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The Financial Ironmonger Blog No 13/2019

The Financial Ironmonger Blog No 13/2019

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 Mueller report in to Russian interference in the 2016 election was finally published last weekend, or more correctly, a four page executive summary which totally vindicated the Donald, as he was quick to point out. Those that hate him have pinned their hopes on the opposite outcome ever since he was elected; he, and his gang, were to be found guilty, thrown out of office, and preferably jailed.

Now the tables are turned; he is a very bad looser, and not much better as a winner, and he is going to go after all those who have sought to destroy him. He could start with the “Russian Dossier”, paid for by the Clinton campaign, and no doubt there will be many other targets. Far from achieving their desired outcome, here is conclusive proof that the establishment was out to get him, a message he will take on the campaign trail, reinforcing his voters’ views.

Which leaves the Democrats a short space of time to come up with a different message other than being anti everything. Higher taxation, together with nationalisation, is not likely to cut the biscuit.

Talks rumble on about merging Deutsche Bank with Commerzbank, focusing now on the need for additional capital, thought to be between 3 and 10bn euros. At the upper end of the range, it would equate to about 40% of the combined market capitalisation. Some 15% of Commerzbank is owned by the Federal Republic of Germany, (the Government), which is slightly awkward given that in other bank bailouts across Europe, the Germans have insisted that the shareholders and depositors must bear the pain, and there must be no state aid.

No doubt they will find a way round this minor embarrassment, but just chucking money at it does not make it a good idea. Deutsche has raised some 30bn euros since 2010, the most recent issue being 8bn in March 2017.

Further evidence of the destructive powers of the internet on the high street was provided by the announcement that Majestic Wines are to close their retail offering, and move entirely online through their Naked Wines subsidiary, acquired just 4 years ago. Some 45% of their turnover is now online, and presumably they want to dump the physical presence before it becomes loss making. The plan is to sell as many shops as they can, and close the rest.

The supermarkets have upped their game in this category, as in so many others, but it is a brave move to abandon half your turnover, given that many of their customers will be impulse buying, rather than deferred delivery via the internet.

I write this on the day that the UK should be leaving the EU, but political chicanery has now delayed this until April 12th, and maybe long after that, depending on events leading up to that date. To get a further extension, there would have to be major changes involving a new proposal, and a general election, or a referendum. As a sideshow, we would have to field candidates in the EU elections on May 24th, not desirable for either the EU or the UK.

There is no clear outcome in view, but if any solution which commands a majority in the house can be found, it would have to be approved by a special EU Council on April 10th. The most likely runner is some form of customs union, which would still leave the UK free to pursue third party trade deals with countries such as America, but that seems wishful thinking.

Otherwise, April 12th looms as exit day, with no deal, which would be disruptive rather than catastrophic. This should have been the base negotiating standpoint at the outset, but it will be up to the historians to debate that.

In the meantime, expect many more twists and turns before this one is resolved.


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.