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The Financial Ironmonger Blog No 12/2019

The Financial Ironmonger Blog No 12/2019

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.


In theory, in this penultimate week before Brexit, the Prime Minister should have attended her final Brussels summit on Thursday with both a Withdrawal Agreement and a future Trade Deal in the bag. After all, “nothing is agreed until everything is agreed”, you may recall. In reality, she was forced to ask for an extension to get the former over the line, whilst talks on the later have yet to begin.

Her third attempt to get a vote on Withdrawal was blocked by the Speaker on the basis that you cannot keep bringing the same thing to parliament, when it has been decisively rejected twice.  Her attempts to convince MPs of all parties to support her were showing signs of progress until she decided to insult them in a very tin-eared speech on Wednesday evening, and without that passing, there will be no extension beyond next Friday.

In the second paragraph of last week’s blog, I warned of the action the Speaker was likely to take, but the Cabinet minister, who was sent out on the media round last Monday evening, denied that there was any hint of it, “never saw it coming”. I suspect that some of the characters in this saga are going to be found to be seriously lacking, come the inevitable inquiry, but I guess it was always so.

I will add updated thoughts before publication.

The UK Brexit has been generating all the noise, and the global media attention, but the EU has been quietly turning the screws on Switzerland, because it no longer deems acceptable the old system of bilateral accords. Last December, they were told that unless they complied with the new regime by the end of June, trading and financial access would be gradually cut off, awkward when you are surrounded by EU member states.

At just 35 pages long, it is thought to be a mirror of the Withdrawal Agreement, except that it is permanent, and gives the EU jurisdiction over such matters as tax codes, state aid, farming and healthcare. The Telegraph reports that punishment starts with the loss of recognition for the country’s bourses, and then ratchets up, sector by sector, until the country is locked out of the EU’s economic system.

Such tactics are unlikely to bear fruit, not least because Switzerland has the strongest geopolitical links of any country; how would they have survived otherwise? They also have little time for their politicians, are mad keen on holding a referendum whenever, and surely will not buckle under this. And, if the EU is prepared to ride roughshod over past agreements, what value would you ascribe to any future offerings?

The worst kept secret in European banking was finally confirmed this week with Germany’s Deutsche Bank and Commerzbank beginning talks on a merger, not least to save either of them being subject to a foreign takeover. Whilst this might have political advantages, it is likely to cost 30,000 jobs. The history of such mergers is not good with competing cultures, and incompatible IT systems just the least of the problems.

The economy itself is in the grip of an industrial recession, and a no deal Brexit would destroy its exports to the UK, whilst the Donald is still thinking about imposing tariffs on car exports. Whatever springs up on the Brexit front this week, and something has to, expert Germany to be at the forefront of attempts to find a compromise.

Which brings us to the question of what is going to happen. It would appear that the House will be allowed indicative, non-binding, votes on at least seven different options before a Meaningful vote on the Withdrawal Agreement is rescheduled.

A separate, but linked, issue is who will be Prime Minister at that point. Most Tory MPs think that the incumbent should go, but are totally split on who should replace her. It would be foolish to try and predict, but this is the week when something must happen to change the present position, which is that we leave with no deal on Friday.


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.