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 29/2017–
Mid July is usually the time when parliament goes in to recess for the summer, markets tend to go quiet, and people head off for either the beaches, or the hills. Much the same happens in most countries round the world, although the Donald wants to get his Obamacare repeal bill through before everyone leaves. There was little chance of that happening and now John McCain is seriously ill, reducing the majority in the Senate to just one.
Just as the end of term mood started to take hold, the BBC was forced in to revealing what the star presenters get paid. Whilst it does sell some of its output worldwide, the vast majority of its income is raised directly from the taxpayer in the form of a tv licence, which costs £147 per annum. It is a criminal offence not to buy one, and some 800,000 are prosecuted each year, jamming up the legal system.
Much like the NHS, it has built a halo of invincibility around itself, impervious to any sort of criticism, and totally undemocratic. The only people that can call either institution to account are the politicians, and there are no votes in doing so. With their income bases secure, they behave like any monopoly; most of the troops are paid an average wage, whilst the real spoils go to the people at the top of the pyramid.
Some of the amounts are eye watering, with one newsreader being paid £500/- for just spouting what is on an autocue. Obviously, you have to turn up on time, sober and then concentrate, but that seems to be the case for most jobs these days. However, it is not just the very excessive amounts being dished out that has caused an uproar, but the revelation that women doing identical jobs are paid a fraction of what the men earn. Not surprisingly, equality lawyers reckon that Christmas has come early.
The excuses offered are pathetic. Apparently, such people are paid vastly more in America, which is true, but they are employed by commercial stations, which live or die by their ratings. Predicting the demise of these organisations is risky, since they are deep in the woodwork, much like dry rot, but eventually someone will kick away the crutch which is the licence fee, and then they will have to sink or swim on their merits.
The only other show in town is the ongoing Brexit negotiations, which seem to be as much on track as any optimist could hope for at this stage. Clearly, the EU is not going to make this an easy process, to ensure that they do not have to repeat it, but it is down to money, and access. It is proposed that any UK citizens living in Europe will only have the right to remain in the EU state that they currently live in, whilst the European Health Card Insurance scheme would cease to apply. Fine; on 2016 figures, it cost the UK £600mn a year.
The real problem is that we pay in £10bnmore than we take out, second only to the Germans, and thus there is a big hole in the budget; the system is propped up by the cross-continental redistribution of wealth, avoiding any political accountability. Thus the need, or requirement, for a big exit bill, which apparently takes no account of the assets that we have contributed to in the EU, such as the buildings in Brussels. Political posturing soon gets reversed; it can be no surprise that the young are so sceptical, and fluid in their intentions. Capitalism might be greatest system in the world, but if you have none, and no chance of getting in to the game, it is a sideshow.
All these ideas, theories, and thoughts have a base limit, which is the ultimate clash with reality. It was said that no battle plan ever survived the first shot, and any of you who have ever been either side of a five year business plan will recognise the stretch of credibility.
Meanwhile, the Donald is looking to hire 70 workers for the winter season at Mar-a Lago, his Florida club. He needs 15 housekeepers, 20 cooks and 35 waiters and has applied for H-2B visas, which would allow him to bring in foreign workers for these posts.
Presumably he has forgotten his inaugural address in which he promised that the country would “follow two simple rules: buy American and hire American”. And as the week came to a close, there was a further vacancy to fill, that of press secretary in the White House. Never a dull moment.
–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.