SMI – no recession priced

SMI-index-since-june-2006

Looking at the above chart and comparing the current move to what we saw in 2008 and 2009 I believe the reaction so far is much too weak to signal a bottom.

It’s more likely to be a drawn out process of sideways without negative news, then down on actual impact of heavy handed EU reactions.

Should the EU make Britain a good deal, then we’re off to the races again. But I would not consider that most likely, even though it would be best for the world economy. Sadly it wouldn’t be good for socialist or left governments, which is why I am afraid we’ll see them hurt their countries.

Why free movement of people (leading to work hotspots and countries) has to be one of the cornerstones of the EU when modern economies that can network their offices, use robots, telecommute, telework, etc, is  beyond my comprehension. But that’s politics. The charts (graphic form of what people think), tells me they are not expecting anything really negative in Switzerland and see the index as a safe haven.

We’re in year 1 of 3 years of growth trouble, is my current feeling. Even if the central banks can and will put a floor in asset depreciation. I’m not convinced they have a magic wand to improve profitability and dividends. They can prop up bonds and give them fairy price levels. And the SNB can fight CHF strength. But the SNB can’t save the EU on it’s own.

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