Swiss bank profit CHF 54 billion
By Vincent-Frédéric Mivelaz
Switzerland’s central bank is expecting a 2017 profit of a whopping CHF 54 billion! It follows a 2016 profit of CHF 24 billion, and comes after the bank’s 2015 decision to stop supporting the franc at CHF 1.20 per Euro. This massive gain blinks positive for the Swiss economy and signals a great 2018.
The Swiss National Bank’s earnings came from foreign currencies (CHF 49 billion - 90.70%), gold holdings (CHF 3 billion - 5.60%) and Swiss francs (CHF 2 billion - 3.70%). SNB shareholders (yes, it is a public company) will get a CHF 15/share dividend, and the federal and cantonal governments will share a distribution of CHF 1 billion. They will also receive a one-off bonus of CHF 1 billion.
Collision of EU monetary and industrial policy
By Peter Rosenstreich
German data tell the story: manufacturing sales increased 4.1% annually (expected 1.2%) and industrial production rose 3.4% monthly (expected 1.8%. Demand for European goods and services is and will remain strong.
This could force the European Central Bank to ‘normalize’ monetary policy, which could push the EUR/USD above its current 1.20 mark – which, in turn, would threaten exports. ECB President Mario Draghi is trying to walk the tightrope, with dovish comments that policy accommodation remains necessary. However, the ECB has upped its growth and inflation forecasts. Quantitative easing could end in 2018, sooner than the market anticipates. We remain constructive on the EU recovery story and see EUR/USD dips as an opportunity to reload longs.