SNB & CHF

Sterling fell 4.25% from the high on December 28 to yesterday.  It has been confined to yesterday's range today.   After finishing below the lower Bollinger Band yesterday, it has moved back into the band today.  The Bank of England meets tomorrow.  It is way to early to seriously look for a change in policy.  At most, MPC member McCafferty may abandon his formal call (dissent) for an immediate rate hike.    He has done this before.  We suspect if the hawk does rejoin the majority, it has...

Since the initial spike higher when the BOJ provided some operational tweaks to its asset purchase program on December 18, the dollar has fallen 5.6% against the yen through Tuesday's low near JPY116.70.  We had warned that the break of JPY120 would spur a move to JPY118, and the move below JPY118 targeted the August low near JPY116.20.  While the euro often carves out a bottom, the dollar's lows against the yen are frequently characterized by spikes.  That was the case, for example in...

Many of the capital markets are enjoying reversals today.  Equity markets are mostly higher. The MSCI Emerging Market equity index is up more than 1%. Several key commodities, like oil and copper, are firmer.  Bond markets, outside the US, are firmer, with the Japan's 10-year yield slipping to new record lows slightly below 20 bp.   The dollar is mixed, as the dollar-bloc currencies firm, as are most of the freely traded emerging market currencies, with the beleaguered South African rand...

The weak growth, large output gap, low return on capital, and a host of other economic malaise are widely recognized.  There seem to be two main schools.   One is associated with Reinhart and Rogoff.    They argue that "this time is not different" and that much of disappointment with economic performances are what should be expected given the end of a historic credit cycle and debt crisis.  The other is associated with Summers, who resurrected Alvin Hanson's 1938 secular stagnation...

A subdued Chinese session, with the yuan, little changed and local equities securing minor gains, let market participants look elsewhere for directional cues.   The new lows in oil, near $30 a barrel, and the bankruptcy filing of Glencore's US subsidiary Sherwin Alumina seemed to weigh on the dollar-bloc currencies.   However, it is sterling today that has the distinction of being the weakest of the majors.  It is off about 0.4% near midday in London following disappointing BRC sales (0.1...

While the strong Swiss franc is causing headaches for mid-ranged hotels, it is attracting foreign investors looking for hotels in the luxury sector. (RTS/swissinfo.ch) For many, Switzerland is a byword for luxury hospitality, stretching back more than a century to when ailing British aristocrats sought health treatments or adventurous travellers crossed the Alps. Many of the hotels that served these clients now require extensive renovations to remain competitive. Increasingly, hoteliers...

Since the start of 2016, women from non-European Union countries can no longer obtain special resident permits to work in Swiss strip clubs. A former cabaret owner speaks out. (SRF/swissinfo.ch) For the past 20 years a special version of the short-term “L” work permit was issued exclusively to cabaret and exotic dancers from countries not in the EU or the European Free Trade association (EFTA). The special status for cabaret dancers was introduced in 1995 and it allowed women from...

Jamie Dimon, JP Morgan ChaseBrian T. Moynihan, Bank of AmericaMichael Corbat, Citigroup Gentlemen: On Friday, I attended a digital money summit at the Consumer Electronics Show. I am writing to you to warn you about the disruption that is about to occur in banking. There are many startups (and larger companies too) that are gunning for you. Perhaps you have watched what Uber has done to the taxi business? Well, these guys are planning the same thing for the banking business. Banks used to...

I was canoeing recently.  When I looked that oar in the water, it looked bent.  It wasn't my equipment, and I am a novice.  I cursed to myself and quickly pulled the oar from the water.  I smiled.  It was not bent.  It was an optical illusion. There is a chart that is making the rounds.  It shows the S&P 500 moving in tandem with the Shanghai Composite.  I have tried to recreate the Great Graphic on Bloomberg.  It does look like a good fit. but do no be misled.  The two different...

The broad measures of the US dollar are trending higher, and former Fed Chair Bernanke recently refuted claims the US was engaged in a currency war. Many observers had thought that with its unprecedented asset-purchase program, the BOJ was engaged in a currency war.  However, the yen has been the strongest major currency over the past six months, and its export volumes are contracting on a year-over-year basis.  Not to worry.  Observers who seem almost to have a pathological...