Tag Archive: newsletter

Local Government Is an Engine of Inflation

2019-06-27

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2019-06-27

The Rising Wedge Model of Breakdown
Insolvency isn't restricted to private enterprise; governments go broke, too. One reason the economy is so much more precarious than advertised is inflation has pushed households and small businesses to the edge--and one engine of that inflation is local government. This is not to dump on local government, which is facing essentially unlimited demands from the public for more services while mandated cost increases in government union employee wages...

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FX Daily, June 26: Biggest Drop in the S&P 500 in June Weighs on Global Equities

2019-06-26

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2019-06-26

The S&P 500 fell nearly one percent yesterday, its steepest fall this month and this was a weight on Asia Pacific and European activity. Most markets have eased, though not as much as the US did. Hong Kong, India, and Singapore were notable exceptions in Asia, where the MSCI benchmark slipped for a second day.

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Swiss monetary policy – it’s (almost) all about the Swiss franc

2019-06-26

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2019-06-26

ECB Deposit Rate and SNB Interest Rate on Sight Deposits, 2014-2019
With the ECB and the Fed both signalling their readiness to provide further stimulus, the Swiss National Bank is unlikely to have smooth sailing over the coming months.How the Swiss National Bank (SNB) reacts to further stimulus by its US and European counterparts will be the key focus of the coming months for investors. 

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Gold boosted by dovish central banks

2019-06-26

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2019-06-26

Gold Bullion and Market Capitalisation of Global Negative Yielding Debt
Bar a further major escalation in trade tensions, it is hard to see much more upside for gold in the short term. We remain more upbeat over the medium term.The gold price soared to a fresh five-year high on 20 June following a dovish Fed monetary policy meeting. Indeed, the dovish shift among major central banks (with the sole exception of the Norges Bank) and high global uncertainty have pushed global yields lower recently, reducing the...

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Federal fat cats see bonuses fall  

2019-06-26

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2019-06-26

The salaries of top managers at Swiss government-affiliated companies shrank last year due to smaller bonuses, according to a federal report published on Friday. Top state earner, Andreas Meyer, head of Swiss Federal Railways, saw his earnings fall below CHF1 million for the first time: down to CHF987,442 ($1 million) from CHF1,007,000 in 2017, the report found.

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Cool Video: Sketch of Bullish Case for Gold

2019-06-26

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2019-06-26

I know some people who are always bullish gold. I am not. In fact, I often think I can find higher returning assets. However, I have recently have turned bullish gold, and while in Toronto on business, I was invited to the set of Bloomberg to discuss my change of heart.

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FX Daily, June 25: Heightened Political Risks Weigh on Sentiment

2019-06-25

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2019-06-25

Overview: It is far from clear that the US sanctions against nine Iranian officials, with the foreign minister to be added later brings negotiations any closer. At the same time, US officials trying to keep expectations low for the weekend meeting between Trump and Xi. The heightened political anxiety will have to make room for Fed Chairman Powell's talk in NY.

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What Gets Measures Gets Improved, Report 23 June

2019-06-25

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2019-06-25

GS Ratio, 1968-2018
Let’s start with Frederic Bastiat’s 170-year old parable of the broken window. A shopkeeper has a broken window. The shopkeeper is, of course, upset at the loss of six francs (0.06oz gold, or about $75). Bastiat discusses a then-popular facile argument: the glass guy is making money (to which all we can say is, “plus ça change, plus c’est la même chose”).

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Swiss poised to retaliate against EU stock market access

2019-06-25

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2019-06-25

The Swiss finance ministry has reaffirmed that it is ready to ban stock exchanges in the European Union from trading Swiss shares – in a worsening row with Brussels over the future of bilateral relations. “In the event of stock market equivalence not being extended, the finance ministry will activate this protective measure. [….] Consequently, trading venues in the EU would lose recognition,” the ministry said on Monday.

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Japan’s Bellwether On Nasty #4

2019-06-25

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2019-06-25

Japan Industrial Production, NSA 2009-2019
One reason why Japanese bond yields are approaching records like their German counterparts is the global economy indicated in Japan’s economic accounts. As in Germany, Japan is an outward facing system. It relies on the concept of global growth for marginal changes. Therefore, if the global economy is coming up short, we’d see it in Japan first and maybe best.

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FX Daily, June 24: Slow Start to Important Week

2019-06-24

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2019-06-24

The Trump-Xi meeting at the G20 this coming weekend and heightened tensions in the Gulf, with the US set to impose new sanctions on Iran's crippled economy are keeping investors on edge. News the opposition won the re-do of the Istanbul mayoral election has lifted the Turkish lira.

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Industry challenges blockchain during hackathon

2019-06-24

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2019-06-24

More than 200 hackers from 19 countries converged on Switzerland at the weekend to take part in the Swiss Blockchain Hackathon. Participants were challenged to come up with blockchain innovations in a variety of sectors as diverse as finance, logistics and agriculture. Switzerland has hosted numerous hackathons over the past few years, designed to stimulate digital entrepreneurship using cutting-edge technologies. Several events have already spun...

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FX Weekly Preview: Cutting to the Quick

2019-06-24

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2019-06-24

Central banks are prepared to take fresh measures to strengthen and extend the business cycle primarily because price pressures are below what their predecessors thought would be acceptable levels. Draghi, speaking for the ECB, the Federal Reserve, and the Bank of Japan ratcheted up their concerns, which, even without new initiatives, were sufficient to drive interest rates lower.

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Smartphone shopping boosts online trade

2019-06-24

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2019-06-24

Online shopping accounts for an ever bigger slice of the Swiss retail market as shopping via smartphone also becomes more popular with consumers, says a new report. Last year, Swiss consumers placed online orders worth a total of almost CHF 10 billion ($10 billion), according to the "E-Commerce Report 2019" published on Thursday. This represents an increase of 10 percent compared with the previous year.

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The Human Cost of “Recovery”: We’re Burning Out

2019-06-24

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2019-06-24

Workers Share of National Income, 1994-2020
The asymmetries are piling up and we're cracking under the weight. Judging by the record-high stock market and the record-low unemployment rate, the "recovery" has reached new heights of prosperity. Academics and think-tankers viewing the global economy from 40,000 feet are brimming with policies to bring the remaining laggards into the booming economy.

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Swiss-EU friction rises in lead up to expiry of stock market equivalence

2019-06-23

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2019-06-23

In 2018, Switzerland and the EU struck a deal to extend Swiss stock market equivalence until 30 June 2019, a date fast approaching. Stock market equivalence makes a trade on the Swiss stock exchange equivalent to a trade on an exchange in an EU country. This allows trades to be pooled across countries, something that supports global trade and improves international market liquidity, a win-win for all traders.

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The Lessons of Rome: Our Neofeudal Oligarchy

2019-06-23

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2019-06-23

Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy. The Inheritance of Rome: Illuminating the Dark Ages 400-1000 is not an easy, breezy read; its length and detail are daunting. The effort is well worth it, as the book helps us understand how the power structures of societies change over time in ways that may be largely invisible to those living through the changes.

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Millionaires in Switzerland still on the rise

2019-06-22

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2019-06-22

Switzerland is home to the fourth-largest number of dollar millionaire households, according to a report by the Boston Consultancy Group (BCG). Worldwide, the number of such millionaires continues to rise. There are now some 500,000 millionaire households in Switzerland, BCG said, putting the Swiss in fourth place behind the US (around 15 million), China (1.3 million), and Japan (1.1 million).

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FX Daily, June 21: Markets Pause Ahead of the Weekend

2019-06-21

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2019-06-21

The global capital markets are trading quietly ahead of the weekend. Equity markets are mostly narrowly mixed. Chinese shares extended their run, and the major benchmarks were up 4%+ on the week. Japan, Australia, South Korea, and India saw gains pared.

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