Few are talking about the Swiss National Bank and why it is connected to today's stock market selloff.
Switzerland's central bank unexpectedly raised interest rates today and announced they would be active in the foreign exchange market. Swiss central bank surprises markets with first rate hike since 2007 (cnbc.com)
Translation: "All the stocks we bought for F/X purposes are going down and we want to lock in profits."
The Swiss and Japanese banks have bought lots of stocks to implement their monetary and currency policies. The Swiss, in particular, own a whopping $177 billion of US stocks as of March 31st AND they bought $25e billion more in 1Q2022! This makes them one of the largest pools of active money in the world. If they start selling, they will be getting in line with other large funds that are now liquidating.
Central banks were price insensitive buyers and now they are sellers.
Be careful out there.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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