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The Financial Ironmonger Blog No 6/2019

The Financial Ironmonger Blog No 6/2019

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.


President Trump finally delivered his annual State of the Union address on Wednesday, delayed because of the government shutdown; it is worth remembering that normal order is only a temporary event, and absent some shift in relative positions, it will be reimposed on February 15th.

The speech set out to have a more bipartisan tone to it, calling for joint measures to improve the crumbling infrastructure, and reduce the ridiculous prices for prescription drugs, to which he could have added over the counter ones as well. Given the massive lobbying machine employed by the medical companies, this seems a forlorn hope.

The Donald, however, does not do bipartisan, and before too long, the effort of trying to be reasonable alluded him, and he was back on the old hobbyhorse of the Mexican border wall, the lack of agreed funding for which caused the shutdown. It was one of the key planks of his election campaign, and if the Democrats refuse to budge, as seems all but certain, he can use it against them next time.

In theory, he could use the defence budget to get it built, but there is pushback from his own side on this. Meanwhile, shutdowns are expensive, destructive, and unpopular. His approval ratings have tanked in to the low 30s, and whilst the result of the Russian investigation is awaited, the Democrats are launching investigations in to such matters as his tax returns now that they control the House committees.

The younger, and more headstrong, want him impeached, but the veteran House speaker, Nancy Pelosi, is likely to block this; she reckons that keeping him in office strengthens their chances, if they can slowly wear him down, a policy which seems to be working. Perhaps he will throw the towel in,  realising that his particular brand of political popularism might have peaked.

Certainly, the levels of wealth inequality in the country are absolutely staggering, combined with high rates of absolute poverty. Bernie Sanders has been banging this drum for years, and would probably have secured the nomination instead of Hilary Clinton, last time round, had the super delegate vote not being manipulated.

To those in Europe, his questions and proposals do not seem unreasonable, but they have in the past been swept aside as “hard-left”, now relabelled as “progressive”. He questions, for instance, why America spends more on the military than the next ten nations combined, most of which count as allies.

His demands include health care for all, and an end to the highest drug charges in the world. Large corporations should pay their fair share of taxes, and a minimum wage of $15 an hour should be introduced. Both Disney, to an extent, and Apple have already moved in that direction.

He wants an expansion in social security benefits, cheaper college education, and some common sense gun control legislation. In the richest country in the world, these do not seem to be unreasonable requests, and would certainly find favour in most mainstream European parties.

Of course, they come alongside some pretty wacky ideas about where the money might come from. Alexandria Ocasio-Cortez, the 29 year old Democrat elected in New York, described as the movement’s poster child, wants a 70% income tax rate, whilst the veteran Elizabeth Warren is calling for a 2% wealth tax, but only on the rich, you understand. Both have conveniently forgotten that the more wealth you have, the more mobile it becomes, so a fat zero to both these ideas. Fortunately, Alexandria is too young to stand for the highest office; you need to be 35 at the point of inauguration, whilst at 69, Elizabeth should know better.

However, it has left me wondering. Trump fought a brilliant campaign by identifying deep-rumbling base issues, which he used to divide the country between those who agreed with him, and those who didn’t, whilst pretending to be a maverick outsider, beholden to no one. A “peoples’ champion”, or at least to enough of those people to get him over the line. But it was never going to work in the real world.

So, maybe the mood will swing, and the people will think that we have tried that, and whilst the economy is in an upswing, and unemployment low, actually none of this has worked for me, so let’s try another way. We could be past the point where the economy is the determinant factor in elections, of which there are many across Europe this year. They will certainly provide good guidance on whether the remodelled Democrats have found a winning formula.


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.