Bath/Head Office & Unquoted Equity Team:
London Office & Quoted Equity Team:
Edinburgh Office & European Quoted Equity Team:
The Financial Ironmonger Blog No 22/2017

The Financial Ironmonger Blog No 22/2017

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 FINANCIAL IRONMONGER BLOG NO 22/2017–

The polls have been all over the place in this election, one of the most shambolic in living memory. It was neither wanted or needed, and far from demonstrating that Theresa May is strong and stable, (the chosen strapline), it has revealed her to be anything but. Even were she to win a thumping majority, the honeymoon she has enjoyed with the voters is surely over.

The most likely outcome is that she will gain between 30 and 40 seats, half from Labour and the rest from the SNP and the Liberals. For the SNP it will signal a reverse in their momentum for a referendum, and bring focus to bare on their poor record of governance, which may eventually prove terminal. The Liberals, having chosen to campaign against Brexit, have misread the mood of the electorate, and are likely to get thumped.

To the genuine surprise of all, the person to emerge with the greatest credit from the whole process is Jeremy Corbyn, who has defended his long held views with dignity, and avoided personal attacks. This is even more remarkable in the face of a very hostile media, and despite recently losing a vote of confidence by his own MP’s by 80%. If the above projections are half right, he is not going to be ousted anytime soon.

This week, I have been in the North East, the North West, and the South East of England, but nowhere do I detect a flicker of interest in the election, outside the media bubble, who I suspect have grown bored of it as well. In this respect, it is different from both Brexit and Trump, where people had very definite views that they were, largely, unwilling to share. I suspect that minds were made up a long time ago, and that will be reflected in a low turnout.

Thankfully, it has not descended “in to the weeds” as my American friends would describe it, bar the disastrous social care policy; no one thinks that we will have Prime Minister Jeremy by this time next week, so his offerings are not credible. The Conservatives are running the line of steady as she goes, with a strong captain at the helm, which is as much detail as you need to know, dear voter. And none of the other parties has any hope of power, so there is nothing to see here; move along.

Nevertheless, expect to see some scaremongering about a Labour/SNP coalition in the final run in to Thursday’s vote. I do not know why the politicians treat the electorate as being so stupid when self-evidently they are not, most having chosen not to be politicians.

Across the pond, the world’s No.1 politician, the Donald, has decided to withdraw from the 2015 Paris climate accord, which is either disastrous, or of no significance, depending on your point of view. Apparently, this entails a four year cooling off period, by which time he may well be out of office, anyway.

 The advance of fracking, solar and wind energy, together with electric cars, has considerable momentum, and before long will reach a point where the economics become unstoppable, rendering the accord redundant. But, if global warming continues, and higher sea levels result, one of the most vulnerable places is New York, where subways would fill up, and streets flood, dramatically reducing the value of his real estate; self-interest will win out.

Whilst such things are speculation for the future, the fragility of existing arrangements was amply demonstrated by the failure of British Airways systems last weekend, grounding most flights from Heathrow and Gatwick. Basically, all the different component parts stopped speaking to each other, so whilst there were planes on the ground, together with the crews necessary, the passengers could not check in either themselves, or their luggage.

This has been blamed on a “power surge”, denied by the electricity suppliers, but what of the backup systems, which are meant to kick in? Even this £400 domestic computer, on which I type, has a surge preventer. Now we are told that some spotty youth turned the thing back on too quickly, causing untold damage to the hardware.

Long after this becomes a business school study of appalling public relations, (which it surely will be), their website suggested that disgruntled passengers seek compensation from their travel insurers, rather than the airline, an idea quickly dismissed by their industry association. Insurance is for the unexpected events, not to cover up the gross incompetence of others. The bill is thought to be £100mn, and rising, with the cost, reputationally, far worse.

–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.