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2018-04-21

Core US inflation is rising and now exceeds 2 per cent.

The 10-year inflation break-even — the rate of inflation at which inflation-linked and fixed income bonds would pay the same, and hence the implicit forecast rate of inflation — is rising.

It is the highest in four years, close to 2.2 per cent; low in historical terms, but above the Fed’s target.


FT 21 April 2018



2018-04-20

To protect the economy from future mega-bank failures, much more work needs to be done.

Under the current plan, certain creditors are designated in advance to absorb a failed bank’s losses once the equity is wiped out. 

Those creditors’ debts are thus riskier, and should be more expensive to the bank than the debt that is not designated to be turned into equity. 

Yet the Fed economists conclude that, in the market, this is not the case. Why?


Mark Roe, professor at Harvard Law School, Project Syndicate 17 April


2018-04-19

Twin reports by the IMF sketch a chain-reaction of dangerous consequences for world finance.


The policy – if you can call it that – puts the US on an untenable debt trajectory. 


It smacks of Latin American caudillo populism, a Peronist contagion that threatens to destroy the moral foundations of the Great Republic.


Ambrose Evans-Pritchard Telegraph 18 April 2018



Rolf Gustavsson om "den informella maktstruktur som man skulle kunna kalla ”det djupa EU”

För att få en skymt av inblick i "det djupa EU" rekommenderar jag en krävande bok: "Adults in the Room" av Yanis Varoufakis, som under en kort tid var Greklands finansminister. 

Dess knappt 500 sidor borde vara obligatorisk läsning, icke minst för alla oss som gillar EU-tanken.

Den allra viktigaste lärdomen är att EU:s helt avgörande maktcentrum ligger i Berlin.

Varoufakis redogör för sina samtal och förhandlingar med Schäuble. De båda var överens på en bestämd punkt; att Grekland var statsfinansiellt bankrutt.

Varoufakis sökte förgäves räddningen i en skuldavskrivning. Schäuble ville rädda tyska och franska banker undan kreditförluster och undvika spridningseffekter till andra länder.


- Den stora risken var att Grekland skulle utlösa en kris i italienska, franska och tyska banker. 

Nu finns i praktiken en EU-garanti för de utestående grekiska statsobligationerna.




2018-04-18

Treaty Change - A snub to Emmanuel Macron ahead of the French president’s trip to Berlin this week

Ms Merkel endorsed the idea of turning the European Stability Mechanism, the eurozone’s financial rescue fund, into a regional version of the IMF.

But she said it would have to be created through treaty change.

FT 17 April 2018

Ms Merkel does not say “no” to eurozone bonds. She says: “Not without treaty change.” 

The German constitutional court in Karlsruhe would never allow Germany’s sovereign guarantee to be given to its eurozone partners without them submitting to effective and centrally budgeted discipline.

Financial Times 31 May 2012

Read more here



2018-04-16

Existing capital requirements and stress tests still aren't enough to prepare banks for a real crisis.

As soon as people start to think a bank is going bust, it’s doomed. 

So it needs enough equity to absorb severe losses and continue operating. 


Bloomberg Editorial 16 April 2018

2018-04-15

Demand and Supply ?

It looks very simple, but looks can be deceiving. The lines on the graph are totally hypothetical! 

We can’t actually observe how much people would buy and sell at hypothetical prices. 


All we can see is how much people do buy and sell in the real world. According to the theory, that’s the point where the supply and demand curves meet. 
That’s very little information.


Noah Smith Bloomberg 13 april 2018

2018-04-11

The 1918 Flu Pandemic: Photos From a Century Ago

World War I was coming to a close, millions of soldiers were still traveling across the globe, aiding the spread of the disease. 

While its exact origins are still debated, it’s understood that the “Spanish Flu” did not come from Spain.


The Atlantic 10 April 2018


2018-04-07

The Marshall Plan: Dawn of the Cold War.

Matthew C Klein FT Alphaville 6 March 2018

https://ftalphaville.ft.com/2018/04/06/2199378/benn-steil-explains-the-marshall-plan/

https://www.cfr.org/book/marshall-plan

Enligt Riksbanken uppgick den 31 december 1991 svenska företags och hushålls utlandsskuld till totalt 693 miljarder kr. Om man därtill lägger att utlänningarna köpt svenska likvida SEK-obligationer för 98 miljarder blir den svenska utlandsskulden 791 miljarder kr (cirka 140 miljarder dollar, vilket är mer än Brasiliens utlandsskuld). 

Den totala svenska bruttoskulden var över 1 000 miljarder, inkl. stat och kommun. Det är mycket pengar. Som jämförelse kan nämnas att Marshall-hjälpen uppgick i dagens penningvärde till dryga 400 miljarder kr och att det totala börsvärdet av de svenska företagen nu är cirka 450 miljarder kr.

"Stålbadet i skuldfällan"
Rolf Englund på DN Debatt 26/8 1992

http://www.internetional.se/dn92.html

US Budget deficit Mauldin

2018-04-05

Underskottet i USA:s handelsbalans ökade till 57,6 miljarder dollar, motsvarande drygt 483 miljarder kronor

Det är den sjätte månaden i rad som USA:s handelsunderskott ökar och är det största på nio år.

OBS att underskottet är på en månad.


SvD/TT 5 april 2018



Similarities between mortgage-backed securities and the 17th century collateralized treasury obligations

On January 2nd 1672 King Charles II defaulted on the collateralized treasury obligations

The amount of debt on which England defaulted was approximately one year’s worth of government tax revenues


Moshe A. Milevsky MarkeWatch 5 April 2018

Why do experts, CEOs, politicians, and other apparently highly capable people make such terrible decisions so often?

It’s because these authorities face the wrong incentives.

Nassim Taleb, via zerohedge, 4 April 2018



2018-04-04

The Phillips curve is far from dead

Years of ultra-low interest rates and low volatility have dulled sensitivity to the leverage and currency mismatch risks inherent in ever more widespread carry trading.

John Plender FT 4 April 2018


Lars Wohlin Riksbankschefen som fick Sverige att säga nej till euron


Han hymlar inte heller med fakta som sätter Marcus Wallenberg i sämre ljus, då han menar att Wallenberg låg bakom politikernas uppfattning att så hårt tro på fasta växelkurser. 

Kronförsvaret fungerade som en räddningsaktion för stora aktörer som SEB. 

Istället vältrades kostnaderna över på svenska skattebetalare. Stora banker hann lösa in sina utlandslån innan kronkursen föll.

Författaren summerar om Lars Wohlin, ”Kampen mot euron är en insats som måste skrivas in i historieböckerna, detta trots att de medier vars agenda var att driva in oss i euron, av naturliga skäl, tystnade väldigt snabbt i ämnet efter september 2003.”

Dick Erixon, Samtiden, 1 april 2018


Sam Harris speaks with Niall Ferguson about his new book The Square and the Tower

They discuss his career as a writer, networks and hierarchies, how history gets written, the similarity between the 16th century and the 21st, the role of social media in the 2016 Presidential election, the influence of advertising on the public sphere, Trump, the Russian investigation, Islamic extremism, counterfactuals, what would have happened if Clinton had won the presidency, immigration in Europe, conspiracy theories, capitalism, globalization, communism, wealth inequality, universal basic income, Henry Kissinger, the prospect of a US war with China, cyberwar, and other topics

18 February 2018




2018-03-28

US Treasury safe haven?

US Treasury yields slip as investors flock to safe havens

CNBC 28  March 2018


US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.



Fokus har allt för mycket har legat på att förtäta befintlig storstadsbebyggelse


i ett läge där egentligen stora nya stadsdelar behövs.

Det handlar enligt /Swedbanks chefsekonom/ Anna Breman om att klara en folkökning på ytterligare en miljon inom åtta år.

2018-03-27

Economists may warn that the combination of Trump’s protectionism, big tax cuts, and uncontrolled government borrowing, 

coming at a time when the US economy is already near full employment, will ultimately fuel inflationary pressure. 


This rule of thumb implies 30-year rates in the 4-5% range.

But financial markets simply do not believe this message.


Anatole Kaletskys Project Syndicate 27 March 2018

Hong Kong is fast emerging as a test case of the global tightening cycle

Forced to import the monetary policy of the US Federal Reserve – nolens volens – as a result of its long-standing exchange link to the US dollar.

Victim of the "Impossible Trinity”: you cannot control the currency, and monetary policy, and have open capital flows. 

In times of stress, one must give.

Ambrose Evans-Pritchard Telegraph 26 March 2018



2018-03-26

Battle of Vienna


The overall command was held by the senior leader, the King of Poland, John III Sobieski, who led the relief forces.


Historians suggest the battle marked the turning point in the Ottoman–Habsburg wars, a 300-year struggle between the Holy Roman and Ottoman Empires.

Man bör även komma ihåg att det var den polske generalen Pilsudski som stoppade Röda armén utanför Warzawa 1920.

Read more here


S&P Selloff. About time

2018-03-25

If the global economy turns down, it will take Italy with it.

What we see in Italy now is the predictable response to two decades of economic policy that failed to produce jobs for young people.

Wolfgang Münchau FT 25 March 2018

2018-03-23

What is Disease X?

By listing Disease X, an undetermined disease, the WHO is acknowledging that outbreaks do not always come from an identified source and that, as it admits, 

“a serious international epidemic could be caused by a pathogen currently unknown to cause human disease.”

Moving fast to find a vaccine involves creating so-called “platform technologies” in advance. These involve scientists developing recipes for vaccines that can be customised.

When an outbreak happens, scientists can sequence the unique genetics of the particular virus and enter the correct sequence into the platform to create a new vaccine.



2018-03-22

The next global recession will entirely reshape the Brexit debate

Austerity fatigue is endemic in the South. Bail-out fatigue is equally endemic in the North.
Do not be fooled by the current recovery. 
Extreme monetary stimulus has papered over the deformed structure of monetary union.



If it weren't for oil and gas, the trade deficit would be a lot bigger.

The U.S. trade deficit in goods that aren't oil and gas is now bigger than ever, both in dollar terms and as a share of GDP.

Justin Fox Bloomberg 21 mars 2018


2018-03-21

Economics failed us before the global crisis, Wolf


Analysis of macroeconomic theory suggests substantial ignorance of how economies work


Socrates might say that awareness of one’s ignorance is far better than the illusion of knowledge. If so, macroeconomics is in good shape.

Martin Wolf FT 20 March 2018



2018-03-17

Rethinking macroeconomics


In January 2018, a group of economists convened by Oxford published their reply to Queen Elizabeth’s question of why nobody in the profession saw the 2008 crisis coming


FT Collections

2018-03-16

Larry Kudlow, National Review, 5 December 2007 Yes, 2007. There ain’t no recession.

The Phillips Curve is right at the centre of the most important economic debate of the moment

Makthavare bör straffas för sina misslyckanden


Om Nassim Nicholas Talebs nya bok "skin in the game"

Ivar Arpi SvD 16 mars 2018



De stora obalanserna i världshandeln är, precis som Trump hävdar, ohållbara.


De kraftiga överskotten i länder som Kina och Tyskland är orimliga och underskotten i USA och Sydeuropa undergräver människors tilltro till demokrati och marknader. 

Ulf Dahlsten SvD 15 mars 2018



Markets are back in fairyland again.

For many investors, the regret of missing out on what may well be a once-in-a-generation bull market overshadows any anxiety about the next crash. 

Animal spirits are all too evident.

Amin Rajan FT 16 March 2018


2018-03-15

When the huge telecom adjustment drops out of the CPI less food and energy base next month

the Y/Y figure will also sharply accelerate.

David Stockman 9 March 2018

Europe's crisis deepens as intellectual opinion turns, and Italy is where it all ends

Once-silent intellectuals are starting to challenge the core assumption of EU ideology, indicting the project for moral vandalism and a reckless attack on the democratic nation state.

Theorists and professors are proclaiming the virtues of the nation – the precious liberal nation, inspired by the universal and redemptive values of the French and American revolutions – in a way we have hardly heard in recent times.

They defend it as the only real vehicle of democracy known to man.

No empire in history has ever been democratic. And the problem with soft empires is that they remain soft only until they meet resistance.
At that point they must persist with a despotic logic – and we saw flashes of that in the eurozone crisis





The takeover of Bear Stearns by JPMorgan Chase sealed exactly a decade ago

The knockdown price of $2 a share was a shock to Wall Street.

FT 15 March 2018


A lot of water has flowed since two hedge funds backed by Bear Stearns collapsed in July 2007 because of their exposure to US subprime mortgages.

FT 26 May 2017



2018-03-14

Italy will remain the principal source of risk for the eurozone for the foreseeable future

Italians were once among the most enthusiastic supporters of the European project. This is true no longer. 

The election results are quite as shocking as the Brexit referendum and the election of Donald Trump.

The biggest frustration may be that the people Italians vote for have next to no room for manoeuvre. 

The question has rather been whom to elect (or sometimes not even elect) to carry out the policies decided in Brussels and Berlin.

Martin Wolf FT 13 March 2018


My conclusion is that Italy will remain the principal source of risk for the eurozone for the foreseeable future.

Wolfgang Münchau FT 11 March 2018




2018-03-13

Neither central bankers nor Wall Street ever see these new style recessions coming

because, in fact, they can't be detected from even an astute reading of the macro-economic tea-leaves.

David Stockman 9 March 2018



Professor: Bopriserna bör falla med 50 procent


Enligt Hans Lind borde ett rimligt riktmärke för bostadspriserna vara att en familj med normalinkomst ska kunna köpa ett radhus i en storstadsförort. 

När Stockholms Handelskammare i torsdags anordnade en debatt om det finns en bostadsbubbla eller inte så var de inbjudna representanterna från byggbranschen överens om att det inte finns någon bubbla.



2018-03-07

A valuable lesson from the Great Recession is that credit-supply expansions play a key role in subsequent recessions.


When lenders make credit more available or more affordable, households respond by taking on debt, which drives up aggregate demand – that is, until the music stops.

Amir Sufi, Atif Mian, Project Syndicate 5 March 2018

Amir Sufi, Professor of Economics and Public Policy at the University of Chicago Booth School of Business, is the co-author of House of Debt.

Atif Mian is Professor of Economics, Public Policy, and Finance at Princeton University, Director of the Julis-Rabinowitz Center for Public Policy and Finance at the Woodrow Wilson School, and co-author of House of Debt.





Liberalerna vill stt Sverige ska vara medlem i euron senast 2022 och att vi ska gå med i bankunionen omgående.



Under sitt landsmöte förra året beslutade partiet att verka för att EU ska bli en federation. 

Aleksandra Boscanin GP 7 mars 2018

Moderaterna vill i dag inte ge någon kommentar utöver meddelandet att de fortfarande inte tycker att det är aktuellt med något euromedlemskap.


(Stefan Löfven var vid folkomröstningen om euron ordförande för "Fackliga röster för Europa") 

Bitarna faller på plats...


2018-03-06

The funny thing is that Trump has an overwhelming case.


US experienced its last annual trade (goods) surplus in 1975.


In all, it cumulates to about $15 trillion more of stuff America bought versus what it sold to the rest of the world since 1975

Even when you throw in the $4 trillion surplus on the services account ( tourism, transportation, insurance, royalties and business services) during the same 43-year period, the deficit on current account with the rest of the world is still $11 trillion, and that's in then-year dollars.

Inflated to 2017 purchasing power, the balance with the rest of the world since 1975 is well larger than the current GDP of the US.

David Stockman 5 March 2018


2018-03-05

US companies are heading for a "stock buyback binge of historic proportions".

"flush with cash from the tax cut", US companies are heading for a "stock buyback binge of historic proportions".

Corporate stock buying is now cranking at a $1 trillion annual rate or nearly double the rate of the last several years. 


David Stockman 2 March 2018


2018-03-02

The US central bank is planning to shed trillions in assets, but markets are calm

 After quadrupling its balance sheet between 2009 and 2017, the Fed is now trying to shed an eye-popping $2tn of assets in a mere four years.

Nothing remotely like that has ever been attempted by a central bank.

Mainstream Media


Wall Street players----including the financial press---have been prospering inside the Bubble so long that they do indeed think it is reality.


We had a close encounter  yesterday during an appearance on CNBC. 

The thirty-something anchors were shocked to hear that Washington's upcoming $1.8 trillion 2019 Treasury borrowing might generate a resounding "yield shock", 

thereby upending the current huge stock market bubble where 4%+ bond yields are most definitely not priced in.

The younger of the anchors (age 32) thought the $1.8 trillion was not a problem... Likewise, the senior anchor further averred that we've been there before and that "awhile back" $1 trillion dollar deficits were absorbed with ease. 

To little avail, of course, we pointed out that "awhile back" came at the bottom the Great Recession when private investment had collapsed and the Fed and other central banks had been running their printing presses red hot. 

David Stockman 28 February 2018



Why Is No One Listening to Jeremy Grantham, 79 ?


In normal times it’s reasonable to believe clients are concerned about how well a manager can handle a downturn. 


“But in a bubble, forget it,” he says. 


“Clients care much, much more about underperforming all their friends on the golf course.”


Institutional Investor 28 Fabruary 2018



Disturbed the jet stream and weather patterns, allowing cold air to seep southwards into parts of Europe

An abrupt shift in temperatures high up disturbed the jet stream and weather patterns, allowing cold air to seep southwards into parts of Europe

The Guardian 1 March 2018


Charles Greene, an atmospheric scientist at Cornell University, believes that warming in the Arctic led to a slowing down of a high-altitude, circulating wind known as the jet stream

BBC och Englund om Jet Stream och vädret




2018-03-01

American consumers have relied on appreciation of equity holdings and home values to support over-extended lifestyles.

It is also the case for the US Federal Reserve, which has turned to unconventional monetary policies to support the real economy via so-called wealth effects.

Over the past 35 years, America has /been/ running balance-of-payments deficits every year since 1982 

(with a minor exception in 1991, reflecting foreign contributions for US military expenses in the Gulf War). 




2018-02-27

The foreign sector mostly draining dollars from our real economy and then investing them in our financial economy

In the past, I used the name “MDuh” for bank-created money, the measure Friedman and Schwartz studied, not the measures they popularized

For this article, though, I’ll use “M63,” referring to the year they published their work.


Read more here


The euro is run in the interest of whichever country poses the biggest threat to the survival of monetary union. Right now that is Italy,”

The euro is run in the interest of whichever country faces the biggest problems and poses the biggest threat to the survival of monetary union at any particular time. 

Bernard Connolly, a hedge fund advisor and former currency chief for the European Commission, 

Ambrose Telegraph 22 February 2018


2018-02-19

Eight cities on the verge of a housing bubble



Eight cities on the verge of a housing bubble






We do not know that the “natural rate of unemployment” is roughly equal to the current unemployment rate.

The problem is that those making that argument are implicitly asserting that they know that the “natural rate of unemployment” – the lowest rate consistent with stable inflation – is roughly equal to the current unemployment rate. 

That is, they believe we’re at full employment. 

But the truth is they have no way of knowing that, and one key indicator – inflation – suggests they may be wrong.


Jared Bernstein, chief economist for Vice President Joe Biden, at John Mauldin 18 February 2018

Olle Wästberg då och då

Olle Wästberg, 1996:
Efteråt har det sagts att Sverige borde ha släppt kronan eller devalverat långt innan det fruktlösa kronförsvaret 1992. Jag tror inte det
Olle Wästberg: Det tomma rummet, Wahlström och Widstrand, 1996


Olle Wästberg, 2002:
Med facit i hand skulle man ha valt att släppa i september, säger folkpartisten Olle Wästberg.
DN 13/9 2002

US twin deficits Martin Feldstein’s catchphrase

US twin deficits

As the dollar weakened last week, Martin Feldstein’s catchphrase from the 1980s was on the lips of most macro traders.


This is what happened to the “twin deficits” during the Reagan and Bush fiscal injections


Gavyn Davies.FT 18 February 2018



2018-02-18

Here is a recipe for disaster. Eurozone reformers act as if the crisis never happened

You start off by taking the two most toxic financial instruments of the past 20 years, and then merge them. 

The first is the collateralised debt obligation, the complex instrument at the heart of the US subprime crisis a decade ago.

Next, you take a much more innocent-looking instrument: a sovereign bond from a eurozone country.

Wolfgang Münchau. FT 18 February 2018




2018-02-15

The country with the highest inflation get the lowest real rate.

With a common currency all have the same nominal interest rate. Therefore the country with the highest inflation get the lowest real rate.
The country with perhaps deflation will get the highest real rate.

Obvious?

Stefan de Vylder wrote that in 2002.

Did anyone write it before?

Att den nominella räntan är gemensam i en valutaunion innebär automatiskt att realräntan blir lägst i de länder som har den högsta inflationen

det vill säga de som skulle behöva en hög ränta, 

och högst i de länder som skulle behöva stimulera ekonomin.

RE: Det låter självklart. Men Stefan de Vylder var med stor säkerhet den första i världen son kom på detta.

Stefan de Vylder, Göteborgs-Posten 2002-10-22

2002 alltså.

Foresta. Lunch idag. Förut Bodströmsmiddag med Nord- och Sydkorea

Som mina Fb-vänner redan vet så åt jag i dag lunch på Foresta.

Jag föll därvid i tankar och erinrade mig när jag var på middag där, som ledarskribent på NWT inbjuden av Lennart Bodström, då chef för TCO som arbetade för införande av fondsocialism och som en förberedelse för maktövertagandet inköpt Foresta som ett ståndsmässigt palats.

Om detta har jag tidigare berättat med länk till Mats Johanssons berättelse om kvällen.

Kjell-Åke Bredenberg (KÅB) en annan av fondernas motståndare var också med.

Jag Googlade lite och fann att Björn Rosengren var den som på uppdrag av Lennart Bodström, pappa till advokaten med samman namn, hade förhandlat om köpet av Foresta.


Källa: Mitt i steget, Johan Hakelius, Björn Rosengren
Albert Bonniers Förlag, 24 maj 2016








The Fed can't legally save the world financial system in another 'Lehman' crisis


The Dodd-Frank Act, rushed through in a pageant of self-congratulation in 2010, prevents the Fed from rescuing individual companies in trouble (there must be at least five, and they must be solvent) or lending to non-banks in a panic. 

It can lend only to "insured depository institutions"


Ambrose Evans-Pritchard 14 February 2018

Increase in US inflation sparks bond market sell-off


Treasury yields hit 4-year highs as Wall St fears sharper rate increases



FT 15 February 2018



2018-02-14

Policymakers relied too much on central banks and too little on fiscal policies, Wolf

Policymakers relied too much on central banks and too little on fiscal policies, in order to escape from the Great Recession. 

Martin Wolf, FT 13 February 2018


Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.

Rolf Englund 5 december 2009




2018-02-08

2018 will be the mirror opposite of 1999.


A triple squeeze will drain global excess savings: the U.S. will become the world’s largest oil producer, 


Germany will abandon its policy of budget surpluses, and India’s economic growth will outstrip China’s. 


The three gluts arose together, and together they will vanish. 


Who will supply the world’s capital after the retirement of these massive hoarders? 


John Authers, FT 7 February 2018


Canada’s housing market flirts with disaster

2018-02-06

2017 the U.S. trade gap leaped to a nine-year high of $566 billion

The last time the U.S. ran a surplus was in 1975.

MarketWatch 6 February 2018

Is the 9-Year Long Dead Cat Bounce Finally Ending?


Markets tend to bounce back after sharp declines as participants (human and digital) who have been trained to "buy the dips" once again buy the decline, 

and the financial media rushes to reassure everyone that nothing has actually changed, everything is still peachy-keen wonderfulness.


Charles Hugh Smith, 6 February 2018

Household leverage ratios exploded


Whereas wage and salary incomes rose by $4.2 trillion or 2.9X, 

household liabilities soared by nearly $12 trillion or 5.2X.

Over the two decades, therefore, household leverage ratios (liabilities to earned income) nearly doubled from 124% to 224%.

David Stockman 5 February 2018


Authers: I hate to admit this, but I think I have found a good historical parallel for what is happening in the markets.

And it is with spring and summer of 2007, on the eve of the credit crisis.

I dislike admitting this because I do not want to be accused of alarmism

John Authers, FT 6 February 2018

2018-02-05

Rädslan sprider sig efter apokalyptiskt börstapp

Tappet med 666 punkter i fredags fick Twitter att explodera. 

Sifferkombinationen är nämligen en biblisk symbol för ett odjur som visar sig under apokalypsen: "Number of the beast".


SvD 4 februari 2018



German politics is tilting towards federalism - Larmet går


The CDU and SPD accept the principle of a fiscal union for macroeconomic stabilisation, and transforming the European Stability Mechanism (ESM), the rescue fund, into an institution of the EU.


Otmar Issing, a former member of the European Central Bank’s executive committee, rightly recognised the importance of the EU section in the agreement.


As an economic conservative he was appalled by the ease with which Germany raised the white flag in the eurozone debate. Banking union, fiscal union, transfer systems — it could all happen very soon. 


It is what the conservative, ordo-liberal German establishment always fought against.


Wolfgang Münchau, FT 4 February 2018





2018-02-04

Doom on Wall Street?

Even though they told us, and most of us believe, that QE was responsible for the inflation of asset prices across the board, somehow quantitative tightening (QT) is not supposed to have the opposite effect.

John Mauldin, 3 February 2018



There is a time to be in stocks… and a time to be out of them.
Without knowing the future, you can still know when something is not normal. 
And when something is not normal… it is just biding its time until it becomes normal again.


Bill Bonner February 2018



2018-02-03

Alan Greenspan says there are "Bubbles in Stocks and Bonds".

Man Who Says "Bubbles Only Identified When They Burst" Detects Bubbles

Mike "Mish" Shedlock, 2 February 2018

Alan Greenspan



No hedge fund that wishes to survive is going to sit patiently on their repo silos at 95% leverage

To the contrary they are likely to not only begin selling with malice aforethought,  but also to actually pivot to the other side. 

That is, start "shorting" what in effect the Fed has announced it will be shorting to the tune of $600 billion per year commencing next October.

2018-02-02

A bond market shock of biblical proportions is now just around the corner

Any security with a positive yield or prospect for even modest appreciation became a target for repo-style leveraged speculation. 

Traders bought the "asset" on 70-95% leverage, and did so with brimming confidence that they could roll the funding over and over again at virtually zero nominal cost.



The pity is that a bond market shock of biblical proportions is now just around the corner---yet neither end of the Acela Corridor sees it coming.

So now is the time to head for the emergency exits.


---
Acela is Amtrak's flagship service along the Northeast Corridor (NEC) in the Northeastern United States between Washington, D.C. and Boston via 14 intermediate stops including Baltimore, Philadelphia, and New York City. /Wikipedia