Newsletter dated August 25, 2016

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Risky asset classes continued to rally during the last two weeks. The biggest gainers are DAX, NASAQ and Emerging Markets in our list. On sector level we see materials and energy stocks as this year’s leaders. The biggest gainer among S&P500 sub indices is the S&P500 gold index which more than doubled versus year-to-date – see also our chart of the day!

Interest rates of the Britisch Pound declined after the Bank of England (BoE) rate cut. While current official statistic on unemployment and inflation paint a rather robust economic picture most banks predict the UK heading into a recession due to the Brexit. While the BoE sees room for further interest rate cuts the US Fed sees economic targets nearly met – according to vice chairman Fischer. Markets price a probability of slightly over 50% for a rate increase by the end of the year.

A group of leading banks namely UBS, Deutsche Bank, Santander, BNY Mellon have announced to to develop a new form of digital cash that they believe will become an industry standard to clear and settle financial trades over block chain, the technology underpinning bitcoin. Having initially been skeptical about it because of worries over fraud, banks are now exploring how they can exploit the technology to speed up and free billions in tied capital. At the same time the BoE is trying to ramp up its research team for digital currencies which are experiencing growing attention in financial industry (see also our special edition click here).

Erwin Lasshofer and his INNOVATIS team continue to research industry trends and business models for selection of superior underlyings – see also our product of the day. However in case of block chain technology we still wait for companies that might be able to exploit this technology and are able to defend this advantage against competition.