SNB & CHF

For me, the defining characteristic of the late nineties wasn’t the dot-coms. Most people were exposed to the NASDAQ because, frankly, at the time there was no getting away from it. It had seeped into everything, transforming from a financial niche bleeding eventually into the entire worldwide culture. We all remember the grocery clerks who became day traders. Behind all that was some darker evolutions. It was a period...

Contradictory Palaver The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronouncements and reversals which will take place in the coming months and years as the world’s reserve currency continues to be compromised.  So far, the Greenback has had its worst start since 1987, the year of...

Swiss Franc The Euro has risen by 0.38% to 1.1502 CHF. EUR/CHF and USD/CHF, February 09(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates The 100-point slide in the S&P 500 and the 1000-point drop in the Dow Jones Industrials yesterday spurred more bloodletting in Asia. The 1.8% drop in the MSCI Asia Pacific Index (for a 6.7% loss for the week) may conceal the magnitude...

Summary: FX implied vol bottomed before the VIX took off. FX vol is at the highs for the year, but euro and yen vol is lower than last September. Sterling vol has risen the most. With the substantial swings in the volatility of equities that have captured the imagination of journalists and punished investors who bought financial derivatives that profited from the low vol environment, we thought it would be...

The UBS Swiss Real Estate Bubble Index declined in the last quarter of 2017, the second quarterly decline in a row. Prices are considered balanced when the index reaches zero. Between zero and 1 is considered a price boom, between 1 and 2 is considered at risk and above 2 a bubble. At the end of 2017 the index sat at 1.32, still in the zone where there is a risk of a price correction. The recent fall was driven by slow...

Swisscom already cut 684 jobs in 2017 (Keystone) - Click to enlarge The Swiss telecom company, whose majority shareholder is the government, announced plans to reduce up to 700 jobs by the end of the year as part of cost-cutting measures. It also revealed a data breach of client information. “By the end of 2018, Swisscom expects to have a headcount of around 17,000 FTEs [full-time employees] in Switzerland,...

Brexit Risks Increases – London Property Market and Pound Vulnerable  – Brexit uncertainty deepens as UK government in disarray– BOE warns of earlier and larger rate hikes for Brexit-hit UK– UK property prices fall second month in row, London property under pressure – No deal Brexit estimated to cost UK £80bn according to government analysis – Transition period causing major uncertainty for UK and pound – Pound expected...

There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. Despite the selloff of the last week I don’t believe any portfolio action is warranted. While the overbought condition has largely been corrected now, the S&P 500 is far from the opposite condition, oversold. At the lows this morning, the S&P 500 was officially in...

Swiss Franc The Euro has fallen by 0.43% to 1.152 CHF. EUR/CHF and USD/CHF, February 08(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates The swings in the equity markets are subsiding, bond yields are firm and the US dollar is extending its recovery. Although US equities closed lower, the MSCI Asia Pacific Index snapped a four-day drop by posting a 0.25% gain. However, the...

Summary: The major currencies but the Canadian dollar peaked Jan 25-26. The Australian dollar has fallen the most since peaking. Many are still viewing the dollar’s recovery as technical in nature and not a turn in the trend. This Great Graphic was created on Bloomberg. It shows five major currencies against the US dollar this year. To avoid giving a misleading impression, the currencies are index to start...