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George Dorgan

George Dorgan

George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.

Articles by George Dorgan

Swiss Trade Balance June 2018: Fifth consecutive record of exports

1 day ago

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners.
Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially true.
Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
But also to a massive Swiss trade surplus with the United States, that lifted Switzerland on

Read More »

Swiss Producer and Import Price Index in June 2018: +3.5 YoY, +0.2 MoM

8 days ago

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. In 2017, however, producer prices are rising again – in both Europe and Switzerland. See more in Is the Swiss Franc overvalued?
Neuchâtel, 13 July 2018 (FSO) – The Producer and Import Price Index increased in June

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Swiss Balance of Payments and International Investment Position: Q1 2018

26 days ago

Current Account
The current account surplus amounted to CHF 18 billion, a CHF 5 billion increase over the year-back quarter. It was calculated as the sum of all receipts (CHF 149 billion) minus the sum of all expenses (CHF 131 billion).

Key figures:
Current Account: Up 41% against Q1/2017 to 18.1 bn. CHF
of which Goods Trade Balance:  Up 62.7% against Q1/2017 to 15.1 bn.
of which the Services Balance: Minus 6.2% to 5.0 bn.
of which Investment Income: Plus 7.3% to 6.5 bn.

 Calculation:

Swiss Balance of Payments Q1 2018(see more posts on Switzerland Balance of Payments, Switzerland Capital Account, Switzerland Current Account, Switzerland Financial Account, ) Source: snb.ch – Click to enlarge

Financial

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Swiss Trade Balance May 2018: Foreign trade overcomes stagnation

June 21, 2018

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners.
Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially true.
Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
But also to a massive Swiss trade surplus with the United States, that lifted Switzerland on

Read More »

Swiss Producer and Import Price Index in May 2018: +3.2 percent YoY, +0.2 percent MoM

June 13, 2018

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. In 2017, however, producer prices are rising again – in both Europe and Switzerland. See more in Is the Swiss Franc overvalued?
Neuchâtel, 13 June 2018 (FSO) – The Producer and Import Price Index increased in May 2018

Read More »

Swiss Trade Balance April 2018: Foreign Trade Caps at a High Level

May 29, 2018

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners.
Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially true.
Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
But also to a massive Swiss trade surplus with the United States, that lifted Switzerland on

Read More »

Privacy Policy

May 18, 2018

Privacy Policy We are very delighted that you have shown interest in our enterprise. Data protection is of a particularly high priority for the management of the Ellusion Ltd.. The use of the Internet pages of the Ellusion Ltd. is possible without any indication of personal data; however, if a data subject wants to use …

Read More »

Privacy Policy

May 18, 2018

Privacy Policy
We are very delighted that you have shown interest in our enterprise. Data protection is of a particularly high priority for the management of the Ellusion Ltd.. The use of the Internet pages of the Ellusion Ltd. is possible without any indication of personal data; however, if a data subject wants to use special enterprise services via our website, processing of personal data could become necessary. If the processing of personal data is necessary and there is no statutory basis for such processing, we generally obtain consent from the data subject.
The processing of personal data, such as the name, address, e-mail address, or telephone number of a data subject shall always be in line with the General

Read More »

Swiss Producer and Import Price Index in April 2018: +2.7 percent YoY, +0.4 percent MoM

May 15, 2018

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. In 2017, however, producer prices are rising again – in both Europe and Switzerland. See more in Is the Swiss Franc overvalued?
Neuchâtel, 15 May 2018 (FSO) – The Producer and Import Price Index increased in April

Read More »

SNB loses 6.8 billion in Q1/2018

April 27, 2018

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle
This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now.
Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for the SNB.
We considered that after an inflationary

Read More »

SNB reports a profit of CHF 47.6 billion for Q1 2018

April 27, 2018

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle
This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now.
Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for the SNB.
We considered that after an inflationary

Read More »

Swiss Trade Balance Q1 2018: The positive trend continues

April 24, 2018

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners.
Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially true.
Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
But also to a massive Swiss trade surplus with the United States, that lifted Switzerland on

Read More »

Swiss Producer and Import Price Index in March 2018: +2.0 percent YoY, +0.2 percent MoM

April 16, 2018

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. In 2017, however, producer prices are rising again – in both Europe and Switzerland. See more in Is the Swiss Franc overvalued?
Neuchâtel, 16 April 2018 (FSO) – The Producer and Import Price Index fell in March 2018

Read More »

Swiss Balance of Payments and International Investment Position: Q4 2017 and review of the year 2017

March 27, 2018

Q4 2017
In the fourth quarter of 2017, the current account surplus amounted to CHF 20 billion, or CHF 2 billion less than the year -back quarter. Lower receipts from investment income resulted in a slight expenses surplus on primary income (labour and investment income), which had shown a receipts surplus in the corresponding quarter of 2016. Moreover, the expenses surplus on secondary income (current transfers) rose. These developments were countered by a higher income surplus in goods trade. The income surplus in services trade was unchanged.
In the fourth quarter, transactions shown in the financial account resulted in a net acquisition on the assets side of the account (CHF 3 billion) and a net incurrence on the

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Repo and Repo Markets

March 23, 2018

What is Repo?

Repo
Traditional /
Securities Lending
What
Cash, Securities, other assets
Securities
Pledged
not pledged
pledged
Ownership
Lender (repo buyer)
Borrower (repo seller)
Risk
More risk-averse
(lender ownership)
Less risk-averse
(lender has no ownership)
Reward
Interest paid by Buyer
Fee paid by borrower
Typical sellers/borrowers
Leveraged traders
(bank desk, hedge funds)

Typical buyers/lenders
Risk-Averse investors
(insurances, money market funds,
recently central banks)

Repo can take the form of either  ( legal and operational differences.)
repurchase agreements or
buy/sell-backs

Purchase: One party sells assets to a counterparty,
Repurchase: Simultaneously commits to repurchase the same or similar

Read More »

Swiss Trade Balance February 2018: Foreign Trade at a High Level

March 20, 2018

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners.
Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially true.
Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
But also to a massive Swiss trade surplus with the United States, that lifted Switzerland on

Read More »

Swiss Producer and Import Price Index in February 2018: +2.3 percent YoY, +0.3 MoM

March 15, 2018

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. In 2017, however, producer prices are rising again – in both Europe and Switzerland. See more in Is the Swiss Franc overvalued?

Neuchâtel, 15 March 2018 (FSO) – The Producer and Import Price Index rose in February

Read More »

SNB reports a profit of CHF 54.4 billion for 2017

March 6, 2018

(Several calculation mistake were corrected)

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse

SNB Results Longterm 2017 – Click to enlarge

Annual result of the Swiss National Bank for 2017
The Swiss National Bank (SNB) reports a profit of CHF 54.4 billion for the year 2017 (2016: CHF 24.5 billion).
The profit on foreign currency positions amounted to CHF 49.7 billion. A valuation gain of CHF 3.1 billion was recorded on gold holdings. The profit on Swiss  franc positions was CHF 2.0

Read More »

Swiss Trade Balance January 2018: Imports Cross the 17 Billion Franc Mark

February 20, 2018

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners.
Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially true.
Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
But also to a massive Swiss trade surplus with the United States, that lifted Switzerland on

Read More »

Swiss Producer and Import Price Index in January 2018: +1.8 YoY, +0.3 MoM

February 13, 2018

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. In 2017, however, producer prices are rising again – in both Europe and Switzerland. See more in Is the Swiss Franc overvalued?
Neuchâtel, 13 February 2018 (FSO) – The Producer and Import Price Index rose in January

Read More »

Swiss Trade 2017: Exports at all-time high

January 30, 2018

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners.
Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially true.
Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
But also to a massive Swiss trade surplus with the United States, that lifted Switzerland on

Read More »

Swiss Producer and Import Price Index in December 2017: +1.8 YoY, +0.2 MoM

January 19, 2018

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. In 2017, however, producer prices are rising again – in both Europe and Switzerland. See more in Is the Swiss Franc overvalued?
Producer and Import Price Index in November 2017
From the data release of Swiss

Read More »

Q3/2017: Swiss Current Account Surplus significantly down

December 30, 2017

Swiss balance of payments and international investment position: Q3 2017

Current Account 
The Swiss current account surplus went down by 15% against the same quarter in 2016. In the third quarter of 2015. The current account surplus was still at 22 bn. CHF.
It seems to be a change in the usual movement that sees higher Q3 surpluses compared to the other quarters.
The surplus in Q2/2017 was similar to the one in Q2/2016, while the Q1/2017 was 25% higher than the one of Q1/2016 (see last year’s results)

There
Key figures:
Current Account: -15% against Q3/2016 to 13,030 bn. CHF
of which Trade Balance: -41%  to 8,323 bn.
of which Services Balance: -4% to 4,573 bn.
of which Investment Income: +128% to 10,548 bn.

Read More »

Swiss Trade Balance November 2017: Foreign Trade in Verve

December 21, 2017

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners.
Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially true.
Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
But also to a massive Swiss trade surplus with the United States, that lifted Switzerland on

Read More »

Swiss Producer and Import Price Index in November 2017: +1.8 YoY, +0.6 MoM

December 14, 2017

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. In 2017, however, producer prices are rising again – in both Europe and Switzerland. See more in Is the Swiss Franc overvalued?
Producer and Import Price Index in November 2017
From the data release of Swiss

Read More »

Swiss Retail Sales, October: -2.7 Percent Nominal and -1.6 Percent Real

November 30, 2017

The Used Goods Question
Retail sales in several countries like Germany, Japan and Switzerland continue to fall or they remain steady for years.
In the United States they have strongly risen recently. We should remind readers, that used goods sold via Ebay or similar, are not contained in this statistics. Still they create economic value for the purchases. By mentality, Swiss, Germans or Japanese pay more attention so that used goods do not lose their value so quickly. Hence used goods have higher economic value in these countries than in others.
From the press release:
Neuchâtel, 30.11.2017 (FSO) – Turnover in the retail sector fell by 2.7% in nominal terms in October 2017 compared with the previous year. Seasonally

Read More »

Health insurance premium index 2017: Premium increases from 2016 to 2017 curb growth in disposable income by 0.3 percentage points

November 30, 2017

Premium growth from 2016 to 2017 dampens the development of disposable income by 0.3 percentage points
Neuchâtel, 24.11.2017 (FSO) – The health insurance premiums index (CIPI) recorded a growth of 3.8 percent over the previous year for the 2017 premium year. The KVPI thus achieved an index level of 185.3 points (base 1999 = 100). The impact of premium development on the growth of disposable income can be estimated using the CIPI. According to the KVPI model calculation by the Federal Statistical Office (FSO), the increase in premiums reduces the growth in average disposable income in 2017 by 0.3 percentage points.
The KVPI covers the premium development of compulsory health insurance and sickness insurance. The

Read More »

Swiss Trade Balance October 2017: A Slowdown at a High Level

November 21, 2017

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners.
Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade partners decided to spend more. This is partially true.
Recently Europeans started to increase their savings rate, while Americans reduced it. This has led to a rising trade and current surplus for the Europeans.
But also to a massive Swiss trade surplus with the United States, that lifted Switzerland on

Read More »

Swiss Producer and Import Price Index in October 2017: +1.2 YoY, +0.5 MoM

November 14, 2017

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015 (see below), compared to -3% in Europe or -1% in the U.S., diminished the overvaluation. In 2017, however, producer prices are rising again – in both Europe and Switzerland. See more in Is the Swiss Franc overvalued?
Producer and Import Price Index in October 2017
From the data release of Swiss

Read More »

Swiss Retail Sales, September: Stable Nominal and 0.8 percent Real

November 2, 2017

The Used Goods Question
Retail sales in several countries like Germany, Japan and Switzerland continue to fall or they remain steady for years.
In the United States they have strongly risen recently. We should remind readers, that used goods sold via Ebay or similar, are not contained in this statistics. Still they create economic value for the purchases. By mentality, Swiss, Germans or Japanese pay more attention so that used goods do not lose their value so quickly. Hence used goods have higher economic value in these countries than in others.
From the press release:
Neuchâtel, 02.11.2017 (FSO) – Turnover in the retail sector remained stable in nominal terms in September 2017 compared with the previous year.

Read More »