George Dorgan

George Dorgan

George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.

Articles by George Dorgan

Navigating Financial Frontiers: A Deep Dive into the World of Private Credit

  Investors constantly seek new avenues for diversification and higher returns in the ever-evolving finance landscape. One such frontier that has gained significant attention in recent years is private credit. This alternative asset class offers unique opportunities and challenges, attracting institutional investors, high-net-worth individuals, and fund managers. In this comprehensive guide, we’ll explore the intricacies …

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Tax Refunds Delayed? Here’s How an Emergency Loan Can Help

For many, tax refunds feel like a mini-windfall—a delightful surprise at the beginning of the year. A chance to cover old debts, splurge on something desired, or simply bolster savings. But what happens when this eagerly anticipated money doesn’t arrive on time?  Delays can, unfortunately, throw a wrench in your financial plans, causing unnecessary stress. …

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How To Ensure Better Operations Within Your Company’s Fleet

  In today’s hyper-connected world, the efficient management of a company’s fleet is an imperative that can’t be overlooked. Businesses that rely on fleet operations must prioritize their management not only for financial prudence but also to ensure the safety and efficiency of operations. Whether you’re overseeing a fleet of delivery trucks, rental cars, or …

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Geld sparen bei der Stromrechnung – so geht’s

  Wahrscheinlich ist Ihnen schon aufgefallen, dass Ihre Gas- und Stromrechnungen teurer sind als früher. Falls Sie nach Möglichkeiten suchen, Ihre Stromkosten zu senken, gibt es viele einfache Maßnahmen, die Sie ergreifen können, um Ihre Energierechnungen zu senken – vom Ausschalten des Lichts bis hin zum kosteneffizienten Wäschewaschen. Hier finden Sie die 23 besten Möglichkeiten, …

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Exploring Self-Directed IRAs for Diversification

    Finding the right retirement portfolio balance is an individual journey, especially in today’s ever-evolving environment. No two individuals are alike when it comes to investing and planning for financial security in retirement, which can make it daunting to find a suitable option that provides protection yet also offers growth potential.  One less conventional …

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Exciting Restaurant Management Software and Tech Emerging

In today’s fast-paced world, technological advancements are changing the game in almost every industry. Restaurants, a sector once considered traditional and manual, are no exception. With the increasing demands of the 21st-century customer, the integration of technology has become inevitable. In this article, we will explore emerging technologies in restaurant management software, the benefits it …

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Unveiling the Advantages of a Free Economic Model

  When discussing different ways to run an economy, one idea that stands out is the “free market” system. Instead of being a mouthful, it’s essentially a way of doing things where the government doesn’t get too involved, and businesses are free to compete. This setup has some pretty cool perks that can make life …

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The Effects of Electricity Deregulation on the State of Texas

Texas is not the only US state to have deregulated electricity. The states of Delaware, Connecticut, Maine, Massachusetts, and New Hampshire have several deregulated electricity zones as well. However, there are significantly more deregulated electricity sectors in Texas than in any other state. As per official reports, more than 26 million residents of the state live …

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Elevating Workplace Culture by Celebrating Employees

Celebrating individual and team successes and encouraging team bonding are among the best ways of improving workplace culture. Employees who feel appreciated regardless of the team they are in are more likely to be highly productive, ensure their team succeeds, and be more motivated and energetic in the workplace. Here are a few ways your …

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How Successful Businesses Minimize Their Fleet Operating Costs

Fleet management is a critical aspect of any business that utilizes multiple vehicles for its operations. It’s an area of business operations that can often seem riddled with complexity and high costs, especially for businesses with a large fleet. However, successful businesses find ways to minimize these costs while maintaining optimal fleet operations. This article …

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Financial Savvy Ways To Thrive In The Auto Market

  The auto market can be challenging and unpredictable, but with the right strategies and insights, automotive business owners can thrive. This article will explore the financial savvy ways to succeed in the auto market, focusing on understanding the current landscape, saving money, using modern financial tools and AI, and navigating warranties and service contracts. …

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Which brokerage account is best for beginners in Singapore?

Money

Are you looking to invest in Singapore but feeling overwhelmed by all the different options? Finding the correct brokerage account can be challenging, especially if you are not an experienced investor. That’s why we’ve broken down some of the top-rated brokers in Singapore, explaining the pros and cons each offers so you can choose which online trading platform is best for your needs.

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Swiss Trade Balance October 2022: declining foreign trade

In October 2022 and after two consecutive monthly increases, seasonally adjusted exports fell by 1.1% (real: −1.8%). However, they remain on a positive trend. Imports fell by 1.4% over one month (actual: −0.8%), but have stagnated since the middle of the year. The trade balance ends with a surplus of 3 billion francs, the highest recorded in the last six months.

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Swiss Trade Balance 3nd quarter 2022: foreign trade remains in rise

Swiss exports and imports, seasonally adjusted (in bn CHF), Q3 2022

Also in the 3rd quarter of 2022, Swiss foreign trade experienced a positive development: while exports increased by 1.3%, imports grew by 0.8%. However, the latter have lost their vigor since the middle of the year. Both imports and exports nevertheless posted a record quarterly result. The trade balance closes with a surplus of 8 billion francs.

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Swiss Trade Balance May 2022: surge in imports towards a level record

Swiss exports and imports, seasonally adjusted (in bn CHF), May 2022

In May 2022, Swiss foreign trade strengthened in both directions of traffic: seasonally adjusted exports increased by 1.2% while imports jumped by 10.3%. The latter thus confirmed their upward trend despite strong fluctuations. Due to the different pace of growth at the outflow and the inflow, the trade balance surplus stood at CHF 2.0 billion.

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Swiss Trade Balance Q1 2022: foreign trade chain record upon record

Switzerland Trade Balance, March 2022

Swiss foreign trade also grew in the 1st quarter of 2022, climbing to a record level. Imports strengthened further (+6.7%) while exports lost ground somewhat (+1.2%). Both at entry and exit, prices stood at very high levels. Due to different trends in the two directions of traffic, the trade balance surplus fell sharply (–2.8 billion francs).

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Swiss Trade Balance Year 2021: exports climb to one record level

Switzerland Trade Balance, December 2021

After a year 2020 strongly affected by the Covid-19 pandemic, Swiss foreign trade proved to be very dynamic in 2021. Exports thus jumped by 15.2% – reaching a record level – while imports swelled by 10 .1%. The different pace of growth at entry and exit explained the jump in the trade surplus to the imposing level of 58.7 billion francs.

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Swiss Trade Balance Q2 2021: export record

Swiss exports and imports, seasonally adjusted (in bn CHF), Q2 2021

Swiss foreign trade showed dynamism in the second quarter of 2021. Exports rose 3.2% to a record level. They posted a fourth consecutive quarterly increase since the drop recorded at the start of the coronavirus pandemic. Imports continued the momentum of the previous quarter and increased 3.8%. The trade surplus stood at 11.5 billion francs.

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Swiss Trade Balance Q1 2021: exports go back above their pre-Covid-19 level

Switzerland Trade Balance, March 2021

During the 1st quarter of 2021 and on a seasonally adjusted basis, exports increased by 4.8% (+ 2.7 billion francs; actual: + 4.9%), signing a third consecutive quarterly increase. At 58.1 billion francs, they not only exceeded their pre-crisis level, but also their second largest quarterly result. Imports increased by 1.7% or 805 million francs (actual: + 1.9%).

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Swiss Trade Balance An exceptional year 2020: border crossings closed and online commerce booming

Switzerland Trade Balance, February 2021

Bern, 04.03.2021 – The 2020 statistics of the Federal Customs Administration (AFD) are strongly influenced by the COVID-19 pandemic. In order to reduce the risk of transmission of the coronavirus, Switzerland has reintroduced systematic checks at national borders for the first time since joining Schengen, imposed entry restrictions and temporarily closed small border posts.

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Swiss Trade Balance January 2021: foreign trade starts the year on a positive note

Swiss exports and imports, seasonally adjusted (in bn CHF), January 2021

After declining in December 2020, Swiss foreign trade again showed a strong increase at the start of 2021. In January and in seasonally adjusted terms, exports rose 5.4% to 18.9 billion francs and imports by 3.3% to 15.3 billion. In both directions of trafficking, the boom relied heavily on chemicals and pharmaceuticals. The trade balance closed with a surplus of 3.6 billion francs.

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Swiss Trade Balance Foreign trade 2020: historic decline against the backdrop of a pandemic

Switzerland Trade Balance, December 2020

Switzerland’s 2020 foreign trade will bear the brunt of the consequences of the COVID-19 pandemic: exports (-7.1% to 225.1 billion francs) and imports (-11.2% to 182.1 billion) posted a historic decline. Never before have they suffered such a significant quarterly decline as in the second quarter of 2020. Foreign trade has fallen back to its level recorded three years earlier. The trade balance closed the year with a record surplus of CHF 43.0 billion.

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Swiss balance of payments and international investment position: Q3 2020

Current Account Q3 2018-Q3 2020

In the third quarter of 2020, the current account surplus amounted to CHF 9 billion, CHF 3 billion less than in the same quarter of 2019. This decline was particularly due to the lower receipts surplus in trade in goods and services. In the case of the goods trade, the decline was attributable to gold trading. This decrease was curbed by the expenses surplus for primary and secondary income, which decreased compared to Q3 2019.

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Swiss Trade Balance November 2020: exports are on the rise

Swiss exports and imports, seasonally adjusted (in bn CHF), November 2020

In November 2020, Swiss foreign trade stood out with an increase in both directions of traffic. In seasonally adjusted terms, exports advanced 4.8% and imports 4.2%. Falling over the previous two months, exports resumed their growth path and the trade balance closed with a surplus of 3.1 billion francs.

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Swiss Trade Balance October 2020: foreign trade falters

Switzerland Trade Balance, October 2020

In October 2020, Swiss foreign trade took off. In seasonally adjusted terms, exports stagnated (-0.4%) while imports fell 3.3%. The slowdown recorded since this summer in both directions of traffic has thus been confirmed. The trade balance closed with a surplus of 2.9 billion francs.

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Covid, November 13: 553 deaths in Switzerland this week as infection rate slows

Daily Fatalities Switzerland, November 13

Over the 7 days to 13 November 2020, Switzerland’s Federal Office of Public Health (FOPH) reported 553 deaths among laboratory-confirmed Covid-19 cases, bringing the death toll to 1,229 since summer and 2,960 since the beginning of the year.

© Sudok1 | Dreamstime.comThe 553 reported deaths this week represent 19% of the total so far, making the last 7 days the deadliest 7-day period since the virus arrived in Switzerland.

There are currently 3,945 Covid-19 patients in hospitals across Switzerland, according to FOPH figures published by RTS, a number significantly above the peak during the first wave.

Switzerland is currently using 77% of its current intensive care capacity (1,142 places), according to SRF. The number of Covid patients in intensive care has reached 512, a number

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Second Covid Wave in Europe, Rest of the World still Unaffected

The second wave of the Coronavirus is currently raging in Europe. The attached image shows the number of newly infected people in European countries on a linear scale. In particular in the Czech republic, but also in Switzerland, France or Spain, one can see a tendency of exponential growth.

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Swiss Trade Balance Q3 2020: foreign trade regains color

Switzerland Trade Balance, September 2020

After its historic decline in the second quarter, Swiss foreign trade showed a clear recovery in the third quarter of 2020. In seasonally adjusted terms, exports swelled by 6.5% and imports by 11.5%. The two traffic departments, however, remained well below their record level for the second quarter of 2019. The trade balance closed with a surplus of 8.2 billion francs.

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Swiss balance of payments and international investment position: Q2 2020

Current Account Switzerland Q2 2020

In the second quarter of 2020, the current account surplus amounted to CHF 10 billion; in the same quarter of 2019 it was CHF 21 billion. This decline was principally due to lower receipts from direct investment abroad. While the goods trade balance and the services trade balance changed only marginally, there was a significant decrease in receipts and expenses.

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Swiss Trade Balance Q2 2020: historic decline in exports and imports

Switzerland Trade Balance, June 2020

Swiss foreign trade recorded a record decline in the second quarter of 2020. In seasonally adjusted terms, exports plunged by 11.5% compared to the previous quarter and imports even by 16.0%. This result stems from the traffic collapse recorded in April in the wake of the coronavirus pandemic, with May and June having regained some color. The trade balance closed with a record surplus of 9.6 billion francs.

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Swiss Trade Balance May 2020: signs of recovery in foreign trade

Swiss exports and imports, seasonally adjusted (in bn CHF), May 2020

After its historic setback of the previous month, foreign trade recovered a few colors in May 2020. Imports posted a seasonally adjusted increase of 9.8% to 13.6 billion francs; however, they are still below their March 2020 level. Although exports fell again (-1.2%), they eased compared to April. The trade balance closed with a surplus of 2.8 billion francs.

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Swiss Producer and Import Price Index in May 2020: -4.5 percent YoY, -0.5 percent MoM

Switzerland Producer Price Index (PPI) YoY, May 2020

15.06.2020 – The Producer and Import Price Index fell in May 2020 by 0.5% compared with the previous month, reaching 97.6 points (December 2015 = 100). This decline is due in particular to lower prices for pharmaceutical and chemical products as well as for petroleum products. Compared with May 2019, the price level of the whole range of domestic and imported products fell by 4.5%.

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Swiss Trade Balance April 2020: foreign trade collapses

Switzerland Trade Balance, April 2020

Compared with the previous month, April 2020 exports contracted by 11.7% (actual: -10.0%); this is the largest seasonally adjusted decline ever recorded. They retracted by 2.2 billion to reach 16.7 billion francs. Imports even plunged by 21.9%, that is, by a drop of 3.5 billion francs, to 12.4 billion francs (actual: -17.8%); they thus fell almost to their July 2005 level. The trade balance closed with a record monthly surplus of 4.3 billion francs.

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Swiss Trade Balance Q1 2020 : chemistry-pharma keeps exports in black numbers

Swiss exports and imports, seasonally adjusted (in bn CHF), Q1 2020

The boom in chemicals and pharmaceuticals enabled Swiss exports to increase in March as well as in the first quarter of 2020 (+ 2.2% respectively + 1.0%). Despite the global economic situation linked to the “Covid-19”, the performance of this sector offset the decline suffered by most of the other groups. As in the previous quarter, seasonally adjusted imports fell (- 2.8%). The trade balance for the first three months of 2020 ends with a surplus of 8.3 billion francs.

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Swiss Balance of Payments and International Investment Position: Q4 2019 and review of the year 2019

Current Account Switzerland Q4 2019

In the fourth quarter of 2019, the current account surplus was CHF 26 billion, CHF 11 billionmore than in Q4 2018. The increase was primarily attributable to the higher receipts surplus in investment income and goods trade. The transactions reported in the financial account showed a net acquisition of financial assets (CHF 40 billion) and a net incurrence of liabilities (CHF 19 billion) in Q4 2019.

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Swiss Balance of Payments and International Investment Position: Q3 2019

Current Account Switzerland Q3 2019

In summary: Nearly any change against the third quarter of 2018. About the same figures. But clearly and – as usual – a massive surplus. Key figures: Current Account: Up 39.15% against Q3/2018 to 18.09 bn. CHF. of which Goods Trade Balance: Plus 49.78% against Q3/2018 to 16.76 bn. of which the Services Balance: Minus 12.94% to 5.25 bn.

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Swiss Trade Balance November 2019: Foreign trade continues to contract

Swiss exports and imports, seasonally adjusted (in bn CHF), November 2019

As in the previous month, cross-border flows of goods fell in both directions of traffic in November 2019. In seasonally adjusted terms, exports fell 1.7% on a month compared to 1.1% for imports. Swiss sales fell back to their level at the start of 2019, while admissions fell by almost a billion francs. The trade balance closed with a surplus of 2.2 billion francs.

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Swiss Trade Balance October 2019: exports fall but remain stable

Switzerland Trade Balance, October 2019

In October 2019, Swiss foreign trade declined in both traffic directions. Exports fell sharply (-5.3%); however, they had jumped 8.8% the previous month, setting the bar very high. Imports fell 2.4%. Since the beginning of the year, foreign trade has thus revealed stagnation. The trade balance closes with a surplus of 2.4 billion francs.

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Swiss Balance of Payments and International Investment Position: Q2 2019

Current Account Switzerland Q2 2019

The assets side of the financial account registered a total net acquisition of CHF 11 billion (Q2 2018: net reduction of CHF 30 billion). Other investment contributed CHF 7 billion to this net acquisition (Q2 2018: net reduction of CHF 36 billion), in part because the SNB increased its foreign claims in connection with repo transactions.

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Swiss Producer and Import Price Index in August 2019: -1.9 percent YoY, -0,2 percent MoM

Switzerland Producer Price Index (PPI) YoY, August 2019

12.09.2019 – The Producer and Import Price Index fell in August 2019 by 0.2% compared with the previous month, reaching 101.4 points (December 2015 = 100). The decline is due in particular to lower prices for rubber and plastic products as well as basic metals and semi-finished metal products. Compared with August 2018, the price level of the whole range of domestic and imported products fell by 1.9%.

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Swiss Trade Balance July 2019: foreign trade decelerates in July 2019

Switzerland Trade Balance, July 2019

After shining the previous month, foreign trade turned red in July 2019. Despite a decline of 3.9% to 19.6 billion francs, exports had their second largest monthly result ever reached. Down 1.7%, imports were close to CHF 17 billion. The chemistry-pharma has greatly impacted both directions of the traffic. The trade balance is closing with a surplus of 2.7 billion francs.

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SNB reports a profit of CHF 38.5 billion for the first half of 2019.

SNB Profit and Loss since 1999

The Swiss National Bank reports a profit of CHF 38.5 billion for the first half of 2019. The profit on foreign currency positions amounted to CHF 33.8 billion. A valuation gain of CHF 3.8 billion was recorded on gold holdings. The profit on Swiss franc positions was CHF 1.1 billion. The SNB’s financial result depends largely on developments in the gold, foreign exchange and capital markets.

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Swiss Producer and Import Price Index in June 2019: -1.4 percent YoY, -0,5 percent MoM

Switzerland Producer Price Index (PPI) YoY, June 2019

The Producer and Import Price Index fell in June 2019 by 0.5% compared with the previous month, reaching 101.7 points (December 2015 = 100). The decline is due in particular to lower prices for petroleum products, petroleum and natural gas as well as basic metals and semi-finished metal products. Compared with June 2018, the price level of the whole range of domestic and imported products fell by 1.4%.

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Swiss Balance of Payments and International Investment Position: Q1 2019

Current Account Switzerland Q1 2019

In the first quarter of 2019, the current account surplus amounted to CHF 17 billion, on a par with the same quarter of 2018. Trade in services recorded a higher receipts surplus compared with the year-back quarter, whereas secondary income registered a higher expenses surplus. The balances of trade in goods and primary income barely changed.

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Swiss Producer and Import Price Index in May 2019: -0.8 percent YoY, unchanged MoM

Switzerland Producer Price Index (PPI) YoY, May 2019

13.06.2019 – The Producer and Import Price Index remained unchanged in May 2019 compared with the previous month. The index stood at 102.2 points (December 2015 = 100). Petroleum products in particular saw higher prices, while chemical and pharmaceutical products became cheaper. Compared with May 2018, the price level of the whole range of domestic and imported products fell by 0.8%.

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SNB Results: Big Win After Big Loss in Q4 2018

Income Statement, 1 January - 31 March 2019

The Swiss National Bank reports a profit of CHF 30.7 billion for the first quarter of 2019. The profit on foreign currency positions amounted to CHF 29.3 billion. A valuation gain of CHF 0.9 billion was recorded on gold holdings. The profit on Swiss franc positions was CHF 0.6 billion.

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Swiss Trade Balance Q1 2019: Foreign trade at a high level

Swiss exports and imports, seasonally adjusted (in bn CHF), Q1 2019

Swiss foreign trade saw a mixed evolution during the first half of 2019. In seasonally adjusted terms, exports fell slightly, still remaining above the 57 billion franc mark. Imports, on the other hand, continued to rise (+1 , 0%) to reach a record level of 51.2 billion francs. The trade balance closes with a surplus of 6.2 billion francs.

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Swiss Trade Balance February 2019: New Peak of Exports

Switzerland Trade Balance, February 2019

In February 2019, like the previous month, seasonally-adjusted exports increased (+ 2.3%), reaching a record level of 19.4 billion francs. On the other hand, imports fell by 1.2% in one month to 17.4 billion francs. The trade balance shows a surplus of 2.0 billion francs.

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Swiss Producer and Import Price Index in February 2019: -0.7 percent YoY, +0.2 percent MoM

Switzerland Producer Price Index (PPI) YoY, February 2019

The Producer and Import Price Index increased in February 2019 by 0.2% compared with the previous month, reaching 101.9 points (December 2015 = 100). The rise is due in particular to higher prices for petroleum products. Compared with February 2018, the price level of the whole range of domestic and imported products fell by 0.7%. These are some of the findings from the Federal Statistical Office (FSO).

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SNB loses 15 billion in 2018

The SNB earned 2 billion on negative interest rates (Swiss franc positions below), but lost nearly 17 billion CHF on FX investments, of which 5 bn on bonds and 12 bn on stocks. Gold was nearly unchanged.

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Swiss Balance of Payments and International Investment Position: Q3 2018

  Current Account Key figures: Current Account: Up 85% against Q3/2017 to 14.6 bn. CHF of which Goods Trade Balance: Up 16.6% against Q3/2017 to 10.5 bn. of which the Services Balance: Minus 5.6% to 5.0 bn. of which Investment Income: Up 74.4% to 7.6 bn. CHF. Financial account Net acquisition of financial assets The … Continue reading »

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Monetary Policy Assessment of 13 December 2018

Conditional Inflation Forecast, December 2018

The Swiss National Bank (SNB) is maintaining its expansio nary mo netary policy, thereby stabilising price developments and supporting economic activity. Interest on sight deposits at the SNB remains at –0.75% and the target range for the three-month Libor is unchanged at between –1.25% and –0.25%.

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SNB reports a loss of CHF 7.8 billion for third quarter of 2018

The Swiss National Bank (SNB) reports a loss of CHF 7.8 billion for the first three quarters of 2018. A valuation loss of CHF 3.7 billion was recorded on gold holdings. The loss on foreign currency positions amounted to CHF 5.3 billion. The profit on Swiss franc positions was CHF 1.5 billion.

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Swiss Producer and Import Price Index in September 2018: +2.6 percent YoY, -0.2 percent MoM

Switzerland Producer Price Index (PPI) YoY, September 2018

The Producer and Import Price Index fell in September 2018 by 0.2% compared with the previous month, reaching 103.2 points (December 2015 = 100). The decline is due in particular to lower prices for scrap. Compared with September 2017, the price level of the whole range of domestic and imported products rose by 2.6%. These are some of the findings from the Federal Statistical Office (FSO).

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Swiss Trade Balance July 2018: Slowdown to a High Level

Switzerland Trade Balance, July 2018

After stagnating the previous month, both exports and imports fell in July 2018. In seasonally adjusted terms, they fell by 3.0 and 2.8%, respectively. The decline in the chemicals-pharmaceuticals sector weighed on the result in both directions of the traffic. The trade balance is closing with a surplus of 1.2 billion francs.

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Swiss Producer and Import Price Index in July 2018: +3.6 YoY, +0.1 MoM

Switzerland Producer Price Index (PPI) YoY, July 2018

The Producer and Import Price Index increased in July 2018 by 0.1% compared with the previous month, reaching 103.3 points (December 2015 = 100). The rise is due in particular to higher prices for watches, petroleum and natural gas. Compared with July 2017, the price level of the whole range of domestic and imported products rose by 3.6%.

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Swiss Trade Balance June 2018: Fifth consecutive record of exports

Swiss exports and imports, seasonally adjusted (in bn CHF), June 2018

The dynamism shown by exports since the beginning of 2017 continued in the second quarter of 2018. They are thus flying from record to record for the fifth quarter in a row. Imports, on the other hand, came to a standstill, at a high level, however, after posting strong growth in previous quarters. The trade balance closes on a surplus of 4.6 billion francs.

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Swiss Producer and Import Price Index in June 2018: +3.5 YoY, +0.2 MoM

Switzerland Producer Price Index (PPI) YoY, June 2018

The Producer and Import Price Index increased in June 2018 by 0.2% compared with the previous month, reaching 103.2 points (December 2015 = 100). The rise is due in particular to higher prices for petroleum products and timber products. Compared with June 2017, the price level of the whole range of domestic and imported products rose by 3.5%.

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Swiss Balance of Payments and International Investment Position: Q1 2018

Current Account Switzerland Q1 2018

The current account surplus amounted to CHF 18 billion in the first quarter of 2018, an increase of CHF 5 billion over the same quarter of 2017. This rise was attributable to the higher receipts surplus on trading in non-monetary gold, which is recorded under trade in goods. In the case of services as well as primary and secondary income, the balances remained stable.

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Swiss Trade Balance May 2018: Foreign trade overcomes stagnation

Switzerland Trade Balance, May 2018

After stagnating in previous months, exports rose in May 2018. Seasonally adjusted exports rose 0.9% in one month. Imports were more dynamic, at + 3.8%. Chemistry-pharma and the vehicle sector generated 90% of growth in both traffic directions. The trade balance closed with a surplus of 2.3 billion francs.

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Swiss Producer and Import Price Index in May 2018: +3.2 percent YoY, +0.2 percent MoM

Switzerland Producer Price Index (PPI) YoY, May 2018

The Producer and Import Price Index increased in May 2018 by 0.2% compared with the previous month, reaching 103.0 points (December 2015 = 100). The rise is due in particular to higher prices for petroleum products. Compared with May 2017, the price level of the whole range of domestic and imported products rose by 3.2%. These are some of the findings from the Federal Statistical Office (FSO).

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Swiss Trade Balance April 2018: Foreign Trade Caps at a High Level

Switzerland Trade Balance, April 2018

In recent months, both exports and Swiss imports have been apathetic. On April 1, 2018, and after seasonal adjustment, they respectively stagnated and fell by 3.4%. The chemistry-pharma has sealed the result in both directions of the traffic. The trade balance closed with a surplus of 2.8 billion francs.

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SNB loses 6.8 billion in Q1/2018

Income Statement, Q1 2018

The Swiss National Bank (SNB) reports a loss of CHF 6.8 billion for the first quarter of 2018. A valuation loss of CHF 0.2 billion was recorded on gold holdings. The SNB’s financial result depends largely on developments in the gold, foreign exchange and capital markets. Strong fluctuations are therefore to be expected, and only provisional conclusions are possible as regards the annual result.

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Swiss Trade Balance Q1 2018: The positive trend continues

Switzerland Trade Balance, Q1 2018

In the first quarter of 2018 and on a seasonally adjusted basis, foreign trade confirmed the positive trend of previous quarters. Both traffic directions have also reached record levels. Exports increased by 0.2% and imports by 4.1%. The divergent evolution of inflows and outflows has led to the smallest trade surplus in four and a half years.

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Swiss Producer and Import Price Index in March 2018: +2.0 percent YoY, +0.2 percent MoM

Switzerland Producer Price Index (PPI) YoY, May 2013 - Apr 2018

The Producer and Import Price Index fell in March 2018 by 0.2% compared with the previous month, reaching 102.3 points (December 2015 = 100). This decline was due in particular to lower prices for petroleum products and pharmaceutical preparations. Compared with March 2017, the price level of the whole range of domestic and imported products rose by 2.0%. These are some of the findings from the Federal Statistical Office (FSO).

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Swiss Producer and Import Price Index in February 2018: +2.3 percent YoY, +0.3 MoM

Switzerland Producer Price Index (PPI) YoY, February 2018

The Producer and Import Price Index rose in February 2018 by 0.3% compared with the previous month, reaching 102.6 points (December 2015=100). The rise is due in particular to higher prices for chemical and pharmaceutical products. Compared with February 2017, the price level of the whole range of domestic and imported products rose by 2.3%. These are some of the findings from the Federal Statistical Office (FSO).

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SNB reports a profit of CHF 54.4 billion for 2017

Income statement for 2017

The Swiss National Bank (SNB) reports a profit of CHF 54.4 billion for the year 2017 (2016: CHF 24.5 billion). The profit on foreign currency positions amounted to CHF 49.7 billion. A valuation gain of CHF 3.1 billion was recorded on gold holdings. The profit on Swiss franc positions was CHF 2.0 billion.

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Swiss Producer and Import Price Index in January 2018: +1.8 YoY, +0.3 MoM

Switzerland Producer Price Index (PPI) YoY, Jan 2018

Neuchâtel, 13 February 2018 (FSO) – The Producer and Import Price Index rose in January 2018 by 0.3% compared with the previous month, reaching 102.2 points (December 2015=100). The rise is due in particular to higher prices for petroleum products, electricity and gas as well as metals and metal products. Compared with January 2017, the price level of the whole range of domestic and imported products rose by 1.8%. These are some of the findings from the Federal Statistical Office (FSO).

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Swiss Trade 2017: Exports at all-time high

Switzerland Trade Balance, Dec 2017

Last year, Swiss foreign trade accelerated yet again relative to 2016: exports rose by 4.7% to reach a new record high. Imports grew by 6.9%, posting their strongest growth rate since 2010. Aside from the improved economic situation worldwide, the weakening of the Swiss franc and price trends played a decisive role in both directions of trade. With a surplus of CHF 34.8 billion, the balance of trade closed the year 6% (or CHF 2.1bn) lower than the previous year.

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Swiss Producer and Import Price Index in December 2017: +1.8 YoY, +0.2 MoM

Switzerland Producer Price Index (PPI) YoY, December 2017

The Producer and Import Price Index rose in December 2017 by 0.2% compared with the previous month, reaching 101.9 points (December 2015=100). Compared with December 2016, the price level of the whole range of domestic and imported products rose by 1.8%. The average annualised inflation rate in 2017 was 0.9%. These are some of the findings from the Federal Statistical Office (FSO).

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Q3/2017: Swiss Current Account Surplus significantly down

Swiss Current Account, Q3 2017

The Swiss current account surplus went down by 15% against the same quarter in 2016. In the third quarter of 2015. The current account surplus was still at 22 bn. CHF.
It seems to be a change in the usual movement that sees a higher Q3 surplus compared to the other quarters.

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Swiss Trade Balance November 2017: Foreign Trade in Verve

Switzerland Trade Balance, November 2017

Swiss foreign trade proved dynamic in November 2017. After correction of working days, exports grew by 9.5% and imports even 16.4% year on year, both boosted by rising prices. In real terms, they increased by 4.4 and 6.8%, respectively. The balance commercial loop with a surplus of 2.7 billion francs.

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Swiss Producer and Import Price Index in November 2017: +1.8 YoY, +0.6 MoM

Switzerland Producer Price Index (PPI) YoY, November 2017

The Producer and Import Price Index rose in November 2017 by 0.6% compared with the previous month, reaching 101.6 points (base December 2015 = 100). The rise is due in particular to higher prices for petroleum products, chemical and pharmaceutical products and scrap. Compared with November 2016, the price level of the whole range of domestic and imported products rose by 1.8%.

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Health insurance premium index 2017: Premium increases from 2016 to 2017 curb growth in disposable income by 0.3 percentage points

Schweiz Krankenversicherungsprämien 2000-2017

The health insurance premiums index (CIPI) recorded a growth of 3.8 percent over the previous year for the 2017 premium year. The KVPI thus achieved an index level of 185.3 points (base 1999 = 100). The impact of premium development on the growth of disposable income can be estimated using the CIPI. According to the KVPI model calculation by the Federal Statistical Office (FSO), the increase in premiums reduces the growth in average disposable income in 2017 by 0.3 percentage points.

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Swiss Producer and Import Price Index in October 2017: +1.2 YoY, +0.5 MoM

Switzerland Producer Price Index (PPI) YoY, October 2017

The Producer and Import Price Index rose in October 2017 by 0.5% compared with the previous month, reaching 101.0 points (base December 2015 = 100). The rise is due in particular to higher prices for machinery, electrical equipment and metal products. Compared with October 2016, the price level of the whole range of domestic and imported products rose by 1.2%.

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The good years have started, increasing SNB Profits

Income statement, 1 January–30 September 2017

The Swiss National Bank (SNB) reports a profit of CHF 33.7 billion for the first three quarters of 2017. But in 2017, the picture is changed. Assuming a “biblical” cycle of seven good years and seven bad years, the SNB could now increase profits every year – thanks to a weaker franc and the seven good years.

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SNB Monetary Policy Assessment September 2017 and Comments

SNB Switzerland Conditional Inflation Forecast

The SNB projects that she will reach her inflation target, shortly under 2% in the medium term, i.e. in 2019/2020. One reason might be the weakening of the Swiss Franc. But she does not prepare for a normalization of her policy: From the history we know that – once the franc is weakening – inflation may rise very quickly.

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Swiss Producer and Import Price Index in July 2017: -0.1 YoY, -0,1 MoM

Switzerland Producer Price Index (PPI) YoY, July 2017

The Producer and Import Price Index remained unchanged in July 2017 compared with the previous month at 99.7 points (base December 2015 = 100). Petroleum products in particular became cheaper. Prices were higher for scrap, computers and metal products. Compared with July 2016, the price level of the whole range of domestic and imported products fell by 0.1%.

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Weekly Speculative Positions (as of August 01): Speculators Press Ahead with Dollar-Bloc Currencies, but Hesitate with Euro and Yen

The net speculative CHF position has risen from -1.5K short to 1.4K contracts long (against USD). In the CFTC reporting week ending August 1, speculators in the futures market continued to build long exposure in the dollar-bloc currencies. In the three sessions after the reporting period closed, the dollar-bloc currencies have traded heavily.

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Swiss Retail Sales, June: 1.1 percent Nominal and 0.5 percent Real

Switzerland Retail Sales YoY, June 2017

Turnover in the retail sector rose by 1.1% in nominal terms in June 2017 compared with the previous year. Seasonally adjusted, nominal turnover rose by 0.5% compared with the previous month. Real turnover in the retail sector also adjusted for sales days and holidays rose by 1.5% in June 2017 compared with the previous year.

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SNB reports a profit of CHF 1.2 billion for the first half of 2017

Income statement, 1 January–30 June 2017

The Swiss National Bank (SNB) reports a profit of CHF 1.2 billion for the first half of 2017. A valuation gain of CHF 0.3 billion was recorded on gold holdings. The profit on foreign currency positions amounted to CHF 0.1 billion and the profit on Swiss franc positions stood at CHF 0.9 billion. The SNB’s financial result depends largely on developments in the gold, foreign exchange and capital markets.

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Swiss Trade Balance First half of 2017: Exports with record value

Switzerland Trade Balance, June 2017

In the first half of 2017, both exports (+ 4.4%) and imports (+ 4.8%) were dynamic. While the former scored a record result, the latter scored a higher in eight years. In both directions of traffic, chemicals and pharmaceuticals contributed decisively to growth. The trade balance loops with a surplus of 19 billion francs.

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Swiss Producer and Import Price Index in June 2017: -0.1 YoY, -0,1 MoM

Switzerland Producer Price Index (PPI) YoY, June 2017

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation.

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FX Weekly Review, July 03 – July 08: Second Euro appreciation phase

EUR/CHF and USD/CHF, July 08

The ECB appears to be preparing investors for a further adjustment of its risk assessment and a reduction of its asset purchases as they are extended into next year.
This assessment has marked a new phase of an appreciating EUR/CHF rate. It followed the previous phase, the one with and after the French elections.  

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Swiss Retail Sales, May: -0.3 percent Nominal and -0.3 percent Real

Switzerland Retail Sales YoY, May 2017

Turnover in the retail sector fell by 0.3% in nominal terms in May 2017 compared with the previous year. Seasonally adjusted, nominal turnover rose by 0.3% compared with the previous month. Real turnover in the retail sector also adjusted for sales days and holidays fell by 0.3% in May 2017 compared with the previous year. Real growth takes inflation into consideration. Compared with the previous month, real, seasonally adjusted retail trade turnover registered an increase of 0.3%.

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Weekly Speculative Positions (as of June 20): Surge in Positioning amid Currency Contract Roll

swiss franc june 26

The net short CHF position has fallen from 14.5 short to 3K contracts short (against USD). The expiration of the June contracts and the roll into September positions appears to have boosted activity in the currency futures, and may obscure the signaling effect. Of the 16 gross positions we track, speculators add to exposure in all but four positions. There speculators covered gross short Swiss franc, Canadian, Australian, and New Zealand dollar positions.

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FX Weekly Review, June 12 – June 17: Greenback Still Trying To Turn

EUR/CHF and USD/CHF, June 17

Swiss Franc vs USD and EUR Rarely in the foreign exchange market is there a V-shaped extreme. Most of the time, the high or low is a process that is carved over time. Although the explanation of the dollar’s weakness here in H1 vary, we continue to believe that the longer-term cyclical rally, the third since … Continue reading »

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Swiss Producer and Import Price Index in May 2017: +0.1 YoY, -0.3 MoM

Switzerland Producer Price Index (PPI) YoY, May 2017

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation.

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Weekly Speculative Positions (as of June 06): Speculators Trimmed Exposure Ahead of Super Thursday

swiss franc june 12

The net short CHF position has fallen from 18.5 short to 16.5K contracts short (against USD). But the major movement was that speculators are net long the euro now and not the dollar any more. This implies that they are also long Euro against CHF. In the CFTC reporting week that covered the US employment data and the run-up to Super Thursday that featured an ECB meeting, former FBI Director Comey’s testimony before the Senate Intelligence Committee, the UK election, speculators mostly reduced exposure in the foreign exchange futures market.

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Switzerland GDP Q1 2017: +0.3 percent QoQ, +1.1 percent YoY

Switzerland Gross Domestic Product ,Q1 2017

Switzerland’s real gross domestic product (GDP) grew by 0.3 % in the first quarter of 2017*. Private consumption growth expanded only slightly, while government consumption rose moderately. Following the previous quarter’s fall, investment in construction and equipment increased.

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Weekly Speculative Positions (as of May 23): Speculators Remain Bearish the Dollar and Bullish Bonds

swiss franc may 29

The net short CHF position has fallen from 21.1 short to 19.8K contracts short (against USD). But the major movement was that speculators are net long the euro now and not the dollar any more. This implies that they are also long Euro against CHF. In the CFTC reporting week ending May 23 speculators in the futures market continued to largely position themselves for further dollar weakness.

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Swiss Trade Balance April 2017: Exports Stagnate

Switzerland Trade Balance, April 2017

In April 2017, adjusted exports of working days shrank as imports strengthened by 2.3%. Changes in sales were marked by the reluctance of the chemical and pharmaceutical sector. The trade balance has closed with the smallest surplus in the last two years.

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Weekly Speculative Positions (as of May 16): Yen and Aussie Bears Push Forward, while Sterling Bears Continue to Run for Cover

swiss franc may 22

The net short CHF position has risen from 15.2 short to 21.1K contracts short (against USD). But the major movement was that speculators are net long the euro now and not the dollar any more. This implies that they are also long Euro against CHF. In the Commitment of Traders reporting week ending May 16, speculators in the futures market made three significant adjustments in the currency futures.

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Swiss Producer and Import Price Index in April 2017: +0.8 YoY, -0.2 MoM

Switzerland Producer Price Index (PPI) YoY, April 2017

The Producer and Import Price Index fell in April 2017 by 0.2% compared with the previous month, reaching 100.1 points (base December 2015 = 100). This decline is due in particular to lower prices for petroleum products and machinery. Compared with April 2016, the price level of the whole range of domestic and imported products rose by 0.8%.

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FX Weekly Review, April 24 – 29: Dollar Remains the Fulcrum

Swiss Franc Index Trade-weighted index Swiss Franc 1M

Often the US dollar, as the numeraire, seems to be the main actor in the foreign exchange market. Other times, the dollar appears to be at the fulcrum between European currencies on one hand, and the dollar-bloc currencies on the other hand. Another way expressing this is whether there is a dollar-move underway or is it really more about the crosses.

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SNB posts 7.9 billion CHF Profit in Q1

SNB Results in the first 1 Quarters 2017: +2.2 billion CHF

The SNB reports a profit of 7.9 bn CHF, of which 2.2 bn come from the gold holdings. Given that the bank has introduced a “minimum euro rate” around 1.06-1.07, this is not very difficult. It comes at the price of continuing interventions.

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Swiss Producer and Import Price Index in March 2017: +1.3 YoY, +0.1 MoM

Switzerland Producer Price Index (PPI) YoY March 2017

The Producer and Import Price Index rose in March 2017 by 0.1% compared with the previous month, reaching 100.3 points (base December 2015 = 100). The slight rise is due in particular to higher prices for scrap. Compared with March 2016, the price level of the whole range of domestic and imported products rose by 1.3%. These are some of the findings from the Federal Statistical Office.

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FX Weekly Review, April 03-08: Dollar Recovery Can Continue, 10-year Yield Set to Rise

Trade-weighted index Swiss Franc, April 01

The US dollar appreciated against most of the major currencies last week. The Japanese yen was the chief exception. It rose about 0.5% as US yields remained heavy and equities were mostly softer. The Dollar Index did not fall in any session last week. It has had one losing session over the past nine, and that was the last day in March when the Dollar Index slipped less than 0.1%. It finished the week a bit above thee 61.8% retracement objective of the decline from last month’s peak (March 9) near 102.25, found just below 101.00 A trend line from the January and March highs is found near 101.40 by the end of next week. It corresponds to the 50% retracement of the Dollar Index decline from the January high, and near the upper Bollinger Band (~101.55 now).

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Swiss Retail Sales, February: +0.5 percent Nominal and +0.6 percent Real

Switzerland Retail Sales YoY, February 2017

Turnover in the retail sector rose by 0.5% in nominal terms in February 2017 compared with the previous year. However, excluding turnover from service stations, retail turnover fell by 0.3%. Seasonally adjusted, nominal turnover rose by 0.9% compared with the previous month. These are provisional findings from the Federal Statistical Office.

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2016 Annual Report of the Swiss National Bank

The Swiss National Bank carried out foreign exchange interventions totaling 67.1B Swiss francs in 2016 in order to counter “an undesired tightening of monetary conditions,” the central bank disclosed in its annual report. That was down from 86.1B francs in 2015, when the SNB intervened heavily at the start of the year following its decision to remove a cap on the franc’s value against the euro.

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Swiss Producer and Import Price Index in February 2017: -0.2 percent

Switzerland Producer Price Index (PPI) YoY, February 2017

The Producer and Import Price Index fell in February 2017 by 0.2% compared with the previous month, reaching 100.2 points (base December 2015 = 100). This decline is due in particular to lower prices for scrap, petroleum products and pharmaceutical products. Compared with February 2016, the price level of the whole range of domestic and imported products rose by 1.3%. These are the findings from the Federal Statistical Office (FSO).

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Swiss National Bank Results 2016 and Comments

SNB Results Longterm 2016

The Swiss National Bank (SNB) reports a profit of CHF 24.5 billion for the year 2016 (2015: loss of CHF 23.3 billion). The profit on foreign currency positions amounted to CHF 19.4 billion. A valuation gain of CHF 3.9 billion was recorded on gold holdings. The profit on Swiss franc positions was CHF 1.6 billion.

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FX Weekly Review, February 27 – March 04: Dramatic Shift in Fed Expectations Spurs Dollar Gains, but Now What?

Trade-weighted index Swiss Franc, March 04

The pendulum of market sentiment swung hard and fast toward a Fed rate hike in the middle of March. The signals from Fed officials, including Governor Brainard and Powell, spurred the move. According to Bloomberg, the market had discounted a 90% chance of a hike before Yellen and Fischer spoke. A week ago, Bloomberg calculations showed a 40% chance of a move.

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Switzerland GDP Q4 2016: +0.1 percent QoQ, +0.6 percent YoY

Switzerland Gross Domestic Product (GDP) YoY, Q4 2016

The Swiss economy relies very much (and probably too much) on exports. In the fourth quarter export of goods fell by 3.8%, while imports remained the same. Investments dipped, too. On the other side, consumption rose by a strong 0.9%. In total, the economy grew by only 0.1% QoQ (+0.6% YoY).

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Swiss Producer and Import Price Index in January 2017: +0.4 percent

Switzerland Producer Price Index (PPI) YoY, January 2017

The Producer and Import Price Index rose in January 2017 by 0.4% compared with the previous month, reaching 100.4 points (base December 2015 = 100). The rise is due in particular to higher prices for petroleum products, scrap and watches. Compared with January 2016, the price level of the whole range of domestic and imported products rose by 0.8%. These are the findings from the Federal Statistical Office (FSO).

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FX Daily, February 08: EUR/CHF down to 1.630, Swiss Boom Starting?

EUR/CHF - Euro Swiss Franc, February 08

The reader might have seen the latest Swiss Consumer Sentiment and the UBS consumption indicator. They suggest that the Swiss boom phase should finally come.
I anticipated the boom already in my slides for the CFA Society. The Swiss boom was postponed when the SNB decided to remove the euro peg in early 2015.

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2016: Swiss Exports and Swiss Trade Balance at New Record-Highs: Swiss Franc Shock Digested

Swiss exports and imports, seasonally adjusted (in bn CHF) September 2016

Following a decline the previous year, foreign trade grew again in 2016, with chemicals and pharmaceuticals shaping the trend. Exports climbed by a total of 3.8% (real: – 0.8%) to a record high of CHF 210.7 billion. However, the two other large groups – machinery and electronics, and watches – were unable to participate in the growth. Imports increased by 4.1% (real: +1.2%) to CHF 173.2 billion. The trade surplus reached a new peak of CHF 37.5 billion.

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Tourism accommodation statistics in November 2016: Slight increase in overnight stays in November

Hotels and Health Resorts, Autmn 2015-2016

The Swiss hotel industry registered 1.9 million overnight stays in November 2016, which corresponds to a slight growth of 0.5% (+9300 overnight stays) compared with the same period a year earlier. Domestic visitors generated 878,000 overnight stays, representing an increase of 0.9% (+7900). Foreign visitors generated 999,000 overnight stays, i.e. a very slight increase of 0.1% (+1400).

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Switzerland Unemployment December 2016: Rise from 3.3 percent to 3.5 percent, seasonally adjusted unchanged at 3.3 percent

Switzerland Unemployment Rate Not Seasonally Adjusted

Registered unemployment in December 2016 – According to the SECO surveys, 159,372 unemployed were registered at the Regional Employment Centers (RAV) at the end of December 2016, 10,144 more than in the previous month. The unemployment rate thus rose from 3.3% in November 2016 to 3.5% in the reporting month. Compared to the previous month, unemployment rose by 743 persons (+ 0.5%).

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Swiss Producer and Import Price Index, November 2016: +0.1 percent MoM, -0.6 percent YoY

Switzerland Producer Price Index (PPI) YoY, November 2016

The Producer and Import Price Index rose in November 2016 by 0.1% compared with the previous month, reaching 99.9 points (base December 2015 = 100). The slight rise is due in particular to higher prices for scrap and petroleum products. Compared with November 2015, the price level of the whole range of domestic and imported products fell by 0.6%. These are the findings from the Federal Statistical Office (FSO).

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200 Russian Propaganda Sites, or simply alternative media?

The following is the list of “Russian Propaganda sites”, as published by PropOrNot. Several articles by the Washington Post refer to this list. Many sites on that list are based on libertarian ideas and Austrian economics. Those are in favor of a free market economy, they reject central banks and the establishment. The rejection of the U.S. establishment is possibly the only point that are in common with Putin.

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Switzerland Consumer Price Index in November 2016: -0.3 percent against 2015, -0.2 percent against last month

Swiss consumer price inflation remain the lowest in comparison with different countries in the euro zone and the United States. Consumer prices in the U.S. are driven by rising health care costs and asset price inflation in shelter. In Europe, we see the opposite phenomenon: Rents in Italy or Spain are steady or falling. In Germany and Switzerland rent control prevents that asset price inflation moves into consumer prices. In Switzerland, more and more supply is helping to contain housing costs.

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Swiss Tourism this Summer: More Swiss Guests, Less Asian Guests

In the summer months, the Swiss hotels registered more guests from Switzerland. from the United States and from Europe. But there was a sharp decline of guest from Asia.
100’000 more overnight stays from Switzerland could not recover the decrease of 200’000. One important reason for decline is the weakening Chinese currency, that reduced their purchasing power, in dollar but also in CHF.

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Net National Savings Rate, the Best Alternative Indicator to GDP Growth

For us the Net National Savings Rate is the best alternative indictator to GDP growth. It is positively correlated with the change in wealth, with the establishment of future productive capacity, the price of government bonds and currency valuations. But today GDP growth is often negatively correlated to the Net Savings Rate. Hence GDP is often a less useful measure.

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Swiss Q3 GDP: +0.0 percent QoQ, +1.3 percent YoY

Switzerland Gross Domestic Product (GDP) YoY, September - December 2016

Switzerland’s real gross domestic product (GDP) has remained almost unchanged in the 3rd quarter of 2016 (+0.0%). Consumption was nearly stagnated, while net exports had a decline. But investments increased by 0.5% on the quarter.

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Health Care Premiums: Is Swiss Statistics Hiding Inflation?

The latest data releases from Swiss Statistics shows that health care premiums have risen by 3%, while health care prices for consumers have fallen. The reason may be the oligopoly structure of the Swiss health care system. But also that we consume higher and higher quantities of health care. Or is Swiss Statistics cheating on inflation?

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Swiss Trade Surplus Shrinks in October

Swiss exports and imports, seasonally adjusted (in bn CHF)

In October 2016, Swiss exports were down 5.6% (in real terms: – 10.4%) against the previous year. Imports rose by 1.8%YoY (in real terms: -1%). The trade surplus diminished, after months of rising exports.

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Weekly Sight Deposits: Investors hedge against Trump’s inflationary policy with Swiss Franc.

Euro/Swiss Franc FX Cross Rate, November 21

We explained the Trump reflation trade, where the Swiss Franc acts as the usual inflation hedge against the obviously inflationary policies of Trumpeconomics. Trump is about tax cuts – i.e. a fiscal deficit up to 10%, and about protectionism. Trump would restrict global trade and push up wages. According to Lars Christensen Trumpeconomics is also about monetary stimulus: Trump would push for a more jobs and a dovish Fed, same as his fellow Republican Nixon did. He could even replace the “hawk” Yellen.

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Swiss Unemployment Rate (ILO-based) behind Iceland, Germany and Czech Republic on position 4: All Four Countries Are Currency Manipulators

Unemployment Rate

With 4.8%, the Swiss unemployment rate based on the ILO concept is higher than the rates in Iceland (2.6%), Czech Republic (4.0%) and Germany (4.1%), but lower than the ones of the remaining 25 countries. As for youth unemployment, the Swiss are on position three with a rate of 11%, this is half the rate of the Eurozone, or a fourth of the rate in Spain or Greece.

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Swiss Producer and Import Price Index, October 2016: +0.1 percent MoM, -0.2 percent YoY

Switzerland Producer Price Index (PPI) YoY October 2016

The Producer and Import Price Index rose in October 2016 by 0.1% compared with the previous month, reaching 99.8 points (base December 2015 = 100). While the Producer Price Index declined by 0.1%, the Import Price Index rose by 0.3%. The slight overall increase is due in particular to higher prices for petroleum products. Compared with October 2015, the price level of the whole range of domestic and imported products fell by 0.2%. These are the findings from the Federal Statistical Office (FSO).

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FX Weekly Review, November 07 – November 11: The Trump Reflation Trade

Trade-weighted index Swiss Franc, November 04, 2016

The Swiss Franc Index rose sharply, shortly after the U.S. elections. But then the Trump reflation trade came. Trump may fulfills the wet dreams of many economists. With tax cuts he might extend the U.S. fiscal deficit up to 10% per year. This resulted in:
Gains on U.S. stocks, inflows in U.S. Bonds, inflation hedges gold and Swiss Francs.

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SNB Sight Deposits November 7: No interventions, EUR/CHF under 1.08 with political jitters

Euro/Swiss Franc FX Cross Rate, November 07

Sight Deposits: show that the SNB has not intervened to sustain the euro, that dipped under EUR/CHF 1.08. We considered the 1.08 as line in sand for the SNB. The odds of Trump are rising. This causes fear and demand for Swiss Franc. The EUR/CHF fell to 1.0750. Speculators were net short CHF January 2015, shortly before the end of the peg, with 26K contracts. Then again in December 2015, when they expected a Fed rate hike, with 25K contracts. We see these net short levels reached again this year, maybe even more. Reason the recently strong U.S. and European PMIs.

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Weekly Speculative Positions: Rising Net Short Euro and CHF, but Stronger Euro and CHF

The weekly speculative position shows increasing short positions on the euro and on the Swiss Franc. On the other side, both currencies have appreciated, what they should not do if net short positions increase. This implies that there is real money, .e.g in the form of cash, bonds, stocks or real estate that is invested in the euro area or in Switzerland. For Switzerland, we will see this in the weekly sight deposits.

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FX Weekly Review, October 24-28: October Surprise Pushes Open Door

Swiss Franc Currency Index, October 22 2016

The Swiss Franc Index could recover some of the losses as compared to the US dollar index. Still the USD/CHF remains above 0.99. The US dollar rose against most of the major currencies last week, but the upside momentum appeared to be dissipating, even before the FBI’s announcement about new Clinton emails. There are a few exceptions like the greenback’s performance against the Japanese yen, Canadian dollar, and Swedish krona. The dollar made new multi-month highs against all three currencies in the last two sessions.

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Weekly Speculative Positions: Net Short CHF Position is Increasing

1022-commitment-of-traders

The net short Swiss Franc position against the dollar has risen to the levels seen before the breakdown of the EUR/CHF floor.
It has increased from short 9.4 K contracts to 16.4 K contracts.
In the last week, speculators raised their short positions by 15% for both the euro and CHF. Euro longs against USD were up slightly, while CHF longs were reduced.

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Swiss Exports + 7.0 percent YoY, Imports +8.4 percent. Trade Surplus +3 bn CHF, Exporters Increase Prices

Swiss exports and imports, seasonally adjusted (in bn CHF)

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity increases, while REER assumes constant productivity in comparison to trade partners.
In August 2016, Swiss exports were up 7.0% YoY (in real terms: + 1.2%) and imports 8.4% YoY (in real terms: + 5.1%).

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Speculators continue reducing Euro shorts

Speculators are reducing their net short Euro positions, since Draghi’s comments on inflation. Apparently not only against the dollar but also against the Swiss Franc. This also means that the euro zone may be target real money (like purchases of stocks, real estate and bonds) instead of Switzerland.

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SNB Balance Sheet Now Over 100 percent GDP

Since 2008 the balance sheet of the Swiss National Bank has risen from 28% to 102% of Swiss GDP. Balance sheets of other central banks have strongly risen, too. But there is one big difference: The risk for the SNB is far higher, the SNB nearly exclusively possesses assets denominated in volatile foreign currency.

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Swiss Exports + 7.9 percent YoY, Imports +11.8 percent. Trade Surplus +2.9 bn CHF, Exporters Increase Prices

We do not like Purchasing Power or Real Effective Exchange Rate (REER). For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity increases, while REER assumes constant productivity in comparison to neighbours. In July 2016, Swiss Exports were up 7.9% YoY (in real terms: + 2.4%) and imports 11.8% YoY (in real terms: + 8.2%). Exporters could even raise prices, as we see in the difference between nominal and real.

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Oil Supply Globally: Market Price Compared to Production Costs

Oil Production Costs Shale Oil Sands Oil Conventional

Mainstream media often speaks of the great shale gas/oil revolution and how it makes the United States more productive and a net exporter of oil. We wanted to go into more details,we compare oil production costs for US shale and global oil producers. As reason for the cheap oil we see the combination of two effects:

Demand: Cheap US money supported a Chinese investment boom in factories and housing until 2012. The over-investment phase is followed by lower demand growth.
Supply: The Arab countries need to maintain their social welfare systems, increased production, and – more or less deliberately – kicked high-cost fracking companies out of the market.

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Great Graphic: The Decline in Durable Goods Prices

This economic graph is maybe the most important in the last decade.  Service prices are rising, while goods prices have steadily fallen. The main reason for us is the possibility to outsource big parts of the durables supply-chain to China and East Asia. This is where productivity growth happens. Prices of services, however, are ever increasing. …

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Household Savings Rate Compared

GDP growth is a bad economic measure. GDP growth in the form of consumption-driven (hyper-) activity (aka Bawerk’s “GDC” Gross Domestic Consumption) must finally lead to a depreciating currency, inflation, falling government bond prices and wealth in real terms. Instead, GDP should be driven by investment and the consequent improvements in productivity.

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The relationship between CHF and gold

Many people think that Switzerland is related to gold due to its inflation-hedging safe-haven status. Historically this is true. With rising U.S. inflation in the 1970s gold appreciated to record-highs. So did the German Mark and even more the Swiss franc, that maintained low inflation levels.

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FX Daily, July 05: Sterling Hammered to New Lows, Yen Pops, SNB intervenes

The British pound has been hammered to fresh lows just above $1.3115. The euro is moving toward GBP0.8500. The immediate catalyst is three-fold. First, one of the UK’s largest property funds has moved to prevent retail liquidation. Second, the BOE reversed an earlier decision on the capital buffer for banks, which is tantamount to easing policy by boosting the banks’ lending capability by as much as GBP150 bln.

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FX Daily, July 01: Markets Head Quietly into the Weekend

EUR/CHF finished the week after Brexit with slight improvement of 0.18%. The scare mongering by the Swiss media was misplaced. The euro even recovered from a dip after BoE governor Carney’s comments on Thursday. We do not see strong SNB interventions at this elevated price level. We judged that the interventions happened below 1.08.

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Purchasing Power Parity, REER: Swiss Franc Overvalued?

Most economists, like the ones at the Swiss National Bank (SNB), claim that the franc is overvalued. Many use misleading Purchasing Power Parity (PPP) measures like the Big Mac index, the OECD index or the PPP based on consumer prices for computing fair values.
The second big mistake is to compute the Real Effective Exchange Rate (REER) with the wrong “base year”The third error is to ignore massive Swiss current account surpluses, helped by high savings and by immigration of cheaper highly qualified personnel. Both help to reduce unit labor costs and achieve productivity gains. Eventually the ex-post FX evaluation based of capital flows in the balance of payments should clearly take precedence against the ex-ante FX evaluations REER and PPP, that are obviously misleading for the franc.

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FX Daily, June 21: CHF Strongest Currency Again

The Swiss Franc was the strongest currency. The euro fell from 1.0877 to 1.0808. Two fundamental reasons:
Speculator anticipate that German investors buy Swiss francs in response to the court decision in favor of the OMT and the positive ZEW.

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FX Daily, June 20: Brexit not the main Swiss Franc Driver

Recently I enumerated the different drivers for the continuing strength of the franc. Most commentators mentioned Brexit fears, but I insisted on the low rate and yield environment in the United States after the last Non-Farm Payroll report and the FOMC.
Today’s jump in sterling confirmed my view. This anticipation of an Anti-Brexit vote was not followed by a franc decline against USD. This also implies that a Brexit will not entrench a huge strengthening of the franc.

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FX Daily, June 3: FX Market Shocked by Non-Farm Payrolls

Massive surprise in the US job report was reflected in currency rates. The EUR/CHF surprisingly increased, despite weak US data. This reflects the fact that the ECB is currently considered the most dovish central bank. The dollar lost 2% against the yen, 1.6% against the euro and 1.3% vs. the Swiss franc.

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Switzerland GDP Q1 2016: +0.1 percent QoQ, +0.7 percent YoY

YoY Growth Swiss GDP

Q/Q GDP growth: +0.1%, YoY GDP growth: +0.7%.
Until 2014, Swiss GDP was driven by net exports: Exports were rising more quickly than imports, which improved GDP.
Positive change in the trade balance in goods: +8.1% YoY exports, +1.4% YoY imports in Q1/2016.
Negative change in the trade balance for services: export +2.0%, import +6.7% YoY
In 2015 and in Q1/2016 the main GDP drivers were consumption (+1.3% YoY in Q1/2016) and investment (+2.1%).
Government consumption and inventories lagged in Q1/2016, they dragged down GDP to 0.1% QoQ.

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BSI: The End of a Swiss Private Bank

Authorities in Switzerland and Singapore are punishing BSI, the private bank based in the Ticino region of Switzerland, for alleged money-laundering offenses, shutting their activities in Singapore and seizing part of its profits.

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Ten Most Expensive Countries for Healthcare in the World

Health costs Life expectancy Obesity

The United States spends 17% of GDP for health care, compared to around 10% in many other advanced economies. Thanks to rising health care costs, GDP growth was higher in the U.S. in recent years. The question is if this kind of GDP growth enriches the whole population or only the privileged.

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Swiss National Bank: Composition of Reserves (Assets) and Investment Strategy

The Q1/2016 update on the SNB investment strategy and its assets.
The Swiss National Bank is a passive conservative investor. As opposed to other investors, the exposure in currencies is as important as the strategic asset allocation according asset classes (bonds, equities, cash, real estate). The importance of currencies is one reason why the SNB is often called a hedge fund, the second the volatility of gains and losses.

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April 2016: SNB running suicide again?

snb intervention, chairman philipp hildebrand

Speculative position: Speculators are even longer CHF (against USD): +9410x 125K contracts.
Sight Deposits: SNB intervenes for 6.4 bln. CHF in only three weeks. Sight deposits (aka debt) are rising by nearly 1% per month, this is 10% per year. The SNB can never achieve such a yield on investment, her yield is between 1 and 2 percent. Is the bank running suicide again?

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History of Bank of Japan Interventions

We show the history of Japanese FX interventions. The Japanese only intervened when the USD/JPY was under 80. Therefore the 2016 FX intervention threads at 108 are ridiculous.
As opposed to the Swiss National Bank, the Japanese only talk, they do not fight.

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March 2016: Highest SNB Interventions since January 2015

snb intervention, chairman philipp hildebrand

Speculative position: Strong shift to CHF long: +4967x 125K contracts after the Fed reduced their expectations of rate hikes for this year. …………Sight Deposits: SNB intervenes for 6.1 bln. CHF during the month of March. This is the higest level since January 2016. ……….FX: EUR/CHF steady slightly over 1.09. As I expected last week, the EUR/CHF …

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SNB Monetary Policy Assessment and Critique

We examine the SNB monetary assessment statement of March 17 and the Swiss economy. We explain why negative rates may be a “toothless measure” if a central bank wants to weaken a currency. They have rather an inexpected consequence, they slow down GDP growth, in particular for banks and pension funds.

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Swiss National Bank Results 2015 and Comments

SNB Results Longterm 2015

The Swiss National Bank (SNB) is reporting a loss of CHF 23.3 billion for the year 2015 (2014: profit of CHF 38.3 billion). The loss on foreign currency positions amounted to CHF 19.9 billion. A valuation loss of CHF 4.2 billion was recorded on gold holdings. The profit on Swiss franc positions was CHF 1.2 billion.

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SNB Reduced Loss from 50 Billion in June to 23 Billion

According to the latest news release, the Swiss National Bank expects an annual loss of 23 billion CHF, after reporting a loss of 50 billion at the end of June. Primarily thanks to the stronger dollar, the SNB was able to achieve unrealized gains of 27 billion CHF in the second half. This reduced her annual loss to 23 billion. With its rate hike, Fed is helping the SNB: the dollar has appreciated by 6% since July.

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Swiss GDP and Swiss Franc Shock Propaganda

For George Dorgan the “Swiss Franc Shock” celebrated by the Swiss press did not affect the Net Exports component of Swiss GDP, but it rather suppressed growth in consumption. Therefore the Swiss economy could not replace lost export jobs by new jobs in the internal economy.

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Weak CHF during the Fat Years of the Joseph Cycle

In December 2015, the seven year Joseph cycle ended with a Fed rate hike. These lean years of the Joseph cycle started in December 2008 when the Fed lowered rates to the current level. We think that in the next seven year cycle, even the risk-averse Swiss investors will buy more foreign assets, not only the central bank and speculators. Different crises have passed in the three parts of the world, the U.S. subprime, the euro crisis and the Emerging Markets crisis. The last one culminated in the Russia crisis and the end of the peg in January 2015. At the CFA Society in summer 2014, I predicted the end of the EUR/CHF peg. This time, however, I foresee a weaker Swiss franc

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China in Continuous PPI Deflation and No Depression In Sight?

Both Chinese PMI and the producer price index (PPI) are in deflation since 2012. This opens a lot of questions about the sustainability of Chinese economic growth, but also about the certain economic theories that consider deflation as a precursor of depression, as it did in the early 1930s. China’s speed of economic growth simply slows, recently to 7%, according to China statistics “China’s Economy Showed Moderate but Steady Growth”.

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What Drives Government Bond Yields?

Private, Financial, Government Bond Debt

For us the five major drivers of government bond yields are:
Inflation expectations and inflation: The by far most important criterion. High inflation expectations must be compensated via higher bond yields. The main driver behind inflation expectations is the wage development, this is the form of inflation that typically persists. Price inflation follows inflation expectations with a certain lag.
Wealth: The higher the wealth of a country, the lower the bond yields. Wealth is typically increased by high savings.
Regular and irregular influences on bond yields by central banks: Regular: Central banks buy government bonds, in particular in US Dollars, the world reserve currency. Irregular: Central banks buy bonds of their own government and depress yields – the “quantitative easing”.

If a country has relatively low wealth then foreigners must help with the purchase of bonds and the following factors become relevant:
Foreign debt relative to GDP: Foreign bond holders want higher yields against risks (e.g. currency risks) of holding foreign assets.
The net international investment position (5a) and change in this position, namely the current account balance (5b).

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The Euro Glut: The Summer 2015 Update

Deutsche Bank’s George Saravelos was one of the first to use the term “euro glut”. He anticipated a massive capital outflow from Europe that countered the huge European current account surplus. The Euro glut also led to the end of the EUR/CHF peg. Reasons are missing investment opportunities in Europe despite the high savings rate.

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SNB interventions June 2015

Latest update for June 2015: The pace of SNB intervention is slowing. Sight deposits, the indicator for SNB interventions, rise by 0.5 billion francs per week.
April and May: Sight deposits rise by 1.5 billion CHF per week. Thanks to this intervention the SNB is able to maintain the EUR/CHF around 1.0450.

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Q1/2015: Swiss Real GDP Rises by 15 percent … in Euro Terms

George Dorgan shows that Gross Domestic Product (GDP) is a measurement in the local currency. Effectively, Swiss real GDP rose by 15% in Euro terms, but fell slightly in CHF. He also emphasizes that Switzerland needs a big rebalancing of its economy, away from exports towards consumption. The Swiss National Bank was right to remove the euro peg. The move towards consumption is only possible when the Swiss franc is stronger because consumers will profit on it.

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The two phases of CHF appreciation… and what is in between

We show the two phases or “two innings” of Swiss franc appreciation: The risk aversion phase and the high inflation phase.
With the weakening of emerging markets and the strengthening of the United States in 2013/2014, the Swiss National Bank (SNB) had won the first battle in the war against financial market, the “risk aversion game”, the first inning in two-part match. Risk aversion is lower because the United States recovered with weaker oil prices.
The “inflation game” started earlier than we expected, at least in the eyes of the Swiss National Bank, namely in January 2015. They anticipate higher inflation that will come with rising wages in the United States and Germany.

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Is the Safe-Haven Government Bond Bubble Finally Bursting?

Government bond yields under 2%

The Safe-haven government bond bubble did not pop, but Italy or Spain have become low yielders as well
Government bond yields under 10 years for safe-havens are close to zero. In April 2013, even 20 year bond yields are less than 3%, What can explain this bubble of the century?

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Ex-Post FX Evaluation: Is the Swiss Capital Account Able to Neutralise the Persistent Current Account Surpluses?

Net International Investment Position in % of GDP Switzerland United States

(post written originally in March 2013)
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. Because of this insufficient risk-reward relationship, outflows in the capital account of the Swiss balance of payments will not cover the persistent Swiss current account surpluses. Only strong outflows in the capital account may lead to a carry trade that may make SNB interventions obsolete.
We judge that the balance of payments model is the only useful ex-ante estimation and ex-post FX rate valuation.
Other ex-ante FX estimations like the Real Effective Exchange Rate for the Swiss franc need to be rejected.

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Rising Sight Deposits at SNB Means Rising SNB Debt

Money creation and sight deposits may have two points of view:
1. The central bank creates money – i.e. the SNB decides to increase sight deposits when it does currency interventions
2. Commercial banks create money – inflows in CHF on Swiss bank accounts make those banks increase their “sight deposits at the SNB. If inflows in CHF are higher than outflows then CHF must rise, unless the central bank does currency interventions.
We will present both alternatives.

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SNB’s IMF data

This IMF data on the SNB website shows SNB Forex and gold reserves in the last month. It is so-called “IMF Special Data Dissemination Standard (SNB Data)”

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The Swiss Political Compass

political spectrum ch

Libertarians close to UP Schweiz (Swiss independent party) ridiculed the Green Liberal Party, GLP and the Pirate Party as being in favor of the state and left-wing, hence not libertarian. George Dorgan suggests that both GLP and the Pirate Pirate are pretty close to UP, hence all three are libertarian parties. He thinks that the discussion if one is “Left” or “Right” needs to be left out completely, when we speak about liberty.

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(1) What Determines FX Rates?

Indian Rupee and Renmimbi against EUR

The effects of so-called “currency wars” and other central bank actions are small compared to the long-term impact made by these five catalysts, which include credit cycles, trade balance, differences in economic growth, and more.

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Marc Meyer

Marc Meyer

The best posts by Marc Meyer, the biggest and most influential enemy of the Swiss National Bank. He regularly published in German on InsideParadeplatz.ch

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(2.6) CPI-based Real Effective Exchange Rate Since 1965: Yen Still Most Overvalued Currency

Japa Switzerland Norway New Zealand Germany Australia Singapore Italy Canada Franc UK USA United States

If we calculate Real Effective Exchange rates on the base year 1965, the Japanese yen remains the most overvalued currency.
This analysis is based on the real effective exchange rate (REER) provided by the Bank of International Settlement (BIS) and a consumer price-index adjusted exchange rate.
The real value of the yen is around 50% higher than 1965, the same applies to the Swiss franc.

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(2.7) The Most Complete Real Effective FX Rate Comparison

bruegel effective exchange

In August 2013 the Bruegel blog offered one of the best comparison of long-term real effective exchange rates (REER). The data is CPI based and therefore not as good as the producer price index (PPI) that reflects tradable goods better.
However the data is huge with three different sources – BIS, World Bank, Eurostat, OECD and Bruegel. The data indicates how the real value of the currencies of China and many other Emerging Markets (EM) have improved against 1995. In order fulfill basic needs like food, transportation and housing, this expansion required more and more commodities. By consequence the commodity producers Canada, Australia, New Zealand, Russia, Brazil and OPEC countries but also less known oil producers like Angola, Guatemala, Honduras, Sudan went into a boom.

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New Swiss Gold Initiative Getting Attention When Parallel Currencies Might Challenge Swiss Franc

Goldfranken

In Switzerland the ordinary people have started several initiatives to protect their savings against the establishment. After the first gold referendum failed in November 2014, a new gold initiative is trying to introduce a gold-backed Swiss currency, as parallel currency or investment vehicle.
With the end of the EUR/CHF peg and the apparent risks caused by the SNB, the importance of the Gold Franc initiative has increased. Different groups want to introduce parallel currencies in addition to the Swiss franc. CHF is based on fractional reserve banking and, according to the critics, its quantity is increasing too rapidly.
A sound money initiative (German “Vollgeld”) wants to abolish fractional reserve banking, while the new gold franc initiative desires a gold-backed currency. Already now, the so-called WIR money (“Our Money”) is a local currency created during the Great Depression. “WIR money” allows borrowing and lending, in particular for real estate. It is fully backed by commodities, like real estate. By law, parallel currencies, like WIR money, are not legal tenders. Due to a lack of convertibility into foreign currency, WIR money trades at a slight discount to the Swiss franc. This, however, might change when the SNB gets further into negative equity.
In the following we will compare the two gold initiatives.

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(5) The Balance of Payments Model

Eurozone July 2012 Balance of Payments

The Balance of Payments is the sum of current and capital account. The Balance of Payments model states that a currency appreciate when the Balance of Payments is positive. We give an explanation in around 400 words, that clarifies the relationships.

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(5.1) FX Theory: The Trade Surplus and the Real Exchange Rate Mean Reversion

Trade and Current Account Deficit United States 1980-2012

George Dorgan explains why currencies of countries with trade surpluses must appreciate over the long-term. Thanks to these surpluses, inflation and costs of companies rise more slowly than in other countries. In Forex a mean reversion does not exist, but only an inflation-adjusted reversion to the mean: a real exchange rate mean reversion or in short the “real mean reversion.”

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(7) FX Theory: The Asset Market Model

Correlation Treasuries vs. Yen

The Asset Market Model implies that a currency will be in higher demand and should appreciate in value, if the flow of funds into financial market of the country such as equity and bonds markets increase.

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(12) FX Rates, Contrarian Investments and the Misleading Concept Called GDP

contrarian

We extended our existing post to contrarian investing. It was published on Seeking Alpha and 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.”

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(14) Best Trading Tips

Read our contrarian insights: We provide regularly contrarian indications to technical Forex movements. Trade after work and do not look at markets during the day, third read scary facts about stops.

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CHF Is No Safe-Haven, but a Safe Proxy for Global Economic Growth

In our view the Swiss franc is not a pure Safe-Haven, but a “Safe Proxy for Global Economic Growth”. Global investors want to participate via the purchase of safe Swiss multi-nationals in global growth. This means inflows into Swiss franc denominated assets. Together with the big Swiss trade surplus, this implies a stronger franc. China stands for global economy, its slowing growth has a negative influence on the profits of Swiss multi-nationals and is therefore negative for the franc.

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What Caused The Swiss Financial Tsunami? Three Reasons, One Trigger, One Chain Reaction

In this post we give our (Swiss) view for the financial tsunami on January 15.
The SNB has preferred its secondary mandate, namely financial stability, and the elimination of risks on its own balance sheet caused by ECB QE.
It will not obey its primary target, price inflation, for the next three to five years. While in the mid-term (5 -10 years) inflation should move up.
Differing perceptions between Switzerland and the Anglophone world about “price stability in the medium and long-term” is the second explanation for the financial tsunami.
The massive trade surplus of 10% of GDP is the third reason.

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9) Markets

We are currently looking for an curator of this category. The aim is explain how to obtain sustainably nice returns on stocks and bonds. The focus here should be also on global macro. Sustainability is key: “buy today and sell far in the future”, for example when you get retired. Publicity for own books or publication is allowed.

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Quantitative Easing, its Indicators and the Swiss Franc

bernanke gold chf, dollar

The main drivers of demand for Swiss francs are the euro crisis and, even more, the behavior of American investors, who go out of the dollar in the fear of bad US economic data and/or Quantitative Easing (QE). Risk-friendly investors move into risky assets like stocks or currencies of emerging markets, while risk-averse investors fear inflation and buy inflation-resistant assets like Swiss francs.

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German Home Prices Quickly Narrowing Gap against France – 2014 Update

german home prices

European national central banks released European household wealth reports in Spring 2013. According to that data, “median” German households were far poorer than many of their European counterparts. Based on 2012/2013 data we compared apartment prices and discovered that French prices were strongly overvalued or German ones undervalued.
We wanted to know if this is still the case in 2014 and integrated our 2012/2013 data with the one of 2014. We discovered that German home prices are quickly recovering their delay against French ones. Hence German wealth is ticking up again.

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Happy Xmas Lars von Trier

Handel Lascia ch’io pianga_

Dear friends and readers, Christmas is family time. But since my blog is contrarian, you read here a contrarian family post by one my idols, Lars von Trier. I just want to thank all my loyal readers and followers for following and commenting on my blog and any discussion on Twitter. Since the blog is driven by …

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Swiss Gold Referendum: Results and Analysis

results gold referendum

In a referendum, the Swiss had to decide about:
1) Ecopop, an ecological-political movement that wants to limit immigration to 0.2% of the population.
2) Abolishment of tax advantages for rich foreigners.
3) A gold initiative.
All three initiatives were rejected, the gold initiative by 78%.
George Dorgan summarizes the outcome. He explains what it means for gold, CHF and the SNB. He argues that the next economic cycle will be driven by stronger wage growth in Germany and in the United States. He argues that in some years time the major enemy of the SNB will become inflation that is caused by rising Swiss asset prices and rents and from inflation spill-overs from Germany and the U.S.

The SNB will finally react according to the proposal raised by Prof. Janssen, a major supporter of the gold initiative: with a managed currency appreciation.

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Heterodox Economic Theories and GDP

Heterodox economic theories focus on the human desires to spend, to save, to obtain credit in order to anticipate spending and future earnings, to increase or to reduce debt or even to deplete existing savings, on human behaviour. Those theories neither think that humans are rational nor that markets are efficient.

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Why was the gold price so low in 1999/2000?

Domestic Private Surplus, Govt Surplus

To find further explanations as to why the gold price was weak in the late 1990s we analyze sector balances. Effectively private spending and private debt went in two different directions: a heavy increase in private spending and debt in the US against less growth in private spending and less debt in the rest of world. This combination fostered GDP growth in the US and weakened it in other countries. Real interest rates were positive. Markets thought that the debt-financed growth could continue for years; they created the dot com bubble on top of it that strengthened technology stocks and the related currency, the dollar. This rare situation led to excessively weak oil and gold prices.

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History of SNB Interventions

SNB Assets vs. Liabilities source UBS with EUR/CHF FX rate

High inflows of around 400 billion francs between 2009 and 2012 in the Swiss balance of payments could only be countered with an increase in reserve assets and interventions by the Swiss National Bank. This number is far higher than the one seen during the collapse of the Bretton Woods system, when the ten times bigger Germany had to buy reserves for 71 billion German Marks (at the time around 56 billion CHF). We look at the detailed history of these interventions.

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Vier Meinungsgruppen im Schweizer Goldreferendum, eine Übersicht

arena srf

Das Thema der “Abstimmungs-Arena” im Schweizer Fernsehen war „Gefährdet die Gold-Initiative die Handlungsfreiheit der SNB“? Dieser Blog versucht zu vermitteln, dass die SNB ihre Handlungsfreiheit im Sinne der Einhaltung der Preisstabilität schon im September 2011 verloren hat, als sie den Euro-Mindestkurs einführte.

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Swiss Gold Referendum: Opinion Polls

According to the latest polls 38% of voters would support the Swiss gold initiative, 47% are against it. The previous poll, recognized as more reliable, showed 45% pro gold and 38% against.
A win of the initiative would most probably imply a breakdown of the EUR/CHF floor.
According to the polls, low income groups are in favor. Effectively their purchasing power would increase when the CHF appreciates.
High income earners and stock owners are rather against it. If CHF improves Swiss stocks could collapse; this explains their voting intentions.

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Swiss Gold Referendum and SNB’s Opinion: An Exchange of Arguments

swiss gold

Already in 2013, the Swiss National Bank (SNB) spoke out against the gold initiative and revealed 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. In this post we provide an exchange of Jordan’s arguments against the ones of the gold initiative. We also state our view that is not as strict as the one of the referendum proponents.

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A Little History of Wages, Inflation, Treasuries and the Fed – And What We Learn from it

On this page we show that
Inflation expectations and wages drive the behaviour of the Fed and Treasury bond yields.
Excessive wage increases lead to recessions, more or less voluntarily caused by central bank tightening
Central banks pin down the short end of the yield curve, while financial-market participants price longer-dated yields
Some Emerging Markets seem to copy strong wage increases and inflation that we lived in the 1970s
Quickly rising higher wages in emerging markets may narrow their competitive advantage against the U.S. and Europe
Therefore the “secular stagnation” might not be so long as expected.

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Sept 2014, George Dorgan at the CFA Society: Predicted End of EUR/CHF Peg

cfa society

George Dorgan held a presentation at the CFA society in Zurich on September 1. The subjects of his speech were:
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 repeat? From Bretton Woods to Bretton Woods 2 and its slow end. Why the unexpected, the black swan happens more often than you think.
The slow end of Bretton Woods 2: rise and fall of the global carry trade and debt-driven growth
The contention that the Swiss franc must depreciate is often based on a simplified view on currency drivers and on “solely” one piece of the balance of payments. An evaluation must take place in full assessment of all drivers.

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The Dollar, the ISM, Buy American and Irrational Exuberance

retail sales emerging

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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Swiss Franc and Swiss Economy: The Overview Questions

pictet long-term graph eur/chf, real trade

Before the upcoming SNB monetary policy assessment meeting on June 19th, rumors started the SNB could follow the ECB and set negative rates on banks’ excess reserves. We would like to deliver the whole background, starting with the question why Swiss inflation has been so low in the past and why CHF always appreciated.

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Stock Indices and Exposure to Emerging Markets

ftse evenues em

Monetary policy is and remains tight in Emerging Markets, in particular since many of their currencies collapsed in summer 2013. This created inflation and led to lower spending. We want to find out which stock indices in the developed world have which exposure to Emerging Markets.

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Über den Niedergang der FAZ und des deutschen Journalismus

niedergang faz

Das deutsche Zeitungswesen ist gleichgeschaltet und schreibt und kopiert die gleiche Propaganda, egal ob FAZ, n-tv.de, Spiegel, Süddeutsche, Focus oder das Staatsfernsehen (ARD & ZDF). Seiten wie compact online, Cicero, Deutsche Wirtschaftsnachrichten des Kopp Verlag sind aber dann wieder zu polarisierend. Es fehlt eine Zeitung von Qualität, die wirklich neutral informatiert und Meinungen vergleicht.
Es bleiben nur das Handelsblatt und die Schweizer Weltwoche als relativ neutrale Medien. Die Zeit ist noch einigermassen ertragbar.
Der Herausgeber des Handelsblatt hat in “Der Irrweg des Westens (Ложный путь Запада)” die Propaganda der Mainstreammedien kritisiert, ohne auf die stark polarierende Sicht von Compact “Querdenker jenseits von Links und Rechts” zu schwenken. Wahrscheinlich als Reaktion dazu hat die Frankfurter Allgemeine Zeitung (FAZ) anfgefangen über sich selbst zu reflektieren
Ich persönlich lese mittlerweile mehr die FAZ-Kommentare, da diese häufig eine bessere Qualität haben als der FAZ-Artikel selbst. Ein Auszug.

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

MH 17 flight

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”.

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Will the Dollar Appreciate on higher U.S. Savings and a Smaller Trade Deficit?

industrial production

In summer 2013, even the sceptical and “gold-friendly” economist John Mauldin followed the mainstream thinking that fracking and other technology could reduce OPEC’s and the Chinese advantage in global trade and reduce the U.S. trade deficit. Recently both claims got refuted: the first with WTI crude oil prices rising to nearly 108$ despite enhanced supply. Detailed data showed that rising U.S. industrial production was not caused by more manufacturing but by mining and the oil industry. We think that any way the U.S. current account deficit could effectively shrink. The reason, however, is that the savings rate of Americans could rise further and the balance sheet recession continue. Traditionally currencies appreciate with higher savings (in local currency) and depreciate with more spending.

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Business Cycles

fed hikes rates wages

The typical backstops of all improvements in business cycles are high oil prices and inflation. Inflation is mostly caused by local effects.

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Swiss Franc History, 2000-2007: The sale of the Swiss gold reserves

gold price vs. snb reserves 1

A critical Swiss Franc History: Between 2000 and 2007, the SNB made the Swiss cantons happy and delivered some billions of francs to prop up their finances. The gains were unfortunately not caused by strong asset management capabilities, but mostly due to gold price improvements and gold sales at quite cheap prices.

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Swiss Franc History: Volcker Shock, Oil Glut and the Breakdown of Gold and Emerging Markets

gold inflation

After the Volcker moment or sometimes called “Volcker shock”, commodity prices plunged, the gold price collapsed. Thanks to additional supply, e.g. from Northsea oil, a so-called oil glut appeared. After the increase of debt in the 1970s, some economies in Southern America collapsed. The major reason was Volcker’s tight monetary policy with high interest rates and the dependency on US funds.

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The Swiss Radical Libertarian Party “UP Schweiz” Is Born

up schweiz

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

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Germany: Last European Country with Lots of Cash Under Matresses

In June 2014, the ECB decided to introduce negative rates on the excess reserves of banks. We explain that German banks had already removed most excess liquidity before the ECB meeting of June 2014, and they will continue to do so. Hence hardly any German bank will pay negative rates after the recent ECB decisions at that meeting.

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SNB Bills, Chinese Repos and Reverse Repos

A repo provides liquidity to banks while the reserve repos aims to reduce liquidity and reduce inflation. In 2011, the SNB used SNB bills and reverse repos to reduce inflationary pressure. SNB bills are short-term bonds that pay a certain interest.

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Is the SNB Intervening Again?

snb intervention, chairman philipp hildebrand

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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The IMF Assessment for Switzerland and our Critique

international monetary fund

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.

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Krimkonflikt: Über die Gleichschaltung der deutschen Medien

nato expansion endangers russia

Der Propagandakrieg in Russland, in den USA und insbesondere in Deutschland und auch in der Schweiz geht weiter. Russische Medien trichtern den Menschen ein, dass eine riesige Flüchtlingswelle von Russen aus der Ukraine stattfindet. Deutsche Medien sind gleichgeschaltet: von links (TAZ, Spiegel, Stern) bis rechts (FAZ, n-tv.de und Welt) trichtern sie den Deutschen ein, dass …

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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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Pros and Cons of the Swiss Countercyclical Capital Buffer

emu vs. swiss m3 credit, exceeds eurozone

Switzerland is currently living in a big real estate boom. The bubble bursting would imply that banks’ collateral in the form of real estate falls in value. Therefore the banks’ assets might fall because many home buyers might not be able to repay their mortgage.  If a real estate bubble pops, then banks should be better capitalized to absorb such a shock. Therefore the Swiss National Bank introduced macro-prudential measures, like the so-called “counter-cyclical capital buffer” (CCB).

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SNB Balance Sheet Expansion

snb balance sheet expansion

Since 2008 the balance sheet of the Swiss National Bank is 280% higher, this is the equivalent of 60% of Swiss GDP. So did most other central banks, too. But there is one big difference: The risk for the SNB is far higher, the SNB nearly exclusively possesses assets denominated in volatile foreign currency.

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Inflation Difference between Eurozone and Switzerland Narrows to 0.5 percent

Swiss CPI vs. Euro zone July 2013

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 … Continue reading »

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The Fed Will Remain Gold’s Strongest Supporter For Years

bernanke gold chf, dollar

In the early 1980s the Fed stopped the wage-price spiral and destroyed the gold price. Today main-stream economists have discovered that rising company profits compared to stagnating wages could an issue for the U.S. economy. For us this implies that the ultimate Fed goal will be to increase wages and inflation. Consequently the Fed has become the biggest supporter of gold and silver prices.

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An Upcoming Italian Success Story?

Labor Participation Rate Australia Canada Italy Germany USA France

Higher exports show that Italy’s economy is trying to become a new German Companies seem to hide their competitiveness. A question remains: Will Italian companies really invest in Italy and create jobs?

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

FX Price Movements November 11 to November 15 2013

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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ECB rate cut creates complex situation for SNB

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
I did wonder about the lack of movement in EUR/CHF yesterday considering that nearly every other euro pair took a hit. It’s either become the forgotten currency or there’s some sneaky SNB support that comes in on risk events.

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

House Prices against income China US Britain

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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8a) Italy and the Euro Exit

Beppe Grillo

Italy, other peripheral economies and later 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.

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

FX News 0909-1509 gold silver CHF

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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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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The U.S. “Oil Trade Deficit” Narrows

Petroleum Ex-Petroleum

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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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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SNB Q2/2013 Composition of Reserves

snb q1-q4 currency breakdown

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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Debt Reduction, the new Financial Cycle, an Important Driver of EUR/CHF

Swiss Debt and Deficit to GDP

In this analysis we describe why the long-lasting financial cycle of debt reduction is one key driver of the EUR/CHF exchange rate. We claim that EUR/CHF can rise more strongly only when the competitiveness of the European periphery increases. When this happens, then debt will be reduced and both public and private deficit spending will stop.

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

CPI Details Japan 2011-2013

  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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The End of Swiss Deflation

Swiss CPI Eurozone Comparison June 2013

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

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

SNB Inflation Forecasts of June 2012 and of September 2012

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.”

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

Switzerland Inflation Eurozone April 2013

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 … Continue reading »

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SNB to Follow the Bank of Japan? Part1

ISM Manufacturing Non-Manufacturing May 2013 YoY

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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The Swiss Trade Surplus: A Really Global Economy

Swiss Trade Balance April2013

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

Renmimbi vs Yen USD

  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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GDP Comparison BRICS Developed Markets

Beautiful charts by Goldman’s Jim O’Neill that help to understand the former and future growth of different emerging, “growth markets”, the BRICS. We criticise his partially over-optimistic views.

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The Great “American” Divide

Corporate Profits against US GDP Growth

Disconnect between Wall Street and Main Street. While asset prices are inflated by continued Fed interventions, boosting profits widening the wealth gap between the top 20% of Americans and the rest.

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Sight Deposits are Rising Despite Weaker Franc

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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EUR/CHF to 1.25?

brent vs. gasoline april 2013

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?

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Global Purchasing Manager Indices

Global PMIs December 3, 2012

Manufacturing Purchasing Manager Indices (PMIs) are considered to be the leading and most important economic indicators.   August 2013 Update 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 …

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The “Sell in May, Come Back in October” Effect and the 19 Fortune-Tellers of the FOMC

fortune tellers

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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Swiss Economic Indicators, March 2013

GDP KOF Wages CPI PPI Trade Balance Consumption SECO Industrial Production Construction

  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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Cyprus: The initial compromise and reactions

Cyprus Haircut

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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Why the Yen Is Now Fairly Valued, USD back as Preferred Funding Currency

Japan

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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Composition of SNB Reserves Q4, 2012, Yield on Investment

snb q4 2012 breakdown by currency

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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Das beeindruckende Comeback Berlusconis.

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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Über die Arroganz und Demokratiefeindlichkeit der deutschen und Schweizer Medien

Deutsche und Schweizer Medien sind oft vereint mit den Europäischen Leadern, Deutschen Exporteuren und den Finanzmärkten im Kampf gegen den gemeinsamen Feind, Silvio Berlusconi, das Enfant Terrible, das Gegenteil der Schweizer Bescheidenheit- und “Bloss nicht zu laut”-Etikette. Berlusconi soll Schuld sein am Abstieg Italiens seit den 90igern, obwohl auch die Linke mit Romani Prodi zweimal …

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SNB Liabilities (deposits & bank notes) at New Record High

Printing Press

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

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Switzerland’s Slow Way to Inflation

Swiss CPI Inflation January 2013

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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SNB Sight Deposits Rise by 100 Million CHF, Week January28

SMI vs DAX January 2013

While FX traders and some hedge funds are long EUR/CHF and some short covering happened, sight deposits show a different picture. They rise again, this time with 100 million francs (see details) in one week. Risk-off investors are not convinced yet that the euro crisis is finished, while other investors keep profit of the rising SMI and Swiss real estate prices.

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Global Purchasing Manager Indices, Update January 25

Global PMIs December 3, 2012

Manufacturing PMIs are considered to be the leading and most important economic indicators.  After a strong slowing in summer 2012 and the Fed’s QE3, this is the fourth month of improvements in global PMIs   January 25th Expansion-contraction ratio: There are 15 countries that show values above 50 and 14 with values under 50. Positive-negative-change ratio: …

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FX Theory: The Balance of Payments Model Explained in 400 Words

Balance of Payments

The balance of payments leads to many confusions because definitions vary. For example, the IMF’s definition is different from the usual or historical definition. Secondly, the relationship between the balance of payments and reserve assets is difficult to grasp, especially in the IMF definition. Thirdly the origin of “errors and omissions” is often unclear. Therefore …

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Traditional Monetarist vs. Market Monetarists

econschools

Along the double mandate of the federal reserve, monetarists can be divided into. – traditional monetarists that focus on a slow increase of money supply in order to avoid price inflation. – Market monetarists that want to target growth and income instead of inflation.

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Quantitative Easing, Gold and the Swiss Franc

Quantitative Easing Mechanisms

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 safe-havens like the CHF, gold or the Japanese Yen up. …

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Former SECO Chief Economist: Switzerland Must Exit Peg in 2-3 Years

Aymo Brunetti

Aymo Brunetti, the former chief economist of the SECO, the Swiss national bureau of economy, says that Switzerland must exit the peg against the euro in two or three years time. This is in line with our analysis of upwards and downwards drivers of Swiss inflation. We judged that in 2 or 3 years time, upwards drivers will clearly outweigh downwards drivers. Details about Brunetti’s interview on Tagesanzeiger.

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The Biggest Bubble of the Century is Ending: Government Bond Yields

Since 1960 Treasury Yield Chart

Government bond yields under 10 years for safe-havens are close to zero. In April 2013, even 20 year bond yields are less than 3%, What can explain this bubble of the century? Update August 16, 2013: So, 10-year Treasury yields have ended the day closer to 3 per cent. But not as close as they … Continue reading »

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Global Purchasing Manager Indices, Update December 17

Global PMIs December 3, 2012

Manufacturing PMIs are considered to be the leading and most important economic indicators.  Since the Fed’s QE3, this is the third month of improvements in global PMIs after a strong slowing in summer 2012.   January 25th Expansion-contraction ratio: There are as many countries that show values above 50 as under 50. Positive-negative-change ratio: 18 countries …

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The Upcoming Spanish Lost Decade(s)

Spain protests

To us, the big theatre surrounding Greece was just a preview of a much bigger crisis that will happen in the coming years in Spain, the upcoming Spanish lost decade(s). Greece was an absolutely desperate case; therefore, everything was quick. It took just two years till we arrived at the official sector participation and yearly German transfer …

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About the Impossibilities of the Common-Currency-Recession-Austerity Cycle

charles wyplosz

Charles Wyplosz, Professor of International Economics, Graduate Institute, Geneva repeats our arguments in “Who says No to Austerity, Says Yes to the Northern Euro about the impossibility of getting out of the common currency – recession – austerity – cycle.  Similar as we do, he proposes a public debt haircut, an end of austerity and a decentralization of remaining debt. We go one step further, we want to break not only austerity but also the current form of the common currency. Read more on Prof. Wyplosz entry on VOX.

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Main US Economic Indicators

US Recession Indicators Concurrent Indicators

The four best “recession” indicators, in form of coincident economic indicators, can be seen at Doug Short/Advisor Perspectives Update September 2013   Update December 21th, 2012   We observe the following: US indicators point upwards, when the rest of the world is slowing. After capital left many emerging markets and Europe, this capital helps the United States …

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Who is the Biggest Debt Time Bomb: Japan, France, the UK or the United States?

picture 3

Some must reads: According to the Economist the biggest time bomb in the euro zone crisis is France.

We wonder why the United States and Britain, that have same weak trade balances, the same weak competitiveness and a debt overhang, shouldn’t have a problem?

Just because France must do austerity according to the German Fiscal Compact wish, and the US and Britain do not need to do this?

Or like Ray Dalio called it, are the US and Britain doing a beautiful deleveraging? Or is financial repression and accumulation of debt a real danger?

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SNB Monetary Policy Assessment Outlook

Growth Differential CH Eurozone UBS

On Thursday, December 13th, 2012, at 09.30 CET, the Swiss National Bank (SNB) holds its quarterly monetary policy assessment meeting. As we explained in the “drivers of Swiss inflation” post, inflation pressures will remain subdued for the next 2-3 years, because the effects of the quick rise of the franc and weakening global growth need to …

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Robert Mundell: Why Libertarians Must Love the Euro

portrait5

The idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor planned for it to do. According to Robert Mundell, the creator of the Optimum Currency Zone concept, the euro would really do its work when crises hit. Removing Keynesian monetary and fiscal juice to pull a nation out of recession. More about this evil genius on Guardian.

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Unicredit: Both Italy and Britain Should Play in the Southern Euro League, Germany in the Northern

erik nielsen Unicredit

The must read “Italy is a better bond bet than Britain” on the Financial Times. Unicredit CEO Nielsen implicitly confirms our latest post on global and European imbalances that can be solved only with a Northern Euro and our post why the UK needs to be downgraded similar as France. Both the UK and Italy have the same weak current account, weak investment position and slow growth. They should play together in the Southern euro league.

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Ist der Franken überbewertet? Kaufkraftparitäten

  Nach dem starken Anstieg des Frankens in den letzten Jahren, sagten Ökonomen wie O’Neilly von Goldman Sachs oder die der Schweizerischen Nationalbank (SNB), dass die Schweizer Währung überbewertet wäre. Einige benutzen den “Big Mac Index”, den OECD-Kaufkraftsparitätsindex oder Kaufkraftparitäten auf der Basis von Konsumentenpreisen als Beweis. Wir zeigen, dass aber nur die Kaufkraftparität aufgrund von …

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Seasonal Factors on Oil

spot crude by month subsamples

Evidence from simple tests supports perhaps some belief that crude oil tends to have strong and weak months of the year, Q4 is often the weakest quarter and Q1 and Q2 the best.

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SNB Sight Deposits Week November 23

snb liabilities ubs

Total sight deposits at the SNB rose by nearly 1 billion to 374 bn francs in the week ending on November 23th. “Other sight deposits”, the ones of foreign banks and Swiss companies, fell by one billion francs, but the ones of local institutes increased  by nearly 2 billion francs.

See full detail on our explanation, historical and our expected development of these SNB monetary data.

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Details zum neuen Piratenpartei Wirtschaftsprogramm #BPT122

logo piratenpartei deutschland

Der Bundesparteitag der Piratenpartei Deutschland, ist für jeden, der auf Basisdemokratie setzt, ein sehr aufregender Anlass für jeden, auch wenn die Ziele der Partei sich nicht unbedingt mit den eigenen politischen Zielen decken.
Die Piratenpartei Deutschland ist eine basisdemokratische Denkfabrik, ganz im Gegensatz zu vielen anderen Parteien, die von einer parteipolitischen Oligarchie, Lobbyisten der Wirtschaft und der Medienlandschaft beherrscht werden.

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Who’s the Next Downgrade Domino to Fall?…The UK?

UK Risk of Default BBC

Who Downgrades France MUST downgrade the UK, too   After Moody’s downgraded France, we are waiting the next major sovereign to suffer the same fate. According to the must-read interactive graph on the BBC, France now has a medium risk of default, but the UK is still in risk status “low”.   According to the BBC, each citizen …

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SNB Sight Deposits Week November 16

snb reserves vs. eur/chf usd gold

Total sight deposits at the SNB rose by 0.5 billion to a total of 373 bn. francs in the week ending on November 16th. “Other sight deposits”, the ones of foreign banks and Swiss companies, fell by 600 million francs, but the ones of local institutes increased by more than 1 billion francs.
See full detail on our explanation, historical and our expected development of these SNB monetary data.

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Before getting too excited about the IEA’s forecast of US oil production leadership…

US Oil Independence

Saxo Bank, recently called for quitting long Gold and “being scared” trades.

For them shale gas & oil is the game changer for the United States. It should make the US the leader for global growth in the next years. The International Energy Association (IEA) declared that the US would be energy-independent by 2030.

Today a nice article about the history of wrong IEA forecasts came out:

Before getting too excited about the IEA’s forecast of US oil production leadership…

Moreover environmentalists do not stop to protest against the fracking techniques.

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Warum uns das demokratische Prinzip in eine Sackgasse führt

Andreas Toegel

Der „In-einer-Demokratie-herrscht-das-Volk“-Mythos wäre durch nichts nachhaltiger zu entzaubern gewesen als durch den seit Jahren aufgeführten Eiertanz um Griechenland- und Eurorettung, durchgeführt durch eine Bankenoligarchie, die dem unwissenden Bürger immer wieder mit Endzeitdrohungen kommt, sollte das kleine Griechenland die Eurozone verlassen. Die Endzeit erreichen wir nun, weil sich die Deutschen vor lauter Angst vor ESM und Target2 weigern zu konsumieren.

 

Buchempfehlung: „Wenn die Demokratie zusammenbricht“

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Global Purchasing Manager Indices, Update December 10

Global PMIs December 3, 2012

  Manufacturing PMIs are considered to be the most leading and important economic indicators. Jim O’Neill, Chairman of Goldman Sachs Asset Management, believes the PMI numbers are among the most reliable economic indicators in the world.  BlackRock’s Russ Koesterich thinks it’s one of the most underrated indicators. Global Purchasing Manager Indices for the manufacturing industry   December 3, 2012 …

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Die Wiederwahl Obamas bedeutet nichts Gutes für die Schweiz

Obama

  Barack Obama war und ist der präferierte Kandidat vieler Schweizer. Obama scheint der Mann von Welt zu sein, während vom konservativen Mitt Romney eher feindselige Politik gegen Russland, China und Iran zu erwarten ist. Daher sind die Neutralität- und Frieden-liebenden Schweizer eher auf Obamas Seite. Aber auch wirtschaftspolitisch scheinen viele Eidgenossen Obama zu mögen. …

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Swiss and German Economic Indicators, Update November 1

Swiss & German Economic Indicators, August 2012

Euro Crisis Has Affected Germany, Switzerland Still Immune    Most Recent Events The Swiss SVME PMI has risen from 43.9 to 46.1. This PMI  is dominated by machinery, metallurgical and electric equipment exporters organized in the Swissmem organization. As opposed to the chemical industry, they were not innovative enough to adapt to the stronger franc; but …

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SNB Monetary Data Week October 26

swiss m1 vs. gdp and credit 2008-2012

Seasonal effects, the good months for the SNB and the US economy, but weaker ones for emerging markets and Switzerland Despite the seasonal effects between October and March, the SNB is not able to sell currency reserves consistently. Traditionally the USD gets stronger and stocks rise over the autumn months till January. This year’s stocks appreciation was possibly already anticipated …

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Euro Crisis Has Affected Germany, Switzerland Still Immune

Swiss & German Economic Indicators, August 2012

Swiss and German Economic Indicators, October 2012   Both Swiss and German economic indicators show continued signs of stability, but the German situation has become worse and might affect the Swiss. Especially low unemployment, rising real wages and strong trade balances are signs of robustness. Despite that, Germany’s industrial production is weaker than last year, …

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Who Has Got the Problem? Europe or Japan?

Japan

A couple of months ago the euro traded close to EUR/USD 1.20 and the whole world was betting on its breakdown. Once the euro downtrend ended thanks to QE3, OMT and euro zone current account surpluses, the common currency did not stop to appreciate against the yen and reached levels of EUR/JPY 104 and above. …

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SNB Monetary Data Week October 19

Swiss Trade Balance by regions English

Seasonal effects, the good months for the SNB and the US economy, but weaker ones for emerging markets and Switzerland Given that the seasonal effects between October to March have started, the SNB might be able to sell some currency reserves. Traditionally both the USD gets stronger and stocks rise over the autumn months till January. This year’s stocks appreciation was …

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Is China’s Growth Rate Healthy Now? Golden Rule of Capital

Fixed Investments as part GDP different countries

After a slowing in Chinese growth this year, economists recently stated that a hard landing has been avoided and that the economy might have bottomed out. Marc Faber has changed his mind and considers buying Chinese stocks. Also Sprach Analyst provides the following data: Sequential growth rates since Q1 through Q3 were 1.5%, 2.0% and 2.2% respectively, or in annualised annual rate, 6.16%, 8.24%, and 9.09% respectively. Compared that with the year-on-year growth of 8.1%, 7.6% and 7.4%.

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Again Flawed Data for Jobs

job fair 200

Some ten days ago, we examined in detail why the monthly job data was no conspiracy as Jack Welch maintained, but  simply flawed. Similarly as  David Rosenberg we said that the way the BLS obtains data for the household survey was error-prone. Gluskin Sheff’s David Rosenberg That the 7.8 percent jobless rate takes it to the …

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SNB Monetary Data Week October 12

Stock market performance per quarter

Seasonal effects, the good months for the SNB and the US economy, but weaker ones for emerging markets and Switzerland, have started Given that the seasonal effects between October to March have started, the SNB might be able to sell some currency reserves. Traditionally both the USD gets stronger and stocks rise over the autumn months till January. This year’s stocks …

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74.8 percent of Norwegians Say No to EU Membership

In the latest poll, 74.8 percent of the Norwegian population says no to EU membership, while 17.2 said they would vote yes in any referendum. 7.9 percent have not decided. Seven out of ten voters of the ruling party do not share the party’s views on the EU and would have voted no in a possible referendum, …

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IMF Data: SNB Forex Reserves and Gold in September 2012

This link  on the SNB website shows the data the central bank provides to the International Monetary Fund (IMF). It shows the SNB Forex and gold reserves in the last month. It is so-called “IMF Special Data Dissemination Standard (SNB Data)” It is released together with the international investment position, some monetary aggregates and the balance of payments two weeks after …

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SNB Monetary Data Week October 5

Stock market performance per quarter

Seasonal effects, the good months for the SNB and the US economy, but weaker ones for emerging markets and Switzerland, have started Given that the seasonal effects between October to March have started, the SNB might be able to sell some currency reserves. Traditionally the United States and the USD dollar become stronger and stocks rise over the autumn months …

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Conspiracy? Why the Jobs Report Was not Cooked, but simply Flawed

CPS Household Survey September 2012

Conspiracy ? Huge Differences Between the Payrolls Report and the Household Survey based on the extracts of Robert Oak, Noslaves.com and his blog on Economic Populist It’s a conspiracy! The BLS is trying to swing the election! They’re cookin’ de books! By now you’ve seen the claims, accusations and mumblings by the pundits, press, twitter and blogosphere. So …

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Marc Faber argues against Jim Rogers

  The most famous investors Marc Faber and Jim Rogers were in a common interview on CNBC. Marc Faber is of our position, whereas Jim Rogers is still bullish on commodities.   Marc points out that China’s bench mark stock index the Shanghai Stock Exchange Composite Index was at 6100 in 2007 even as it …

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SNB Monetary Data Week of September 28

snb -expansion

Seasonal effects, the good months for the SNB and the US economy, but weaker ones for emerging markets and Switzerland, have started Given that the seasonal effects between October to March have started, the SNB might be able to sell some currency reserves. Traditionally the United States and the USD dollar become stronger over the autumn months till …

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Order the Full Report on the S&P Critique

snb purchases adjusted

  In the full report we explain in detail how one can analyze the balance sheet of the Swiss National Bank (SNB) based on several sources of information, for example the monthly bulletin, which shows the changes of the SNB balance sheet and the quarterly distribution of the SNB assets including the information about FX …

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Can The SNB Make Profit On Currency Reserves ?

Money Market Funds Risk Aversion

  Abstract We determine the main criteria with which markets evaluate currency prices. We focus on explaining the differences between the carry trade era (or like Ben Barnanke called it “The Great Moderation”) and the period after the financial crisis. Our research shows that each one of the following three main preconditions must be fulfilled, …

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Die drei wichtigsten Bedingungen, so dass die Nationalbank die Währungsreserven abbauen kann

    Die grossen Schweizer Franken-Mythen: Die SNB kann Gewinne durch die Währungsreserven erzielen   Letzten Sonntag behauptete der frühere Nationalbank-Direktor Niklaus Blattner in der Sonntagszeitung: “Nach der Ankündigung von EZB-Direktor Mario Draghi kann kein Zweifel mehr bestehen, dass der Euro fortbestehen und Griechenland in der Währungsunion bleiben wird.” Draghi, Direktor der Europäischen Zentralbank (EZB), …

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Eurobonds, fiscal or banking union are all pure utopia

Eurobonds dare pure utopia SNBCHF.COM

Germany’s stance in the euro crisis: More than ESM will not be possible for many years updated on August 31, 2012   German politicians and the German Bundesbank believe that the Euro crisis can be only solved by supply side reforms as formulated in the Euro Plus Pact, reforms that were already successfully introduced during the Thatcher/Reagan era in the …

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Economic Indicators: In Switzerland and Germany the Euro Crisis Seems to Be Far Away

Swiss & German Economic Indicators, August 2012

 Swiss vs. German Economic Indicators, August 2012        Both Swiss and German economic indicators show continued signs of stability. Especially low unemployment, good retail sales and strong trade balances are signs of robustness. The German trade surplus has improved compared to last year, whereas the strong franc harmed the Swiss trade surplus just a bit. …

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Brad DeLong on Jackson Hole and Quantitative Easing

Brad DeLong Daedalus

  Berkeley Professor Brad DeLong has delivered a nice allegorical entry in his type pad on a quick Quantitative Easing. Letting speak old greek mythological figures he hides his personal opinion. A half now completely written platonic dialogue on what the Federal Reserve is Doing — or not Doing — Right Now DeLong explains the …

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8) Euro Crisis and Euro Macro

We are currently looking for a curator that takes over the euro macro category. The Euro Crisis and its Reasons, details and chronology, German economists ,Eurobonds, fiscal or banking union,Who Says No to Austerity, Says Yes to the Northern Euro Ways to the Northern Euro

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Otmar Issing’s new book on the euro crisis

Issing Book

  We well remember when the über-bailouter of the Financial Times Wolfgang Münchau claimed that except some old economy professors like Otmar Issing nobody in Germany would like to abolish the euro. According to Münchau the euro can be saved only via a fiscal and a banking union. The response to Münchau’s post could be …

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Global PMIs Contracting More – Are Stocks Overvalued?

Global PMIs July 2012

updated August 05,2012 We publish a detailed analysis of global PMIs and compare them with the main risk indicators S&P500, Copper, Brent and AUD/USD some days after most PMIs came out. Abstract: Thanks to positive US consumer confidence, stock markets are highly valued, whereas the Purchasing Manager Indices (PMIs) for the manufacturing industry are contracting …

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Globale Einkaufsmanager-Indizes per 5.August 2012. Sind die Aktienmärkte überbewertet ?

Dank der seit dem Winter immer noch positiven amerikanischen Konsumentenstimmung, steigen die Aktienmärkte weiter, während die Einkaufsmanager-Indizes der Fertigungswirtschaft sich schon seit 3 Monaten abwärts bewegen. Wie kommt dass die Aktienmärkte heute wesentlich höher als im September 2011 stehen, obwohl die Konjunkturdaten, insbesondere in der Fertigungswirtschaft wesentlich schlechtere Zahlen als damals liefern ? Dies obwohl …

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SNB Zwischenbericht 2. Quartal 2012: Nationalbank möglicherweise mit mehr als 10 Milliarden Gewinn

jordan vs. ackermann was it a pyhrrus Victory ? snb results q2/2012

  Am 31. Juli um 7.30 Uhr wird die Schweizerische Nationalbank (SNB) den Zwischenbericht für das zweite Quartal 2012 herausgeben. Wir offerieren unseren Lesern schon jetzt eine Schätzung.  Wir rechnen mit einem Gewinn von 10,65 Milliarden CHF dank der starken Erhöhung der Devisenreserven in den Monaten Mai und Juni und der Abschwächung des Franken gegenüber dem US-Dollar, …

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Der italienische Euro-Austritt: Warum er in 2-3 Jahren kommen kann und warum er Italien helfen wird

Silvio Berlusconi ist “endlich” zurück und Kandidat seines “Polo della Liberia (PDL) für die Wahlen 2013. Premierminister Monti, der nicht vom Volk, sondern von den Finanzeliten gewählt wurde, soll bis zum Frühjahr 2013 regieren, könnte aber aber auch früher zurücktreten. Aufgrund einer Umfrage im Juni würde die Anti-Euro-Bewegung “5 Stelle” 20,6% in Wahlen erhalten, Berlusconi’s …

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The End of Swiss and Japanese Deflation

Deflation Japan USA

At a time of speculations about global deflation, we show an interesting and very different aspect. Our CPI and wage data comparison among different developed countries, shows that Switzerland and Japan will see both inflation, whereas other countries like Australia will see disinflation.

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Update vom Deutschen Verfassungsgericht 11. Juli

esm bundesverfassungsgericht 2

Deutsches Verfassungsgericht braucht 3 Monate für seinen Eilentscheid, der nun eine halbe Hauptsachenentscheidung ist. Die Wahl im Gericht zwischen der system-relevanten Bank ESM und dem “Herausschmeissen” der Südländer aus dem Euro und vieles aus dem Verfassungsgericht.

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Only 17% of German voters in favor of Eurobonds

  Voters are strongly against many other European utopias The newest poll of the Forsa institute, here in the left-wing Stern and the conservative Welt, shows that Germans are strongly against Eurobonds and many more European “utopias”, as we called it. The German chancellor Angela Merkel recently connected her life with the fulfillment of the voters wish to …

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EUR/CHF, A History of Interventions: What markets say, June 2012

genius

SNB In A Bind With Euro Holdings Today’s reserve data showed skyrocketing reserves at the Swiss National Bank as they defend the EUR/CHF floor. Reserves were at 365B francs at the end of Q2 compared to 245B at the end of March, with all the growth coming in the final two months of the quarter … Continue reading »

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Is the SNB prepared for the black swan ?

Will the SNB printing policy lead to inflation and a housing bust when Germany leaves the Euro ? Recently the voices for a German euro exit have become louder and louder. The most recent voice comes from Biderman , the FT says that the rise of German Bunds holds the secret how the eurozone crisis will …

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Some of our Twitter followers

Marc Faber 3

Here a quick list of some of our Twitter followers:

Marc Faber Blog @marcfaberblog FOLLOWS YOU
Marc Faber is an investor and economist known for his spot-on assessment of the world economy. He also manages his own investment company, Marc Faber Limited.· http://marcfaberblog.com
economie_suisse ‏@economie_suisse FOLLOWS YOU
La principale organisation faîtière de l’économie suisse

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Quantitative Easing Indicators, June 2012

5 year FAV Credit Suisse

The main drivers for 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 in the fear of Quantitative Easing. This will push down the dollar and safe-havens like the CHF, gold or the …

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The “Sell in May, come back in October” effect and its equivalent for the SNB

Sell in May, Come back in October

  The “Sell in May, come back in October” effect It is the same seasonal anomaly nearly every year: The statistically flawed (see here and here) Non-Farm Payrolls (NFP) report delivers some good winter readings with 200K new jobs, this time additionally fuelled by a weather effect; biased data that let hard-core Keynesian policy makers doubt Okun’s law. Consequently the stock markets rally …

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The latest bubble: Real estate in Russia

Global House Prices

Still a draft, From Barnaul, Siberia, Russia Inna, 28, is a high-school teacher, she has one child. Her monthly salary is 8’500 Russian Rubel, about 257 USD. Similarly as many state employees her salary is very low. Recently the state doubled the salary of policemen and soldiers from 20’000 RUB to 40’000 RUB. A main …

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EUR/CHF, A History of Interventions: May 2012

5-24 eurchf

FT A Wee Bit Late To The Party… Notices Europeans have been buying Swiss francs and dollars. Who knew? By Jamie Coleman  || May 30, 2012 at 19:43 GMT AUD/USD, NZD/USD Dragged Higher As EUR Recovers As Gerry mentioned earlier, the talk of a rescue fund for EZ banks seems to have set off some short covering …

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CNBC rumors: Different peg methods for the SNB

Crawling peg RSD

There are currently rumors going on on CNBC that the SNB is planning something this night. As we explained here, the SNB had to strongly restart the printing press and printed tremendous 13 bln francs in one week. Moreover, they probably sold some of their in Q4 2011 and Q1 2012 acquired GBP, JYP and …

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Is the SNB pegging away from the Euro to the SDR currency basket using their FX reserves ?

snb fx currency distribution q1 2012 usd eur jpy

We reckon that the central bank has introduced an automatic peg mechanism which obliges them to buy euros at exactly 1.2010 and sell euros above this level (reasons and details here). If they sold more euros than they bought, they are happy to have offloaded some items of their overloaded balance sheet. If they bought more euros than they sold, however, there are some “superfluous” euros. Instead putting these euros on their balance sheet, they might sell these superfluous euros against the other SDR currencies USD, GBP and JPY, which pushes the euro down against this currency basket – something that German and Swiss exporters will appreciate.

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EUR/CHF, A History, The Game Changes: April 2012

eurchf 15 mins

EUR/GBP: If You Want To Know Why Its Falling, Have A Look At The SNB Thanks Goose for the reminder that the SNB released figures on its FX reserves holdings and these showed a marked increase in GBP holdings. This has been a constant theme over the last few weeks/months, the SNB buys EUR/CHF in the marketplace …

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Why the Euro Crisis may last another 15 years

home prices ireland, spain, uk, france, usa, germany, switzerland 1990-2008

Abstract In the following article we will explain which types of crisis occur in the euro area and will argue that this crisis will last at least another fifteen years. (1) Competitiveness crisis: Before the euro introduction peripheral countries regularly saw their currency depreciate against the German Mark and helped them to increase their competitiveness. …

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5) FX Theory

Breakdown of global GDP growth1

Content : What Determines FX Rates? Purchasing Power Parity, Real Effective Exchange Rate, Balance of Payments Model, (Reverse) Carry Trade, Asset Market Model, Real Mean Reversion, lots more

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Written in February 2012: Will the EUR/CHF never rise over 1.22 or 1.23 again?

Our analysis from February 2012 shows astonishing accurateness: It predicted that the euro would not rise against CHF and that the commodity currencies were overvalued and subject to correction.

Basic foreign exchange theory, the SNB price stability mandate and strong fundamentals for Switzerland and bad ones for the peripheral countries of the euro zone speak for the thesis that the EUR/CHF exchange rate might never go over the level of around 1.22 or 1.23 again. Therefore the SNB will need to think about an exit strategy from the current floor. Moreover, it predicted the break-down of commodity currency, because they were clearly overvalue in 2012, but the Swiss franc was not.

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Oil price increases in 2012 and why they are not real

Gasoline consumption

Oil prices  Oil prices will rise quickly this year along with the recovery, the Iran issues and last but not least driven by investor demands of yield, implemented in the HFT algos. Interestingly the Iran issues already existed in December, but oil prices were falling, at that moment investors did not believe in a global recovery yet, …

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EUR/CHF: One Year of Free Market (07/2010-07/2011): July 2011

ForexLive Asian Market Open EUR/USD is trading around 1.4390 and USD/JPY is at 77.20 as the market awaits the latest developments out of Washington. Risk pairs like EUR/JPY and EUR/CHF are likely to be whippy this morning as the headlines hit the newswires. Good luck out there. By Sean Lee  || July 31, 2011 at 20:49 … Continue reading »

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EUR/CHF: One Year of Free Market (07/2010-07/2011): June 2011

6-14 eurchf

Specs Scrambling For Cover In EUR/CHF The Armageddon trade is being taken off in dramatic size in thin-month-end markets, driving EUR/CHF above 1.2200. USD/CHF is nearing resistance at 0.8440. Traders not talk of significant interest from real money accounts to buy both USD/CHF and USD/JPY at the fixing at 15:00 GMT. The danger now is … Continue reading »

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EUR/CHF: One Year of Free Market (07/2010-07/2011): May 2011

May 2011 ForexLive Asian Market Open: Analysis With Fries Just brilliant Jamie Australian GDP this morning and the market is now gearing itself for a poor number after yesterday’s data and weekend comments from the Treasurer. China is selling rallies in AUD/USD and Middle East Sovereigns are buying big dips; sounds like a recipe for medium … Continue reading »

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Swiss Franc at record highs (May 2011)

swiss franc versus cross currencies 2010-2011 chfusd chfjpy chfeur

May. 27th 2011 Extracts from the history of the Swiss franc (May 2011) This month, the Swiss Franc touched a record high against not one, but two currencies: the US dollar and the Euro. Having risen by more than 30% against the former and 20% against the latter, the franc might just be the world’s …

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EUR/CHF: One Year of Free Market (07/2010-07/2011): April 2011

eurchf daily

Quick Look At The Order Board EUR/USD: At least two sizeable barriers at 1.4550; light stops immediately above 1.4555; decent-sized offers near 1.4600 AUD/USD: Decent-sized bids from option players 1.0610/20 USD/JPY: Solid bids 82.00, 81.80, 81.50. Offers still solid 83.10, 83.30 and somewhat larger near 83.50. EUR/GBP: Heavy stops above .8950 EUR/CHF: Moderate buying interest near …

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Has the Swiss Franc Reached its Limit? (February 2011)

chf-usd 1 year chart 2010-2011

Feb. 6th 2011 Extracts from the history of the Swiss franc (February 2011) The second half of 2010 witnessed a 20% rise in the Swiss Franc (against the US Dollar), which experienced an upswing more closely associated with equities than with currencies. It has managed to entrench itself well above parity with the Dollar, and …

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Swiss Franc Surges to Record High (December 2010)

usd chf 2 year chart

Dec. 29th 2010  Extracts from the history of the Swiss franc (December 2010)   In the last two weeks, the Swiss Franc rose to record highs against not one, not two, but three major currencies: the US Dollar, Euro, and British Pound. The Franc is now entrenched well above parity against the Dollar, and is …

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Capital controls: The poison cupboard of the SNB

The SNB has already tried a lot to weaken the franc. A (google) translation of a list of capital controls of the Never Mind the Markets blog.   The fear of the economic effects Brake by an overvalued franc increases. Massive interventions by the Swiss National Bank (SNB) with € purchases are now ineffective fizzles. Does it …

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EUR/CHF, a Year of Free Market (07/2010-07/2011): September 2010

Cable Showing Signs Of Tiredness Cable rallied above 1.5900 in the early European rush to sell EUR/GBP but the sharp fall since doesn’t bode well for the short term bulls. I personally have exited most of my long position and will look to reinstate towards 1.5500. GBP/CHF once again halted at the major 1.5360 low … Continue reading »

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EUR/CHF, a Year of Free Market (07/2010-07/2011): August 2010

ForexLive Asian Market Open: CHF, JPY Up; GBP Down EUR/CHF will begin the new month at fresh record lows and this may encourage some of the bigger macro funds to join in the rout, those that aren’t already involved that is. I think it was Paul Tudor-Jones who said that his best trades often came … Continue reading »

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EUR/CHF, a Year of Free Market (07/2010-07/2011): July 2010

eurauddaily

EUR/CHF Hit Again EUR/CHF has been hit again, down at 1.3535 from early 1.3580.  Recently there has been talk of the Swiss National Bank selling the cross, something I for one certainly can’t substantiate.  Also yesterday there were rumours of a September rate hike in Switzerland.  All very murky. The EUR/CHF cross selling has helped pressure EUR/USD, which is … Continue reading »

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EUR/CHF: A Year of Free Market, June 2010

eur chf

EUR/CHF Firmer EUR/CHF up at 1.3260 from early 1.3210.  Move comes as Hungary official says government plans loan deal with IMF.  Large German name seen buying the cross. By Gerry Davies  || June 30, 2010 at 06:45 GMT Euro Profit Taking Rebound The euro has found some buying support across the board on profit taking. I …

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SNB Abandons Intervention (June 2010)

swiss snb forex reserves intervention

Jun. 22nd 2010 Extracts from the history of the Swiss Franc (June 2010) The Swiss National Bank (SNB) has apparently admitted (temporary) defeat in its battle to hold down the value of the Franc. ” ‘The SNB has reached its limits and if the market wants to see a franc at 1.35 versus the euro, …

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EUR/CHF: A History of Interventions, May 2010

ForexLive Asian Market Open: EUR Worries Return The big Sovereign players couldn’t get enough of the EUR when it was at 1.40 and now it looks like they can’t get out quick enough. The BIS has been a regular seller on behalf of other central banks, the SNB are quietly trying to offload what they …

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EUR/CHF: A History of Interventions, April 2010

April 2010   Quick Look At The Order Books AUD/USD: stops below .9135 and again below .9070 USD/JPY: solid bids 92.70, stops below 92.40, heavy semi-official bids expected at 91.50 ( I’m hearing of “massive” stops below 90.50 so if market gets on a roll lower keep this level in mind) EUR/USD: looks like the order …

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EUR/CHF: A History of Interventions, March 2010

, March 2010 Big Barrier Eyed In EUR/CHF Traders report a large barrier option is in play at the 1.4200 level in EUR/CHF. Nothing attracts price action like a big barrier. The owner of the option wants to protect his investment while the bank that sold the option wants to knock it out to erase …

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EUR/CHF: A History of Interventions, December 2009

baghdad bob

December 2009 EUR/CHF Selling Off EUR/CHF is down at 1.4835 from an early 1.4865, the swissy bulls happy to probe for signs of meaningful SNB interest.  Many are voicing surprise at the lack of interest being show by the Swiss National Bank to curtail the recent burgeoning swissy strength. There is talk of 1.4800 barrier …

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EUR/CHF A history of interventions: November 2009

November 2009 Asian FX Market Open: Price Action Suggests That There’s More To Come As I wrote yesterday, the market moves reminded me of 12 months ago when risk aversion was in full flow and this has continued throughout the European session. As Lilac mentioned after the FTSE fell by over 3%, we could be …

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EUR/CHF A History of Interventions: October 2009

A market view history of the EUR/CHF from the website ForexLive October 2009 Cue The Jaws Music EUR/CHF is trading below 1.5100, presently at 1.5090,  very nearly at 1.5o80 where the SNB is last said to have intervened………. More Signs Of US And Global Recovery The US GDP number was yet another sign of a global economic recovery …

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EUR/CHF A history of interventions: September 2009

  A market view history of the EUR/CHF from the website ForexLive September 2009 Market Settles Down After More NZD-Led Volatility As Jamie said earlier, it’s amazing that an economy half the size of Norway’s can lead the market by the nose and it has now done so for the second successive day. NZD/USD rose almost …

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SNB Could Intervene…Again (September 2009)

snb swiss franc Intervention

Sep. 29th 2009   Extracts from the history of the Swiss Franc (September 2009)   After a brief “hiatus,” the Swiss Franc is once again rising, and is now dangerously close to the $1.50 CHF/EUR “line in the sand” that spurred the last two rounds of Central Bank Intervention.Both from the standpoint of the Swiss …

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Recent History of the Swiss franc, August 2009

A market view history of the EUR/CHF from the website ForexLive August 2009 Swiss KOF Leading Indicator Much Stronger Than Expected The Swiss KOF leading indicator for August has come in at -0.04 from a revised -0.85 in July, much stronger than the median forecast of -0.60.  The indicator’s m/m rise in August is the strongest …

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Recent History of the Swiss franc, July 2009

eur chf

A market view history of the EUR/CHF from the website ForexLive July 2009 EURCHF Offers 1.5250 Im hearing that EURCHF offers at 1.5250 are lined up ready to defend the level. There was an attempt to take it higher on Friday after the German IFO number but failed. 1.5250 is proving to be quite a level. …

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Recent History of the Swiss Franc: June 2009

  A market view history of the EUR/CHF from the website ForexLive June 2009 Don’t Get Too Fancy- Most Of The Clues Are Face-Up On The Table EUR/USD: big option play has tied the market in for the last 2 weeks and there are 2 more to go we believe. 1.3750/1.4250 range on the wide but …

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SNB Intervenes on Behalf of Franc (June 2009)

swiss franc rises after snb intervention

Jun. 26th 2009 Extracts from the history of the Swiss franc (June 2009)   Back on March 12, the Swiss National Bank issued a stern promise that it would actively seek to hold down the value of the Swiss Franc (CHF) as a means of forestalling deflation. The currency immediately plummeted 5%, as traders made …

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SNB rate decision June 18th 2009

Extracts from the History of the Swiss Franc Courtesy on EasyForex.com SNB rate decision June 18th 2009 Written by Michael J. Malpede Wednesday, 17 June 2009 18:23 GMT The Swiss National Bank (SNB) will hold its monetary policy meeting on Thursday June 18th.The SNB is expected to hold rate policy steady at 0.00%-0.75%.Recent Swiss economic …

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Recent History of the Swiss franc: May 2009

5-15 eurchf 2009

A market view history of the EUR/CHF from the website ForexLive May 2009 BIS And SNB Expected To Be Buying EUR/CHF On 1.50 Handle Dealers expect to see bids appearing from either the Swiss National Bank or the Bank for International Settlements if EUR/CHF dips back towards 1.5050. By Sean Lee  || May 28, 2009 at 04:03 …

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Recent History of the Swiss Franc: April 2009

crosses 2 apr 09

A history of the EUR/CHF from the website ForexLive April 2009 Selling EUR/CHF Seems Akin To Poking Billy Goat Gruff With A Sharp Stick It seems to me selling the EUR/CHF cross down here is akin to poking the elder billy goat gruff with a sharp stick.  You get it, Alpine meadows, goat herds….(Ok I know … Continue reading »

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Recent History of the Swiss franc: March 2009

eurusd hourly 12 mar 09

A history of the EUR/CHF from the website ForexLive March 2009 Be Warned, April Fools Day Don’t believe everything you hear today as somebody might be having you on! The CHF is making a comeback and it’s imminent demise, which I have been forecasting, is obviously greatly exaggerated. EUR/CHF is back under 1.5100 and no sign … Continue reading »

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Recent History of the Swiss franc: January to February 2009

eurchf hourly 6 feb 09

Swissy Sees Some Slight Improvement   Swissy is seeing some slight improvement in afternoon trade, the EUR/CHF cross presently down at 1.4900 from the 1.4990 session high posted earlier. The general flight to perceived safety, with gold fast approaching $1,000, will be playing a part with swissy’s safe haven premium coming into play. However how …

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Swiss Franc in Spotlight (January 2009)

Jan. 29th 2009   Extracts from the history of the Swiss franc (January 2009).   The Swiss Franc is in the same boat as the US Dollar and Japanese Yen, benefiting from an increase in risk aversion and an unwinding of carry trade positions. In other words, the currency rising on the back of the sound monetary …

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Credit Crisis Could Lift Yen, Franc (July 2008)

Jul. 31st 2008 Extracts from the history of the Swiss franc (July 2008).   As the credit crisis has unfolded, the Dollar has remained (relatively) strong, especially considering the deteriorating state of its economy. The reason for this, of course, is that in times of crisis, investors flock to perceived safe havens, such as the …

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Deutliche Unterschiede bei Bruttonationaleinkommen und Bruttoinlandsprodukt

Bruttoinlandsprodukt vs. Bruttonationaleinkommen Schweiz

  Deutliche Unterschiede bei Bruttonationaleinkommen (BNE) und Bruttoinlandsprodukt (BIP) Im Gegensatz zu Irland und Luxemburg, wo das BIP wesentlich grösser als das BNE ist, ist es mit der Schweiz umgekehrt. Aufgrund der globalen Aktivitäten der Schweizer Firmen wuchs das BNE in den letzten Jahren wesentlich stärker als das BIP. Die einzige Ausnahme sind 2007 und 2008, …

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The Spanish Ailing Car Industry

foto foto 9669_2

  Extracts from Think Spain. October 2005.   Foreign companies who manufacture cars in Spain are facing a fresh crisis. In addition to the problems of VW subsidiary Seat, various others are being forced to take decisions about the renewal of a number of different models which are reaching the end of their life-cycles. While …

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Le taux plancher contre le D-Mark, le précédent de 1978

Une secrète contribution de “Le Temps”, juste pour les francophones parmi nos abonées.   Il y a trente-quatre ans, la Banque nationale suise avait déjà défendu un taux de change pour le franc suisse. Plongée dans les archives et rappel du contexte perturbé qui a poussé la Suisse jusqu’à cet extrême LES LIENS Les trois …

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