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Discussion Starter · #1 · (Edited)
Headline: Swiss franc soars as Switzerland abandons euro cap

BBC News - Swiss franc soars as Switzerland abandons euro cap

I know there's a substantial supply pipeline, but I'd assume this is going to eventually affect watch prices for Swiss brands, and other brands using Swiss movements. Or maybe prices will start to jump immediately as people anticipate upcoming changes...

Either way, it's gotta be a good day for Seiko, Citizen, Sea-Gull, et al.
 

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Discussion Starter · #3 ·
The Miyota 9015 and Seiko NH35 (and their variants) are providing such amazing values to the market right now that it really does seem like a gap could open in the market. Obviously case finishing and a lot of other factors go into watch prices, but those movements are all over the place in the $200-$600 range. With ETA 2824's and their ilk starting in the top of that price range, it'll be interesting to see what happens if they move out of it entirely... Maybe Seiko/Citizen will raise their prices, but that leaves a gap for Sea-Gull (ST21 variants) and other Chinese makers who are doing really nice movements to exploit. Will they then raise their prices too?

I'm most interested in how it will affect Micros, since that seems to be where the bulk of what I like comes from (see my sig)...
 

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I think Swiss watches-even movements-are priced artificially high anyway. And I think many buyers of luxury Swiss watches like the exclusivity the high prices carry with them. True, some buyers might be priced out, but I think the Swiss will adjust the prices. The luxury brands will have to do it without appearing to do it so buyers won't realize that the emperor has no clothes...
 

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We bought a Datejust ladies for my friend from and AD at the beginning of Jan for 4400 USD after discount.

Now it is 5400 USD after discount.

Sure we already feel the heat.
 

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I doubt the franc will stay where it is at for long. it will go back to 1.2 to the euro within a few months. same as three years ago. the Swiss bank will come under massive pressure from Swiss business to do something.
 

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I've been thinking about this since reading the news.

If, as tobytobes said, the Swiss Central bank reverses itself, and the CHF reverts to its previous cap, then this will be a temporary "hiccup" in the costs the Swiss manufacturers experience. Only time will tell if it translates into price spikes at the retail level. However, I've noticed some discussion lately of rising prices in Swiss watches already, which makes me wonder if some brands and retailers weren't raising prices in anticipation of this move, even though the news stories seemed to indicate it was very much a surprise decision.

If the CHF doesn't revert, then I see a few possible outcomes:

1. Swiss watch prices go up. Basically, the Swiss watch industry says, "screw you, we're Swiss, if you want a Swiss watch, this is what they cost."

2. Swiss watch prices don't go up (at least not precipitously). Since Swiss costs are in CHF, they're DEFINITELY going up relative to retail sales, which are mostly in other currencies. This means the Swiss would have to accept thinner margins. I can only see this happening if the Swiss somehow determine the market demand for their products more or less puts a cap on their retail prices at their current levels. With weakening demand in Asia, it's conceivable we could see some stability in prices as the Swiss wait for the Asian economy to recover its previous gusto before considering any price increases. If that happens, it would hurt those companies' stocks. Sure enough, their stocks got pounded following the announcement, so this scenario may not be too far-fetched. Perhaps this is exactly what analysts, and by extension, the stock market, are predicting.

3. All watch prices go up. This is basically my "rising tide lifts all ships" theory of commodity pricing. As oil rises, people switch to other energy sources, whose prices subsequently rise with increased demand. Likewise, as Swiss prices go up, people shift focus to other alternatives, driving those prices higher as demand for them rises.

To the extent that this is a "problem" at all, I think it's a problem for everyone.

The "real" Swiss watch companies (those whose products are 100% Swiss made with all Swiss-made components) will see their costs go up, and may not be able to raise their retail prices as much (= thinner margins). If they shift some of their production overseas, it means some Swiss people lose their jobs, and likely a devaluation of those brands. We already know many Swiss companies use Asian-sourced components, but we tend to associate that with lower-cost Swiss watches. If Rolex and the like start using Chinese ebauches, that's a game-changer, perhaps.

For micro-brands who've been using Swiss OEM assemblers, it's probably an even bigger problem, as it presents a real business continuity challenge. How do they deal with dramatic price increases when re-ordering? I think many will shift at least some of their production to Asia, start using more Asian movements, etc.

For micro-brands who've been using Asian OEM assemblers, it may or may not be a problem, but my suspicion is it will be. If 10%-20% (just to pick a range out of the air) of the market shifts from Swiss manufacture to Asian manufacture, that's a noticeable increase in how crowded that market already is. I'm talking about the wholesale/manufacturing side of it, not the retail side of it. A shift like that could make it harder for micros to source good components, find reliable vendors, etc. It could mean more production delays and higher costs, maybe lower quality. The bigger brands could soak up all the best production capacity from what's available, leaving micros to scramble around picking up the scraps - basically, it would destabilize that eco-system, and make every relationship more transient, every projection more speculative.

It's not like the market on either side can instantly absorb a big dip or big spike in production. The Swiss would be hit hard by a 10%-20% reduction in domestic manufacturing. The Chinese can't just snap their fingers and gin up 10%-20% more production capacity. Even if there's excess production capacity, it's likely near the lower end of the quality scale, not near the higher end. It takes time to build or expand factories, to acquire machinery and hire more workers. It will take time for either side to adjust. Until that happens, expect volatility, expect the unexpected.

As to what a WIS can do with this information, you could either sit tight, do nothing, and wait for the dust to settle (if you think prices aren't likely to rise any faster than usual), or you could go on a buying spree, accelerating your purchases in the expectation that prices are about to make a big move upward.
 

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As to what a WIS can do with this information, you could either sit tight, do nothing, and wait for the dust to settle (if you think prices aren't likely to rise any faster than usual), or you could go on a buying spree, accelerating your purchases in the expectation that prices are about to make a big move upward.
...i've found my justification for the wild spending spree over the last couple months! :-d

i do anticipate i'm near the end of things for the forseeable future, 2015 will be an interesting year. if i truly had any idea of which way the financial wind would truly blow, i'd hit wall street and make a mint
 

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...i've found my justification for the wild spending spree over the last couple months! :-d

i do anticipate i'm near the end of things for the forseeable future, 2015 will be an interesting year. if i truly had any idea of which way the financial wind would truly blow, i'd hit wall street and make a mint
Call me a cynic, but I've come to believe that whatever happens, there is always a small group of people who knew ahead of it becoming public knowledge, and made sure to take those steps necessary to put themselves in the best position possible after the fact. Once any news like this becomes public, I always think it's too late to profit from it by doing anything differently, and any reactive measure is as likely to backfire as it is to work out.

To wit, I think if retail prices were going to go up, it's already happened (hence, the recent discussions about it). If Swiss manufacturers were going to suffer, it would already be baked into the stock prices (and we saw them all take a dive following the news). If micros were going to have a harder go of it, we'd be seeing that play out in production delays, cost increases and other consequences (and we've seen just that - component price increases, production delays, etc).

My money says the "smart money" knew about this well in advance of any discussion here.
 

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Call me a cynic, but I've come to believe that whatever happens, there is always a small group of people who knew ahead of it becoming public knowledge, and made sure to take those steps necessary to put themselves in the best position possible after the fact. Once any news like this becomes public, I always think it's too late to profit from it by doing anything differently, and any reactive measure is as likely to backfire as it is to work out.

To wit, I think if retail prices were going to go up, it's already happened (hence, the recent discussions about it). If Swiss manufacturers were going to suffer, it would already be baked into the stock prices (and we saw them all take a dive following the news). If micros were going to have a harder go of it, we'd be seeing that play out in production delays, cost increases and other consequences (and we've seen just that - component price increases, production delays, etc).

My money says the "smart money" knew about this well in advance of any discussion here.
oh, i'm sure the smart money is already in.
now it's just a matter of things playing out...the real question is how hard will it hit f71r's in 2015, if at all. we tend to play in the shallow end of the pool...here swiss watches are bought after careful consideration usually, so there probably won't be a land rush to grab those...how it affects other markets and micros, on the other hand, will be more meaningful.
 

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Headline: Swiss franc soars as Switzerland abandons euro cap

BBC News - Swiss franc soars as Switzerland abandons euro cap

I know there's a substantial supply pipeline, but I'd assume this is going to eventually affect watch prices for Swiss brands, and other brands using Swiss movements. Or maybe prices will start to jump immediately as people anticipate upcoming changes...

Either way, it's gotta be a good day for Seiko, Citizen, Sea-Gull, et al.
Glad I have a swiss made Wenger I guess
 
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