Tag Archive: newsletter

Why “This Sucker Is Going Down”

2019-12-12

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2019-12-12

Once the contagion starts spreading, loose money won't put the fires out. As the nation's political and economic leaders struggled to contain the 2008 financial meltdown, President George W. Bush famously summed the situation up: "If money doesn't loosen up, this sucker will go down."Eleven years into the loose money recovery, this sucker is finally going down for reasons that have little to do with tight money and everything to do with the...

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If Trade Wars Couldn’t, Might Pig Wars Change Xi’s Mind?

2019-12-12

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2019-12-12

China Price Stability, 1996-2019
Forget about trade wars, or even the eurodollar’s ever-present squeeze on China’s monetary system. For the Communist Chinese government, its first priority has been changed by unforeseen circumstances. At the worst possible time, food prices are skyrocketing. A country’s population will sit still for a great many injustices. From economic decay to corruption and rising authoritarianism, the line between back alley grumbling and open rebellion is...

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Central Banks May Be Driving Us Toward More Waste, More Carbon Emissions

2019-12-12

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2019-12-12

People's Bank of China Balance Sheet
Christine Lagarde, the new president of the European Central Bank (ECB), has added a new green dimension to monetary policymaking. The charming Frenchwoman signaled that the ECB could buy green bonds, possibly as part of the reanimated bond purchase program (a form of QE). This could reduce the financing costs of green investment projects.

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FX Daily, December 11: Sterling Holds Firm Despite Tighter Poll

2019-12-11

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2019-12-11

Overview: The capital markets continue to tread water as investors await this week's key events. The first, the FOMC meeting concludes later today. Tomorrow features the UK election, where the race appears to have tightened, and Lagarde's first ECB meeting at the helm. Global equities continue consolidating the recent gains. Asia Pacific equity markets were mostly higher.

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Bank savers feel sting from negative interest rates

2019-12-11

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2019-12-11

Swiss savers are being made to pay for global demand for the franc. The number of bank customers being charged negative interest rates on their deposits is on the rise – and shows no sign of reversing. The problem for domestic savers stems from the popularity of the Swiss currency. Amid economic uncertainty worldwide and a paucity of return on many investments, people have taken to dumping their assets in the solid franc.

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Swiss seek compromise amid ‘lack of will’ at climate talks

2019-12-11

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2019-12-11

This year, the signal from the scientific community has been loud and clear on climate change: something needs to be done, and soon. But leadership at the United Nations’ annual climate conference appears less clear-cut, and the head of the Swiss delegation is frustrated by hesitation to move ahead.

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Disposable (Employment) Figures

2019-12-11

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2019-12-11

Establishment Survey; Blowout Payrolls, 2014-2019
If last month’s payroll report was declared to be strong at +128k, then what would that make this month’s +266k? Epic? Heroic? The superlatives are flying around today, as you should expect. This Payroll Friday actually fits the times. It wasn’t great, they never really are nowadays (when you adjust for population and participation), but it was a good one nonetheless.

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The destruction of civilization – implications of extreme monetary interventions

2019-12-11

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2019-12-11

When I was asked to write an article about the impact of negative interest rates and negative yielding bonds, I thought this is a chance to look at the topic from a broader perspective. There have been lots of articles speculating about the possible implications and focusing on their impact in the short run, but it’s not very often that an analysis looks a bit further into the future, trying to connect money and its effect on society itself. 

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The BIS Misses An Opportunity To Get Consistent With The Facts

2019-12-11

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2019-12-11

Net lending through repos and federal funds by size group
Much has been made about the repo market since mid-September. Much continues to be made about it. The question is why. It is now near the middle of December and repo looks dicey despite repo operations and a not-QE small-scale asset purchase intended to increase the level of bank reserves. Always the focus on “funds” which may be available. It was John Adams who took on the task of defending several British soldiers on trial for the Boston...

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Gold $1600 In 2020 as Case for Diversifying into Gold ‘as Strong as Ever’ – Goldman

2019-12-11

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2019-12-11

Gold will climb to $1,600 over the next year – Goldman. ◆ Goldman is still forecasting that gold will climb to $1,600 over the next year due to investment demand. ◆ Investors should diversify their long-term bond holdings with gold, citing “fear-driven demand” for the precious metal – Goldman Sachs Group Inc.

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FX Daily, December 10: Capital Markets: Still Seems to be the Calm before the Storm

2019-12-10

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2019-12-10

Overview: Equities are trading lower, and bonds are mixed as the FOMC, UK election, and the US decision on the December 15 tariffs draw near. The MSCI Asia Pacific Index three-day rally ended today as only China and South Korea's markets rose. Europe's Dow Jones Stoxx 600 gapped slightly lower at the open.

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Switzerland Unemployment in November 2019: Up to 2.3 percent, seasonally adjusted unchanged at 2.3 percent

2019-12-10

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2019-12-10

Switzerland Unemployment Rate n.s.a., November 2019
Unemployment registered in November 2019 - According to surveys by the State Secretariat for Economic Affairs (SECO), at the end of November 2019, 106,330 unemployed were registered at the regional employment agencies (RAV), 4,646 more than in the previous month. The unemployment rate rose from 2.2% in October 2019 to 2.3% in the month under review.

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You Will Never Bring It Back Up If You Have No Idea Why It Falls Down And Stays Down

2019-12-10

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2019-12-10

Friedman's Plucking Model of Trend-cycle Analysis
It wasn’t actually Keynes who coined the term “pump priming”, though he became famous largely for advocating for it. Instead, it was Herbert Hoover, of all people, who began using it to describe (or try to) his Reconstruction Finance Corporation. Hardly the do-nothing Roosevelt accused Hoover of being, as President, FDR’s predecessor was the most aggressive in American history to that point, economically speaking.

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The Taxonomy of Collapse

2019-12-10

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2019-12-10

The Lifecycle of States and Empires: Expansion & Collapse
The higher up the wealth-power pyramid the observer is, the more prone they are to a magical-thinking belief that the empire is forever, even as it is crumbling around them. How great nations and empires arise, mature, decay and collapse has long been of interest for a self-evident reason: if we can discern a template or process, we can predict when the great nations and empires of today will slide into the dustbin of history.

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The End of an Epoch, Report 8 Dec

2019-12-10

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2019-12-10

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

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Why this Boom Could Keep Going Well Beyond 2019

2019-12-10

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2019-12-10

Interest rates down, stock prices up, 1990-2020
The Austrian business cycle theory offers a sound explanation of what happens with the economy if and when the central banks, in close cooperation with commercial banks, create new money balances through credit expansion. Said credit expansion causes the market interest rate to drop below its "natural level," tempting people to save less and consume more.

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FX Daily, December 09: China’s Steps-Up Import Substitution Strategy while USMCA Comes Down to the Wire

2019-12-09

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2019-12-09

The important week is off to a slow start. While the MSCI Asia Pacific benchmark extended its gains for a third session, European and US shares are struggling. The Dow Jones Stoxx 600 is consolidating its pre-weekend 1%+ rally, while US shares are trading heavier after rallying for the last three sessions.

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FX Weekly Preview: An Eventful Week Ahead

2019-12-09

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2019-12-09

The US employment report on the first Friday of December usually marks the unofficial end of the year. The desks are often lighter and dealers are loath to jeopardize the year’s bonuses in thin and often erratic markets.  This year is an exception.  Next week features the first ECB meeting with Lagarde at the helm and the final FOMC meeting of the year. 

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Swiss asset managers linked to Austrian corruption scandals

2019-12-09

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2019-12-09

Swiss asset managers are involved in some of Austria’s biggest corruption scandals, according to the SonntagsZeitung newspaper. The paper writes that in ongoing cases involving far-right politicians Jörg Haider, Karl-Heinz Grasser and Heinz-Christian Strache, the trail leads back to Zurich, Zug and Nidwalden in Switzerland. It sources this information to a whistleblower.

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Another month of falling prices in Switzerland

2019-12-09

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2019-12-09

Swiss prices fell by 0.1% in November 2019, the sixth time in 12 months. But not everything is cheaper. Prices fell in December 2018 (-0.3%), January 2019 (-0.3), July (-0.5), September (-0.1), October (-0.2%) and November 2019 (-0.1). When combined with the low inflation experienced in the other 6 months the 12-month price drop is -0.1%.

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