Emerging Markets

Fed have caused the short-term dollar funding to rise dramatically. Back to levels not seen since 2008.

https://www.zerohedge.com/news/2018-10-30/emerging-markets-face-new-problem-trillions-bonds-mature-and-soon

IBM’s move for Red Hat: Open-source

The true lesson of IBM’s move for Red Hat: Open-source has truly arrived

International Business Machines Corp.’s hefty $34 billion deal to buy Red Hat Inc. is the biggest proof yet that the 20-year-old movement of free and open software can lead to a real revenue-generating business, thanks to new advances in technology.

https://www.marketwatch.com/story/the-true-lesson-of-ibms-move-for-red-hat-open-source-has-truly-arrived-2018-10-29

Downside

Read more here

Cash is king again

Interest rates on two-year certificates of deposit have just cracked 3%

 U.S. stocks are at historically elevated levels when compared to, say, the size of the national economy, or the corporate earnings of the past decade. 

https://www.marketwatch.com/story/cash-is-king-again-but-is-that-also-a-sign-of-an-impending-recession-2018-10-29

Europe Is Too Exposed to Italy to Let It Go

French and German banks have more than $400 billion at stake and would lose big  if the country left the currency union.

When Greece’s fiscal mismanagement triggered a crisis in 2010, French and German banks were holding about $115 billion in various Greek investments

Bloomberg 29 October 2018

NASDAQ 100 was recently up nearly 220%

 NASDAQ 100 was recently up nearly 220% in inflation-adjusted terms since the pre-crisis peak in 2007 compared to a mere 2.2% gain in industrial production over the same 11 year period.

We are talking apples-to-apples here: Constant dollar stock prices versus real physical output; and also from the prior peak, not the March 2009 stock market bottom.

David Stockman 22 October 2018

Paul Volcker is the greatest man I have known.

He is endowed to the highest degree with what the Romans called virtus (virtue): moral courage, integrity, sagacity, prudence and devotion to the service of country.

Review by Martin Wolf FT 29 October 2018

At the end of the day, those with the power to set and enforce EU fiscal and monetary rules know full well that the eurozone could not survive a Greek-style crisis in Italy.

It is their responsibility in the months ahead to make sure it doesn’t come to that.

Jim O'Neill Project Syndicate 17 October 2018

Quantitative easing is winding down fast. Net QE peaked an annual rate of $2 trillion in 2016. It will be negative by the end of this year.

 Ambrose Evans-Pritchard Telegraph 25 October 2018

Last week, I received a poignant invitation: Paul Volcker, the legendary former chairman of the US Federal Reserve, asked me to visit his apartment to discuss his legacy.

Mr Volcker is publishing his memoir. The release of Keeping At It was initially scheduled for late November but the publisher has rushed the date forward to October because the former Fed chair is ill. 

So the towering figure of finance wanted to share some thoughts — and warnings — to current and future policymakers, politicians, voters and investors.

Gillian Tett FT 25 October 2018

Italy The short history of the eurozone has taught us that resistance is futile.

The main instrument of coercion in the eurozone is not its fiscal rules, but the power of the European Central Bank to withdraw funding from national banks.

This is not a discretionary power, but one that is automatically triggered once a country‘s sovereign debt loses investment grade status.

Wolfgang Münchau FT 28 October 2018

Nils-Eric Sandberg om Åke Ortmark

Hans bästa bok hette Ja-sägarna - Medlöpare och nickedockor kring Gyllenhammar, Karl XII, Kreuger och andra furstar.

Jag föreslog honom att komplettera med en bok om nej-sägarna - den skulle ha blivit betydligt tunnare.

Nils-Eric Sandberg SvD 28 oktober 2018

Läs om boken här

Turn off the liquidity taps and the ability to believe the impossible evaporates

When money is constantly cheap and available everything seems straightforward. 

Markets go up whatever happens, leaving investors free to tell any story they like about why. 

It is easy to believe that tech companies with profits in the low millions are worth many billions. 

Or, as one fund manager told me last month, that traditional equity valuation methods are no longer the point

Merryn Somerset Webb FT 26 October 2018

“Alternative economists are doom and gloomers that have been wrong for 10 years, but a broken clock is still right twice a day…”

I find this disinfo argument somewhat hilarious because of the extraordinary level of dishonesty inherent in it, but I also find it revealing in a way.

Brandon Smith via Alt-Market.com 26 October 2018

Third Quarter GDP 3.5%, Much Weaker Than it Looks: Inventory Adjustment 2.07%

Mish 26  October 2018

Martin Wolf: Inaction over climate change is shameful

That is no longer because it is technically impossible. It is because it is politically painful. 

We are instead set on running an irreversible bet on our ability to manage the consequences of a far bigger rise even than 2C. 

The scale of the uncertainty is an argument for action, not inaction. 

Nobody really knows what risks humanity will ultimately find it has run by continuing on its present course. But we do know that our descendants are quite likely to end up on a different planet, with no way back to our own. 

The bet that our descendants will then cope might be correct. But it might also be disastrously wrong. 

The sane choice must surely be to preserve the planet we have.

Martin Wolf FT 23 October 2018

Soon the casino gamblers will be shocked

With new borrowings of $1.2 trillion by the US Treasury and $600 billion of existing bond sales by the Fed during FY 2019, you have $1.8 trillion of homeless debt slamming hard upon the scales of supply and demand.

That this fiscal eruption is not even in today's Wall Street narrative and the QT is completely ignored tells you all you need to know. 

Soon the casino gamblers will be shocked, blathering that another purported comet from outer space caused interest rates to soar, notwithstanding disappointing "growth".

Moreover, once the bond market Armageddon gets cranking, it will way overshoot to the high side (above 4% or even 5% on the 10-year).

Thereupon, carry trade speculators will be forced to dump their bonds, triggering massive mutual fund redemptions and the violent unwinding of Wall Street hatched bespoke trades.

David Stockman 17 October 2018

FDR’s attempts to revive the economy are viewed as a failure in light of the devastating second depression that occurred in 1937-38.

Instead, the Great Depression finally ended with the explosive growth of military expenditures starting in mid-1940. 

Capitalism in America: A History, by Alan Greenspan and Adrian Wooldridge

FT 16 October 2018

Inflationsmålet. Inflation targeting.

Nackdelarna överväger dock. 

Bubblor riskerar att uppstå på tillgångsmarknaderna genom den rikliga tillgången på billiga pengar. Obalanser skapas i ekonomin. Den privata skulduppbyggnaden drivs på. Handlingsutrymmet vid en framtida kris krymper. 

Historien har lärt oss att finansiella kriser kan få förödande effekter på ett lands ekonomi.

Anders Palmér, tidigare prognoschef på finansdepartementet och chefstrateg på Första AP-fonden, SvD 14 oktober 2018


There is no time like the present to adopt a monetary target better suited to a world of low interest rates.

The Economist 11 October 2018


Ambrose, Wolf och Johan Schück om inflationsmålet

Is i magen

https://www.cnbc.com/2018/10/11/ubschief-economist-this-is-not-the-end-of-the-bull-market.html

Wall Street

The 2008 financial crisis was not the result only of moral hazard; nor was it unforeseeable.

Consumers, rating agencies, and policymakers all bet on housing

NICOLA GENNAIOLI , ANDREI SHLEIFER Project Syndicate Sep 27, 2018

Sverige kan inte räkna med någon hjälp alls nästa gång en kris slår till.

Krisen drabbade inte minst svenska banker som lånar det mesta av sina pengar på kreditmarknaden i stället för från vanliga sparare – pengar som de sedan lånar ut till exempelvis bolånetagare.

Varningen kommer från vice riksbankschef Cecilia Skingsley, SvD 10 oktober 2018


Cecilia Skingsley: Den 23 september 1992 blev läget akut.

Wolf: How to avoid the next financial crisis

The financial crisis of 2008-09 and the resulting recession were a historical watershed. 

The pre-crisis world was one of globalisation, belief in markets and confident democracies.

Today’s is a mirror image.

Martin Wolf 9 October 2018

Surge in ‘real yields’ could spell danger for stocks

https://www.marketwatch.com/story/its-the-surge-in-real-yields-that-could-spell-danger-for-stocks-as-bond-markets-swoon-2018-10-09

Bankernas utlandslån 8.000 miljarder kronor

Patricia Hedelius SvD 8 oktober 2018

Läs mer här

U.S. inflation is the world's most important economic variable.

CNBC 8 October 2018

Lars Tobisson om Sverigdemokraterna

Taktiken att bekämpa SD genom att isolera dem har inte visat sig särskilt framgångsrik. Trots vad som avslöjats om SD:s ursprung har över en miljon väljare gett dem sina röster.

De har gjort det av en enda anledning. Beträffande invandrings- och integrationspolitiken hade de gamla partierna fel och SD rätt. 

Det visade sig helt enkelt inte möjligt för lilla Sverige att ta emot alla förföljda och nödlidande människor i världen. Invandringen måste regleras.

När de etablerade partierna försummade att lyssna på väljarna och deras – som det ansågs – inskränkta och främlingsfientliga åsikter på detta område, öppnades en möjlighet för ett populistiskt parti att ta sig in i riksdagen. 

De gamla partiernas försök att låtsas som om nykomlingen inte fanns där har snarast motverkat sitt syfte.

Det vore klädsamt om övriga partier erkände sin felbedömning och sin medverkan till att SD kommit in i riksdagen. Om det inte vore för invandringspolitiken, skulle de inte varit där i dag.  

Lars Tobisson.SvD 6 oktober 2018

Vi förstod inte att östeuropéer skulle betrakta Bryssel som ett nytt Moskva.

Misstaget är förmodligen ett av det förra seklets största. 

Sedan den hegemoniala kommunismen bröt samman handlar här all politik om nationalism. 

EU verkar leda till samma förlust av nationell suveränitet som under det stora kommunistiska imperiet, ett mästrande översitteri, till en hierarkisk ordning som tränger ut den egna nationalstaten i periferin och i betydelselöshet. 

Vi begrep det inte. Och det har visat sig vara ett fatalt misstag, förmodligen ett av det förra seklets allra största.

Inte heller insåg vi att östeuropéerna redan hade ett projekt som de arbetat intensivt på i mer än ett sekel: den egna, suveräna nationalstaten.

Richard Swartz DN 6 oktober 2018

Richard Swartz, eurons födelse och Tysklands återförening

Federalism

When I was the Supreme Allied Commander of NATO several years ago, my wife and I would occasionally visit Cologne, Germany

The region is notable for a variety of historical reasons, but especially as the heart of the ancient Holy Roman Empire. 

Nearby Aachen is the burial site of Emperor Charlemagne, who died in AD 814 and is famously known as the Father of Europe for having helped stop Islamic invasions well over a millennium ago. 

James Stavridis Bloomberg 5 October 2018

Holy Roman Empire

The reason Martin believes the market is headed for a significant decline is the divergences between the few large-cap stocks that are rising (and thereby propelling the market averages higher) and the vast majority of other stocks that are not.

Get ready for an 8% to 13% stock market correction.

That is the forecast of Hayes Martin, president of Market Extremes, an investment consulting firm that focuses on major market turning points.

Market Watch Oct 4, 2018 

– 1991 anställdes jag som planeringschef i Statsrådsberedningen – regeringen Bildt. 

Det var dramatiska år av intensiv omvandling i och utanför Sverige och samtidigt en djup global ekonomisk kris.

Olof Ehrenkrona ny kolumnist hos SvD Ledare

SvD 4 oktober 2018

Kronkursförsvaret

Stockman: The mother of all yield shocks

We are making our way across Europe today just as the mother of all yield shocks we have been warning about begins to have its way with the clueless boys and girls and robo-machines in the casino. 

The US dollar bond pits alone will soon be shocked with $1.8 trillion of homeless government debt as the US Treasury issues $1.2 trillion of new paper and the Fed dumps $600 billion of old debt during the fiscal year that incepted three days ago.

David Stockman, October 4th, 2018

Martin Wolf: It is legitimate to believe the EU has over-reached. On monetary union, I agree.

It is legitimate to believe the EU has under-reached. On defence, I also agree. 

But it is illegitimate for a sane person to despise the EU’s goals or hope that it will collapse into chaos.

Martin Wolf 4 October 2018

Dow drops 250 points as 10-year US yield hits its highest level in 7 years

Thursday's moves come after the Dow hit a record high. The Dow, along with the S&P 500 and Nasdaq, initially moved higher as investors first cheered the strong economic data released Wednesday.

https://www.cnbc.com/2018/10/04/us-markets-rising-rates-economic-data-and-politics-in-focus.html

It’s ten years since the fall of Lehman Brothers.

Do you remember yesterday? 

It’s ten years since the fall of Lehman Brothers. 

Frances Coppola - September 15, 2018

Bo Södersten, gift Friggebo, om löntagarfonderna

Ett genomförande av den arbetarstyrda ekonomin fordrar långtgående reformer, bl a måste den nuvarande kapitalägarklassen pensioneras och produktionsmedlen socialiseras.

Finns det något som vi kan lära av Stalin är det hans tes om nödvändigheten av socialism i ett land.

Under resten av 70-talet och 80-talet är den enda realistiska linjen att arbeta för socialism i ett land, Sverige. Den dominerande uppgiften är att genomföra reformer som steg för steg kan föra oss mot arbetarstyre, jämlikhet och genuint folkligt inflytande.

Jag är övertygad om att det ekonomiska system som byggt upp i Jugoslavien i form av arbetarstyrda företag tillhör en av vårt århundrades mest betydelsefulla sociala innovationer.

Socialdemokratin har inte förlorat regeringsmakten. Inget tyder heller på att den kommer att göra det.

Bo Södersten, gift Friggebo,  i "Den svenska sköldpaddan" 1975. Rabén & Sjögren

Glöm aldrig 4 oktober.

Glöm aldrig 4 oktober. Att vi var en hårsmån från utplånat fritt privat näringsliv och glöm aldrig att socialister aldrig slutar vilja förstöra och härska över företagare.

Och TACK tack tack alla ni som var med i kampanjen mot löntagarfonderna 

Ni räddade oss. Ni räddade Sverige.
För det är vi er evigt tacksamma.

Rebecca Weidmo Uvell Facebook 4 oktober 2018

Rebecca Weidmo Uvell 

Löntagarfonderna

The ECB has bought €2.5tn of eurozone debt securities under a QE programme that is set to stop at the end of this year.

The central bank’s monthly purchases halve to €15bn of bonds in October.


FT 4 October 2018

Finance, the media and a catastrophic breakdown in trust

Two days after Lehman Brothers declared bankruptcy, in September 2008, I went on an anxious walk to my local bank branch. 

Working in New York, I had recently sold my flat in London and a large sum had just landed in my account at Citibank — far more than the insured limit, which at that point was $100,000.

John Authers FT 4 October 2018

The de-civilising process - the collapse of manners

Today’s young, the most educated generation in history, are more likely to model their style on the urban underclass than on yesterday’s educated elite – hence the spread of tattoos, piercings and beards.

Adrian Wooldridge political editor and Bagehot columnist at The Economist

1843/The Economist

ECB’s chief economist, particularly worried because of the shadow banking syste

Peter Praet, the ECB’s chief economist, told a Financial Times conference that 

he was particularly worried about “the degree of leverage in the financial system ... because of the shadow banking system”.

Patrick Jenkins FT 1 October 2018