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MoneyWeek 1039

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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 level of distortion in global markets is getting a bit too weird for comfort” You know something odd is going on in global markets (see page 4). But do you know quite how odd? Here’s a hint that the level of distortion is getting a bit too weird for comfort. In the US, the number of loss-making mid-and small-cap companies as a percentage of the total is at an all-time high (29%). We can forgive a lot of losses right now (lockdown, etc) and this number often peaks towards the end of a recession. But how’s this for nuts: investors are currently paying a premium for those loss-making companies. They’ll pay more for “no money”, than they will for “some money” (see page 22 for how to avoid doing the…

1 min.
complaint of the week

Hollywood resident Aaron Epstein had spent hours on the phone to customer services regarding his slow internet service, says Jamie Johnson in The Daily Telegraph. After internet provider AT&T did nothing to help, the 90-year-old – whose service was so bad that trying to stream a film on Netflix was “like watching a slideshow”, he said – decided to pay $10,000 for an advertisement in The Wall Street Journal. It was an open letter to John Stankey (pictured), CEO at AT&T, condemning AT&T’s service “for the people who live in N. Hollywood, CA 91607”. Epstein pointed out the fastest speed offered in his neighbourhood was only 3MBS, compared with the 100MBS the firm offered for other neighbourhoods and the 200MBS rivals offer. Epstein is “not a frivolous spender”, but the…

1 min.
good week for

The luxury watch market has more than doubled in size to £17bn since 2000, and the pandemic hasn’t hurt demand, says Richard Godwin in The Sunday Times. Apparently the rise of “revenge spending” – “impulse buys to make up for the loss of other pleasures” – amid lockdown has turned into a huge driver of online sales for Swiss manufacturers. An eight-year-old border collie named Lulu has become “a newly minted millionaire” after her 83-year-old owner left her $5m in trust, says Cole Higgins on CNN. Businessman Bill Dorris, who died late last year, specified in his will that the trust is to provide for all of Lulu’s needs. His friend Martha Burton will be reimbursed for “reasonable monthly expenses” to care for the dog.…

1 min.
bad week for

Koo Stark (pictured), faces a £285,000 court bill after an appeal court judge dismissed her claim to a£50,000-a-year allowance from US financier Warren Walker, with whom she has a daughter, says Rory Tingle on MailOnline. The actress said that Walker promised her the money in a letter in 1997. The High Court rejected the initial claim last year, saying it was not a “legally-binding” deal. A pub landlady has ended up with a legal bill of £54,000, after she opened her ex-husband’s post in a bid to prove he was having an affair, says Claudia Aoraha in The Sun. Karen and Lawrence Santi, who had run a chain of pubs together, split up last year. He sued her for breach of privacy, and she was ordered to pay 60% of his…

2 min.
the reflation trade has further to run

Inflation or deflation? Investors have spent the last few months piling into assets that stand to gain from a vaccine-enabled global recovery. “Frothing” commodity prices should bring higher inflation, but signs remain scant in official figures, says Albert Edwards of Société Générale. US core consumer price index (CPI) inflation, which strips out volatile food and energy prices, came in at 0% in January compared to a month before. In China, year-on-year core CPI slipped into outright deflation for the first time since 2009. “The global reflation trade may well have got ahead of itself.” Inflation is coming “The only way is up” for prices in America, says James Knightley of ING. Figures over the next few months will come in much higher because of base effects – the comparison period a year…

1 min.
will higher bond yields sink equities?

Will rising bond yields sink stocks? The arrival of the pandemic last spring sent investors flooding into the traditional safe haven of government bonds. That sent bond yields, which move inversely to prices, plummeting. By August the US ten-year Treasury was yielding just 0.5%. Positive vaccine news means bond yields have been ticking back up since the autumn, especially in America. Investors are selling out of government debt instruments to buy into growth opportunities in other asset classes. Rising inflation expectations also mean bond investors demand higher yields as protection against the risk that their income stream is inflated away. Finally, massive US government borrowing increases the supply of bonds in the market, which lowers their prices and raises yields. The 30-year US Treasury bond is back above 2% for the…