SNB & CHF

With the ECB poised to take additional steps down the unorthodox monetary policy route, financial and economic forces are as potent as ever.  However,  there is a subtle shift taking place that few seem to recognize.  It is the re-emergence of non-economic/non-financial issues.  Since the Great Financial Crisis began, and especially since the emergence of the European debt problems, economics have been paramount in Europe.  Even political developments were understood in relation to the...

Small cable cars that provide vital transport in the mountains for farming families and hikers could soon be a thing of the past. (SRF/swissinfo.ch) Half of the 200 small lifts in Switzerland face closure, due to mounting maintenance costs. It’s down to a new law introduced in 2007, to bring Switzerland in line with the European Union. It requires that small lifts meet the same rigorous safety standards as the large mountain lift companies in popular tourism centres. While bigger companies...

The US dollar remains firm, even if it has eased from its seven-month high against the euro and five-year high against the Swiss franc recorded yesterday.  The US October personal consumption expenditure was disappointing, and prompted some downward revision to Q4 GDP forecasts. The Atlanta Fed estimates that Q4 GDP is tracking 1.8% rather than 2.3%.   However, it is not seen deterring the Federal Reserve from hiking rates next month.  The decline in the weekly jobless claims, the rise...

Soggy Dollars First, there’s a word for someone who buys gold in the hope its price will rise. This word is not investor, but speculator. Second, statistical anomalies cannot be asserted as proof of manipulation. Also, the article is giving the reader the blueprint for a no-brainer way to profit by the mistakes of the manipulators. If it were that easy, then people would be doing it. Third, with gold there is nothing to trust. Gold just is.  Which is rather the whole point. If market...

This Great Graphic was composed on Bloomberg.  It shows two time series.  The yellow line shows the premium the US pays over Germany for two-year money.  The white line shows the premium the US pays over Japan for two-year money.   The premiums have risen sharply since mid-October and today are at new multi-year highs.  In the middle of October the US premium over Germany was near 80 bp. Today it was near 136 bp.  Although the German 2-year yield has fallen below -40 bp, it is the US...

On Monday, the Federal Reserve met to discuss the discount rate.   There has been a steady increase in the number of regional Federal Reserve presidents requesting an increase in the discount rate.  The minutes of the October 26 meeting were reported yesterday. The meeting was held before the FOMC met on October 27-28.  At that meeting, nine of the 12 regional presidents expressed a preference to lift the discount rate.  It is a preference because it is ultimately up to the Board of...

The divergence of monetary policy is discounted, they argued. Ahead of next week's big events, which include the IMF's SDR decision, the ECB meeting, OPEC meeting, and the US jobs data, the euro, against which speculators have amassed a large short position, just shy of a record,  were supposed to be content. The euro did gain almost a cent between Monday's low when it briefly dipped below $1.0600 and today's high, which stopped shy of $1.0690 in early Europe.  However, it was greeted...

The US dollar recorded its high for the year against the Swiss franc on January 14 near CHF1.0240.  It closed that day a little below CHF1.0190.  The next day the Swiss National Bank surprised the world by lifting its cap against the euro.  The dollar plunged to nearly CHF0.7400.   It has taken increased prospects of a Fed rate hike, negative 75 bp on sight deposits at the SNB, and the prospect of more, if the European Central Bank takes additional unorthodox monetary measures in early...

A NATO country has shot down a Russian plane.  The refugee influx is threatening to unravel the Schengen Treaty of free movement.    Germany's Merkel celebrated her tenth anniversary as Chancellor this past weekend, but she faces one of the most serious challenges of her tenure.    Portugal accounts for less than 2% of the eurozone GDP.  We argue, that like Greece, Portugal's importance is greater than the size of its economy.  Among the political challenges Europe faces, the Iberian...

The US dollar is trading choppily but with a distinct softer bias.  The economic news has been limited, and the apparent downing of a Russian plane by Turkey caused a flurry of activity, with Turkish assets coming under initial pressure which has abated somewhat.   The euro briefly dipped below $1.06 yesterday for new seven-month lows, but there was no follow through selling.  As is often the case with such chart points, a snap back after the violation, the euro reached $1.0670 in early...