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One of the most important problems in economics is: How do we know if an enterprise is creating or destroying wealth? The line between the two is objective, black and white. It should be clear that if business managers can’t tell the difference between a wealth-creating or wealth-destroying activity, then our whole society will be miserably poor. Any manager will tell you that it’s easy. Just look at the profit and loss...

Swiss Franc The Euro has fallen by 0.08% at 1.1229 EUR/CHF and USD/CHF, January 07(see more posts on EUR/CHF, USD/CHF, ) - Click to enlarge FX Rates Overview: The combination of robust US jobs and wage growth, more comforting words from Powell and a strong rally US stocks before the weekend helped lift Asian markets today and underpinned risk-taking appetites. However, renewed protests in France (and Hungary)...

The S&P 500 fell more than 12% in a few weeks. The 10-year Treasury yield fell nearly 40 bp. There were cries that the sky was falling. A recession is imminent, we are warned by prognosticators. The Fed went ahead and raised interest rates on March 21, 2018, and the S&P 500 proceeded to gap lower the next day and continued to sell-off the following day. Investors did not like the unanimous decision. Yet far from...

It’s not yet clear that the stock market swoon is predictive or merely a panic attack triggered by a loss of meds. We contrarians can’t help it: when the herd is bullish, we start looking for a reversal. When the herd turns bearish, we also start looking for a reversal. So now that the herd is skittishly bearish, anticipating a recession, contrarians start wondering if a most hated rally is in the offing, one that would...

© Ifeelstock | Dreamstime.com In 2016, Switzerland’s government decided to tighten the VAT exemption on imported purchases, a move that affects most online orders from foreign retailers. The new rules took effect on 1 January 2019 – they were originally planned for 1 January 2018 but systems and processes were not ready. Until the beginning of this year, any order attracting less than CHF 5 francs of VAT was allowed...

China’s National Bureau of Statistics (NBS) reports that the country’s official manufacturing PMI in December 2018 dropped below 50 for the first time since the summer of 2016. Many if not most associate a number in the 40’s with contraction. While that may or not be the case, what’s more important is the quite well-established direction. Coming in at 49.4 in December, it’s down in a straight line from 51.3 in August....

Weber joined UBS as chairman following a stint as head of the German central bank. The European Union should stop dictating terms to Switzerland and start negotiating an acceptable compromise if it wants to find agreement on future ties, says UBS chairman Axel Weber. In an interview with the Tages-Anzeiger newspaper, Weber said the current EU demands are unlikely to be approved by the Swiss people should they be put to...

Recency bias is one thing. Back in late 2006/early 2007 when the eurodollar futures curve inverted, for example, it was a textbook case of mass delusion. All the schoolbooks and Economics classes had said that it couldn’t happen; not that it wasn’t likely, it wasn’t even a possibility. A full-scale financial meltdown was at the time literally inconceivable in orthodox thinking. A global panic, some sort of unserious...

The New Year is off to an auspicious start. The Japanese yen, the third most actively traded currency behind the dollar and euro, got caught in a vortex of a retail short squeeze, algos, and who knows what else. The US dollar plunged from around JPY109 to a slightly below JPY105 in a few minutes a little more than an hour after US markets closed yesterday.   Japanese markets were still closed for the holiday, which may...

Swiss men are happier than women on the financial front. One Swiss in two is satisfied with the state of their financial situation, according to a study. Just under a third (28%) expect their finances to improve in 2019. The French-speaking population is feeling much more positive than last year. In 2018, one fifth of French-speaking Switzerland still believed that their financial situation was deteriorating, according...