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The Swiss National Bank Is Long $100 Billion In Stocks, Reports Record Loss
When the Swiss National Bank revealed its long awaited Q1 financials earlier today, everyone was eagerly looking at the number showing just how massive the quarterly P&L loss would be to the central bank following its shocking decision from January 15 to remove its EURCHF 1.20 floor, which sent the CHF soaring and by implication caused huge losses to the mostly EUR-denominated SNB assets.
The loss was indeed, massive, coming in at CHF 29.3 billion, or $32 billion.
This was the biggest quarterly loss for the Swiss central bank to date, dwarfing that of CHF18.5 billion incurred in the second quarter of 2013, when the price of gold plummeted, and certainly one of the biggest central bank losses in history, if of course, the others tracked their P&L the way the SNB does.
This is how the SNB described its loss:
The Swiss National Bank (SNB) reports a loss of CHF 30.0 billion for the first quarter of 2015.
The loss on foreign currency positions amounted to CHF 29.3 billion. A valuation loss of CHF 1.0 billion was recorded on the gold holdings.
The SNB’s financial result depends largely on developments in the gold, foreign exchange and capital markets. Strong fluctuations are therefore to be expected, and only provisional conclusions are possible as regards the annual result.
Loss on foreign currency positions
The negative result on foreign currency positions amounted to CHF 29.3 billion in total.
On 15 January 2015, the SNB decided to discontinue the minimum exchange rate of CHF 1.20 per euro with immediate effect. This led to an appreciation of the Swiss franc and, as a result, to exchange rate-related losses on all investment currencies. For the first quarter of 2015, these amounted to a total of CHF 41.1 billion.
Interest income provided a positive contribution, at CHF 1.6 billion, as did dividend income, at CHF 0.3 billion. The generally lower interest rate level resulted in price gains of CHF 3.7 billion on interest-bearing paper and instruments. Equity securities and instruments benefited from the favourable stock market environment and contributed CHF 6.2 billion to the net result.
The subsequent commentary was amusing. Reuters reports that "had the SNB maintained the cap on the franc in the face of a quantitative easing programme by the European Central Bank, the expansion of the SNB's balance sheet would have been even greater and eventual losses more devastating, said Peter Rosenstreich, head of market strategy at Swissquote Bank."
Which, of course, sums up what anyone who is buying stocks or bonds can expect because every bubble, even those of central bank balance sheets, or rather especially those, eventually bursts.
...the loss could have political repercussions for the central bank, and could rule out an annual payment to its shareholders, including the federal government and cantons.
"This massive loss will have a lasting sting on the psyche at the SNB and politically within the cantons, which might hamper policy strategy moving forward," Rosenstreich said.
Yes, traumatic and all that.
But what caught our attention was not the SNB Income Statement but its Balance Sheet. Here, we find that while the total assets of the SNB have risen to CHF581 billion as of March 31, the bulk of this was due to "foreign currency investments", which amounted to CHF532 billion.
That's impressive, but that's not the punchline.
What is, is the following table, according to which 18%, or CHF95 ($102 billion) of the assets held on the SNB's balance sheet are, drumroll, foreign stocks!
In other words, the SNB holds 15% of Switzerland's GDP in equities!
We'll give the SNB credit: while every other central bank is loaded to its gills in stocks, none dare admit it.
That said, with an equity AUM greater than 99.9% of all global hedge funds, isn't it time for the SNB to at least file a 13-F?
And not just the SNB - with the NY Fed having participated directly and indirectly (via Citadel) in the market for the past decade if not longer, is it too much to ask of the world's central banks to reveal the amount and identity of stock (and E-mini) holdings? After all, both the Fed, the SNB and all their peers are desperate to "reflate" the world in the only way they can - though stock market levitation. So if anything, admitting to the world not only that they buy stocks outright, but show which stocks they buy, resulting in massive future lagged frontrunning of such central bank 13-F purchases.
Source: SNB
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Switzerland!?
And here I thought they're a bunch of smart, super efficient, smug bastards.
WTF happened to em??
WTF happened to em?? fiat money-paper happened to them
They are living in the same dollar system( Pax americano) as ALL fucking world
"" we find that while the total assets of the SNB have risen to CHF581 billion as of March 31, the bulk of this was due to "foreign currency investments", which amounted to CHF532 billion. ""
What A Fucking SCAM...
And... How Much Are THey SHORT GOLD ????????
i have a strong feeling that this is a charade (about short gold)
Whatever we do, let's NOT audit the Fed. I'm not sure we want to know what's really in there. If the "conservative" Swissies look this ugly on the inside, how do you think we look inside?
I have a feeling there would be people puking all over their keyboards shortly after ZH put up an article with the audit details.
how do you think we look inside?
I don't think about it at all. I think about that we should hang up this banksters, all of them. They are worse than terrorists
a central banks loses 100 Billion?
then just print up 500 Billion for a nice buffer and give all your buddies big raises, bonuses and purchase more hookers and blow.
There...fixed it for them. See how easy it is when you can Ctrl-P
Aw, fuck it. Might as well make it an even Trillion...why the hell not, right bitchez?? ;-)
So if they're actively trading stocks, how much did the SNB make for the front-running HFT's?
ND, I'm a survivor of many a tequila hangover and I bet I can barf into my wastebasket and save my keyboard... :-)
"how do you think we look inside?"
We? Who is this we, Kemosahbee?
These fiat banksters are a metastasised cancer.
It includes seashells according to the latest Stockman article.
Long $100 Billion In Stocks, Reports Record Loss
Wait. What?
A caveman could do this.
That's a pretty risky portfolio.
The Swiss should diversify into precious metals, maybe some iron pyrite or unobtanium.
Look here, if it ain't fixed they shouldn't break it.
I smell a bailout!
What could possibly go wrong? BUY!!!!!!!
Remember when the Swiss were bankers instead of sheep?
They could all be gold mining stocks ...
Regards,
Cooter
I would estimate that CB'S represent up to 50% of the markets.
100%. there is NO MARKET.
only casino
Buzz
Agree no market
The other 50% is pension and wealth funds.
I haven't chewed this fat before, but as it is the CB's can continue to buy until they own literally everything. I am sure the system blows apart before then, but this feels like a logical MC Escher painting ... I don't know if I should throw up or throw down!
Regards,
Cooter
Except for the fact that it's illegal for the US Fed to own securities that aren't backed by the US Gov't. Of course that hasn't stopped them from purchasing MBS, doing Maiden Lane, etc etc.
that's just the shit we know about. i suspect they dabble in stock options, interest rate derivatives, commodity futures, currency exchanges, the whole nine yards.
well in 2009 they did buy The Red Roof Inn.
well in 2009 they did buy The Red Roof Inn.
well in 2009 they did buy The Red Roof Inn.
oh yeah, the "it's against the law" line of argument. As if they care now or have cared in the past. Anyone that believe's these CB's, including the fed, isn't stuffed to the gills with equities, derivatives, etc. is totally deluded and in denial.
At then end of the day when the tyrant is standing there with his army, possession in the law and you don't have it.
I, we, are 330 million.
Liberty is a demand. Tyranny is submission.
"smug bastards."
this part you got right. lol
jordan isn't much to begin with and then he takes his orders from someone else.
what else is new.
It's ok, the HFTs have their backs.
It's ok, the HFTs have their backs.
"Switzerland!?
And here I thought they're a bunch of smart, super efficient, smug bastards.
WTF happened to em??"
They were "Americanised"
That is, they lost their moral compass and started to look at what was most expedient. And to hell with the citizens.
That will not end well, either place.
I thought the Repubicans were trying to do that with social security.
Bunch of Keynesian dunderheads running the central bank
Check this legitimate ways to mak? money from home, working on your own time and being your own boss... Join the many successful people who have already used the system. Only reliable internet connection needed, no prior experience neccessary, that's why where are here. Start here... www.globe-report.com
Soon to be long $200 billion, just print more.
Silly Tyler, we know that number is underreported.
yeah the previous article left out equity purchases by world central banks.
So if you want to run the big hedge fund money, you need control of a central bank!
I can see it now: "In the quarter just ended, the world basically fell apart. . . but our global short positions resulted in a gain of 35%. So everybody grab your fiddles and enjoy watching this bitch burn to the ground"
if you want to run the money, you need central bank - fixed for you
Who needs buybacks when you got the Swussies
Yeah, something doesn't sound right about being able to conjur up money out of thin air and buy pieces of businesses in other countries. Money should represent value for work you have done, a claim check on assets if you will. To be able to create it out of thin air to claim real assets with no return in value on your part is stealing from those who produce.
Unbacked fiat doesn't sound like a sustainable system once people figure it out, does it?
Fiat is the weaponised debt of empire, deleveraged of all but a hypothetical value. It's impossible to measure real value of work and goods using it. If you want real value, grow vegetables.
let's make war on (insert whatever), and weaponize... is anything left unweaponized? even vegetables are items of trade wars
One could argue that ZH wouldn't have an audience without the crashes of 99/00 and 07/08, so you might be on to something!
"Royalty" in the past has often shown they are often NOT good at figuring out they have been figured out until it is well too late.
Regards,
Cooter
This is the point I've been trying to make for years and no one I talk to seems to get it. The bank of Japan can buy stocks in the US or Europe with their funny money. Why should they give a shit if indexes plunge 50-60% just print moar paper and sooner than later every central bank owns everything. Allowing the "independent" central bank to own the printing press allows them to own the government, corporations, and all the real estate everywhere.
I think at some point the market gets crushed and THE central bank prints $200 billion, €200 billion, and ¥2 trillion yen a month just to do it all over again.
This time they'll just give the money to the masses so that the masses can buy shit from their corporations.
Yeah there is something morally wrong with printing money out of thin air and buying up the equity capital stock of foreign nations. But as long as it is my central bank that's doing it - my ex-banker ethics are OK with it...
even in a market crash where they report a huge paper loss, because the equity is backed tangible productive assets and cash flows
unless- they are buying equity derivatives and would only have a claim on the assets of Blackrock, Citadel, etc,
or unless- they were loading up and over concentrated in momo stocks like iCrap or Twatter with no real underlying assets other an intellectual property.
or unless- they are buying Swiss stocks which artficially inflates the value of local companies, and invites unwanted foreign fiat inflows into the local economy.
But otherwise - Party On.
"Yeah, something doesn't sound right about being able to conjur up money out of thin air and buy pieces of businesses in other countries. "
The source of the tyranny right there.
Money, printed, or not, is a claim on real goods and services. So, when the music stops, they will own the chairs, and the people will be left groveling at their feet for scraps.
Liberty is a demand. Tyranny is submission.
My friends, AK, AR, and Glock,, and I won't grovel.
"Yeah, something doesn't sound right about being able to conjur up money out of thin air and buy pieces of businesses in other countries. Money should represent value for work you have done, a claim check on assets if you will. To be able to create it out of thin air to claim real assets with no return in value on your part is stealing from those who produce.
Unbacked fiat doesn't sound like a sustainable system once people figure it out, does it?"
I agree, and it is difficult to see this end in anything else than a total rejection of fiat money, eventually.
The problem is today's population is badly educated and kept busy with circus and fast food. (They learned the most important lesson from the Romans.)
I will gladly revolte, but I am busy with this thing on TV and my KFC.
Exhibit A why federal reserve QE won't be equities.
For starters prohibited by Article 14 of Federal Reserve Act (would require congress to change)
QE to date has only been treasuries and gse mbs (with implied fedgov backing) which carries weight of "full faith of US government" ... no such backing for stocks
hence no audit the FED as they would be exposed.
For starters prohibited by Article 14 of Federal Reserve Act...
HAHAHAHAHAHAHAHAHA!!!
how naive. they own an empty mall down the street from me. have you seen their books? nobody has. they own maiden lane 1 & 2. god (and yellen, and dudley) only know what all crap is in there. wake up and smell the coffee.
yeah, maiden lane was illegal ... but only a few tens of billions ... and occurred at depth of crisis
but it wasn't QE (trillions)
what's a little fascism between friends kind of thing? there is never just one cockroach.
This guy has it all figured out. Even his girlfriend is only a little pregnant.
NY FED makes an off-balance sheet swap with the swiss national bank and, voila, they own $100 billion in equities.
you underestimate the dudley. dangerous man.
the only way federal reserve could do end round would be currency swap with ECB and ECB bought equities (or more likely lent to banks who bought stocks) ... but ECB would be on the hook for losses
the only way federal reserve loses would be if euro when tits up
So let me see if I understand this. Bank A buys stocks and swaps with Bank B. They do this until they own majority in all meaningful markets. The markets tank and Bank A suffers losses. Ok, fine.
Did you miss the part where they end up owning the fucking world?
What's the problem?
Private Gains while Losses are socialized across Govt then taxpayers -
Doesn't matter - Japan is already up to their eyeballs in US stocks and they only started buying April 1st.
stateside
We have seen how effective the Central Bank has been in the Stock Market:
25 YEARS LATER Stock Market has reached 50% PEAK VALUATION.
Japan is PAST and PROLOGUE.
Fed: Here you go Citadel.
Citadel: Righty ho! It's off to buy stocks we go!
See, the Fed didn't buy stocks. It's totally legal and legit. Not a smidgen of corruption.
That's not how this works. The Fed takes GSE paper and treasuries off the market. This buying restricts supply and pushes down yield, which pushes everyone into something else, i.e. equities. They won't show equities on their balance sheet - but they force their proxies into them.
The fuck else are you gonna do with billions of spare euros?
buy more bonds or more dollars, double gay circle
medium giraffe is right. "The fuck else are you gonna do with billions of spare euros?"
I'd just add... if you don't want to end up with dollars flowing out of your gills... again
"you underestimate the dudley. dangerous man. "
William Dudley is an evil man.
A Goldman Sachs soldier.
How many times has he called his buddies at Goldman to tell them decisions by the Fed committee before they were announced?
i think you have that backwards. the squid calls dudley and tells him to tell yellen what to do. they also control congress and the president. the world actually.
well, i guess that solves the mystery of who is buying twtr common today. lulz
And as we speak the "markets" go into a straight line back up from modest lows!!
PPT in place, this CAN NOT be allowed to go lower at all costs!!
BULLSHIT!!
Ferdinand Lips is turning in his grave.
He told everyone, few listened especially his fucking dumb assed countrymen who voted down the Gold proposal.
Looks like the mahority of the Swiss are just as clueless as the rest of the civilised world and would much rather be told what to do, scared what to do if you will, than think things through logically.
I'm not so sure Lips would have called them "fucking dumb assed countrymen"
but a small wink from reality: many companies in Switzerland are thinking hard about a switch to the EUR
one pharma giant is since long calculating, accounting, reporting and paying dividends in USD
recently, some Swiss transport companies wanted to switch their labour contracts to EUR
generally speaking, Switzerland risks that a serious chunk of it's economy becomes EUR based. just saying
I am Swiss and distrust in your currency has never been as low! The clever companies hedge and some didn't do it during the 1.20 days but now they're back in it. You make it sound as if it we'd rather have your Euros. Reality is we don't want them.
"This was the biggest quarterly loss for the Swiss central bank to date, dwarfing that of CHF18.5 billion incurred in the second quarter of 2013, when the price of gold plummeted"
One of the main arguments used to shout down the Swiss Gold Initiative was the old "gold is volitile and backed by nothing" canard. Interesting to see they are now losing money faster than ever.
Sometimes I wonder how much different the world would be if people would simply pay attention.
But that ignores the intervening 2014 period with 38 billion in profit... even on a relatively short timeline there is remarkable stability given the external forces driving instability (until they really fuck up trading at the hedge fund with its own printing press).
the FED could own 50% of every other asset known to man... I think this is the game... buy it all, in the end they own all the assets, then they don't need the dollar anymore.
When times were good - own the dollar, when times are bad, own all the assets. FED owners really can't lose. Along with banks and their share buy backs there will be bankers at the head of every major corporation as they will have more than 20% of the stocks
Federal Reserve Bank has a balance sheet
assets - treasuries, currencies, gold, mbs
liabilities - federal reserve notes (cash) "out there"
sliver of capital
Assets held for the most part are backed by full faith of US government (and in theory unwound ... by sucking cash out of economy)
if, $100 billion stock purchased ... and stock dropped to $50 billion ... no way to get $50 billion lost out of economy (US Treasury would have to make whole)
bottom line - federal reserve can't do it alone (buy stock) unless congress on board ( amends FRA or promises to look other way)
Unless they declare that "normal" rules related to capital requirents simply don't apply to them. I'm no expert on the FRA, but I don't know any legal reason they couldn't declare that today, if they wanted to.
The Fed has so many items off-balance sheet. They don't want an audit.
Fucking great article, congratulations Tyler.
Paging Bruce Krasting...
It's a bitch without all the foreign capital isn't it. The Swiss will play for their FATCA spinelessness the weight of the Alps in gold. This is just the beginning of their troubles.
They are holding stocks because that is what the central banks control: the stock markets with software attached to infinite amounts of fiat.
Duh. BTFD stupid.
The argument that the FED doesn't own stock is ridiculous!!! Let me set this question up like you'd see on an IQ test. If Banks own stock, and the Banks own the FED. Does the FED own stocks? Simple isn't it. That is also why the CME set up a conduit for CENTRAL BANKS to trade.
I'm sure that everyone who believes that the FED don't own stocks also believe that the Dutch own 400 billion dollars worth of US treasuries. There is in reality only one Central BANK. If all central banks are owned by the TBTF banks then the people that own said banks own it all. Just a question of how much they want to give everyone else.
Take it a step further. All the fiat in the world is probably controlled (owned) by no more than a couple handfuls of families. We all live at their mercy and accept the currency they control in exchange for our goods and services. They manipulate or control governments which in turn provide these few elitists with the protection of their wealth and the currency.
Only chance we have is to refuse taking the currency and start working with alternatives, ie barter or gold and silver backed communal currencies.
Don't worry. The Fed is selling them puts to cover the positions
subsidy for the rich. now that the middle class is destroyed, everyone's on the dole
Perhaps apple will aquire Switzerland.
To eliminate the copetition in watches.
And peeps wonder why the markets only go up. Clearly, as I have said before, the CB's can't let the markets return to mean, because if they do..........it's default city baby!!!
The cuckoo clock just exploded!
Oh, the irony of having a margin call on your Twitter investment Tweeted to you.
#payupdeadbeat
When the Fed and all the Central Banks buy up all the equities outstanding in the world, does that mean the world economy is owned by the commercial banks (who own the Fed, etc.)?
Is that facism, communism or just clever banking? What if the banks are then nationalized?
and all bought with fabricated money.
So long as Western Governments can continue to buy financial assets with "tax revenues from the future" - everything is going to be okay -
They need a better trader.
The SNB bought up EUR to support the peg until they couldn't justify the support anymore. Their loss of $100 billion is probably due to the immediate EUR collapse right after they lifted the peg. I don't think these are trading losses. SNB is in for a world of hurt.