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’From deposit stashing to repo lending at UBS
UBS announced lacklustre results on Tuesday, saying it expected further weakness in investment banking in the first quarter.
But the bank also provided details of some interesting underlying trends at the bank,
FX trader du jour [updated]
Hildebrand’s wife, Kashya Hildebrand, said in a written statement published on Swiss television late yesterday that her “interest in the dollar purchase was motivated by the fact that it was at a record low and almost ridiculously cheap.”
Via Bloomberg.
Caging unilateral risk
There’s a great note from Marc Ostwald of Monument Securities this Thursday morning.
And he gets right to the heart of the issue.
The problem isn’t so much where FX and bond rates are going, but rather the uncertainty related to rogue unilateral actions of particular governments and central banks.
What will Switzerland do with all those euros?
While the scale of Switzerland’s forex intervention on Tuesday caught many people off guard, what’s also caused a bit of bother is seemingly the interpretation of the move.
A key observation, for example,
Swiss real estate will become the new gold
Here’s an interesting view on the consequences of the SNB’s move from Societe Generale’s Sebastien Galy.
First of all, as others have noted too, Galy believes the decision to defend a 1.20 level floor against the euro is credible this time,
A Swiss “sigma” event
Or, turning the leveraged into fondue. Hat-tip to Scott Barber of Reuters graphics:
Related link:
European Central Bank response – ECB
Carried away in Switzerland [updated]
Negative rates have arrived! In Switzerland, anyway.
Which means the risk of the Swiss franc becoming a funding currency for carry trade — à la the Japanese yen — is very real.
That said, volatility is still the issue.
Robin Hood meets William Tell
This should make Davos a bit less tense; a win-win for the British and Swiss governments on Wednesday:
Aug 24 (Reuters) – Switzerland and Britain struck a deal on Wednesday to tax money kept by British residents in secret Swiss bank accounts,
Swiss ‘capital preservation’
FT Alphaville has already talked about the risks associated with a government bond turning into a bit of a Giffen good. (Great Depression, ahem.)
A Giffen good is essentially one in which the traditional laws of supply and demand do not apply because there is no viable substitution option.
[Competition] A Swiss CPI basket
Consumer prices are on everybody’s mind in Switzerland.
World Radio Switzerland (the English-speaking Swiss network) kicked things of this morning with a debate about why on earth prices in Switzerland are refusing to budge lower,
Le plan, negatifs taux d’intérêt
On Wednesday, the SNB unleashed it’s ultimate Swiss franc depreciation plan — le plan, negatifs taux d’intérêt — a.k.a the strongest signal yet that it is prepared to take interest rates negative to curb Swiss franc strength.
Swiss bank avalanche
This might be a deferred sell-off following Monday’s holiday in Switzerland. In the words of one analyst though, they’re ‘stuck between a soft dollar and a hard franc…’
(That’s because the wealth management arms of both banks have mainly US dollar revenues and Swiss franc costs).
The Swiss franc’s safe-haven status, a visual interpretation
The Swiss franc is on the rise against the euro and the dollar again on Wednesday thanks, as multiple market reports state, to its safe-haven status.
In fact, the currency was last quoted at about 1.158 versus the euro and 0.7996 against the dollar.
Glencore’s Achilles’ heel
FT Alphaville has been poring over the Glencore prospectus overnight and we’ve come across a few further points of interest on the matter of funding.
As we noted earlier last month, Glencore’s marketing business is very much focused on tried and tested arbitrage strategies unconnected to the ‘flat-price’ of commodities,
UBSoiled all over again
Because the first 50-page report into shareholders’ subprime losses, released in April 2008, was not enough. UBS have now published a 76-page “Transparency report to the shareholders of UBS.”
This Swiss bank is a sucker for subprime pain.
CoCos can cost – your bonus
Here’s a data point for those skeptical of CoCo capital’s saving graces.
(CoCos, or contingent convertible capital, are a kind of convertible bond that automatically switch into equity once certain capital or bailout triggers are breached.)
Earlier this week Switzerland moved to make CoCos a key element of future bank capital,
That’s a big bowl of (Swiss bank) CoCos
Presenting the Credit Suisse cuckoo-for-CoCos roadshow…
[July 22 Q2 2010 earnings call transcript] We are encouraged by what seems to be an increased consensus among policymakers on contingent capital securities,
Bonds, breaking for the Swiss border
Tinned food? Check. Bunker? Check. Emergency smokes? Check.
Rolex watch, Toblerone, fondue kit, cuckoo clock? Check.
There’s a very Swiss theme to this week’s European Credit Alpha note from Barclays Capital.
Dear SNB LLC investor…
The euro plunged to an all-time low against the Swiss franc on Tuesday:
Which means analytical knives are out for the Swiss National Bank’s dear, departed policies of intervention in the FX market.
Swiss intervention, exiting stage left
Is the Swiss National Bank throwing in the towel on EUR/CHF intervention?
IFR Markets’ Divyang Shah thinks so:
The SNB has given the green light to tolerating further CHF strength by dropping the reference to intervention in their latest monetary policy assessment.
Swiss intervention in context
How big was the Swiss National Bank’s forex intervention in May?
This big. (Click to enlarge and get the full Hildebrand experience):
That’s from Sean Corrigan at Diapason Commodities, who notes that according to provisional data released by the Federal Statistics Office on Tuesday,
Swiss franc intervention cost a billion a day in April
The Swiss Central Bank has just released its monthly statistics — things which are likely to attract plenty of interest, given recent rumours of central bank currency intervention.
The raw data is available here.
So what happened to Switzerland’s Greek bonds?
Beady-eyed readers have pointed out that the Speigel chart we posted earlier does not accurately reflect Swiss holdings of Greek bonds — which dropped significantly over the course of 2009 according to SNB data.
Geneva snow havoc!
Let’s face it, snow in southern England is a bit of a rarity.
Consequently, it’s quite understandable that when the occasional dump occurs transport chaos, truancy and mindless sledging-related accidents are common place.
Switzerland, the former bolt-hole?
Neutral, snowy, and tax-lite – Switzerland was supposed to be the destination of choice for outraged City-types and others in the financial sector intent on protecting their bonuses.
Some excited reports even had Goldman Sachs moving its European headquarters from London to somewhere less fiscally challenged,
Swiss tax rules lure McDonald’s from UK
McDonald’s is to leave London for Geneva, joining the growing ranks of US companies moving their European headquarters to take advantage of preferential intellectual property tax laws, the FT said. The fast-food group,
Switzerland to block UBS record transfer to US
The Swiss government on Wednesday waded into the legal battle between UBS and the US authorities by saying it would forbid the bank from handing over confidential client information, if a crucial court case next week required it,
Never apologise, never explain
For some time now we have marvelled at the willingness of institutions to back fund raisings from even the most desperate of companies. So we should probably not be surprised that someone – in this instance UBS – has decided to launch a cash call without any explanation as to why it needs the money or what it will be used for.
Switzerland to dilute bank secrecy
Switzerland emphasised on Tuesday its willingness to dilute bank secrecy, as the US indicated it would continue with legal action to force UBS to reveal the names of its American offshore private banking clients.
Moody’s puts UBS on review for downgrade
Just as the ECB warns that commercial banks in the euro-zone may lose another $283bn by the end of next year on financial writedowns, Moody’s finds equivalent cause for concern at Switzerland’s most beleaguered bank,