Innehållsförteckning för Issue 1281 från MoneyWeek

The UK property market seems boringly steady ahead of the autumn Budget. Halifax reports that prices rose by 1.3% in the year to September, the slowest pace of annual growth since April last year. The average house price fell by 0.3% compared with August, to an average of £298,184. While that sounds bad, the figure contrasts with data last week from Nationwide recording a 2.2% annual rise in prices in September, including a 0.5% month-on-month rise. The net effect seems to be that UK property is going nowhere fast. The good news, Sarah Coles of Hargreaves Lansdown tells The Guardian, is that with interest rates falling there are decent mortgage rates available, with the average two-year fix below 5%. There are anecdotal reports of hesitancy as minds focus on the…

Storm Amy sent UK wholesale power prices negative over the weekend. Gusts exceeding 90mph caused wind turbines to work overtime, dumping excess power onto the National Grid. Cheap electricity isn’t the norm, says Matt Oliver in The Telegraph. International Energy Agency (IEA) figures show that average electricity prices for industrial users were 26.6p/kWh last year, once taxes are included. That is 27% higher than Germany and 63% higher than France, which has abundant nuclear energy. Britons also pay some of the world’s highest domestic electricity costs, although German households shell out even more. A key problem is that UK power prices are usually determined by natural gas, a flexible but expensive source.…

Shares in US chipmaker Advanced Micro Devices (AMD) surged by more than a quarter after it announced a multibillion-dollar deal for AI infrastructure with OpenAI, the creator of ChatGPT, say Louisa Clarence-Smith and Katie Prescott in The Times. OpenAI will buy six gigawatts of AMD’s top AI processors over the next five years, “which consume the same amount of electricity as London at its busiest times”. The deal also gives OpenAI the option to buy a 10% stake in AMD, with analysts suggesting that the AI company is “spreading its bets” after signing a major deal with AMD’s rival, Nvidia, and also agreeing to invest in US chipmaker Intel. Markets are clearly viewing AMD’s blockbuster deal as a major positive factor, says Bloomberg’s Ian King. But while it gives AMD…

Shawbrook is to list on the London Stock Exchange in a boost to the struggling market, which has seen very few initial public offerings (IPOs) recently, says the Financial Times. The flotation could be London’s biggest this year, valuing the private equity-backed specialist bank at £2bn. Shawbrook is aiming for a free float of at least 10%, the minimum requirement for inclusion in the FTSE indices. CEO Marcelino Castrillo said the IPO will allow the lender to access additional capital pools and boost its brand recognition. The bank’s previous attempts to list were thwarted by market turmoil earlier this year. Shawbrook, which lends to small- and medium-sized firms, has a loan book of £17bn.…

With the abrupt resignation of his fourth prime minister, French president Emmanuel Macron is “running out of wriggle room”, says John Leicester in The Washington Post. As the outgoing Sébastien Lecornu intimated, France, which has been highly politically unstable for more than a year, is “verging on the ungovernable”. Édouard Philippe, Macron’s longest-serving premier, “broke ranks” to call on Macron to step down and call presidential elections two years before the end of his second five-year term in 2027. The chaos is eroding investor confidence in the EU’s second-largest economy and “frustrating efforts” to rein in its huge deficit and debts. Macron caused the chaos and he should resign, says Ambrose Evans-Pritchard in The Telegraph. His decision to call snap legislative elections in July 2024 backfired, leading to a hung…

● Aston Martin Lagonda is a “profit warning on wheels never far from a refuelling”, says Alistair Osborne in The Times. The luxury carmaker’s shares have crashed by over 99% since rolling on to the market in 2018. Now it has posted another profit warning, blaming “heightened challenges in the global macroeconomic environment”. It’s true that tariffs haven’t helped, but “how much more of this can the public markets take?”. Minority investors must already feel that their role is to “put more fuel in the tank for zero reward”. The “next pit stop” may not be far away, given that the cash-burning firm is loaded with £1.38bn net debt against a market value of £738m. The reality is that it “should not be listed”. Chair Lawrence Stroll should find a…

Howard Marks, co-founder, Oaktree Capital Management The US market has moved “from ‘elevated’ to ‘worrisome’” as the S&P 500’s price/earnings (p/e) ratio continues to rise, says Howard Marks, the co-founder of alternative-assets giant Oaktree. Stretched valuations seemed “troublesome, but not threatening” at the start if the year and there was little sign of irrational exuberance, but the picture is no longer so reassuring. “Fundamentals appear to me to be less good overall than they were seven months ago, but at the same time, asset prices are high relative to earnings, higher than they were at the end of 2024, and at high valuations relative to history.” “There’s a popular perception that [the Magnificent Seven’] elevated valuations are responsible for the S&P 500’s unusually high average p/e ratio.” Yet high valuations…

conversableeconomist.com Governments face a temptation to make two popular choices at the same time, says Timothy Taylor: lower taxes and raise spending. The result, of course, is higher debt. A growing number of countries are seeking to avoid giving in to temptation by setting up fiscal rules. The challenge is to come up with rules capable of bending in a crisis and that the government of tomorrow will accept. The hard part is specifying what consequences will follow if a government breaks the rules. Ecuador and Spain mandate corrective actions when fiscal rule limits are approached. Many countries require corrective actions over a couple of years or remedial measures in the next budget. What’s important is to have institutions to create pressure from outside government – a “fiscal council”, perhaps,…

● Baillie Gifford US Growth narrowly saw off a new challenge from activist Saba Capital at its annual meeting. Roughly 51% of votes cast were in favour of re-electing the trust’s four directors. The board said opposition was “almost entirely” attributable to Saba, which has a 29% stake. In February, the board won a clearer victory on a turnout of 67%, versus 59% now. Saba did not put up any candidates this time, and chair Tom Burnet criticised it for trying to oust the board. “Without directors the company would have been in breach of the Companies Act, UK listing rules and its own articles,” he said. Saba also disclosed a new 5% stake in VC fund Molten Ventures, which is trading at a 44% discount. ● Gore Street Energy…

Pension experts continue to argue about the best way to plan for next month’s Budget, with speculation mounting that the chancellor may target the tax-free cash lump sum savers are entitled to take out of their funds. While financial advisers warn of the dangers of taking knee-jerk action to avoid a situation that may not come to pass, several leading figures in the pension industry have said they are taking precautions with their own money. Savers aged 55 and over can withdraw up to 25% of their pensions savings as a tax-free lump sum, up to a maximum withdrawal of £268,275. However, rumours continue to swirl that Rachel Reeves will cut the maximum tax-free withdrawal allowed, possibly to as little as £100,000, potentially raising up to £2bn a year. That…

The trust is an actively-managed investment vehicle providing investors with broad access to China’s growth opportunities, from established technology leaders to entrepreneurial private businesses yet to list. Chinese equities have advanced strongly this year despite US-China trade tensions and a subdued property market. Low initial valuations and improving sentiment towards sectors driven by innovation (following DeepSeek’s breakthrough AI model) have also helped. We focus on identifying companies with scalable growth potential, a sustainable competitive advantage and strong execution by managers. These often align with beneficiaries of long-term structural growth trends, such as China’s expanding domestic consumption and rapid technological innovation. A particular emphasis is also placed on smaller, under-researched firms, offering attractive opportunities in mispriced stocks with healthy prospects. Here are three businesses the trust currently invests in. “DeepSeek’s AI…

Bridge by Andrew Robson Marvellous Marvin Declarer won West’s King of Hearts lead with dummy’s Ace and sought a way of avoiding that second Diamond. Can you see one? Here is the winning line, found at the table by Marvin Rosenblatt in 1984. At trick two, lead the ten of Clubs to the Ace (the ten to avoid later blockage). Now cash the Ace of Trumps and lead a Trump to the Queen. Then, leaving the last defensive Trump (the Knave) outstanding, lead a second Club to the… Nine. Your only chance is that East has four Clubs plus the last Trump (if West holds them, he has a Club trick). Assuming East does hold four Clubs to West’s two, he is twice as likely to hold the Knave. Your…

“In the absence of tech-related spending, the US would be close to, or in, recession this year,” says George Saravelos of Deutsche Bank. Growth in the world’s largest economy is proving resilient despite tariff shocks and a sluggish labour market. The reason? An AI capital investment boom. America’s big tech firms are splurging nearly $400bn on AI chips and data centres this year, a figure forecast to reach a cumulative $3trn by 2028, says The Economist. That spending may have contributed as much as 40% of all US GDP growth over the past year. Big tech companies are trying to build artificial general intelligence (AGI), or machines that outperform “the average human at most cognitive tasks”. If they achieve it, annual economic growth could rocket to 20% a year. If…

Shares in Tesco have reached a 12-year high after the supermarket giant raised its profit forecast, says Emily Hawkins on This is Money. Sales were up 5.1% to £33bn in the six months to 23 August, and Tesco now expects a profit of between £2.9bn and £3.1bn for the full year, compared with a previous estimate of between £2.7bn and £3bn. CEO Ken Murphy noted healthy demand for its Tesco Finest range, with “good weather encouraging shoppers to buy new products”. He also said that the group continues to make “broad based” gains in market share. Tesco’s performance against its competitors has been so strong that it has now increased its market share for each of the last 28 four-week periods, says Alistair Osborne in The Times. This has allowed…

Five to buy Taylor Wimpey The Telegraph Taylor Wimpey is expected to be demoted from the FTSE 100 index owing to a difficult backdrop for the business and high cladding-related remediation costs. However, the housebuilder’s solid balance sheet means it can weather any other challenges, and trading conditions are likely to improve with interest-rate cuts. The company is well placed to capitalise on the housing-market rebound and deliver higher completions and rising profits. The shares are “grossly undervalued” and offer scope for rerating. 99p SSP The Times SSP’s shares rose recently due to reports that an activist investor is trying to gauge interest in a takeover from private-equity firms. Buyout groups would be “foolish” to ignore the company behind Caffè Ritazza and Upper Crust now that its annual adjusted earnings…

My hope when markets began to wobble earlier this year was that the spotlight would start to shift a little bit away from US equities. This isn’t because I’m a committed bear on America. Yes, I am uncomfortable with how much a typical global portfolio will now have in pricey-looking US stocks when domestic politics are clearly becoming less business-friendly. However, that is about managing risk rather than a firm certainty that the tech boom has yet run its course. Instead, my concern is that the amount of commentary that hinges on the US market, US economy and US politics – indeed, anything wrapped in the stars and stripes – has become monomaniacal. Markets have far too little idea what is happening elsewhere. Take the entire UK stockmarket, which is…

Protect the unlucky, not the workshy Ryan Shorthouse The Spectator Since the 2008 financial crisis, the average person has got a bit richer, but the UK still has too much “relative poverty”, says Ryan Shorthouse. Those on the left attribute this to exploitation by the powerful; those on the right point to individual agency. In truth, much is attributable to “brute luck”. Businesses close. Relationships break down. But that does not mean the leftist impulse to expand welfare is correct. The welfare bill, including pensions, now accounts for nearly 25% of all government expenditure. Support should be both more generous and more targeted. UK out-of-work benefits are among the lowest in the developed world, often pushing people who have had a bout of bad luck into “punishing poverty”. We could copy…

theconversation.com Regional inequality is a long-standing problem in the UK that successive governments have failed to “get to grips with”, say Colin Mason and Michaela Hruskova. Indeed, the UK economy is the “most regionally imbalanced in the industrialised world” and this has a damaging effect on productivity and growth. The current government wants more growth, but it won’t get it without “boosting the UK’s regions and nations along with London and the southeast”. How? Previous attempts have been fragmented, lacked coherence and focused on large infrastructure investments. But it is entrepreneurship and innovation that will be key. Business start-up and scale-up rates are significantly higher in London and the south of England. Of the UK’s 100 fastest-growing companies, 51 are in London or the southeast. These make a disproportionate contribution…

Private equity has grown rapidly in recent years. By 2024, there were more than $6trn in private equity assets, up from $2trn a decade ago, according to data firm Preqin. Venture capital added about $2trn more, up from $0.5trn in 2014. While that sounds huge, it is still a fraction of the size of public markets. Total private equity and venture capital investments – including funds of funds – are roughly 12% of the size of public equity markets, according to private equity group HarbourVest, even though there are nearly 25 times more privately-backed companies than public ones. Returns have been solid. In the 25 years to the end of 2024, private equity funds returned about 9% a year, with volatility of around 10%, according to Deutsche Numis and Datastream.…

Aviva, one of the UK’s biggest pension providers, is to double the amount of money it invests in private markets on behalf of savers in its pension plans. The move applies to savers who use Aviva’s default investment strategies, whereby the provider chooses investments on their behalf. They will see their exposure to private markets increase to 20%-25% of their funds. Private-market investments include property, infrastructure and investments in privately owned companies, but could span almost any asset that isn’t traded on a public market. The contrast is with traditional equities and bonds, which are bought and sold on open exchanges. Fund managers such as Aviva have increasingly taken the view that savers without exposure to these areas are missing out on a potentially attractive source of returns – as…

We are now on the eighth generation of the Corvette and, “at first glance, America’s most iconic sports car has moved into the 2020s in a form that’s almost unrecognisable compared with its ancestors”, says Alex Ingram in Auto Express. For starters, Corvettes now wear their own badge instead of Chevrolet’s. Parent company General Motors, which owns both brands, believes the brand name is strong enough to be a marque in its own right and “we agree”. But the biggest change is that, for the first time, the front-engine layout has been ditched for a mid-mounted set-up. Corvette took that decision in order to compete better with Porsche and Ferrari at iconic endurance races around the world, such as at Daytona and Le Mans. As for the latest change, we…

Anywhere But Here How Britain’s Broken Asylum System Fails Us All Nicola Kelly Elliott & Thompson, £20 The issue of immigration, and especially that of asylum, seems to be sucking all the air out of the room of political debate these days, leaving no oxygen left for dealing with other issues. From the contentious protests outside hotels accommodating refugees, to the rise of Reform in the opinion polls, there is a clamour for the government to “get tough” on those gaming the system. Nicola Kelly argues that the system isn’t in fact as soft as many people seem to think and can frequently be quite harsh on those seeking sanctuary. Unlike many of the other books addressing this subject, this is no dry academic tome. Kelly draws on her experiences as…

“Gloomier investors now sense pre-crisis complacency in credit markets even as high-profile bankruptcies and worries about America’s economy cause strains. Private credit ballooned as banks withdrew from riskier lending following the financial crisis; new institutions sought high returns in opaque markets, and were willing to put up with the risk. This has led to extraordinarily complex financial arrangements, many beyond the sight of regulators and even the institutions involved. Fitch’s analysts caution that private credit’s connections to the banking system are not yet large enough for it to constitute a risk to the entire financial system, as was the case with credit markets in 2007, but even if a credit bust does not arrive, there are other dangers. With spreads so close to historic lows, there is vanishingly little money…

Pub chain J D Wetherspoon has reported solid results, including a big rise in profits, says Jessica Newman in The Times. Pre-tax profit jumped 10% to £81.4m in the 12 months to 31 July, with total revenue increasing 4.5% year-on-year to £2.13bn, a new record. However, the shares dipped more than 3% on the news. Investors may have been discouraged by the fact that while like-for-like sales (excluding pub openings and closures) rose 5.1%, this growth slowed to 3.2% in the nine weeks to 28 September. Analysts also think that “uncertainty surrounding cost pressures and consumers’ reaction to next month’s Budget” are keeping investors “on the sidelines”. J D Wetherspoon is “slowly clawing its way back to pre-pandemic profit levels” says AJ Bell’s Russ Mould. It is also “clearly benefiting…

German insurance giant Allianz is on track for a record year, says WirtschaftsWoche. Premiums are set to total more than €190bn in 2025, while net profits are likely to eclipse last year’s €10.5bn. The core business, property and casualty insurance, which comprises around half of group profits, looks robust, with demand rising worldwide. Margins are on the rise as the ratio of payouts to income from premiums declines further. Cybercrime has become a new growth market for Allianz, while demand for life and health insurance remains buoyant as populations age. The group’s advanced digitalisation also bodes well. The stock offers good value on 11.8 times 2026 earnings and a yield of 4.7%.…

Keir Starmer’s “reverse Midas touch” has led public support for mandatory digital IDs to plunge from 35% in June to –14% after he announced they would be introduced before the next election, says Eleni Courea in The Guardian. Starmer has a net popularity rating of –66, the lowest recorded by Ipsos for any prime minister since 1977. The cards, which will give everyone in Britain a special code proving their identity, will initially be used only to prove someone has a right to work in the UK, as part of a “crackdown on illegal immigration”, says Steve Bird in The Telegraph. However, Downing Street has hinted that, in future, it would make it “simpler to apply for services such as driving licences, childcare and welfare, while streamlining access to tax…

Over the last couple of weeks there have been some faint signs that the initial public offering (IPO) market in London is finally coming back to life. The digital bank Shawbrook said on Monday it would list its shares in the UK, at a value of around £2bn. Last week the food and drinks company Princess Group, which makes Branston’s pickle as well as tinned tuna, said it was considering a listing in London, with a valuation of around £1.5bn. The Beauty Tech Group made its debut on the market last Friday. And yet, as welcome as that flurry of activity is, it should not distract anyone from the wider picture. The London market remains in a dire state. A report last week found that it has slipped to 22nd…

The Magnificent Seven is a nickname for the group of companies that has been responsible for much of the gains in the US stockmarket over the past two years. The term became popular after Bank of America analyst Michael Hartnett used it in a research note in May 2023, and has largely taken over from the FAANGs – Facebook (Meta), Amazon, Apple, Netflix and Google (Alphabet) – as the preferred shorthand for the large-cap growth stocks that are dominating the market. The Magnificent Seven has several names in common with the FAANGs – Alphabet, Apple, Amazon and Meta – and also includes Microsoft, which was already being treated as a member of the FAANGs in most analyses. Unwieldy attempts to expand the acronym to include it – such as FANMAG…

“It was a fascinating hobby, made much more fascinating by the cheques I received for my efforts, but I felt I had become a professional photographer by accident.” Cecil Beaton, quoted in The Times. He felt more drawn to the theatre “I was lucky enough to have Elvis, the Beatles and Bob Dylan, to follow in their footsteps — or not follow in their footsteps. From there I learnt how important it was not to lose focus on who I am or the work I’m doing. It’s more important than the money, although it’s great to get paid well. It’s more important than the fame, although that can be fun too, and a nuisance on occasion. I simply wanted to write great songs, play great shows and have a conversation…

atvbt.com ● Be at ease. Parties are like babies –if you’re stressed, everyone else will be too. ● Timing is everything. Advertise that the party will begin at quarter to the hour. Then people will arrive on time and not half an hour late. ● Get friends to help. Get a few close friends to come early and help set up, then you’ll already be having fun when things start. ● Invite the right people. Most people will only go to a party if they know three or more others who are going. Name-drop mutual friends in invitations. ● Be selective. You need friends who will blend together well for small gatherings and to avoid ingredients that will “ruin the flavour” of the “Everything Soup” at large ones. Don’t be…

A sale of London-listed reinsurer Conduit is “almost inevitable”, says Richard Bernstein of activist fund Crystal Amber, who took a personal stake in the firm in August. Bermudan-based Conduit raised £826m when it floated at 500p in December 2020, but fell as low as 271p this year, following a $118m loss on California wildfires, and a court ruling on insurance claims for aircraft seized by Russia in 2022. CEO Neil Eckert should “signal that the company is up for sale and that [he] will stand down” by the end of the year, Bernstein said in The Times in August. Bernstein’s own stake is small, but he has “broad support” among investors for his view that Conduit should be “wide open” to a “opportunistic bidder” at net asset value of 475p,…

● Thousands of pensioners who built up pension rights prior to 1997 are now suffering hardship because they have no statutory right to annual pension increases in line with inflation, campaigners warn. The loophole applies to members of defined-benefit pension schemes, who are only entitled to inflation-linked increases in pensions built up before 1997 if their scheme rules explicitly specified this. That has led to people seeing the value of their income steadily eroded by inflation, warns the Deprived Pensioners Association and the Pension Action Group. Both groups have told MPs that the government should change the law. ● More than nine million pensioners will receive letters in the coming weeks confirming that they are eligible for a winter fuel allowance payment of between £100 and £300 this winter. The…

Kai Trump, 18, has “joined the family moneymaking machine” with the launch of a new clothing line, says Connor Stringer in The Telegraph. The teenager (pictured) modelled one of her new sweatshirts on the lawns of the White House recently, sparking a social-media storm of criticism, and sported a top from her range while she stood alongside her grandfather, Donald, as he boarded the presidential plane en route to the Ryder Cup in New York. The Trump family have already been raking in cash from their vast property empire and cryptocurrency and business interests. Kai launched her new clothing line on social-media site Instagram, says Martha McHardy on Newsweek. The $130 cotton sweatshirts are available in three colours and feature Kai’s name or initials. Simple they may be, but they…

£99, jeroboams.co.uk The concept of elite terroir is well-rehearsed throughout the wine world, with the very finest single-vineyard wines emanating unwavering directness that sings of their uniqueness and rarity. So why wouldn’t lesser-known wineries from less familiar climes not highlight the precision of their favourite tracts of land, celebrating those instances when soil strata, aspect and topography, and in turn, flavour, of their most distinctive wines render them genuinely remarkable? Of course, many are doing so, and this week’s featured single plot release is the very first from Achaval Ferrer’s recently acquired vineyard, Nazarens. Winemaker Gustavo Rearte already produces a trio of single-plot wines all line-priced at £99 from London wine merchant Jeroboams. The 2021 Finca Bella Vista is the most “claret-shaped”, with a slightly wilder and more savoury finish…

Can You Run the Economy? It’s Your Turn to be Chancellor Joe Mayes Ebury Press, £16.99 Until video games took over in the mid-1990s, books that allowed you to choose between several different paths, such as the Choose Your Own Adventure series, as well as the adventure game books produced by Ian Jackson and Steve Livingstone, enjoyed a mass following. Bloomberg’s Joe Mayes has masterfully revived the format for a more mature audience with feelings of nostalgia for the late 1980s and early 1990s. In Can You Run the Economy? It’s Your Turn to be Chancellor, Mayes explains the role of the second most powerful person in government by giving the reader control over the nation’s finances. The older game books could be quite complex, and some of them ran…