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 33/2017–
I am usually to be found away from my desk in August, so I had forgotten how quiet, and indeed silly, things become in markets and politics. 24 hour news journalism abhors a vacuum, and leads people to make mischief.
President Trump condemned all parties involved in the violent clashes that took place in Charlottesville, Virginia, at the weekend, as did Justin Trudeau, Prime Minister of Canada, the pin-up of the Liberal elite. Eventually the Donald was forced to call out the Ku Klux Klan, neo-Nazis and white supremacists, whilst no such demands were made of the Justin, who has managed to hold on to his saintly image rather better than Macron, in France. I suspect that this is due to the relative strength of the economy, which means he can swan round the place doing nothing, and reminds me of another prominent Canadian rather closer to the UK.
Away from the noise, the US consumer seems to be quite happy; true, the malls are suffering from lack of footfall as consumers increasingly shop on online, with internet sales growing at an annual 10% pace. Retail sales, excluding autos, are up about 3.5% from a year ago, whilst in the second quarter, spending on motorcycles was up 9%, small planes 16%, and pleasure boats 22%. Whilst these are hardly normal consumer items, on a wider basis, spending was up 13% at theme parks, so maybe people are going there rather than shopping. These are hardly the results you would expect from an economy that is struggling, but clearly it is in transition.
Imagine how much better it would be if there were meaningful cuts to tax rates, and labour regulations were reformed; thoughts of that drive the market upwards, and the Donald could assist the process, or just get out of the way. Either would be very beneficial.
There remains the problem of those who have little or no financial stake in the system, and this is where the easy fix of raising the minimum wage bumps in to the law of unintended consequences because the employer turns to automation, wherever possible. Thus the jobs are not being taken by Muslims and Mexicans, but by microchips. Another example of this rule is the work being done by the Gates foundation, which is investing billions in Africa, trying to raise living standards. Where successful, it has allowed the locals to buy mobile phones, and to save enough to pay the traffickers to get them to Europe. The only answer, in America, has to be getting them to work on updating the infrastructure.
–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.