Thursday, January 15, 2015

Swiss National Bank moves to Ditch Euro Cap- Sending Shockwaves?

What's going on here? This seems to be a surprise? Of course, who really knows?
Personally, I have a bit of a problem believing that any bank would make such a surprise move.

http://ei.marketwatch.com//Multimedia/2014/11/17/Photos/ZH/MW-CZ430_swiss__20141117160646_ZH.jpg?uuid=b40b2b78-6e9d-11e4-a36b-061242be7836
The Swiss National Bank rocks the Market?

The Swiss National Bank shocked investors by ditching its currency ceiling against the euro and slashing its deposit rate to negative 0.75%.

Check out the original url on this breaking news:   http://www.marketwatch.com/story/us-stocks-rebound-on-tap-as-futures-surge-with-big-bank-earnings-ahead-2015-01-15?dist=beforebell

  US stocks were all set for a rebound, but, now?

 Swiss franc rockets after SNB ditches euro cap

ZURICH--The Swiss franc rocketed beyond parity with the euro on Thursday after Switzerland's central bank stunned markets by scrapping its long-standing cap on the strength of the currency.
The franc surged more than 20%, ending more than three years of calm in Swiss foreign exchange markets. The Swiss National Bank has intervened in markets since September 2011 to prevent the franc climbing too high, acquiring billions of euros in an effort to stop the common currency dropping below 1.20 to the franc.
In the aftermath of the SNB's shock move, the euro plunged as low as CHF0.93.
"This is a very unexpected development," said Vasileios Gkionakis, currency strategist at UniCredit. "This is a clear and significant divergence from the rhetoric so far of 'enforcing the floor with utmost determination.' Medium term I am worrying about the implications on SNB's credibility...the change in language was very abrupt."

Was the move by the Swiss bank an attack on the Euro? While assisting the US dollar?
 The impact reverberated throughout currencies markets, sending the euro plunging against the dollar to $1.1579, its lowest point November 2003. The dollar also shot higher more broadly, with sterling adding a cent to $1.53.
 Swiss central-bank shocker: It’s a ‘tsunami’; it’s a ‘bombshell’

• “With ECB easing coming up, and worries over both Russia and Greece looming, we cannot rule out that the SNB will have to do more than today’s rate cuts to curb the strength of a floating Swissie.” — Danske Bank analysts
• “The timing of the move is a surprise, coming just a month after the last change in interest rates. But it could well be that the SNB has chosen to front-run the likely move to QE from the ECB, whether than happens next week or the subsequent meeting in March. ... Clearly, the SNB felt that they were giving with one hand and taking away with the other by moving rates further into negative territory. But at this point in time, the SNB has broken a dam wall and the waters have flooded out. It will take time to see what lies beneath.” — Simon Smith, chief economist at FxPro
“If sustained, the impact of the decision on Switzerland’s economy could be significant for a few years. Exporters will suffer lower price competitiveness and might move more production outside the country. Tourism and retail trade are also likely to suffer. A period of strong deflation is a serious risk. However, the Swiss economy is used to occasional periods of overvaluation and should ultimately be able to cope.” — Christian Schulz, senior economist at Berenberg
 Any help in understanding this would be greatly appreciated- I know there are very well informed persons lurking about- What do you think?

UPDATES:

#1-Swiss mess could make oil plunge seem like minor hiccup

One day, it’s gold. The next, it’s equities. Most days, it’s crude. On Wednesday, it was copper. On Thursday it was the Swiss franc and Swiss stocks. And the move in those two makes those others look like minor-league hiccups.
While you were sleeping, all hell broke loose in Switzerland, as the central bank ditched its currency cap against the euro after four years and slashed interest rates to negative 0.75%. The Swiss franc is rallying wildly, while the Swiss stock market is cratering
 #2-Why the currency wars are likely to hit the stock market

 
Scutify Chart(s) of the Day: Amazing how similar the 1-hour, 1-quarter and 1-year charts of the U.S. dollar versus the Swiss franc are. No so for the 1-day chart, though. Anyway, this is all about the currency wars and these types of dislocations in a currency market are likely to have some huge ramifications for some companies’ earnings, for some of the large casino banks, for hedge funds and for economies at large.
Governments of developed and developing countries have been manipulating their fiat currencies for my whole lifetime and I don’t expect it to stop any time soon. The entire Swiss GDP is about $650 billion, about equal to the market cap of Apple. So it isn’t like the Swiss franc is ever going to replace the U.S. dollar as the world’s reserve currency. Most currency war outcomes still favor the U.S. dollar for the next few years. I still think after we get some temporary fear built into the stock markets from these currency dislocations, we’re likely right back into the bubble-blowing bull market we’ve been successfully riding for the last five or six years.
And I love this quote!
“No one talks about the birth and death rates of American business because Wall Street and the White House, no matter which party occupies the latter, are two gigantic institutions of persuasion. The White House needs to keep you in the game because their political party needs your vote. Wall Street needs the stock market to boom, even if that boom is fueled by illusion. So both tell us, ‘The economy is coming back.’ — Jim Clifton, chairman and CEO of Gallup,

16 comments:

  1. Some people get slandered as conspiracy theorists because they believe in a group of wealthy scum (illuminati) who start our wars, run our evil banks, and control our governments.

    Their goal of a one world government (New World Order) includes one world currency.
    For those who consider such things possible, the need to destroy the existing currencies first is an obvious part of the plan. The US went into the graveyard of empires in Afghanistan, and now its "fight' with Russia is sinking the US dollar. The US buck is a dead man walking. On again off again frienemy China is also supposedly hurting the US dollar. The natural flight of capital from failing currencies (US buck) to safer zones (Euro) is happening. The need to attack the Euro is also part of this plan as all must be destabilized to 'save the world' with the new NWO currency. This Swiss move appears to be a shot against the Euro.

    ReplyDelete
    Replies
    1. Hi Anonymous

      "The natural flight of capital from failing currencies (US buck) to safer zones (Euro) is happening."

      You've got this bit switched around

      The flight of capital has been to the US dollar as of late. Many other currencies are way down. The Euro. And the Canadian dollar.
      The US dollars is stronger now then in the recent past

      http://fortune.com/2014/09/25/will-the-u-s-dollars-rise-last/

      But, I agree with this part
      "The need to attack the Euro is also part of this plan as all must be destabilized to 'save the world' with the new NWO currency. This Swiss move appears to be a shot against the Euro"

      This does look like a shot at the Euro, definitely

      Delete
  2. I don't know if or how relevant this is...but I remember reading last year on Corbett or some other blog that the Swiss had over-extended themselves... buying up US treasury bonds...perhaps it was Paul Craig Roberts...in any event this analyst was wondering how a small economy like Switzerland could afford to take the load of all these treasury bonds off the hands of the US...at a time when the US needed someone to take them off their hands.

    As I've said before, it's all a shell game to me and so I don't try too hard to figure out international finance or banksterism.

    gc

    ReplyDelete
    Replies
    1. Banks are a shell game, just like war, medicine, politics, media and anything big that has an impact on us. I'm sure you wouldn't advocate not trying to understand those things too.
      One step forward, two back, keep on trying till the day we die. What other choice do we have.
      Cash gives everyone some degree of freedom. If the new currency is 100% digital (debit card with biometrics) then we will all be under the thumb of whoever is in control. Access denied for speaking about taboo subjects.....just a click away.

      Delete
    2. GC- " the Swiss had over-extended themselves... buying up US treasury bonds"

      Hm, I will have to look into that one. I had not heard that

      Delete
    3. AnonymousJanuary 15, 2015 at 12:02 PM

      Cash gives everyone some degree of freedom. If the new currency is 100% digital (debit card with biometrics) then we will all be under the thumb of whoever is in control. Access denied for speaking about taboo subjects.....just a click away.

      Which is why I keep on using cash....

      Delete
  3. What to make of the Belgium arms dealer who turned himself in yesterday; now raids today? Details on who this arms dealer is scarce?

    ReplyDelete
    Replies
    1. Didn't read that one? Connected? Distraction? Of course arms dealers go hand in hand with bankers, so....

      Delete
    2. Allegedly sold the weapons to cooly. Belgium 5 he big treasury buyer and recent other attacks on Israeli interests

      Delete
  4. linked comment:
    The mistake made by the Save Our Swiss Gold campaign was that they tried to explain to people that huge mistakes had already been made and that pain was on the way no matter what.



    The SNB said going to gold would cause the peg to fail, a huge sprike in the SNB a crashed stock market and huge instability. They won the day threatening the Swiss people with what was already garaunteed to happen.



    And from looking at English Swiss media sites, no one seems to even realize whats been done to them. They got all the bad consequences they would have gotten with gold, but no gold.

    http://www.zerohedge.com/news/2015-01-15/moscow-or-geneva?page=1

    now moving on to the Swiss bank secrecy litigation and latest credit suisse settlement...

    Laggard is making quite a name for herself.: a month ago she said she could see the IMF headquartered in China and today she is shocked the SNB didn't call her about the peg move...

    ReplyDelete
    Replies
    1. anonymous

      " They got all the bad consequences they would have gotten with gold, but no gold."

      Oh, yah, that is clear even from the piece I posted
      It's like the Swiss are destroying their own economy, but what the hell for?
      From above:

      "“If sustained, the impact of the decision on Switzerland’s economy could be significant for a few years. Exporters will suffer lower price competitiveness and might move more production outside the country. Tourism and retail trade are also likely to suffer. A period of strong deflation is a serious risk"

      I'm not getting this move other then to bolster the US dollar, make things worse for Europe and the elites turn Switzerland in a 3rd world nation?

      Delete
  5. I am adding two more news stories to the post concerning this incident
    gold is up, but the swiss don't have any gold?

    ReplyDelete
  6. Sorry, I made a mistake and confused Switzerland with Belgium. He're the link:

    http://www.zerohedge.com/news/2014-05-21/who-new-secret-buyer-us-debt

    ReplyDelete
  7. One has to wonder at who is propping up the stock market this from yahoo
    https://au.finance.yahoo.com/intlindices?e=europe

    and here for usa

    https://au.finance.yahoo.com/usindices?e=dow_jones

    You get the feeling that some party people are sitting on the trading floor with there favorite high and singing "Happy days are here again" and voila all is well in the world my friend, that is until the muck hits the mistral, then it will "it' not my fauly" or wow never saw that coming" or "the market is never supposed to go down,,,,is it? "

    Oh well reality will catch up ..eventually.

    Meantime get your money out of the bank and get tradeable goods you can barter with.

    ReplyDelete
    Replies
    1. "Meantime get your money out of the bank and get tradeable goods you can barter with"

      Good advice Gordon, I second that!

      Delete

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