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The Financial Ironmonger Blog No 28/2017

The Financial Ironmonger Blog No 28/2017

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 28/2017–

The travails of Trump have far exceeded his travels this week, as he has criss-crossed the Atlantic firstly for the G 20, and then back to Paris for Bastille Day celebrations. The G 20 was never going to go particularly well, given that he thinks, rightly, that Europe should pay more for defence than it does. And his relationship with both the Chinese and Russians is ambivalent, at best, but he is learning that running a country is very different from his background of absolute control of his property empire, and reality TV star, where he was in total command.

The quandary is that he was elected as the chaos candidate, vowing to drain the swamp, but despite his victory, vested interests were never going to let that happen, which is starting to play out. The latest leaks are thought to have originated from the security services, with whom he has a running battle, but the basic problem is that his style of management is fundamentally unsuited for the office that he holds. All political parties are a coalition round a common thread, and the Donald is not interested in consensus; he has never needed to be, and that is not going to change.

Whilst his position looks somewhat beleaguered, his supporters remain onside, and there is a real possibility that the relentless negativity of the Democrats will backfire on them. He has consistently warned of the perils of unlimited immigration of people from Africa, and the Middle East, only to be branded racist.

Recently, the President of the European Parliament, Antonio Lajani, predicted an exodus from Africa of “biblical proportions” if immigration is not limited, whilst the new, squeaky clean French version, Emanuel Macron predicted much the same. Even Bill Gates, (the founder of Microsoft), who has chucked more money at underdeveloped countries than most, called for turning back boats of would-be migrants in the Mediterranean. Austria are having none of it, and have simply built a wall round their country, contrary to EU rules on free movement, an idea they might have learnt from elsewhere.

The Donald may, therefore, be ahead of the game, even if Washington does not want to play. Next year, there are mid-term elections, and then battle is re-joined for the 2020 Presidential campaign, for which the Democratic candidate seems to be Bernie Sanders, (defeated for selection by Hillary Clinton), and who sits as an independent. He would be 79 on polling day; just saying. They need to move on and stop carping at Trump. Easy target he may be, but they need fresh ideas if they are to make progress.

Here in the UK, we have a similar problem of a leader in office, but not in control. Theresa May tried a reboot this week, but as any IT specialist will tell you, simply turning the thing off and then on again is unlikely to solve deep seated problems. Her ill-fated election campaign showed that far from being a principled, strong politician, she was no more than an empty vessel, albeit possessed of a minor tear duct, we were allowed to know.

My understanding is that far from a tear shed at tea time, this is a continuous waterfall, and with her credibility shot to pieces, you have to wonder how long she can continue, or why she would bother. Some think that delivering a successful Brexit will define her term, but the definition of that is highly subjective, and still a long way off.

I suspect that she will be gone soon, forever linked to the pictures of the Grenfell Tower, the abiding image of her time in control. Grossly unfair, but politics is a filthy game, and often a zero sum one, at that.

Back in what still counts as the real world, (just), Royal Bank of Scotland has agreed to pay £4.2bn compensation to the Federal Housing Finance Agency having sold them duff mortgages prior to the crash. Initially, the shares rose on the news, since it was not as much as feared, but soon slumped when it became clear that a further £3bn has been set aside for fines which have yet to be imposed.

Last month, they closed the branch in the village, following HSBC who left last autumn, so now there are none. Oh, and the baker closed in November, and the shop selling pushbikes last month. In their place, a shop retailing impossibly expensive candles has opened, presumably anticipating the point where we all have electric cars, but not enough power stations, a lack of investment caused by an idiotic price cap.

Last week, an upmarket tailor moved into the next unit, so you can now have a suit built in this small Cheshire village. I am not sure this is going to work; the locals only wear such garb for matches and dispatches at church, and most of that will not have troubled a craftsman.

I have spent the week trying to get to grips with Alternative Reality, which is apparently the key driver of the next I- phone, due out in the autumn, which might be a really good thing, since I will no longer have to make sense of what constitutes this world.

–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.