Happy Thanksgiving!
It takes readers to make a successful blog and I have been blessed to have readers who are able to add to the discourse that makes for profitable investments and trades. There is no one source for all the answers and a healthy give and take provides for better strategy. Alternative views sometimes urge caution and better trade selection then a one-sided discussion with myself. Again, my wishes to you for a Happy Thanksgiving. I am going to be on with Rick Santelli on Friday morning to discuss whatever he wishes. Hopefully, we’ll discuss SNB, Draghi and whatever else. If any readers have any burning issues, post them in the comments and hopefully they’ll get covered in a very tight time frame.
As I cautioned last week, December stands to be very volatile in the realm of global-macro. Last Friday, President Draghi tickled the markets by suggesting that the ECB is ready to embark on a genuine QE program rather than the continued jawboning that has successfully provided time for the Euro politicians to address some of the problems confronting the economies of many European nations. The EURO dropped 1.5 percent on Draghi’s comments November 21 but has spent the last three trading days clawing back most of the losses. Today, some ECB members were hinting that the QE program will begin sometime in the first quarter of 2015. Next Thursday, the ECB has its meeting. If Draghi fails to provide real numbers for a QE program the EURO could rally 2-3% because the market is very SHORT the EURO CURRENCY. It’s also December when markets are thin as portfolio managers do not wish to risk their performance.
Also, the Swiss referendum may provide impetus for volatility if the Swiss nation votes in favor of forcing the SNB to increase its gold reserves, which could call the question of the 1.20 EUR/CHF policy. Currently, the polls are predicting the referendum on GOLD will fail but I am urging caution because the SNB and Swiss business elites are on the stump urging a NO vote, which indicates nervousness by the leadership of the ruling class. If the SNB were to break the 1.20 peg it may send the EURO lower as the market anticipates the SNB selling euros or at least not purchasing any more as it diversifies its reserves. To show the potential impact I am including a chart (forwarded by JOEY G.) showing the increase of central bank balance sheets over the last decade. If the Swiss citizens are aware of this the vote will be very close. In reflecting upon this chart I have to inquire: WHO IS BUYING ALL THE SWISS FRANCS?
***A PERSONAL REQUEST. I have utilized the book, “The Rotten Heart of Europe,” as a reference source to enhance the knowledge base of this blog. Two years ago, my friend Bill Shepard and I paid to republish this great book by Bernard Connolly. (Bernard wrote a new forward in an effort to update the book and its relevance from the original publication in 1995.) As the turmoil in Europe is set to increase and the fallout from Europe becomes a greater weight on global markets, the “Rotten Heart” takes on added importance.
THUS I AM ASKING THAT BLOG READERS BUY AT LEAST 10 BOOKS TO GIVE AWAY TO FRIENDS, COLLEAGUES AND FAMILY AS A GIFT. IF YOU HAVE FINANCIAL CONFERENCES “ROTTEN HEART” WOULD MAKE A GREAT GIVE AWAY. WE ARE NOT MAKING ANY MONEY ON THIS JUST TRYING TO EDUCATE INVESTORS ABOUT THE POTENTIAL DANGERS OF THE EUROPEAN SITUATION. PRIOR TO THE REPUBLICATION, THE FEW COPIES OF THE BOOK WERE SELLING FOR SEVERAL HUNDREDS OF DOLLARS AS MANY WERE DESTROYED BY THE EUROPEAN AUTHORITIES (the original printing in 1995 was 2,000 books, of which only 200 remained until we undertook this worthwhile project).
Since January of 2013 we have sold 2,000 paperback copies so we have several thousand remaining. I would prefer to sell minimum of 10 and all orders will be received at Rottenheartofeurope@gmail.com and you will be instructed about billing. Otherwise, for lesser orders go to Amazon and search out the book and buy it from Yra Harris, but it will be a higher cost with the Amazon fees. Cost for direct purchase of at least 10 books will be $11.00 per book, including the shipping. Thank you in advance and let’s educate those you love and those you merely tolerate.
Warmest Regards, Yra
Tags: ECB, EUR/CHF, Euro, Gold, Mario Draghi, QE, Rotten Heart of Europe, SNB, Swiss Franc, Swiss referendum
November 26, 2014 at 3:41 pm |
U too my good friend!!!!!!!!!!!!!!!
November 26, 2014 at 4:04 pm |
Yra,
Have a wonderful Thanksgiving, and great chat with Santelli Friday.
I’ll get another load of books from you to distribute to students when you and Rick visit classes in the spring term.
Kevin
November 26, 2014 at 5:04 pm |
Happy Thanksgiving to all the Harrises- you are the salt of the earth.
November 26, 2014 at 9:09 pm |
Happy everything Yra ….
November 27, 2014 at 12:53 am |
Yra a good day to say a heartfelt thankyou for the effort and intellect that makes your blog such a unique resource.
As for who is buying the CHF – by keeping a static peg the SNB has created ASYMMETRY – peg stays, lose a little slowly, peg goes make a lot fast. When Hildebrand was in charge there were on-going rumours of the peg been moved (to 1.25 say) that kept us on our toes and restored symmetry. The macro hedgies love asymmetry and collectively have very deep pockets, especially for a trade that is most likely to come to fruition during a risk off period (CHF strong) and hence could be viewed as a diversifier.
Should the NO vote happen, Mr Jordan should hike the peg on a surprise basis and promise to do it again, and hence recruit some market liquidity to do his work for him, rather than standing against the tide as he is now. If it’s YES then heaven knows how they weather the massive attack on the peg that will follow (sell EURCHF and buy XAU), now that would be a hell of a start to your “volatile December”!
Thanks again and best wishes.
November 27, 2014 at 6:19 am |
Ira, Happy Thanksgiving to you and your family. You have a way at looking through the noise and getting to what matters. Thank you for your insight.
Bill S
November 27, 2014 at 11:35 am |
I’m thankful to Yra for sharing years of knowledge for free !! Happy thanksgiving all
November 29, 2014 at 5:58 pm |
Interesting that Swiss business elites would support SNB policy since I’ve read before this policy stymies foreign capital investment?
November 29, 2014 at 6:04 pm |
And wow Yra, thanks for arranging the republishing of “The Rotten Heart”, a huge hat’s-off and big THANK You for taking that on, I wasn’t aware! 🙂
“The Rotten Heart Of Europe”, I predict you receive a surprising level of interest.
November 30, 2014 at 8:42 am |
Thank you all for the kind remarks –and Chicken let’s hope you are right for the Rotten Heart of Europe deserves a good reading—every upper level European History course should have it on its must read list as should econ and finance classes.It is not an easy read as you know but is a must for anybody investing in global finance–all the best to everyone for health and prosperity
November 30, 2014 at 5:30 pm |
Ah, immigration limits voted down too. As a priority, business appreciates keeping a lid on labor costs.
November 30, 2014 at 7:11 pm |
Yra, not meaning to clog your thread here but are the SNB interventions really in the long term interest of the global community and free markets?
I’m sure the Swiss people would want their central bank to make the best choices just like the Germans will no doubt insist on when their chance to vote arrives?
December 1, 2014 at 4:38 am |
HI YO SILVER
December 1, 2014 at 9:53 am |
Hi Yra, I hope this message finds you well.
You know.. in the book of ‘Inside the house of money’, Drobny asked you the following question:
“Tell me about your matrix.”
and you replied with,
“Global macro is the matrix. It’s my mental picture of how money flows around the world, the flow of funds on a global basis seeking out the highest risk-adjusted return. Money is always moving somewhere, whether it’s from oil to currencies to metals or to stocks. I follow it.”
I have been pondering over your answer for some time on how you formulate your global matrix and without revealing proprietary components of your matrix (but I do secretly hope you can share more, haha!), can you kindly advise/enlighten me on the approach I should take or book(s) to read in order to get ideas on formulating a similar one? Thanks for your help!
DeeQue
December 1, 2014 at 10:23 am |
chicken—you would think so but like in the rest of the world Swiss banks seem to be operating on a plane far different from what will be best for the Swiss nation.The exporters relish the efforts of the SNB but the policy in my mind is badly flawed and will cause Switzerland will suffer—when I don’t know but as day follows night it will come as the SNB balance sheet is a ticking time bomb–especially as it is dependent on the ECB
December 1, 2014 at 12:54 pm |
Good Holiday wishes to you Yra. I’m wondering what your thoughts might be on this blog entry: http://blog.mpettis.com/2014/10/how-to-link-australian-iron-with-marine-le-pen/
I plan on getting the ‘Rotten’ book. Wish I could justify buying ten of them but…
Thank you for all you do!
December 1, 2014 at 3:21 pm |
Can you please share your views on today’s moves in gold and silver? I’m looking at the Mar15 Silver chart and it really is outrageous trying to make sense of it. Seems it’s another indication of the confusion or volatility that exits in today’s markets.
December 1, 2014 at 5:36 pm |
Rob Syp—it is maddening but tonight’s blog will reiterate the point that the central banks have created a financial system run amuck–i think today reflected that with the Gold move after the Swiss election but this volatility is going to be with us as we know await the ECB on Thursday with a market heavily short the Euro.
December 1, 2014 at 5:38 pm |
DeeQUE–I will be happy to answer any questions for it is only proprietary that I may have a tendency to over analyze but knowing more and is passed on years of putting the picture together–send me the questions you may have at yrah53@gmail.com
December 1, 2014 at 5:40 pm |
DonnaLasater–thank you for your words and the future book order.I will rad this Michael Pettis or may have read it already and get you a full answer—Pettis’ book “the Great Rebalancing” is a great fit for this blog—he is a big thinker that I respect
December 1, 2014 at 8:27 pm |
In the movie “Where the Buffalo Roam” Bill Murray plays Hunter S. Thompson and says a line “It never got weird enough for me”
Thank you markets for always providing us with something.
Yra, you could have not called any better 2 weeks ago when saying “I’m gonna take a needed break cause in 2 weeks the Swiss are voting and things could get interesting”
HI YO SILVER
December 2, 2014 at 2:02 pm |
Now, don’t hang on, nothing lasts forever but the earth and sky
It slips away, and all your money won’t another minute buy
DUST in the wind, all we are is DUST in the wind…..
December 2, 2014 at 4:41 pm |
Chicken–bringing out Kansas–no wonder you walk the yellow brick road