Calm before US Payrolls
|Trading has calmed. Gone are TV pundits screaming of trade wars and retaliation. US equities ended yesterday on firm footing after a negative opening. The Nikkei climbed 1.53% on news that China would postpone tariffs on US imports and opt for negotiations. Fears of a trade war are sidelined for now.
US treasuries fell, forcing yields steeper, especially at the long end. March’s ADP report on private employment showed a 214 thousand increase, surprising to the upside. This sets the stage for a positive non-farm-payroll report: markets expect 185 thousand new jobs, driven by unseasonably warm weather at the start of the year. Spillover into the USD should be limited, but President Trump is always good for a market-shaking surprise. The USD is not cheap, so we would stay loose on long greenback positions.
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Switzerland’s richest bank
Shares of the Swiss National Bank continue to rally, closing yesterday at CHF 9,400. It’s a crypto-style rise, because in mid-2017 the price was around CHF 2,000! However, despite large gains from foreign equity and foreign exchange holding, this does not equate to shareholder value, because the SNB pays out a large dividend.
Reasons for the rise are Switzerland’s safe haven status, the SNB’s current, negative interest rates and even speculation that the central bank will morph into a sovereign wealth fund similar to that in Norway. Investors can dream on, because SNB shareholder have no voting rights and no say in general matters. We believe the price spike is partly due to limited liquidity. Investors are scrambling to buy the few available shares.
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