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.

Euro area: Flash PMI surveys pass their peak

The IHS Markit flash composite purchasing managers’ index (PMI) for the euro area eased to 57.5 in February from 58.8 in January, below consensus expectations (58.4). The index marked its the largest monthly decrease since August 2014. Activity in both services PMI (-1.3 points to 56.7) and manufacturing (-1.1 points to 58.5) cooled in February. But while the breakdown by sub-indices showed that the pace of growth in new orders and output slowed...

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Swiss Trade Balance January 2018: Imports Cross the 17 Billion Franc Mark

Although exports fell in January 2018 from the December peak, their trend remains upward. Imports, for their part, began the year with fanfare to sign a record result. In both traffic directions, chemicals and pharmaceuticals made rain and shine.

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Our emerging market currencies scorecard gives good marks to real and rouble

The scope of this note is to present a score card for Emerging Market (EM)currencies, designed to assess the attractiveness of a given currency over the coming 12 months. The scorecard (see chart), constructed using a rules - based methodology, suggests that the Russian rubble and the Brazilian real are currently among the most attractive EM currencies.

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Europe chart of the week – French unemployment

French unemployment fell surprisingly fast in Q4 2017, to a new cyclical low.France registered the largest drop in unemployment in about ten years in Q4 2017. In metropolitan France, the number of unemployed fell by 205,000 to 2.5 million people, pushing the ILO unemployment rate down to 8.6% of the labour force (-0.7pp), its lowest level since Q1 2009.

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Swiss Labour Force Survey in 4th quarter 2017: 0.6 percent increase in number of employed persons; unemployment rate based on ILO definition at 4.5 percent

The number of employed persons in Switzerland rose by 0.6% between the 4th quarters of 2016 and 2017. During the same period, the unemployment rate as defined by the International Labour Organisation (ILO) declined from 4.6% to 4.5%. The EU's unemployment rate decreased from 8.3% to 7.4%. These are some of the results of the Swiss Labour Force Survey (SLFS) conducted by the Federal Statistical Office (FSO).

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Euro area inflation: the Phillips curve and the ‘broad unemployment’ hypothesis

Monetary policy in 2018 is all about the Phillips curve. The extent to which wage growth and inflation respond to falling unemployment will shape the monetary tightening cycle. If recent price action is any guide, any surprise on that front could result in market overreaction and volatility spikes. The most elegant description of the current state of research was provided by ECB Executive Board member Benoît Coeuré last year, who described the...

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Europe chart of the week – Italian productivity

With less than 30 days to go, the Italian general election remains highly unpredictable. The new electoral system and the fact that 37% of seats are to be allocated on a ‘first-past-the-post’ system make projecting seats from voting intentions particularly hard. Importantly, Italy is going into this election with an economy that is performing relatively strongly relative to recent history. However, cyclical strength is masking structural...

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

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...

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Switzerland: inflation edged lower in January

According to the Swiss Federal Statistical Office (FSO), the headline consumer price index (CPI) inflation eased to 0.7% y-o-y in January from 0.8% y-o-y in December, in line with consensus and our own expectations. Core inflation (CPI excluding food, beverages, tobacco, seasonal products, energy and fuels) also eased, from 0.7 % y-o-y in December to 0.5% y-o-y in January (see Chart 1), back to the level of October 2017.

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Swiss Consumer Price Index in January 2018: +0.7 YoY, -0.1 MoM

The consumer price index (CPI) fell by 0.1% in January 2018 compared with the previous month, reaching 100.7 points (December 2015=100). Inflation was 0.7% compared with the same month of the previous year. These are the results of the Federal Statistical Office (FSO).

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Switzerland Unemployment in January 2018: Unchanged at 3.3 percent, seasonally adjusted unchanged at 3.0 percent

Registered unemployment in January 2018 - According to SECO surveys, at the end of January 2018, 149,161 unemployed people were enrolled in the Regional Employment Centers (RAV), 2,507 more than in the previous month. The unemployment rate remained at 3.3% in the month under review. Compared with the same month last year, unemployment fell by 15,305 (-9.3%).

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Swiss real estate market UBS Swiss Real Estate Bubble Index 4Q 2017

The UBS Swiss Real Estate Bubble Index declined in the fourth quarter of 2017, and is currently in the risk zone at 1.32 index points. This second fall in succession was driven by the persistently low increase of mortgage volumes. However, this may have been underestimated, as the records of mortgages granted by insurers and pension funds are inadequate. The majority of the sub-indicators remained unchanged in the last quarter.

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When will the SNB start the process of policy normalisation?

When the Swiss National Bank (SNB) scrapped its currency floor three years ago, its monetary policy strategy was clear: to fight Swiss franc appreciation. It did so verbally, by calling the currency “significantly overvalued”, and physically, by implementing a negative interest rate and intervening in the foreign exchange market as necessary. Three years on, the interest rate on sight deposits at the SNB remains unchanged at a record low of -...

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China: PMIs suggest moderation in momentum in Q1

China’s official manufacturing purchasing manager index (PMI) came in at 51.3 in January, down slightly from December (51.6). The Markit PMI (also known as the Caixin PMI) stayed at 51.5, the same as in the previous month (Chart 1). The official non - manufacturing PMI rose slightly to 55.0 in January from 44.8 the previous month.

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The Historical Warnings of Money

It’s interesting, to me anyway, that an image of the Roman goddess Juno remains to this day on the logo of the Bank of England. There are many stories about her role as it relates to money, but what cannot be denied is that the very word itself came to us from her temple. The Latin moneta was derived from the word monere, a verb meaning to warn. Moneta was Juno’s surname.

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Strong growth and Abenomics mean Japanese equities continue to provide opportunities

Japanese growth momentum is at its strongest in over a decade, with the quarterly Tankan survey of business conditions and sentiment strengthening to an 11 - year high in Q4 2017. The economy may have expanded by 1.8% in 2017, up from 0.9% in the previous year. In 2018, the growth rate may moderate slightly to 1.3%, but should remain well above Japan’s potential growth, which currently stands at 0.85%, according to the Bank of Japan (BoJ, see...

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Swiss Retail Sales, December: +1.5 Percent Nominal and -0.8 Percent Real

Turnover in the retail sector rose by 1.5% in nominal terms in December 2017 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.8% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO).

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Tax cuts and ‘animal spirits’ mean higher US growth in 2018

December’s US tax cuts – which saw corporate taxation reduced particularly sharply – are being echoed in signs that ‘animal spirits’ are finally kicking in. Both set the stage, in our view, for higher US growth, in large part driven by greater investment. We therefore upgrade our 2018 US growth forecast from 2.0% to 3.0%. We forecast that real non-residential investment growth will accelerate to 7.0% in 2018, up from an estimated 4.6% in 2017. We...

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Switzerland UBS consumption indicator December: pleasing end to the year

At 1.69 points, the consumption indicator lay well above the long-term average in December 2017, conveying an optimistic snapshot of Swiss private consumption. Weaker figures for new car registrations prevented an even higher value. The consumption indicator fell slightly in December 2017 to 1.69 points from 1.73. However, values had been revised upward in the past few months.

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Swiss Trade 2017: Exports at all-time high

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...

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