Visar inlägg från januari, 2018

It appears to be the dollar dog that is wagging everything else

Which is the tail and which is the dog?   The dollar is falling, the oil price is rising, bond yields are rising  and stocks have just endured two uncharacteristically tough days after a prolonged period of exuberance.  John Authers, FT 30 January 2018

Longtime bear John Hussman expects the S&P to eventually lose two-thirds of its value.

Is he finally right?   MarketWatch 31 January 2018 Hussman acknowledges that he’s proven “fallible” since 2009

Lex in Depth: the case against share buybacks

S&P 500 companies have spent $1.1tn on share repurchase programmes over the past two years FT 30 January 2018

That appeared to break the fabled long-term downtrend in 10-year Treasury yields

John Authers, FT 30 January 2018

Wells Fargo's head of interest rate strategy is detecting a major trouble spot in the bond market.

Who's going to buy all those extra Treasury notes? Read more here

Only the Argentine Peso is weaker against the greenback this year

Sakakibara Expects Dollar to Head Toward 100 Yen by End of 2018 Bloomberg 25 January 2018

Trichet: "It is extremely important that the US has been saying that a strong dollar is in the interests of the US."

Then European Central Bank president Jean-Claude Trichet 6 July 2009  John Connally, when Treasury secretary in President Richard Nixon’s cabinet, famously told his European counterparts in 1971 that the dollar “is our currency but your problem” Most famously, back in 1987, Ronald Reagan often repeated that: "A strong dollar means a strong America."  When his Treasury secretary, James Baker, appeared on Sunday morning talk shows to threaten the German authorities by saying "either inflate your mark, or we’ll devalue the dollar", the next step has gone down in history.  The Black Monday crash came the next day.

NAIRU: not just bad economics, now also bad politics

Janet Yellen has long believed it’s possible for “too many” Americans to have jobs.  In her view, shared by many of her generation in the economics profession, consumer prices will rise too fast unless millions of people remain unemployed. Matthew C Klein, FT Alphaville 24 January 2018

The End of the 'Strong Dollar' Policy (Yes, Again)

I remember sitting in Bloomberg's London newsroom hearing that the sky was falling when Paul O'Neill and John Snow, the first two Treasury chiefs under George W. Bush, veered from the script developed by Robert E. Rubin, who held the post under Bill Clinton and is most closely associated with the term. Daniel Moss, Bloomberg 24 januari 2018 Why Treasury secretaries should stick with the strong dollar mantra Lawrence Summers, FT 25 January 2018

Sveriges bytesbalansöverskott större än Kinas

Läs mer här

Wolf. Big questions to be answered concern timing, consequences and even what is meant by ‘normalisation’

Prophets of doom predict (or hope) that the world will at last suffer for the sins of activist central bankers. Martin Wolf, FT 21 January 2018, state of the art article with nice charts

Very similar to what we saw before the Lehman crisis, ” said William White

“All the market indicators right now look very similar to what we saw before the Lehman crisis,  but the lesson has somehow been forgotten,” said William White Ambrose Evans-Pritchard, 22 January 2018

Utflyttningsskatten och The Reich Flight Tax

Personer som flyttar utomlands och har en nettovinst på över 100.000 kronor på sina kapitaltillgångar måste ta upp vinsten till beskattning. De flesta väntas få anstånd på att betala skatten tills när tillgången faktiskt säljs. Undantag görs för tillgångar på investeringssparkonton, tillgångar i en näringsverksamhet samt fastigheter och bostadsrätter.  – Tillgångar i investeringssparkonton beskattas löpande och är därmed redan beskattade, vad gäller fastigheter har vi redan i dag rätten att beskatta de även om innehavaren har flyttat, säger Åsa Windrot Thell.  Hon ser en trend där alltfler länder inför en utflyttningsskatt, bland andra Danmark, Spanien, Frankrike och Tyskland.  Dagens Nyheter 29 november 2017 The Reich Flight Tax (German: Reichsfluchtsteuer) was a capital control law implemented in order to stem capital flight from the Weimar Republic.  The law was created through decree on 8 December 1931 by Reich President Paul von Hindenburg.  Wikipedia

Nordamerika. Även där finns en stor union. Den kallas USA. Mellan huvuddelen av USA och dess delstat Alaska ligger ett ensamt brittiskt land, Kanada

Effekten av Brexit på lång sikt framgår av läget i Nordamerika.  Även där finns en stor union. Den kallas USA och har ca 325 miljoner invånare.  Mellan huvuddelen av USA och dess delstat Alaska ligger ett ensamt brittiskt land, Kanada, med en befolkning på knappt 35 miljoner Washington kräver inte att Kanada skall bli en delstat i USA, anta den amerikanska dollarn som valuta eller ha fri rörlighet för arbetskraften.   Ingen tycks tro att Kanada genom att stå utanför USA går en mörk ekonomisk och politisk framtid till mötes. Nils Lundgren, GP 20 januari 2018

It’s not just China. Global debt rose to a record $233 trillion in the third quarter of 2017

Private non-financial sector debt hit all-time highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey. Bloomberg 22 January 2018

DSGE macroeconomics does not really allow for the large-scale financial panic we saw in 2008

In particular, there should be room for formalised theories in which the economy is subject to multiple equilibria —  what could be called paleo-Keynesian views  — which show how both large crises and protracted periods of stagnation are possible. Martin Sandbu, FT 19 January 2018

Germany’s current account surplus – 8.5pc of GDP, and the world’s largest in absolute terms at almost $350bn

Maury Obstfeld, the IMF’s chief economist, said Germany’s current account surplus – 8.5pc of GDP, and the world’s largest in absolute terms at almost $350bn (£252bn) – is 4.5 percentage points of GDP beyond what can be justified by demographic arguments. The currency claim may raise eyebrows in Washington, where some suspect that the European Central Bank’s negative interest rates (-0.4pc) are a disguised way to hold down the euro – bad etiquette for a currency bloc running a surplus near $430bn, three times that of China Ambrose, 18 January 2018

How Economics Survived the Economic Crisis

Paul Krugman. His answer to Queen Elizabeth II’s now-famous question: “Why did no one see it coming?”  Krugman’s cheerful response is that the New Keynesians were looking the other way. Theirs was a failure not of theory, but of “data collection.” They had “overlooked” crucial institutional changes in the financial system.  While this was regrettable, it raised no “deep conceptual issue” – that is, it didn’t demand that they reconsider their theory. Read more here

The economy needs rate hikes to curb speculative excess.

The economy needs higher rates, but not because of any threat of faster inflation.   The economy needs rate hikes to curb speculative excess. There's a great big pile of evidence that financial markets have reached the speculative mania phase. The Federal Reserve’s response to all of this has been to engage in a ridiculous discussion about inflation targeting.  Policy makers are still concerned about the rate of inflation being too low and are seemingly oblivious to the signs of excess speculation all around them Jared Dillian, Bloomberg 16 januari 2018

A Franco-German consensus on the euro

Politicians should follow trail blazed by economists "a very interesting contribution by a group of 14 French and German economists, many of the best policy-oriented thinkers of both countries. " Martin Sandbu FT 17 January 2018

Treasury Department to issue $1 trillion of debt in 2018

almost double the amount seen in 2017 Market Watch 16 January 2018

Fed failed to do anything about the massive buildup of debt.

Fed was focused on unemployment and inflation during the 1990s and early 2000s,  they failed to do anything about the massive buildup of debt.  This laid the groundwork for the financial crisis. John Mauldin Lacy Hunt January 2018

In 2016, total corporate debt increased by $717 billion, yet investment in plant and equipment fell by $21 billion.

Where did the money go? Buybacks and dividend payouts John Mauldin Lacy Hunt January 2018

What macroeconomists actually do

Problems can be traced back to two intellectual revolutions Martin Sandbu 16 January 2018

Rethinking macroeconomics

The deepest effort to date to account for how economics failed us in the crisis Martin Sandbu 15 January 2018

Kaletsky menar att det var Paul Volcker som ledde återgången till "demand management".

USA:s tidigare centralbankschef Paul Volcker är mest känd för att ha blivit tillsatt av Ronald Reagan för att få ner inflationen, vilket lyckades genom en hård åtsramning med recession som följd. Det ryktet kvarlever med märklig kraft. Men Kaletsky menar att det var Paul Volcker som ledde återgången till "demand management". - In the United States, the return to demand management began as early as the summer of 1982, when a three-year recession and the bankruptcy of the Mexican government persuaded the Fed that its experiment with monetarism had gone too far. Då sänktes räntan Läs mer här

Just nu inte mycket som talar för en prisuppgång. – Men en utplaning kommer säkert att komma

Antalet bostadsaffärer brukar sedan ta fart under våren. Men enligt Per-Arne Sandgren finns det just nu inte mycket som talar för en prisuppgång. – Men en utplaning kommer säkert att komma, säger Per-Arne Sandgren, analyschef på Svensk mäklarstatistik. SvT Nyheter 15 januari 2018 Anders Borg, SvD 21 januari 2014: - Jag tror att vi ska räkna med stillastående priser på bostäder under tio år framöver. Professor Irving Fisher, October 1929: "stock prices have reached what looks like a permanently high plateau." Läs mer här

Investors believe the 10-year Treasury yield will be below the 3 per cent mark in two, five and even 10 years’ time.

Derivatives contracts indicate that investors believe the 10-year Treasury yield  will be below the 3 per cent mark in two, five and even 10 years’ time.   Robin Wigglesworth, FT 12 January 2018

The Secular Bond Bull Market Has ended, perhaps.

The Moment of Truth for the Secular Bond Bull Market Has Arrived John Mauldin 10 January 2018 The $50 Trillion Question for Bonds Bloomberg 10 January 2018 The bond bear market is finally upon us after more than 25 years,  bond guru Bill Gross said,  CNBC 10 January 2018 Read more here

Last of the market bears wait in hope of a crisis

FT 10 January 2018

U.S. Trade Deficit Balloons to Widest in Almost Six Years

Gap grew 3.2% to $50 b Imports rose 2.5% to a record $250 b Exports climbed 2.3% to all-time high of $200 b Bloomberg 5 January 2018 Detta är månadssiffror. 12 x 50 = 600 miljarder dollar, eller i SEK x 8,14 = 4.884 miljarder.

Investors pour money into funds that protect against inflation

FT 5 January 2018

A major S&P ratio has a whiff of 1929. Is this a bubble yet?

John Plender FT 5 January 2018

Central banks have created the illusion of calm. It won't last.

By boosting asset prices, policy makers aimed to buttress elevated debt levels and, via the wealth effect, increase confidence, consumption and investment.  But rising values of financial instruments representing claims on productive assets don't create real purchasing power unless converted into cash or real enterprises producing earnings. Satyajit Das, Bloomberg 3 januari 2018

The very toxin that sparked the crisis is relied on to reboot economies - Beware the butterfly moment

Central banks need to reverse their policies, since continuing low rates and excessive leverage may well result in an explosive cocktail of multiple asset price bubbles. Reversal, however, means that central banks will be unable to control volatility and keep a floor under asset values — something they have relied on to promote excessive risk-taking. Pascal Blanque and Amin Rajan, FT 4 January 2017

Greenback weakness would have far-reaching consequences for financial assets in 2018

FT 2 January 2018

The terrible price of austerity Chancellor Brüning

Chancellor Brüning's austerity policies went far beyond keeping interest rates high to stay on the gold standard and stem capital flight.  A series of draconian fiscal budgets imposed severe spending cuts and tax rises Frances Coppola 28 December 2017

How to explain the paradox of low market volatility, record highs on the world’s stock markets and reduced levels of investor anxiety despite rising political risk?

Axel Weber, former head of the Bundesbank, now chairman of UBS, FT 1 January 2018 More about Axel Weber

Stefan Ingves om 1992 och bostäder och stigande belåning

Söndagsintervjun SR 26 november 2017

Should economic growth slow or cease, the pillars that define our society – democracy, individual liberties, social tolerance and more – would begin to teeter.

BBC 18 April 2017