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The Financial Ironmonger Blog No 7/2017

The Financial Ironmonger Blog No 7/2017

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.


On Friday morning, news came that the American company Kraft-Heinz was bidding £115bn for Unilever, one of the largest UK companies. Should the offer go through, it would be the second largest in history. I imagine that various competition authorities would want to examine it closely, and certainly, if it was a French company, the government would simply block it. I seem to remember similar noises about having a “national interest test” in the UK, but I am not sure that it came to anything.

This is the second large bid since the referendum vote, and shows how vulnerable companies are following the collapse of sterling. The shadow boxing around Article 50 continues with each side positioning itself, and trying to work out where the red lines might be. The UK position on the divorce payment is that we want a share of the assets as well, presumably office blocks in Brussels, of which, I am told, there are more than 90 devoted to the cause.

The red line coming from the EU this week is that there will be no access to the single market, in whatever form, unless the UK agrees to stay within the Common Fisheries Policy. The territorial waters were recklessly negotiated away by Ted Heath in 1973, leading to a total decimation of the fishing fleet.

In the waters previously under UK control the share of the catch in the North Sea is 20%, the Channel and Irish Sea 19%, whilst West of Scotland it is 32%. For UKIP, it is an absolute red line, and for many others, it is a totemic sign of all that was lost to the EU. Coal, steel and shipbuilding industries were lost to lower cost producers globally, wiping out whole communities, particularly in the North East. The fishing industry was destroyed by politicians alone; after decades of backsliding, they eventually agreed a compensation scheme. Many people would relish the opportunity to rebuild what was once there, and not just for nostalgic reasons.

West of the great fishing ports of Hull and Grimsby lies Doncaster, which because of its geographical position, has been an important trading post, and distribution centre, since Roman times. The coal mining has long gone, the jobs replaced by those in massive warehouses, including one run by Amazon. Since everything including property and people costs much more in London, they have decided to buy the old HS 125 trains that used to run on the East Coast Mainline, strip them out, and use them to run parcels in to central London.

People who can think round corners such as this should be in government, commented one blog reader. However, it does highlight the shortage of inner city space for these kinds of activities, which would tend to suggest that free home delivery will be under the same threat as local branch banking. Maybe they could use the redundant ones as pick up points.

Here in Venice, home delivery has not really caught on, not surprisingly, given that everything has to move by boat, although both UPS and DHL run services. Rubbish is collected every day, bar Sundays and holidays, with Monday, Wednesday and Friday designated for recycling cardboard. Compliance is extremely high, and thus the old and the new manage to co-exist.

Airbnb, and other rental platforms, are not so easily accommodated. Cheap money, and the ability to rent out an apartment without effort, is changing the structure of the few neighbourhoods that the locals still inhabit, and as we have seen before in Dublin, London and elsewhere, key workers can no longer afford to live in.

I went to a local pizza restaurant on Thursday evening, which has been family owned for 25 years, the last five by the new generation. The chap who runs it, apart from inventing all the different types of pizza they offer, has self taught himself five different languages, and yet his takings are down 40% in the last six months. So, we debated this; it can hardly be down to political uncertainty in a country that has had at least 65 governments in the last 75 years, or currency fluctuations.

Eventually, he reckoned that it was the Airbnb effect that was changing the shape of the area, fewer locals. And Tripadvisor, where his restaurant is highly rated, brings large groups of tourists, (hence his 5 languages), but drives away the locals, who hate the rowdy behaviour that comes with mob movement. It is astonishing how badly people think they can behave in other countries. Whilst the locals still come, it is only for a drink whilst their take away is prepared; this is no use, since the margin lies in the extras, such as salad, wine and coffee.

Ten years ago, as a junior waiter in one of the smart hotels in this city, he cleared 3,200 Euros a month, a figure never seen since. We might relish the opportunities that the internet has brought to us, but equally we should recognise that it has profound, unintended consequences, including hollowing out parts of this unique city.


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.