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The Financial Ironmonger Blog No 46/2017

The Financial Ironmonger Blog No 46/2017

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 dust is beginning to settle after the mid terms, as the first snow of winter arrives in Washington. The loss of the House of Representatives is sub-optimal for the Donald, but after January he will still control the White House, the Senate, and the Supreme Court, where he can appoint conservative-leaning justices.

The areas for cooperation between the two parties looks limited, even if there was any political will, which is clearly absent. The Democrats will not help on Tax Reform 2.0, which would need a majority in the House, because this might help boost the economy, reinforcing the economic backdrop going in to the election in 2020.

Health Care policies are so hopelessly divided that little progress can be expected there, whilst on immigration, the Democrats’ victory in the House dooms any chance of funding the border wall. The Donald will continue to persue his trade policies, and the question is whether he gets more aggressive with China, which would harm the economy, or whether he cuts a deal.

Which only really leaves infrastructure, which is linked to the immigration issue. The booming economy means that there is very little surplus labour, and that is before they start rebuilding Florida, after the storms, and California, after the fires. A continued tough line on immigration is going to very detrimental, and yet it remains a central plank of his election strategy. Something is going to have to give.

Whilst he is grappling with these problems, and no doubt others which will emerge, the younger and increasingly left-wing Democrats in the House will be pushing for his impeachment, starting enquiries in to varied aspects of his life, including tax returns.

How he copes with these will dominate the next two years, and the form would suggest not well, but it is bound to have the effect of slowing government down. Maybe that is what the voters were aiming for in these elections, but coming from a platform of relentless negativity lost the Democrats the 2016 election, so there is no reason to think that it will be a winning move in 2020.

Here in the UK, the long-awaited 585 page draft Withdrawal Agreement has been published, which will become the legal basis for Britain’s departure from the European Union. That’s if it is ratified by the EU27 leaders, the UK parliament and the European parliament. It might be a big ask.

Next Tuesday, the EU27 will publish the draft political declaration setting out the parameters of a future trade deal, and given this document is a mere seven pages, expect sparks to fly when the paucity of the total deal is finally exposed to all.

How all this plays out is anyone’s guess, but it looks unlikely that the attempt by far-right Conservatives to unseat their leader is getting much traction, at the time of writing. Nevertheless, the deal seems to have generated little enthusiasm from any side of the debate, and Mrs. May has to accept that expectations have been deliberately mismanaged by her in the run up to this point.

When you add up all those implacably opposed to her, whatever she put on the table, with those who hate the deal, but have no views on her, the total would suggest that there is more chance of refloating the Titanic than getting this approved by parliament.

The Irish, in particular, have stated that there is no chance of changing the Agreement, and it would need all 27 to agree. Perhaps the most likely outcome is that it is rejected by parliament at the first vote, the currency then tanks, before a second vote redeems the position.

It is a bit like watching a film in which you are in a vehicle, hurtling towards an unwelcome conclusion, and you have no idea what the scriptwriter has written as the ending.

Interesting times, not least for those trying to run a newsroom.


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.