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The Financial Ironmonger Blog No 14/2019

The Financial Ironmonger Blog No 14/2019

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.


It is often said that a week is a long time in politics, and never more true is that than the one which has just passed in the UK, where the government has effectively asked the opposition what kind of Brexit deal they might like, and indicated that they might be prepared to go along with that. Of course none of the different factions can have what they want, which presupposes that the opposition have a coherent plan, in the first place.

The objective now, for both parties, is to avoid taking the wrap for what is likely to be a very unsatisfactory outcome, although neither are likely to escape censure at the ballot box. I will look at the latest situation before publication.

The other recurring theme of this blog is the internet, which will continue long after Brexit is a footnote in history. The best way to think of this is to think of those pictures of houses, indeed whole streets, being flooded after heavy rainfall. There is always some hapless interviewee explaining how it came as a complete surprise, with the water rising through the floorboards, and coming through the brickwork until the ground floor is swamped. Many properties are never restored; think here of empty high street shops.

Two examples this week, firstly Saga, which produced some dreadful numbers. The company was formed fifty years ago, packaging holiday trips for the over 55s in an age where travel agents ruled. Then it learnt how to cross-sell other services to the captive audience, including motor insurance, previously the domain of brokers.

The internet has vastly expanded the horizons of their audience who don’t want to be grouped with “old” people, and now organise their own trips to India, Africa or wherever takes their fancy. Insurance generated 68% of revenues in 2017, but fell by 10 percentage points last year, with further declines forecast. The culprit is price comparison websites. The “silver surfers”, back from their exotic travels, have plenty of time to search for the cheapest price, brand loyalty not being their problem. Hard to see a happy ending.

The other is Boots, the royalty of UK retail, having been around for more than 170 years, and occupying the very best sites. Now part of Walgreens Boots Alliance, the UK and US operations dominate the drugstore market where fat margins have been the order of the day for a long time. In both countries, they are now under pressure from governments that want to reign in budgets, as much as possible.

The diversified offering of non-prescription drugs, general healthcare, cosmetics and home appliances is under attack from every type of retailer, with supermarkets now opening pharmacies, wherever they can get licences, in what is still a highly protected sector. This is an example of the floodwaters coming through the floorboards, and the brickwork, and has profound long-term consequences.

Last summer, Amazon bought PillPack, which can deliver whatever medication you want from centralised locations, at keener prices. There are more than 100 million Amazon Prime members just to start with; one hour delivery times make this an unbeatable offering. Indeed, it is difficult to think of any sector that will not feel adverse effects, although butchers and bakers would appear relatively secure, for the moment.

Back to Brexit; as it stands, the UK will leave the EU on Friday, if no agreement can be reached with the EU, who are due to meet on Wednesday. They are keen to be seen as helpful, so the odds must be on some kind of fudge, which the Prime Minister is trying to organise with the Labour party. Reports suggest this includes remaining in a customs union, which would seriously hamper the ability of the UK to strike trade deals with other countries, and effectively renders the whole exercise pointless. Since Mrs May’s definition of Brexit changes by the hour, she would no doubt claim this to be a successful outcome, even if the voters disagree. This is the point of maximum danger, for both parties.

A poll last week shows that just 7% of voters feel a strong connection to their political party, whilst 40% are wedded to the side they backed in the referendum, according to the Spectator. Both main parties are thus deeply split, ever conscious of what happened to the Liberal Democrats, who joined the Conservatives in the 2010 coalition, claiming to be putting country before party, which led to their political oblivion.

It seems all but inevitable that the Tories are irredeemably split, but Labour could still escape such a fate, and for that reason, I cannot see them cutting a deal with May, even if she agreed to their mutually irreconcilable demands. Right now, she would agree to anything, having lost control of her party and government; in any other organisation, she would have been shown the door. Whichever side of the argument you are on, this is no way to carry on.

Meanwhile, for some light relief, turn to the forthcoming US presidential elections. The frontrunners, in the polls for the Democrats, are Bernie Sanders, (who has declared), and the even more popular Joe Biden, (who has not). Kamala Harris, (the blog tip), lies in third. Bernie can be dismissed as way too socialist, the equivalent of putting mustard on your toothbrush, for most voters.

Joe, however, is facing a storm of accusations from women who object to his overly tactile behaviour towards them for which, helpfully, there is miles of footage. He defends this by saying he is being judged by today’s standards, (which did not apply in the past), but for the Donald, he is now “Creepy Joe”, a nickname he is unlikely to be able to shrug off. A quiet retirement seems the best option, another scalp claimed by the master of US politics.


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.