- Up until 15 Jan 2015, Switzerland maintained a currency ceiling against the euro (in place since 2011).
- This would stop the Swiss franc from appreciating too much.
- In times of strong franc demand, the Swiss central bank would let the franc appreciate to a point, and then stop the appreciation, by selling as many francs as the market wanted (and thereby accumulating foreign currency reserves).
- US (2009, 2011, 2013 - ended 2014).
- UK (2009, 2012, 2013), Japan (2009, 2011, 2013).
- Europe (starting now - Jan 2015 - would have started earlier but resistance from Germany).
- Merkel believes QE eases fiscal pressure on spendthrift member states (i.e. no need to be vigilant on Fiscal Policy (budget) because Monetary Policy (QE) available).
- Also believes it will ease pressure on same member countries to embark on tough economic reforms.
- Believes it is "back-door fiscal union" (i.e. countries with weak budgets get helped by those with strong ones).
- Equites down off lower global growth outlook.
- Industrial metals (like copper) lower for same reason.
- Government bonds doing better as receding inflation fears and less likelihood of higher US interest rates soon.
- Dodd-Frank being chipped away at by Republicans.
- Being done through legislative action in the House of Representatives.
- Republicans not mentioning it much in public statements, because Wall Street still viewed with suspicion.
- Legislation adopted in the wake of the 2008 financial crisis, primarily aimed at curtailing excessive risk-taking by big banks.
- Key rule = "Volker Rule" that prevents banks from speculating with their own money (proprietary trading).
- Seen as central legislative achievement of Obama's first term.
- Lowest level in 5 and a half years.
- Copper used in construction and electronics.
- Seen as a barometer of economic growth, and with global growth slow and expected to worsen, speculative and fundamental demand for copper has dropped.
- Inflation is bad for bonds, i.e. it erodes the "fixed income" return of bonds.
- But global inflation is falling (due to cheap oil and slow global growth).
- Hence more demand for bonds, hence bond prices fall.
- Overall improved governance & broad-based economic reforms.
- Economies diversifying away from commodity exports & into manufacturing + services (especially tourism).
- Telecoms, finance, transport & infrastructure = best growth sectors.
- Alexis Tsipras (head of coalition of left of centre political parties) expected to win, possibly ushering in a radical economic program.
- He proposes undoing recently-imposed austerity measures, restructuring external debt and totally changing the banking sector, but might just be electoral hot air.
- Investors concerned that he will force a Greek default (on its debts) and exit from the euro (Grexit).