SNB & CHF

Iranian elections have supposedly put a very nice ‘moderate’ spin on Iranian politics in parliamentary ranks, and more importantly, Assembly of Experts composition. While it would be churlish to deny, it represents a significant step forward for President Rouhani’s agenda to 2017, albeit a number of vital caveats remain for how real any political shift actually is. We’ll do the Parliament first, and then move onto the Assembly second. With a ‘grand finale’ of what it means for Iranian...

Deflation is portrayed as the great economic scourge.  It exacerbates debt servicing costs and encourages consumers to defer purchases.  Central banks in Japan and Europe have responded with aggressive, unorthodox measures, often combining asset purchase programs with negative interest rates.   However, deflation is not very deep, and the measurement is not very precise.  In recent years, it has become common for many central banks to define their mandate of price stability as being...

The angst that characterized the first several weeks of the year continues to dissipate.  Major equity markets are extending their two-week recovery into a third week. Immediate concerns about the US falling into a recession have eased.  The market have withstood some downward pressure on the Chinese yuan.  Late yesterday Moody's cut its outlook for China's credit rating to negative from stable, and this did not cause much of a ripple in the capital markets.  In fact, the Shanghai and...

Zero Hedge published an article on Canadian Bullion Services (CBS) last week. Other sites ran similar articles. The common thread through these articles, and in the user comments section, is that CBS is committing criminal fraud. Or, if not, then it’s a conspiracy by the Canadian government to confiscate gold. Terms like fractional reserve and re-hypothecation were dusted off for the occasion. I don’t know anything about this company other than what I read that day. I am writing today to...

Many economists argue that the key challenge is that of insufficient aggregate demand.  That is why world growth is slow.  Hobbled with debt, households have pulled back.  Business investment is weak.  Government dissavings has been offset by household and business savings.  The solution offered by some economists is a large public investment program.  The G20 encouraged members not to rely on monetary policy, which even some central bankers are concerned, has reached a point of...

During a period in which the zero bound no longer is the floor of interest rates, and many central banks continue to ease policy,  we have been watching gold a bit closer.   In early January, we noted that the technical pattern warned of breakout.  Our first objective was $1110-$1135.  In early February, we updated our view with gold trading near $1150. The charts still looked constructive; we suggested a new target near $1200.   The increasingly precious metal rose to almost $1263.5o on...

It could have been a disaster.  US faltered yesterday, with the S&P 500 again struggling in the 1945-1950 area, and China's PMIs were weaker than expected.  However,  after initial weakness Asian shares turned higher.  The nearly 0.9% rise allowed the MSCI Asia Pacific Index to close at its best level in five sessions. European bourses are firmer, led by the 1.2% rise in the German DAX.    The Dow Jones Stoxx 600 is up 0.6% near midway through the session.  Consumer discretionary,...

01.03.2016 09:15  - FSO, Economic Surveys (0353-1602-20) Retail trade turnover in January 2016 Swiss retail trade turnover falls by 1.3% Neuchâtel, 01.03.2016 (FSO) – Turnover in the retail sector fell by 1.3% in nominal terms in January 2016 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.5% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO). Real turnover in the retail sector also adjusted for sales...

01.03.2016 09:15  – FSO, Economic Surveys (0353-1602-20) Retail trade turnover in January 2016 Swiss retail trade turnover falls by 1.3% in nominal term, +0.2% yoy in retail Neuchâtel, 01.03.2016 (FSO) – Turnover in the retail sector fell by 1.3% in nominal terms in January 2016 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.5% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO). Real turnover in the...

In a recent article by Kessler Companies (hat tip Zerohedge) they correctly point out that inflation, as measured by the consumer price index, have a tendency to accelerate as the US economy moves into a recession. Contrary to popular belief, the beginning of a recession is not deflationary but the exact opposite. As can be seen from the chart, consumer prices do indeed move higher into recessions as represented by the shaded areas. Why? The most obvious explanation is simply that the...