In the first six months of 2022, the firm reported a pre-tax loss of £15.2m, down from £24.6m profit for same period the year before. Sales fell by 10%, which CEO John Lyttle has blamed on an increase in clothes being sent back for refunds and softening demand from British households amid worsening macroeconomic conditions. International revenue was dented by longer delivery times. Sales are expected to continue declining at this rate. The stock has slumped by 82% in 12 months.…

2019 Ramey, Russian River Valley Chardonnay, Sonoma County, California (£54.00, bbr.com). A super-scoop this week! I have quoted retail prices for the wines this week, but they do not arrive in the UK until late October, so contact Berry’s, and you can secure your allocation ahead of time, in bond. But hurry along because stocks of all of these wines are in very limited supply. There is no doubt that I rate Ramey as one of the world’s preeminent Chardonnay producers. This was evinced by a tasting of the new 2019 releases in the Berry Bros & Rudd cellars in St. James’s Street, London, a week or so ago. My featured estate wine leads the way in drinkability, value and versatility. There is tremendous generosity of perfume, fruit and length,…

An unnamed Dutch woman has left her entire €5m fortune to the medieval city of Bruges in Belgium, says The Times. The woman was a mining heiress who moved from Switzerland to a house in the city centre in 2014 after visiting as a tourist. Bruges’s gothic buildings and canals (pictured) make it immensely popular with holidaymakers – nine million people visit each year. The bequest includes the house, valued at €700,000, plus €3.3m in cash and €1m in shares. “We sometimes get small donations… but I have never seen anything like this,” said mayor Dirk De fauw. The sole condition is that the woman remains anonymous, meaning the council will not be able to name a street or square after her. Good week: Fund managers Michael Lindsell and Nick…

Singapore has overtaken Hong Kong as Asia’s top financial centre, says the latest Global Financial Centres Index (GFCI). The semi-annual classification, compiled by City of London think tank Z/Yen and the China Development Institute is based on quantitative data and surveys of financial professionals, says Huw Jones on Reuters. “New York remains... the world’s most favoured financial centre”, with London in second place. Singapore has risen three places to the third spot, pushing Hong Kong into fourth, says Les Echos. Hong Kong’s strict Covid-19 policies and obligatory hotel quarantines have cut it off from the world for two years and dented its appeal as a business hub. Singapore began to allow quarantine-free travel in August. Four million visitors are expected in 2022. “Last year, just 91,400 people arrived in Hong…

The pound has rallied from last week’s record low to its pre-mini-budget level. That reflects market bets that sharper Bank of England interest rate hikes – predicted to peak above 5% – will prop up sterling. Last month’s sell-off was part of a much longer trend, says Ed Conway on Twitter. During the gold standard era (1870s-1914) exchange rates were fixed, with one pound buying $4.87. Sterling has steadily fallen since, with sharp devaluations in 1949 and 1967. Its “persistent depreciation” against the US currency over the past 70 years “mostly reflects higher inflation in the UK than in the US, requiring a lower exchange rate to equalise price levels in both countries”, say Chris Giles and George Parker in the Financial Times.…

Vodafone is in talks with Hong Kong-based CK Hutchison, owner of telecoms group Three, “to combine their UK businesses and create the biggest mobile operator in the country”, says Anna Gross in the Financial Times. Vodafone “has been under pressure from activist investors to change strategy and improve shareholder returns” by pursuing deals that would “allow it to simplify its sprawling international business and sell off poorly performing divisions”. The hope is that merging Vodafone with Three will help transform two operators that currently “lack the necessary scale to earn their cost of capital”, allowing them to “accelerate the rollout of full 5G in the UK and expand broadband connectivity to rural communities and small businesses”. It’s true that the combination “could create significant value”, as it would allow both…

Burjeel has become the first privately-owned firm to go public in the UAE this year, says Bloomberg; 2022’s previous listings were all state-owned. Burjeel, 80%-owned by VPS Healthcare, operates hospitals and medical centres specialising in areas ranging from radiology and neurosurgery to dentistry and dermatology. It is currently in the midst of a $1bn expansion into Saudi Arabia’s healthcare market. Burjeel is offering 550.7 million shares, accounting for 11% of the company, in order to raise around $350m. The sale comes amid a boom in initial public offerings (IPOs) in the Middle East, fuelled by high oil prices and consequent global inflows in local equities.…

Cambridge, Massachusetts, Alzheimer’s hope: The 36% jump in Biogen’s share price last week following the release of data from its Alzheimer’s drug trial “looks impressive” but “implies some scepticism” that Biogen, together with Japanese partner Eisai, have found the “holy grail” of a cure for the disease, says Robert Cyran in Breakingviews. In a trial of around 1,800 patients in the early stage of Alzheimer’s, their drug, lecanemab, delayed cognitive decline by 27% compared to a placebo. Doctors will debate whether this is clinically meaningful, particularly given that measuring disease progression is difficult, but if it does work, the $11bn “pop” in Biogen’s market cap suggests investors are being conservative. It implies $6.5bn of sales in five years. If the drug is priced at $20,000 per patient, that would mean…

● British Steel “has gone cap in hand to business secretary Jacob Rees-Mogg [pictured] asking for an urgent bailout likely to amount to hundreds of millions of pounds”, says Ruth Sunderland in The Daily Mail. It reckons that its blast furnaces are no longer viable due to high energy prices, putting 4,000 jobs at risk. Yet the firm is owned by China’s Jingye, which bought it for £50m in 2019, promising to invest £1.2bn and raving about “a ‘splendid future’ in which British Steel would ‘revitalise the glory’ and ‘impress the world’”. The government should not have taken “that torrent of guff” at face value: it should have forced Jingye to make legal undertakings on jobs and investment. “Ministers are in a bind” due to the strategic importance of the…

Mark Mobius, co-founder, Mobius Capital Partners Investors should consider buying Brazil if leftist leader Luiz Inacio Lula da Silva beats incumbent Jair Bolsonaro in the Brazilian presidential election and there’s a peaceful handover (see page 10), says veteran emerging markets manager Mark Mobius. “If the election goes well and Lula gets in, then we probably will look to add some of our holdings,” he tells Bloomberg. “It’s not because of Lula only, but because there’s a stable transition of power and that’ll be good news.” A likely consumer spending boom under Lula is one obvious good reason to be bullish on Brazilian stocks. The challenger is already promising to ramp up government spending: in addition to maintaining a current social programme – set up by Bolsonaro – that pays BRL600…

adamsmith.org Keir Starmer says it is absurd that firms owned by the Chinese and French governments operate in the UK energy market, but not one owned by the British taxpayer, says Alex Singleton. The largest onshore windfarm in Wales, he notes, is owned by Sweden. But Sweden runs that Welsh windfarm efficiently because it is only interested in it “to the extent that Welsh windpower produces profits for Swedes to enjoy”. Swedish politicians aren’t competing for Welsh votes in elections. Stockholm also has “no input into what the subsidy level, output prices or wage levels are or should be in Wales”. It operates the wind farm like any other private commercial operator would. However, if the British state were running the Welsh wind farm, then the government would have an…

The mini-budget earlier this month has led to a mortgage meltdown. Over 1,600 mortgage deals have been withdrawn from the market and the ones left are at considerably higher interest rates. So, why the chaos – and what can you do to shield yourself from huge rises in mortgage repayments? The budget led to fears the Bank of England would be forced to increase the base rate rapidly to tackle inflation. Expectations of higher interest rates in future tends to raise bond yields – government debt interest rates – which are the basis for mortgage rates. Bond yields also rise as bonds are sold off (prices move inversely to yields) amid concern over the country’s economy. “Bond yields rocketed… and nobody knew where they were going next”, says Sarah Coles…

Can contractors look forward to the end of IR35, the much-hated tax regulation that has caused problems for so many self-employed people? The short answer, despite headlines following the government’s mini-budget suggesting it is to be abolished, is no. Still, the system may soon become more flexible. IR35 is the set of rules used to define contractors’ employment status and thus how much tax they pay. The aim is to prevent people who are to all intents and purposes employed – they work only for a single employer, say, with little discretion about when and where they work – claiming they are self-employed in order to secure tax benefits. These rules will remain in place. However, from next April, the government will reverse reforms introduced in 2021 (and 2017 in…

The runaway champion of the current market turbulence has been the Brevan Howard fund called BH Macro (LSE: BHMG), which is up 20% in share-price terms year-to-date. Its returns are so good that it has left traditional defensive funds such as Personal Assets (down 5%), Ruffer Investment Company (up 4.5%) and Capital Gearing (up 5.4%) in the dust. To be fair, this trio are fundamentally unlike BHMG: they are multi-asset investors who use fairly conventional holdings (stocks, bonds and other trusts) defensively – although they have also been known to use esoteric strategies at times – while BHMG is a full-blooded hedge fund. On the other hand, BHMG is also very different from other listed hedge funds, such as Pershing Square Holdings and Third Point Investors, which are down 8%…

Owning shares in the luxury-clothing company Burberry (LSE: BBRY) over the past four years has been like the film Groundhog Day: there have been several surges, only for the price to subside to its original position. In both 2018 and 2019, the stock briefly shot up but then relinquished its gains. Similarly, its Covid-induced collapse in early 2020 was followed by a long rally. Then came yet another slump before an ongoing uptick left it at the same level it was at the start of 2018. Can the company find a way to break out of this stop-start cycle, or are investors doomed to keep repeating history? At present Burberry is facing two main problems, one short-term and one more fundamental. Firstly, the ongoing Chinese lockdowns caused sales in the…

The UK stockmarket accounts for less than 5% of global market indices, yet it makes up a huge proportion of British investors’ portfolios. Nowhere is the tendency to invest mostly at home more pronounced than among income investors. For many, the UK remains the “go to” market for dividends, and yet by taking this siloed approach, many investors are losing out on exciting opportunities for both capital growth and healthy growing dividends elsewhere around the world. The scope for healthy dividends in emerging markets, for example, is growing. This is apparent in economic powerhouses such as China and India, but also in diverse economies such as South Africa and Mexico. The growth opportunities within these markets have long been apparent: working-age millennials in China outnumber the entire US population. However,…

As predicted last week, the Dow Jones Industrial Average has fallen below 30,000. Next target: 20,000. Do we know that the Dow will trade below 20,000? No, of course not. But what we think we know is that the Federal Reserve will surprise investors twice. First, on the way down. Second, on the way up. Many investors are already surprised by the Fed’s steadfast pursuit of lower inflation levels. Fed chair Jerome Powell has vowed to keep hiking rates until the “job is done”. Many analysts think he has gone too far and could cause a nasty recession. But today, we take the other side: we explain why the Fed won’t go far enough. For now the Fed has no choice. It is way behind the curve and has to…

“IMF, ERM, Lehman” – the course of Britain’s politics has often “been set by tumultuous events in financial markets”, says Gerard Baker in The Times. This could prove a similar turning point. The Bank of England’s emergency intervention (see page 14) has calmed the turmoil in gilt and currency markets. The Bank delayed quantitative tightening (sales of bonds bought with printed money) and will instead buy up to £5bn of long-dated gilts daily. Yet with those purchases due to end on 14 October, investors remain jittery. UK 30-year gilt yields spiked to 5.1% at the height of last week’s sell-off (bond yields move inversely to prices), but have fallen back to 4.2% following the Bank’s intervention. The UK’s 30-year borrowing costs remain higher than they were on the eve of…

Credit Suisse is in the middle of a crisis, says Ben Martin in The Times. Executives at the “troubled bank” have failed to allay investors’ fears about its “financial health”. The problem began last week, when worries started to circulate “that the lender could be in trouble”. In response, executives “raced to bolster confidence in the loss-making group” through a series of telephone calls. However, the slide in its share price, which at one stage reached 12% on Monday, and the rise in the cost of insuring its debt against default (measured by credit default swaps) suggest that “those efforts have fallen short”. The spike in borrowing costs and the fall in Credit Suisse’s share is a little extreme given that “there was no obvious bad news to explain the…

Five to buy AstraZeneca The Times Pharmaceuticals giant AstraZeneca has spent the last ten years slimming down its “previously disparate drug portfolio” and increasing investment in research and development, which now comprises 20% of revenue each year. “The result has been... sales growth outstripping listed peers.” The company also boasts 13 “blockbuster” drugs generating at least $1bn in sales a year. While the patent for two of them will expire in 2025, it boasts a “meaty pipeline” and several ongoing clinical trials. The shares have doubled since 2017 and “they could perform just as well to 2027”. 9,763p Finsbury Foods The Mail on Sunday “If you’ve had Thorntons caramel shortbread, a Mary Berry-branded chocolate sponge or a boozy Gordon’s gin cake,” you have tasted Finsbury Foods’ products. The company produces…

The US state of Florida is still reeling from the after-effects of Hurricane Ian, “one of the deadliest hurricanes in recent memory”, which has already killed nearly 100 people, say Bernard Debusmann and Sam Cabral on the BBC. While the death toll pales in comparison to 2005’s Hurricane Katrina, which killed more than 1,800 people, and 2017’s Hurricane Maria, which killed nearly 3,000, the economic cost will amount to many tens of billions of dollars. Nearly two million people were driven from their homes, insurers have already reported about $1.44bn in preliminary claims, and one forecast estimates the total damages could rise to $75bn. The carnage threatens “to swamp the state’s property insurance market”, says Joshua Chaffin in the Financial Times. This was already “buckling”: six firms fell into insolvency…

There are certain investment lessons that are obvious, but never seem to be learned. “Don’t expect instant liquidity from illiquid assets” is pretty high up that list. Yet several property funds are again restricting redemptions – just as they did in 2016 and 2020 – as result of too many investors trying to get their money out too fast (see page 28). On this occasion, only institutional funds (ie, those used by pension schemes) seem to be affected, unlike last time when retail investors got locked in as well. However, it’s not hard to imagine that retail funds may eventually limit withdrawals, if the real-estate downturn continues amid higher rates and a weak economy. MoneyWeek has set out its views on this many times in the past: we simply don’t…

Moscow’s Asian PR mission fails Richard Heydarian Nikkei Asia Amid “punishing Western sanctions” following its invasion of Ukraine, Russia has turned to Asia, “offering heavily discounted oil and leveraging its large arms and agriculture industries” to woo the region’s booming economies, says Richard Heydarian. Although this “diplomatic braggadocio” may be helping mitigate its own economic collapse, Asian nations are pulling back. Pre-invasion, a charm offensive was well under way, designed to establish “robust” trade and investment ties. Moscow supplied Russian vaccines during Covid-19; Vladimir Putin appealed as a role model for macho populist leaders. But now countries fear falling foul of Western sanctions. Singapore has even imposed its own. Meanwhile, the Philippines and Indonesia have both cancelled major arms deals with Russia. For over a decade, Putin “carefully cultivated” relations…

politico.eu The internal combustion engine is “arguably Germany’s greatest invention”, says Joshua Posaner. Yet it will be little use as vehicles switch over to “battery cells and lines of software code”, areas where America and China lead the way. An “emotional connection to the oil-greased engine runs deep in the ranks of every German carmaker, where generations of engineers have known nothing else”. Even today, many in the industry are reluctant to write off the engine. So instead of taking long-term bets on new technology, Germany’s petrolheads spent years promoting diesel as a way to keep regulators happy. Then Volkswagen’s emissions scandal invalidated that approach. That left them behind in the race to electrify. Last year Elon Musk’s Tesla sold “the most all-electric cars of any brand in Germany”. Mercedes,…

In recent years “demand for annuities… wilted due to record-low interest rates. The rates offered… are determined by long-term gilt yields, which are affected... by the Bank of England’s base rate,” as Sarah O’Grady notes in the Daily Express. But now, thanks to the bond-market rout, which has seen yields soar, annuity rates are looking attractive for the first time in years. Those “who lock in an annuity rate today can earn tens of thousands of pounds more over their retirement than those who bought the best deal just a year ago”, says Lauren Almeida in The Sunday Telegraph. A 65-year-old buying an annuity with £100,000 could secure an annuity income of £6,637, according to figures from Hargreaves Lansdown, up from around £4,900 a year ago. Seven consecutive interest rate…

More start-ups keen to raise cash may be able to use the Seed Enterprise Investment Scheme (SEIS) following changes in the mini-budget. SEIS offers very generous tax reliefs to investors who put cash into early-stage businesses, but only a limited number of these firms have hitherto qualified for the scheme. That number will now increase. At present, to raise money using SEIS, a business must be no more than two years old, have gross assets of no more than £200,000 and fewer than 25 employees. From April 2023, however, the age limit will rise to three years and the assets cap will climb to £350,000. Firms will also be able to raise up to £250,000 of SEIS investment, up from £150,000 today. The changes mark a significant expansion of SEIS,…

Elliott Management has raised its stake in Swedish Match, the world’s biggest makers of oral nicotine products, leaving a $16bn takeover bid from Philip Morris “hanging in the balance”, says Reuters. Elliott said on Friday that it had increased its stake to 7.25% from 5.5%. The activist is believed to oppose Philip Morris’s offer on the current terms: since a takeover requires the approval of 90% of shareholders before 21 October, opposition from just 2.75% of other investors would cause it to fail. Long-term Swedish Match shareholder Framtiden Partnerships, which holds 1%, has already said it is against the takeover. Swedish Match shares are trading above the SKr106 offer price, suggesting that investors expect Philip Morris to offer a higher price.…

The Investment Company Institute, a global association of regulated funds, recently said that 16% of the US stockmarket is owned by passive funds, which track an index such as the S&P 500, compared with just 14% for active funds, where a fund manager attempts to select shares that will beat the market. This is the first time that the amount of money invested passively has exceeded the amount invested actively. However, while supporters of index funds argue that their low costs make them a great vehicle for investors, others insist that they create a distortion in the market which savvy traders can exploit. In particular, it is said that because index funds have to buy shares that are included in an index (and dump those that leave it), the price…

Car dealer Pendragon (LSE: PDG) has produced encouraging interim results, says Investors’ Chronicle. Despite a fall in sales volumes, Pendragon’s pre-tax profits rose by 7% year-on-year to £32.9m in the first six months of 2022 as car prices increased, thanks partly to supply constraints in turn caused by the semiconductor shortage. While used and new car volumes fell by 15% and 18% respectively, gross profit per unit increased by 23% to £1,676 and 59% to £2,576. Pendragon’s online marketplace CarStore now lists more than 10,000 cars. The share price has climbed by 47% over the last year.…

Floyd Odlum was born in Union City, Michigan in 1892. After switching from journalism to law he graduated from the University of Colorado in 1914, taking a job at Utah Power and Light in Salt Lake City. Three years later he joined Simpson, Thatcher and Bartlett, a New York law firm specialising in utilities law. In 1923 he set up a listed investment company, or investment trust, the United States Corporation (later Atlas Utilities Corporation) with $39,000 from friends and family. The fund’s subsequent investments in utilities proved to be so successful that additional investors joined in. By 1929 its assets were worth $6m. What was the investment? In the summer of 1929, Odlum was convinced that the US stockmarket was overvalued and heading for a crash. He raised $9m…

“While Ferrari and McLaren embrace downsized V6 hybrid powertrains for their entry-level supercars, Lamborghini continues to blaze its own uniquely hedonistic trail as it unleashes the last series production Huracán,” says Richard Meaden in Evo. The design concept for the Tecnica is simple: mash together two of the company’s best cars – the sublime Huracán Evo RWD and the hardcore STO – and embrace the majesty that comes out the other end. But it’s been executed with all the precision one might expect from one of Europe’s premier carmakers. A celebration of their technical prowess taken to the extreme, “the Tecnica is a last hurrah before Lamborghini’s bestselling model is replaced by an all-new hybridised supercar”. “The noise – oh my God the noise. I’m sure this latest iteration of…

$30m How much Avatar made at cinemas globally last weekend. The film, which was first released in 2009, is the highest-grossing movie ever, with $2.85bn in ticket sales. It has been re-released to promote a sequel that is due out in December. TWD3bn The amount (£83m) that Taiwanese billionaire Robert Tsao has pledged to donate to help his country defend itself against an invasion by China. The proposal includes spending TWD1bn on training three million “civilian soldiers”, while some of the rest will fund the development of military drones. Tsao, who founded chipmaker UMC, was previously an advocate of better relations with China, but changed his views after the crackdown on pro-democracy protestors in Hong Kong in 2019. Rs250,000,000 The lottery prize (£2.7m) won by Anoop Babu, an autorickshaw driver…