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.

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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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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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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Italy heads towards new elections

Fragmented politics and the risk of a financial crisis continue to hang over the country.This weekend, the Five Star Movement and the League decided to pull the plug on their attempt to form a coalition government after the President of the Republic Sergio Mattarella vetoed the appointment of anti-euro professor Paolo Savona as minister of finance. Mattarella has granted ex-International Monetary Fund official, Carlo Cottarelli, a mandate to form a...

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Switzerland GDP Q1 2018: +0.6 percent QoQ, +2.2 percent YoY

Switzerland’s real gross domestic product (GDP) grew by an above-average 0.6% in the 4th quarter of 2017.1 Growth was broad-based across the various business sectors, with manufacturing, construction and most service sectors, particularly financial services, providing momentum. On the expenditure side, growth was underpinned by consumption and investment in construction but was hindered by investment in equipment and foreign trade.

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Swiss Retail Sales, April: +2.2 Percent Nominal and -0.1 Percent Real

Turnover in the retail sector rose by 2.2% in nominal terms in April 2018 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.1% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO).

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KOF Economic Barometer: Falls Back to its Long-term Average

The KOF Economic Barometer for May fell by 3.3 points to a new standing of exactly 100 points. The last time the Barometer had a similar standing was in December 2015. The current value of 100 points to an average development of the Swiss economy in the coming months.

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

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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Les économistes de Suisse disent NON à Monnaie pleine. Sondage KOF.

Les économistes d’universités et d’instituts de recherche de Suisse ont été invités à donner leur avis sur la votation, du 10 juin 2018. Malgré le message ambitieux: « Pour une monnaie à l’abri des crises : émission monétaire uniquement par la banque nationale !», le titre n’a pas suffi à accrocher les répondants à l’enquête d’opinion menée par le Centre de recherche économique KOF de l’Ecole Polytechnique de Zurich.

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ECB: contingency plans

A look at different scenarios for the ECB’s exit from quantitative easing and its expected rate hiking cycle.Our baseline scenario for ECB normalisation still holds. We expect QE to end in December 2018 and a first rate hike in September 2019. The ECB is likely to wait until its 26 July meeting to make its decisions on QE and forward guidance.Still, downside risks have risen to the point where another open-ended QE extension can no longer be ruled...

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PMIs point to downside risk to near term euro area growth

Euro area flash PMI indices failed to stabilise in May. Details were somewhat less worrying than headline numbers and overall still consistent with a broad-based economic expansion, if only at a slower pace than last year. Our forecast of 2.3% GDP growth in 2018 still holds, but the balance of risks is now clearly tilted to the downside in sharp contrast with the situation prevailing a few months ago.

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