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MoneyWeekMoneyWeek

MoneyWeek Issue 966

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.

Country:
United Kingdom
Language:
English
Publisher:
Dennis Publishing UK
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51 Issues

IN THIS ISSUE

access_time3 min.
from the editor-in-chief...

Still use cash? You’re a dinosaur. Last year in the UK, a mere £1 in every £5 was spent in cash. Most people now use debit or credit cards (or some other kind of digital money) for everything. It might seem to you that this doesn’t matter much – or perhaps that it is a good thing. Cash is grubby; it’s a bore to get hold of (the number of ATMs in the UK is falling) and impossible to replace when lost. Its absence also makes life easier for honest traders. With no cash to deal with, VAT returns practically calculate themselves, tills don’t need reconciling and those trying trips to the bank to deposit takings disappear forever (as do the robberies that come with having cash). The lack of…

access_time2 min.
corporate spat of the week

A bitter legal row is underway between online supermarket Ocado and its upstart rival, Today Development Partners (TDP), reports The Times. Ocado boss Tim Steiner has accused co-founder, Jonathan Faiman (pictured) – who left in 2010 – of inducing another senior executive to leave Ocado and join TDP, taking confidential information with him, including details of a proposed tie up between Ocado and Marks & Spencer. Faiman has responded with a countersuit, says the Financial Times – he says Ocado’s legal tactics have cost TDP millions of pounds in foregone profits after a deal with Waitrose fell through. Steiner and Faiman had been friends since nursery school – they set up Ocado with Jason Gissing in 2000. Good week for: Offshore wind farms in the UK are now competitive without subsidies. Electricity…

access_time2 min.
ignore the rugby – buy the stocks

“Few folk expect Japan to win the Rugby World Cup that kicked off in Tokyo last Friday,” says Ian Cowie in The Times. But the country’s unloved stockmarket could well prove a winner. The scrum between American and Chinese trade negotiators has done equities in the Land of the Rising Sun no favours. At just over 22,000, the country’s Nikkei 225 benchmark is still far from regaining the 39,000 high it achieved at the height of the 1989 bubble. Shares in the broader Topix index are down by more than 10% over the past year. Low expectations... The dampening effect of the trade war saw Japan’s exports fall 8.2% year-on-year in August, the ninth straight monthly decline. Those numbers generated plenty of doom-laden headlines, but the reality is more positive, says Jonathan…

access_time2 min.
an “alarming echo” of the financial crisis

Last week’s spike in US repo rates was “an alarming echo of the financial crisis”, says The Economist. The usually placid repo – short for “repurchase agreement” – market is the place where banks go for short-term loans when they need extra cash. Interest rates in this “overnight” market are supposed to stay within the range set by US Federal Reserve interest rates, which was 2%-2.25% before the latest cut (see page 5). Yet a sudden shortage of liquidity last week prompted buyers to bid up prices, sending the rate as high as 10% at one point. The jump prompted the Fed to intervene directly in the market for the first time in a decade. It pumped more than $200bn into the system last week to alleviate the squeeze. The intervention…

access_time1 min.
cracks emerge in corporate debt

American corporate debt is close to all-time highs, says Daniel Bergstresser on PBS. The total value of non-financial company debt is now almost $10trn, equivalent to half of America’s GDP. The debt problem has been aggravated by corporations borrowing in order to boost shareholder returns, typically through share buybacks, says The Economist. If management declines to “optimise” its balance sheet with extra debt then “a band of capital-rich buyout firms stand ready to do the job”. Now the median credit rating for US company paper is BBB, one grade above “junk”. As long as corporate profits remained strong nobody thought that the debt was anything to worry about, writes Justin Lahart in The Wall Street Journal. Yet recent revisions to profit figures have made the “debt-to-income” tabulations look a whole lot…

access_time1 min.
viewpoint

“Alison Rose’s elevation to the top job at RBS, where she will succeed Ross McEwan as chief executive, is cause for celebration. Never before has the UK had a woman running one of its big four banks... her elevation comes after a series of high-profile campaigns that have failed to improve women’s lamentably slow climb up the corporate ladder... McKinsey research has shown that companies with the greatest gender diversity in the boardroom are 21% more likely to be more profitable than their peers and 27% more likely to create superior value. These figures are quoted in a recent report for the government by Rose, who was asked to review how banks could better serve women who want to start a new business. To illustrate how sexism is endemic in…

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