Bath/Head Office & Unquoted Equity Team:
London Office & Quoted Equity Team:
Edinburgh Office & European Quoted Equity Team:
The Financial Ironmonger Blog No 46

The Financial Ironmonger Blog No 46

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 46–

The FBI decided to wade in to the American elections last Friday, which has subsequently caused a large drop in support for Hillary Clinton, who appeared to be on the home straight, well ahead of Donald Trump. The investigation centres on the use of private servers at her New York home whilst she was Secretary of State, an astonishingly naïve act. More than half the e mails have been destroyed by her lawyers, on the grounds that these were private, but it is quite possible that they were automatically copied to her closest advisor, Huma Abedin, who was married to ex- Democratic Congressman, Anthony Weiner.

The pair were introduced to each other by the Clintons, a classic power marriage, where Bill even conducted the service. Despite his inbox containing 650,000 e mails, he found time to send highly inappropriate texts to a 15 year old girl, hence the authorities seizing his computers, and phones. Maybe the e mails that Clinton thought to be destroyed are in this haul; meanwhile, Weiner is thought to be in a rehabilitation facility in Florida, which might just keep him out of the limelight until next Tuesday is past.

It would be ironic, however, if the potential Clinton presidency was sunk by a sex scandal.

The problems are not confined to the Democrats; Trump is due in court on November 28th, POTUS or not, over his university, which failed to deliver, but this is a civil case, where the plaintiffs are seeking to recover $40m. You could not make this stuff up, and you have to wonder how a country can unite after such a divisive vote.

On which point, the High Court ruled, on Thursday, that the UK government must get parliamentary approval before triggering Article 50, the exit route from the EU. Whilst there will be an appeal, there is no way that parliament would vote against, but it does show how difficult these negotiations are going to be, even before we start trying to put a deal together with the remaining countries. Sterling had a brief bounce on the news, whilst domestic orientated equities picked up. It got no better on Friday, when a Conservative MP resigned, complaining about a lack of consultation.

Earlier in the week, the Governor of the Bank of England announced that he would be staying on for an extra year, but two years less than expected. In the unlikely event that Brexit goes according to plan, he will leave in 2019, having achieved pretty much nothing.

Maybe that is what is needed; plenty of countries limp along with little or no functioning government, as would happen if Hillary Clinton gets elected. Alternatively, should it be Trump, it would send a strong signal that status quo rule by the establishment has disadvantaged many people, up with which they will no longer put. It is a vastly more complicated issue than that, centred on the deflationary effect of the internet, and subsequent globalisation.

President Obama offered hope, but the life chances of the poorest are worse than when he started. Trump, likewise, promises to bring back the jobs that have been lost in basic industries, but that seems a tall order. Former miners assembling Apple phones in rural Pennsylvania is not going to happen.

I commented previously on the bankruptcy of the South Korean company, Hanjin, which was the eighth-largest container shipping company, and how this might bring some normality to an industry suffering overcapacity. This was borne out on Monday when Japan’s three companies agreed to merge, so there are signs that the background is improving, confirmed by AP Moller-Maersk in their Q3 results. The CEO even called the bottom for rates, but the shares still sank like a stone. 90% of freight is shifted by ships, so this is a sector to watch.

The short term focus, however, is this Tuesday; the choice between the continuation policies of Obama by Clinton, or the rollercoaster ride inferred by Trump. I have to come to a view as to which is going to prevail between these two hopelessly unsuited contenders.

My judgement is based on the ongoing actions of the FBI, which has changed the odds, dramatically. Hillary has a very good CV for the job, buckets of experience, but ultimately her married name, and the ongoing investigations will render her powerless. From a UK perspective, imagine Cherie Blair now leading the Labour party, somehow pretending that nothing has changed.

Trump has challenged that orthodoxy, breaking all the rules along the way, and has said much that needs saying, if you filter out the stuff best left unsaid. I think that he will win, but either way, politics in America, and indeed elsewhere, will never be the same again.

–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.