News & Politics

MoneyWeek Issue 965

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
Dennis Publishing UK
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51 Issues

in this issue

3 min.
from the editor-in-chief...

“Divestment from fossil fuel stocks has ‘reduced about zero tonnes of emissions’” Bad news for WeWork this week. Turns out the public market just isn’t that into it (see page 7). Investors reckon there is a strong chance that the model (long-term debt on buildings let out to short-term tenants, with a little free beer chucked in along the way) might be unsustainable. Given that chance, they decided that they weren’t mad to pay to value the company at the $65bn it orginally thought might make sense, or for that matter, even half of $65bn (maybe $15bn – but really not much more). The initial public offering (IPO) has been pulled. Perhaps investors are beginning to see sense when it comes to unicorn IPOs (see my blog at moneyweek.com for more). Still,…

2 min.
business opportunity of the week

An underpopulated region in southern Italy is offering incomers up to €25,000 if they move to one of its villages, set up a business and live there for three years, reports The Guardian. Molise is Italy’s second-smallest region and has a population of just 305,000, which is shrinking – 9,000 people have left in the last five years. Anyone who moves to a village with a population of less than 2,000 qualifies, says Donato Toma, the region’s president. They will receive €700 a month for up to three years, as long as they set up a business. “They can open any sort of activity”, says Toma. “A bread shop, a stationery shop, a restaurant, anything. It’s a way to breathe life into our towns while also increasing the population.” Good week…

2 min.
this shock will linger over the oil market

Saturday’s attack on Saudi oil facilities was “the big one”, says Spencer Jakab in The Wall Street Journal. The drone strikes on the world’s largest oil processing plant at Abqaiq has forced Saudi Arabia to cut output of of crude oil by 5.7 million barrels per day (mbpd), roughly 60% of its output and as much as 6% of global supply. World oil production is around 100 mbpd. Even if supplies are restored quickly, as Saudi Arabia has reportedly indicated they will be, the “technological sophistication and audacity” of this strike against critical infrastructure, for which Iran-backed Houthi fighters in Yemen have claimed responsibility, “will linger over the energy market”. A game-changer The attack prompted the biggest one-day rise in Brent crude prices in at least 30 years. The benchmark rose by…

1 min.
the pin that pricks the bond bubble?

Markets had neglected the scope for oil to spike, says Louis Gave of Gavekal Research. The theory was that “with so much excess supply around the world, no lasting energy shock is possible”. Attention focused instead on the potential for deflationary shocks from a “Chinese devaluation” or “eurozone implosion”. That has helped create a record bond bubble. Yet this week’s oil price spike and talk of war in the Middle East are a reminder that “the next shock... could actually be inflationary”. Inflation has already been “creeping higher, despite a strong US dollar and a weak oil price”. It wouldn’t be the first time an inflation shock snuffed out an equity upswing. The 1973/74 oil price spike “put the Nifty Fifty bull market to the sword”. Indeed, the 1970s oil shock…

1 min.
will there be another gulf war?

US Secretary of State Mike Pompeo was quick to point the finger at Iran for Saturday’s Abqaiq attack despite Tehran’s denials. Donald Trump tweeted that America was “locked and loaded” and pledged support for his Saudi allies. The standoff between Saudi Arabia and Iran has deep religious and political roots and is “in many ways a regional equivalent of the Cold War”, says Jonathan Marcus on the BBC. The two sides are engaged in proxy conflicts, notably in Yemen where Riyadh has been conducting an unsuccessful war against Iran-backed Houthi rebels for the past four years. Neither side is prepared for a direct confrontation, but Saudi Arabia has been emboldened by the White House’s support and the Abqaiq incident “could upset the apple cart”. All sides have reasons to resist conflict,…

1 min.

”It wasn’t just the attacks on Saudi Arabia that caught the eye of the bond bulls... Chinese macro data showed the world’s second-largest economy cooling off more than expected in August. Industrial production growth weakened to a 4% year-on-year pace... This was the lowest print since 2002... retail sales growth dipped to... the weakest pace in four months. The mantra is the central bank is getting set to cut banking sector reserve requirements ratios once again – but this is a limited response to the magnitude of the slowdown. And in recent days, we saw both Turkey and Vietnam ease policy (along with the European Central Bank) – so we have 19 central banks... cutting rates this year and by a cumulative 1,470 basis points. The monetary authorities have turned…