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The Financial Ironmonger Blog No 35/2019

The Financial Ironmonger Blog No 35/2019

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 35/2019–

The G7 meeting passed off without serious incident, and one is left wondering why the thing exists, at all. Formed in 1976, it seems to have lost purpose, if it ever had any, and to have Italy at the top table when the much larger economies of China, India and Brazil are not represented seems bizarre. You could well see the Donald refusing to turn up to the next one, or just send one of his kids; he is not interested.

It is, of course, his style, and one cannot help but think that our very own Boris has spent his fallow years, since standing down as Mayor of London, watching very closely, and learning. In short, this week he has decided that Parliament will close for five weeks from September 12th until October 14th, which is four days longer than it would usually be shut whilst the parties hold their annual conferences.

This has produced a storm of outrage from the usual suspects, most of it deeply hypocritical, but given that it is entirely in line with previous events, there is no reason why any of the legal objections should overcome this, one having failed already. There is no doubt that he has stretched the boundaries of what is deemed acceptable, but the gloves are off.

Next week will either prove decisive, if the Remainers can get their act together, or the Government will sail through until the middle of October, when there simply won’t be time to open a second front. The Remainers have brought this upon themselves, threatening, last week, a government of national unity, only to fall at the first hurdle, unable to agree who would lead it.

They now have but two options. They can seek to pass a law requiring him to seek an extension, before the end of October, to Article 50, just as they did with the hapless May, who, by then, was supplicant anyway. This is easily sorted; he can go to the EU and say that any time they grant him will be used to frustrate any plans they have, including a new budget for the next seven years, due in 2020, and they will then refuse the  extension.

Alternatively, they can go for a no confidence vote, and unable to agree on an alternative government within fourteen days, seek a general election. Which he is well prepared for, with announcements already made on funding for the NHS, police numbers, and tonight, a massive increase in spending on education.

It is high risk. However, it is now more than three years since the referendum, and there must be some sort of resolution. My guess is that the EU will back down, and a fudge will be agreed, for all the blustering. The UK remains the pre-eminant security force in Europe, and the EU needs us, alongside them, to continue to have a voice at the top table. One has to acknowledge, however, that almost anything could happen over the coming weeks.

It is worth reminding readers that the FTSE 100 index now yields 4.5%, against cash which produces nothing, and the vast majority of those earnings are generated by international operations, unlikely to be affected by short term influences. The currency has tanked already, so a large amount of downside is in the pricing. For the brave, this could be the Indian summer for markets.

–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.