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The Financial Ironmonger Blog No 12/2018

The Financial Ironmonger Blog No 12/2018

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 12/2018–

The Donald has duly announced $50bn in trade tariffs against China, which was widely flagged, and less than thought, and probably targeting mobile phones. The deficit with China last year was $375bn, and the total with all trading partners was $800bn, although these figures are widely disputed. Should there be retaliation, it will be against agricultural products, and aircraft.

The equity markets don’t care for this type of stuff, albeit that a trade war is better than a physical one. America are looking for “reciprocal” trade terms for their companies, so this is probably an attempt to get proper negotiations going, having been fobbed off for years. Certainly, the recently announced tariff on steel and aluminium imports has been much watered down.

The Fed raised interest rates this week by 0.25%, and indicated that there would be two further increases this year, and three next, whereas the market was braced for four, and then two. This move towards normalising the backdrop should be welcomed, indicating that economic conditions are improving, even if political ones are not.

The New York Times has teamed up with the Observer, and Channel 4, to investigate Cambridge Analytica, the mysterious company behind the Trump win, if you believe this theory. By harvesting the data of millions of Facebook users, they could profile them, target advertising at their specific points of interest, and somehow bend their minds to voting for the Donald. None of this is news. Without much effort, I found an article dated December 2016 explaining the idea.

Obama tried similar tactics in 2012 as Clinton did in 2016. The best that can be said is that the research indicated where he should concentrate his efforts in the final push of the campaign, and that worked for him. Ultimately, the election was decided by the cumulative votes of less than 100,000 people in Michigan, Wisconsin and Pennsylvania. Clinton had access to the same data, but stayed home. The idea that Cambridge Analytica are mind -readers or brain-washers ascribe to them powers that they simply don’t have.

It is an advertising agency, spawned in a digital world, and they may have better techniques than traditional media, but the idea is the same, which is to influence outcomes. It is all about gathering data, and everyone is at it. In the UK, most supermarkets have loyalty cards, and the consumer is then sent offers that would be most appealing to them, an idea that must be twenty years old.

Before you can complete a booking on Virgin Trains, they enquire as to the purpose of your journey, on business, going to see friends etc., or no comment, but the dropdown has to be completed. Everyone is after your data, end of. Which is how Facebook is financed, and many others. It is naïve to pretend otherwise. Banner advertising is an extension of this, annoying as it is.

Occasionally, I contribute to tripadvisor, reviewing hotels, or restaurants which have been good, and they send me a monthly update on how many followers I have, and other information. At the end of February, there were 40,124, which I should convert to blog readers. This has a downside; having recommended my favourite bar in Venice, which has but 36 seats, it is now swamped, not least by the 5,854 loyal readers, who have read that review, and who have no doubt told their friends. Grr!

At the bottom of this monthly update, they asked me to review Flat Iron Covent Garden, and the Cross Keys pub. The former is brilliant, but you cannot book, so when I turned up, at 18.00, they indicated a wait of 90 minutes, after which they would text you. That was the only contact information I gave them. As to the Cross Keys, I simply put it in to Google to find a phone number, so how do tripadvisor know this?

Cambridge Analytica seem to have overpromised, and maybe people have been naïve in giving their details to facebook, and others, but big data is the thing, along with AI. Of our 650 MP’s, 30 have a science background, so you can be assured that they will be way behind the curve on this. As to data protection, it is each to their own.

Meanwhile, the Brexit negotiations have entered the next phase, which is trying to sort out a free trade deal, the point at which the politics takes over from the economics. The border issue in Ireland is a non-event, given that exports from Northern Ireland to the south represents 5% of GDP, whilst those flowing the other way amount to just 1.6% of total Irish exports. Think milk, cows and sheep. That is about it.

It clearly suits EU negotiators to keep this as a big, unsettled issue, to gain leverage in other areas. With just a year to go, expect it to get tough.

–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.