FX Daily, November 15: UK Political Drama Roils Sterling

Overview: The resignation of the UK's Brexit negotiator after Prime Minister May had secured support from a majority of the cabinet sent sterling sharply lower.  Raab's resignation underscores the difficulty the Brexit agreement faces in the UK Parliament.  Sterling was hammered nearly 2.5 cents on the news and trade below $1.28.

Swiss National Bank Unexpectedly Sold US Stocks In Q3, Dumping Over 1 Million Apple Shares

The SNB’s latest 13-F form filings (yes, the Swiss central bank lists its US equity holdings like the hedge fund that it is) to the SEC were released this week. And, like every other quarter, we take a closer look to see what stocks the world's only hedge fund central bank that prints money out of thin air bought, and on rare occasions, sold. This was one of those rare quarters.

The Failure of a Gold Refinery, Report 12 Nov 2018

So this happened: Republic Metals, a gold refiner, filed bankruptcy on November 2. The company had found a discrepancy in its inventory of around $90 million, while preparing its financial statements. We are not going to point the Finger of Blame at Republic or its management, as we do not know if this was honest error or theft.

Swiss Labour Force Survey in 3nd quarter 2018: 1.2percent increase in number of employed persons; unemployment rate based on ILO definition falls to 4.4percent

The number of employed persons in Switzerland rose by 1.2% between the 3rd quarter 2017 and the 3rd quarter 2018. During the same period, the unemployment rate as defined by the International Labour Organisation (ILO) declined by 0.6 percentage points to 4.4%. The EU's unemployment rate decreased from 7.3% to 6.5%.

Financial institutions raided over mobile pay deals

The Swiss Competition Commission has searched the premises of Credit Suisse and UBS, PostFinance and the credit card companies Swisscard and Aduno for allegedly boycotting mobile payment methods such as Apple Pay and Samsung Pay. The Competition Commission said on Thursday it had opened an investigation on Tuesday.

FX Daily, November 15: UK Political Drama Roils Sterling

Overview: The resignation of the UK's Brexit negotiator after Prime Minister May had secured support from a majority of the cabinet sent sterling sharply lower.  Raab's resignation underscores the difficulty the Brexit agreement faces in the UK Parliament.  Sterling was hammered nearly 2.5 cents on the news and trade below $1.28.

The Implicit Desperation of China’s “Social Credit” System

Other governments are keenly interested in following China's lead. I've been pondering the excellent 1964 history of the Southern Song Dynasty's capital of Hangzhou, Daily Life in China on the Eve of the Mongol Invasion, 1250-1276 by Jacques Gernet, in light of the Chinese government's unprecedented "Social Credit Score" system, which I addressed in Kafka's Nightmare Emerges: China's "Social Credit Score".

Pushing Past the Breaking Point

Schemes and Shams. Man’s willful determination to resist the natural order are in vain.  Still, he pushes onward, always grasping for the big breakthrough. The allure of something for nothing is too enticing to pass up.

Impressive Swiss Recovery After SNB Peg Removal

Retail data shows that the SNB peg removal in January 2015 as early as April 2015 with minimal adverse impact on the economy. Trade surplus showed that Switzerland had fully recovered its lost trade surplus in May and expectations crossed an important threshold into positive territory in June. CHF strengthened since May end, as the market caught wind of the Swiss recovery, and the Grexit would further strengthen the CHF if it were to occur.

Swiss Franc History, 2012: CHF becomes a “safe” Risk-On Currency

At the end of May, SNB president Jordan admitted that the EUR/CHF floor will not raised (here also cited by Bloomberg): “We cannot arbitrarily manipulate our currency. In an even worse crisis situation this would be disastrous and counterproductive. The floor must be legitimized. The current minimum exchange rate is realistic and has helped the Swiss economy.”

Richard Koo: Balance Sheet Recessions

Weak Yen, Is it Really a Currency War?

Some journalists, like Ambrose Evans-Pritchard of the U.K.'s Telegraph and Michael Casey of the Wall Street Journal, have already claimed this to be a shot in the currency wars. Casey focuses exclusively on the BOJ activity and does not even mention GPIF. Evans-Pritchard spends most of his time talking about the bearish yen implications of the increased BOJ purchases, and mentions GPIF only at the very end of the his essay, and even then to...