Tag Archive: newsletter

After Fed Disappoints, Will Trump Initiate Currency Intervention?

Following months of cajoling by the White House, the Federal Reserve finally cut its benchmark interest rate. However, the reaction in equity and currency markets was not the one President Donald Trump wanted – or many traders anticipated. The Trump administration wants the Fed to help drive the fiat U.S. dollar lower versus foreign currencies, especially those of major exporting countries.

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FX Daily, August 2: End of Tariff Truce Trumps Jobs

Overview: The market was finding its sea legs after being hit with wave and counter-wave following the FOMC decision, and more importantly, Powell's attempt to give insight into the Fed's thinking. Trump's tweet than signaled an end to the tariff truce with a 10% levy on the $300 bln of imports from China that have not been subject to action previously.

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Swiss Consumer Price Index in July 2019: +0.3 percent YoY, -0.5 percent MoM

The consumer price index (CPI) fell by 0.5% in July 2019 compared with the previous month, reaching 102.1 points (December 2015 = 100). Inflation was 0.3% compared with the same month of the previous year. These are the results of the Federal Statistical Office (FSO).

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UBS To Start Charging Rich Clients With Negative 0.75 percent Interest Rate

For years, European banks were leery of passing on the ECB's negative -0.40% deposit rate to their clients for fears of deposit flight and other unintended consequences, in the process being forced to "eat" the difference and impacting their interest income.

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Glencore suffers $350m hit as cobalt prices decline

Glencore has taken a $350 million hit because of falling cobalt prices as the problems facing its African copper business continue to pile up. The Switzerland-based miner and commodity trader has been grappling with a string of issues in the Democratic Republic of Congo, where it operates two copper mines, and in Zambia, where it owns another asset.

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FX Daily, August 1: Mid-Course Correction Sends Greenback Higher

Overview:  The Federal Reserve delivered the first rate cut since the Great Financial Crisis but couched it in terms of a mid-course correction rather than the start of a larger easing cycle.  By doing so, Fed chief Powell cast the cut in less dovish terms than the market expected and the reaction function of the market has been clear. 

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DATA ADDS TO THE CASE FOR ECB ACTION IN SEPTEMBER

Slowing economic momentum in the euro area means that we are lowering our GDP forecasts for this year. The euro area economy grew by 0.2% q-o-q in Q2, down from 0.4% in Q1.While 0.2% is still a decent pace of growth, concerns about the economy in the second half of the year have increased. Recent data have shown that the industrial slump has started to leave some marks on the domestic economy.

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Nestlé invests CHF99 million in factory expansion in Indonesia

The Swiss food giant has announced plans to invest CHF99 million (around $100 million) to expand three factories in Indonesia. The goal is to increase Nestlé’s production capacity in the country by 25%, according to a company announcement on Wednesday.

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FX Daily, July 31: Sterling Steadies, Attention Shifts to FOMC

Overview: After a shellacking in recent days, sterling has stabilized though there is not much of a bounce to speak of, suggesting the adjustment to the risk of a no-deal Brexit may not be complete. After the S&P 500 posted back-to-back declines, Asia Pacific equities struggled. Hong Kong shares led the regional decline.

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SNB reports a profit of CHF 38.5 billion for the first half of 2019.

The Swiss National Bank reports a profit of CHF 38.5 billion for the first half of 2019. The profit on foreign currency positions amounted to CHF 33.8 billion. A valuation gain of CHF 3.8 billion was recorded on gold holdings. The profit on Swiss franc positions was CHF 1.1 billion. The SNB’s financial result depends largely on developments in the gold, foreign exchange and capital markets.

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Main Street Small Business on the Precipice

As a generality, the average employee (including financial pundits) has no real experience or understanding of what it takes to start and operate a small business in the U.S. Government employees in the agencies that oversee and enforce regulations on small businesses also generally lack any experience in the businesses they regulate.

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Switzerland’s first integrated crypto asset exchange launched

Smart Valor, the country’s first integrated cryptocurrency exchange offering custody, trading and brokerage, has gone live with nine crypto-fiat trading pairs. The assets on Zug-based platform, that was launched in 2017 as part of the Thomson Reuters Incubator, includes crypto currencies and security tokens.

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FX Daily, July 30: Sterling Pounded

Overview:  The prospect of a no-deal Brexit continues to pound sterling lower.  A little more than two months ago, it was testing $1.32.  Two weeks ago it was around $1.25.  Today it traded near $1.2120 before stabilizing.  On the other hand, the 10-year Gilt yield is below 65 bp, a new multiyear low, while the international-laden FTSE 100 is holding its own in the face of heavier equity prices in Europe.

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Obvious Capital Consumption, Report 28 Jul

We have spilled many electrons on the topic of capital consumption. Still, this is a very abstract topic and we think many people still struggle to picture what it means. Thus, the inspiration for this week’s essay. Suppose a young man, Early Enterprise, inherits a car from his grandfather. Early decides to drive for Uber to earn a living. Being enterprising, he is up at dawn and drives all day.

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Switzerland assists Japanese probe into Carlos Ghosn 

Canton Zurich’s public prosecutor is assisting the Japanese authorities in an inquiry related to bank accounts associated with Carlos Ghosn, the former leading auto executive. Tokyo prosecutors sent a request for legal assistance to Switzerland in January, a spokesperson for the country's Federal Office of Justice (FOJ) told swissinfo.ch.

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China’s Big Gamble(s): Betting on QE Again?

As an economic system, even the most committed socialists had come to realize it was a failure. What ultimately brought down the Soviet Union wasn’t missiles, tanks, and advanced air craft, it was a simple thing like bread. You can argue that Western military spending forced the Communist East to keep up, and therefore to expend way too much on guns at the expense of butter.

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Uptick in site deposits puts the spotlight on SNB intervention in the franc

Has the SNB started to intervene. The weekly site deposit data from the Swiss National Bank showed a small uptick but with some perspective, it's a notable turn. Bloomberg highlights the bump and what looks like a bid to keep EUR/CHF above 1.10.

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FX Daily, July 29: Prospects of a No-Deal Brexit Weigh on Sterling

Unrest in Hong Kong and disappointing earnings reports from South Korea weighed on local equity markets, and the MSCI Asia Pacific Index fell for the third consecutive session. European equities are edging higher in tentative trading. The Dow Jones Stoxx 600 is firmer for the sixth session of the past seven. US shares are little changed after record-high closes before the weekend.

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Lucerne Considers Coach Tax, other Measures to Manage Tourist Influx

One of the most popular destinations in Switzerland is reviewing its tourism strategy and mulling introducing coach fees in a bid to curb traffic woes and other disruptions caused by the large number of tourists it welcomes.

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World’s Central Banks End Pact That Limited Selling Of Gold

In a surprising announcement on Friday morning, the European Central Bank said the 21 signatories of the 4th Central Bank Gold Agreement (CBGA) "no longer see the need for formal agreement" as the market has developed and matured, and as a result the signatories "decided not to renew the Agreement upon its expiry in September 2019."

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