SNB & CHF

Deposit bail-in risks are slowly being realised in Ireland, after it emerged overnight that FBD, one of Ireland’s largest insurance companies, have been moving cash out of Irish bank deposits and into bonds. Revelations regarding deposit bail-in risks came in the wake of warnings of a new property crash centred on the housing market in Ireland. The former deputy governor of the Central Bank warned in an op-ed in a...

Second Half Recovery Dented by “Resurgent Consumer” We normally don’t comment in real time on individual economic data releases. Generally we believe it makes more sense to occasionally look at a bigger picture overview, once at least some of the inevitable revisions have been made. The update we posted last week (“US Economy, Something is Not Right”) is an example. We’ll make an exception today though. Our friend...

Swiss Franc The Swiss Franc was nearly unchanged against the euro. Click to enlarge. FX Rates The US dollar closed the pre-weekend session well off its lows that were seen in response to the disappointing retail sales report. It has been unable to sustain the upside momentum, and as North American dealers prepare to return to their posts, it is trading lower against most of the major currencies. The notable...

Summary: Some romanticists want to have another Bretton Woods fixed exchange rate regime. Bretton Woods had difficulty from nearly the day it went operational. It is misguided to think a new rigid regime is needed or is appropriate. Today is the anniversary of the final blow to the dollar-gold standard. By August 15, 1971, the exchange of dollars for gold was limited to central banks, and US President...

15.08.2016 09:15  – FSO, Prices (0353-1607-50) The Producer Price Index or officially named “Producer and Import Price Index” describes how the changes in price for producers and importers. For us it interesting because it is used in the formula for the Real Effective Exchange Rate. I When producers and importers profit on lower prices (compared to other countries), then the Swiss Franc reduces its overvaluation. In...

The only way to reverse declines in labor participation and stagnation in wages and demand is to make it easier to start enterprises and hire people. Mainstream economists are mystified why wages/salaries are still stagnant after 7+ years of growth / “recovery.” The conventional view is that wages should be rising as the labor market tightens (i.e. the unemployment rate is low) and demand for workers increases in an...

Short Circuited Feedback Loops Finding and filling gaps in the market is one avenue for entrepreneurial success.  Obviously, the first to tap into an unmet consumer demand can unlock massive profits.  But unless there’s some comparative advantage, competition will quickly commoditize the market and profit margins will decline to just above breakeven. Unfortunately, finding and filling gaps in the market is much easier...

  Insanity Rules Bond markets are certainly displaying a lot of enthusiasm at the moment – and it doesn’t matter which bonds one looks at, as the famous “hunt for yield” continues to obliterate interest returns across the board like a steamroller. Corporate and government debt have been soaring for years, but investor appetite for such debt has evidently grown even more. A huge mountain of interest-free risk has...

United States EM FX ended the week on a soft note, despite the weaker than expected US retail sales report. Official concern about strong exchange rates is beginning to emerge. First it was Korea, then on Friday it was Brazil as acting President Temer said his country needs to maintain a balanced exchange rate, neither too weak nor too strong. We expect more pushback to emerge if the current rally is extended....

Seven people are in hospital with stab wounds and burns, police say, after an attack on a train near St.Gallen, Switzerland. The man set the train carriage on fire using a flammable liquid and also stabbed passengers, including a six-year-old child, police said. Details are sparse for now but The BBC reports, the suspected attacker, described as a Swiss man aged 27, was also taken to hospital after the incident near...