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MoneyWeek Issue 946

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.

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51 Issues


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from the editor-in-chief...

“How does one prepare for a government led by Jeremy Corbyn? It isn’t easy” Last week, The Sunday Times ran this headline: “Corbyn plot for cut price swoop on water giants.” The story – about how Labour’s plan is to privatise the UK’s water companies at a value of less than £20bn, rather than the £70bn everyone else reckons they are worth – was a timely reminder that the real risk to the finances of MoneyWeek readers is not Brexit itself, but that the mismanagement of Brexit leads to a Labour government. Labour is promising much higher taxes, much higher spending and significant-sounding levels of asset confiscation. That’s not likely to be good news for anyone who has wealth or who is trying to build it (in which I include the 9.5…

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loser of the week

Ramona Ang, the wife of Craig Wright, an Australian who is one of several people to have been identified as “Satoshi Nakamoto”, the mysterious inventor of bitcoin, told the High Court she lost $2.3m when her bitcoin trading account was frozen. In 2014, she and Wright registered a company called Denariuz, intended to be the first bitcoin-based bank, to a terraced house in Doncaster. The business was dissolved in January 2017, and Ang opened a bitcoin trading account with Cyprus-based Reliantco Investments. She invested $200,000 from the sale of a house in Australia, and proceeds from Denariuz. That sum had grown to $700,000 before it was frozen by Reliantco without warning. Ang argues the sum would now be worth $3m. Reliantco argued the case could only be heard in Cyprus,…

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china bull trips over trade spat

China’s stimulus might have worked too well, says Thomas Gatley of Gavekal Research. Beijing responded to slowing GDP growth last year with a mix of monetary and fiscal measures including roughly $2trn in tax cuts. Yet stronger than expected March data has prompted the Politburo to pivot back to calling for “structural reform”, a tonal shift implying that easing is over for now. Downbeat manufacturing surveys have also injected some “healthy scepticism” into the China rally, says Laurence Fletcher in the Financial Times. The country’s CSI 300 benchmark of domestic stocks had rocketed 30% this year, but with factory output gauges virtually flat in April investors are re-examining their assumptions about how much the stimulus can do for China and other emerging markets. And that was before this week’s trade threat…

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how much damage could a trade war do?

Only a month ago Donald Trump was boasting that an “epic deal” with China was in the works, says The Economist. Yet a pair of tweets has brought the world’s two biggest economies “back to the brink of a fully fledged trade war”. The US president threatened to impose 25% tariffs on all Chinese imports (at present only about $50bn-worth of tech imports pay the 25% rate). The tweets badly rattled markets. The US has already imposed tariffs on $250bn of Chinese goods, with Beijing retaliating with levies on $110bn of US products. Chinese exports to the US have fallen 47% since June last year, according to Reuters. Estimates of the economic damage from existing measures are relatively modest, but a full-blown escalation could be expensive. The International Monetary Fund has…

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the boom in dodgy us debt

Investors are “flocking” back to the same kind of debt instruments implicated in the financial crisis, says Joe Rennison in the Financial Times. So-called “synthetic” collateralised debt obligations (CDOs) bundle together derivatives ultimately linked to bonds and loans. But where banks piled into CDOs backed by subprime mortgages in the years prior to the 2008 crash, this time hedge funds have a new darling: corporate debt. There’s plenty of it to bundle up. Non-financial business debt-to-GDP in America has ballooned over the past seven years to a record of around 78% of GDP, almost as high as household debt. Loans going to already heavily indebted borrowers, known as leveraged loans, grew by 20% in 2018 to $1.1trn, while their share of the market is at a record high. Defaults are low…

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“If you’re a bloke in a suit who’d like to apply for the governorship of the Bank of England (deadline 5 June)… You’ll probably already have read the job spec on the Cabinet Office website, which refers to candidates as ‘she/he’… you can be pretty sure Chancellor Philip Hammond has asked the headhunters to come up with a shortlist that’s at least 50-50… that’s a good thing: not only because the Bank has fallen behind the zeitgeist in largely failing to appoint or retain women in its top ranks throughout Mark Carney’s governorship, but also, as this column has argued ever since the 2008 crisis, because women often make better senior bankers than men, being less prone to machismo. So I’d say Ladbrokes has mispriced the female favourite, Santander UK…