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The Financial Ironmonger Blog No 44/2017

The Financial Ironmonger Blog No 44/2017

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.


Part of the attraction of returning to Venice is that nothing much ever changes, which has benefits in an increasingly unstable world. No doubt some analyst would describe the activity, of constantly returning, as an escape valve, and if that is the case, it comes highly recommended.

The buildings are pretty much what they were three hundred years ago, and are likely to be the same in three hundred years time, barring some totally avoidable stupidity. A long range forecast on which I cannot be proved wrong.

Obviously, things change at the margin Gas, electricity, running water, boats with engines, and those wretched phones. Eighteen months ago, they were useless at helping you navigate the narrow streets, but now they work. The streets remain as narrow as ever, but are now blocked by idiots looking at screens, to the evident frustration of the locals, who need to go about their daily business. Visit the areas where they live and there is much graffiti about banning tourists, a typically socialist solution.

The locals are being driven out by the house prices, which is a second home problem, (as in Cornwall), rather than a primary one, like London. The Channel Islands have a two tier pricing system, and New Zealand have banned the practice altogether, but Italy is locked in to the EU, and the Schengen agreement on free travel without borders, which covers some 400mn people.

Thus, an idea to install turnstiles at the entrances to the City was deemed illegal, but it would have raised taxes, and controlled numbers. Talking of the latter, Austria, Denmark, France, Germany, Norway, Poland and Sweden closed their borders on a “temporary” basis, in 2016, clearly illegal under this agreement, but if you run the show, you can invent your own rules.

A point clearly missed by the UK Brexit negotiation team, who continue to think that they are acting in good faith. The Italians, in whole or part, are in no position to put pressure on anyone. The referenda, conducted a week last Sunday, was a legal vote, the outcome overwhelming in this particular region, but both sides regard it as advisory, and know that it will lead to a marginal shift of powers, at best. A national “pat on the back” for your efforts, duly noted, but hey.

Underlying this is the weakness in the banking system, plagued by non-performing loans, resulting in dreadful balance sheets. The ECB has carried on buying as much of this debt as it can, and thus the project will survive. The Spanish situation is not that much different, Catalonia being too far enmeshed in the system to ever escape.

The government has handled this so badly, sending in riot troops, whereas a more conciliatory approach would have defused the situation. On a turnout of 43%, 90% voted for separation, hardly an overall majority. The leaders of the movement have fled to Brussels, HQ of the EU, hardly the sort of place where they would get any sympathy for their views.

Meanwhile, I am out of the country for 10 days, just ten, and I return to find that interest rates have doubled, and the Tory party are engulfed in some sex scandal. The former will be of far more interest to most people than the latter; as I commented last week, there is a whole generation of people who have never known anything different, but it is long overdue. At the edge, it may have some balancing outcome on house prices, which have been soft in the London area, but that is for many different reasons, not least punitive stamp duty, and the fear that many high end, city jobs, will move in to Europe as a result of Brexit. It does not alter the fact that some 95/- people moved to London last year, whilst less than 7/- new homes were built.

It is hard to remember the last government that was not consumed by some kind of sleazy scandal, be it sex or corruption. The latest allegations seem somewhere north of infantile, and yet the Secretary of State for Defence has resigned because he cannot recall which are true and which false. Allegedly.

There are many serious issues facing the world in general, and individual countries in particular. Every voter is entitled to expect that their elected politicians should behave in the wider interest, rather than their own narrow ones. Otherwise, I am with Ruth Davidson, leader of the Scottish Conservatives, who wants the stable cleaned out, totally.

Not that delighted to be back, since you ask.


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.