January 2015

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Volatility in the aftermath of the SNB decision to lift FX floor on EURCHF

The following two charts illustrate the increased volatility that can be observed since the SNB decision was taken to cancel the floor on EURCHF. Even though the two charts are intraday charts of January 27th 2015. Chart 2 shows that after 9am CET the FX rate is suddenly extremely volatile. At the same the chart 1 shows that the SMI moved up as the CHF strengthend and then also weakened…


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Swiss Winners of the SNB Decision January 15th; Phoenix Mecano

If you’re interested in which companies are not suffering as a result of the SNB decision, here’s one: Phoenix Mecano has lost just 1% as of today (Jan 20th) vs the SMI drop of ~12% (figure 1). If you were to just look at figure 2, showing Phoenix Mecano revenue by country, and knowing the company is Switzerland based, you would assume that they were going to suffer due to…


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Price Level Divergence Examples Switzerland vs Germany

Today I was once again hit by how much different the swiss price level is compared to Germany. Take the example of the company Gross Baumaterial AG which trades in building materials. Then compare it with the germany company Toom Baumarkt in Konstanz (swiss-german border). Notice any differences? It seems crossing the german border makes a product +100% more expensive. Graph 1: Gross Baumaterial AG – Werbefax 044 500 92 02  17.1.2015 Graph…


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Swissquote Website At Maximum (or Overloaded) since EURCHF Cap-Drop Decision by SNB

I also noticed this first hand in the last two days: While other media sites were coping well with high visitor flows, the Swissquote website was extremley slow or not spitting out quotes. At some points going into time-out mode. Today the proof their system was maxed-out and not ready for such a surge in information demand: The disturbing thing in Switzerland is, there’s not really any other site that is…


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Could SNB neutralise ECBs QE programme? (at least partially)

Considering that the SNB has such vast amounts of bonds from EU members and obviously isn’t comfortable with the rumoured details of the ECB QE programme (just like the German Bundesbank coincidentaly), one could argue that they will be selling bonds, reducing risk as soon as the ECB QE programme is announced (or even before). Now the interesting question is, considering the size of the SNB balance sheet, and their…


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SNB successfully front-running ECB Printing Press

Luckily the SNB has given up the EURCHF exchange rate of 1.20. Many market participants believe they had to preempt the next wave of speculation (pressure on swiss franc) that would have occured with the impending ECB decision to buy government bonds in the former ‘PIGS’. Also see this comment on reuters: It came a week before the European Central Bank is expected to unveil a massive bond-buying program that might…


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What your bank advisor should have to show you when proposing new investments

As I pointed out this post about self-serving advice from ‘Megabanks‘ it is important to check what your advisor, client relationship manager, private banker is actually proposing. 1) What will the one-off cost be of the proposed transactions (transaction costs). My point: Show me the exact figure in currency. I want to know how much of my annual/semi-annual/quarterly lunch or dinner with my banker is being paid for by the…


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Risk Management: Megabanks Wealth Management Advice Still Dangerous / Toxic for Clients

I was recently shown an investment proposal by a prospect that shocked me. It was produced in October 2014! The prospects ‘Megabank’ advisor had proposed he sell around 15 of his current single stock holdings, representing around about 25% of his portfolio. This is what they proposed do to with the money generated through the sales: Of ~CHF 1.1m they wanted to channel over 800k into their own products. Description…