SNB & CHF

Reports indicating that Italy is close to establishing a bad bank prompted one wag to ask if  Italy does not already have enough.  The country may be better served by setting up a good bank.  The sharp sell-of in shares of Italian banks this year is an important driver of G7-leading 12.4% slide in the local bourse this year.   The Renzi government has been trying to establish a "bad bank" to warehouse the non-performing loans (NPLs) that are hardening the arteries of Italy's financial...

With equities sliding and oil pushing back below $30, it may feel like the resumption of moves in the first two and half weeks of the year, but it is different.  It is considerably more orderly.  The contagion from the equity and oil slide is more limited than previously, and even oil is recovering in the European morning to trade back above $30.  European equities opened lower but spent the morning recovering, even if not fully.   The change is also evident in the foreign exchange...

Let me share a little story, that I think will help illustrate a point. Before Copernicus, people believed that the other planets orbited the Earth. They looked up at the night sky and saw that the outer planets like Jupiter normally moved slowly eastwards in the night sky. But sometimes, they seemed to stop moving and then moved west for a while. With their assumption of the Earth being at the center, this funny path was hard to describe and impossible to explain. What could possibly cause...

We have consistently been making the contrarian call for a falling silver price and a rising gold to silver ratio for years. This ratio has risen a lot during this time. So are we ready to change our call yet? This being the start of a new year, we wanted to take the opportunity to… [caption id="" align="alignnone" width="1064"] Gold and Silver Price[/caption]   This content is for The Last Contango – Free Membership members only. Please login to view this content. (Register here.) Full...

The Bank of Japan meets later this week.  We do not think that it will expand its already aggressive monetary policy stance.   Given the largely operational adjustments announced last month, it seems premature to expect substantive adjustment now.    It is true that the recent string of data has been mostly disappointing, and the yen has strengthened on a trade-weighted basis over the past month.  Our takeaway from talking to Japanese officials is that they are not exceptionally concerned. ...

Greek Prime Minister Tsipras is celebrating the one-year anniversary of this election.  He offered Greek voters an opportunity to replace him last summer, but they stuck with him. Many economic issues remain unresolved. Pension reform promises to be a flashpoint between the Tsipras government and the official creditors.    Although the G10 has eleven members, official creditors are no longer represented by the Troika, as there are now four.  The ESM has joined the EC, ECB and IMF. When...

When the Gotthard Base Tunnel comes into operation later this year, it will revolutionise Alpine transport. Its opening will also bring a wealth of opportunities to the Italian-speaking canton of Ticino. The tunnel – the longest of its kind in the world – is at the heart of the New Trans-Alpine Railway Link (NEAT) project, geared at improving the north-south rail link through the Alps. The construction of base tunnels will put the rail link’s highest elevation only 550 metres above sea...

(from my colleague Dr. Win Thin) EM enjoyed a nice bounce to end last week. The global liquidity outlook has clearly moved in favor of EM, at least for now.  However, the overall global backdrop has not shifted in favor of EM just yet.  Bottom line:  enjoy this EM rally with a short-term timeframe in mind, with the idea that EM turbulence will likely return later this year. Idiosyncratic risks abound in the usual suspects.  The Brazilian real is likely to underperform in light of COPOM’s...

[unable to retrieve full-text content] Asia followed suit, extending the recovery seen in the last couple of sessions to end last week.  Equities rose as did oil prices.   The MSCI Asia-Pacific Index rose 1.2%, and the Nikkei posted its first back-to-back gains this year.  Brent firmed, with the March contract trading to $32.80.   However, in late-Asia and early Europe, the momentum fizzled.  Brent retreated $2 before finding support, and European equities edged lower before recovering...

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