SNB & CHF

In January 2016, just as the wave of “global turmoil” was cresting on domestic as well as foreign shores, retired Federal Reserve Chairman Ben Bernanke was giving a series of lectures for the IMF. His topic wasn’t really the so-called taper tantrum of 2013 but it really was. Even ideologically blinded economists like Bernanke could see how one might have followed the other; the roots of 2016 in 2013. In May and June of...

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 the introduction and the video for the terms gold basis, co-basis, backwardation and contango.  Fundamental Developments There were big moves in the metals markets this week. The price of gold was up an additional $21 and that of silver $0.30. Will the dollar fall further?As always, we are interested in the fundamentals of supply and demand as measured by the basis. But first, here are the charts of the prices of...

While the broader market for Swiss stocks has risen modestly this year, one ‘entity’ has outperformed its peers by such a staggering margin, it has left bamboozled market experts struggling for an explanation. And that company is…the Swiss National Bank. The price of a share in Swiss National Bank in August rose above 3,000 francs ($3,143) for the first time, more than double the level of a year ago, and up 50% since...

(The sporadic updates continue while I am on a two-week business trip. Now in Barcelona, participating in TradeTech FX Europe) Several developments have attracted our attention, but the key take away is that the global capital markets have stabilized after appearing downright frightful at the end of last week, as stocks, yields, and the dollar plummeted. Equities rallied om Monday and there was follow through buying in...

The ICRC is the world's largest provider of physical rehabilitation services in developing countries.  (Keystone) - Click to enlarge The Swiss-run International Committee of the Red Cross (ICRC) has launched the world’s first ‘Humanitarian Impact Bond’, which encourages private sector investment in humanitarian programmes. The innovative “payment-by-results” model centres on a five-year private placement programme...

– Safe haven gold extends rally to 11-month high after North Korea nuke test and U.S. warns of ‘massive’ response– Asian and European stocks fall, bonds flat, gold, silver, palladium, Swiss franc rise as Korea tensions flare as North Korea tests ‘hydrogen bomb’– North Korea prepares for possible ICBM launch says S. Korea– U.S. warns of ‘massive,’ ‘overwhelming’ military response to North Korea after meeting with Trump...

 Lasting Debt “Rule one: Never allow a crisis to go to waste,” said President Obama’s Chief of Staff Rahm Emanuel in November of 2008. “They are opportunities to do big things.” At the time of his remark, Emanuel was eager to exploit the 2008 financial crisis to raid the public treasury. With the passage of the American Recovery and Reinvestment Act in February 2009, Emanuel’s wish was granted. The Obama administration...

In an economy in which wages for 95% of households are stagnant for structural reasons, pushing inflation higher is destabilizing. The official policy goal of the Federal Reserve and other central banks is to generate 3% inflation annually. Put another way: the central banks want to lower the purchasing power of their currencies by 33% every decade. In other words, those with fixed incomes that don’t keep pace with...