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The Financial Ironmonger Blog No 47

The Financial Ironmonger Blog No 47

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.


I ended the last blog by predicting that Donald Trump would win the POTUS campaign, against all the odds, so it was with some trepidation that I settled down, on Tuesday evening, to watch the results broadcasts. My plan was to get an overview, wait for the early results, and head to bed.

It did not go that way, and as with all such contests, dawn rises before you know, on one of the most dramatic elections, ever. Heading to London, on Wednesday, people seemed really shocked, and having been immersed in an investment conference ever since, that remains the view.

On Thursday, we were addressed by Sir Christopher Meyer, our Ambassador in Washington during the Clinton and Bush presidencies. He admitted that he had failed to see it coming, and had little idea how this was going to pan out. Apparently, the present incumbent, Sir Kim Darroch told Downing Street that Clinton would win, which is said to have provoked irritation. His chances of a quiet weekend will not have been helped by the arrival of Nigel Farage at Trump HQ, a brilliant act of one upmanship that leaves the Government looking very flatfooted.

The press have been busy trying to justify how they got it so wrong, but even without the benefit of hindsight, it was obvious that the wheels were coming off the Clinton campaign as she doubled back to lobby in states previously said to be in the bag. The unprecedented arrival of the incumbent president to campaign on behalf of his chosen successor only added to the sense of panic.

In the end, she won the popular vote, but lost in the all-important electoral college. Surprisingly, fully 47% of the population failed to turn out and support any of the candidates, hardly qualifying this as “the most important election of my lifetime”, as Sir Christopher put it. In the end, the majority of people voted for change, some perhaps spurred on by Obama describing Clinton as the continuity candidate. People did not want more of the same.

This is a lesson the politicians in Europe need to grasp very quickly, if they have not already got it from the Brexit vote. Italy is holding a referendum on December 4th on changing the constitution in order to make the country more governable, which seems sensible, but provides an opportunity for the disaffected to protest. Whilst we have learnt not to take much notice of the polls, the indications are that the government will lose. Next year, we have elections in France and Germany, both of which have significant protest movements; it is no longer unthinkable that the EU as a construct might be under severe strain.

More by luck than good judgement, the Brexit vote might leave the UK in a very good position, free to negotiate our own trade treaties with the Americans, something that Trump is said to be very keen on. Obama, you will recall, had us at the back of the queue.

It is worth remembering that Trump is not a Republican; he just high jacked the party for his presidential run. Whilst they control both Houses, they do not have an absolute majority in the Senate, and there are many Republicans in both places who carry no candle for Trump. His ability to get things done without significant consensus is therefore pretty limited as is his experience of this type of deal making. He is going to have to build a good team around him, ironically drawn from the derided establishment. This is not the only contradiction in this extraordinary outcome; few have realised that the job of First Lady is now occupied by an immigrant.

It is easier to see what is not going to happen rather than what is. The wall is not going to happen, not least because Capitol Hill will not give him the funds to do so, and there is no chance of the Mexicans paying for it. In the unlikely event that it was built, the Mexicans would just tunnel underneath it, or use drones to fly drugs over the top of it.

Likewise, the threat to slap import tariffs on goods from Canada, China and Mexico would only drive up the cost in places like Walmart, hurting the poor blue-collar workers that were his key supporters. On the other hand, his comments on NATO are credible; if we cannot be bothered to pay for our own defence, we cannot expect them to do so.

Cutting taxes and red tape whilst borrowing to improve the infrastructure should help to create jobs and boost economic growth, reason enough for people to choose change over continuity. On balance, I think that even those distraught at the outcome will begin to see that there are many positives that could emerge from this; a reset was needed.



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.