Jim Grant just posted the following to his LinkedIn Account. It is what he wrote in Grant's Interest Rate Observer back in September where he predicted that the Swiss National Bank would have to permit appreciation of the franc and that holders of three-year call options on the Swiss/Euro exchange would be wildly rewarded.
(Grant's, September 19, 2014) Like a celebrity in flight from the paparazzi, the Swiss Confederation demands protection from its pesky admirers. To beat back the unwanted appreciation of the Swissie, the Swiss National Bank is – once again – vowing to move heaven and earth. Now under way is a speculation. Prompted by a friend (that's you, Harlan Batrus), we venture that the SNB will sooner or later be forced to permit the franc to appreciate and thus to enrich the holders of low-priced, three-year call options on the Swiss/euro exchange rate. It's a long shot, to be sure – the options are cheap for a reason –but we judge that the prospective reward is worth the obvious risk.
Continue Reading »