On Weds. I will be defending my skepticism, boosted by Grant’s Interest Rate Observer, on indexed Exchange Traded Funds at the Qwafafew club of Quant analysts some of whom created the whole idea of country fund ETFs. I was mistaken when I said Grant’s has an ownership link with Horizon Kinetics whose “Alice in Indexland” research it promoted in confabs and publications. HK was merely a contractor for Grant’s. I will go into the lion’s den to listen the CEM Group, CBOE, and FTSE Russell equity index suppliers and if I am truly brave express my skepticism about robo-indexation.

I will start by tackling the completely out-of-date daily high and low figures for European markets published by the Financial Times, co-manager of FTSE Russell. This is only updated weekly at best and the FT blames Reuters for the lapse. Surely they would do better not to publish this trash data at all?

The Neue Zuericher Zeitung revealed another aspect of the Swiss National Bank investment in what it thinks is the total US market. In fact, we have argued that it is buying any share traded in the US, including lots of Canadian shares and plenty from the Far East and Europe—and even Switzerland! The purpose of the black box index buying is to stop the Swiss franc from rising against the dollar and wiping out exporters. But the SNB in fact is buying lots on non-US stocks according to its careless reports to the US SEC, which effectively are indirectly weakening the dollar. But there is a good side to this according to the NZZ:

“In Q3 the Schweizerische Nationalbank had a further SwFr 7.4 billion gain in the book value of its stock portfolio which reached 28.7 Swiss francs” the daily blog write [my translation]. “With holdings of over 720 billion Swissies, the smallest change in valuations and interest rates can lead to billions in rises or falls in its portfolio. In H1 this year the stated gain was SwFr 21.2 bn vs a loss the year before of 49.9 bn francs.

“With the exchange rate against the euro virtually unchanged in Q3 and the price of gold high and also unchanged [in Swiss francs], the rise was entirely from prices and dividends from its stock positions.”

What this program has allowed the Berne CB to do is to stop flight capital moving into Swiss francs from currencies with negative interest rates, like the euro. The total of Swissie bond issues outstanding was flat year to year.

The badly programmed robot investor of course can again suffer a stock holding loss as it did in 2015. But the fascinating fact that the bank wound up buying euro-denominated and Canadian stock which happens to have American Depository Receipts or other stock trading here still shows up the idiocy of indexation.

Swiss reader JH writes to tell me what we really should do is buy shares of the bank on the Zürich Stock Market. Each of the 26 Swiss cantons has a sharehold and the returns from that are very important for some cantons.

I believe that Brexit cannot happen without a new general election in Britain is now seen as likely by John Llewellyn of www.llewellyn-consulting.com with which we trade issues. He wrote after the Nissan (NSANY) deal with PM Theresa May to give it access to the European Union market no matter what happens in the talks on a fine deal “put her head in a noose”. The former deputy chief economist of the Organisation for Economic Cooperation & Development, whom I know from Paris, writes: