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The Swiss National Bank Activity Should Be The Only Indicator Needed To Signal A Bear Market In Equities

David Belle profile picture
David Belle


  • The SNB is the world's largest hedge fund.
  • Buy the dip should continue until we see large decreases in SNB holdings on quarterly filings.
  • Swiss govt bond yields maintaining positive value could be a signal that they will shed holdings.

As we all know, central banks have been the largest buyers of assets worldwide. In just 6 months they have purchased $1.6tn of assets. Large QE programmes, reduced aggregate demand globally after 08 and a requirement to actually make a return in the face of negative yields have caused central banks globally to be a price impartial buyer of various assets, and US equities especially have been the pick of the SNB.

Take a look at their top holdings (correct as of Q1 filing):

Just of note, they've increased their holdings of Apple shares by 3 million approximately since December.

For me, I would remain a buyer of the US indices purely off this basis. The trigger for me to change would be a discernible and sustained rise of Swiss 10YY. They are still well pushed under negative territory, although there could be the case of a slow rise:

I'd argue that until we see a real base made above 0%, and good rate increase expectations to sustain future rise in yields, we won't see any let up in the US equities rally (even with price this distorted). The ECB may lead the SNB in this. Last week they have signified that there will be no further rate cuts which would indicate that they do want to unwind their balance sheet (how, I do not know, but China may be a big buyer of EZ assets and may purchase at a big discount so the risk may payoff). This could prompt the SNB to act, which would lead to them selling their holdings. This is really why it's key to watch what Europe and the Swiss especially are doing, since I'd guess that central banks are possibly able to have a head start on the lowly investor. Maybe.

Going into

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David Belle profile picture
Macrodesiac - Level up your market IQTechnicals for show, macro for dough.Trade in the tails and always have a view.Trade the value, not the price.

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Comments (8)

Aug 2020 TSLA NIO & PLUG are the SNB's biggest new positions - all blowing the market away months later - i'm no longer going to do any work evaluating companies etc - P/E's earnings etc dont matter! it's liquidity - i'm just going to watch the 13F filings & buy what the SNB are buying! as they are propping up this market! gotta love a put
David Belle profile picture
Interesting idea, and a good one to follow, though not necessarily bullish. Also kind of cool that it's basically the sp500 sans banks plus citi and overweight/underweight a few stocks. But basically the sp500. They seem to have bought the passive Kool Aid with some minor deviations. I imagine the PM having a thick Swiss-German accent and wearing black glasses. I'm not sure being passive investors makes them a 'hedge fund' though. Also, as passive investors, I fear their large positions will simply add significant weight to any (all) sell off(s).
Tom Bergerson profile picture
Great topic. I have been pondering the stance of the SNB as well. Positive yields is one part of the puzzle. Their currency vis a vis the Euro and to some extent the USD is another (and related to yields). And of course the SNB is only one of the very many price insensitive buyers out there, if a large one. SWFs are another consideration. If oil crashes further there may be some pressure out of the Middle East on equities as they sell to maintain their social programs. And potentially from the Norwegian SWF as well.
David Belle profile picture
Cheers for the reply! I tend to look mainly at one factor and the most sensitive or pertinent factor to that content. I find looking at too many brings in serious endogeneity. It's also easier to simply to watch the yield vs man you there flows! But you're definitely right, on all other aspects too.
Interesting theory. Just keep in mind that the Swiss central bank is not a traditional investor. Although its investment objectives have never been disclosed, it is a safe guess to assume that it is capital preservation. The 600 B+ portfolio has to be invested somewhere and bonds meeting the quality requirement have mostly negative yields. Since the franc remains stubbornly overvalued this could well continue for quite a while. Depending on where US treasury yields are heading there could come a reduction of US equities. However, one should not expect any major moves because the SNB does not want to shake up markets. My two cents.
David Belle profile picture
You're absolutely right. The fact that they can buy at pretty much any price is a large part of it. However, I still believe that they are sensitive enough to react to +ve yields. That's why I'm kind of thinking that ECB forward guidance may be the answer. It could be anything really and only time will tell. I'm still buying though!
This makes sense to me. Although the SNB has now some sort of a "Chinese" approach by watching a basket of currencies there is no doubt that the EU with 60 % of exports has more importance than the rest of the pack. The Fed is presently the bogeyman but I have some serious doubts that we shall see more than three rate hikes any time soon. Looking at the long end of the yield curve tells you that many others seem to agree. Moderate growth and moderate inflation is good news for stocks.
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