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The Financial Ironmonger Blog No 10/2019

The Financial Ironmonger Blog No 10/2019

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 10/2019–

I went to an investment conference in London last week, more to catch up with some chums rather than in expectation of significant insight. On the main topic of the day, (for those that live in the UK), no light was shed on Brexit.

I spoke with three European managers on Thursday, who felt that falls in some of their stocks last autumn had been indiscriminate, and did not reflect the true underlying picture in the region. Well, things fall for a reason, and there are many canny investors out there that can exploit these anomalies, so a mental note to watch the data to see if there is improvement.

I did not have to wait long since the European Central Bank did a complete U-turn, and started printing money again, having slashed growth forecasts. Euro zone banks will now be flooded with cheap cash in an effort to stave off recession, a policy that is going to be place for at least two years. The blame for this downturn was caused by geopolitical uncertainties, protectionism and vulnerabilities in emerging markets, apparently, and nothing at all to do with the disastrous policies pursued by Europe in the ten years since the GFC. Needless to say, the currency collapsed.

A fund manager covering Asia reckoned that many of the countries in his region were in good shape, demonstrated by the fact that their government bonds yield far less than the American equivalents. He had two main concerns going forward. Firstly, global warming is going to have a big impact in certain parts of the region, leading to mass movement of people, since there is not the money to rebuild, or relocate.

Secondly, the rise of socialism, which could have a devastating impact on capital markets.

I thought that I would try this out when it got to Q&A with the chap from Wall Street. Fund managers get trained at the same school as politicians, and hate getting drawn in to anything apart from discussing their portfolio, or the state of the economy, lest their political views get ascribed to the “house”, which at all times, aims to offend nobody.

“Politics?”. No answer, but brain clearly working overdrive.

“OK, so will Donald get re-elected?”He is now hoping that one of his colleagues is going to set off the fire alarm, but still no answer.

“Do you think socialism is on the rise in America?”At last, safe to have an opinion. All 20 odd candidates that have declared for the Democrats are tacking either left, or hard-left, he said, and that increases the chances of Donald getting re-elected. One of the policies, not necessarily shared by all 20), is that instead of your corporation paying your healthcare premiums, they would send them to a Federal Fund, for central distribution.

He reckoned that this would be total anathema to people who would never even think of voting Trump, but on this one issue, they would hold their noses, and support him.

I am not sure that I have anything useful to add to the forthcoming week of  Brexit votes, assuming that they happen. The options seem to be no deal, no Brexit, and quite possibly no Prime Minister, but somehow there will be a resolution to the problem.

–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.