SNB & CHF

Summary There is much to like in Bullard’s new paradigm. The problem is that it does not reflect the Federal Reserve’s view or approach. Policy emanates from the Fed’s leadership, but be confused by the noise. The dot plot the recent FOMC meeting was curious.  We noted right away that inexplicably there was one official that apparently anticipated one hike this year and then no hikes in 2017 or 2018.  There was...

Summary The pain of negative yields and social chaos will be very long lasting and very good for gold. So, gold must go up, but Brexit is not one of the reasons why it should. This tells me that in the short term there will likely be a correction in the gold price, creating an opportunity to trade Going Up for the Wrong Reason Gold is soaring. It should—and a lot—but in my view not for the reason it is. Indeed gold...

Summary The U.S. is too big, too varied, too much of everything. You can’t fix a single view of it, even in your mind. But now our problems, challenges, and discontents are big. They are national and international.  We cannot see them. We cannot understand them. Instead, we draw their measure from the news media – based on a flag that flutters and sags, depending on which way the wind is blowing. Bold Prediction...

  Summary People have become used to the idea that the State is their sugar daddy. Many apparently believe that it has some undisclosed, infinite stash of resources at its disposal which it can shower them with at will. The reality is unfortunately different. Hollande Threatens to Ban Protests Brexit has diverted attention from another little drama playing out in Europe. As of the time of writing, if you Google...

Summary On Wednesday, Janet Yellen pressed on the broken buttons again.  After the two day FOMC meeting, the Fed Chair announced they’d continue pressing the federal funds rate down to just a ¼ to ½ percent – effectively zero.  What type of insanity is this? If she keeps it up, and whole thing doesn’t implode, the yield on the 10-Year Treasury note could also slip below zero…along with the hopes and dreams of three...

Major data this week: German Constitutional Court ruling on OMT. UK referendum. EMU flash PMI. ECB TLTRO II launch. Yellen testifies before Congress, RBI Rajan to step down in early Sept. The Chair of the Federal Reserve testifies before Congress on Tuesday and Wednesday.  Given the recent FOMC meeting and Yellen’s press conference, it is unlikely new ground will be broken. It is difficult for the market to price out...

Sterling In the days ahead of the murder of Jo Cox, a UK member of parliament, apparently for her support for remaining in the EU, speculators in the futures market scooped up sterling.  They added 25.4k sterling contracts to lift the gross long position to 61.7k contracts.  This is the second largest long speculative position after the mid-March holdings of 62.9k long contracts. In the previous CFTC reporting...

EUR/CHF The EUR/CHF was finished nearly without change after it had fallen to 1.0775 on Thursday.  The rise of GBP and EUR on Thursday can be explained with speculation that the death of Jo Cox will help the anti-Brexit camp. We reported that FX speculators bought Sterling with two hands. FX Rates June 13 to June 17, 2016 click to enlarge USD/CHF Speculators have finally positioned themselves long CHF against...

We have seen several explanations for the financial crisis and its lingering effects depressing our global economy in its aftermath. Some are plain stupid, such as greed for some reason suddenly overwhelmed people working within finance, as if people in finance were not greedy before 2007. Others try to explain it through “liberalisation” which is almost just as nonsensical as government regulators never liberalised...

One town has been marking the time 100 years ago when Switzerland welcomed tens of thousands of prisoners of war. Revisiting the place has been an emotional experience for some of their descendants. Based on agreements with the belligerent nations, who paid the costs, 68000 sick and wounded British, French, German, Belgian, Canadian and Indian prisoners were interned for several months in sanatoria and hotels. These were mainly located in Alpine tourist resorts, thus supporting an industry...