What’s next for the SNB?
If you’ve been following me closely over the last few months, you’d have seen how much I’ve spoken about central banks, and the extent to which they control the market.
I think keeping these themes central to what I write about is where I develop my market optimism and cynicism from – it keeps me level headed.
Back at the launch of my book, Retire Rich: How to Trade Your Way to £1,000 a Week back in October I spoke to attendees about one central bank in particular – the Swiss National Bank (SNB).
Let’s look at this again today, since the year has ended and we can reflect on what the SNB done…
Last year, the SNB made $55bn… That’s a greater profit than Apple made.
Now, I would never expect this from a country’s central bank. But as I’ve mentioned previously, they’ve been artificially suppressing their exchange rate by buying a huge amount of US equities and bonds. Their portfolio adds up to about $800bn of foreign currency operations.
What’s more, they had a huge increase in their share price in the middle of last summer. Take a look here…
An increase of 350%? Profits of $55bn?
The SNB hardly seems like a national central bank at all… they appear to be more like a crypto-currency crossed with a massive tech stock.
It’s an odd set up at the SNB too… it’s part private owned and part owned by Swiss landowners and public organisations.
The biggest private shareholder is Theo Siegert, who is on the board at both Handel and Merck companies. He owns about 6.7% of the SNB…
I wonder if there’s any collusion or murky (excuse the pun) goings on. I would not like to speculate!
For years, the Swiss National Bank have been suppressing the Franc through the means I outlined above – as this chart demonstrates:
Looking at this chart technically, however, we have come into a level of demand. You can tell a level of demand as it is the bearish candle before a heavy move off that breaks a high (FYI: A level of supply is the bullish candle before a level that breaks a low).
In combination with this, the Swiss National Bank May have hinted at changing their monetary policy (which would be in line with the price action displayed on the chart).
Chairman Thomas Jordan said that the bank was in ‘no rush at all’ to raise rates. But given that their 10 year bond is still yielding negatively, there is a lot of movement upwards that the bank could move the rate by.
However, it’s far more dependent on the EU pace of hikes than their own, in my opinion…
The other big central banks, the Fed and BoE, have already raised, with the ECB showing prudence towards slowing their rate of asset purchases into 2019.
Now all of this points to what I think is a great trade position idea, that I’m sharing today with my Trading Point Pro readers.
You might be able to spot this yourself from looking at the chart above and applying the trade strategies I’ve been teaching you.
But if you can’t and want to know the details of my trade idea, simply click here to join Trading Point Pro today.