George Dorgan

Author's details

Name: George M. Dorgan
Date registered: August 4, 2012 6:19 am

Biography

George Dorgan is an analyst with long years at Reuters and UBS. 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. George Dorgan has global expertise, lived in several countries. He speaks seven languages fluently: English, German, French, Italian, Spanish, Portuguese and Russian. His Google Plus profile and his Twitter account.

Latest posts

  1. Place of Birth of New Ukrainian Leaders Cement the Country’s Move to the West and the EU — October 27, 2014 9:12 am
  2. Ron Paul: Will The Swiss Vote to Get Their Gold Back? — September 21, 2014 9:00 am
  3. The Dollar, the ISM, Buy American and Irrational Exuberance — September 9, 2014 5:29 am
  4. George Dorgan Presents at the CFA Society in Zurich September 1 — August 27, 2014 7:46 am
  5. The Best Contrarian Macro Investment: Russia — August 9, 2014 7:24 am

Most commented posts

  1. Isn’t it wonderful to trade with a strong central bank behind you? — 10 comments
  2. Can The SNB Make Profit On Currency Reserves ? — 10 comments
  3. Main US Economic Indicators — 7 comments
  4. What’s this crazy movement in EUR/CHF ? SNB Floor Hike ? — 6 comments
  5. Why the Yen Is Now Fairly Valued, USD back as Preferred Funding Currency — 4 comments

Author's posts listings

Place of Birth of New Ukrainian Leaders Cement the Country’s Move to the West and the EU

Ukraine Languages Candidates Exit Poll

The place of birth of the Ukrainian leaders give us hints where the country is headed. Most of them come from the very West of Ukraine, from places that formerly were part of the Austrian-Hungarian empire, of Poland or Romania.

Permanent link to this article: http://snbchf.com/2014/10/place-birth-ukrainian-leaders-cement-countrys-move-west/

Ron Paul: Will The Swiss Vote to Get Their Gold Back?

On November 30th, voters in Switzerland will head to the polls to vote in a referendum on gold. On the ballot is a measure to prohibit the Swiss National Bank (SNB) from further gold sales, to repatriate Swiss-owned gold to Switzerland, and to mandate that gold make up at least 20 percent of the SNB’s …

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Permanent link to this article: http://snbchf.com/2014/09/ron-paul-swiss-gold-referendum/

The Dollar, the ISM, Buy American and Irrational Exuberance

In this Cross Asset Global Macro Analysis we name our reasons for the current dollar strength. The main causes are ECB’s euro “downtalk”, tight monetary policy in Emerging Markets, rising savings of the aging populations. This leads to weak global spending and growth. With the help of Fed-financed higher asset prices and falling gasoline prices, …

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Permanent link to this article: http://snbchf.com/2014/09/dollar-ism-irrational-exuberance/

George Dorgan Presents at the CFA Society in Zurich September 1

George Dorgan will present at the CFA society in Zurich on September 1. The focus of his speech will be: Reasons why the EUR/CHF exchange rate will fall under 1.20 once the deflationary pressures in Europe have ended The missing link in the CFA program between its chapters on micro-economy, macro and currencies Does history …

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Permanent link to this article: http://snbchf.com/2014/08/george-dorgan-cfa-society-zurich/

The Best Contrarian Macro Investment: Russia

We name thirteen macro-economic reasons why Russia is currently the best place for contrarian investments.

Permanent link to this article: http://snbchf.com/2014/08/best-contrarian-investment-russia/

SNB Results Q2/2014: Draghi’s Weak Euro Policy, a Nice Gift for the SNB, for Now

The ECB commitment to a weak euro and the maintenance of ultra-low interest rates, was a nice (temporary) gift for the Swiss National Bank (SNB). The bank earned nearly 12 billion francs in Q2/2014.

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Permanent link to this article: http://snbchf.com/2014/07/weak-euro-nice-gift-for-snb/

Contrarian Investment, FX Rates and the Misleading Concept Called GDP

We extended and improved our existing post to contrarian investing. It was published on Seeking Alpha. We are pleased that it was awarded the Editor’s Pick.
Gross Domestic Product(ion) is (or has become) a measurement of activity and consumption, but not of capital accumulation and production.
In many cases, GDP growth is negatively correlated to saving. Higher savings (aka austerity) leads to lower GDP growth today, but to higher GDP in the future. In its worst case, GDP growth could be completely based on credit, eliminating the capital basis of a country (example Greece).
FX rates are less driven by GDP but by savings and investments, in particular on the corporate side, by investors and micro-economic indicators.
In addition to micro-economic indicators like price to cash flow or price to book ratio, the saving rate is the best macro-economic indicator of the investment style called “contrarian investing.”

Permanent link to this article: http://snbchf.com/2014/07/fx-rates-misleading-concept-called-gdp/

Malaysian MH17: Ukrainian&Western Propaganda against Russian Propaganda. Who is Best?

strong suspicion that Ukrainian air control deliberately facilitated and enabled the shot-down. Combining Western and Ukrainian propaganda with pro-Russian propaganda helps. In each piece of “manufactured or exaggerated news” there might be a bit of truth. Still there is only one party to this conflict that has to gain from a deliberate blowing up of MH17, this is not Russia or the so-called “Donezk People’s Republic”.

Permanent link to this article: http://snbchf.com/2014/07/malaysia-airlines-flight/

Permanent link to this article: http://snbchf.com/2014/07/dollar-higher-savings-smaller-current-account/

Inflation Expectations = Real GDP Growth = Ten-Year Treasury Yields – 0.5%?

In most periods, inflation expectations and wages remain the main drivers of US bond yields. Inflation and its early indicators like money supply or inflation expectation surveys are the main determinants of the Fed’s behaviour. The inflation expectation surveys are often closely related to wages.

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Permanent link to this article: http://snbchf.com/2014/07/inflation-expectations-drive-yields-not-fed/

The Swiss Radical Libertarian Party “UP Schweiz” Is Born

On June 18th, 2014, the new radical libertarian party UP!, “Unabhängigkeitspartei”, Independent Party was founded. The party is co-lead by the former head of the  Swiss young liberals, Brenda Mäder, the former head of the young liberals St. Gallen Simon Scherrer and by Silvan Amberg, the former leader of FDP’s homosexual association. The Swiss FDP is losing some of their brightest …

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Permanent link to this article: http://snbchf.com/2014/06/swiss-radical-libertarian-up-schweiz/

Inflation Difference between Eurozone and Switzerland Narrows to 0.3%

According to Swiss Statistics the inflation rate has risen to 0.2% y/y – as for both the Swiss CPI standard and the European HICP standard.

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Permanent link to this article: http://snbchf.com/2014/06/inflation-difference-eurozone-switzerland-0-3/

Negative Rates for Bundesbank TARGET2 Surplus?

The ECB surprised with negative rates on excess reserves, on the deposit facility and even on TARGET2. We clarify whether the Bundesbank, as a member of the euro system, must pay negative interest rates on its huge TARGET2 surplus.

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Permanent link to this article: http://snbchf.com/2014/06/negative-rates-bundesbank/

ECB Measures Background: How to Reduce German Competitiveness and Talk down the Euro

In our view, the ECB measures of June 2014 want to increase German lending, spending, salaries and inflation. Finally they target a reduction of German competitiveness. The ECB wanted to talk down the euro but will not succeed. We explain why the measure are bullish for the euro. We expect EUR/USD of 1.40 in the …

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Permanent link to this article: http://snbchf.com/2014/06/ecb-how-to-reduce-german-competiveness/

Global Inflation Spikes Up, Are You Sure About What You Are Doing Mr Draghi?

  The European Central Bank (ECB) has the habit of reacting late. As seen in July 2008 and July 2011, the ECB is often the last major central bank to hike rates. They hike rates at the moment when others prepare for a recession or a significant slowing. Currently we are witnessing the opposite movement: The world is getting …

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Permanent link to this article: http://snbchf.com/2014/06/global-inflation-spikes-ecb/

SNB Follows ECB? Pictet’s Negative SNB Interest Call

Pictet calls for negative interest rates in Switzerland in order to maintain rate differentials between the euro zone and Switzerland. Maintaining rate differentials would be useful for FX speculators and for money market funds that still invest in the euro zone.

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Permanent link to this article: http://snbchf.com/2014/06/pictet-negative-interests/

Euro and EU sceptical Parties in EU 2014 Elections: The Economic Danger Is Left not Right

  The tendency of the European parliament elections seems to be that in the Northern countries rather right-wing parties obtain more votes, like British UKIP, German AFD, Danish People’s Party, Austrian FPÖ or Sweden Democrats. In the austerity countries the left-wing movements are getting stronger and stronger, led by SYRIZA in Greece and Sinn Fein …

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Permanent link to this article: http://snbchf.com/2014/05/eu-sceptical-parties-eu-2014-elections/

Don’t Worry, Inflation Will Come Back! It is already there; just not where you live !

We name the main drivers of disinflation and the downwards manipulators of the CPI: Markets, central banks, investors, governments, statisticians, ageing, entrepreneurs, global competition, technology and last but least the euro. Despite that downwards-manipulation we realized that inflation is there, just not where you might live!

Permanent link to this article: http://snbchf.com/2014/05/dont-worry-inflation-will-come-back/

Stagnating Salaries as Main Reason for the British Home Price Boom

The major reason for rising British and American home prices is for us the relatively new phenomenon that they are to able to finance at cheap rates. Swiss or Germans have seen relatively low mortgage rates for more than three decades (with a short exception in the mid 1990s after the German reunification). The main driver of low rates …

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Permanent link to this article: http://snbchf.com/2014/05/stagnating-salaries-for-british-home-price-boom/

Hans Werner Sinn’s Piketty Critique: r ≠ i > g

Hans Werner Sinn has formulated his critique with Piketty. Sinn says that r ≠ i > g. Interest rate are usually higher than economic growth, but not necessarily increases of wealth.

Permanent link to this article: http://snbchf.com/2014/05/hans-werner-sinn-piketty-critique/

Swiss Franc, Pseudo-Mathematics And Financial Charlatanism: Extended Version

We have published the extended version of “The Swiss Franc, Pseudo-Mathematics And Financial Charlatanism” on the investor site Seeking Alpha. The version is longer than the one published previously.

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Permanent link to this article: http://snbchf.com/2014/05/swiss-franc-pseudo-mathematics-financial-charlatanism-seeking-alpha/

SNB First Quarter Results: 1.7% annualized Yield on Seigniorage, 2% annualized Loss on FX Rate Change

The main task of a central bank occupied with QEE (quantitative easing or exchange intervention) is to obtain higher gains on seigniorage than it loses with its “ever appreciating” currency. Otherwise its equity capital would be absorbed. In the first quarter of 2014, the Swiss National Bank (SNB) was unable to accomplish this task.  

Permanent link to this article: http://snbchf.com/2014/05/snb-first-quarter-results-1-7-annualized-yield-seigniorage-2-annualized-loss-fx-rate-change/

QE, QEE, the Money Multiplier and the Secular Stagnation Confusion

The Indian central banker Rajan recently accused his Western colleagues of lax policy until 2007. Furthermore he argued that FX intervention using so-called “quantitative easing or exchange intervention” (QEE) help to dry up the needed money supply in India. We will look on his statement from this money supply angle: In some countries, the money …

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Permanent link to this article: http://snbchf.com/2014/04/qe-qee-money-multiplier-secular-stagnation-confusion/

Update 2014: Swiss home price to income ratio small in historic and global comparison

Based on four different data sources, we prove  that Swiss the home price to income ratio is small in global comparison and in a historic perspective. Combined with another decade of near zero interest rates, reason enough to think that the Swiss real estate boom should continue for another decade.

Permanent link to this article: http://snbchf.com/2014/04/update-2014-swiss-home-price-income-ratio-small-historic-global-comparison/

Swiss Yearly Inflation Rate Overtakes First Eurozone Countries

  According to Swiss Statistics the yearly inflation rate is at 0.0%, and the monthly rate is +0.4%. The Spanish CPI is already under zero at -0.2%, and the Italian one is at +0.3%, not to speak about severe Cyprus or Greek deflation . Still in February 2012, the difference between the Swiss and Euro …

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Permanent link to this article: http://snbchf.com/2014/04/swiss-inflation-rate-overtakes-first-eurozone-countries/

Official Eurostat Trade Balance Massively Distorted by UK Sales Of 1464 Tonnes of Gold To Switzerland

Somebody who follows regularly the trade balance figures from Eurostat, may have noticed a sentence that was repeated in each monthly release from the Eurostat trade statistics in 2013: “The EU28 trade surplus increased significantly with Switzerland”. The reason was massive gold sales from the UK to Switzerland.

Permanent link to this article: http://snbchf.com/2014/04/official-eurostat-trade-balance-manipulated-uk-sales-1464-tonnes-gold-switzerland/

Is the SNB Intervening Again?

Update March 21, 2014: Total SNB sight deposits increased to 367.8 bln. CHF, but flows reverted a bit. Foreign banks and “non-banks” reduced their CHF exposure at the SNB to 50.8 bln, possibly converting a part of the difference into USD. Dollars are more useful when sanctions will hurt both Russian and German firms. On …

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Permanent link to this article: http://snbchf.com/2014/03/snb-intervening-again/

The IMF Assessment for Switzerland and our Critique

In the 2014 assessment for Switzerland by the International Monetary Fund several sentences caught our eyes; we will contrast them with our recent critique. The most important one was that for the IMF is only “moderately overvalued”, this would have no negative effect for exporters.

Permanent link to this article: http://snbchf.com/2014/03/imf-assessment-switzerland-2014/

SECO expects 2.2% Swiss growth, further CHF strength ahead, understand why

The Swiss government see Swiss GDP growth at 2.2% in 2014 and 2.7% in 2015. Our estimate sees a divergence in the GDP components; we expects a lower trade surplus and higher spending. in both cases CHF should rise.

Permanent link to this article: http://snbchf.com/2014/03/seco-expects-2-2-growth-swiss-franc-will-rise/

2013 SNB’s Valuation Gains 14 billion CHF on Stocks, but Losses of 35 bln. on Gold, FX and Bonds

The Swiss National Bank (SNB) is reporting a loss of CHF 9.1 billion for the year 2013 (2012: profit of CHF 6.0 billion). Valuation losses on gold holdings amounting to some CHF 15.2 billion contrast with a profit of CHF 3.1 billion on foreign currency positions and a net result of CHF 3.4 billion from …

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Permanent link to this article: http://snbchf.com/2014/03/2013-snb-valuation-gains-14-billion-chf-stocks-losses-35-bln-gold-fx-bonds/

GDP: Switzerland Enters Boom and.. incredibly.. SNB is Still Printing Money

According to the latest data from the SECO,Swiss GDP rose by 0.2% in Q4/2013. Despite the relatively weak headline, the detailed data showed a couple of characteristics that speak for an upcoming boom. At the same time, the Swiss National Bank is printing money again: both the monetary base and money supply are increasing.

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Permanent link to this article: http://snbchf.com/2014/02/gdp-switzerland-enters-boom-snb-printing-money/

George Dorgan bei den Jungfreisinnigen Zürich, Teil 1: CHF und Schweizer Wirtschaft

Am 7. Februar hat George Dorgan eine Präsentation bei den Jungfreisinnigen Zürich gehalten. Themen waren die weitere Entwicklung des Frankens, die Schweizer Wirtschaft, die SNB und die Auswirkungen der Gold- und Masseneinwanderungsinitiativen.

Permanent link to this article: http://snbchf.com/2014/02/prasentation-george-dorgan-bei-den-jungfreisinnigen-zurich-teil-1/

Ukraine: About Street-Elected Overthrowers and Democratically Elected Dictators

It only needs a few years until democratically elected presidents become so-called “tyrants” and “dictators”. The bad economic situation in many emerging markets and Russia, and therefore also in Ukraine, has taken its toll. Demonstrators and Ukrainian nationalists toppled a president that has a Russian mother tongue. But Yanukovych was a protector of the country’s …

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Permanent link to this article: http://snbchf.com/2014/02/ukraine/

Swiss Yes To Referendum Against Mass Immigration Is A Yes To Higher Salaries And Higher Inflation

In the referendum on Mass Immigration on Sunday, the Swiss opted for less competition, which implies that with the upcoming Swiss boom, salaries and inflation will rise.

Permanent link to this article: http://snbchf.com/2014/02/referendum-mass-immigration-swiss-higher-salaries-higher-inflation/

George Dorgan at Swiss Young Liberals: Slides

On Friday the 7th of February at 19.00, George Dorgan is presenting his outlook on the Swiss Franc. He explains if and when the Swiss National Bank is able to generate profits again. Moreover he discusses the influence of the two referendums “Save Our Swiss Gold” and “Against Mass Immigration” on the Swiss Franc and …

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Permanent link to this article: http://snbchf.com/2014/02/george-dorgan-swiss-young-liberals/

UBS Consumption Indicator Points to 2.5 Percent Swiss GDP Growth in 2014

FacebookShare As usual, the Swiss economy seems to be better than economists thought. After 1.40 still in December, the UBS consumption indicator has risen to 1.81, a value higher than the ones in 2012, when private consumption increased by 2.4%. Similarly as last year, the latest reading contradicts UBS’s own growth forecasts, albeit this year …

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Permanent link to this article: http://snbchf.com/2014/01/ubs-consumption-indicator-2014/

Permanent link to this article: http://snbchf.com/2014/01/discrepency-developed-emerging-markets/

SNB Increases Weight of Countercyclical Capital Buffer for Banks

The SNB requires banks to raise the weight of the counter-cyclical capital buffers” (CCB) by holding extra capital worth 1 per cent of the risk-weighted assets in their mortgage portfolios.

Permanent link to this article: http://snbchf.com/2014/01/snb-increases-weight-countercyclical-capital-buffer/

Permanent link to this article: http://snbchf.com/2014/01/volcker-moment-redux/

Inflation Difference between Eurozone and Switzerland Narrows to 0.5%

Another five months till Swiss inflation is higher? When the European economy starts to expand again, who will hike rates first, the SNB or the ECB? December Update According to Swiss Statistics the inflation rate remained stable at 0.1% y/y, while the inflation measured by the European HICP standard was +0.3% y/y, slightly higher than …

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Permanent link to this article: http://snbchf.com/2014/01/swiss-inflation/

An Upcoming Italian Success Story?

While the mainstream is still talking about potential riots in Italian streets, we rather see positive adjustments in the Italian economy.

Permanent link to this article: http://snbchf.com/2013/12/upcoming-italian-success-story/

Swiss GDP Details Compared to UK, USA, Germany, Japan and Australia, Q3 2013

The Swiss GDP was again one of the strongest major economies. The quarterly growth rate in the third quarter was 0.5%, the yearly one 1.9%. U.S. GDP improved by 3.6% QoQ annualized. For comparison purposes, our figures are not annualized; hence the equivalent is 0.9% QoQ. In Japan and Switzerland private consumption rose by 0.1% …

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Permanent link to this article: http://snbchf.com/2013/12/swiss-gdp-q3-2013/

Fundamentals,FX,Gold and CHF:Week November 18 to November 22

Fundamentals with highest importance: The HSBC Flash Purchasing Manager Index (PMI) for China weakened from 50.8 to 50.4. In particular, new export orders, output prices and employment started to decrease again, while output increased. The preliminary Markit manufacturing PMI for the United States edged up to 54.3 (vs. 52.3 expected), a 9-month high after the …

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Permanent link to this article: http://snbchf.com/2013/11/fundamentals-fx-gold-and-chf-week-november-18/

Japan Beats the United States in GDP Growth per Capita for Last Decade

Mainstream economists speak of two Japanese lost decades(s) between 1990 and 2009.  Often the United States and the UK are seen as leader in growth. Some statistics might confirm this: When we look on a more subtle criteria, namely GDP growth per capita, available at the world bank, we see a different picture. China and …

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Permanent link to this article: http://snbchf.com/2013/11/gdp-growth-per-capita/

Fundamentals,FX,Gold and CHF:Week November 11 to November 15

Fundamentals with highest importance: In Janet Yellen’s hearing at the Senate Banking Commission, the future Fed chair emphasized the need to provide support to the economic recovery and to overcome low inflation. Her speech supported equities, gold and US Treasuries. GDP in the Euro zone rose by 0.1% QoQ in line with expectations, but less …

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Permanent link to this article: http://snbchf.com/2013/11/fundamentalsfxgold-and-chf-week-november-11/

Fundamentals,FX,Gold and CHF: Week November 4 to November 8

Fundamentals with highest importance: The U.S. GDP release for Q3, showed that despite the recent U.S. critique with Germany, the Americans are trying to follow the successful Germans: for the first time since Q1/2012 and Q2/2011 exports rose more than imports. GDP was up 2.8%, but not driven by consumption, it was mostly helped by …

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Permanent link to this article: http://snbchf.com/2013/11/weekly-fundamentals-fx-gold-chf-november-4/

ECB rate cut creates complex situation for SNB

Some extracts from ForexLive.com Says Thomas Jordan. Need to wait to assess impact of ECB rate cut Wasn’t totally surprised by the cut Interest rates will remain low in Switzerland Low rates may lead to property bubble risk which SNB will respond to if necessary SNB monitoring property market which is already in difficult situation …

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Permanent link to this article: http://snbchf.com/2013/11/ecb-rate-cut-snb/

Weekly Newspaper on Swiss National Bank and Swiss Franc

  Feel free to click into the other categories “politics”, “business”, #chf, #snb in order to see more articles.

Permanent link to this article: http://snbchf.com/2013/11/weekly-newspaper-on-swiss-national-bank-november4/

Fundamentals,FX,Gold and CHF: Week October 28 to November 3

This week had a focus on – due to the government shut-down – the long awaited U.S. data: Highest importance: The ISM Manufacturing Purchasing Manager Index (PMI) for October came in at 56.4, higher than the 55 expected. The value for new orders and for production remained above 60 despite the government shutdown. The value …

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Permanent link to this article: http://snbchf.com/2013/11/fundamentals-fx-gold-and-chf-week-october28/

Fast CHF and Gold Price Movements

Our CHF and Gold News Bar on our home page explains daily CHF and gold price movements based on the most important fundamental indicators in a few sentences. Keep in mind that the only Swiss fundamental data that is able to move the CHF must come from the SNB and from Swiss inflation data – …

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Permanent link to this article: http://snbchf.com/2013/11/understand-chf-price-movements/

In Which Positions Does the SNB Win and Where Does it Lose Money: Details on the Q3 Results

UPDATE October 31, The official press release focused on the results for Q1 to Q3. The loss was 6.4 billion after a 7.3 bln. CHF loss in the first two quarters. Over all three quarters especially gold and the yen weakened the central bank’s positions. For the third quarter, it means that income was positive …

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Permanent link to this article: http://snbchf.com/2013/10/estimate-q3-2013-results/

Weekly Newspaper on Swiss National Bank, Edition October 28

The SNB recently published the latest real effective exchange rate (REER). According to that the franc was only 7% overvalued against the base year 1999. Credit Suisse (CS) has taken some more factors than the REER under consideration: for them the fair value of the EUR/CHF is now 1.22, while the dollar was still undervalued. …

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Permanent link to this article: http://snbchf.com/2013/10/weekly-swiss-national-bank-oct-28/

Fundamentals, FX, Gold and CHF: Week October 21 to 25

Major Fundamental Events The week contained a lot of important fundamental events, in particular Non-Farm Payrolls and preliminary “flash” PMI readings.   Highest importance for FX rates Non-Farm Payrolls (NFPs) weakened to 148K, private NFPs to 126K, both against 180K expected. Especially the private NFPs were disappointing. The decrease in the unemployment rate from 7.3% …

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Permanent link to this article: http://snbchf.com/2013/10/week-october-21-to-25-fundamentals-gold-and-chf/

Week October 14 to 18, A Close Look at China’s Fundamental Data

  Weekly Overview of FX Rates Movements The week was driven by the following factors: Solid Chinese economic data including a 7.8% rise in GDP. The end of the debt ceiling debate, at least for now. The expectation by the Fed member Evans that the government shutdown has delayed Fed tapering. San Francisco Fed’s Williams …

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Permanent link to this article: http://snbchf.com/2013/10/chinesefundamentals-week-october-14-oct-18/

European Industrial Production Still Contracting, Switzerland Expanding Again

Swiss industrial production is rather insensitive to price changes and to the recent slowing of global demand thanks to the concentration on pharmaceuticals and luxury products.   Based on Eurostat’s industrial production for July and August , we compared the values from 2010 to 2013 for these two summer months. This aggregated two-months comparison is …

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Permanent link to this article: http://snbchf.com/2013/10/industrial-production-europe-switzerland/

Weekly on Swiss National Bank

Permanent link to this article: http://snbchf.com/2013/10/weekly-swiss-national-bank/

Fundamentals, Gold and FX Movements, Week October 7 to Oct. 12

Our weekly summary of fundamental news on FX that aims to explains price movements, with particular emphasis on the possibly biggest mysteries: the gold price (GLD) and the Swiss franc (FXF) .   Weekly Overview Hopes on a compromise between Obama and republicans on the U.S. debt ceiling and high U.S. initial unemployment claims  sustained …

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Permanent link to this article: http://snbchf.com/2013/10/fundamentals-gold-and-fx-movements-week-october-7/

Fundamentals, Gold and FX Movements, Week September 30 to October 4

Our weekly summary of fundamental news on FX that aims to explains price movements, with particular emphasis on the possibly biggest mysteries: the gold price (GLD) and the Swiss franc (FXF) . The clear winner of the week was the Aussie, supported by a positive PMI and positive news from the RBA. In the previous …

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Permanent link to this article: http://snbchf.com/2013/10/fundamentals-and-fx-movements-week-september-30/

Fundamentals and FX Movements, Week September 23 to September 27

Weekly summary of fundamental news on FX with a focus on CHF and gold price movements. Weekly price movements The U.S. budget discussion and rather bad U.S. fundamental data made JPY and CHF the winners of the week. After weeks of improvements, the currencies of the Emerging Markets and carry trade currencies, like NZD, AUD …

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Permanent link to this article: http://snbchf.com/2013/09/fundamentals-fx-movements-week-september-23/

Fundamentals and FX Movements, Week September 16 to September 20

Weekly summary of fundamental news with a focus on CHF and gold price movements. Friday, September 20:The St. Louis Fed president James Bullard explained that the Fed was close to tapering 10 bln. $ and that markets overreacted after the FOMC with their strong performance. As a consequence the S&P500 inched down by 0.6% while …

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Permanent link to this article: http://snbchf.com/2013/09/fundamentals-and-fx-movements-week-september-16/

History of Wrong Forecasts by Swiss and Fed Economists: Update September 2013

Or how to talk down and how to talk up an economy with wrong forecasts   American and Swiss mentalities are very different, the Americans have the tendency not to care about the future a lot, the Swiss, however, do things only after careful consideration of potential risks. This tendency can be proven economically with …

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Permanent link to this article: http://snbchf.com/2013/09/history-wrong-forecasts/

Quantitative Easing, its Indicators and the Swiss Franc, Update FOMC September 2013

The main drivers of demand for Swiss francs are the euro crisis, but even more, the behavior of American investors, who go out of the dollar in the fear of further bad US economic data and of Quantitative Easing. This will push down the dollar, and both safe-havens like the CHF, gold or the Japanese …

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Permanent link to this article: http://snbchf.com/2013/09/quantitative-easing-indicators-swiss-franc-update-fomc-september-2013/

Fundamentals and FX Movements, Week September 9 to Sept. 13

The weekly summary of global fundamental news with focus on CHF and gold price movements. Friday, September 13:The leading news came from U.S. retail sales and the Michigan consumer sentiment. Retail sales were up +0.2% instead of 0.5% expected, sales excluding autos and gas +0.1% (vs +0.3% exp.) The Michigan consumer sentiment disappointed at 76.8 …

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Permanent link to this article: http://snbchf.com/2013/09/fx-movements-week-september-9-september-13/

Global Purchasing Manager Indices: Europe and China Recover while other Emerging Markets Still Struggle

Emerging markets: Years of strong increases in wages combined with tapering fears have taken its toll: Higher costs and lower investment capital available. EM Companies have issues in coping with developed economies. Some of them even need to shed jobs.

Permanent link to this article: http://snbchf.com/2013/09/global-purchasing-manager-indices-europe-and-china-recover-while-other-emerging-markets-still-struggle/

Swiss Q2 GDP Details Compared to Japan, Germany, Australia and U.S.

  The Swiss GDP for Q2/2013 was in line with its peers in developed countries. The quarterly (not annualized) change was +0.5% compared to 0.6% for Japan and the United States, +0.7% for Germany and +0.5% for Australia. Swiss and Japanese growth was driven more by consumption, while the U.S. advances were based more on …

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Permanent link to this article: http://snbchf.com/2013/09/swiss-q2-gdp-compared-to-japan-germany-australia-and-u-s/

No SNB Intervention: Massive Swiss M0 Increase due to Post Finance Transformation into a Bank

  Anybody wondering about the massive M0 Increase in Friday’s SNB IMF data: As we know, the monetary base M0 is the main mean of financing currency interventions. It consists of bank notes and sight deposits of domestic banks. However the SNB did not intervene, it was no money printing this time. Deposits of Swiss Post …

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Permanent link to this article: http://snbchf.com/2013/09/m0-increase-post-finance/

CHF Price Movements: Correlations between CHF, Gold and the German Economy

A big part of Swiss consumption is imported from Germany. Therefore Swiss inflation is often correlated to German inflation. Investment flows often move to Switzerland and Germany at the same time

Permanent link to this article: http://snbchf.com/2013/08/chf-price-movements-correlations-between-chf-gold-and-the-german-economy/

Currency Positioning and Technical Outlook August 12: Corrective Pressures Dominate

Submitted by Marc Chandler, Global Head of Currency Strategy, Brown Brothers Harriman The main tension in the foreign exchange market is between positions adjusting pressures, which are US dollar negative, and widely held ideas that the trajectory of growth and interest rate differentials favor the US, which is dollar positive. There are some important economic data due …

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Danthine: SNB would end franc cap once it raises interest rates

It was obvious already at the latest SNB Monetary Policy Assessment, the SNB is becoming more and more hawkish. At the forefront is its ueber-hawk Jean-Pierre Danthine, the person responsible for the overheating Swiss housing market. He has now announced: SNB would end franc limit once it raises interest rates The Swiss National Bank will …

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Inflation Difference (HICP) between Eurozone and Switzerland Narrows from 1.4% to 1.1%

  According to Swiss statistics, the yearly change in the Swiss consumer price index has risen from  -0.1% to 0%. The headline MoM figure fell by 0.4% due to the yearly sell-off in the retail sector. The difference between euro zone and Switzerland in terms of the European  Harmonized Index of Consumer Prices HICP has …

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The U.S. “Oil Trade Deficit” Narrows

The United States trade balance has strengthened to a deficit of only -34.2 bln USD in June 2013. This is nearly half the record-high trade deficit of 62 bln. $ in August 2008 and not too far from record-lows of 26 bln. $ in July 2009, when oil was really cheap. In the first six …

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Permanent link to this article: http://snbchf.com/2013/08/u-s-trade-oil-trade-deficit/

Five myths about libertarians

    Five myths about libertarians The specter of libertarianism is haunting America. Advocates of sharply reducing the government’s size, scope and spending are raising big bucks from GOP donors, trying to steal the mantle of populism, being blamed for the demise of Detroit and even getting caught in the middle of a battle for …

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Permanent link to this article: http://snbchf.com/2013/08/five-myths-about-libertarians/

SNB Q2/2013 Composition of Reserves

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. here the newest data Total Balance Sheet and Liabilities The total balance sheet size decreased from 511 bln. …

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Permanent link to this article: http://snbchf.com/2013/08/snb-q22013-composition-of-reserves/

Our Detailed Estimate of SNB Q2 Results: 17 Billion Francs Loss, The Reality 18 Billion

UPDATE: July 30th, 2013: Our estimate for the quarterly loss missed the reality by 1 billion francs. The quarter results: 18.3 billion francs loss. The loss for H1 was 7.3 billion CHF. July 1st 2013: We estimate that the Swiss National Bank (SNB) obtained a loss of 17.3 billion francs in the second quarter 2013. …

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Permanent link to this article: http://snbchf.com/2013/07/estimate-q2-results/

Abenomics Succeeding? Don’t Believe the Mainstream Media, Just Energy and Import Prices Are Higher

  While the FT says: Abenomics is succeeding in bringing inflation back to Japan. The preferred core CPI measure, which excludes volatile food prices, rose a higher-than-anticipated 0.4 per cent in June (year-over-year), the highest reading since November 2008 and the first positive reading since April 2012. (The reading was flat in May). Overall inflation …

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Permanent link to this article: http://snbchf.com/2013/07/japan-cpi-abenomics-mainstream/

Swiss ZEW Investor Survey Sees 1.20 per Euro Cap Gone within 2 Years

The Swiss ZEW investor sentiment has risen to 4.8 by 2.6 points, news that do not influence markets. More interesting is the following:  Swiss ZEW Investor Survey Sees 1.20 per Euro Cap Gone within 2 Years * Majority see no change in euro/franc for next 6 months (Reuters) – The Swiss National Bank will most …

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Swiss industrial production unimpressed by global slowing

Swiss industrial production rose by 3% in the first quarter 2013 compared with the same quarter of the previous year. Turnover rose by 3.7%. Details

Permanent link to this article: http://snbchf.com/2013/07/swiss-industrial-production-unimpressed-by-global-slowing/

The End of Swiss Deflation

The yearly change of the Swiss consumer price index has risen from -0.5% to -0.1%, the end of deflation is near. Swiss inflation measured with the European standard HICP has even improved to +0.2% y/y. Details

Permanent link to this article: http://snbchf.com/2013/07/end-swiss-deflation/

SNB Monetary Assessment June 2013: Very risk-averse, nearly hawkish tone

The Swiss National Bank (SNB) delivered a, for her standards, very hawkish monetary assessment with the focus on the risks in the financial sector. This does not come as a surprise for us. Each time, after the United States has recovered from a crisis – just like now – inflation and risks increased in Switzerland. …

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Zillow CEO: If You Can, Sell Your U.S. Home Now

Via CNBC   Against the backdrop of increasing home prices and the prospect of much higher mortgage rates, it’s a “great time” to sell, Spencer Rascoff, CEO of online real estate marketplace Zillow, told CNBC on Thursday. That is, if you can find a place to buy, he added. “As mortgage rates inevitably come from …

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Permanent link to this article: http://snbchf.com/2013/06/zillow-ceo-if-you-can-sell-your-u-s-home-now/

Democracies Like Bubbles, Totalitarian Regimes Hate Them

Totalitarian regimes, like China, fear bubbles and revolutions. Strangely, these regimes help to prevent asset bubbles, and the resulting unequal distribution of wealth between rich asset owners and the poor without assets. Today’s FT article shows how Chinese authorities fear the bubble and the revolution. China cash crunch deepens as PBOC withholds funding Short-term interbank …

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Permanent link to this article: http://snbchf.com/2013/06/democracy-likes-bubbles-totalitarian-regimes-hate-them/

Italian Retail Prices Remain close to Switzerland, Germany Far Cheaper

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 Doomed from The Beginning: Let us Go for Exchange Rate Targeting and Maintain Stability

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/

Adam Smith Institute: Could Deflation Be Salvation?

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/

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The Cyclical and Exchange-Rate Induced Chinese Slowing

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/

Abenomics: A USD/JPY Trade the Smart Money Banks on

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.

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Permanent link to this article: http://snbchf.com/2013/06/a-usdjpy-trade-the-smart-money-banks-on/

Swiss second after Australia/NZL as for Employment Growth Since December 2007.

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/

Swiss Inflation Rises, Services Up 0.6% YoY, Goods Swiss Origin +0.3%, Energy Tames

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/

SNB to Follow the Bank of Japan? Part1

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/

Swiss, Norwegian and UK PMI Lead European Recovery

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/

Pictet Become “Secular Dollar Bulls” and Gold Bashers: Our Response

  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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Q1 GDP: Japan +1.0%, AUS, Swiss +0.6%, US +0.45%, Germany +0.1%, Italy -0.5%

  Update June 26: The Swiss economy has grown more quickly than the United States in Q1 2013. Japan is in the lead of the global comparison with 1.0% quarterly growth, Australia and Switzerland follow with 0.6%, the US has 0.45% QoQ (or 1.8% annualized), Germany 0.1% and Italy slowed by -0.5%. Weakest currency, strongest …

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Permanent link to this article: http://snbchf.com/2013/05/swiss-gdp-0-6-qoq-1-1-yoy/

High German Pay Rises: The End of the German Bunds Bubble

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/

UBS’s Consumption Indicator 1.46 Contradicts UBS’s Swiss GDP Forecast

UPDATE, February 2014 According to the latest data from the SECO,Swiss GDP rose by 2% in 2014 and not by 0.9% as the UBS predicted. 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 …

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Abenomics: Japanese Economy Would Have Recovered Even Without it

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/

How 40% Renmimbi appreciation vs Yen Caused a Deflationary Commodity Price Shock for World Economy

  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/

Jim Rogers: EU Should Address Real Problem: Their Excessive Spending Habits

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/

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