SNB & CHF

  A Morally and Economically Superior Monetary System It has been theoretically demonstrated and seen in general practice that a monetary system of 100% metallic money devoid of central banking checks monetary inflation, prevents a general rise in the price level, and eliminates the dreaded business cycle while making all sorts of monetary mischief nearly impossible. A gold standard is not only economically superior...

Summary Italian banks have done worse that European banks. Italian banks outperformed Germany banks from end of H1 12 through H1 15. US banks and financials more broadly have outperformed Europe. Italian banks were struggling before the UK referendum.  The result drove down interest rate, which keeps margins under pressure. The prospects of weaker growth as a result of Brexit means that demand for credit...

  Landfall of a “Told You So” Moment… Late last year and early this year, we wrote extensively about the problems we thought were coming down the pike for European banks. Very little attention was paid to the topic at the time, but we felt it was a typical example of a “gray swan” – a problem everybody knows about on some level, but naively thinks won’t erupt if only it is studiously ignored. This actually worked for a...

Swiss Franc Click to enlarge. Brexit Amid a better if not strong risk appetite, sterling has rallied two cents from yesterday’s lows near $1.28 to poke through the $1.30 level in the European morning. Click to enlarge. United Kingdom It was helped by an industrial production report that was better than expected. Industrial and manufacturing output fell 0.5% in May. This was around half of the expected decline...

07.07.2016 09:15  – FSO, Prices (0353-1606-90) Swiss Consumer Price Index in June 2016 Consumer prices increase by 0.1% Neuchâtel, 07.07.2016 (FSO) – The Swiss Consumer Price Index (CPI) increased by 0.1% in June 2016 compared with the previous month, reaching 100.7 points (December 2015=100). Inflation was -0.4% in comparison with the same month in the previous year. These are the findings of the Federal Statistical...

Summary Don’t be fooled, the yuan has fallen more against its basket that against the dollar this year. It is not clear what China means by stable. Market forces appear to be moving in the same direction as officials wish. Here are two Great Graphics that portray two time series: the dollar-yuan exchange rate and the yuan against a trade-weighted basket.  The first chart comes from a highly reputable...

Forex has been the big banks secret gold mine, supporting their other losing operations (like normal banking business, lending, etc.).  To a large extent this has been unraveling, and this SIBOR lawsuit is another attack on their risk free profit center (FX).  Read the entire lawsuit released by Elite E Services here in full.  More than 50 unknown defendants and about 20 known FX banks are named in the case, submitted...

Investec Switzerland. Swiss stocks, dislodged in 2015 as a haven from European volatility, have seen the status restored following Brexit — so much that some investors are balking at valuations. After trailing shares from Germany to France and Italy for most the past year, the Swiss Market Index is finding a new appeal in the fallout of the U.K. vote to leave the European Union. Investors buying up...

Swiss Franc Once again the SNB was heavily intervening and the pound fell against both euro and CHF.Thanks to SNB interventions, the Euro did not even dip under 1.08. Click to enlarge. Brexit What a difference a few days make.  Many saw last week’s equity market advance a sign that Brexit anxiety was overdone. However, quarter-end position adjustments appear to have been misread.  Equity markets are falling now....

Summary The IMF identified three banks that posted the most significant systemic risks. It has been overshadowed by new pressure on Italy’s banks, and. Three UK commercial real estate funds have been frozen to prevent redemptions. The conventional narrative has it backward. It worries about the threats to stability emanating from the periphery in Europe.  Policymakers, investors, and economists still refer to...