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The Financial Ironmonger Blog No 34/2019

The Financial Ironmonger Blog No 34/2019

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 Prime Minister has this week been engaged in talks with Angela Merkel in Germany and Francois Macron in France, principally about the Irish backstop, but also about other aspects of the Withdrawal Agreement with which he disagrees.

The former seemed to be quite encouraging, offering thirty days for new proposals to be brought forward with which Macron concurred, having previously stated, on numerous occasions, that there was no chance of any changes at all. Maybe, this is just an attempt on behalf of the EU to appear reasonable, right to the end, thus shifting the blame firmly on to Boris if no deal is reached.

Given that the Taoiseach, Leo Varadkar, has made a virtue out of refusing to find an answer to the Irish border issue, it is going to be very hard for him to compromise; he fondly imagines that he has the full-hearted support of all the other leaders, and that they will happily pick up the bill for any disruption, thought to be well north of £500mn in the initial stage.

The ramp up in rhetoric coincides with the G7 meeting, which has got under way this weekend. The one thing that has been agreed is that no communique will be issued, which is probably a lot easier than pretending that there is agreement on anything much. The Donald has issues with, amongst others, the French for imposing a 3% tax on American digital companies, the Germans for refusing to inflate their economy and pay their NATO dues, and the EU generally.

It will be a delicate mission for Boris to find a middle road, as optimism meets reality. The Donald, in any case, is side-tracked by his latest real estate deal, which is to buy up Greenland. Whilst it is physiographically part of the North American continent, politically it is a self-governing region of the Kingdom of Denmark. The Danes are appalled, the locals would like a chat.

70% of their total income comes by way of subsidy from Denmark, alcohol addiction is rife, and it has the highest suicide rate in the world. Given the vast wealth in raw materials, lead, zinc, diamonds, gold and oil, amongst others, it should be prospering, which it would, given American investment of funds and expertise. This story might have more legs than people imagine.

Brexit uncertainty has caused the equity market to stall, for lack of direction, whilst the currency has slumped since the referendum, 16% against the euro, 17% against the Hong Kong dollar and 18% for the American version. It was only a matter of time before others saw opportunity, and thus American private equity firm Advent has swooped on defence supply company Cobham, obviously anticipating a decent return by breaking it up.

Meanwhile, Greene King, which runs 2,700 pubs, and employs 38,000 people, was acquired by Hong Kong based billionaire Li Ka-shing for £4.5bn. It is difficult to think of a sector more vulnerable to an economic downturn, such as that foretold by ardent Remainers, but this deal is more than a vote of confidence in UK plc. Greene King own the freeholds of more than 80% of their premises, and with more than 1,000 pubs a year closing across the country, there should be ample scope to rationalise the estate, with not a lot of downside, given that the properties are in the books for £4.6bn, pretty much what the bidder has paid for the whole company.

Finally, in an increasingly complex world, I though you would enjoy this letter from a reader of the Economist, commenting on his HR Department.

At my job operating a drawbridge I am expected to set performance goals relating to “core competencies”. These include building relationships, oriented outcomes, creativity and innovation. Curiously, they do not include safely operating the 900-tonne piece of mechanical infrastructure entrusted to my care. At my annual review, learning agility is defined in terms of “an awareness of changing workplace trends”. That such skills are valued more highly than not crushing pedestrians says something.


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.