Category Archive: 2) Swiss and European Macro

Main Author 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.

Rise in Bund yield will be limited

With the faltering in euro area business sentiment since February, the Italy-led sell-off of risk assets at the end of May and the European Central Bank’s (ECB) dovish meeting in June, we are revising our year-end forecast for the German 10-year Bund yield from 0.9% to 0.6%, as we hinted we might do in a previous note.

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Swiss Trade Balance May 2018: Foreign trade overcomes stagnation

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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Tourist accommodation in 2017: supplementary accommodation recorded growth in overnight stays of close to 7 percent

In 2017, supplementary accommodation posted a total of 15.9 million overnight stays, i.e. an increase of 6.9% compared with 2016. With 10.8 million units, Swiss visitors represented more than two-thirds of demand (68.3%), i.e. a rise of 7.0%. Foreign visitors registered a 6.6% increase with 5.0 million units. Among this clientele, European visitors generated the most overnight stays with a total of 4.2 million (+8.4%).

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European cars at a crossroad

Falling momentum in new car sales, together with the threat of US tariffs is adding to the uncertainty facing the European car industry.Last weekend’s G7 summit in Canada ended badly, with President Trump withdrawing his support for the summit’s final statement. Heightening tensions between Europe and the US are Trump’s hints that the White House is considering import tariffs on cars and car parts.

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Union européenne. Les chiffres de la dette. LHK

Le volume cumulée d’endettement de l’UE atteint en 2017 le chiffre respectable de 12, 46664 billions d’euros (à ne pas confondre avec le billion américain!). - Cela revient à un endettement cumulé de 12 466 640 000 000 euros, soit 12 trillions d’euros (référence de mesure US)

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Swiss Unemployment Continues to Fall

The number of registered unemployed in Switzerland dropped by 9% in May 2018 to a rate of 2.4%, down from 2.7% in April, according to a report by the State Secretariat for Economic Affairs (SECO). The rate in May 2018 was 22% lower than in May 2017.

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Swiss wage index 2017: Nominal wage increase of 0.4percent in 2017 – real wages decrease by 0.1percent

The Swiss nominal wage index rose by +0.4% on average in 2017 compared with 2016. It settled at 101.1 points (base 2015 = 100). Given an average annual inflation rate of +0.5%, real wages registered a decrease of -0.1% (101.0 points, base 2015 = 100) according to calculations by the Federal Statistical Office (FSO).

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Credit Spreads: Polly is Twitching Again – in Europe

The famous dead parrot is coming back to life… in an unexpected place. With its QE operations, which included inter alia corporate bonds, the ECB has managed to suppress credit spreads in Europe to truly ludicrous levels.

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Tourist Accommodation in the Winter Season 2017/2018: Growth in Overnight stays in Switzerland

The Swiss hotel industry registered 16.5 million overnight stays during the winter tourist season (November 2017 to April 2018), i.e. an increase of 4.6% (+724 000) compared with the same period of the previous year. With a total 8.7 million overnight stays, foreign demand grew by 5.6% (+460 000). Domestic demand rose by 3.5% (+264 000) reaching 7.8 million units.

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

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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ECB gets ready to make the leap

The ECB has had essentially two options going into the June meeting: either a dovish decision but a hawkish communication (hinting at an imminent QE tapering), or a hawkish decision but a dovish communication (counterb alancing a tapering announcement with dovish sweeteners).

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Europe chart of the week-German new orders

German new orders were weak across the board in April, contracting for a fourth consecutive month and by a larger-than-expected 2.5% m-o-m following a downwardly-revised 1.1% drop in March. As a result, total manufacturing orders are off to an extremely weak start in Q2 (-3.3% q-o-q after -2.2% q-o-q in Q1). What is more, the decline in demand for German goods in April was fairly broad-based across countries and sectors.

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Europe’s Woes Multiply

The Markit group that provides many of the PMI surveys noted with today's reports that the eurozone outlook has "darkened dramatically." This makes for a poor backdrop for the ECB, which meets next week. However, with price pressures recovering from the Easter-related distortions, the ECB is still on track to finish its asset purchases at the end of the year. This seems largely taken for granted.

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Switzerland Unemployment in May 2018: Down to 2.4percent from 2.5percent, seasonally adjusted unchanged at 2.6percent

Registered Unemployment in May 2018 - According to the State Secretariat for Economic Affairs (SECO) surveys, at the end of May 2018, 109'392 unemployed people were enrolled in the Regional Employment Centers (RAV), 10'389 fewer than in the previous month.

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Swiss Consumer Price Index in May 2018: +1.0 percent YoY, +0.4 percent MoM

The consumer price index CPI) increased by 0.4% in May 2018 compared with the previous month, reaching 102.1 points (December 2015=100). Inflation was 1.0% compared with the same month of the previous year. These are the results of the Federal Statistical Office (FSO).

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Espagne, victime des crises, de grands travaux inutiles, et de la… corruption. Nicolas Klein

Dans le contexte morose initié en 2008, l’Espagne était considérée (et l’est encore par beaucoup) comme un « pays à risque » au regard de la rapide dégringolade qu’elle a connue à la suite de la crise des subprimes aux États-Unis d’Amérique. Entre 2007 et 2011, le produit intérieur brut espagnol a reculé de 5 % tandis que le nombre de demandeurs d’emploi passe de 1,7 million à 4,2 millions.

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Europe chart of the week – Spanish growth

This week saw the final release of Spanish GDP growth for Q1. The economy again managed to post robust growth, the highest among the four largest euro area economies (+0.7% q-o-q versus 0.4% q-o-q for the euro area). The breakdown of figures showed that domestic demand was once again the main growth driver.

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Employment barometer in the Q1 2018: Fastest growth in employment in industry for 10 years

In the 1st quarter 2018, total employment (number of jobs) rose by 1.6% in comparison with the same quarter a year earlier (+0.6% with previous quarter, +1.7% in full-time equivalents). The Swiss economy counted 77 000 more jobs and 11 000 more vacancies than in the corresponding quarter of the previous year.

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Euro area inflation close to ECB target in May

Today’s release of euro area flash HICP surprised to the upside both in terms of headline inflation (which surged from 1.2% to 1.9% y-o-y in May, above consensus expectations of 1.6%) and, crucially, in terms of core inflation (HICP excluding energy, food, alcohol and tobacco rose from 0.7% to 1.1%).

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Spain Snap Elections in Sight

Political instability in Spain has added to turmoil in other peripheral countries. The situation is not comparable with the one that Italy is experiencing at the moment, but since it comes at the same time it is increasing market volatility. Last Friday, Spain’s main oppositionparty, the Socialist party (PSOE) filed a no confidence vote against Prime Minister Mariano Rajoy. The debate will start on May 31 with a vote probably on June 1.

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