When it comes to ethics and moral philosophy you might not put Elon Musk in the same bracket as Aristotle, David Hume or Immanuel Kant. But this week Musk underlined his strong views on remote working by declaring it “morally wrong”. Musk has practical objections, stating employees are less productive in a home environment, but his interview with CNBC elaborated on more principled arguments. It’s white-collar workers and managers – the “laptop classes” as Musk deems them – that are typically afforded this WFH privilege, which isn’t available to those in service industries or working on a factory floor. Musk isn’t the only one championing a return to office; chancellor Jeremy Hunt said this should be the “default” location for employees. Workers don’t seem to miss these quite as much though, with a survey this week finding more than 70% of millennials and Gen Z-ers would consider looking for a new job if their employer asked them to be in the office five days a week.
It’s not so much of a share tip – more a share tipple. Private investors watch investments made by Berkshire Hathaway keenly, given Buffett’s strong track record of backing winners, and this week it emerged he has a substantial ($41.3 million) holding in Diageo. The investment in the FTSE-listed company behind some of the biggest alcoholic brands in the world was however not mentioned at the recent AGM in Nebraska, where much of the focus was on the company’s real life succession drama and expected dividend gains. The latest buy has emerged thanks to a change in the way the company reports its investments, with the company now listing all the holdings of its biggest subsidiary, General Re.
Purplebricks Sold for £1…
Troubled online estate agent Purplebricks is the latest company to be sold for the bargain basement price of £1. This is certainly a turnaround for Purplebricks, which was once seen as a major market disruptor and valued at £1.4 billion as recently as 2017. It has entered a conditional sale with rival Strike, who will take on Purplebrick’s liabilities for the £1 fee – presumably representing a somewhat heftier price tag. A number of other companies have famously been sold for £1, including Homebase, BHS, Woolworths and Chelsea Football Club. Of course, the former two no longer exist, and Woolworths is now just an online brand. Chelsea is still going strong (although maybe not on the pitch). Will Purplebricks be able to deliver a more substantial turnaround in fortunes?
…while Center Parcs on the Market for £5 Billion
At the other end of the price scale, Center Parcs has put up a “for sale” sign on its UK and Ireland holiday parks, with an asking price of £4-5 billion. This is almost double what the seller, a Canadian private equity firm, paid back in 2015. Demand for staycations boomed during the pandemic but some analysts question future growth prospects given the squeeze on family finances. Center Parcs recently shelved plans to build a new park in West Sussex and recently faced considerable criticism and social media ridicule after trying to evict customers on the day of the Queen’s funeral. A mark of respect!
Bitcoin *is* Betting, MPs Say
MPs are calling for tighter regulation of cryptocurrencies and non-fungible tokens to protect consumers but instead of following this path, a group of MPs is proposing crypto assets be considered a form of gambling and regulated accordingly. This could see restrictions on how products are promoted and advertised, for example.
Mind you, politicians don’t always have the best track record when it comes to investments. Top Brexiteer Steve Baker was one of the investors caught up in the collapse of Neil Woodford’s flagship UK Equity Income fund, and declared in 2019 that, although he didn’t regret the move, he did want his money back. For its part, the Treasury seems less keen on classifying crypto as “gambling”, and it could be argued that current gambling regulations have done little to stop a tide of money flowing into spread bets on football corners, for example. As a former sports minister and gambling campaigner Tracy Crouch said, crypto feels “like a Wild West town with no sheriff”. It remains to be seen whether it will be the Gambling Commission or the FCA polishing their badges and shaping up for this role.
Dividend Options Mapped for Income Seekers
Investors wanting to stay clear of the Wild West of crypto might want to consider their options for higher-yielding stocks and funds instead. As part of our special report on income investments this week, we have taken an in-depth look at some of the options available. This includes mapping out Europe’s highest-yielding opportunities, a closer look at property investments, including REITs, and a review of equity income and high-income bond funds. High yields can go hand-in-hand with high risks, but this guide to the income terrain will hopefully help investors find the best spots to dig for gold.
Restart Button Hit in Microsoft-Activision Deal
There’s been glitches of a kind the whole way through Microsoft’s attempt to acquire Activision Blizzard, makers of Call of Duty and World of Warcraft. The deal was initially off after being blocked by the UK competition authorities. But this week the takeover, surprisingly, received approval from the EU, after it accepted Microsoft’s concessions on access to its games via cloud streaming providers. Does this mean the deal is back on? It seems unlikely to go ahead without the approval from UK regulators, but Microsoft is appealing the CMA’s decision and this latest decision might strengthen its case. The deal is also facing opposition on a third flank with the US regulator suing to block the deal, so it’s unlikely this is the last we’ll be hearing about it.
Defaults Increase as Cost-of-Living Bites
The real-life effects of the cost-of-living crisis can be seen in a raft of numbers published this week by different regulatory bodies. The FCA’s Financial Lives survey showed that 5.6 million people had missed bill or loan payments in at least three of the last six months – an increase of 1.4 million over the last year. The FCA says almost 11 million people are struggling to keep up with financial commitments as interest rates, energy bills and food prices continue to rise. These difficulties are also reflected in the mortgage market, where more than 75,000 homeowners have fallen behind on mortgage payments with a 2% increase in just three months. Meanwhile, the number of repossession claims lodged by lenders has increased 40% year on year. These figures are perhaps more alarming when you consider the majority of homeowners are on fixed-rate mortgages, which for now at least give some shelter from rising rates. As these expire, there are fears the numbers could get much worse, and fast.
What’s a Billion Pounds Worth These Days?
Well, it buys an awful lot of trainers if you are JD Sports. The retailer announced this week that it’s on track to hit £1 billion in profits this year as it boosts overseas expansion plans on the back of the ongoing athleisure trend. At the other end of the scale, British Land, one of the UK’s largest commercial landlords, announced losses of just over £1 billion in the past 12 months. This was mainly caused by a significant write down of its property portfolio, which consists of prime office and retail space, particularly in the City of London. The company said that while prices were bottoming out, rising rates continue to be a ‘double edge sword” and the property market remained “fragile”.
Telecoms Shift People for AI
There have been widespread job losses at technology giants like Google, Facebook and Twitter over the last year. This week we learned major telecom companies are planning similar cuts. Vodafone will reduce its headcount by 11,000 over the next three years – that’s more than 10% of its global workforce. Its new boss described the company’s performance as “simply not good enough” and says she plans to streamline and simplify the mobile phone operator. Meanwhile BT is going much further, although over a longer timeframe. It announced plans to shed up to 55,000 jobs by 2030 – around 40% of its current workforce. Most of these will be in the UK with around a fifth from its customer services department as staff are increasingly replaced by AI technology. Will this lead to better customer service – and phone calls answered that bit quicker? The worry is that with so many job losses in this department customer service standards may get worse before they get better.
