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Once again SNB chairman Thomas Jordan spoke about negative interest rates. What should he do? Since August 2012, the ECB does not pay interest on banks’ deposit facility. The consequence was that banks removed these excess reserves at the ECB. Jordan impressed FX traders and they pushed the EUR/CHF over 1.2650, to its highest level …
CHF: The long way to a risk-on currency The Swiss franc continues to weaken. We think that the EUR/CHF might top close to 1.30 in the coming months. After that the franc should slowly improve again because it will become a sort of risk-on currency. As basis you should understand that the Swiss franc has …
Goldman Sachs Asset Management via Business Insider “I have chosen to focus on the world,” said Jim O’Neill in his final note as an economist for Goldmans Sachs. O’Neill, who is famous for coining the acronym BRICs, discusses how the BRICs and other growth markets will continue to be an increasingly important driver of global …
Whoever is betting on a quick and long lasting U.S. recovery after the deep financial crisis should look on Japan in 1998/1999. After the Asian financial crisis, the Japanese yen recovered from 147 yen per dollar to 115 in just 4 months. This at the height of the strong dollar period. We often see over-enthusiam …
Monetary and fiscal policy in the Euro crisis: The Balance of Payments Crisis The euro zone crisis is a balance of payments crisis.1 Balance of payments crises (“BoP” crises) often appear during inflationary periods – when inflation in the leading country of the global monetary system, the United States, is high. During inflationary periods, during …
Many people claim that “money printing” and increasing money supply does not create inflation, some even speak of the “inflation lie”. Effectively, higher money supply did not create high inflation in developed nations, yet, because many of them were in a balance sheet recession, a period when firms and individuals prefer to reduce debt instead of spending, …
We think that the Italian, other peripheral economies and also France will follow Japan for a decade or more of balance sheet recession: stagnant wages, falling real estate prices and a reduction of private debt. On one side, we reckon that this might not be so bad because it will help exports and competitiveness, but …
We regularly publish the SNB asset structure by currency, rating & duration, they might be a template for the tactical asset allocation in these dimensions (CHF certainly excluded) for other fixed income and/or rather conservative asset managers. Composition of SNB Forex Reserves, Q1/2013 With the strong results of 11.2 billion francs, the SNB reduced the …
Richard Koo’s Central Banks in Balance Sheet Recessions: A Search for Correct Response In the following some extracts: Koo bashes Quantitative Easing as pure measure to increase asset prices: About the inability of FX markets to judge the effects of monetary expansion: Koo: As more and more people began to realize that increases …
The Swiss National Bank speaks out against the gold initiative and reveals that the Swiss gold is stored mostly in Switzerland and 20% in the UK and 10% in Canada. There is no Swiss gold in the United States according to SNB chairman Jordan. We speculate that the gold stored in the U.S. got transferred …
Not even the Swiss National Bank seems to understand the CHF price movements and why it is currently weakening. In this post we indicate some fundamental reasons why the franc could weaken. (This post contains a movie which should start immediately) Based on Verdelhan’s “The Share of Systemic Risk in Bilateral Exchange Rates“, the SNB …
About the trade-off between economic recovery and financial stability In the recent post on gold prices, we maintained that the Fed will raise interest rates far later than most FOMC members admit. This would imply that the years of financial repression will continue and investors will push up asset prices, incl. gold, instead. Many libertarians …
In the first part we identified the six major fundamentals that drive gold and silver prices. In this second part we speak about the relationship between gold and silver. We explain which fundamental factors speak for an increase of gold and silver prices and which don’t. Since fundamentals are very difficult to grasp, many people …
Everybody is wondering why China is currently so weak, with a HSBC manufacturing in contractionary territory. No wonder, the main competitor in electronics and many more products,the Japanese yen …
Switzerland’s banking secrecy is under threat. EU finance ministers have agreed to put pressure. Jim Rogers EU leaders should address the real problems – like their own unchecked spending habits. Video
Swiss inflation unchanged in April against March. The inflation difference between the Euro area and Switzerland on a new low. While in early 2012 it was near 4%, if has shrunk now to 1.6%. Details
Despite the weaker franc, sight deposits at the SNB are still rising. Last week they increased by 300 million CHF – details here. For us the SNB is not buying …
Most recently the Bundesbank critised the ECB decision to reduce Italian yields contained in the OMT program. To put things into perspective: Germany paid 5% interest for 10 years government …
Chinese economy is weaker, the Brent oil price under 100$ , the German DAX near 7500, the USD/JPY near 100, the Australian dollar is dipping. Most assets that are positively correlated to CHF are weaker. Time for EUR/CHF to rise?
Swiss inflation edged up 0.2% MoM when seasonal effects on clothes and footware were corrected. On a year basis, the CPI fell by 0.6%. Major reason were the falling energy prices, details
In March 2013, the foreign currency reserves of the Swiss National Bank (SNB) rose by 8 bln. CHF from 437 bln. to 445 bln. mostly thanks to valuation gains on US dollar, sterling and Canadian dollar. full details
According to latest IMF data the Swiss current account surplus rose from 49 billion CHF in 2011 to 80 billion in 2012, this is from 8.5% of GDP to 13.5%. Details
The SNB published the weekly monetary data for the week of the “Cyprus crisis”: SNB sight deposits are slightly up 400 million francs, mostly due to local banks. Details
The SNB published the weekly monetary data for the week before the Cyprus event: SNB sight deposits are slightly up 250 million francs, mostly due to other sight deposits (companies, the Swiss confederation, foreign banks) while local banks reduced their deposits slightly. Details
No signs of the so often mentioned “deflationary pressures” by the SNB.
According to Swiss statistics hourly wages rose by 1.1% in the year 2012, while they went up by 1.0% in 2011. More details
