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 FINANCIAL IRONMONGER BLOG NO 51/2017–
It is that time of year; reflections on how it panned out and thoughts on what the future might hold. Maybe it is one of the luxuries of writing weekly that I am constantly doing both, so there is no fixed point to judge things from. But it is fun to lookback to what people were thinking and saying twelve months ago.
Back then, the recently elected Trump was going to nuke everybody that didn’t share his views, which was quite worrying when they were hard to discern, and to avoid his wrath. But it didn’t happen that way. The initial spell in office was fairly chaotic, amplified by a very hostile press, but apparently, his whole campaign was equally disorganised. Maybe that is how he won; hammer home very basic messages, and be totally unpredictable. Match that with some brilliant analytics, targeting specific groups of voters, and the Democrats never stood a chance.
It also invalidates the idea that there was any meaningful collusion with the Russians; the Trump team just were not that organised. Similar accusations were made about their involvement with the UK Brexit referendum, but whoever was looking in to it quietly dropped their investigation this week. Fake news.
Gradually, the President has come to realise what is, and is not, achievable, which many credit to the Generals within the establishment bringing discipline to the process. The tax bill marks a significant achievement at the end of his first year, and the number of illegal immigrants crossing the Mexican border has fallen dramatically without a single brick being laid on the contentious wall.
Ideally, there needs to be another major policy win in the first half of next year, such as infrastructure spending. The mid-term elections loom on November 6th, and the opposition have high hopes, being consistently ahead in the polls. However, they may not count for much. There are 25 Democratic Senate seats up for grabs, and just 8 Republican. 10 of those 25 are in states that Trump won in 2016, so if his team carry on delivering on his promises, they should do well against a relentlessly negative Democratic party.
Their hopes have been enflamed by the win in Alabama this week where the defeat of the Republican Roy Moore signals the end of Trump, in their view. It proves nothing more than Republicans drew the line at credible allegations of paedophilia, according to Capx, and by a margin of just 1%.
Thus it was not Donald that blew the world apart, as predicted by some, but a Hollywood sleezeball, Harvey Weinstein, a film producer who is said to have traded access to fame and celebrity in return for favours. I am not an ancient history scholar, but my understanding is that the Egyptians perfected this model circa 3,500 BC.
The difference, now, is that the accusers are highly accomplished actresses, for the most part, and know how to exploit the media message. Over the last eighteen months, we have seen the rise of populism in politics, of which Brexit and Trump are the most obvious examples, both of which seemed to be movements without any obvious foundation. Now the swarm has moved on.
Across the Atlantic, where it has claimed the scalp of the UK defence Minister, and just this week, the Deputy Prime Minister, both of whom are instantly forgettable. Where this trend will end is anybody’s guess.
Back in America, the need for the infrastructure bill is certainly evident by the state of the roads, some of which are truly shocking. Given that this is a country that does not do public transport, it would have an immediate benefit.
Money also needs to be spent on the Pennsylvania Congress Hall, the birthplace of modern American democracy, where the paint is peeling off the windows, and the whole thing looks run down. If the mission is to make America Great Again, this would be a good place to start. Perhaps I should write to Donald.
A final thought from a northern Californian who appeared at lunch on Saturday. He reckoned that a lot of that region’s wineries had burnt down, (the buildings rather than the crops), and that combined with grape disease in Italy, means that the price of wine is going to rise over the next eighteen months. I am trying to get this verified, but it would make for a more interesting investment than Bitcoin, with the obvious advantage that should it not come to pass, you can drink it anyway.
–MORE ABOUT OUR GUEST BLOGGER, DAVID OAKES–
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.