View more on these topics

Tom Becket: US political squabbling means everyone loses


The sparring politicians in the US can dress it up any way they want but this was a pyrrhic victory for the Democrats, a shattering defeat for the beleaguered Republicans and a travesty enforced upon the American people.

Last week, after a 16-day government shutdown and endless hours of negotiations and nonsense, the two parties and two parts of the US government decided to raise the debt ceiling. There are three key takeaways, in our opinion.

First, and most import-antly, this is another calamitous own goal from the US politicians. Politics remains the greatest extant risk for financial markets and this again underlines the reasons why.

The behaviour of the politicians over the last month is no way to get confidence soaring through the veins of companies and consumers.

President Obama said: “We will begin to reopen our government immed-iately and we can begin to lift this cloud of uncertainty and unease from our businesses and from the American people.”

Good luck, mate.

Second, we are going to have to get used to this form of dysfunctional dialect of politics in the US.

This latest “agreement” is only another shoddy sticking plaster applied to a gangrenous wound. The next skirmish has only been delayed to the early days of 2014. Now that is really something to look forward to.

Third, this muddies the turbulent waters of US politics even further than they were a month ago. A toxic air still hangs over Capitol Hill.

As the dust settles, the Democrats will claim victory but they should note that they were fighting a battle that the Republicans had no chance of winning.

This defeat will spur on the Tea Party activists who will see the emerging star of the South, Ted Cruz, as the man to carry their fight to the less extreme Republicans and maybe even to the next presidential primaries.

His hard-line stance in this battle will have been admired by those to the very right of the Republican party.

What does this mean for our portfolios?

Despite the fears that we hold over US politics, we still believe that equity markets are likely to rally into the year end.

Global economic momentum is accelerating and we expect corporate results to be broadly supportive although they will not be spectacular.

There are still good pockets of value in Europe, Japan and Asia while cyclical sectors such as Industrials and Financials should benefit from an improving economy.

Most other assets appear to us to be fairly valued, neither very expensive nor (sadly) very cheap.

However, we need to learn from the events of the last few weeks, recognise the risks that remain and if we decide to break with diversification at this juncture, then
we would be as mad as the US politicians.

Tom Becket is chief investment officer of Psigma Investment Management 



L&G appoints ex-Hartford risk officer as non-exec director

Former Hartford Financial Services chief risk officer Lizabeth Zlatkus has been appointed a non-executive director at Legal & General. She will take up the role from 1 December. Zlatkus joined Hartford in 1983 and held a range of senior positions including chief financial officer and chief risk officer of the firm. She also served as […]


Alan Lakey wins court case against PPI claims chaser

Highclere Financial Services has been awarded £340 through the small claims court after contesting a payment protection insurance misselling claim from a claims management firm. In a case heard on 9 October at Accrington Crown Court, claims firm Aims Reclaim was forced to pay Highclere partner Alan Lakey £100 for wasting his time and a […]


EC ‘very open’ to talks on UK financial services powers

European commissioner for internal markets Michel Barnier says he is “very open” to reviewing EU financial services rules and heaped praise on the UK’s bid to renegotiate its role in Europe, in what will be seen as a major boost to reformers. Speaking to Money Marketing at the British Bankers’ Association annual international banking conference […]


HMRC may impose VAT on platform charges

HM Revenue & Customs is investigating whether platform charges should be subject to VAT. Money Marketing understands HMRC is seeking to tax a wider range of platform charges after rebates became subject to income tax in April. One option that has been floated among the platform industry is making fixed platform costs liable to VAT. […]

Japan: the Land of the Rising Dividends

By George Boyd-Bowman, Fund Manager at Neptune Many Western investors have long bemoaned the lack of a true dividend culture in Japan, claiming the corporate culture is not tilted in favour of shareholders. Yet today, in the Land of the Rising Sun, we see a fresh impetus to focus on shareholder returns, which is leading […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm