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The Financial Ironmonger Blog No 38/2017

The Financial Ironmonger Blog No 38/2017

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.


The first time I went to Florence was in 1985, when two return tickets from London with British Airways cost £1,000. I have every sympathy with the plight of Ryanair passengers caught up in the missing pilot saga, or whatever it is, but travel then was only for the rich, or impecunious. The visit coincided with a severe drought, end September, and the Arno had run dry, to the extent that the fountains had been shut off, together with more basic facilities. The rats were having a field day, in the river bed.

Last time, I stayed in the hills above the city, now dominated by tourists from the Far East wearing identical ponchos, following a guide holding a table tennis bat as a rallying point. I vowed never to return.

So, it seems a curious place for the PM to choose to make her speech on the future of Brexit; hopelessly hobbled by her cabinet as to where this is going, and pretty much ignored by the EU. I do not know if the Italian PM was invited, but he was not turning up. Sources indicate that an offer to continue paying £10bn to the EU, per annum, for the two years after we leave, is a compromise that can be pushed through the Commons, providing we get free access to the European market.

This is way short of their demands, and is nothing more than a payment to keep the EU at the negotiating table. Indeed, it seems to be the only point of any substance to have come out of the speech, which given the arm-twisting that preceded it, is a pretty limp outcome. It has been obvious for quite some time that there would need to be an extended implementation period, so it is a waste of time traipsing off to Italy to confirm what everyone knew. Nigel Farage, one of the most successful politicians of his generation, reckons that May will be gone before Christmas, and I would not bet against it.

At the time of the limited coalition deal with the DUP, (which produced a notional majority), they got the Chief Whip to sign it off on behalf of the Government, reckoning that May’s was worthless. And nothing much gets passed the DUP. Those who hoped to see matters concluded fairly quickly are in for the long haul; uncertainty is not known as a strong growth stimulant. Much the same as planting your new roses in gravel rather than peat.

Contrast this with Transport for London who axed Uber’s operating licence on Friday, subject to 21 days’ notice. Queue some hysterical PR; apparently 40,000 drivers are to lose their “job”, whilst 3.5mn Londoners are to be inconvenienced. This works out at an average of 88 trips per day, per driver, and might explain the traffic problems, which leads me to conclude that you should not read too much in to press releases. As a way of demonising the Labour mayor, and getting Brexit out of the headlines, it is a brilliant wheeze.

This blog will be posted before the outcome of Sunday’s German election is known, although everyone is predicting that Chancellor Angela Merkel’s Christian Democratic Union will be the largest party with 36% of the electorate, and 255 seats. Her coalition partner, the Social Democrats are forecast 26% and 176 seats, giving the pair a very comfortable majority out of the total of 631. Nothing to see here you might conclude. But if you have been through UKIP, Brexit, Trump and Macron, (whilst keeping an eye on Catalonia), you will know that nothing is certain in politics.

In Germany, the wild card is the Alternative for Germany party, (AfD), which was formed less than four years ago. It has been scooping up support from the SPD, particularly amongst poor East Germans, who are concerned about the effects of mass immigration. This might sound like a familiar pattern. The YouGov poll predicts that they will get 12%, and 85 seats, making them the official opposition. However, others think that voters are unwilling to publically endorse the party’s far right views, whilst privately supporting them, and the vote share may come out much higher.

Liberal commentators reckon that this will be the first times that “Nazis” have been in parliament since the 1930’s, which seems completely over the top; this is a movement which has grown out of the poor and disadvantaged who feel that they have been abandoned by the system. Trump totally understood this, and ruthlessly exploited it for his victory.

Hillary Clinton clearly does not, as demonstrated by her latest book, What Happened. Everyone else is to blame for her failure, bar herself, but principally “millions of bigoted white nationalists”. Curiously these same people voted twice for Obama, and yet a third of them switched to Trump. One in four working-class supporters switched to Trump, irrespective of skin colour, their principal concern being a declining standard of living.

Clinton, banging on about a booming economy just demonstrated how out of touch she was with the traditional Democrats, branding them “deplorables”, and nothing in the book suggests that she actually gets what happened, nor that the party is doing anything to reverse this loss of support, bar cutting deals with Trump. Which can only reinforce the decision made by the defectors, and cause the remainers to question their existing allegiance. None of which bodes well for 2018, or 2020.


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.