In the traditionally bad month September, the S&P lost just 0.1%, the Dow Jones lost 0.5% and the Nasdaq gained 1.9%. Overal not such a bad September as the average after all. September 9th, was a particular bad day for markets because of FED members talking about rate hikes again, which feared the market. Later on this fear was taken back by another FED member since the market was reacting so strong on it… Typically FED again. There won’t be a rate hike till after the US elections in our opinion.
Something we definitely kept our eyes on was Deutsche Bank. Deutsche Bank was starting to look a bit like Lehman Brothers in 2008. It started with the fine they received of $ 14 billion by the US Justice Department for the mortgage bonds debacle in 2008. German government officials immediately responded that they wouldn’t help Deutsche Bank in case of any problems. After that several hedgefunds decided to take their money to another bank. This created bank run fears, which created problems for banks worldwide. Deutsche Bank has $ 42,000 billion worth of financial derivatives on its balance sheet. In case of a bankruptcy this whole financial derivative portfolio would be dismantled, which would probably cause huge problems. This whole debacle caused stocks to go down last weeks. After this domino fell the US Justice Department decided to stop it by settling for just $ 5 billion instead of the original $ 14 billion. Of course they gave another reason for this reduction in fine, but basically it’s 2008 all over again. Banks can take huge risks, because they will be saved anyway.