Tag Archive: newsletter

FX Weekly Preview: The Evolution of Three Issues are Key in the Week Ahead

2019-05-27

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2019-05-27

As May winds down, the light economic calendar will allow investors to take their cues from the evolution of three disruptive forces--trade, Brexit and the US economy. With actions against Huawei and possibly a handful of Chinese surveillance equipment producers, the US raised the stakes. The retaliatory tariffs are effective on June 1, but Beijing has not formally responded to the moves against Chinese companies.

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Swiss pay more for magazines and clothes than other countries

2019-05-26

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2019-05-26

Swiss consumers pay a “high price island” premium of up to 245% for magazines and clothing compared to prices being charged for the same goods in neighbouring countries. A consumer group study found the price differential to be higher in Italy and France than in Germany. For many people living in Switzerland the findings of the Swiss Alliance of Consumer Associations, together with watchdogs in the French and Italian-speaking regions of the...

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China’s Insurmountable Global Weakness: Its Currency

2019-05-25

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2019-05-25

US Dollar's Share of Global Payments, Loans and Reserves
If China wants superpower status, it will have to issue its currency in size and let the global FX market discover its price. Quick history quiz: in all of recorded history, how many superpowers pegged their currency to the currency of a rival superpower? Put another way: how many superpowers have made their own currency dependent on another superpower's currency?

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Image of Swiss banks improves among public

2019-05-25

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2019-05-25

The image of Swiss banks has returned for the first time to pre-financial crisis levels, according to a survey by the Swiss Bankers Association (SBA). Cybercrime remains a concern, however. “The banks’ positive image is the result of a combination of their commercial success and social responsibility, and the respondents’ positive experiences with them in everyday life,” the SBA said in a statement on Wednesday.

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Technology Is Not Just Disruptive, It’s Disastrously Deflationary

2019-05-24

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2019-05-24

Technologies by proportion of companies likely to adopt them by 2022
Deflation eats credit-dependent, mass-consumption economies alive from the inside. While AI (artificial intelligence) garners the headlines, the next wave of disruptive technologies extend far beyond AI: as the chart of technologies rapidly being adopted shows, this wave includes new materials and processes as well as the "usual suspects" of machine learning, natural language processing, data mining and so on.

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OECD lowers Swiss growth forecasts for 2019-2020 

2019-05-24

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2019-05-24

The Organisation for Economic Cooperation and Development (OECD) has revised its growth forecasts for Switzerland downwards for the next two years due to a global economic slowdown. After a strong 2018 (+2.5%), gross domestic product (GDP) growth should slow in 2019 (+1%), the OECD said on Tuesday. This compares to its earlier forecast last November of +1.6%.

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The Transitory Story, I Repeat, The Transitory Story

2019-05-24

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2019-05-24

Money Markets Equivalents, 2017-2019
Understand what the word “transitory” truly means in this context. It is no different than Ben Bernanke saying, essentially, subprime is contained. To the Fed Chairman in early 2007, this one little corner of the mortgage market in an otherwise booming economy was a transitory blip that booming economy would easily withstand. Just eight days before Bernanke would testify confidently before Congress, the FOMC had met to discuss their lying eyes....

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FX Daily, May 23: Trade, Brexit, and Disappointing Flash PMIs Weigh on Global Markets

2019-05-23

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2019-05-23

Overview:  The deterioration of the investment climate is spurring the sales of stocks and the buying of bonds. The dollar is firm.  China and the US appear to be digging as if the trade tensions will remain for some time and the breech is beginning to look too big for Trump and Xi to pull another rabbit out of the hat like they did at the end of last year when the tariff truce was struck.   The move against Huawei and possible a number of...

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Rising downside risks to euro area growth

2019-05-23

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2019-05-23

Extra Euro Area Export of Goods in Volume, 2012-2019
While our forecasts remain unchanged for now, external drags on growth prospects for the euro area look set to persist for longer than we had previously expected.A potential improvement in euro area growth in H2 2019 on the back of a revival in the global economy is in jeopardy due to the intensifying trade dispute between the US and China.

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Proposed Negative Rates Really Expose The Bond Market’s Appreciation For What Is Nothing More Than Magic Number Theory

2019-05-23

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2019-05-23

The Real GDP Problem 1988-2018
By far, the biggest problem in Economics is that it has no sense of itself. There are no self-correction mechanisms embedded within the discipline to make it disciplined. Without having any objective goals from which to measure, the goal is itself. Nobel Prize winning economist Ronald Coase talked about this deficiency in his Nobel Lecture:

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UBS to implement zero interest rate on savings accounts

2019-05-23

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2019-05-23

As of June 1, Switzerland's largest bank will stop paying interest on adult savings accounts. Funds deposited in UBS savings accounts currently earn a rate of 0.01%, just like at Credit Suisse, the other major Swiss bank. Almost all other Swiss banks pay a small interest on saving accounts with the average amounting to 0.07%.

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Weakening Japanese momentum behind strong GDP figures

2019-05-23

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2019-05-23

Growth in Japanese Real GDP, 2012-2019
Japan’s latest GDP report reveals some notable weakness in the economy despite the strong headline figures.The preliminary reading of Japanese GDP for Q1 shows that the economy grew by 2.1% q-o-q annualised, beating the consensus forecast of -0.2%.However, behind the strong headline figures, details of the GDP report reveal some broad-based weakening in momentum.Declining corporate capex and sluggish household consumption both drag on domestic...

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FX Daily, May 22: Sterling Can’t Get Out of Its Own Way

2019-05-22

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2019-05-22

Overview:   There is a nervous calm in the capital markets.  Yesterday's rally in US shares failed to excite global investors.  China, Hong Kong, and Taiwan markets fell, while Japan was mixed. Foreign investors continued to sell Korean shares, but the Kospi rose.  European shares narrowly mixed, leaving the Dow Jones Stoxx 600 little changed.

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Women represented on all top Swiss company boards

2019-05-22

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2019-05-22

For the first time, all of Switzerland’s top 20 companies have at least one woman in the boardroom. The finding by consultancy firm Russell Reynolds shows the slow but steady progress towards gender equality in the management of Swiss firms.

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Rare Earths may Provide Leverage

2019-05-22

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2019-05-22

Many American observers argue that the trade imbalance gives the US an advantage in a trade war with China. The US enjoys escalation dominance in tariffs because Chinese imports of US goods are so much less than the US imports of Chinese goods.  However, the focus on quantities may be misleading.

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Two Intertwined Dynamics Are Transforming the Economy: Technology and Financialization

2019-05-22

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2019-05-22

If you want to understand how the economy is being transformed, look at the intersection of Big Tech, financialization and the central state. The two dynamics transforming the economy--technology and financialization--are intertwined yet widely viewed as unrelated. Critics and proponents of each largely ignore the other dynamic: critics of institutionalized fraud and other manifestations of financialization implicitly assume the economy will return...

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FX Daily, May 21: Equities Find Some Traction while the Dollar Firms

2019-05-21

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2019-05-21

Overview:  Equities are paring some of their recent losses.  The MSCI Asia Pacific Index is posting its first back-to-back gain in a month, led by a more than 1% rally in China.  Heightened prospects for an Australian rate cut in a few weeks helped extend the run in the local equity market to a new record high.  European bourses are higher, with the Dow Jones Stoxx 600 rising around 0.3% in the morning session.

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China’s Nuclear Option to Sell US Treasurys, Report 19 May

2019-05-21

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2019-05-21

Gold and Silver Price
There is a drumbeat pounding on a monetary issue, which is now rising into a crescendo. The issue is: China might sell its holdings of Treasury bonds—well over $1 trillion—and crash the Treasury bond market. Since the interest rate is inverse to the bond price, a crash of the price would be a skyrocket of the rate. The US government would face spiraling costs of servicing its debt, and quickly collapse into bankruptcy.

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Swiss give clear ‘yes’ to corporate tax reform

2019-05-21

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2019-05-21

Swiss voters largely accepted on Sunday a reform of the corporate tax system that will scrap preferential treatment for multinational firms. The result also means a financial boost for the country's ailing pension system. Two years after voters rejected a similar idea to overhaul corporate tax rules, the issue – this time linked controversially to pensions – received a clear thumbs-up.

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Cool Video: End of Tariff Truce Spurs Over Correction

2019-05-21

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2019-05-21

The S&P 500 recorded a key reversal on May 1, and the end of the tariff truce ensured follow-through selling.  With today's early losses, it is off nearly 3.5% this month.   In my brief chat with Stuart Varney at Fox Business, I suggest that the stretched technical condition left the market vulnerable to a "buy in May and go away"  scenario. 

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