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George Dorgan

George Dorgan

George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.

Articles by George Dorgan

Swiss balance of payments and international investment position: Q2 2020

4 days ago

Current Account

Key figures:
Current Account: Down 52.14% against Q2/2019 to 9.878 bn. CHF
of which Goods Trade Balance: Minus 13.55% against Q2/2019 to 15.193 bn.
of which the Services Balance: Minus 39.69% to 1.158 bn.
of which Investment Income: Minus 70.07% to 3.012 bn. CHF.

Current Account Switzerland Q2 2020(see more posts on Switzerland Balance of Payments, Switzerland Capital Account, Switzerland Current Account, Switzerland Financial Account, ) Source: snb.ch – Click to enlarge
In the second quarter of 2020, the current account surplus amounted to CHF 10 billion; in the same quarter of 2019 it was CHF 21 billion. This decline was principally due to lower receipts from direct investment abroad. While the goods trade balance and the services trade

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Fed and ECB Money Printing Helps SNB Back into Positive Territory

August 3, 2020

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.

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Franc will rise again with crisis or inflation
With a new crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
Deflationary period (e.g. Corona Crisis)
During deflationary periods and recessions, the SNB will strongly intervene, similarly as she did in 2008/2009.
During the Corona Crisis, the SNB intervened at 1.05 – 1.06 for a euro, in 2009 even for 1.50 These high intervention levels pave the way for losses in later periods, which are the

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Swiss Balance of Payments and International Investment Position: Q1 2020

June 29, 2020

Current Account

Key figures:
Current Account: Down 13.72% against Q1/2019 to 17.4 bn. CHF
of which Goods Trade Balance: Plus 8.05% against Q1/2019 to 17.4 bn.
of which the Services Balance: Minus 53.84% to 3.02 bn.
of which Investment Income: Minus 0.54% to 6.3 bn. CHF.

Current Account Switzerland Q1 2020(see more posts on Switzerland Balance of Payments, Switzerland Capital Account, Switzerland Current Account, Switzerland Financial Account, ) Source: snb.ch – Click to enlarge
In the first quarter of 2020, the current account surplus amounted to CHF 17 billion, CHF 3 billion less than in the same quarter of 2019. This decline was principally due to trade in services, particularly licence fees, telecommunications, computer and information services, and

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SNB Interim Results: -38 Billion, An Analysis

April 24, 2020

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.

Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
Deflationary period (e.g. Corona Crisis)
During deflationary periods and recessions, the SNB will strongly intervene, similarly as she did in 2008/2009.
During the Corona Crisis, the SNB intervened at 1.05 – 1.06 for a euro, in 2009 even for 1.50 These high intervention levels pave the way for later losses, which are the inflationary periods.

Read More »

Swiss Balance of Payments and International Investment Position: Q4 2019 and review of the year 2019

March 23, 2020

Key developments in 2019
The current account surplus for 2019 was CHF 86 billion, CHF 29 billion more than the previous year. This increase was principally due to growth in primary income (labour and investment income). In the year under review, receipts exceeded expenses by CHF 14 billion, whereas in the two previous years, expenses had significantly exceeded receipts. The main contributors to this development had been finance and holding companies, which had reported exceptionally high expenses for direct investment earnings in the two previous years. These expenses were significantly lower in the year under review. The receipts surplus in goods trade increased by CHF 7 billion to CHF 66 billion, chiefly due to higher goods exports according to the foreign trade

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Swiss Balance of Payments and International Investment Position: Q3 2019

December 20, 2019

Current Account
In summary: Nearly any change against the third quarter of 2018. About the same figures. But clearly and – as usual – a massive surplus.

Key figures:
Current Account: Up 39.15% against Q3/2018 to 18.09 bn. CHF
of which Goods Trade Balance: Plus 49.78% against Q3/2018 to 16.76 bn.
of which the Services Balance: Minus 12.94% to 5.25 bn.
of which Investment Income: Plus 25.74% to 5.08 bn. CHF.

Current Account Switzerland Q3 2019(see more posts on Switzerland Balance of Payments, Switzerland Capital Account, Switzerland Current Account, Switzerland Financial Account, ) – Click to enlarge

Financial account
The following is from the official press release and gives more details on the other parts of the financial account.

Net acquisition of

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SNB reports a profit of CHF 38.5 billion for the first half of 2019.

July 31, 2019

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle
This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now. Bad quarters like the one in Q4/2018 are rare now.

Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for

Read More »

SNB Results: Big Win After Big Loss in Q4 2018

April 25, 2019

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle
This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now. Bad quarters like the one in Q4/2018 are rare now.

Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for

Read More »

Swiss Balance of Payments and International Investment Position: Q4 2018 and review of the year 2018

March 25, 2019

Key developments in 2018
The current account surplus for 2018 was CHF 71 billion, CHF 26 billion more than in the previous year. Changes in primary income (labour and investment income) had the greatest impact: Whereas one year earlier an expenses surplus of CHF 9 billion was recorded, owing to exceptionally large expenses for direct investment receipts in 2017, in the year under review there was a receipts surplus amounting to CHF 3 billion. The receipts surplus in goods trade increased by CHF 7 billion to CHF 57 billion. This was attributable mainly to higher receipts from merchanting. The receipts surplus from trade in services rose by CHF 2 billion to CHF 20 billion. Secondary income (current transfers)

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SNB loses 15 billion in 2018

March 5, 2019

Overview
The SNB earned 2 billion on negative interest rates (Swiss franc positions below), but lost nearly 17 billion CHF on FX investments, of which 5 bn on bonds and 12 bn on stocks.

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, the results have huge swings that depends on the FX rate.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for the SNB.
We

Read More »

Will the SNB ever make profits again?

January 10, 2019

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle: Rising Bond and Stock Prices until 2017
Until 2017, the SNB was able to profit on a secular tendency where both stock and bond prices (until 2016) were rising. This led to rising profits, that compensated for the ever rising Swiss franc.
One new negative effect of huge balance sheet
In an interview with Swiss Eco television program, SNB vice president Fritz Zurbruegg stated that the SNB is able to intervene thanks to

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Will the SNB ever make profits again?

January 9, 2019

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle: Rising Bond and Stock Prices until 2017
Until 2017, the SNB was able to profit on a secular tendency where both stock and bond prices (until 2016) were rising. This led to rising profits, that compensated for the ever rising Swiss franc.
One new negative effect of huge balance sheet
In an interview with Swiss Eco television program, SNB vice president Fritz Zurbruegg stated that the SNB is able to intervene thanks to

Read More »

Swiss balance of payments and international investment position: Q3 2018

December 21, 2018

Current Account

Key figures:
Current Account: Down 35.7% against Q3/2017 to 14.6 bn. CHF
of which Goods Trade Balance: Down 23.9% against Q3/2017 to 10.5 bn.
of which the Services Balance: Plus 8.7% to 5.0 bn.
of which Investment Income: Minus 39.7% to 7.6 bn. CHF.

Current Account Switzerland Q3 2018(see more posts on Switzerland Balance of Payments, Switzerland Capital Account, Switzerland Current Account, Switzerland Financial Account, ) Source: snb.ch – Click to enlarge

Financial account
Net acquisition of financial assets
The assets side of the financial account registered a net reduction of CHF 34 billion (Q3 2017: net reduction of CHF 37 billion). This reduction was mainly due to other investment,

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Monetary Policy Assessment of 13 December 2018

December 13, 2018

Swiss National Bank leaves expansionary monetary policy unchanged
The Swiss National Bank (SNB) is maintaining its expansio nary mo netary policy, thereby stabilising price developments and supporting economic activity. Interest on sight deposits at the SNB remains at –0.75% and the target range for the three-month Libor is unchanged at between –1.25% and –0.25%. The SNB will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration.
Since the monetary policy assessment of September 2018, the Swiss franc has depreciatedslightly on a trade-weighted basis. This development is primarily due to the strengthening of the US dollar. The franc is virtually

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SNB reports a loss of CHF 7.8 billion for third quarter of 2018

October 31, 2018

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle
This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now.
Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for the SNB.
We considered that after an inflationary

Read More »

Swiss Balance of Payments and International Investment Position: Q2 2018

September 24, 2018

Current Account

Key figures:
Current Account: Up 27.0% against Q1/2018 to 22.1 bn. CHF
of which Goods Trade Balance:  Up 4.8% against Q1/2018 to 15.2 bn.
of which the Services Balance: Minus 20.6% to 4.6 bn.
of which Investment Income: Plus 107.7% to 10.7 bn. CHF.

Current Account Switzerland Q2 2018(see more posts on Switzerland Balance of Payments, Switzerland Capital Account, Switzerland Current Account, Switzerland Financial Account, ) Source: snb.ch – Click to enlarge

Financial account
Net acquisition of financial assets
The assets side of the financial account registered a net reduction of CHF 50 billion (Q2 2017: net acquisition of CHF 60 billion). With the exception of reserve assets, all

Read More »

SNB reports a profit of CHF 5.1 billion for the first half of 2018

July 31, 2018

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle
This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now.
Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for the SNB.
We considered that after an inflationary

Read More »

Privacy Policy

May 18, 2018

Privacy Policy We are very delighted that you have shown interest in our enterprise. Data protection is of a particularly high priority for the management of the Ellusion Ltd.. The use of the Internet pages of the Ellusion Ltd. is possible without any indication of personal data; however, if a data subject wants to use …

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SNB loses 6.8 billion in Q1/2018

April 27, 2018

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle
This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now.
Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for the SNB.
We considered that after an inflationary

Read More »

Swiss Balance of Payments and International Investment Position: Q4 2017 and review of the year 2017

March 27, 2018

Current Account
The current account was down 9.6% against the same quarter in 2016.
Key figures:
Current Account: -9.6% against Q4/2016 to 19,679 bn. CHF
of which Trade Balance: +24.4%  to 17,279 bn.
of which Services Balance: -4.0% to 4,820 bn.
of which Investment Income: -42.7% to 5,877 bn.
Higher Trade Surplus in Goods: +24.4%
Main Reason:
The weaker franc helped to achieve a record trade surplus
higher exports of chemical and pharmaceutical  products
 machinery and electronics.
merchanting also expanded
Smaller Surplus in Services
Main Reason:
License fee income back to normal after exceptionally strong Q4/2016
Investment Income nearly halved
Receipts in Investment Income fell by 10%, while expenses were nearly

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SNB reports a profit of CHF 54.4 billion for 2017

March 6, 2018

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But the SNB may lose 50 billion in one year and win 60 billion in the next year or vice verse.
Good years of the Credit Cycle
This trend was stopped in 2016, even without the need for a cap on the franc. But one should consider that we are in the good years of the credit cycle now.
Franc will rise again with crisis or inflation
With a new financial crisis or a with a big rise of inflation, the run into the Swiss franc will start again.
And this at an exchange rate that is not digestible for the SNB.
We considered that after an inflationary

Read More »

Swiss balance of payments and international investment position: Q3 2017

December 30, 2017

Current Account
The current account was bellow 15% against the same quarter in 2016.
Key figures:
Current Account: -15% against Q3/2016 to 13,030 bn. CHF
of which Trade Balance: -41%  to 8,323 bn.
of which Services Balance: -4% to 4,573 bn.
of which Investment Income: +128% to 10,548 bn.

Swiss Balance of Payments Q3 2017(see more posts on Switzerland Balance of Payments, Switzerland Capital Account, Switzerland Current Account, Switzerland Financial Account, ) – Click to enlarge

Financial Аccount

Net acquisition of financial assets
Overall, the assets side of the financial account registered a net reduction of CHF 34 billion (Q3 2016: net acquisition of CHF 68 billion), with direct investment accounting for

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The good years have started, increasing SNB Profits

October 31, 2017

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the SNB accumulates foreign currencies with interventions, they have huge swings.
But in 2017, the picture is changed. Assuming a “biblical” cycle of seven good years and seven bad years, the SNB could now increase profits every year – thanks to a weaker franc and the seven good years.
… until the next recession comes and the seven bad years start.
At that moment the SNB will have to tolerate a massive loss:
Given that the recession would be inflationary, she will tolerate a far stronger franc, for example EUR/CHF may fall from 1.25 to 0.90 over some years.
Which will result into up 60-80 bn. CHF loss at the peaks.

SNB

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SNB Monetary Policy Assessment September 2017 and Comments

September 14, 2017

Contradictory Policy Statement
In the monetary policy assessment, the Swiss National Bank projects that she will reach her inflation target, shortly under 2% in the medium term, i.e. in 2019/2020. One reason might be the weakening of the Swiss Franc, that will make imported products more expensive and raise inflation.
But she does not prepare for a normalization of her policy: From the history we  know that – once the franc is weakening – inflation may rise very quickly.

Price Inflation (KPI) followed Monetary Inflation (M1, M3) with a lag of 3-4 years
The SNB projects that she will reach her inflation target, shortly under 2% in the medium term, i.e. in 2019/2020. One reason might be the weakening of the Swiss

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Weekly SNB Interventions and Speculative Positions: Investors do not take North Korea dispute seriously

August 14, 2017

FX
Despite the tensions between Donald Trump and North Korea’s Kim Jong-un, the EUR/CHF only depreciated to a low of 1.1284.

Euro / Swiss Franc FX Cross Rate, August 14(see more posts on EUR/CHF, ) Source: markets.ft.com – Click to enlarge

SNB interventions nearly at zero

Data for the last weeks:
In the last week, the SNB did not have to intervene. This proves that investors haven’t taken the tensions seriously.

Change in SNB Sight Deposits July 2017(see more posts on SNB sight deposits, ) Source: snb.ch – Click to enlarge

Speculative Positions
Speculators were net short CHF in January 2015, shortly before the end of the peg, with 26.4K contracts. Then again in December 2015, when they expected a

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SNB reports a profit of CHF 1.2 billion for the first half of 2017

July 31, 2017

From the official news release

Interim results of the Swiss National Bank as at 30 June 2017
The Swiss National Bank (SNB) reports a profit of CHF 1.2 billion for the first half of 2017.
A valuation gain of CHF 0.3 billion was recorded on gold holdings. The profit on foreign currency positions amounted to CHF 0.1 billion and the profit on Swiss franc positions stood at CHF 0.9 billion.
The SNB’s financial result depends largely on developments in the gold, foreign exchange and capital markets. Strong fluctuations are therefore to be expected, and only provisional conclusions are possible as regards the annual result.

The increasing volatility of SNB Earnings
Annual results are not really definite. Given that the

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Weekly SNB Interventions and Speculative Positions: Hawkish ECB, less SNB interventions

July 17, 2017

FX
The EUR/CHF remained over 1.10 in the last week, thanks to hawkish comments from ECB president Draghi.
Headlines Week July 17, 2017
On June 27, Draghi told the audience at the annual ECB Forum that transitory factors were holding back inflation.
This has boosted the euro against both USD and CHF.
Our opinion, however, is that this “transition” is very long, possibly comparable to the Japanese deflation/ low-inflation over decades.
At the latest from December/January 2017/2018, the EUR/CHF must go down again, See the following:

Euro/Swiss Franc FX Cross Rate, July 17(see more posts on EUR/CHF, ) Source: markets.ft.com – Click to enlarge

Why must EUR/CHF go down again?
The graph shows that the European

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Swiss balance of payments and international investment position: Q1 2017

June 26, 2017

Current account
Switzerland has typically a weaker current account surplus in the winter months than in the other 3 quarters.

Key figures:
Current Account: +39% against Q1/2016 to +11.1 bn. CHF
of which Trade Balance: +78%  to +10.5 bn.
of which Services Balance: +21% to +5.5 bn.
of which Investment Income: -50% to +2.8 bn.

Financial account

Net acquisition of financial assets
The net acquisition of financial assets totalled CHF 15 billion (Q1 2016: net reduction of CHF 13 billion). Reserve assets saw a net acquisition of CHF 36 billion (Q1 2016: net acquisition of CHF 18 billion) as a result of the SNB’s foreign currency purchases. Direct investment recorded a net acquisition of CHF 8 billion (Q1 2016:

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Weekly SNB Interventions Update: Slight Rise after Weeks of Near-Zero Interventions

June 19, 2017

Headlines Week June 19, 2017
The pro-European politician Macron has won the presidential elections and now also secured the parliament.
He is a politician that promises economic improvements, more investment, more jobs. This is similar to Hollande four years ago and – by the way – similar to Trump.
As opposed to Hollande, Macron also advocates limitations on salaries and less social protection for workers, to restore France’s competitiveness.
Mostly probably he will fail – similar to his predecessor – because the French economic reality is simply different.
And so the EUR/CHF must go down again, but the main reason is monetary policy. See the following:

Euro/Swiss Franc FX Cross Rate, June 19(see more posts on

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Weekly SNB Interventions and Speculative Positions: More Interventions at higher Euro rate

May 16, 2017

Headlines Week May 15, 2017

The pro-European politician Macron has won the French elections. He is a politician that – similar to Hollande four years ago – promises economic improvements, more investment, more jobs.
As opposed to Hollande, he also advocates limitations on salaries and less social protection for workers, to restore France’s competitiveness.
Mostly probably he will fail – similar to his predecessor because the French economic reality is simply different.
His success moved the EUR/CHF up to 1.0980, mostly caused by FX speculators.
But serious investors – i.e. not FX speculators – did not follow the political event. The SNB had to intervene for 1.9 bn francs.
Serious investors are far more interested

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