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The Financial Ironmonger Blog No 33/2019

The Financial Ironmonger Blog No 33/2019

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.


For most people, the fact that the yield curve has now inverted will pass them by. Simply, it means that it is cheaper to borrow money over ten years, rather than two, thought in the past to be a classic sign of impending recession. Which might be right given tariff wars between America and China, Germany’s self-inflicted problems, Italy’s political situation and the UK leaving the EU. There is no shortage of blog topics!

Perhaps to start with no deal, which Jeremy Corbyn, leader of the opposition, has achieved before the elected government. The idea of a government of national unity was always less seaworthy than a colander, and thus it is that no leader of any party is prepared to see him installed as such, bar the SNP, who can see the opportunity to make serious mayhem amongst Labour voters in Scotland.

The Westminster cognoscenti have a general election nailed on for either October 10th, (which seems undeliverable in terms of timeline), or Friday, November 1st, the day after the UK leaves the EU. Traditionally, elections have been held on a Thursday, but there is no reason why they cannot be moved to any other day. The view from Downing Street is that there is nothing legally, or procedurally, that can be done to thwart this outcome, albeit it appears to be an exceptionally high-risk strategy. But it ties in with the theme of the new government, all or nothing.

I have no idea how this will resonate with the voters, who are much more aligned with parties that represent their Brexit views, rather the old socialist/capitalist split. We will get more of a clue from the G7 summit at the end of this month, the first opportunity for the new prime minister to seriously engage with other world leaders; the Donald will blaze free trade, the Europeans will sulk, but if no deal is to be avoided, it will become obvious then.

A general election seems the most obvious outcome, with national broadcasters planning furiously for the event, having been caught out in 2017 by Theresa May, who promised that no such thing would happen. Looking back, the vicar’s daughter, (for that was the brand strap), told many untruths, but time is a great healer, and in no time at all, everyone has forgotten that she existed.

There is now a real possibility that there will be a general election in Italy, at much the same time, Matteo Salvini having pulled the plug on the coalition with the Five Star movement last Friday, when most politicians were on holiday. His right-wing party, Liga, won 34% of the vote in the euro elections this May, with Five Star on 17%, almost a mirror reversal of the numbers in the general election of March 2018. If he can get above 40%, he would command a majority, almost unheard of in post war Italy.

And he hates the EU, styling himself as a democrat and a patriot, which chimes with those Italians who have had a very turgid ten years, (most of them). It is not quite as broke as Greece was by the end, but the debts are of a magnitude higher, such that the delicate mechanisms of the EU would not be able to rescue it, should it come to that.

All of this, at a time when new people are being installed in Brussels, following the May elections, who, by definition, are less experienced than their forebears. Perhaps this would not matter so much if the economic powerhouse, Germany, was firing on all cylinders, but it is not. Their policy makers insist on maintaining a balanced budget, so the European Central Bank will have to lower interest rates further to stimulate demand.

Inevitably, that weakens the Euro, which inflames the Donald, who has threatened 25% tariffs on all cars coming in to America from there. They export other stuff as well, thought to be 50% of total output, so you have an economy very vulnerable to changes in external influences, only some of which are in their control. Not a lot they can do about US/China sanctions, but making their, agreed, 2% of GDP contributions to defence spending might be a start.

As it is, almost none of their military kit from tanks to fighter planes seems to work, for which I am secretly grateful, given the history of the last 100 years. Maybe, they should outsource their obligations to the Americans and the British, not least when the former have bought Greenland, as the Donald intends.

Not sure how you build a Trump Tower on a glazier, but I am a wordsmith more than an engineer.


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.