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The Financial Ironmonger Blog No 9/2019

The Financial Ironmonger Blog No 9/2019

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 9/2019–

Last weekend saw the first ever meeting between the EU and the League of Arab States, 27 countries in the former, (with a further one in detention), and 22 in the latter. The 49 amigos have promised to hold regular meetings going forward, the next in Brussels in 2022. The joint communiqué talked of the strength of international law, and the importance of maintaining strong borders. With the exception of the trainee terrorists that have gone south, the human traffic flow is entirely towards Europe.

Which the politicians do not like, not least because most of the economies are struggling to look after their own, let alone incomers. It is debatable whether the next recession hits before the European elections in May, or shortly after, but both are firmly nailed in for 2019.

This blog is not going to explore those problems in any detail, except to get you thinking. What is the future of the Arab states when no one wants their oil anymore, or for Africa, an explosion in population combined with a reduction in productive land, and fresh water? The resultant number of people on the move is going to be huge, (way bigger than anything seen to date), and it is almost certainly irreversible. I will return to this subject again.

The venue for this meeting was the Egyptian resort of Sharm el Sheikh, a faux construct for the benefit of western tourists who flocked there until October 2015, when a plane carrying tourists back to St Petersburg, was downed by some rudimentary ordinance, shortly after takeoff. Which heralded the end of the tourist industry. The Foreign Office still advise against all but the most essential travel, especially by air, and to “avoid crowded places and gatherings”.

Notwithstanding these warnings, the Prime Minister turned up, a rare opportunity to lobby the remaining 27 leaders of the EU, and got received like the long lost relative at a wedding; long lost, of course, for good reason. If there ever was any motivation to try and strike a deal with her, it has long gone, because they believe that she is unable to deliver anything she promises, other than by pure luck.

The seeds of this were sown when Article 50 was triggered, allowing two years before the exit date, and once the date was fixed, the EU had no incentive to reach any sort of agreement. When it became obvious that the UK had no coherent plan, they then imposed a two-stage timetable, whereby they would only move on to meaningful talks about free-trade once the money had been agreed, and the Irish border had been thrown in as an extra safeguard.

You may recall that “nothing was agreed until everything is agreed”, but the choice is now to agree to the Withdrawal Agreement , (a legally binding international treaty), and failing that there is a vote on agreeing to not leave unless there is a deal, or begging for more time. Pathetic would not sum it up, and away from the Westminster bubble, I suspect the voters sense it. Where it goes from here, I know not, but smoothly seems an unlikely outcome. The Withdrawal Agreement is thought to have a one in four chance of passing on March 12th.

The no deal option was forced on the Prime Minister by the threat of 21 of her ministers resigning; in the past, they would have been fired, leading to the fall of the government, and a general election. However, the Fixed Term Parliament Act means that one can only be called if there is a two-thirds majority of MPs in favour, hardly conceivable in the present circumstances, since very few are keen to face their electorate.

It is very difficult to imagine that the whole thing can shamble on until May 5th, 2022, the next given date, but right now, that is how it stands.

–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.