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Swiss Franc Speculators were net short CHF in January 2015, shortly before the end of the peg, with 26.4K contracts. Then again in December 2015, when they expected a Fed rate hike, with 25.5K contracts. The biggest short CHF, however, happened in June 2007, when speculators were net short 80K contracts. Shortly after, the U.S. subprime crisis started. The carry trade against CHF collapsed. The...

Summary: Light economic calendar in the week ahead, but anticipation of US tax reform may underpin dollar and equities. European politics are in flux (France, Italy, Greece) and this may see spreads widen over Germany. Russia’s outlook was upgraded by Moody’s before the weekend, and China has announced no coal imports this year from North Korea. Brazil is expected to cut Selic by 75 bps. The week ahead is...

Stock Markets EM FX ended last week on a soft note, as some risk off sentiment crept back into the markets. The dollar gained broadly on Friday despite lower US rates as bonds rallied, the yen gained and equities sold off. Markit PMI for February Tuesday and FOMC minutes Wednesday could give the markets some further clues regarding Fed policy. We believe markets are underestimating the Fed’s capacity to tighten...

The Producer Price Index (PPI) or officially named "Producer and Import Price Index" describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015...

Summary: The system of checks and balances is working. Populism-nationalism is not sweeping across the world. Even in US and UK, populist agenda was appropriated by the main-center right party. The attack on the body politics is activating the immune system in ways that the consensus narrative does not recognize. The high level of anxiety among investors is masked by the rise of equities. As political issues...

Summary Head of Samsung Group Jay Y. Lee was formally arrested on allegations of bribery, perjury, and embezzlement. The assassination of Kim Jong Un’s half-brother suggests the political situation in North Korea may be heating up. The Polish central bank is tilting more hawkish. The Turkish central bank said it will allow domestic companies to use liras to repay export loans. Nigerian President Buhari may...

Gold is undervalued according to a record number of fund managers Last time gold was considered undervalued, the price surged BAML surveyed 175 money managers with $543 billion in assets under management 34% of investors believe protectionism is the biggest threat to markets Gold viewed as the best protectionist investment by a third of investors Gold in USD – 10 Years - Click to enlarge For the third time in a...

Right now there are two conventional propositions behind the “reflation” trade, and in many ways both are highly related if not fully intertwined. The first is that interest rates have nowhere to go but up. The Fed is raising rates again and seems more confident in doing more this year than it wanted to last year. With nominal rates already rising in the last half of 2016, and with more (surveyed) optimism than even...

Swiss Franc EUR/CHF - Euro Swiss Franc, February 13(see more posts on EUR/CHF, ) - Click to enlarge GBP/CHF Pound to Swiss Franc exchange rates provide strong beginning to the week Pound to Swiss Franc exchange rates have enjoyed a strong boost to begin the week, after what had been a disheartening end to the week for many Franc buyers. The Pound has regularly suffered on Friday’s since the Referendum, with...

On Friday, after it emerged that as part of Marine Le Pen’s strategic vision for France, should she win, is a return to the French franc as well as redenomination of some €1.7 billion in French (non-international law) bonds, both rating agencies and economists sounded the alarm, warning it would “amount to the largest sovereign default on record, nearly 10 times larger than the €200bn Greek debt restructuring in 2012,...