In the second quarter of 2018, one in which the global economy was shaken by the rapid escalation of Trump’s trade war, and in which central banks were one after another hinting at their own QE tapering and rate hiking intentions to follow in the Fed’s footsteps, what was really taking place was another central bank buying spree meant to boost confidence that things are now back to normal, using “money” that was freshly printed out of thin air, and spent to prop up risk assets around the world by recklessly buying stocks with no regard for price or cost.
Nowhere was this more obvious than in the latest, just released 13F from the massive hedge fund known as the “Swiss National Bank.” What it showed is that, just like in the prior quarter, and the quarter before that, and so on, the Swiss central bank went on another aggressive buying spree and following a modest selloff in the first quarter which was a mirror image of the SNB’s buying spree during Q1 2017 – the Swiss central bank boosted its total holdings of US stocks to $87.5 billion, up 6.6% or $5.4 billion from the $82.0 billion at the end of the first quarter, and just shy of their all time high.
On a share basis, the SNB added some 33.659 million shares to its total holdings of US stocks, which at the end of Q2 stood at 1.320 billion.
Some notable observations: in the second quarter, after the SNB printed money out of thin air, it then added 4.85 million shares of AT&T, 673K shares of MSFT, 305K shares of AAPL, 272K shares of FB, 46K shares of AMZN, 423K shares of XOM. And according to some calculations, the SNB’s portfolio now generates over $1 billion worth of dividends, or as @SheepleAnalytics notes, “they print money and we ship them our profits.”
While we are far beyond the point of debating central bank intervention in equity markets (we do want to remind readers that until several years ago, it was considered “fake news” to even mention it, and those who accused central bankers of manipulating stock markets were said to be paranoid tinfoil basement dwellers), we want to point out that unlike the BOJ, which at least keeps its capital markets distortion local, the SNB, which likewise creates money out of thin air (then sells it for dollars in an attempt to keep the Swiss franc depressed) is actively causing substantial price distortions in the US while collecting billions in annual dividends from US corporations which are then remitted to various Swiss cantons and regional governments to fund local growth.
