MoneyWeek 1054

MoneyWeek is a weekly magazine that enables you to become a better-informed, smarter investor and enjoy the rewards of managing your money with confidence. 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
Dennis Publishing UK
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3 Min
from the executive editor...

“It’s going to become harder for passive funds to pose as neutral vehicles for index tracking” Last week was a tough week for Big Oil, with ExxonMobil, Shell and Chevron all losing climate-related battles with varying consequences (Alex explains the details on page 7). Perhaps not coincidentally, the last couple of weeks have been rather positive for the oil price itself. A barrel of Brent crude will now cost you more than $70. This is partly due to growing confidence in the strength of the recovery, as well as ongoing caution on the part of the Opec oil cartel about pumping more oil. But I suspect it’s also got something to do with the fact that if you make it harder for big oil companies to produce more oil, then eventually…

1 Min
bounceback news of the week

Business investment is undergoing a revival, says The Economist. Capital spending (capex) globally will soon be 20% above pre-pandemic levels and by 2022, the average S&P 500 company is expected to be spending about 10% more on factories and technology. “Semiconductor firms are engaged in one of the biggest… capex sprees” ever, which is “enormously significant”. Business investment in the US relative to GDP had been stagnant for decades; in Britain, pre-pandemic capex was 15% lower than in the late 1990s. Yet capex is the “secret sauce behind higher living standards”. Without it, productivity has been “sluggish”, leading to a “gnawing sense that capitalism was misfiring”. But now that consumers are spending again, firms are adjusting to a post-pandemic world with, for example, more online shopping. Big tech has led…

1 Min
good week for

The US state of Ohio is encouraging people to get coronavirus vaccines by entering those who get at least one jab into its “Vax-a-Million” lottery, writes Jenna Romaine on The Hill. This week, Abbigail Bugenske became the first to win one of five prizes of $1m for the over-18s, while 14-year-old Joseph Costello won one of five college scholarships aimed at teens. “It’s not often that unions have much to celebrate in post-Thatcherite Britain”, notes Philip Aldrick in The Times. But last week they received two pieces of good news. Uber agreed to recognise the GMB union for its 70,000 private hire drivers – the first time that any ride-hailing app has accepted collective bargaining. And official figures for 2020 showed that union membership rose for the fourth year in a…

1 Min
bad week for

Bank transfer scam victims are losing over £491 a minute, or £700,000 every day, according to research by consumer group Which?, says Rupert Jones in The Guardian, while the banking industry’s approach to reimbursing victims is “unfair and inconsistent”. Data from UK Finance revealed a total of £412m has been lost across 189,000 cases of bank transfer fraud between May 2019 and the end of 2020. TV presenter Dr. Christian Jessen (pictured) must pay Northern Ireland first minister Arlene Foster £125,000 plus legal costs after libelling her on Twitter. In December 2019, he shared the unfounded claim that the former DUP leader was having an affair, says the BBC. Jessen did not delete the tweet – which a judge described as“grossly defamatory” – until around two weeks after he first uploaded…

4 Min
stockmarkets are due a breather

Stockmarkets have started 2021 well, but it may not seem like that for most UK investors. A strong pound has reduced year-to-date returns from the US, Europe and global indices from double digits in local currencies to 8.1%, 8.8% and 6.8% in sterling respectively. The UK, up by 10.8%, has done better but investment trusts have lagged, with the sector’s index up by just 4.2%. This is largely due to the switch from growth to value. Most trusts favour the former over the latter. After the extraordinary returns from growth investing last year, investors can hardly complain about a modest setback while value trusts were due some catch-up. From here, the bull and bear factors are evenly matched. The pessimists point to rising bond yields as evidence that the multi-decade decline…

1 Min
china crimps commodities cycle

China may have “slammed the brakes” on the commodities supercycle, says Craig Mellow in Barron’s. On 23 May regulators vowed “zero tolerance” towards “excessive speculation” in the market. They are unhappy about reports of hoarding by commodities firms. That sent local metals prices plunging, with iron-ore contracts on the Dalian Commodity Exchange falling by 9.5%. Nevertheless, global copper prices are still up by 28% in 2021, while iron ore has gained more than 30%. China has enormous leverage in the industrial metals market, says Mellow. The economy consumes 70% of worldwide iron ore and 58% of its copper; 60% of the domestic steel industry is also state-owned. Many investors think we are at the dawn of a new commodities supercycle, but “a few words from the Chinese government” are giving the…