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rffrydr
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 Posted: Thu Jun 17, 2010 1:15 pm Post subject: |
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Marc Chandler
SNB and BOJ
6/17/2010 2:36 PM EDT
| Quote: | The Swiss National Bank reivsed up its growth and inflation forecasts and essentially ended the QE under which it intervened heavily in the fx market.
The last major centrla bank to intervene heavily wsa the BOJ in late 03 and eearly 04. The yen strengthened through the intervention period. As soon as the intervention ended the yen weakened.
Could this same pattern paly out again with the Swiss franc ? The dollar-franc performance may be dictated by the general dollar direction. So look at the euro-franc cross rate. It so far it is holding above the record low made on June 9th. There are some bullish divergences being to appear on the short-term momenutm studies. Initial resistance is near CHF1.38 (currently CHF1.3770). A move above CHF1.3850 would likely signal a move toward CHF1.40. Above CHF1.4040 would confirm a double bottom and project toward CHF1.43. |
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rffrydr
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| Posted: Wed Jun 09, 2010 7:14 am Post subject: |
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These guys don't get it. Switzerland only exists at the behest of europe:
| Quote: | In a broader context, this amounts to around 133% of nominal private GDP consumption or – at SFr30,500 for each of the Confederation’s 4.53 million workers – equal to Sfr46.60 per hour – around 136% of their median labour income for the period – equivalent, therefore, to hiring an extra 6.2 million souls (not easy to achieve in a nation of only some 7.5 million).
So far, by spending this almost unimaginable sum, the SNB managed to limit the Franc’s appreciation to some 3.5% vis-vis the euro, versus the 12.5% gain made by the US dollar – i.e., it spared the currency an extra move of ~9%.
NH
So, even assuming that ALL Swiss exports have a perfectly elastic demand curve and that there are NO gains to be had from the commensurately cheaper imports foregone (and, hence, from a lower cost base for a small, specialised, resource-poor country), we might reckon that, with Swiss goods exports to the Eurozone running at around Sfr35 billion for the period (together with perhaps another Sfr12 billion in service exports) – roughly 55% of the nation’s total – he might at best have staved off Sfr4.2 billion in lost export revenues (9% of SFr47 billion) – for each single franc of which lavish act of sectional corporate welfare no less than SFr32.80 have been printed up and passed out, with all the risks this entails for future monetary stability. |
More positive gold carry, higher gold. It's still about deflation.
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rffrydr
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| Posted: Wed May 26, 2010 11:39 pm Post subject: |
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This one's for you, Diesel:
| Quote: | | Finally, the recent crisis has triggered a lot of safe haven flows into the Swiss Franc, as well as Hedge Fund attempts to fight the SNB's extraordinary FX intervention. As money has flowed out of Europe and into the CHF, it has driven Swiss implied interest rates sharply negative in the FX Forward market, with the 1M rate trading as low as MINUS 1.3% (see first chart below)! This is even more extreme than the market stresses in Q4-2008. I bet a few players are looking at their carry bill and scratching their heads. Interestingly, this is a gift for the Gold bugs who can now get long of Gold and get POSITIVE CARRY! We are not quite up to the panicked levels of November 2008 when Citigroup was imploded, but we are pretty close (second chart). |
Proving once again, Gold and Deflation are secret lovers:
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rffrydr
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rffrydr
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| Posted: Mon Apr 19, 2010 10:13 am Post subject: |
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One more 'killer app." Switzerland would be one big shoe to drop. That these banks cannot practicably be nationalized maybe the (de)stabilizer necessary.
The Swiss Miss: How the Internet Killed Switzerland
By Roger Arnold
RealMoney Contributor
4/16/2010 3:30 PM EDT
The current clash between Switzerland and the U.S. over bank secrecy has been building for two decades. The headline at the moment is that Union Bank of Switzerland (UBS - commentary - Trade Now) -- known on these shores simply as UBS -- will have to disclose to U.S. tax authorities the names of some of its U.S. clients. But that's not the end of the story, it's just the end of the beginning. Switzerland and Swiss banking are set to be forever changed.
Let me explain.
There has traditionally been an unwritten agreement between the U.S. and Swiss governments over the marketing of Swiss financial products to U.S. citizens -- namely, as long as Swiss financial firms do not market their products in the U.S., the U.S. wouldn't expend effort to enforce U.S. tax law.
This was politically, economically, legally and socially expedient prior to the commercialization of the Internet and the ability of offshore financial firms, Swiss and others, to market their products globally to anyone with an Internet connection.
I'll come back to this in a moment, but first let's review the scheme through which Swiss financial firms and U.S. citizens interacted during the age of the quid pro quo and prior to the commercialization of the Web.
The traditional way in which foreign individuals, not companies, used the Swiss financial industry in pursuit of privacy was through the Swiss insurance companies, not directly through Swiss bank accounts. A U.S. investor could buy an insurance annuity in his name through a Swiss insurance company that paid a guaranteed nominal return.
This account was required by U.S. law to be reported to U.S. authorities. The account holder could then select an "independent" Swiss law firm to "manage" that account. This "manager" would then direct that a loan of equal size to the original annuity purchase be made. The loan funds being "borrowed" out of the insurance annuity would carry an accrued rate equal to the annuity's payment rate, so you could say the money effectively was washed.
At this stage the "borrowed" funds were unfettered by U.S. tax-reporting requirements, as long as they were not delivered to the annuity owner. The Swiss adviser would direct that the "borrowed" funds be deposited in an account at an affiliated or subsidiary Swiss bank of the insurance company, to be managed from there for the benefit of the end account owner.
The receiving bank would hold the account in "street name" for the insurance company and would invest the proceeds as the Swiss adviser dictated. The proceeds could then be anonymously invested in any market around the world. Think about that.
This is where it gets a little dicey.
Technically, there was supposed to be no interaction between the adviser/manager and the end account holder for the account to qualify as a non-reportable account to U.S. authorities. In reality, the end account holder would instruct the adviser as to how to manage the account.
Those communications, however, needed to be handled delicately, as the U.S. authorities regularly monitored mail between Swiss firms and U.S. individuals for any indication of foul play. (The introduction of the Internet rendered mail monitoring moot.)
The question now is, can the Swiss contain the damage, and can Swiss banking regain the trust of its customers?
Swiss banking can be divided into two sections, domestic and international. International banking operations are concentrated in two dominant players, UBS and Credit Suisse (CS - commentary - Trade Now).
Between these two, foreign operations -- accounts held for foreigners -- and the income derived from them accounts for about 70% of their business, while 80% of deposits are held in foreign currencies. As well, these two banks account for about 35% of all deposits in offshore accounts globally. Swiss bank secrecy is one of the underpinnings for that.
If there were a run on these two banks as foreign depositors withdrew funds, it would be very difficult and probably impossible to prevent their insolvency and nationalization. This in turn would cause further erosion of bank secrecy and set the stage for more withdrawals and a collapse of Swiss banking in general.
I do not believe that will happen, but it is not implausible, and understanding that their capital structures leave them vulnerable is important.
The principal issue is for the Swiss government (along with UBS and Credit Suisse) to coordinate quickly and definitively which foreign depositors to offer up to their corresponding tax authorities in return for those authorities agreeing to not proceed further. The longer the Swiss drag this out, the more likely it is that their foreign governments will encroach further into forcing the Swiss banks to open their books, and the system will collapse.
The goal is for the Swiss government, along with UBS and Credit Suisse, to go back to the old way of doing business -- 1) substantially increased minimum bank accounts for individuals, and 2) a preference for accounts not held in the name of an individual.
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rffrydr
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| Posted: Tue Feb 09, 2010 10:08 am Post subject: |
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| Quote: | | The magnitude of the moves in EUR/CHF, meanwhile, pale in comparison. But with a central bank as erratic as the SNB pulling the levers, trading EUR/CHF is a bit like swimming with Jaws. First they defend 1.51 for 9 months....before pulling the bid and seeing the cross trade down below 1.47. While they've hit the market a few times since, their behaviour this morning was not suitable for young viewers. In a market trading 1.47, they put a 1.4905 bid into EBS; panic predictably ensued, stops were run....and here we are trading back below 1.4700 again. Someone in Zurich must love the smell of napalm in the morning.... |
Macroman
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rffrydr
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rffrydr
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rffrydr
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| Posted: Thu Dec 10, 2009 11:24 am Post subject: |
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Good ol' Moody's still plugging away: downgrades swiss banking system.
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HenryTo
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rffrydr
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rffrydr
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| Posted: Tue Nov 17, 2009 9:17 am Post subject: |
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The witch (jew?) hunt is showing results: the trend in socking it to our un-american americans continues:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aR3OpLPlJxh8&pos=8
Are not the "filthy rich" in the same class? Nardelli they are coming for you.
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rffrydr
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| Posted: Fri Nov 13, 2009 8:18 am Post subject: |
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FT Report on Private Banking
http://www.ft.com/reports/private-banking-2009
The wealthy are down about 20%...not bad, all things considered.
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rffrydr
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rffrydr
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| Posted: Sun Sep 27, 2009 2:57 pm Post subject: |
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Wow! Total capitulation.
http://www.google.com/hostednews/ap/article/ALeqM5iRnW_PP9RtYpGgoc5KZiwY84hjrQD9AVK9DG0
Just last week Switzerland taken off the "grey list."
Don't think Obama will get much in the way of european good-will from here. Maybe a slap to Super Sarko, biggest critic of Swiss banking but the IRS touch will give many to pause.
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