| Subject: | Yesterday, 08/09/11, Might Have Been the Blow off In Swiss Franc |
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| Date: | Wed, 10 Aug 2011 09:35:59 -0700 |
| From: | Jas Jain |
Yesterday, 08/009/11, Might Have Been the Blow off In Swiss Franc
SF CME SWISS FRANC FUTURES; 08/09/11
________Open_____High____Low___Last___Change
SEP11 1.3251 1.4167 1.3182 1.3996 +.0754
It traded in a 10-cent range in a day and was up 7.5 cents. If the current price persists, CHF would put the Swiss economy thru a ringer—deflation and recession with corporate profits getting squeezed. SMI should be down 25-40% from the recent high. Let us hope that for the sake of the Swiss economy CHF gets below $1.25, preferably below $1.15, over the next few months.
Fundamentals and relative values matter.
Jas
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2 comments:
Re: Yesterday Might Have Been the Blow off In Swiss Franc
Hugh: “I had a long talk about this with a Swiss banker over lunch at the GATA conference in London this past weekend. He thought they would beat it by imposing taxes on foreigners making deposits and so on. I told him that I thought he was underestimating the demand in the outside world for a safe-haven currency and what that would do to the Swiss economy. For example if it goes up 2x or 3x, not just 20%. I don't think I convinced him, but he did look mildly upset at the thought. I'd love to hear whether he's seen the light on the issue yet this week :-) I.e. the point being that really good times for the Swiss franc will actually thoroughly trash the Swiss economy.”
Thanks, Hugh. The behavior of CHF has all the hallmarks of rampant speculation, i.e., driven wholly by traders/speculators and not long-term buy-and-holders that want diversification. The movement is mostly futures trading driven. CHF is not gold!
Extremes always lead to all kinds of problems down the road. Most people don’t understand fundamentals anyway.
Jas
Wall St. Jumps on My diagnosis of Swiss Franc
Source: CNBC-World. Goldman Sachs forecasts a recession and deflation if Swiss franc (CHF) stays high. Morgan Stanley says that Swiss franc is the most over-valued currency in modern history.
It doesn’t require a genius to figure that out. It requires incredulity to keep one’s savings in CHF at the recent price in the range of $1.27-$1.41. Those who have liquid assets in CHF, especially, deposits, had one in a lifetime opportunity to diversify into other currencies, but nothing blinds people more than rising prices of assets they are long. "Genius is rising prices!"
In general, US Trausury and USD bears are among the stupidest people when it comes to understanding how the US Treasury functions. There is no Printing of Money going on in the US.
Swiss franc is down 14 cents, or 10%, against the USD in five days! My target of 70c, down from high of $1.41+, could happen in 2-3 years; although, normally it takes more like 5+ years to correct that much. Currencies trend, but all trends are broken. Some violently.
Jas
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