Bath/Head Office & Unquoted Equity Team:
London Office & Quoted Equity Team:
Edinburgh Office & European Quoted Equity Team:
The Financial Ironmonger Blog No 18/2017

The Financial Ironmonger Blog No 18/2017

Every week our guest blogger, David Oakes of Mosaic Money Management (aka The Financial Ironmonger), shares with us his take on some of the major UK and overseas macro and political events that shaped the previous week.

Please be reminded the value of investments, and the income from them, may fall or rise. The views expressed in this article are those of the author at the date of publication and not necessarily those of Chelverton Asset Management Limited or Mosaic Money Management. The contents of this article are not intended as investment or tax advice and will not be updated after publication unless otherwise stated.


It would have been naive to think that Brexit negotiations were going to be conducted in a civilised manner, given what is at stake for the 27 remaining countries, but it is extremely disappointing to see the behaviour of the European Commission President, Jean-Claude Junker, following a dinner in Downing Street. The leaking of details of the discussions was clearly planned, designed to discredit the Prime Minister at the beginning of the election campaign leaving her labelled as incompetent, badly briefed, or both.

On their part, this is a serious misjudgement; she is neither. On Wednesday, they sought to broaden the attack by virtually doubling the estimated cost of leaving to some £80bn, and this from an organisation which has not had the accounts signed off for the past twenty years. Such demands can have little credibility when they don’t know the costs themselves.

I have pointed out, previously, that the Germans are very much in charge of the show, and are the only country to have benefited; it is significant that the leaks from the dinner appeared in one of their leading papers. Yanis Varoufakis, the former Greek finance minister, said that there was no point in negotiating with the EU, since their tactics are to beat the opposition down in a slow war of attrition, all the while taking their instructions from Angela Merkel. That she faces re-election in September only adds to the problem.

Professor Varoufakis did not last very long in office, the Greek anti-austerity movement crushed by you know who. He had no cards to play, the country being bankrupt, and with finite demand for its only export, olive oil. Even countries that have proper oil are struggling. He wanted a 50% debt reduction, much as the Germans were granted at a conference in London in 1953, where repayments of the balance were dependant on economic activity. This required them to run a trade surplus, hence where we are now.

Whilst our hand is much stronger than the one he was forced to play, it is disturbing that the mindset that we are dealing with remains the same. I was thinking that we should bring him on board as an advisor to our team, until he said that he would vote for Corbyn, given a chance. Even so, he is one of the few available with direct experience, and if his ideas are thought bonkers, they will still have brought some humour to a situation singly lacking in it, so far.

Elections produce all sorts of surprises; the interview with the shadow Home Secretary, Diane Abbott, about her plans for increasing the number of police officers will be replayed countless times over the years. She had no idea how much it would cost, or how the money could be found, and then proceeded to lie in an attempt to cover up her incompetence. Perhaps the bigger surprise is that she occupies this position due to such a dearth of talent.

And yet on the very same day, the Prime Minister, daughter of a vicar, is photographed eating chips whilst walking along a street in Cornwall. It was always drummed in to us, from a very young age that you did not eat in public and she is older than me.

Here in America, the Border Security staff seem slightly less offensive than on previous trips, albeit that any charm school attempts would be starting from a long way back. Tourism has taken a knock from the Trump election, more due to the media than anything that is happening on the ground. I saw a figure the other day which suggested that 98% of the coverage in the first 100 days had been negative towards him, impossible to prove, but the Democrats have spent much of the time trying to ramp up the Russian link, (surely disproved when he bombed an airfield of Russia’s key middle eastern ally, Syria), and otherwise raging at the “Deplorables”.

Whilst they have no attempt to reach out to the voters who twice elected Obama, and then switched, the President has been getting on with enacting some of his agenda. Domestically, some of this is going to be a stretch, and most voters accept that that was always going to be the case; the details matter less to international observers than who comes out on top.

On Foreign Policy, he has much greater scope, and has reversed his isolationist stance championed on the campaign. He has taken decisive action in Syria, leaving the Russians in no doubt that they are responsible for their client state; a comprehensive peace plan has now been put forward by Moscow. Likewise in North Korea, where the more recent missile launches have all exploded on take-off, hardly a coincidence, whether by American or Chinese intervention is not known.

Iran has been told that their interference in the Middle East is counterproductive, whilst opponents of the elected government in Afghanistan have been given due warning. All these are big issues from which the previous administration shrunk, preferring to “lead from behind”. Quite what the man on the ground thinks is what I hope to report next week.

This will be published before the result of the French election becomes clear, but it seems unlikely that opinion polls are that far out. As I was leaving a French restaurant in London a couple of weeks ago, I paused to ask what the waitress thought; she was in her early twenties, and obviously educated and intelligent.

Her reply was Macron, before adding “I don’t care, because I am never going back there”. I suspect that Marine will already be working on the next attempt, hoping to convert more of the young voters before her long established support falls away.


David joined Manchester stockbroker Henry Cooke, Lumsden in 1977 and after becoming a member of the London Stock Exchange in 1984 held a number of senior positions within the firm including Managing Director of the in-house fund management company and member of the Executive Committee.

After senior appointments at Cazenove Fund Management and latterly Mercater Capital Management, David joined Mosaic Money Management in 2013. He has successfully managed private client and fund portfolios for over thirty years and has particular expertise in providing a multi manager service to his loyal client base.

The Financial Ironmonger is a hat-tip to Ironmonger Lane, the location of Chelverton’s London office.