Bath/Head Office & Unquoted Equity Team:
London Office & Quoted Equity Team:
Edinburgh Office & European Quoted Equity Team:
The Financial Ironmonger Blog No 45/2017

The Financial Ironmonger Blog No 45/2017

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 45/2017–

Oh for the smack of firm government, and I am not thinking of our own, or the curious construct that inhabits Washington. My man in Florida reports that the average Jo is counting on these tax reforms getting through, and if the GOP cannot cut taxes, you might question their purpose, but, as ever, it is not as simple as that.

No, I am thinking of Mohammed bin Salman, Saudi Arabia’s crown price who gathered most of the powers of state to himself, and promptly detained his main opponents, on grounds of “widespread corruption”, and other coverall charges. The best they can hope for is some kind of plea bargaining deal whereby they can hang on to some of their wealth whilst accepting eternal banishment to those wretched dunes.

This is the same chap that tried to impose order on OPEC, which seems to have borne fruit, finally. The oil price is up some 40% since June, the supply sector seems to be on fire, in terms of activity, and the frackers must think that Christmas has come early.

Importantly, the Donald is a major supporter, which might be a step in trying to get the Middle East stabilised, at the very least. Firm government, however, is a double edged sword, particularly in this week when you could celebrate the centenary of the Russian Revolution on November 7th and 8th, and the anniversary of the fall of the Berlin Wall on the 9th, the latter being a direct consequence of the former. And all before the advent of mobile phones, on which there is no doubt an app for rent a mob, subject matter to be decided later.

Such appeal to the masses has not worked for the Catalonians, whose leaders fled to Brussels, and have now handed themselves in to the authorities. As I pointed out last week, it is difficult to think of anywhere that would be less sympathetic to their views, since it would involve leaving the euro, and place serious strain on the banking system. The very clear message is that no country, or part thereof, is going to be allowed to leave the currency union, whatever. Ask Greece.

It is not even clear that the majority of Catalonians want to leave, indeed the opposite. Both sides have handled this very badly, need to step back and take stock. Locking up these miscreants for thirty years will have the same effect as throwing petrol on a bonfire, to the benefit of no one.

Meanwhile, back in the UK, another government minister is forced out for an act of gross stupidity, bordering on treason. That is two in two weeks, and it is starting to resemble one of those reality TV shows, where a contestant gets chucked out every episode. Paradoxically, the weaker the government gets, the stronger the Prime Minister’s position since no one wants to bring on a leadership election, let alone a general one.

The next scheduled episode in this everyday drama is the Budget on Wednesday 22nd, where the Chancellor faces demands from all sides, and it does not look like he has much to play with. Reports suggest that he is not prepared to let the PM see the contents, which brings back memories of the Blair/Brown years, which didn’t end too well.

There is a real risk that it will be another fiasco, like the one in March, and with backbenchers feeling increasingly empowered, there is a possibility that the resulting Bill will not get through parliament. Queue chaos.

What I find depressing is that for those of us who live in the real world, it is unimaginable that a Finance Director would not share a company’s results and forecasts with the CEO, albeit that there might be some artistic licence along the way. Why people who govern the country think that the normal rules do not apply to them is a mystery, much as they regard the laws of gravity only hitting those outside the Westminster bubble.

The voters have demonstrated that they know better, in numerous elections, over the last twenty four months, but the politicians still don’t get it. Something, anything, will turn up to save them, much as if you play the film Titanic in reverse, it ends with a very jolly launch party in Belfast. The more pragmatic would suggest that everyone on board had five very good days, despte the outcome.

–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.