Swiss National Bank Put On Alert In the Event of BREXIT

Forget about Trump v Clinton. The British Empire’s fate stands in the balance. The corrupt finaglers from Brussels are doing everything they can to prevent England from declaring independence from the EU. They want their fish, their banks, and their people. Markets are going to be EXTREMELY volatile next week. There is a better than average chance that some of you reading this will perish under the brush fires of catastrophic consequences.

The Swiss National Bank is the worst actor in the negative interest rate dilemma, mainly because of their balance sheet success. Because everyone else, save Germany, is an abomination in Europe, whenever things get dicey, people flee to the swissy. In the past, this has put a pervasive and unsustainable pressure on the Swiss banks to deter this from happening. Thus, we are seeing them prepare now, ahead of Thursday’s vote.

“This is an event that is possible, and the probability increased in the last few days, but the base scenario that we have does not include the Brexit,” President Thomas Jordan told reporters in Bern after the central bank kept interest rates unchanged. Nevertheless, “turbulences could arise, and we intend to stabilize the market in case such a situation arises.”

The SNB held its deposit rate at minus 0.75 percent on Thursday, as forecast by economists in a Bloomberg survey. It also reiterated its threat to wage currency-market interventions if needed, saying the franc remained significantly overvalued.

“Fundamentally, we have room to maneuver on these two instruments,” Jordan said. “In a first phase, should the situation arise, it will be about stepping in to markets in a stabilizing manner to prevent exaggerations.”

“We will have a full team that will be following developments as they unfold,” Governing Board member Andrea Maechler said. “We will be following developments very closely. We have a global view, we follow markets on a 24-hour basis.”

“In case of Brexit we expect markets to test 1.05 francs per euro — a level that we expect the SNB to defend fiercely,” said Karsten Junius, chief economist at Bank J Safra Sarasin in Zurich.

Economists surveyed by Bloomberg predict interventions will probably be the SNB’s first line of defense to rein in any currency strengthening. Some also expect a cut to the deposit rate, already at a record low.

Jordan last admitted to currency purchases at the height of the Greek debt crisis a year ago. The SNB has some 600 billion francs ($626 billion) of foreign-currency reserves, a sum almost equal to the economy’s annual output. Growth slowed to 0.9 percent last year due to the strong franc.

In spite of the success of the SNB, their banks are in dire straights. Both Credit Suisse and UBS are trading all record lows. No one is safe. Hide the kids and the husbands.