Moshe Strugano & CO

19/10/2026

The Swiss franc is considered the world's strongest currency, a sort of rock in the storm. Since March of this year, however, it has lost about 7% of its value against the U.S. dollar and 3% against the crisis-prone euro. What’s going on? How should we interpret this?

The first question can be answered elegantly using purely mechanical reasoning. Drawing on the slogan coined by James Carville in 1992 (“It’s the economy, stupid”), one could say: “It’s the interest rate differential, stupid.” Interest rates in Switzerland are the lowest in the world: the Swiss National Bank’s key interest rate is 0%, while the federal funds rate in the U.S. stands at 3.75% to 4%. The interest rate differential for market-determined rates is even wider. The yield on 10-year government bonds in Switzerland is 0.5%, while the yield of 10-year Treasuries currently stands at 5.1%, with high volatility (last Wednesday, it even briefly exceeded 5.3%). Incidentally, this interest rate differential greatly annoys President Trump, and he suspects that sinister forces are at work, trying to exploit the American people. “They live off the U.S.” he said. However, market-driven bond yields suggest that the large interest rate differential may not simply be the result of malicious manipulation.

Given the wide interest rate differential and the fact that the Swiss franc has now partially replaced the yen as a source of funding for so-called “carry trades” (short in CHF, long in USD), the Swiss franc could actually be trending even weaker. However, exchange rates are determined not only by interest rates but also by fundamental factors. Key factors here include (i) political stability—currently somewhat less solid than it used to be in the U.S.—, (ii) the inflation differential, and (iii) differing trends in government debt. In the U.S., inflation stands at 3.7%, compared with a still relatively low 1.0% in Switzerland. This could, of course, change quickly, depending primarily on how energy prices develop. What remains, however, is the high and rapidly rising federal debt in the U.S. In August, it exceeded USD 40 trillion. In 2025, general government gross debt stood at 123.9% of GDP in the U.S., compared with just 40.7% in Switzerland.

We do not want to overhype the Swiss franc here. However, when we look at the big picture—especially considering Switzerland’s political stability—we can reasonably assume that the Swiss franc’s long-term upward trend and its status as a safe haven will continue. While the past is no guide to the future, it is still worth remembering that over the past 20 years, the Swiss franc has appreciated by about 50% against the U.S. dollar and by about 70% against the euro.
Moshe Strugano Attorney
Strugano&Co Attorneys

11/10/2026

Some off shore news banking and regulation:

China’s Massive Offshore Tax Crackdown

Beijing has shocked the wealth management industry by enforcing retroactive tax rules on offshore wealth. Wealthy Chinese citizens are now facing an aggressive 20% flat tax on foreign income and offshore trust transfers. This clampdown is heavily impacting illiquid asset structures—such as private equity and real estate—forcing multi-family offices to frantically restructure clients' wealth before strict disclosure penalties take effect.

2. Global Watchdog Flags Swiss Liquidity Gaps

The Financial Stability Board (FSB) issued a major peer-review report warning that several major jurisdictions remain "materially non-compliant" regarding emergency bank funding. Strikingly, Switzerland and the EU banking union were criticized for failing to secure defined, rapid-deploy liquidity frameworks to handle sudden bank runs, a review sparked by the chaotic 2023 collapse and subsequent UBS takeover of Credit Suisse. Only Hong Kong, Japan, the US, and the UK were judged fully compliant.

3. FATF Grey List Pressure Intensifies

The Financial Action Task Force (FATF) has maintained heavy pressure on 24 jurisdictions currently under increased monitoring (the "grey list"). This is heavily altering how global counterparties and clearing banks treat transactions coming out of mid-tier and boutique offshore hubs, causing substantial transactional friction for corporate structures.

4. Legal Structure & Relocation Shocks

• Cayman Islands: Landmark Legal Services Amendment (LSA) regulations have completely disrupted the offshore legal market. Foreign lawyers are now strictly barred from relocating to practice in the Cayman Islands unless they have attained at least 5 years of Post-Qualified Experience (PQE).
• Argentina's Pivot: In contrast to traditional tax havens tightening boundaries, Argentina has aggressively entered the global market by launching its own "Golden Visa" program, seeking to court free-market capital and high-net-worth individuals.

Moshe Strugsno attorney
Strugano&Co

28/09/2026

ETFs—a great thing, but not for the uninformed
ETFs offer efficient, low-cost market access, but investors should understand procyclical effects, concentration risks, and underlying exposures.

An event that received somewhat less attention but is nonetheless of great significance for the financial markets also celebrated its 50th anniversary: the introduction of index funds, which later paved the way for ETFs. John Bogle, founder and CEO of the Vanguard Group, launched in 1976 the first publicly available index fund, thereby revolutionizing the way ordinary people could invest in the stock market. The Vanguard 500 Index Fund initially raised only USD 11 million in assets. That wasn’t even enough to purchase all the stocks in the S&P 500 Index. However, the resulting ETFs have experienced dramatic growth since then. According to ETFGI, a leading independent research firm, the global ETF industry comprises 17,713 ETFs with USD 24 trillion in assets from 1,044 providers.

ETFs (Exchange-Traded Funds) are an unparalleled, efficient, and cost-effective way to invest in entire markets or specific sectors. For example, the total expense ratio of the Vanguard 500 Index Fund amounts to just 4 basis points (0.04%). However, investors must also be aware of certain characteristics that may entail risks. In particular, the fact that investments in ETFs are generally procyclical and that investors may also be exposed to concentration risks.

The most widespread passive index fund weightings are based on market capitalization. This generates a procyclical effect. New capital flows primarily into securities that have already risen significantly. This isn’t necessarily a bad thing. You just must be aware that by investing in ETFs, you are also pursuing a momentum strategy to a certain extent.

The resulting concentration risks are somewhat more delicate. Furthermore, this diminishes the advantage of index ETFs that a single investment can offer very broad diversification. The U.S. index, for example, has in a sense also become a bet on ten companies and a single theme. The ten largest stocks in the S&P 500 account for 38% of the index. Nvidia alone accounts for 8%. The information technology and communications sectors have a combined weighting of nearly 50%, while the energy sector, for example, accounts for only 4%.

The MSCI World Index, too, does not necessarily reflect the entire world economy accurately, as U.S. stocks account for 70% of its composition while China is not represented at all. Or if you invest in an MSCI Emerging Markets ETF, 29% of your investment goes to Taiwan, 22% to South Korea, 20% to China—and only 4%, for example, to Brazil.
Strugano&Co Attorneys
Strugano

05/09/2026

Nvidia’s AI-driven growth remains strong, while rising U.S. debt and persistent inflation increase risks for Treasuries and the U.S. dollar.

In our last blog, we discussed the enormous volume of investments in data centers. Since then, two other big numbers have made headlines. First, the earnings report from Nvidia—the world’s most valuable company—released last Wednesday, and about two weeks ago, the news that U.S. federal debt had surpassed USD 40 trillion.

Nvidia has once again beaten estimates. Thanks to continued strong demand for AI chips, Nvidia’s revenue rose 106% to USD 96.22 billion in the second fiscal quarter. The company’s profit jumped 126% to USD 59.7 billion. An incredible success story, as evidenced by the stock’s performance: the price has increased tenfold over the past five years. AI and the data centers required to support it are the driving forces. As we explained a fortnight ago, growth will continue. There are already around 12,000 data centers worldwide. However, these serve standard storage and cloud needs. The large number of new data centers that are planned or currently under construction are used for AI applications. These require significantly more computing power and, accordingly, huge quantities of Nvidia’s high-performance chips.

We are maintaining our substantial position in Nvidia stock. But we are monitoring the situation closely. Nvidia’s growth is also showing signs of slowing; free cash flow has more than halved in a single quarter, and moreover the company just locked up USD 279 billion in purchase commitments – a 135% surge from the previous quarter.

The growth of another metric is of greater significance to the financial markets and is placing an increasing burden on them. U.S. federal debt has exceeded USD 40 trillion—a fivefold increase over the past 20 years. There are no signs of a slowdown (see also www.usdebtclock.org). The budget deficit stands at 6% of GDP, and any austerity measures are currently being offset by spending, such as on the war in the Middle East.

The seemingly unstoppable rise in debt and an inflation rate that remains well above the Fed’s 2% target (the PCE index reported last Wednesday stands at 3.7%) form a toxic cocktail for what remains the world’s most important market: the U.S. Treasury market. Added to this is a power struggle between Treasury Secretary Scott Bessent and Fed Chair Kevin Warsh. While Warsh took a hawkish stance at last Friday’s meeting of central bank governors in Jackson Hole and signaled a focus on combating persistent inflation, Bessent is intervening directly in the market in a highly unorthodox manner. The Treasury buys back outstanding long-term bonds and finances these purchases by issuing securities with shorter maturities (or—even worse—by taking on new debt). It may be true that, given the positive yield curve (which, incidentally, was significantly steeper a year ago), this saves on interest costs. But every economics student knows that this cannot sustainably lower market-determined yields at the long end of the curve. Stanley Druckenmiller, Bessent’s former mentor and one of the most successful financial market investors, also sharply criticizes Bessent’s approach.

All of this tends to undermine confidence in the stability of the government bond market and, ultimately, in the U.S. dollar as well. However, given the strength of the world’s largest economy—which is further bolstered by its technological leadership—there is no cause for panic. We are monitoring the situation closely and will continue to provide updates. However, it certainly makes sense to hold a certain position in gold already at this early stage.
Strugano&Co Attorneys
Moshe Strugsno Attorney

US National Debt Clock : Real Time U.S. National Debt Clock

22/08/2026

AI investment is accelerating, but rising leverage and funding needs warrant attention as data-centre spending expands and key suppliers benefit.

Analysts estimate that investments by the five hyperscalers—Amazon, Microsoft, Alphabet, Meta Platforms, and Oracle—will rise by more than 80% this year to approximately USD 755 billion. The figure is expected to reach USD 900 billion by 2027. According to Jim Zelter, president of Apollo Global Management, USD 8 trillion is set to be invested in data centers alone over the next five years. That’s a staggering figure. It’s, for example, roughly double Japan’s GDP and 90 times Switzerland’s annual federal government spending.

So far, so good. These are investments in a technology of the future. They are undeniably good for the economy and society. However, there are two aspects to consider. On the one hand, the question arises as to whether these investments will ever truly pay off for all hyperscalers. After all, competition is fierce, and China, e.g., has entered the fray as well. The battle for market share is raging, as evidenced by OpenAI's announcement last week. OpenAI has introduced unlimited text chats for free ChatGPT users while slashing AI prices to drive usage and revenue growth. It remains to be seen who the ultimate winners will be and what return they will achieve on their investments.

The second point is of greater importance in the short term: the financing of these massive investments. While virtually all hyperscalers have high operating cash flows (which is one of the differences from the dot-com bubble), even they are reaching their limits, and some are now experiencing a negative free cash flow. Capital requirements are now being met through (potentially dilutive) capital increases—such as the one by Alphabet, which unexpectedly issued USD 85 billion in new shares in June. How intense the search for capital is shows the announcement by Nvidia last week: it partnered with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR to mobilize USD 500 billion to fund data centers and chip factories. A somewhat unusual method of raising capital, which is to some degree reminiscent of a perpetuum mobile, involves the seller of a product providing financing to the buyer of that product. Nvidia, for example, is in talks to provide a USD 250 billion guarantee for OpenAI as part of a massive data-center project.

However, the type of financing that really needs to be closely monitored is debt financing—be it through private debt or through the public capital market. According to Bloomberg, the five hyperscalers mentioned have already issued bonds totaling nearly USD 200 billion so far this year. Creating leverage in a highly competitive market increases risks and could lead to a backlash in the long run.
Amid all these considerations and deliberations, however, one thing is clear. All of this enormous capital—regardless of how it is generated or financed—will continue to flow, for the foreseeable future and in ever-increasing volumes, into data centers that are indispensable for the expansion of AI.

Among the clear beneficiaries are, above all, semiconductor manufacturers such as Nvidia and Marvell Technology, as well as the world’s leading contract manufacturer, Taiwan Semiconductor Manufacturing; ASML Holding, which holds a virtual monopoly in the field of photolithography; and providers of data center infrastructure such as Iren Ltd. and Keel Infrastructure.

Moshe Strugano & Co
Law Firm

15/08/2026

Interest rates remain pivotal for growth stocks, as higher discount rates reduce the present value of long-dated earnings and revenues.

The Fed has once again left the federal funds rate unchanged in the range of 3.50 to 3.75 percent, even though three voting members of the FOMC favoured a rate increase as inflation remains well above the 2% target. The financial markets view this, along with the remarks made at the press conference, as a signal that there is no need to fear monetary tightening for the time being. However, this dovish stance has led to uncertainty in the market as to whether the Fed actually intends to fight inflation resolutely, as Fed Chair Kevin Warsh has repeatedly assured. We continue to believe that Warsh is successfully balancing government pressure to lower interest rates with economists’ calls for a more restrictive monetary policy.

We do not wish to delve into monetary analysis in detail here, but rather share with you some basic thoughts on the impact of interest rates on the stock market.

For one thing, bond investments naturally compete directly with stock investments. According to an estimate published by the Federal Reserve Bank of St. Louis, the US 10-year real interest rate currently stands at approximately 2.1%. That is quite significant, but given the solid growth prospects for companies, this alone is unlikely to really slow down the stock market - at least for the time being.

The significant impact that interest rates have on growth companies is often not well understood. Yet the connection is quite simple: Many companies, especially those in industries with extremely high growth potential, typically do not generate significant profits until far in the future. And future cash flows must be discounted to their present value.

To illustrate this, we present a back-of-the-envelope calculation here using the long-term interest rates relevant to investments—specifically, the yield on 10-year government bonds.

As an example to illustrate the interest effect, we take SpaceX. The company posted a loss of USD 4.28 billion in the first quarter and reported revenue of USD 11.4 billion in 2025. Earnings estimates for a period far into the future are not available and are, in any case, subject to significant uncertainty. However, there are several revenue estimates. The most extreme comes from Morgan Stanley: a staggering USD 3.3 trillion for the year 2040. The table shows the net present value (NPV) of this revenue at various interest rates.
NPV of USD 3.3 trillion in 14 years
Rate 3.60% 4.70% 5.60% 8.50% 0.40%
NPV 2.01t 1.73t 1.54t 1.05t 3.12t

This is not a valuation of SpaceX. It is a simplified illustration of the time-value effect applied to a projected revenue figure.

Given the current yield on 10-year Treasuries (red), revenue in the year 2040 is worth only about half as much today. The 8.5% (Treasury yield in 1990) is, of course, hard to imagine, but it clearly illustrates the discounting impact. On the other hand, the value discounted by using the yield on 10-year Swiss government bonds (green), is hardly diminished. Incidentally, this shows that the Swiss stock market is actually quite reasonably valued from this perspective.

Moshe Strugano & Co Law Firm.