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The Financial Ironmonger Blog No 44

The Financial Ironmonger Blog No 44

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.


At the start of the week, I flew to State College, home to Penn State University, one of America’s most prestidigious.  The temperature is in the mid eighties with trees the most beautiful colours as the fall progresses. By Saturday, they are forecasting a minimum temperature of just 2 degrees,(didn’t happen),  which demonstrates how quickly the seasons change in this part of the world, and then it becomes a question of just what winter is going to throw at them, which some years can be minus 30.

They are well prepared for it; it is a violation to park your car on the streets between 10pm and 2am; that’s when they plough the snow. In many respects, the place is self sufficient, having its own airport, police and fire departments, power station and bus system, the later both powered by fracked gas. Gas powered buses, incidentally, are coming to the UK, and the difference in air quality is noticeable.

The institution is fabulously wealthy, aided by a substantial endowment fund; when I was here two years ago, the University had a net worth of $11.7bn, which will have increased since. Were it quoted, it would be a serious member of the FTSE 100, by way of comparison, and it is not the only example of such universities in this country. In the town, it is rare to find a shop, bar or restaurant that is not advertising for new staff, so you could come away from here thinking that America is in great shape, if this was your only snapshot.

Pennsylvania is one of the five swing states that will determine the outcome of the race for the White House. Going in to the third debate, Clinton had a lead of 6.9%, which will be hard to dislodge in the final three weeks. Nevertheless, the students have been campaigning for their respective sides, outside the main campus gates. What started as a civilised exchange of views turned amusing on Tuesday afternoon, as reinforcements arrived with a megaphone each, clearly aided by a liquid lunch.

By Wednesday, these must have been banned by the authorities. Less than 1% of the students streaming past the trestle tables engaged with either side, so maybe their minds are made up, or there is no interest. Nevertheless, the Democrat nominee for Vice-President, Tim Kaine, was due on campus Friday afternoon, sadly after I had departed.

Students who come from other states can apply to have their vote moved here, which involves hassle, but that process finished some time ago, and only the firmly committed would bother. So, it seems a bit odd that they would be using the resource here, unless their internal polling is giving them different readings. My hosts at dinner on Tuesday evening didn’t really want to engage on the subject at all; it is not one for polite conversation.

By Thursday, the political stalls had been replaced by one selling pumpkins, which proved to be no more popular. They have achieved success, however, with by products such as flavoured ice-cream, coffee, toast and beer; the Amish, meanwhile, use them to feed their pigs.

30 miles south of State College, heading for Washington, you pass Lewistown, population 8,000. This is Trump country. Once the road bypassed it, the decline started, but the real hit was in 1972, when devastating floods wiped out the marginally profitable American Viscose Corporation plant, which was never rebuilt, costing thousands of well paid jobs. The other major employer, the Standard Steel Works has since shut, leaving only GE Inspection Technologies, here only because they acquired a local firm. In May, they started cutting back on the 250 jobs, relocating them to Boston, some 6 hours away.

Should the plant close, the town will have lost all its major employers, leading to a deskilling of the population, and inevitable social decline. Much the same thing is happening in towns right across the country; this is what a post industrial landscape looks like, brilliantly chronicled in Hillbilly Elegy by J D Vance, ISBN (HB) 978-0-00-822109-6. These are Trump’s people.

Here in Washington, unless you watch the television, you would have no idea that there are just 16 days until the election. During the week, the polls have closed up, with Clinton on 47%, Trump 43%. My hunch, and it is only that, is that Trump is such a divisive person that some supporters do not want to publically commit; the same phenomenon of “shy” voters was decisive in the Scottish referendum, the 2015 General election, and the EU referendum. Advance voting is underway, with 3.2mn cast already; the pundits reckon the total will be 45mn before the actual day. Each side claims that a high turnout favours them, whilst the news anchors are grateful for anything that will give content, however meaningless, or mindless.

The final thought belongs, as ever, to the taxi driver. Usually, he said, that he changes his hours, at the end of August, from days to evenings, when the tourist season withers. This year, for the first time since 2008, he has carried on doing days, such is the increase in demand from American tourists. From this, he concluded that the local economy is picking up; these people are the most astute observers of such trends.


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.