Tag Archive: newslettersent

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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FX Daily, May 24: Greenback Pushes Lower

The US dollar is pulling back after recording new highs for the year against the euro and sterling. The greenback is lower against nearly all the major currencies, but the Canadian dollar. It is also softer against most of the emerging market currencies. The chief exception is the Turkish lira. Yesterday's 300 bp rate hike could only stem the rot momentarily and the lira's 2.3% decline today, wipes out 2/3 of the annual rate increase.

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Swiss pharma suspected of delaying generic competition

The United States Food and Drug Administration (FDA) published Thursday a list of pharmaceutical companies that include Basel-based Novartis and Roche, all of which are suspected of hindering the development of generic versions of their own medicines. Over 150 complaints were filed.

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Anchoring Globally Synchronized Growth, Or We Gave Up Long Ago?

January was the last month in which China’s National Bureau of Statistics (NBS) specifically mentioned Fixed Asset Investment (FAI) of state holding enterprises (or SOE’s). For the month of December 2017, the NBS reported accumulated growth (meaning for all of 2017) in this channel of 10.1%. Through FAI of SOE’s, Chinese authorities in early 2016 had panicked themselves into unleashing considerable “stimulus.”

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Tales from “The Master of Disaster”

Daylight extends a little further into the evening with each passing day. Moods ease. Contentment rises. These are some of the many delights the northern hemisphere has to offer this time of year. As summer approaches, and dispositions loosen, something less amiable is happening. Credit markets are tightening. The yield on the 10-Year Treasury note has exceeded 3.12 percent.

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FX Daily, May 23: Dollar and Yen Surge, European Data Disappoints

The US dollar has extended its gains against most of the major currencies. Momentum, positioning, and divergence continue to drive it. The euro briefly traded a little below $1.17, an important technical area and has enjoyed a bounce in late morning turnover in Europe.

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Alpine tunnel closure causes major holiday traffic disruption

Traffic queues of up to 28 kilometres were reported at the northern entrance to the Gotthard tunnel on Saturday, owing to a long weekend and the closure of another major Alpine road tunnel because of a fire. The San Bernadino tunnel in southeast Switzerland was closed on Friday afternoon after a German tourist bus caught fire in the tunnel, leaving two people with minor injuries. It is expected to remain closed over the Pentecost weekend, since the...

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Great Graphic: Euro-Swiss Shows Elevated Systemic Risk

The Swiss National Bank's decision in January 2015 to remove the cap on the Swiss franc (floor on the euro) that it has set at CHF1.20 is seared into the memory of a generation of foreign exchange participants. It is not exactly clear where the euro bottomed in the frenzied activity that followed the SNB's surprise move. Bloomberg records the euro's low near CHF0.8520.

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The Next Recession Will Be Devastatingly Non-Linear

The acceleration of non-linear consequences will surprise the brainwashed, loving-their-servitude mainstream media. Linear correlations are intuitive: if GDP declines 2% in the next recession, and employment declines 2%, we get it: the scale and size of the decline aligns. In a linear correlation, we'd expect sales to drop by about 2%, businesses closing their doors to increase by about 2%, profits to notch down by about 2%, lending contracts by...

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Why the Fundamental Gold Price Rose – Precious Metals Supply and Demand

Keith Weiner’s weekly look on Gold. Gold and silver prices, Gold-Silver Price Ratio, Gold basis and co-basis and the dollar price, Silver basis and co-basis and the dollar price.

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Eurosceptic Italian government faces a reality check

With the putative M5S-League government publishing its final common programme, we take a look at the road ahead for the Italian economy and for Italian government debt.We expect negative noise surrounding the Italian budget to intensify initially, but believe that negotiations with Brussels will result in compromises eventually, including dilution of the incoming Italian government’s fiscal easing measures. The biggest risks lie with the proposed...

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Fribourg – moves to axe government pensions for life

Switzerland’s government is working hard to find ways to fix a looming state pension shortfall. Two politicians in the canton of Fribourg have decided to seek savings by attempting to cut lifetime government pensions granted after short stints in the job, according to the newspaper 20 Minutes.

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Weekly Technical Analysis: 21/05/2018 – USD/JPY, EUR/USD, GBP/JPY, USD/CAD, USD/CHF

The USDCHF pair reaches the key support 0.9955 now, and as we mentioned in our last report, breaking this level will confirm completing the double top pattern that appears on the chart, to rally towards our negative targets that begin at 0.9900 and extend to 0.9850. Therefore, we will continue to suggest the bearish trend supported by the negative pressure formed by the EMA50, unless the price managed to rally upwards to breach 1.0055 level and...

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Emerging Markets: Week Ahead Preview

EM FX ended Friday on a weak note and extended the slide. For the week as a whole, the best EM performers were PHP, TWD, and SGD while the worst were ARS, ZAR, and TRY. With US rates continuing to move higher, we believe selling pressures on EM FX will remain in play this week. Our recently updated EM Vulnerability Table supports our view that divergences within EM will remain.

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Bi-Weekly Economic Review: Growth Expectations Break Out?

There are a lot of reasons why interest rates may have risen recently. The federal government is expected to post a larger deficit this year – and in future years – due to the tax cuts. Further exacerbating those concerns is the ongoing shrinkage of the Fed’s balance sheet. Increased supply and potentially decreased demand is not a recipe for higher prices. In addition, there is some fear that the ongoing trade disputes may impact foreign demand...

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Gold and Gold Stocks – Conundrum Alert

Moribund Meandering Earlier this week, the USD gold price was pushed rather unceremoniously off its perch above the $1300 level, where it had been comfortably ensconced all year after its usual seasonal rally around the turn of the year. For a while it seemed as though the $1,300 level may actually hold, but persistent US dollar strength nixed that idea. Previously many observers (too many?) expected gold to finally break out from its lengthy...

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Italy Defies Gravity and Risk to Fiscal Rectitude

Italian asset markets continue to fare better than many expected. The political uncertainty following the March election has been followed by confidence that the Five Star Movement and the (Northern) League will be able to put together a government in the coming days. If so, Italy would have taken half the time Germany did to cobble a government together after inconclusive elections.

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Switzerland’s vote to change its monetary system – sensible or silly?

Sometimes Swiss voters are presented with questions that only specialists are equipped to answer. The vote on 10 June 2018 to change their monetary system appears to be one of these. On the surface it appears simple. Upon closer inspection it contains much complexity and uncertainty, compounded by a widespread misunderstanding of how the financial system works – banks do not act simply as intermediaries, lending out the deposits that savers place...

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Rapid escalation in Swiss fines for freight trucks

An increasing number of heavy goods vehicles (HGVs) are being pulled over for motoring offences at border crossings. Customs officials have reported 83% more violations in the last eight years, rising from 17,997 on 2010 to 32,967 last year. A further 24,464 fines and cautions were issued against HGVs according to the SonntagsZeitung newspaper.

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FX Weekly Preview: Dollar Power

There are several trends in the capital markets at a high-level. The euro and yen's decline has coincided with sustained rallies in European and Japanese equity benchmarks. Emerging market equities and currencies have been trending lower.

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