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The Financial Ironmonger Blog No 31/2019

The Financial Ironmonger Blog No 31/2019

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 31/2019–

Some ten days in to the Boris Johnson Premiership, the sun still seems to rise, albeit accompanied by biblical amounts of rainwater, in some parts of the country. The latter seems to be happening rather too often to ignore, and it is clear that the Victorian infrastructure is not up to it. But it will have to wait. His first, and only target, is Brexit on October 31st to which all other issues are subservient.

Central amongst these is the vexed question of the Irish backstop, without which the whole country will revert to its previous lawless state, according to the doomsters. It has been quickly forgotten that the separatist IRA disbanded because it had been thoroughly infiltrated by the UK security forces, whose advantage will only have grown since then.

The former are now engaged in highly organised smuggling of both people and goods across the border, just as other groups will be across any border that has restrictions, and there is no reason to disrupt this. If it is to happen, the IRA would love it; a harder border is in their economic interests.

However, both the EU and the government in Dublin have admitted that the vast majority of legitimate trade can be checked before it crosses the border, so the problem remains highly theoretical, but above all, political. Leo Varadkar leads a weak coalition, and the EU have stolen the reverse gear he now needs.

The American Congress have said that they will block any trade deal with the UK that violates the Good Friday Agreement, although they are mutually exclusive, but this is a perfect backdrop for the Donald to step in. Friend of Boris, stalwart defender of Irish Americans, (I made that up), he could bash some heads together to solve a totally confected issue.

It is becoming clear, especially to the population, that a no-deal would be catastrophic for them, and I do hope that a way forward can be found. Described as God’s own country, the people are some of the kindest I have ever come across, but like so many other countries, they really don’t deserve their politicians.

The ones who have not emigrated remain resourceful, and canny. Like so many other economies, new car sales have fallen, down 8.4% from twelve months ago, not least due to very high taxes on new cars. So, the answer is to import second-hand ones from the UK, up 16% over the same period, and now representing some 27.5% of all cars newly registered, in July. Where there is a will etc.

The decision by the Fed to cut interest rates by 0.25% this week has left investors somewhat perplexed as to the future direction of travel, but it does no harm, at this stage of the political cycle. No major economy has managed to restore interest rates to anything like the level which prevailed before the GFC, and they are now heading in the other direction.

We are going to have to learn how to live with negative interest rates, old dogs and new tricks. But if you think that this is just an aberration, you can now fix your mortgage for fifteen years at 2.75%.

Across the pond, the Donald, not content with watching the Democrats trying to destroy their leading contender, Joe Biden, has hit on a new marketing gimmick. Plastic straws. Banned in trendy parts of the east and west coast, they are the perfect rebuke to the liberals thereof. Each comes with Trump embossed on the side, with a pack of ten selling for $15, raising more than $500/- for the campaign so far. Production has been ramped to meet demand; brilliant!

–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.