Politics and markets all mixed

It’s getting ever-harder to split politics from financial markets.

We’ve just heard Donald Trump thanking himself via Twitter for sending many US shares to new highs: “Stock Market is heading for one of the best months (June) in the history of our Country. Thank you Mr. President!”

Further, this week’s G20 meeting will be studied more than ever for clues about the trade war that’s still weighing on global equities.

Then there’s the Tory party leadership contest that will determine the next Prime Minster. Which in turn will be a major factor on how Brexit influences stock, bond and currency prices across the UK and Europe.

Meanwhile, the Woodford saga continues.

So there’s much to talk about… including your responses to our recent articles…

Will Trump be stumped?

I must admit that I don’t dislike Mr Trump as much as most other people do.

Sure, he’s a brash, confrontational and sometimes offensive politician. And many of his policies seem to have been hatched in a sanity vacuum. But at least you know what you’re getting. And when you look at the Democratic alternatives for President in 2010, well, there’s not a lot of quality there, just a contest to see who can out-Corbyn our own Labour Party leader in creating a socialist nirvana.

When it comes to self-congratulatory comments on the stock market, though, Trump is getting into very dangerous territory. Despite his attempts to manipulate the Federal Reserve into lowering interest rates – seen as a fillip for equities – he still can’t control share prices. So when the inevitable market downturn occurs, he’s likely to get the sort of flak that won’t exactly help his re-election chances.

Over to the G20 summit in Japan. This is hardly my favourite event, to be honest, and not only because I dislike politicians in general.

As with Davos, on which I’ve ranted before, the G20 is just a photo-call opportunity for so-called world ‘leaders’ to strut their stuff. Except that I reckon the planet would be much better off without their duplicitous ways of separating us from our hard-earned money and spending it on their own pet projects.

As for imposing extra tariffs on trade (I believe Trump has this one wrong too), politicians’ desire for more controls and artificial constraints is anathema to those of us who want to live in a genuinely free society.
Before I progress fully into rant mode, let’s move onto the new PM and Brexit.

Having been almost past the post in the middle of last week, Boris Johnson is now contending with the fallout from last Friday’s ‘domestic’ as well as his refusal to join in a planned TV showdown with his prime ministerial opponent Jeremy Hunt.

But rather like another already-mentioned politician with flapping blond hair, Bojo has proved a past master at sidestepping adverse publicity that would have sunk most of his rivals. And he’s still clear favourite for the UK’s top job.

So if we get Prime Minister Boris, will Britain definitely leave the EU by the end of October this year? He’s said very clearly that this’ll happen, deal or no-deal. But can he be trusted? Your views on this are welcomed!

Further, if that October deadline nears without Parliamentary approval for the currently-proposed withdrawal agreement while the EU refuses to change the terms of the latter, might there yet be a second referendum? If the new PM reckons a general election is too risky, he might plump for a follow-up poll.

Of course, Parliament will need to pass legislation for it. And a couple of you have differing views on the subject.

 

Two weeks ago, ‘S’ opined that “if there’s to be a second referendum it should offer the choice of IN – meaning fully in the EU, i.e. adopting the euro and free movement, etc. – or OUT. Anything else will be a compromise worse than the current position.”

But according to ‘C’, “‘S’ is wrong… the principle of leaving the EU was decided in 2016. There’s no need and no time for another referendum. But if there were, the choice would be between the withdrawal agreement ‘negotiated’ by Mrs May and no-deal. That would be the only way to honour the 2016 referendum result and save British democracy. Remaining or revoking Article 50 would be Parliament stomping on the electorate, i.e. dictatorship.”

Agreed, it would be. And I genuinely fear for our democracy if Parliament somehow manages to overturn the UK’s withdrawal from the EU. At best, I suspect my dislike of politicians will become even more widespread. At worst, we could be looking at some sort of new civil war. That almost certainly won’t end well.

Finally, the Woodford files. The once-feted fund manager is copping it from all sides. And my partial sympathy for the mistakes that he’s made isn’t widely shared.

“David, your column is usually spot on, but on Woodford I disagree”, say ‘W’. “Some folks have lost a lot of money in Woodford funds. [And] Woodford stated some while back that Brexit wasn’t likely to cause any downward effect. Really? So I was one of the very lucky ones, not a smart one, who bailed out [early]. My heart goes out to investors who thought they were playing safe… and are now suffering huge losses.”

“Woodford and (his backer) Hargreaves Lansdown, hang your heads in shame!”

‘K’ is even more forthright. “These guys are just a bunch of crooks, still charging management fees”, he complains.

I’d like to note that I’m not defending Woodford’s poor stock selections. But I can see why he’s made them. And I agree with the point about management fees. Cancelling, or indeed refunding, these would have been a nice touch.

In addition, the alternative to suspension would have been the policy just adopted by H2O Asset Management – which has also suffered liquidity problems – of continuing to allow withdrawals but charging a discount for these.

Some readers have asked for advice on what to do with their Woodford holdings. Unfortunately I’m not allowed to give this. But as I’ve already commented, I do hope that those of Woodford’s investors who wish to sell will be able to do so without suffering too much financial damage.

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