Chart of the week: Switzerland the safe haven

Investors rattled by the prospect of a global slowdown and a worsening trade war are heading for Switzerland; the local stockmarket index has just hit a new record.

The politically stable country compares favourably to the shaky eurozone and increasingly fraught global geopolitical backdrop, while the index also boasts more stable, dividend-paying multinationals – such as Nestlé and Roche – than other markets, as Bloomberg points out.
It also bodes well that the Swiss franc, along with the Japanese yen, is deemed a safe haven when the global economy is slowing. Indeed, according to a study by JP Morgan, the franc was the best-performing currency during the last four US interest-rate cutting cycles.
“While the US unemployment rate is currently near a 50-year low of 3.6%, that statistic doesn’t tell the full story and can mask a deterioration in the labour market. The participation rate measures all active workers divided by the working-age population… When people who are unemployed grow too discouraged and stop looking for work, it causes the participation rate to go down. But as a result, the unemployment rate goes down as well because it doesn’t include people who have given up. This makes the picture look better than it is. From about the late 1980s until 2008, the participation rate was around 66%… But after the crisis, the rate dropped… The latest jobs report shows it’s at 62.8%… Men’s labour-force participation has fallen for almost six decades… Women’s labour-force participation has also been declining, although this is a… more recent phenomenon.”
Michael Klein, The Conversation

Leave a Reply

Your email address will not be published. Required fields are marked *