SNB & CHF

  Alphas and Epsilons BALTIMORE – One of the delights of being an American is that it is so easy to feel superior to your fellow countrymen. All you have to do is stand up straight and smile. Or if you really need an ego boost, just go to a local supermarket. Better yet, go to a supermarket with a Trump poster in the parking lot. Trigger warning: In the following ramble, we make fun of democracy, Trump, obesity,...

See the introduction and the video for the terms gold basis, co-basis, backwardation and contango. Amerexit and Brexit… Doubts About Debt This was a shortened week, due to the American holiday of July 4, celebrating the start of the war that lead to “Amerexit”, 240 years ago. The prices of the metals were up this week, +$25 in gold and +$0.48 in silver. The gold to silver ratio dropped a fraction of a point, showing...

Shortly before I was on Bloomberg TV today, Leadsom withdrew from the Tory leadership context, leaving May, who favored remaining the EU, as the likely successor of Cameron.  Leadsom had been trailing May even before her controversial weekend comments. Sterling shot up to almost $1.3020, and as was the case last week, there appeared to be a wall of sterling sellers lurking there.  Sterling was trading below $1.29...

Gold With both stocks and US Treasury prices at all time highs the market is sensing that something has to give, and that something may just be more QE, which likely explains the move higher in gold to coincide with both risk and risk-haven assets. As of moments ago, gold rose above $1,370, and was back to levels not seen since 2014. Curiously, the move higher is taking place after Friday’s “stellar” jobs report,...

EM and other risk assets rallied on Friday after the strong US jobs data.  It appears that markets are pricing in a benign backdrop for risk near-term; that is, the US economy is recovering but not by enough to warrant an imminent Fed rate hike.  The July 27 meeting seems unlikely, and so the next likely window would be September 21.  Yet EM typically weakens in the run-up to FOMC meetings and so investors should...

Summary: Electoral politics remains significant. BOE is likely to cut rates, while BoC may tilt more dovishly. US Q2 earnings season formally begins. Investors are under siege.  A growing proportion of bonds in Europe and Japan offer negative yields. The German and Japanese curves are negative out 15-years, while one cannot find a positive yield among any tenor of Swiss government bonds.   Despite a string of...

Faking It   Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. […] The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. — Alan Greenspan, 1961 He was in it for the power...

  Consequences of Central Bank Policies The existing capital stock continues to be frittered away at the expense of savers and retirees.  Nonetheless, central bankers don’t give a doggone about it.  This, after all, is one consequence of roughly eight years of near zero interest rate policy. Central planning superheros, leaving a wasteland behind… Image credit: Steve Epting 30 year bond yield Another related...

Permaculture is an agriculture system based on combining plants to simulate patterns in natural ecosystems. For some it's proving an effective method for controlling pests. (RTS/swissinfo.ch) --- swissinfo.ch is the international branch of the Swiss Broadcasting Corporation (SBC). Its role is to report on Switzerland and to provide a Swiss perspective on international events. For more articles, interviews and videos visit swissinfo.ch or subscribe to our YouTube channel: Website:...

Swiss Franc Currency Index In the Brexit month, the Swiss franc index clearly underperformed the dollar index. The major reason is that the dollar is seen as a better safe-haven than the Swiss Franc, possibly because Swiss sales are affected more when British demand falls. Click to enlarge. Swiss Franc Currency Index (3 years) The Swiss Franc index is the trade-weighted currency performance (see the currency...