Swiss Timing

This is my 100th blog post in the short 3 months of going live, and is providing me with a vital outlet for my inner thought processes. I woke up late this Friday morning, as it seems my week has consisted of one late night after another. After turning on my phone, the beeping text alerts beat me to my trusted Bloomberg app to see what happened in the markets over night.

Friday I work from Bondi so before I discuss what I think about the Swiss “shock” take a look at my office for today.

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For those who haven’t heard the Swiss “suddenly” removed the peg to the Euro they implemented in 2011 to halt its then increase in value. The reason then was as a safe haven during the global financial crisis people were pouring their money into this tiny country and in so doing killing the countries large export economy. Isn’t life amazing, here is that Kabbalistic Jungian idea of unity of opposites: Good = Bad.

With the recent drop of the EUR to the USD and the likely further demise of the EURO the Swiss bankers decided to not continue buying the EUR to maintain the peg and sit with an enormous pile of EURO “assets” on their balance sheet.

Take a look at how the market reacted. The Swiss currency rose almost 30% at its highest during the day to then correct roughly half that.

20150115_EUEOD2_0

It dropped 3,500 pips at its worst.

The Swiss stock market also went into freefall dropping 15% before recovering to lose about 8% the worst since 1989.

20150115_EUEOD3_0

The question I want to deal with on this my 100th post is whether any of this could be anticipated? I believe YES and NO. So much for getting off the fence.

The reason I say YES, is because in terms of the theme I am developing for my book The Market Complex there was a clear interference by the Swiss Central Bank with the ebb and flow of the natural way of things which most people left unconscious and soon began to treat as natural.

The psychological rule says that when an inner situation is not made conscious, it happens outside, as fate. That is to say, when the individual remains undivided and does not become conscious of his inner opposite, the world must perforce act out the conflict and be torn into opposing halves. Collected Works, A Symbol of the Self.

So yes when a complex is identified it is known that it will produce unpredictable eruptions (read: sudden market dislocations like today). However the answer to whether we could anticipate when this shock would take place the answer is NO. When the energy around a complex amplifies we do know that things are about to become increasingly unpredictable. The news out of Europe and the threat to the Euro’s long term existence is being well played out in the media and political circles. I think it is fair to say that an eruption in this market complex was well overdue and the best thing one could have done in anticipation was buy volatility protection or stand aside from this market.

In conclusion this picture sums it up, you cannot have good without bad, up without down.

swiss

6 thoughts on “Swiss Timing

  1. Good morning Mr. Berman, I suggest a small correction about the post “swiss timing” you posted yesterday. In this post you talk about a drop about 30% Swiss currency against euro, then half recovered in the same day. The cross EUR/CHF yesterday, however, has seen a significant appreciation of the Swiss franc to the euro! For this reason, in fact, the Swiss stock index has lost significantly value! It means that everything that is manufactured in Switzerland, also “services”, it is relatively more expensive and therefore more difficult to sell! That’s it. Thank You.

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  2. I enjoyed your thoughts but would like to point out that the Swiss currency rose and didn’t fall. It was the EUR that almost fell 30% against the CHF.

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