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by Tyler Durden
Sep 12, 2017 4:15 AM
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SHARES
While the broader market for Swiss stocks has risen modestly this year, one 'entity' has outperformed its peers by such a staggering margin, it has
left bamboozled market experts struggling for an explanation.
And that company is…the Swiss National Bank.
The price of a share in Swiss National Bank in August rose above 3,000 francs ($3,143) for the first time, more than double the level of a year
ago, and up 50% since mid-July, as the Financial Times noted in a story about its performance.
Shares of the SNB trade like any other company listed on the Swiss stock exchange, though because of their price liquidity is somewhat thinner. The
Swiss cantons together own 45% of the SNB while 15% is owned by cantonal banks and the remaining 40% by private individuals or companies.
The Swiss Federal Government owns no shares.
Given the SNB’s holdings – it has demonstrated a voracious appetite for Apple stock and currently holds more than $80 billion in US stocks – the
shareholder-backed hedge fund is also having one hell of a year. Perhaps it’s understandable that shareholders see these gains as a driver of
value.
And of course, the FT has a few theories about what’s been driving the bank’s astounding gains.
One is that, because of the bank’s stellar P&L, it will almost certainly make a dividend payment this year (it has occasionally failed to do so, like in
2015). Dividend payments are fixed by law at a maximum of 15 Swiss franc per share.
If paid in full, that would amount to a yield of 50 basis points – far superior to the minus 15 basis-point yield on the country’s 10-year bond.
Another is that some German investing newsletter issued what amounts to a “buy” call:
“German investor newsletter Actien Börse encouraged a buying spurt after likening the shares in July to ultra-rare “Blue Mauritius” 19th century
postage stamps. Trading in the 100,000 SNB shares is thin, so even modest buying or selling leads to significant price swings.”
Of course, these arguments seem specious: Investors could still probably lock in higher yields by buying Treasurys and hedging their exposure,
as one example. And the influence of that newsletter sounds like it’s being overstated.
However, the FT hints at one possible driver that’s probably closer to the truth: Private investors are trying to front-run a possible share buyback by the
central bank. As the FT notes, the SNB wouldn’t be the first central bank to buy back its shares.
“Another theory is that investors are speculating they might be bought out. Central bank buybacks have happened before. In the early 2000s, the
Basel-based Bank for International Settlements — which acts as a bank to central banks — bought out its private shareholders so it could
focus on its public service functions, rather than the interests of financial investors.”
Regardless of their motives, the stock’s gains are almost definitely being driven by private shareholders. As we reported last year during a
smaller bout of appreciation in the SNB's stock, it’s unlikely that a canton or a cantonal bank would buy the shares en masse because their ownership
has been carved in stone for many years.
http://www.zerohedge.com/news/2017-09-11/forget-tulips-bitcoin-heres-real-bubble 1/10
9/14/2017 Forget Tulips & Bitcoin - Here's The Real Bubble | Zero Hedge
has been carved in stone for many years.
And as the FT notes…
Harder to explain, however, is why the price of SNB shares has risen so steeply this summer.
“Institutional investors do not invest in them, so there is no demand for analysis or coverage,” says Andreas Venditti, bank analyst at
Vontobel in Zurich. “Since the impact of even small financial market moves on its financials is so huge, it would be difficult to do a reliable
earnings estimate.”
The alternative is that a private investor is quietly buying up all the stock available. The single largest private shareholder is a German national called
Theo Siegert, a German business leader and professor at Munich University. He owns 6.7% of the Bank, more than any Swiss canton except Bern. Still, if
the buyer was Siegert, he would have to file a new report as a large shareholder once he crosses a 10% threshold.
While buybacks are unlikely, and a leveraged buyout of the central bank woud be impossible - though it'd make for an interesting case study - there’s
only one probable conclusion left: The SNB is pushing global stock prices up, in the process creating the next bubble. And now private traders
are gobbling up shares of the bank itself, adding a dangerous feedback loop to the equation.
The SNB isn’t the only central bank that trades publicly. Both the Bank of Japan and the Bank of Greece are publicly traded, as is the Bank of Belgium;
but when it comes to massive wealth-multiplying asset purchases, the BOJ is the real master.
And we all know how that turned out.
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Well said .....
..and F me….
….don’t they own a whole bunch of the US equity market ?????
The central planners Bro of the Sorrowful Figure • Sep 12, 2017 7:10 AM
First bitcoin was sold with a bunch of lies like its was untrackable that government could do anything against it or it was a threat to
governments and now you see governments supporting it and the FBI arresting crypto veterans not the average crypto guy. Another lie its
the decentralization with the exponential growth of the blockchain every year less and less people will be able to "mine" bitcoin wich will lead
to a kind of centralization.
Making Merica G... Bro of the Sorrowful Figure • Sep 12, 2017 6:23 AM
ag/au lol. Barbaric relics in 2017.
do what you implicitly claim to respect by your very presence on this website, objective analysis of all sides of an argument and the
notion that we win an argument by the merit of the content and facts of your position instead of by incessant ad hominem...
I don't give a rat's ass bout your cyrptos, I gots enuff cyrptos of another kind pon my plate... but this naive and touching call out to
another time an place takes me back... when the site rocked with guys n gals who knew their p's n q's and had their ducks all in rows...
around 2011 or so...
when the boyz who manage things here were pointing a finger towards a dude at a desk in the Basel Building of da Beast, as being the
ultimate place to blame for the incessant gold manipulation wese were all growing to love... to loath... and a line like todays'
the Basel-based Bank for International Settlements — which acts as a bank to central banks — bought out its private
shareholders so it could focus on its public service functions, rather than the interests of financial investors.”
could only have appeared as the most ridiculous sarc. Public service functions?
But that was then... and this is now. And to expect your interlocutors here to be capable of raising the bar of debate above the level of the
lowest form of "tranny mud wrastlin mud slingin" is touchingly naive... and out o touch. But I likes yur style... takes me back to a kinda
kinder, gentler me... so lemme give ya a brief history of the DEVOLUTION of GOLDBURG ... into a steaming cesspool of inarticulate angst,
malice, and envy. To which point ... this BIS thing is central... ya see...
back in the day,,, there really were ... top flight investigators, advocates, street-fightin, bitchin warriors o the word what knew how to put
serious FEAR into the BANKSTER GANGSTERS of the BIS n other scamster central to our modern system of crony capitalism gone beserk.
Two of the most prominent being REG HOWE... and his buddy BOB LANDIS. Reg took on the BIS in a legendary lawsuit confrontation AND
battled them to a draw... over their refusal to pay fair market value for withdrawing shares amongst many other things(see link)and
conclusively demonstrated the role of that body in collusive serial market manipulations. LANDIS was equally masterful at reading over eye
glazing bs from scamsters like Barrick... spotting the serial criminality hiding behind the accountant style bafflegab... and parsing the
motivations and methods behind a blizzard of buzz words designed to conceal more than reveal the financial data.
THOSE. WERE. THE. DAYS. THOSE WERE MEN. Their time has passed.
Bout the end of the first decade of this new millennia... with the giants worn down and used up... we entered the alleged 'bull market' of
2010... and a new Klondike style gold rush of new smart guys looking to score from the upsurge of investor interest in shiny things. A raft
of poseurs... with no real knowledge of metals, markets, or meritorious communication, stepped up to steal the mike and bombard us with
bullshit which would turn out to have been at the behest of the very "manipulators" who they loved to scream loudest at! BACK UP THE
TRUCK@NEVERBEENABETTERTIME.CON
A whole generation of gullible investors led down the garden path by a phalanx of pretend friends ALL WORKIN FOR DA MAN! Who turned
out to be a Panda in a three piece suit with a Harvard MBA and a desk at the PBOC... workin the phone all day with his allies at JPM to turn
the big wheel o fortune eastwards ho... at the expense of the wretches of the west and their dying polities.
Gold is real. I got's me some... then I GOTS outta Dodge... for good... and sat back to watch the show. Endless scamming bullshit
investment advice from fake experts on the payrolls of serial con artists. That was the precious metals thing. Seven years o pain no gain
and the gomers here never tire of comin back for MOAR!
And somehow... you think the next thing got invented to turn folks into bagholders... "crypto currencies"... is gonna turn out different
huh? You'll get no ad homs from me... I just watch and wonder...
is there any limit at all to the gullible and naive acceptance of the oldest shell games recycled over and over by the usual suspects? Can
their victims ever learn to avoid the siren call of 'the next big thing?" Have fun here dude... I certainly do... but drop your expectations of
your interlocutors down... way down... from your starting point here... in order to learn to do so. Ain't been no 'fight club' here for many a
moon.
a Smudge by any... Bro of the Sorrowful Figure • Sep 12, 2017 10:15 AM
Might be OT but if you have a coinbase wallet....try selling some coin and take the funds down into your bank account.
You might find out that....you can't.
If you can, pull it all out of coinbase. Now.
http://www.zerohedge.com/news/2017-09-11/forget-tulips-bitcoin-heres-real-bubble 7/10
9/14/2017 Forget Tulips & Bitcoin - Here's The Real Bubble | Zero Hedge
http://www.zerohedge.com/news/2017-09-11/forget-tulips-bitcoin-heres-real-bubble 8/10
9/14/2017 Forget Tulips & Bitcoin - Here's The Real Bubble | Zero Hedge
http://www.zerohedge.com/news/2017-09-11/forget-tulips-bitcoin-heres-real-bubble 9/10
9/14/2017 Forget Tulips & Bitcoin - Here's The Real Bubble | Zero Hedge
http://www.zerohedge.com/news/2017-09-11/forget-tulips-bitcoin-heres-real-bubble 10/10