Swiss Franc Hits All Time High Against Dollar After SNB Books Profit From UBS Bad Bank, Warns On Inflation

Tyler Durden's picture

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asdasmos's picture

Swiss Franc Bitchez

SWRichmond's picture

FXF Bitches.  I also hold a small amount of CHF.  The lady at the bank asked me if I was going on vacation.  I just smiled.

Harlequin001's picture

well, I would never have believed this...

Cognitive Dissonance's picture

we present its obituary, translated into Swissish.

I say old man, but isn't that actually Swoooish?

Image is of Ben and Timmy taking the dollar for a ride. Timmy is on top....of course.

swissaustrian's picture

The CHF hits all time highs for several months now - this headline is a bit sensationalistic

Expect a further price move like 1971-1979 and 1985-1988.

Itsalie's picture

Swiss engineering exports to Asia were competitive up to 2007, then hit a wallwhen the franc abruptly gained and USD/CHF traded below parity. They recovered during the crisis, now both Swiss and German exports are hitting a wall again. Last I check swiss exports shrank 5% in March, mom. As usual, things in forex market dance to chairsatan's tune, so maybe another few more centimes to drop. DXY 70 here we come :) and gas to $5 as promised at the FOMC. "Not much I can do for you, sorry".

swissaustrian's picture

As you can see from the statistics here http://www.bfs.admin.ch/bfs/portal/fr/index/themen/06/05/blank/key/ausfuhr/herkunftslaender.htmlAsia and the U.S. markets are not the main contributors to swiss exports. So a weak dollar is not the main concern here, its the EUR. The EUR/CHF-rate is somewhat stabilized since the ecb rate hike anouncement.

A lot of the exports to Asia are luxury goods (especially watches). We also have herds of Japanese and Chinese people buying this stuff during their trips to switzerland due to importing restrictions / tarrifs in their home countries.

To make a long story short: The USD is not such a big worry for Swiss exports in general.

Urban Redneck's picture

The data for today's press releases is on the SNB homepage

http://www.snb.ch/

Dick Darlington's picture

OT: Very bad news from Spain. Unemployment jumped to record 21,3%. Also Retail sales reported today collapsed almost 9% YoY in March. CPI hit almost 4%. I expect the officials and the banking cartel to increase the positive spin abt Spain to keep up the "CONfidence". Only a matter of time when Spain will be asking for a handout from the German taxpayer...

http://www.washingtonpost.com/business/spanish-unemployment-rate-rises-one-full-point-to-eurozone-high-of-213-percent/2011/04/29/AFP9fNBF_story.html

Turtlelord's picture

It's all good....

(When you're swiss based)

Apart, that is,  from wiping any return on my USD denominated investments which despite rising 30+% in USD they're still slightly in the red in CHF terms....

 

swissaustrian's picture

Did´nt you hedge your currency risk?

I also started a bit too late and began hedging in september 2010. But i still would do it now if i had not done before. Fx-hedging Cost me about 1,5% of my total USD-holdings.

Snidley Whipsnae's picture

"Did´nt you hedge your currency risk?"

Yes, with PMs... the greatest hedge against financially ignorant and profligate pols, and central banksters that do nothing but push the print button...

swissaustrian's picture

Well, i  have to account in CHF.

Therefore PM-prices in CHF (not USD) matter to me. I bought Fx-hedges for my pm holdings too.

Non-hedged gold did´nt make a new in CHF since 1 year!

 

 

Turtlelord's picture

Did´nt you hedge your currency risk?

I guess that makes me look like a bit of a fool and in a way I may have been.

On the other hand I do hold physical PM's (UBS is so easy to deal with as long as you use ubs-issued bars) to balance things out. My goal is not to make a killing (although I'd welcome it if it came by, like with Ag) but rather to keep things in balance and hopefully growing a bit.

 

The truth is that other than shorting everyone else's currency, at the moment, there isn't a hell of a lot of options to deploy one's CHF.

rokakoma's picture

Agreed:

S&P on:
3rd Jan: 1271
28th Apr: 1360

DXY on:
3rd Jan: 79
28th Apr: 73

S&P * DXY on:
3rd Jan: 1271 * 79 = 100409
28th Apr: 1360 * 73 = 99280

YTD the S&P is actually down more than 1% if you look at it as a foreigner. The S&PDXY graph is basically FLAT all the year.

After all, I just simply do not understand how can european stocks be up on a stronger euro. But the US is definiately doing ZERO market growth in terms of an average foreign currency basket. (DXY) And since the S&P index is capitalization weighted, we can say, US companies worth not a penny more, than at the begining of the year. Meanwhile they cost more in dollars.

What, if not this, is called inflation? Stocks up 7% YTD while they worth NO MORE? 7% inflation in 4 months! That's yearly 22.5%

Snidley Whipsnae's picture

But Chairistan tells us that inflation is gdp growth. Meanwhile this am after London opened PMs are rising... again...

Blythe's minions... always late to work on Friday morns...

Urban Redneck's picture

1) Ben Prints Paper 24/7 and spreads it amongst his friends

2) Many recipients of Ben's USD paper run as fast as they can to Jean Claude and buy his EUR paper

3) Proud new owners of EUR paper want to make a profit on their otherwise worthless fiat, and since they don't trust Greek bonds yielding 20% they buy EUR stocks

Voila - rising EUR & rising EUR stocks

rokakoma's picture

Probably you are right, the problem is, that's not sustainable, since it's based (the eur stock buying) on nothing.

Sooner or later european stock must collapse, while US stocks can still go up. The money will have no place to go, and on that day comes the big dollar collapse with all the foreign stock market collapses, at the same time commodities and us stocks will skyrocket.

The tipping point will be, when ppl realize buying european stocks is not the same than buying commodities. 

johny2's picture

Silver is going over $50 today with DXY under 70 in a very short time...

AUD's picture

Wouldn't a healthy 'profit' on toxic assets indicate CHF denominated credit spreads tightening? Could explain the 'strength' of the CHF.

Turtlelord's picture

Could explain the 'strength' of the CHF

As I see it the strength lies in several factors. Here are a few and I'm sure more knowledgeable folk could add to this:

  1. SNB has more extensive Gold reserves than equivalent organisations.
  2. Banks are regulated somewhat more tightly than elsewhere, hence the term "Swiss Finish" to the various Basel agreements.
  3. Extremely stable democracy and rule of law.
  4. Very healthy state tax income stream. (Zug, where I am, stands to get an extra $600MM in taxes just out of Glencore going public instead of staying private).
  5. Swiss "niches" (pharma, choccies, discreet banking) withstand cycles quite well.
SoNH80's picture

Switzerland is the ultimate safe haven.  I've been there, I was mightily impressed that all homes and public buildings have SOLID air-raid shelters, designed for when the country would have to survive a Soviet occupation of all of the surrounding countries.  First-rate defensive military infrastructure, and when the chips are down, energy independence (hydroelectricity and electric trains).  It will be the last tent pole standing in the West.

ZeroPower's picture

Not convinced till the USDCAD hits its 2008 lows.

Tense INDIAN's picture

warns of INflation .....Wow ...after so much already.....i wonder how low DXY may go

 

 

Hephasteus's picture

After people borrow their 401k dry, use up their unemployment it hits 66. We are a bananna republic.

tmosley's picture

I really don't see why everyone complains about loss of exports when their currencies rise.  Your people have a lot of that currency.  Its rise means they don't have to work as much to get goods, including foreign goods.  Just retool for more internal consumption.  It doesn't take long.  The US did it in a year after WWII, and we are HUGE.  The Swiss should be able to do it in a few months, for the most part.

But then, we are all ruled by the insane, so simple ideas like that just go out the window.

SoNH80's picture

The Swiss still make excellent things that the world wants to buy. They have the right stuff to weather just about any storm, short of cosmic-scale disasters.

AbbeBrel's picture

The nice steady supply of liquidity oozing from The Bernank means that all the Banksters and Hedge Funds can reliably borrow short, sell the bucks, and go long whatever - PMs, Bunds, Equities, Aussies, etc.   You can feel the tension building as this carry trade continues to be wound up.   Of course, with unemployment high and the housing sector busted, The Bernank doesn't have to worry too much about inflation expectations "becoming unmoored" - and thus doesn't have to signal to his minions that there will be any pertubation in the Flow.

Bottom line is that, as observed by the FT.com, a low interest rate regime is actually supportive for a currency, as it forms the source liquidity for the carry.   It is when the rush for the exits begins, that things get interesting.   Not every bankster and hedge fund will make it out the door in time.   At that point, the other side of the carry has to be sold to cover the loans that leverage the bet.   After two years of gearing up, the moan of the mainspring as the clock is forcibly unwound is likely to be deafening.   When will this happen?  It is unknowable - but watching for the first of the bulls to get sick, as when Bear Stearns expired in March 2008, will likely be the first hint that "This Time is Not Different".

 

Mountainview's picture

Swiss National Bank president Hildebrand and Big Bernanke are Princeton buddies...they now each other from those days. Their mind set can't therefore be too different... It's all about perception...todays Swissy strength has nothing to do with the real industrial,commercial economy, but with refuge value like gold and silver...and dislike for $... 

broogy's picture

Guys, NOK is the right currency