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The Financial Ironmonger Blog No 20/2019

The Financial Ironmonger Blog No 20/2019

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 20/2019–

Those hoping for some clarity on the Brexit process finally got their wish this week; well, sort of. The government, in the form of the Prime Minister is to bring back the Withdrawal Agreement, this time in the form of a Bill, in the first week of June, so that parliament can have a fourth vote on it. The idea is to scare enough of its’ opponents in to voting for it that it will finally happen.

This is foolhardy, to say the least. The opposition will not vote for anything put forward by the government and given that the slender majority depended on the DUP, (since retracted), it is sunk. Many conservative members have hardened their resolve, as the ratings collapse in the polls, so the end result is that she will leave office in the first week of June.

This neatly coincides with a visit by the Donald who told her, on his last visit, that her negotiating tactics were rubbish, not that there is any love lost between them. By then, we will know the results of the European elections, to be held this Thursday, in which the Conservatives are polling at 9%, their worst number, ever. The votes have moved in a tidal wave to the Brexit party, formed less than five weeks ago.

It also has considerable support from Labour members, and there is therefore much discussion as to whether this is the end of two-party politics, as we have seen in many other European countries. On the face of it, a single-issue party, drawing support from across the political spectrum is not going to easily translate in to one capable of national governance. Indeed, its moment of greatest triumph could be the very time to disband it.

However, a lot of Conservative voters are going to take a long time to switch back to what has been assumed to be their natural home; indeed, they have been taken for granted. Repeated attempts to try and force the deal through parliament have caused enormous damage, and the Bill itself is said to be so poisonous that it has yet to be published. Those who have seen it describe it as a “political hand grenade”.

It is very difficult to judge to what extent this impacts on the economy. Thomas Cook, the largest tour operator, produced some dreadful figures this week, blaming Brexit as the reason people are not booking overseas holidays this summer, but acquisitions made many years ago have left it with very high debts, and therefore vulnerable to any downturns.

It is not specific to this sector; any retail facing company which is not up to the mark is suffering, and even those internet only fashion chains are now complaining that the high levels of returns are destroying profitability, which tells you how bad it must be for those with High Street operations.

The forthcoming race for the leadership of the Conservative party, and, by definition, prime minister until 2022, should bring a modicum of common sense to the domestic agenda, which has been sorely absent these past two years. High on the list will be the curtailment, or scrapping of HS2, the high-speed rail line to the north.

In the meantime, enjoy Thursday, likely to be one of the greatest upsets in UK political history.

–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.