There was some debate a few months ago as to whether the massive drop in oil prices constituted a “black swan” event. Meaning that it was a completely unforeseen highly important event which had the potential to change economic sentiments quickly.
Some argued that the crude plunge was not unforeseen at all. That they knew all about it. The tea leaves had told them.
I argued that the downward move in oil was in fact a “black swan” which had the potential to change the world economic game to a very large degree.
Black swan, black duck or whatever things are moving big time in the world economy all of a sudden. Russia and Iran are in nearly free fall. And now a big right cross from the Swiss National Bank. (Which is dealing with piles of Russian money seeking safe haven and an ECB which is about to go into serious QE mode.) It has ended Swiss franc’s peg to the euro.
Over two decades ago, George Soros took on the Bank of England, and won. Just before lunch local time, the Swiss National Bank took on virtually every single macro hedge fund, the vast majority of which were short the Swiss Franc and crushed them, when it announced, first, that it would go further into NIRP, pushing its interest rate on deposit balances even more negative from -0.25% to -0.75%, a move which in itself would have been unprecedented and, second, announcing that the 1.20 EURCHF floor it had instituted in September 2011, the day gold hit its all time nominal high, was no more.
So who picked up some of the yellow stuff on the long dip?