“Wir testen das jetzt mal”

Pfäffikon SZ, Switzerland – Now the monetary policy worldwide has gone too far, market participants are seeking solutions to cope with it. Insurance giant Munich RE decided to save cash. In the vaults of Munich’s insurer, a double amount to millions of euros is already stored. “Wir testen das jetzt mal,” Nikolaus von Bomhard, CEO of Munich RE, said.

Fragile
The events of last week proved that the society is currently in a weak juncture. To what extent the attacks in Brussels can influence the European consumer confidence, or even affect the U.S. election, will become clear shortly. In any case, it seems that 2016 will be a turbulent year in many ways. Political hardening is lurking, which will not benefit the extremely fragile financial climate. For the coming quarter, some market researchers foresee dramatically declines in earnings for the companies included in the S&P 500.

Insane
The escalated monetary experiment of Draghi et al. reversed more or less the financial values. The good saver with a carefully crafted pension is brought to the financial abattoir. The person who has lived on credit the past decades is the laughing third though he does not know why. It seems difficult to me to explain this insane monetary policy to young generations. After all, money is not free.

China
I have already pointed out that the 75-year old debt cycle is coming to an end. According to fund manager Kyle Bass of Hayman Capital, Chinese banks can lose about five times more during a new credit crunch than U.S. banks lost in 2008. “What happens in China will not stay in China,” Bass said. Earlier, Bass predicted the same for Japan; which, moreover, never happened. However, it is not inconceivable that it will gently start to crack in China this summer when the banking system will be tested. This year’s volatility on the global stock markets fits the image where different investors become completely disoriented over time; this is a similar picture to 2007, 2008 and 2011.

Meanwhile, Nikolaus von Bomhard of Munich RE is rightly expressing appropriate outrage about the negative interest rate policy and the weak knees of the Deutsche Bundesbank. The financial gagging of European citizens continues, where the possible next step is the complete eradication of cash. However, I wonder if this will actually happen in Switzerland.

It remains for me to wish you a good Easter weekend.


Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in the above mentioned shares and has no intention of doing so in the next 72 hours.