Syz the moment

The view by our Chief Economist Adrien Pichoud: • Going forward, we believe that the SNB is now done with the recalibration of its monetary policy and that it shouldn’t cut rate further this year. • Swiss monetary policy can now be deemed as “neutral” for inflation and economic activity, as the real short term rate is close to 0% (actually just below with a cash rate of 1.25% and an inflation rate of 1.4%). • Provided growth remains on a gradual upward trend toward potential in 2025 (1.5%) and there is no unexpected development on the inflation front, there will be no reason for the SNB to lower further the CHF short term rate. • Should European or global developments trigger volatility and upward pressures on the CHF, we believe the SNB would rather resort to interventions on the FX market to manage the impact on the economy, rather than use the interest rate lever.

The Swiss National Bank cut borrowing costs again to loosen constriction on the economy and stem gains in the franc, a move that contrasts with the hesitancy of global peers over easing.
Officials in Zurich lowered their benchmark by 25 basis points to 1.25% on Thursday after a decision that observers found hard to predict.

Source: Bloomberg

Concurrently the cost of a Big Mac was 5.69 dollars in the U.S., and 5.87 U.S. dollars in the Euro area. What is the Big Mac index? The Big Mac index, published by The Economist, is a novel way of measuring whether the market exchange rates for different countries’ currencies are overvalued or undervalued. It does this by measuring each currency against a common standard – the Big Mac hamburger sold by McDonald’s restaurants all over the world. Twice a year the Economist converts the average national price of a Big Mac into U.S. dollars using the exchange rate at that point in time. As a Big Mac is a completely standardized product across the world, the argument goes that it should have the same relative cost in every country. Differences in the cost of a Big Mac expressed as U.S. dollars therefore reflect differences in the purchasing power of each currency. Source: Tavi Costa, Crescat Capital, Statista, The Economist

In 1987, Bernard Arnault created $LVMH. In 1988, Johann Rupert created richemont $CFR.SW – an acquisition-driven luxury group much like LVMH, and to date, one of Arnault's largest competitors. Richemont is now the second largest luxury conglomerate and the third largest luxury company (with $RMS being the second) in the world. The group's many prestigious maisons include Cartier, Van Cleef & Arpels, Montblanc, Piaget, and Vacheron Constantin, to name a few. Since inception, Richemont has compounded its top line at 5% per year. Looking instead at the last 15 years, the group has grown its revenue and FCF at a 6% and 9% CAGR respectively. Quartr just created this infographic, mapping out every acquisition since Richemont's inception.

@BloombergTV

Swiss National Bank cut the policy rate by 25 BPS to 1.50%. USDCHF and EURCHF both jumped by more than one figure to 0.8970 and 0.9780 respectively. Market was only pricing in a 35% probability of this cut.

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Rolex sales crested $10 billion for the first time as the top Swiss watch brand gained market share, according to a report by Morgan Stanley. The dominant Swiss luxury watch brand produced 1.24 million watches in 2023 with sales of 10.1 billion Swiss francs ($11.5 billion). That’s a gain of 11% from 2022, analysts at Morgan Stanley and Swiss firm LuxeConsult said in a report Wednesday, adding Rolex’s current level of market share is “unprecedented.” The maker of the Daytona, Submariner and Datejust models grew its retail market share to just over 30% as well-heeled buyers clamored for watches made by the Geneva-based entity, which is controlled by a charitable trust named for Hans Wilsdorf, who co-founded the brand in 1908. The lower priced Tudor watch brand, which is owned by the same foundation as Rolex, had sales of about 545 million francs in 2023, according to Morgan Stanley estimates. source : bloomberg, morgan stanley