FT Weekend China in breach, Risks ahead, Quad vaccines, Israel the test case, Targeted adds good or bad? and more

14 Mar

FT Online
UK declares China in breach of 1984 Hong Kong declaration
Raab says Beijing in ‘state of ongoing non-compliance’ with accord that guaranteed a high degree of autonomy
That China’s actions of changing the election system that had previously been agreed is a breach of a legally binding agreement. This comes just ahead of PM Johnson’s planned publication of his strategy for dealing with China; which is expected to make Britain less reliant on Chinese investment and technology.
Johnson instead hopes to join the 11 countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership as a way to increase Britain’s presence in the region. It will also be sending the HMS Queen Elizabeth (Aircraft carrier) to East Asia this summer.
UK Foreign secretary said Beijing’s ‘reforms’ were “part of a pattern designed to harass and stifle all voices critical of China’s policies”. He also said the new law was ''a demonstration of the growing gulf between Beijing’s promises and its actions,”
Beijing has since 2017 been denying the status of the 1984 handover agreement say that is a historical document with no practical significance. But is was signed by China and lodged by both China and the UK at the United Nations.
China is now under increasing pressure from more counties over the new law. I think Beijing was caught out by the strength of the 2019 protests and could well be caught out by the strength of International protest over Hong Kong; especially as it gives Biden an opportunity to proved his pre election pledge of holding China to its agreements.
At the weekend Chinese State media explained the new law as a means to “cut off the channels and tools” used by the US and the UK “to intervene in Hong Kong’s affairs”.
In reality it is very unlikely that China will reverse its actions; that would be unthinkable to President Xi as it would undermine his standing with his domestic audience. But what it may mean is that Taiwan is given more international support as the West realises that because it did not take more concerted action on Hong Kong earlier it has failed to protect the people pf Hong Kong. Only by taking strong action over Taiwan and re-admitting it to the United Nations can it prevent the loss of Taiwan too.
For China whilst it will ride out the international flak it is likely to worry many country’s that the agreements they have signed with China will also ,in time, become ‘historical documents with no practical significance’, many of those associated with the Belt and Road Initiative have already come under scrutiny.

Bridgewater’s Prince warns on risky assets after bond decline
Hedge fund manager links boom in blank cheque companies and cryptocurrencies to Fed policies.
Key being what the Fed does when it bumps into constraints; like inflation, currency deflation or just people saying that with so much money being printed they don’t want to own bonds.
Already inflation expectations have picked up this year and the impact has been the sell off in US tech names. Prince also thinks that the surge in Spacs and crypto are a '“manifestation of that environment” created by the loose monetary policy of the US central bank and stimulus provided by Congress.’
Whilst the Fed so far has brushed off the treasury sell-off as a healthy reaction to the US recovery it will face harder questions if the trend continues. Prince asks“Does the Fed come in and print money and buy the bonds to keep the bond yield from rising in that environment?” he asked And with inflation rising and the economy doing better and the bond yield going up, do they keep it from going up or do they let it go? If they do yield curve control, do they risk the dollar?” “Either way it hurts you,” added Prince. “Either the bond yield goes up or the dollar goes down. That’s the risk of the second stage of a bond move.”
Already foreign investors are beginning to scale back their purchases.Prince also worries about index investing; as low rates mean yield hungry investors with few alternatives to equities. So funds end up competing for the same stocks and push prices every higher for lower future returns. He says “It has the look of a Ponzi scheme,” he said, “because if you can sell it on to someone else that’s fine but what happens if you can’t.”
Notes that Princes observations are similar to Carson Block piece The ‘stonk’ bubble poses significant global risks  The primary causes of this market dysfunction are the prevalence of passive investing and leverage, which it published Feb 11, 2021.
In conclusion Prince notes that
'Bridgewater’s performance was “pretty close to even” in 2021. Its funds include All Weather, a passive strategy that invests in a variety of markets, weighted by their volatility, and Pure Alpha, a more traditional macro fund that makes bets on the direction of stocks, bonds, currencies and commodities.’
Without doubt the Fed is monitoring the moved very closely. The FOMC meeting this week will be closely watched for Powell's comments on the recent surge. So far they seem to have adopted the swan approach; smooth and unruffled on the surface (Powell saying he had noticed that surge but wasn’t worried) but paddling like blazes beneath the water line trying to find a new solution. The reality is that there isn’t one. It will be a judgement call on which path to follow and the timing of any action. It’s real options are limited to raising rates or printing money.
For investors, especially index investors it may be time to think about further diversification. Index investing and ETF’s are locked into following whichever index they are benchmarked to, and as noted above everyone is chasing or selling the same stocks. A lot of people are looking to rotate at the same time and that is increasing the volatility. Stepping out of the indexes and starting to do some stock picking, whilst it takes more effort it is also likely to mean better returns.

Fears mount over North Korean ‘great leap backwards’
Leader Kim Jong Un’s ideology of self-reliance risks causing food shortages and economic collapse.
By closing the borders the North Korean economy has gone from bad to worse. There is little prospect of the policy being changed an little prospect of the population being vaccinated. It doesn’t mention whether the policy has been successful in preventing covid entering the country but it makes clear the prices are rising, people are losing the ability to make a living. Even the ‘donju’; North Korea’s moneyed class. They benefited from trading with China but the borders closed even they are suffering.
Kim is said to be pushing 'the ideology of self-reliance developed by his grandfather and North Korean founding leader Kim Il Sung. Rather than accept outside help or allow greater economic liberalisation, he has instead taken steps to centralise control while accelerating nuclear weapons development, many experts said.’A crucial time as last years harvest is nearly consumed and the next does not start for a couple for months. Another crucial time will be April, if fertilisers imports are still not allowed then futures crop yields will be diminished.
Another case where the worlds impotency is demonstrated. World leaders can call upon Kim to change and re-open the borders but they can’t force him, and it is the 25m people of N Korea who suffer.

Front page
US and Asian allies take on China with push to deliver 1bn Covid jabs
• Initiative launched after ‘Quad’ summit • Indo-Pacific region to receive J&J vaccinationsLink to the post Quad meeting statement https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/12/quad-leaders-joint-statement-the-spirit-of-the-quad/
The key reading from the statement’s first paragraph'We strive for a region that is free, open, inclusive, healthy, anchored by democratic values, and unconstrained by coercion. We recall that our joint efforts toward this positive vision arose out of an international tragedy, the tsunami of 2004. Today, the global devastation wrought by COVID-19, the threat of climate change, and security challenges facing the region summon us with renewed purpose. On this historic occasion of March 12, 2021, the first-ever leader-level summit of the Quad, we pledge to strengthen our cooperation on the defining challenges of our time.’
The fact they are primarily stressing reaction to covid and giving to the region is a key piece of marketing as is the fact that it does not at any point mention China directly. It concludes 'The ambition of these engagements is fit to the moment; we are committed to leveraging our partnership to help the world’s most dynamic region respond to historic crisis, so that it may be the free, open, accessible, diverse, and thriving Indo-Pacific we all seek.’
The Quad parties have come up with an arrangement where all of them contribute something. India will use its manufacturing capacity to make US vaccines, with financing from the US International Development Finance Corporation and the Japan Bank for International Cooperation. Australia will finance training and provide last-mile logistical support for the distribution of vaccines; to provide 1bn covid jobs by 2022
Also they also agreed to work to ensure a free and open Indo-Pacific and to cooperate on maritime, cyber and economic security, issues vital to the four democracies in the face of challenges; whilst not mentioning China directly that is where most of the challenges come from.

Deutsche doles out bumper bonus pool despite freezing dividends for 2nd year
FT starts 'Deutsche Bank is facing an investor backlash after handing out a 46 per cent rise in bonuses to its investment bankers, despite a freeze in dividend payments as it returns to annual profit for the first time in six years.’
The bonus pool is Euro 1.9bnn which is 16x Deutsche Bank’s 2020 profit. It also notes that the CEO’s profit rose 46% and unlike last year he is not waiving any part of his pay.
It also notes that the ‘rank and file employees’ saw flattening salaries. It states 'The lender’s 16,200 investment bankers represent 20 per cent of the bank’s workforce but are receiving 47 per cent of all bonuses. The groupwide bonus pool rose 29 per cent to €1.9bn. Deutsche had wanted to increase it to above €2bn but its plan was blocked by the European Central Bank.’
Investors will be trouble by the moves, the banks is still struggling. No doubt it will say the moves are necessary to retain staff but the reality is that management probably needs to retain investor confidence more, especially as the scope for key employees to move is very restricted in today work place.

Israelis toast Pfizer as lockdown lifted
Country in party mood as more than half its 7m adults celebrate being vaccinated.Looks at the re-opening of the country and the surge in F&B although still with many shops closed, having gone out of business. But many remain wary 'A poll by Channel 12 news on Wednesday showed that three-quarters of Israelis were still wary of declaring the pandemic over, despite the raucous partying and street celebrations.’Key being that whilst there are still restriction they are not being enforced. So far 3m or the 7m population have been vaccinated but the rate of inoculation is dropping, with many who have not been vaccinated not wanting to be, 'either out of concerns about its safety, or because they think their youth and health will protect them.’The government is using the threat of forced quarantine on arrival for the unvaccinated to encourage them to get a jab. It is considering pushing workplaces to mandate compliance in order to try and get more people vaccinated. It has doses available but no takers! A position a lot of countries wish they were in. Whether having 3m or 4m out of 7m is enough to hit the spread and prevent a resurgence remains to be seen but we will all be watching carefully.
For investors it suggests that there are opportunities in the F&B sector post pandemic but picking the winners will still be fraught. RE-opening with a surge is good but being able to cope with the negative cashflow from the closed period is an overhang on the businesses. The latest job numbers showed and big increase in hiring in the F&B sector which is positive but we still don’t know if new strains or the lack of complete population inoculation will come back to haunt.
Read also the editorial A tantalising glimpse of a post-vaccine world. Countries are beginning to map out the pathway to a new normal

History shows pandemics rarely end neatly or with complete eradication
Lesson of the past is that a multipronged health strategy including societal reform is needed.
An interesting read with the key lesson being not to just rely on vaccines but on other reforms of changes, usually in investment in healthcare.It highlights that in the case of smallpox the vaccination programme eventually succeeded but only with a coercive and violent campaign in the final stages. '“Women and children were often pulled out from under beds, from behind doors, from within latrines,” wrote Stanley Music, a senior WHO epidemiologist sent in 1973 to Bangladesh, where some citizens were still refusing injections. “When they locked their doors, we broke down their doors and vaccinated them.”
With Israel re-opening but with 3m of the population un-vaccinated out if 7m the world will be watching closely

FT BIG READ. US ECONOMY AND POLITICS ‘People see the power of government’
Joe Biden’s stimulus plan that passed this week cements a leftward shift, giving the White House a greater role in society. Some Democrats hope it could develop into a full rejection of free-market Reaganism.
Brings together the thoughts from a number of recent articles.Basically Biden at the moment is popular. A lot of the population agree with the stimulus bill, it says that whilst not one Republican senator voted for the bill, 41% of Republican voters say they support it. That could be crucial for the mid team elections. But importantly the Democrats have learnt the lessons from previous administrations that going big is better than being conservative as far a garnering public support is concerned. Most of the public don’t think about paying for it they only see the benefits it would appear.
Next will be Biden infrastructure spending and again there could be opposition but there is the potential for wider support for some areas of spending over others.It notes that paying for all of this, so far has not really been part of the debate but with rising inflation expectations and potential interest rate rises there will be tough questions ahead. Nice quote 'Maya MacGuineas, president of the Committee for a Responsible Federal Budget, says many US lawmakers have grown “almost numb” to budgetary considerations.’
“A trillion here, a trillion there, people are just tossing them on to the pile with no regard for the consequences because they have become so used to being able to borrow through this crisis, when it was the right thing to do,” she says. “If you dangle big cheques or free things in front of anybody, of course they want it.”
The key is making sure the money is spent properly any failures will be used against the Democrats as the Republicans hold them to account.A good read, Biden is currently riding the wave well, continuing to do so will be key, with at home and abroad.

Notebook If Big Tech has our data, why are targeted ads so terrible?  
Makes the point that tech companies targeted ads maybe less sophisticated than they claim and maybe closer to tolling by algorithms. That means the companies that are increasingly moving their advertising budgets to online targeted advertising maybe wasting their money.
I agree with the writers own experience that most of the adverts that I regularly see hold no interest. Another thing I would also raise is the fact that I constantly see then actually means that I am growing the resent the company’s and so they could be paying for negative advertising. She notes how Grammarly seems to be chasing her.
The problem is Facebook and others want to milk their users for as much as they can and for targeted adverts no doubt they can change more. Now I am sure once in while an advert comes up that interests a viewer. But on the basis that that person is on the internet at the time; if they are looking for something all they need to do is put it in the search engine.
Why would I in the middle of playing say solitaire want to sign up to Grammarly, or switch to another game, or learn a new language? It strikes me that its more about ad men trying to justify their existence and make advertisers pay more.
It would be interesting to do a survey of whether repeated adverts result in a negative impression of the company and a fall in sales?
It’s not just the likes of Facebook and Google, Reuters recently has started asking on the basis of reading an article how likely am I to recommend their services? The first time I answered but getting asked every day and several times I am starting to resent the intrusion. The FT itself did it, asking when I clicked on a story if I wanted to add it to my notification list, once or twice is fine, but every article every day gets very annoying.
My guess is that for all the data collection skills that the tech companies have they can only guess what you like from clicking on an advert. They have no way of working out your negative reaction to an advert from not clicking on it. When advertising was in print, you would just gloss over it, with digital it is fired at you again and again and you have no choice unless you pay for a service which has no adverts.
The article cites research from Ebay and Airbnb both of which found stopping on line adds made no difference to the traffic they get. It quotes a statement
'At least one Facebook employee may agree. According to an internal memo included in a recently unsealed court filing, an unnamed product manager wrote in 2016 that “more than half the time we’re showing ads to someone other than the advertisers’ intended audience”. Facebook declined to comment.’
It concludes that'If this is the case then what is the point of invasive data tracking? All that data collection, all those privacy violations. For what? Gothic fashion and greetings cards. The dirtiest secret about targeted advertising could be that it doesn’t work.’

I would go further and say that companies could actually harm their brand by the excessive use of so called ’targeted ads’. In reality they are little more than the ’targeted mailing lists’ used 25 years ago. At the end of the day the best advertising is word of mouth, for that you just need a good product. Let's face it nobody advertised the internet but we all use it; choice of search engine usually comes down to what is built in or personal recommendation. I’d finish by repeating the maxim if you find a good restaurant you will tell one of two friends, if you go to a bad one you’ll tell about 10 people. On line advertisers might want to consider that too when they plan their ’targeted ad campaign’.

Ma’s private jet records show billionaire is down but not out
Alibaba founder appears to be moving around China freely despite troubles with BeijingAn interesting look at his possible schedule and may indicate that his fall from grace is not a bad as was first thought. Although regulatory pressure on his Ant and Alibaba seems to be continuing.

Keswick safeguards family jewels at Jardine Matheson
Looks at Ben Keswick and the news this week of a corporate restructuring where the Jardines Group will buy out the minorities which could be very beneficial for the Keswicks’ Weatherall’s and Jencks.
But there are risks unwinding a structure set up in the 1980’s to protect the family interests from takeover, as the controlling family will only own 17% of the stock. But that is less of a worry than leaving the business in its current state. In HK is holds Mandarin Oriental hotels, Hong Kong Land (listed in Singapore) but in total it has exposure to 'around 28 uncorrelated sectors acquired by Henry [Keswick] over the 47 years he was at the top of the firm, and it’s hard for anyone to articulate why”, said one adviser to the business. “Under Ben, you’ll start to see them manage their portfolio with a sharper focus on sectors and return on capital.”
It notes the Keswick’s annoyed Beijing by moving their listing to Singapore after the 1997 handover. That Ben is reportedly a consensus leader where Henry Keswick was a conviction leader. Also that he is very private and has never given a media interview, but lives in Hong Kong with his wife and four children.
Since being announced the share have risen but there is also news of minority shareholders not being happy with the deal. The company has suffered in the past two years as have many others, in my view it has suffered less than Swire’s to which it is often compares and traded against.
It has a number of successful businesses throughout Asia; streamlining the business will hopefully remove holding company discounts and allow for better allocation of capital. I would hope so. An interesting read.

Rakuten gains $2.2bn capital injection to drive growth
'Rakuten plans to raise $2.2bn through landmark capital tie-ups with Japan Post Holdings (8.3% stake), Chinese technology group Tencent (a 3.6% stake) and US retailer Walmart (a 0.9%stake), as the Japanese ecommerce company seeks to fend off the threat from Silicon Valley.’
It looks like a good deal with lots of positive synergies potentially. Tencent gives it exposure to China. For Japan Post it will hope to find a new source of income but I wonder if Rakuten can benefit from the Japan Post network?
The deal comes just after Rakuten has made some large investments into its own network in order to compete with 'bigger rivals NTT DoCoMo and SoftBank. In addition to Amazon, it also faces tougher competition at home after Z Holdings, a subsidiary of SoftBank’s telecoms arm that operates Yahoo Japan, completed its merger with messaging app Line earlier this month.’
It is a tough market but I think this is a good move as long as it leverages the relationships.

Clean power ‘Gold rush on steroids’ forecast for electric car battery metals. Lithium, nickel and cobalt attract strong demand as shift to green economy accelerates
Worth a read there are various short term imbalances along with a longer term trend both of which support the move into these metals. Especially since in some cases there has been an under investment in certain metals but investors need to be aware that there is available reserve capacity in some.
The article mentions a number of ETF funds that have seen recent surges as investors look to get exposure to the sector and the fact that more funds are being created. A key point to the article is that the changes are occurring in China, the US and Europe at the same time which will no doubt have a multiplier effect and could kick off a super cycle in commodity prices.
It also mentions the new area of sea floor mining which is likely to take off in 2024 once 'a mining code is passed by the International Seabed Authority, a UN-backed body of 167 governments.’ A move that is opposed by many scientists because it is unknown about how much irreversible harm that might do to ocean ecosystems. I am sure Jacques Cousteau would be against it but for investors prepared to take the risk the returns could be very lucrative although the ‘green credentials’ might be blurred and ESG factors could come into play.
Article mentions lithium producers, Albemarle, Chile’s SQM and China’s Ganfeng Lithium, all of whom have raised or plan equity funding to expand production.
I think that EV’s are going to dominate in the short term and it makes sense to have exposure. Currently Hydrogen technology looks unlikely to challenge but I thinks its credentials as ‘green’ rank higher than EV but time will tell.
Still in addition to the metals needed for battery don’t forget copper and aluminium the metals needed to get power from the alternative energy producers (wind farms and hydro, wave power etc) to the grid.
Worth also reading Oil sector revival has producers eyeing boom time. Which notes how, for all the talk of ‘green’ most people remain firmly addicted to fossil fuels.

Bond trading signals show expectations for only a shortlived burst of inflation
'Some economists, including former Treasury secretary Lawrence Summers, have argued that the next impending injection of fiscal stimulus in the US will generate destabilising inflationary pressures. But investors are unconvinced.’
Points out that US break even curve has inverted which happened during the 2008 financial crisis but that the two year breakeven rate is hovering around 2.7%, the five year at 2.5% and the ten at 2.3%; suggesting that most investors don’t believe any pick up in inflation will be sustained. Discounting the risk of 1970’s style inflation, something that Powell and Yellen are also downplaying. Powell has said 'any jump in inflation would be “neither large nor sustained”. The Fed’s favourite gauge, the core personal consumption expenditures price index, currently languishes at 1.5 per cent.’
So most expect short term inflation to be muted and not spiral out of control.
I’m not so sure, inflation is largely about expectations and no one alive has any benchmark for how things will develop. Powell and Yellen and many others are best guessing they have no more insight than anyone else, me included. But it does seem a little presumptuous to assume any inflation will be short lived. That is not the historical norm. They feel we have the tools to deal with any inflation that arises but even Powell has said inflation is about expectations. As Japan has seen for over 10 years those are not easily guided. Why does the US think it can?
So I would be positioning for at least for ‘just in case’ and think it prudent for more than that.

Apollo abandons talks to buy portions of Greensill Capital
• US group was eyeing IP and tech units • Financial strain builds for GFG Alliance
The key being that Greensill didn’t actually have proprietary systems and the company they had an alliance with Taulia seems to have done a deal with JP Morgan leaving little of value for Apollo to purchase.It looks likely that in addition to Greensill demise Gupta’s GFG could also collapse, with many of its suppliers now asking for upfront payments.
Also worth reading The Top Line. 
Greensill exposes blind spots in radar for systemic risk 
Notes that there was little supervision of the company anywhere globally. 'Since market participants are not retail investors or small businesses but large institutions and wealthy individuals, mainly based outside the UK, they are considered too sophisticated to need much protection.’
But that was the same that was said about AIG back in 2008… until it blew up.
What matters is the systematic risk; which at resent cannot be quantified. Credit Suisse is budgeting for between $1bn-$2bn. Insurance policies covered $4.6bn but whether the policies are valid is open to question since Tokio Marine says the underwriter breached exposure limits. IAG says it has no net exposure but the stock dropped 10% Tuesday after a warnings from hedge fund manager John Hempton about possible exposure.
Softbank, Credit Suisse, Tokio Marine and no doubt others will fight and litigate over liability. The question posed in the conclusion is if Greensill had been 10x bigger would it have been regulated?
'Where is our radar for systemic risk? Thirteen years on from the financial crisis, there are still gaping holes’
Makes a very good point. The other good point to note that it is the tech behind the transaction that has the real long lasting value. That seems to be the only thing of any real value in this debacle.

For Interest 
The severe cost of the world’s baby bust by Jeremy Grantham co-founder of GMO asset management. Shanna Swan, of the Icahn School of Medicine at Mount Sinai and author of ‘Count Down: how Our Modern World Is Threatening Sperm Counts, Altering Male and Female Reproductive Development, and Imperilling the Future of the Human Race’, contributed
Starts with 'We are in a global baby bust of unprecedented proportions. It is far from over and its implications are gravely underestimated.
The worldwide fertility rate has already dropped more than 50 per cent in the past 50 years, from 5.1 births per woman in 1964 to 2.4 in 2018, according to the World Bank. In 2020, the 20 per cent shortfall below replacement rate in US fertility, together with low net immigration, produced the lowest population growth on record of 0.35 per cent, below even the flu pandemic of 1918.’
Covid is making a bad situation worse. That is increasing the burden on pension and medical systems. 'With the old taking up more resources, and the shortage of young workers requiring more capital spending to maintain productivity, the current era of excess savings is likely to end.’
Resulting in higher inflation and real interest rates back to pre 2000 levels and probably a reversion to lower asset prices as seen in the 20th century.
But it is good for the environment but not really enough to make a significant difference meaning that more investment in that will be required but that spending will be in competition with other demands and so may not be made.
It also notes that the change is not just by people choosing not to have babies. Social empowerment of women and a decline in sperm count due widely used chemicals in things that we come into daily contact with.
He concludes 'Known endocrine disrupters must be banned entirely, and far more stringent regulations are needed to oversee new chemicals that are being developed, to ensure that they are proven safe before they come to market.As we did with leaded petrol and lead paint, we are poisoning ourselves and our environment. We have to stop now to protect both our health and our economic wellbeing. We are in a global baby bust of unprecedented proportions. It is far from over and its implications are gravely underestimated.’
I think he is right, we are underestimating the problem. He mentions China and the rate of change occurring there. It has the further problem of having for years told people only one child, now it has a problem persuading people to have more than one. People have also realised that with better healthcare children survive the normally dangerous early years. But education is now expensive; in China a lot of people have found having a pet is cheaper and as satisfying. Suggest for investors that Pet companies over on-line educators would make a better investment. I wrote a while ago on the covid impact on birthrates but he is making the wider case. It also raise ESG issues about chemicals used by companies which maybe something that investors need to pay more attention to going forward.

All Consuming. Christian Louboutin put power in women’s soles 
Looks at how painting the soles of his shoes changed so much. An interesting read about how some types of marketing can be so effective.
Contrasts with the so called ’targeted adverts’ by tech companies.

Person in the News A tech investor doing God’s work
Looks at Cathie Woods and her Art Fund. Wildly successful fund manager rides her investment creed amid a speculative market boom, writes Michael Mackenzie
Notes the similarities with the Dot.com boom and bust but notes along with her catholic faith that she started as an analyst covering data companies
'Yet the concept they embedded “ended up becoming the world wide web”. This made her appreciate how innovation is underestimated, and “how exponentially explosive growth can be”. They also shaped the investment philosophy that made her name and fortune.’
Also notes she is a tireless consumer of research, sees big trends an is patient waiting for frution; with a 10 to 15 year perspective. Recent weeks have seen some explosive moves but she still believe in the core trend. 'Sceptics think Ark’s tech holdings are wildly overvalued, an inevitable reckoning will burn retail investors, and see in Ark a replay of the Janus Twenty fund, which enjoyed a huge run up in the 1990s but hit a wall after the 2000 crash. “These companies need to exceed high expectations and that’s where it gets difficult,” says Peter Garnry, head of equity strategy at Saxo Bank.’
It concludes 'Wood is unrepentant. She dismisses talk of a bubble, and is open with investors that her bets are long term. After all, Amazon’s share price took a decade to reclaim its 1990s internet bubble peak — but investors who held on eventually made huge gains.As Wood sees it, it’s all God’s work anyway. “It’s not so much about me and my promise. It’s about allocating capital to God’s creation in the most innovative and creative way possible.”'
Worth a read

Pandemic demand for golden visas shows globalism never really happened by John Dizard. Looks at the demand for second or multi passports via investment capital.  Notes recent big volume from 'Chinese, expats living in Gulf countries, the post-Soviet rich, and some Nigerians and South Africans.’Interestingly seems like the New Zealander’s are the only ones happy with life.  I must say rugby, sailing and bbq life really doesn’t need much more.  

The Long View Patience needed to exploit the value stock opportunities. By Michael Mackenzie
Opens with 'Sir John Templeton, the famed contrarian and successful bargain hunter, had this tenet that formed his investing approach: “Buy stocks for less than they are worth and hold them as long as it takes for the market to appreciate how undervalued they are.”’
A tenet that has helped those value investors that has the staying power over the past few years.
Notes "The Russell 1000 value index for US stocks has gained almost 30 per cent since November, well ahead of a 15 per cent rise in its growth sibling.’
But now the tough question, does it continue. The valuation gap between growth and value remains at historically high levels and there is a certain irony that the resurgence comes just after a number of very notable value players decided to close their funds after so many bad years.
Notes that areas thought to have good potential are industrials and banks benefitting from tech advances. Value names could also see a surge as technically driven momentum funds joining in the current interest. Renewables are also in the frame. The current thinking is that value will beat growth for the next 3 to 4 years!
Concludes 'That is the kind of stock picking market conditions that Templeton successfully harvested during his long career.’

In addition to momentum funds driving the value names the fact that so much of the market is index linked or EFT driven is likely to make this a self fulfilling prophecy. As retail investors rotate out of their tech ETF’s into value ETF’s; the tech names will see selling pressure and value names demand. Outperformance will come by picking stocks rather than following the broader trends and the ability to short certain names to enhance performance.

The post-Covid city A year of the pandemic has shaken the world’s great metropolises and laid bare their flaws. How can we remodel them to be greener, cheaper and happier places to live? Simon Kuper reports
Looks at the office, the neighbourhood, mobility, shops, homes and gardens.
Has some interesting ideas; Too many shops, reversion to residential? Shopping centre to become social centres with F&B and leisure activities, modern homes to include an office space?
Worth a read along with How can I add value to my home?
Not all improvements to a property will make you a return when you sell. Pools and offices are good bets, while conservatories and hot tubs are two to avoid

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