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MoneyWeek Issue 945

There's a reason MoneyWeek is Britain's best-selling financial magazine. We exist to help you ground your portfolio so that it keeps your money safe during rough patches and growing in the good times. We don't just look at how to maximise your returns and limit your losses, we also like to look at how you can keep more of the money you've made. Week-in, week-out we'll guide you through the financial world as it changes, alerting you to all the opportunities to profit and dangers to avoid, as they appear. Income strategies, rising-star companies, the best funds and trusts, clever ways to preserve your wealth during market turmoil... you will get the best ideas from the sharpest financial minds and investing professionals in Britain.

United Kingdom
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51 Issues


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from the editor-in-chief...

“Does Michael Fabricant MP have any idea just how big his pension entitlement is?” In an interview with The Times at the weekend, MP Michael Fabricant answered the question: “What’s better for retirement – property or pension?” with “Property. I’ve made a bit of money on my London flat”. Two questions for Mr Fabricant. First, how does he intend both to live in and live off his flat? And second, has he ever looked at his pension? Fabricant has been an MP since 1992. He has built up 26 years’ worth of pension entitlement, which should mean that he retires on an inflation-linked pension of not far off £50,000 a year (I can’t be exact here, as he could have made one of a variety of contribution choices). To buy a similar…

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loser of the week

Lei Jun, chairman of Chinese smartphone-maker Xiaomi (pictured), could be on the hook for a CN¥1bn (£115m) bet he made in December 2013 with Dong Mingzhu, chairwoman of air conditioner maker Gree, says Bloomberg. Lei bet live on TV that the revenue made by his firm, viewed at the time as an upstart by many more traditional firms, would outstrip Gree’s after just five years. But last week Gree reported revenue of ¥198bn for 2018 – ¥20bn more than Xiaomi made over the same time. “Let the entire nation be our witness,” said Lei, “if our revenues beat Gree’s in five years... please pay me one yuan.” Dong was more confident. “Let’s make that bet one billion,” she said, on agreeing to the bet. Good week for: Disney was celebrating this week…

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get set for an inflation scare

Strong US GDP figures carried a “sting in the tail”, says The Economist. The world’s largest economy shrugged off a government shutdown to expand at an annualised pace of 3.2% in the first quarter, comfortably outstripping consensus forecasts. Yet “quiescent” inflation – running at an annual rate of 1.9% in March – suggests that underlying demand could be weak, so the Federal Reserve is unlikely to resume hiking rates for now. The most likely path for US interest rates is now downwards, reckons Komal Sri-Kumar on Bloomberg. Central bankers are happy to take a dovish stance because previous predictions that ultra-low rates and quantitative easing (QE) would trigger surging inflation did not materialise. Between 2008 and 2015 the Fed’s balance sheet of assets bought with printed money “more than quintupled”, but…

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oil will come off the boil

The price of Brent crude, the main oil-price benchmark, has broken through $75 for the first time this year, marking a 50% increase since 1 January. A US waiver that had enabled China, India, Japan, South Korea and Turkey to continue buying oil from Iran after the reimposition of sanctions last year expired on 2 May, while unrest in Libya and American sanctions against Venezuela have also raised concerns about global supply. The “sense of pessimism” that hung over the global economy at the turn of the year has receded in recent weeks, says The Economist, but an oil-price shock could yet “reinstate the gloom”. The waiver expiry alone will remove more than one million barrels per day – about 1% of global supply – from circulation. Pricier energy is bad…

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argentina is reverting to type

The Argentine peso has been the worst-performing currency against the dollar this year, and more misery could be in store. Investors have been dumping the country’s “century bond”, whose launch in 2017 had seemingly heralded a new start under business-friendly president Mauricio Macri: the 100-year paper has fallen to 66 cents on the dollar, says Colby Smith for the Financial Times, implying a considerable risk of default. A poll putting leftist firebrand and former leader Cristina Fernández de Kirchner ahead of Macri has alerted markets to the risk that the president may lose his bid for re-election in October. With inflation still running at 55% in March and the economy shrinking, voters appear willing to give another chance to Kirchner, who is facing trial on corruption allegations, says The Wall Street Journal.…

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Dow 2,400 anyone? No, that… isn’t a typo. It also didn’t come from one of those clickbait advertisements with a link to overpriced gold coins or even from a noted perma-bear. The notion comes from Stephen Moore, who President Donald Trump plans to nominate for the Federal Reserve Board, during a weekend radio interview.... He predicted “the biggest sell-off in the stockmarket in American history” if Democratic ideas “come into play and enter the White House”. If the Dow Jones Industrial Average merely matched its horrific performance between September 1929 and July 1932, the index would reach 2,400, a level first touched in the 1980s. Historically, the chance of an incumbent failing to keep the White House is only 30%. Unfortunately for those inclined to believe Mr. Moore’s prediction, bookmakers…