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[gofbme-blog]

Happy 5th birthday to Swiss Francs

Happy 5th birthday to Swiss Francs Exactly 5 years ago on January 15, 2015, when the Swiss National Bank (SNB) removed the Swiss franc peg from the euro and allowed the franc to float. EUR/CHF fell from the floor of 1.2000 down to a low near .9650 in a heartbeat, taking out longs who believed the SNB would commit to the 1.2000 floor. Traders, and a few brokers, were wiped out of business on that day as they didn’t have the funds to pay their margin calls From early October 2019 until early December 2019, USD/CHF was stuck in a range between .9850 and 1.0025. Twice the pair tried to clear the 1.000 level, only to close back below it. Over the last 2 days, both EUR/CHF and USD/CHF have made new long-term lows. One of the reasons for this could be that the SNB has intervened less. However, one should never forget the lesson the markets learned 5 years ago today – that they could be much lower and much more quickly!

[gofbme-blog]

What can keep GOLD strong in 2020 ?

1.Inflation should remain subdued. 2.The same applies to GDP growth, although global growth could bottom out. 3.The Fed will be in a wait-and-see mode, but with a dovish bias. 4.The ECB and the BoJ will remain accommodative. 5.U.S. dollar should stay strong. 6.The U.S. fiscal policy will remain easy. 7.Trade wars will be softer with a phase one trade deal signed. 8.The uncertainty regarding Brexit should also diminish, as Conservatives won a majority in December parliamentary election. 9.Thus, investors could increase their appetite for risky assets. 10.Bond yields have room to move higher in 2020.

[gofbme-blog]

Love for US$ to continue?

US President Donald Trump addressed the Economic Club of New York on Tuesday. Attendees and global investors eagerly awaited any mention of tariff policy or China trade negotiations—two issues that have come to dominate risk sentiment in recent weeks, overshadowing another perennial irritant for the US president: a strong US dollar.

 In broad terms, the US currency has been on a rising trend over the last decade. The dollar index currently trades around 36% higher than its 2008 low.

 Greenback strength in part reflects its global dominance. A recent Bank for International Settlements survey showed that daily trading in foreign exchange markets reached an equivalent of USD 6.6 trillion earlier this year; of that sum, USD 5.8 trillion involved the US dollar. This is further amplified by the scale of the US equity and bond markets. Last year, the US accounted for around 40% of equity market capitalization and outstanding issuance in bond markets globally.

 But the US dollar’s central role is not set in stone, and the following are a  number of long-term dynamics worth monitoring:

 ·  US economic and foreign policy. Rising US public debt and more populist policies have fueled concerns over the US fiscal outlook. The national debt has grown 16% under the current US administration to USD 23 trillion, and the next presidential term could usher in another significant round of government spending. In addition, the current White House has levied tariffs and imposed financial sanctions more widely and stringently than previous administrations, and often with a political lens. This has disrupted the established international status quo in certain areas, raising concerns abroad about the risks of US dollar dependence.

· The shifting world economic order. The global financial and trade system is increasingly complex, with diverging national interests. As the center of global economic growth shifts from West to East, it is pulling some countries away from the established multilateral system. China's rising economic, technological, and geopolitical clout is creating an increasingly bipolar world order, and the Chinese renminbi has the biggest potential to play a more important role as a global currency in the long term.

· A more balanced global system. Substituting for the dominant US dollar with another single currency may not be the optimal solution for a multi-polar world. 

So while the US dollar will likely maintain a dominant role, and indeed could benefit from near-term uncertainty, there could see a gradual transition away from it. And though the shift may appear far away on the horizon, the structural changes in this market as too important to ignore for anyone who invests or does business internationally.

[gofbme-blog]

Is healthtech an IT vertical?... may be not!

14th November, 2019

HealthTech is not just a vertical in the broader IT market. Just as "fintech" describes a specific set of applications of technology to solve specific problems in the financial sector, we use the term "HealthTech" to refer to the evolving use of IT to address the general problem of efficiency and cost constraints in providing healthcare. While the theme has connections to other ones, including consumer technology (e.g. wearables) and enabling technology (e.g. artificial intelligence and big data analytics), these applications are a discrete set of overlapping opportunities. Opportunities like population health and telemedicine have potentially large, if uncertain, total addressable markets. Their successful adoption could drive the theme's overall growth rate into the upper single digits or higher over the next decade. Below are a few highlight of the main segments in the current market:

Software, AI, and big data. The ability to store, retrieve, and analyze health data electronically is at the core of the HealthTech theme. Electronic medical records (EMRs) are now widely adopted and are largely a replacement market in the US. Industry enthusiasm for population health software has waned, but this is a temporary phenomenon as payers will ultimately need to capitalize on the data stored in EMRs; the population health and other next generation healthcare IT solutions as primarily opportunities for the coming decade.

Telemedicine and remote monitoring. Telemedicine helps to match regional supply and demand, lower costs, and improve access to care for patients in markets with less established healthcare infrastructure. New 5G networks should increase connectivity speeds and make it easier and safer to transmit critical health information wirelessly. Wearables are being rapidly adopted in consumer fitness tracking and are gradually incorporating more medicalgrade sensors. They could provide an early warning about an individual's health risks by continuously collecting vital signs and improving the quality of diagnostic data.

Drug development applications. Better use of data could improve clinical trial efficiency, speeding drugs to market and improving pharma NPV. Pharma companies have begun to experiment with incorporating "real world evidence" in the drug approval process, and regulators appear open to innovation involving data collection. The most accessible way for investors to gain exposure to these developments is through contract research organizations (CROs) that provide outsourced R&D services to the pharma and biotech industry.

Imaging, image-guided surgery, and robotic surgery. The diagnostic imaging market provides a practical example of how advanced software and AI are already being used to make healthcare delivery more efficient by combining image data with software. Image-guided and robotic surgery techniques also can cut healthcare costs by reducing surgical complications and shortening hospital stays. Related markets such as image guided therapy and radio oncology add another opportunity, with a growth rate in the mid-single digits. Robotic surgery is currently a high-growth area within the broader medical technology field, and still represents less than 20% of applicable surgical procedures.

[gofbme-blog]

Record Highs in Equities and fall in bond prices

13th November, 2019

No matter that much of the current economic data is murky, or that the road toward a trade resolution between Washington and Beijing is a long and winding one. There is no mistaking the changed mood of financial markets: the threat of a hard landing for the global economy is behind us, and a rebound beckons.

But the extent and scope of an economic recovery in 2020 remains very much a point of conjecture. Bullish equity-market sentiment ultimately requires a substantial rebound in business investment that reflates the global economy. Evidence of such a surge may not arrive until the spring of next year at the earliest.

November has provided some signs that the worst of the soft patch is behind the global economy, while reports emerging from the ongoing US-China trade talks suggest that both sides can see plenty to gain from a deal.

As a result, global bond yields have climbed to their highest levels in more than three months, with ten-year yields in France back above zero for the first time since July. Record highs for various equity markets are being characterised by big rotations between sectors and regions.

So-called “value” shares — typified by global financials, which have been hit hard by negative interest rates in Japan and Europe, and then the summer fears of recession — are powering up. This trend is amplified by rising long-dated government bond yields, which normally benefit banks as they can lend at higher rates while their cost of funding is negligible.

Investors are overlooking quarterly results which show profits falling for both S&P 500 and Stoxx 600 companies, preferring to focus on sunnier forecasts for next year.

Fiscal stimulus can lift Germany out of the doldrums Greater government spending is certainly on the agenda for the UK economy and an equity market that has been largely ignored by foreign investors,

The prospect of fiscal ammunition being deployed, along with fading prospects of an escalation in the trade war, explains much of the current enthusiasm within equity markets.