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MoneyWeek 1036

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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.

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United Kingdom
Dennis Publishing UK
51 Issues

in this issue

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

“The stories that drive investment bubbles change – but their structure does not” Bubbles are all different – and all the same. The stories that drive them change – but their structure does not. TS Lombard has a note reminding us of how they usually unfold. Bubbles start with rising awareness of a story driven by growing media attention (this is when the institutional investors move in). Next comes a cycle of growing enthusiasm (as individuals move in), followed by greed and Fomo (“fear of missing out”), before a mania develops and we reach yet another “new paradigm” characterised by academics explaining why markets have now reached a “permanently high plateau”. After that comes the crash, and the denial, fear and capitulation that are required before we can start all over…

1 min.
scandal of the week

A former president of the Vatican bank, Angelo Caloia (pictured), was found guilty last week of embezzlement and money laundering, says Francis Rocca in The Wall Street Journal. Caloia presided over the “scandal-plagued bank’s real estate assets” from 2001 to 2008, a period in which he was found to have manipulated sales for his own profit alongside his lawyer, Gabriele Liuzzo. Caloia, 81, and Liuzzo, 97, were accused of having caused losses of more than €50m for the bank, embezzling money from the sale of 29 of the bank’s properties. The pair were sentenced to nearly nine years in prison and ordered to pay the bank €23m in compensation. Their prosecution came from a “cleanup” of the bank, which had been plagued by allegations of mismanagement, by Pope Benedict XVI’s…

1 min.
good week for

A geologist who found a rock formation in the shape of Sesame Street’s “Cookie Monster” (pictured) stands to pocket $10,000 should he choose to sell the geode, says Bonnie Burton on CNET. Mike Bowers found the blue agate in Brazil and has received several offers from collectors, but hasn’t yet decided if he’ll sell. Cambridge-based quantum computing start-up Riverlane has raised $20m in a round of fundraising aimed at boosting its global growth, says Daniel Thomas in the Financial Times. Quantum computing promises vastly increased computing power. Riverlane has created a universal operating system that will make the “vastly complicated quantum hardware” easier to use. Eight of the world’s 33 quantum computing manufacturers are “based in a three-mile radius in England”.…

1 min.
bad week for

UK taxpayers could be forced to pay £80m in shortfall fees if Channel Tunnel operator Eurostar collapses, says Oliver Gill in The Daily Telegraph. The pandemic-stricken rail service has suffered a 95% fall in passenger numbers since March 2020. It has already received £178m from the French state, which is the majority owner. The UK sold its stake in 2015, but legal agreements mean costs to run the railway between London and the Channel Tunnel can be shifted from Eurostar to a government-funded domestic operator unless there is a rescue deal. First-time homebuyers in 2020 paid an extra £10,000 in deposits compared with 2019, says Dominic Walsh in The Times. This marks a 23% increase in the size of the average down payment, which has now risen to £57,278, according to…

2 min.
stocks shrug off signs of overheating

The stockmarket “bubble-o-meter is flashing bright red”, says John Authers on Bloomberg. Signs of froth are everywhere, from the record number of fund managers telling a Bank of America survey that they are making risky bets to wild swings in the price of bitcoin (see page 20), previously a harbinger of market turning points. Biden goes big US stocks celebrated Joe Biden’s inauguration as US president last week by hitting new record highs, says Randall Forsyth in Barron’s. The S&P 500 has gained more than 4% since the start of the year. The bull market is riding an optimistic “triumvirate”. First, monetary policy remains exceptionally supportive: the M2 gauge of the US money supply grew by an annualised 25.1% last month. Second, the vaccine trade is still going strong. But most importantly, third…

1 min.
china: the good news is priced in

China has surpassed the US as the world’s leading recipient of new foreign direct investment (FDI), say Paul Hannon and Eun-Young Jeong in The Wall Street Journal. The US had held the FDI top spot “for decades” but last year saw inflows plunge by 49% amid the pandemic, while China’s advanced 4%. FDI is a measure of direct business investment rather than financial market flows. For all the talk of decoupling and shifting supply chains, big multinationals are still ploughing money into the country, with Starbucks spending $150m on a coffee-roasting plant and AstraZeneca setting up a network of regional offices. China’s latest financial liberalisation effort, meanwhile, is in commodity futures. China is the world’s biggest consumer of iron ore and copper but most prices are still set on exchanges in London…