Weekly Newsletter dated October 6, 2016

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The US Presidential elections are just 1 month ahead of us. It’s far from clear wether Donald Trump or Hillary Clinton will be the winner. Investor wonder if they have to align their portfolios accordingly. They might have already heard such prophecies as “I would vote for Mr. Trump because he may only destroy the U.S. economy, but Hillary Clinton will destroy the whole world”.

In fact we know very litte about Trump’s economic agenda. This leaves many investors even more uncomfortable. On the other hand a potential presidency of Hillary Clinton is said to be bad for banks by imposing stricter regulation. Consumer discretionary stocks would benefit from lower taxes for middle-class incomes and increased minimum wages. She is promoting a $275 billion infrastructure plan and thus respective companies. While she would probably support healthcare service companies by expanding “Obamacare” she has been campaigning for lower drug prices which could depress pharma profits.

So how does US presidency really effect markets? And what should investors do about it? You can find out in our latest investment blog on Presidential Elections (http://www.innovatis-suisse.ch/news/ )

Versus our last newsletter two weeks ago equity and bond markets have little changed. The most significant moves were 12% up for crude oil and 7% down for gold. The jump in oil had been caused by an OPEC surprise. News headlines said they cut their output. In fact they agreed at a meeting in Algier to decide the group’s next formal meeting, on Nov. 30 in Vienna, on details of trimming production by up to 700,000 barrels a day which is less than 1% of world production. And it is still unclear how members share this cut. And OPEC’s overall share of world production has decreased to just on third over recent decades. However it is a surprising signal to markets of OPEC’s ability to strive for agreement and come over several rivalries e.g. between Iran and Saudi Arabia or OPEC and Russia.

For the drop in Gold many analysts cite rate hike speculations. However, Erwin Lasshofer and his INNOVATIS see probability for a rate increase by the end of the year rather decreased – although still at a high level of over 60%.