September was a steady month showing gains for the first three weeks, then a downturn in the last week. This was caused by negative market sentiment about the biggest bank in Germany – Deutsche Bank. They are facing a fine by the U.S.A. banking regulator of 14 billion dollars (that is not a misprint, it is billion). It appears to be a new way of collecting revenue from foreign companies (i.e. not U.S.A. companies) they fined B.P. very heavily after the Deepwater Horizon explosion and fire.
I think that they calculate the maximum fine they can impose on a company, without it going bankrupt, then the only people who suffer are the shareholders and investors. As 14 billion dollars will take Deutsche Bank to the brink, expect a bit of negotiation and the fine to come down. What's a few billion dollars when it is somebody else’s money? One of the companies under the spotlight with the U.S. authorities is Royal Bank of Scotland (Nat West).
The portfolios managed to finish the month to 2nd October on a slightly positive basis, the low risk portfolio was up 0.24% and the Low/Medium portfolio was up 0.34%. We are not proposing to make any changes to the portfolios this month, they are invested on a defensive basis and we would prefer to get the U.S.A. Election out of the way before we make any changes – Election Day is 8th November 2016.
4th October 2016