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The Financial Ironmonger Blog No 19/2019

The Financial Ironmonger Blog No 19/2019

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.


Good GDP figures for the first quarter, in the UK, soon descended in to a row about what they meant. Growth of 0.5% between January and March was respectable for an economy supposedly in total paralysis on the eve of Brexit, on March 29th, which of course never happened. However, that did not become obvious until the date was upon us, so it is safe to assume that people were making decisions based on it actually happening.

Manufacturing was the strongest sector, growing by 2.2%, whilst the much larger services sector rose 0.3%. The former may be attributable to stockpiling, ahead of that date, but a closer inspection of the figures reveals that most of that increase was due to imported items, but however you spin this coin, companies clearly judged it worth having either components, or finished goods, readily available. It would follow that they clearly expected to be able to trade with overseas customers, post Brexit.

The services number is also encouraging, representing more than 80% of the economy; difficult, after all, to stockpile haircuts and insurance policies, amongst other things. Curiously, the weakest part was agriculture, fishing and forestry, which fell by 1.8%. You may recall dire warnings that supermarkets were to have their shelves stripped bare within a couple of days of leaving, but food manufacturers clearly thought otherwise, and produced less.

Maybe they had already heard that the warehouses were full to bursting, and there was no room for essential supplies of condensed milk, or whatever else was to sustain an enfeebled population, or more likely, they just ignored the politicians, judging that we could get by without their help.

The next scheduled date for leaving is October 31st, unless a cross-party deal is agreed before the European elections on May 23rd, in which case it may be August 1st. Under this unlikely scenario, the MEPs elected on the 23rd would not be able to take up their seats, a matter likely to head for the courts should the Brexit party gather the largest number of seats, as predicted, if not an overall majority.

The more serious point is that those companies who have strained their cashflow by stockpiling in the run up to March 29th will now have to decide whether to run down their positions over the summer, and rebuild them in the autumn, or to change tack. The further complication is that warehouse space, in October, is pre-booked for all that stuff without which Christmas cannot happen, such as imported decorations.

Maybe, should the Donald proceed with his trade war with the Chinese, the economy will look in a different position by then. Headline figures of $200bn of tariffs sound shocking and produce pages of copy as to why the global system, as we know it, is about to come to an end. Sure, they have a negative impact on specific parts of certain sectors, such as American exports of soya beans, but it is difficult to find any rational commentator who thinks that there is anything other than a very marginal impact on an economy, growing at 3.3% per annum, and showing no signs of slowing down.

Getting even with the Chinese was one of the messages from the election stump, dismissed at the time as just part of his isolationism, although the idea that other countries were stealing American jobs certainly rang true amongst sections of the electorate. Now it seems to be the Number One subject in Washington, with the Democrats more enthused than the Republicans, presumably not realising that it plays straight in to his re-election campaign.

Not that anyone in the UK can offer any sort of criticism of other countries’ political system. The American”deplorables”, (remember them?), have now translated to the “village idiots”, (anyone who supports Brexit), according to one MEP candidate, who then furiously denied the comment, despite the recording being played back to him. Idiot.

However, the real problem is that there are now more idiots than there are villages, the old ratio of one to one having been abandoned in the quest to build new homes, thus turning them in to towns. The ensuing glut has either been elected to Westminster, or are determined to be so, a movement endorsed by many other democracies.

I offer you the forlorn hope, that hell-bent on self-destruction, they might just succeed, and leave the rest of us to get on with life.


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.