Interesting article... Seems SNB is now acting as a fund manager which I suppose is within their investment criteria as they share their profits with the Govt.
The Swiss financial paper Finanz und Wirtschaft has run an amusing and interesting Q&A with James Grant, publisher of long-running Wall St investment newsletter,Grant's Interest Rate Observer: Do you think Fed chief Janet Yellen will make the case for another rate hike at the Jackson Hole meeting next week?
Janet Yellen is by no means an impulsive person. According to the Wall Street Journal, she arrives for a flight at the airport hours early – and that's plural! So this is a most deliberative and risk averse person. We have been hearing for years now that the next time, the next quarter, the next fiscal year they will act. So I believe what I'm seeing: None of these days the Federal Funds Rate will go higher than 0.5%. I can't see that happening. Wall Street seems to think along the same lines. So far, many investors don't take the renewed chatter of a rate hike too seriously.
The Fed is now hostage to Wall Street. If the stock market pulls back a few per cent the Fed becomes frightened. It has come to a point where the Fed is virtually a hostage of the financial markets. When they sputter, let alone fall, the Fed frets and steps in. Obviously, the financial markets like this cautious mindset of the Fed. Earlier this week, US stocks climbed to another record high.
Isn't that a funny thing? The stock market is at record highs and the bond market is acting as if this were the Great Depression. Meanwhile, the Swiss National Bank is buying a great deal of American equity. Indeed, according to the latest SEC filings the SNB's portfolio of US stocks has grown to more than $US60 billion.
Yes, they own a lot of everything. Let us consider how they get the money for that: They create Swiss francs from the thin alpine air where the Swiss money grows. Then they buy Euros and translate them into Dollars. So far nobody's raised a sweat. All this is done with a tab of a computer key. And then the SNB calls its friendly broker – I guess UBS – and buys the ears off of the US stock exchange. All of it with money that didn't exist. That too, is something a little bit new. So what are investors supposed to do in these bizarre financial markets?
I'm very bullish on gold and I'm very bullish on gold mining shares. That's because I think that the world will lose faith in the PhD standard in monetary management. I don't want to suggest that it is the one and only thing that people should have their money in. But to me, gold is a very timely way to invest in monetary disorder.
