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The Financial Ironmonger Blog No 32/2019

The Financial Ironmonger Blog No 32/2019

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.


That the UK economy softened in Q2 should come as no surprise to anyone. Many companies ramped up production of finished goods, and the parts needed to make them in Q1, having been promised, on 108 separate occasions by the Prime Minister, that the UK would leave the EU on March 29th.

In Q2, orders could be fulfilled from existing stock, with raw materials depleted from the stockpile. An expensive business, and not one likely to be replicated, even if warehouse space was available, which it is not at the end of October, the sheds being full of plastic Christmas Trees, and other stuff that the nation cannot function without.

Whilst those are one off factors specific to the UK, the German economy is probably in reverse, which hardly augers well for the rest of the eurozone. Add to that, the Donald and his trade dispute with the Chinese, and the picture does not look so rosy. However, there are always two sides to this; exports from Vietnam to America are up by a third in the last twelve months, so companies are simply relocating production to Trump friendly countries.

Simply is, indeed, the wrong word. Uplifting production facilities is expensive and complex, and therefore not done lightly. The Chinese must realise that this is not just re-election blustering but is doing them long term damage.

Previous blogs have toyed with the possibility of negative interest rates, which is where the whole German bund market has now reached. UBS, the major Swiss bank, announced this week that it will soon start to charge customers, who hold over a million or so francs on deposit, 0.75% per annum, on top of the 0.4% they are already losing.

Any forward looking forecast, which by definition they must be, is fraught with problems. Indeed, the GDP numbers referred to at the start of this blog, will still be subject to revision in ten years’ time. It is an imperfect art, if it can be called even that, but major decisions are made on the back of these numbers, incredibly.

For most readers, this kind of detail is beyond their  zone, and I fully understand that, but I would urge you to think about the implications of interest rates going negative. Banks will continue to try and find a way round it, the average American credit card borrower now paying 17% per annum on their debt, but that is a sideshow to the main story.

For the meantime, all UK eyes are focused on the deadline, at the end of October, to leave the EU. The latest idea from those who do not wish to leave is to form a government of national unity, which if you consider that half the voters want to leave, and the other half remain, is frankly impossible.

There is no chance of Labour agreeing to this unless Jeremy Corbyn was the leader, which presumably would exclude any Conservative MPs signing up, since they would immediately be expelled from their party. And there is no chance of the SNP going along with this unless they were granted a second referendum, something the Scottish Labour Party would not stomach.

Writing this from the Highlands of Scotland, the SNP demands seem bizarre. They will leave the EU along with the rest of the UK, and Brussels have already stated that there is no point in them applying, even if they could become an independent state. London not only gives £10bn a year to the EU, it gives the same to Scotland, the absence of which would destroy the economy. And yet, they command real fear in these parts, proving that logic does not always get the upper hand.


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.