George Dorgan
Author's details
Name: George Morgan Dorgan
Date registered: August 4, 2012 6:19 am
Biography
George Morgan Dorgan is a former UBS and Reuters analyst. He currently works as financial consultant and portfolio manager in Switzerland.
He is the main editor of the snbchf.com blog. This blog is supported by several independent Swiss and American financial advisors and consultancy firms, who want to deliver independent advice from the often misleading mainstream of banks and asset managers.
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Additional information about George Morgan Dorgan:
He has the German nationality, he speaks seven languages fluently, including Italian, Spanish and Portuguese and even some modern Greek. He lived in Italy , France and Spain and knows the mentalities and economic situations in these countries quite well. In the last 5 years he has learnt to speak Russian as well.
Latest posts
- Marc Faber in the interview (unfortunately only Swiss Germany) — June 17, 2013 6:24 pm
- FX Theory: Currencies of Countries with High Economic Freedom, Immigration and Savings Must Appreciate — June 16, 2013 6:57 pm
- Italian Retail Prices Remain close to Switzerland, Germany Far Cheaper — June 16, 2013 7:53 am
- Abenomics Doomed from The Beginning: Let us Go for Exchange Rate Targeting and Maintain Stability — June 13, 2013 4:11 pm
- Adam Smith Institute: Could Deflation Be Salvation? — June 11, 2013 10:52 pm
Most commented posts
- Can The SNB Make Profit On Currency Reserves ? — 17 comments
- What’s this crazy movement in EUR/CHF ? SNB Floor Hike ? — 17 comments
- Isn’t it wonderful to trade with a strong central bank behind you? — 13 comments
- Target2 Balances and SNB Currency Reserves. They are Both the Same Concept — 12 comments
- The Swiss Trade Surplus Unveiled — 11 comments
Author's posts listings
Key phrases: Do you agree that we have seen the worst in the euro crisis thanks to Mario Draghi’s “whatever it takes”? Faber: I am not sure, if the worst is behind us. It depends for whom, for the workers, for the middle class, for the wealthy. Via monetary easing central banks have increased the …
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Permanent link to this article: http://snbchf.com/2013/06/marc-faber/
The title sounds like the success story of the American dream. Thanks to American economic freedom, immigration, savings and investments, the importance of the dollar in the 19th century and the first half of the 20th century was continuously rising. Still, due to the gold standard, the success of the US economy and its …
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Permanent link to this article: http://snbchf.com/2013/06/currencies-freedom-immigration-and-savings/
Disinflation Finally Starting in Italy The Swiss site preisbarometer.ch is run by the Swiss Consumer Association. Their price data shows that a food basket is 46% more expensive when compared between the German “Kaufland” shop and the Swiss “Coop”. Going to France into “Leclerc” gives you an advantage of 38% against Coop. However, for a …
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Permanent link to this article: http://snbchf.com/2013/06/italian-prices-germany-switzerland/
Abenomics has failed It was doomed from the very beginning. You cannot create out of risk-averse Japanese risk-tolerating Americans. Public Japanese opinion puts enormous pressure on BoJ policy and on the government; the risks of rising JGB yields are too high. Japanese hate volatility, the government cannot risk its funding. The emphasis on the word …
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Permanent link to this article: http://snbchf.com/2013/06/abenomics-doomed-exchange-rate-targeting-maintain-stability/
Imagine wages and factor prices are stable. Hence deflation means productivity growth: Higher quantities bought for a lower price. Low inflation or even deflation is the Swiss success story for decades and the success story for the United States recently. The Pigou effect seems to be saving the US economy, just as it did in …
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Permanent link to this article: http://snbchf.com/2013/06/adam-smith-institute-deflation-salvation/
SNB Vice Chairman Jean-Pierre Danthine is undoubtedly the most hawkish member of the governing board, an opposite personality to the rather interventionist and Keynesian hedge fund manager Philip Hildebrand. Danthine has perfectly understood that times for the SNB might get hard again in 2014. Jean-Pierre Danthine has made some comments recently: – Swiss franc stays …
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Permanent link to this article: http://snbchf.com/2013/06/snb-cap-2014/
We believe in the Chinese economy, but it has just gone into a cyclical and a exchange-rate induced slowing. Any Cassandra views like recently by Charles Dumas, chief strategist of Lombard Research, but also some of Richard Koo’s earlier views, that there will be a burst of the Chinese housing bubble, are exaggerated. Markets Insight: …
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Permanent link to this article: http://snbchf.com/2013/06/the-cyclical-and-exchange-rate-induced-chinese-slowing/
The New Normal and the Old Normal The New Normal, as named by Zerohedge, includes Richard Koo’s balance sheet recession (or “yin” phase) for many developed nations: lower spending and lower borrowing for years and “exceptional monetary policy” for another decade. The successful investor must understand that others often trade the old normal, but we …
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Permanent link to this article: http://snbchf.com/2013/06/zerohedges-new-normal-bullish-on-japan/
Hedge funds worldwide have been counting on a rise and subsequent fall in USDJPY, and conditions remain intact for that to happen, though not to the extremes that many once expected.
Permanent link to this article: http://snbchf.com/2013/06/a-usdjpy-trade-the-smart-money-banks-on/
Employment growth since Dec ’07: Oz +8.1%, Switzerland +6.9%, Germany +5.8% Canada +4.3% Sweden +2.6% UK +0.9% Dutch +0.7% USA -2.1% Japan -2.3% Italy -3.1%
Permanent link to this article: http://snbchf.com/2013/06/swiss-second-after-australianzl/
Precisely at the moment when the dollar undergoes a secular bashing with a 6% loss against the yen and 3% against the euro, Pictet publish their “secular dollar bull era” video and recommend investors to avoid gold. “Secular movements” in currency markets are mostly driven by current account (CA) surpluses or deficits, while housing …
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Permanent link to this article: http://snbchf.com/2013/06/pictet-secular-dollar-bulls/
Our preliminary estimate of Q2 performance: 8 billion francs loss We explained that the Swiss National Bank (SNB) imitated hedge funds in 2012 and Q1/2013. The bank invested pro-cyclical and not like usually central banks or insurances counter-cyclically. They increased the equity share to 15% and still hold 64% government bonds, most of them German …
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Permanent link to this article: http://snbchf.com/2013/06/will-the-snb-suffer-high-losses-in-q22013/
Cheaper energy prices and long-lasting contracts help against inflation. Swiss inflation increased by 0.1% against April. According to Swiss Statistics, on a year basis, the CPI fell by 0.5%. Major reasons for lower figures were the 6.3% YoY decrease in energy prices, 4.5% YoY lower clothes and footwear price and technological improvements in communication that caused …
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Permanent link to this article: http://snbchf.com/2013/06/swiss-inflation-rises/
The drivers of disinflation or the downwards manipulators of the CPI We name the main drivers of disinflation and the manipulators of the CPI: Markets, investors, governments, statisticians, ageing, entrepreneurs, global competition, technology and last but least the euro.
Permanent link to this article: http://snbchf.com/2013/06/dont-worry-inflation-will-come-back/
Questions to George Dorgan Is there any chance that the SNB or other central banks could follow the BOJ and just depreciate the currency? George Dorgan: What did the BoJ do? Monetary easing and talk down the yen in a mercantilist style. A central bank is able to talk down a currency only if there …
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Permanent link to this article: http://snbchf.com/2013/06/snb-follow-boj/
Update: “Algos finally looked at the calendar”, the sell in May effect and the seasonal weakness of the dollar is back. June 3rd: With the weak ISM PMI of 49, but stronger European PMIs, the Anti US currencies, AUD, CHF, NZD and gold and silver showed a big rebound. USD/JPY -1.27% AUD/USD +2%, USD/CHF -1.23%, …
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Permanent link to this article: http://snbchf.com/2013/06/eurchf-1-30/
we slowly move into an inflationary environment and prices of German Bunds and US Treasuries are falling…. ECB and Fed interest rates seem to be nailed to zero for years.
Permanent link to this article: http://snbchf.com/2013/06/how-modern-monetary-policy-changed-chf/
The Swiss, Norway, the UK and Germans are in the lead, while, despite improvements, France, Italy and Spain are still lagging (details).
Permanent link to this article: http://snbchf.com/2013/06/swiss-norwegian-and-uk-pmi/
Given the strong UBS consumption indicator and an increase of 2% in employment against Q4/2012, we predicted yesterday that Swiss GDP would be stronger than the forecasts. Effectively GDP has grown by 1.1% YoY against the median analysts’ estimate of 0.9%. The quarterly increase was 0.6% against a forecast of 0.2%. It shows that sooner …
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Permanent link to this article: http://snbchf.com/2013/05/swiss-gdp-0-6-qoq-1-1-yoy/
Yesterday’s German CPI has given a first insights of what is coming these years: German inflation. For years excessive risk averseness put pressure on German yields. Most recently, energy prices helped to push down inflation and on German yields possibly for a last time. But many ignore that the main reason for inflation are rising …
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Permanent link to this article: http://snbchf.com/2013/05/short-german-government-bonds/
Once again the Swiss economy seems to be stronger than expected. UBS’s consumption indicator for April came out at 1.46 (details). This number seems at odds with the weak private consumption in UBS’s Swiss economic forecast, that predicted Swiss private consumption to rise only by 0.9% against 2.8% in 2012. Furthermore, the Swiss continue …
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Permanent link to this article: http://snbchf.com/2013/05/ubs-consumption-indicator/
In the European household wealth reports by national central banks it became clear that “median” German households are far poorer than many of their European counterparts. Some academics, like De Grauwe, do not trust the national banks’ survey data and elaborated their own statistics. We trust the national central bank surveys and explain why Germans …
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Permanent link to this article: http://snbchf.com/2013/05/french-home-price-bubble/
The Swiss trade balance for goods clearly indicates its global orientation. Switzerland has a trade surplus with the US, Canada, the UK and many emerging markets. Swiss exports are mostly luxury products and pharmaceuticals. The total surplus for the 4 first months in 2013 was 7.7 billion CHF, about 1.2% of GDP, annualized around …
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Permanent link to this article: http://snbchf.com/2013/05/swiss-trade-balance-global-economy/
It was an interesting shoot-out between Robert Savage, currency strategist at FX Concepts, and George Dorgan, financial editor and portfolio manager at SFC Consulting, at the yearly Euromoney Swiss Franc Forum. Robert Savage’s thesis was that, similar to the Japanese yen between October 2012 and March 2013, the Swiss franc would become a funding currency for …
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Permanent link to this article: http://snbchf.com/2013/05/where-is-the-carry-trade-bob-savage/
Response to Prof. Nick Rowe, Carleton University, Canada and Lars Christensen, the leading “Market Monetarist“. Nick Rowe: Is the Bank of Japan trying to push down bond yields? Well, yes and no. Yes, it is fighting a battle to push down bond yields, but that battle is part of a wider war for economic recovery. And …
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Permanent link to this article: http://snbchf.com/2013/05/why-abeconomics-is-madness/
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 has appreciated by nearly 40%. While China has to fight years-long appreciation of wages, the Japanese profit on years-long deflation and cheaper costs. At the …
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Permanent link to this article: http://snbchf.com/2013/05/40-renmimbi-appreciation-commodity-price-shock/
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 …
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Permanent link to this article: http://snbchf.com/2013/05/negative-rates-swiss-franc/
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
Permanent link to this article: http://snbchf.com/2013/05/jim-rogers-address-real-eu-problem/
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 …
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Permanent link to this article: http://snbchf.com/2013/05/jim-oneills-bullish-brics-outlook-until-2020-and-our-critics/
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 …
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Permanent link to this article: http://snbchf.com/2013/05/how-long-will-the-u-s-recovery-last-a-reminder-japan-in-19981999/
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 …
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Permanent link to this article: http://snbchf.com/2013/05/fed-cause-euro-crisis/
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, …
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Permanent link to this article: http://snbchf.com/2013/05/friedmans-monetary-cycle/
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
Permanent link to this article: http://snbchf.com/2013/05/swiss-inflation-unchanged-difference-euro-area-to-switzerland-down-to-1-6/
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 …
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Permanent link to this article: http://snbchf.com/2013/05/european-balance-sheet-recession/
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 …
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Permanent link to this article: http://snbchf.com/2013/04/snb-bottom-fishing-yen/
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 euros, but traders are taking more and more derivative (carry trade or FX positions) against the franc that do not show up in the sight …
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Permanent link to this article: http://snbchf.com/2013/04/sight-deposits-are-rising-despite-weaker-franc/
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 bonds between 1996 and 2002. This at average inflation-adjusted GDP growth rates of 0.5%. But there was no ECB that was buying German bonds …
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Permanent link to this article: http://snbchf.com/2013/04/germany-5-interest-growth-1996-2002/
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 …
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Permanent link to this article: http://snbchf.com/2013/04/richard-koo-newest-paper/
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 …
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Permanent link to this article: http://snbchf.com/2013/04/swiss-gold-location-gold-initiative/
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)
Permanent link to this article: http://snbchf.com/2013/04/price-movements-of-the-swiss-franc/
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?
Permanent link to this article: http://snbchf.com/2013/04/sight-deposits-nearly-unchanged-assault-on-swiss-franc-coming/
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 …
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Permanent link to this article: http://snbchf.com/2013/04/asset-price-bubbles-nus-economy-recover/
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 …
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Permanent link to this article: http://snbchf.com/2013/04/old-silver-fundamental-factors-positive-negative/
For us, gold and silver are the most complicated assets to price. Stocks, currencies and other commodities mostly depend on fundamental data of the stock, the country or on physical demand and supply of the commodity. Once fundamental data about the asset comes out, even an inexperienced investor can understand most price movements. Pricing gold …
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Permanent link to this article: http://snbchf.com/2013/04/gold-and-silver-prices/
By Stephen Jen (via Itau Global Connections). Bottom line Now that the Bank of Japan will be led by a team of super-doves, the mechanism through which a more aggressive BOJ could influence the yen is through capital flows. We have used the analogy of a two-stage rocket to describe how USDJPY could be propelled. …
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Permanent link to this article: http://snbchf.com/2013/04/fate-of-usdjpy/
Manufacturing Purchasing Manager Indices (PMIs) are considered to be the leading and most important economic indicators. In the last month, Asian economies showed better PMIs, while the Americas slowed their expansion and Europe still struggled. Update April 10 After the slowing in Q3 and Q4/2012, Asian and Pacific emerging economies returned to growth, …
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Permanent link to this article: http://snbchf.com/2013/04/global-purchasing-manager-indices-april-10/
Cheap ECB interest rates and rising home prices helped to enrich Southern Europeans between 1999 and 2007. Germany’s middle-class and poor, most of them not owning a home, were the ones that financed the expansion in a period of falling real wages and rising profits of German companies. We think that most of this will …
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Permanent link to this article: http://snbchf.com/2013/04/european-transfer-union-north-to-south/
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
Permanent link to this article: http://snbchf.com/2013/04/swiss-inflation-up-0-2-mom-down-0-6-yoy/
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
Permanent link to this article: http://snbchf.com/2013/04/snb-reserves-rise-by-8-bln-chf-thanks-to-stronger-usd-gbp-and-cad/
The Bank of Japan has introduced the expected “massive” quantitative and qualitative easing programme. “Quantitative” means increase of quantities of JGBs bought, “qualitative” the purchase of more ETFs, REIT and the loan support program.
Permanent link to this article: http://snbchf.com/2013/04/quantitative-qualitative-easing-no-fx-purchases/
The U.S. economy regularly improves between October and April, this year additionally fueled by “unlimited” quantitative easing, weaker gas prices and higher competitiveness thanks to a stronger Chinese yuan and weaker Asian economies. Update 2013: The Case-Shiller index continued to climb in April 2013; it became clear that this year the “Sell in May” …
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Permanent link to this article: http://snbchf.com/2013/04/sell-in-may-fortune-tellers-fom/
The German finance minister Wolfgang Schäuble has become the evil genius of the euro crisis. He has understood that the Cyprus won’t lead to a bank-run and collapse of capital markets. We all know that the US is now recovering.
Permanent link to this article: http://snbchf.com/2013/03/wolfgang-schauble-the-evil-genius/
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
Permanent link to this article: http://snbchf.com/2013/03/swiss-current-account-surplus-rises-from-8-5-to-13-5-of-gdp/
Switzerland continues to see a robust economy, even if the leading KOF indicator fell to 0.99 after highs of 1.68 in September. On other side, real and nominal wages continue to increase. As opposed to the KOF value, the UBS consumption indicator is rising. This shows that the internal economy is able to balance …
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Permanent link to this article: http://snbchf.com/2013/03/swiss-economic-indicators-march-2013/
We have insisted in several posts that the northern euro zone is very reluctant to continuously bail out the periphery and in particular its banks. The euro group chief Dijsselbloem has confirmed this now.
Permanent link to this article: http://snbchf.com/2013/03/dijsselbloem-the-end-of-bankers-and-bond-holders-moral-hazard/
Submitted by Marc Chandler, Global Head of Currency Strategy, Brown Brothers Harriman The US dollar rose against all the major currencies in the past week. It seems clear that the greenback’s gains were not a reflection of domestic developments, though it is true that US data stands in stark contrast with nearly every other major country. …
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Permanent link to this article: http://snbchf.com/2013/03/currency-positioning-and-technical-outlook-dollar-correction-at-hand/
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
Permanent link to this article: http://snbchf.com/2013/03/only-slight-increase-of-370-million-francs/
UPDATE March 25 The final compromise: via Reuters TOP NEWS Detail of EU/IMF bailout agreement with Cyprus Sun, Mar 24 22:19 PM EDT BRUSSELS (Reuters) – Cyprus clinched a last-ditch deal with international lenders on Monday for a 10 billion euro ($13 billion) bailout that will shut down its second largest bank and inflict heavy …
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Permanent link to this article: http://snbchf.com/2013/03/cyprus-the-final-compromise/
The initial compromise The Cyprus compromise combines a 10 billion € bailout with European, basically German tax-payers money, that also obliges rich account owners (9.9% levy) – rich Russians and Brits – and poorer account owners (6.75% levy) – Cypriot tax-payers money – to take part in the deal. Initial reactions from Zerohedge over Keynesian mainstream …
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Permanent link to this article: http://snbchf.com/2013/03/cyprus-updated/
If the upcoming referendum “Save our Swiss gold” wins, then the SNB must increase gold holdings from 10% to 20% of its balance sheet. This possibly implies an end of the CHF cap.
Permanent link to this article: http://snbchf.com/2013/03/swiss-gold-referendum/
The International Monetary Fund (IMF) judges “that the SNB’s net revenue is subject to large fluctuations, and sizable losses could occur if an appreciation of the Swiss franc was to take place before foreign exchange interventions were unwound.”
Permanent link to this article: http://snbchf.com/2013/03/imf-risks-on-snb-balance-sheet/
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
Permanent link to this article: http://snbchf.com/2013/03/in-week-before-cyprus-snb-sight-deposits-rise-by-500-million-francs/
Nicosia will impose a 9.9 percent one-off levy on deposits above 100,000 euros in Cypriot banks. This constitutes maybe the final stage of the euro crisis, with the very last country to be rescued. Or will it be a new escalation and may be the most dangerous one, a bank-run? How many Cyprus clients managed …
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Permanent link to this article: http://snbchf.com/2013/03/cyprus-tax-on-deposits-how-many-clients-managed-to-successfully-escape-to-switzerland/
Producer prices and “real mean reversion” for currencies show that the yen is currently fairly valued. Many momentum factors could, however, speak for some further weakening, while seasonality favours an appreciation. For us, the US dollar is back as the preferred funding currency. The real mean reversion for currencies Some economists, like Goldman’s O’Neill, in the case …
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Permanent link to this article: http://snbchf.com/2013/03/why-the-yen-is-now-fairly-valued/
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
Permanent link to this article: http://snbchf.com/2013/03/swiss-wages-keep-on-rising-no-sign-of-deflationary-pressures/
In its monetary assessment the SNB maintains the EUR/CHF floor and warned against further risks in the euro zone. The SNB has downgraded the inflation path to -0.2% (previously-0.1%) in 2013 and +0.2% (+0.4%) in 2014.We do not completely agree.
Permanent link to this article: http://snbchf.com/2013/03/snb-monetary-assessment-march-2013/
In our series about emerging markets, we name some that are overheating and could face increases of government bond yields due to higher inflation and weaker current accounts. At the same time, banks are aggressively selling emerging market bonds as possibility to achieve high yields. Tristan Hanson, head of asset allocation at Ashburton Asset …
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Permanent link to this article: http://snbchf.com/2013/03/more-about-overheating-emerging-markets/
Even if many speak about deflation in Europe, we rather think that continuing better data from the United States will help euro zone inflation to bottom out soon, especially because Germany and some other Northern nations will exhibit rising prices and spending. UPDATE June 2013: German inflation in May: Food prices increase by 5.4% YoY, …
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Permanent link to this article: http://snbchf.com/2013/03/new-inflationary-cycle-starts-in-germany/
We reckon that the Fed’s Quantitative Easing in 2010 (QE2) is the main reason why many emerging markets started to slow considerably in the course of 2012. This weakness might continue for some time. As for the consequence on certain emerging markets, QE2 was quite similar to the Volcker moment in 1982 and could therefore …
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Permanent link to this article: http://snbchf.com/2013/03/volcker-moment-redux/
With the weakening of emerging markets growth and the strengthening of the United States, the Swiss National Bank (SNB) has won the first battle in the war against financial markets. We judge that until the second battle, the “inflation battle”, starts, some years will pass.
Permanent link to this article: http://snbchf.com/2013/03/snb-has-won-the-risk-aversion-battle-when-will-the-inflation-battle-start/
The gap has fallen from 3.7% in February 2012 to 2.1%. Swiss CPI is rising on monthly basis, but still negative with 0.3% YoY.
Permanent link to this article: http://snbchf.com/2013/03/difference-swiss-and-eurozone-inflation-rate/
Readers will have read already the headline news. We repeat the data under a different perspective: We focus on income and yields for foreign exchange positions and gold in order to see if the SNB is able to survive a franc appreciation during an inflationary period in the U.S. and Europe. We leave out the …
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Permanent link to this article: http://snbchf.com/2013/03/snb-results/
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 asset managers. Moreover we publish the yield on investment. Composition of SNB Forex Reserves, Q4 2012 The Swiss National Bank (SNB) saw …
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Permanent link to this article: http://snbchf.com/2013/03/composition-snb-reserves/
A new study by Credit Suisse claims that the SNB needs to hike interest rates in order to avoid excessive risk taking in real estate markets; in particular around the centers of Geneva and Zurich, but also in the Southern Swiss cantons with lower income, but high real estate prices. More details
Permanent link to this article: http://snbchf.com/2013/03/credit-suisse-study-swiss-real-estate-market-needs-higher-rates/
Hedge Funds have lost their power. This year has shown that their only remaining possibility to gain easy money is a concerted action with some of their friends manipulating currency markets, calling it “currency wars” and creating an unholy alliance with the dovish prime minister Abe. Some of the biggest U.S. hedge-fund investors have made …
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Permanent link to this article: http://snbchf.com/2013/03/when-hedge-funds-close-their-short-yen/
Opposed to the leading Swiss monetary economist, Ernst Baltensperger, we think that the risk of losses on the SNB balance sheet and of an asset price bubble might be more important than the danger of upcoming Swiss inflation.
Permanent link to this article: http://snbchf.com/2013/03/what-ernst-baltensberger-got-wrong/
February 28, 2013 2:58 pm
by George Dorgan
February 28, 2013 2:58 pm
Wir sind beeindruckt von dem Leitartikel der Weltwoche, der doch ganz unserem Gedankengut entsprochen hat. Der deutsche Kanzlerkandidat Steinbrück hat der deutschen Demokratieverachtung und EU-treuen Überheblichkeit dann noch das i-Tüpfelchen hinzugefügt. “Zwei Clowns haben gewonnen.“ Von Roger Köppel, Die Weltwoche Demokratie ist, wenn es anders herauskommt, als Meinungsführer, Journalisten und tonangebende Politiker gedacht haben. …
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Permanent link to this article: http://snbchf.com/2013/02/das-beeindruckende-comeback-berlusconis-was-der-%c2%adbundesrat-aus-den-italienischen-wahlen-lernen-sollte/
February 28, 2013 7:15 am
by George Dorgan
February 28, 2013 7:15 am
The U.S. housing market is the main driver for risk on/off movements and therewith implicitly of the gold price. We state charts, e.g. Shiller Home Price Index and U.S. New Home Sales statistics, arguments in favour of a housing recovery and the counter-arguments.
Permanent link to this article: http://snbchf.com/2013/02/is-u-s-housing-really-recovering-pros-and-cons/
February 27, 2013 8:30 am
by George Dorgan
February 27, 2013 8:30 am
Krugman in the 1990s: ”France represents the most extreme case of “eurosclerosis”: of “ludicrously overregulated” labor markets and overprotected jobs. These issues and the unsuited German monetary policies to create the euro were the source of France’s troubles.” View Craig Willy’s blog.
Permanent link to this article: http://snbchf.com/2013/02/paul-krugman-in-1990s-long-live-the-french-franc/
February 26, 2013 9:49 am
by George Dorgan
February 26, 2013 9:49 am
We repost our original paper of July 2012, realizing that already on the political elections level, we were right. We think that Italy, as opposed to Argentina in 2001 and Spain today, would survive a euro exit without big problems. Given the current public and political opinion in both Italy and Germany this scenario has …
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Permanent link to this article: http://snbchf.com/2013/02/talian-euro-exit/
February 25, 2013 11:29 am
by George Dorgan
February 25, 2013 11:29 am
SNB sight deposits are rising again, by 700 million CHF in one week. But the amount of cash in form of bank notes and coins has risen by 10% since September. It seems that the central bank is now not only virtually printing (via sight deposits) but also physically. SNB liabilities reached a new record high. Details
Permanent link to this article: http://snbchf.com/2013/02/snb-liabilities-deposits-and-bank-notes-reach-new-record-high/
February 24, 2013 7:27 am
by George Dorgan
February 24, 2013 7:27 am
Based on 5 indicators, credit cycles, current account and trade balances, financial position of the concerned country, risk aversion and the alignment of rich and poor nations, we explain the price movement of FX prices on a fundamental data basis. Please read the first part “The Five Main Factors That Determine FX Rates” in order …
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Permanent link to this article: http://snbchf.com/2013/02/fx-price-movements/
February 24, 2013 6:40 am
by George Dorgan
February 24, 2013 6:40 am
We reckon that a sustained US recovery will make it possible that the eurozone splits up. Today’s Italian elections are maybe the start of an upcoming Italian euro exit.
Permanent link to this article: http://snbchf.com/2013/02/italy-us-recovery-makes-a-eurozone-split-up-possible/
February 23, 2013 7:17 am
by George Dorgan
February 23, 2013 7:17 am
Central Bank data shows that the Swiss National Bank (SNB) remains the only central bank that strongly participated in currency wars with Foreign Exchange interventions, while such “physical” interventions by the Bank of Japan remain very limited. The recent Japanese FX interventions were purely verbal, while hedge funds and FX traders warriors acted on behalf of …
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Permanent link to this article: http://snbchf.com/2013/02/snb-only-currency-warrior/
February 21, 2013 7:25 am
by George Dorgan
February 21, 2013 7:25 am
We remind readers that the voting members of the 2013 FOMC are strongly leaning towards dovish policy (see details of its composition). Dovish economists have a common understanding: the reverse Volcker moment implies that QE3 is open-ended.
Permanent link to this article: http://snbchf.com/2013/02/fomc-hawks-can-only-squawk-but-not-vote/
February 20, 2013 7:29 am
by George Dorgan
February 20, 2013 7:29 am
We reckon that the Swiss National Bank (SNB) will have issues maintaining the EUR/CHF floor in the longer term, because the expected yields on Swiss investments abroad will not be sufficiently higher than the yield on investments in Switzerland. Therefore, outflows in the capital account of the Swiss balance of payments cannot cover the persistent …
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Permanent link to this article: http://snbchf.com/2013/02/swiss-capital-account-neutralise-current-account-surpluses/
February 18, 2013 6:48 pm
by George Dorgan
February 18, 2013 6:48 pm
Most recent Swiss inflation data show that several items have risen by 1% in one month. Former ECB member Lorenzo Bini Smaghi claims that a currency war would lead to financial repression even by central banks that predominantly concentrate on price stability – like the SNB. A must read on the FT.
Permanent link to this article: http://snbchf.com/2013/02/will-the-snb-start-financial-repression-too/
February 16, 2013 10:03 pm
by George Dorgan
February 16, 2013 10:03 pm
The Fed’s plan is recreate an asset bubble, so that economic actors have enough time to forget about the latest one and adjust their rational expectations about low future growth to the upside. Read the Circle Bastiat.
Permanent link to this article: http://snbchf.com/2013/02/recreating-the-asset-bubble-the-feds-plan-for-economic-recovery/
February 14, 2013 7:41 am
by George Dorgan
February 14, 2013 7:41 am
Comparing Private Credit and Money Supply between Switzerland and the Euro Zone The Swiss National Bank (SNB) has decided to propose the establishment of the countercyclical capital buffer to the Swiss government, at last. A first step in preventing the Swiss asset bubble.
Permanent link to this article: http://snbchf.com/2013/02/the-countercyclical-capital-buffer-is-finally-there/
February 13, 2013 7:31 am
by George Dorgan
February 13, 2013 7:31 am
UPDATE February 2013 inflation data: The inflation figures for February showed the upwards movement we expected. On monthly basis inflation rose by 0.3%. The Swiss CPI is getting closer and closer to the one of the euro zone. We explain the January 2013 data on Swiss inflation and indicate which components drive the consumer …
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Permanent link to this article: http://snbchf.com/2013/02/switzerlands-slow-way-to-inflation/
February 12, 2013 7:22 am
by George Dorgan
February 12, 2013 7:22 am
Submitted by Mark Chandler, from marctomarkets.com Last week the euro was the weakest of the major currencies and the recently beaten up sterling and yen were the strongest. A similar pattern was also evident in the dollar-bloc. The New Zealand dollar had been the strongest and last week had was the weakest, with the …
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Permanent link to this article: http://snbchf.com/2013/02/net-speculative-positions-technical-forecast-week-february9/
February 11, 2013 6:33 am
by George Dorgan
February 11, 2013 6:33 am
The latest improvement in U.S. unemployment and good PMIs, finally let the sight deposits (money supply) at the SNB fall by 800 million francs in week ending on February 1 and 400 million for the one of Feb 8 . See the recent history of sight deposits.
Permanent link to this article: http://snbchf.com/2013/02/snb-sight-deposits-fall-by-800-million-chf-february-1/
February 10, 2013 9:18 am
by George Dorgan
February 10, 2013 9:18 am
We give an overview of opinions of leading economists that want to help Japan out of deflation. Paul Krugman, Richard Koo, Adam Posen and Kyle Bass. We show that FX traders and some hedge funds might have weakened the yen solely on the opinion of the unholy alliance of Kyle Bass and Shinzo Abe.
Permanent link to this article: http://snbchf.com/2013/02/economists-on-japan-unholy-alliance-bass-abe/
February 10, 2013 7:14 am
by George Dorgan
February 10, 2013 7:14 am
The effects of so-called “currency wars” and other central bank actions are small compared to the long-term impact made by five catalysts.
Permanent link to this article: http://snbchf.com/2013/02/what-determines-fx-rates/
February 10, 2013 6:52 am
by George Dorgan
February 10, 2013 6:52 am
Thoughts on the Japanese Currency Debasement (part 3) or why the liquidity trap will not need monetary easing to abate In previous posts we looked on the following aspects of the recent Japanese currency debasement: Overview: What different leading economists – Paul Krugman, Richard Koo, Adam Posen, Kyle Bass – think about the Japanese currency …
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Permanent link to this article: http://snbchf.com/2013/02/liquidity-trap-proble/
February 9, 2013 7:20 am
by George Dorgan
February 9, 2013 7:20 am
We show that Target2 imbalances and the SNB currency reserves represent the same issues, namely current account surpluses/deficits and capital flight. Therefore it makes sense to compare them, in total and by inhabitant.
Permanent link to this article: http://snbchf.com/2013/02/target2-snb-currency-reserves-feb2013/
February 9, 2013 7:12 am
by George Dorgan
February 9, 2013 7:12 am
As we explain here, , Target2 balances and SNB currency reserves represent the same concept, namely capital flight (in a positive and negative sense) and current account imbalances. While Target2 numbers for Germany and Northern Europe go down, SNB reserves remain the same, only 3 billion CHF away from record highs.
Permanent link to this article: http://snbchf.com/2013/02/target2-diminish-snb-reserves-same/
February 7, 2013 7:30 am
by George Dorgan
February 7, 2013 7:30 am
The U.S. economy regularly improves between October and April, this year additionally fueled by “indefinite” quantitative easing, weaker gas prices and higher competitiveness thanks to a stronger Chinese yuan and weaker Asian economies.
Permanent link to this article: http://snbchf.com/2013/02/sell-in-may-come-back-in-october/
February 6, 2013 7:07 am
by George Dorgan
February 6, 2013 7:07 am
Still in September, SNB’s Zurbrügg was speaking of negative rates and deflationary risks in Switzerland. At that meeting we told him that deflationary risks were absurd given rising M1/M3, higher salaries and strongly rising home prices . Now he admits that negative rates will not come.
Permanent link to this article: http://snbchf.com/2013/02/snbs-zurbrugg-no-negative-rates/
January 31, 2013 5:15 am
by George Dorgan
January 31, 2013 5:15 am
In 2012, austerity, the commitment of ECB and Fed and the weak euro helped to reduce peripheral yields, current account and partially fiscal deficits. The euro zone has possibly won the war. Now the weak countries need to win the peace, namely generate growth via competitiveness says Hans Werner Sinn in FAZ.
Permanent link to this article: http://snbchf.com/2013/01/sinn-the-euro-crisis-is-not-solved/
