Swiss National Bank

ECB Blames Leak To Hedge Funds On "Internal Procedural Error"

Shortly after 6pm London time yesterday, The ECB's Benoit Coeure told a non-public audience of hedge funds in London that "the central bank would moderately front-load its purchases in its quantitative easing program because of the seasonal lack of market liquidity in the summer." The reaction was a 50 pips drop in EURUSD... but this was inside information was not released to the trading public until around 8am London time - and resulted in a 150 pip plunge. In other words, a select private group of head funds in London were leaked ECB front-loading news 14 hours before The ECB deemed it 'correct' to publicly release the comments... due to what The ECB calls "an internal procedure error."

How China Covered The World In "Liquidity Swap Lines"

Central bank liquidity lines like those the Fed used to bailout the world seven years ago have become a fixture of the post crisis financial system. Since 2009, China has essentially blanketed the globe with yuan liquidity lines, inking swap agreements with nearly three dozen countries with the primary goal of increasing the degree to which the renminbi is used in international trade.

A Portrait Of The Classical Gold Standard

"It was, at least in theory, simple enough in the old days," wrote a wistful W. Randolph Burgess, head of the New York Federal Reserve, in 1938. "In the present strange new world, where the old gold portents have lost their former meaning, where is the radio beam which the central banker may follow? What is the equivalent of gold?" The men of his era and of the late nineteenth century understood the meaning of such a question and, more importantly, why it is one that must be asked. But theirs was a different world, indeed — one without "QE," ZIRP," or "Unknown Knowns" as fiscal policy. And there were no helicopters, either.

Russell Napier Explains What's In Store For Gold If Cash Is Outlawed

"If banknotes are outlawed you will be forced to hold money that is a liability of a commercial bank (deposits) and refused access to money that is the liability of the central bank (bank notes)... In such a world, zero-yielding gold would be a high-yielding instrument. If the authorities ever sought to restrict access to banknotes, then gold would suddenly find itself enfranchised as money for the first time in many decades. So, given the scale of these competing forces, it is just too early to say what might happen to the gold price, but the allure of gold will grow the more it becomes clear that central bank fiat has failed and the age of government fiat is dawning."

Deflation Works!

Threatened with deflation, the authorities will want to turn the tide in the worst possible way. What’s the worst way to stop deflation? With hyperinflation. Yes, we may suffer a year or two more of sluggish growth... or even deflation. Stocks will crash and people will be desperate for paper dollars. But sooner or later, the feds will find their feet and lose their heads. Most likely, the credit-drenched world of 2015 will end... not in a whimper of deflation, but in a bang. Hyperinflation will bring the long depression to a dramatic close long before a quarter of a century has passed.

Free Lunches, Fragile Fed Faith, & Minsky Moments

Investors are beginning to question the efficacy of these extreme central bank policies. More are joining the chorus of critics that believe policies have become counter-productive in both the short and long run.  If true, it could mean that a Fed hike might come sooner than markets believes; and may occur prior to the arrival of the desired and optimal economic conditions. There must be a lesson to learn for those investors who blindly follow central bank actions.  The lesson embedded in the dramatic re-pricing in European financial markets during the past 12 days may simply be that there are dangers when chasing assets irrespective of price levels. It seems to us that the ability of central banks to generate a Pavlovian or conditional investor response to their policy actions is now rightly being called into question.

Guess Who Owns $1.1 Billion In Apple Stock

Last week we revealed that the Swiss National Bank is the proud owner of an equity portofilio that sums to $100 billion, or around 15% of Switzerland's GDP. Courtesy of the bank's latest SEC filing, we now know just what the Swiss were buying in Q1...