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2021-04-30

As was true in 2007, just before the financial crisis exploded, liquidity and leverage can matter

Total margin debt across Wall Street hit $822bn by the end of March — after Archegos had failed. 


That was almost double the $479bn level of this time last year and far more than the around $400bn peak that margin debt reached in 2007, just before the financial crisis.


Matt King at Citi, for example, recently told clients that one reason why bond yields have stayed low — and equity markets soared — is that the Fed has been quietly releasing funds into the market, via banks, from the so-called US Treasury General Account.


After all, the Archegos episode was a repeat lesson in how nobody usually worries about excess leverage while asset prices are rising. It is only when they suddenly tumble, for idiosyncratic or system-wide reasons, that nasty surprises emerge.


Gillian Tett FT 29 April 2021


https://www.ft.com/content/ac7cfe19-54a5-4e9a-b059-bbce3e78e354






Det finns anledning att fundera över hur det blivit så, men viktigare är givetvis att se framåt; Janerik Larsson

Sverige står inför en intensiv EU-debatt.

I min bok ”Det långa loppet” (Ekerlids förlag) om de första 20 åren av Svenskt Näringslivs verksamhet skriver jag om EU-folkomröstningen 1994 och EMU-folkomröstningen 2003.

Det svenska EU-medlemskapet inleddes den 1 januari 1995. Någon särskilt intensiv offentlig diskussion om EU eller det svenska medlemskapet har inte förekommit sedan dess med undantag för EMU-folkomröstningen 2003. Det finns anledning att fundera över hur det blivit så, men viktigare är givetvis att se framåt. 

Fem år innan folkomröstningen inleddes arbetet med ett ungdoms- och skolinformationsarbete som syftade till att väcka intresse och positiva känslor för ”Europa”. 

Att den svenska eurofolkomröstningen 2003 skulle sluta med ett nej stod tidigt klart. 

Två viktiga faktorer spelade in för att döma Ja till EMU till misslyckande. Näringslivet var splittrat. 

Skulle kommissionens tankar bli verklighet finns det fog för att tala om risk för allvarliga skador på den framgångsrika frihetliga västliga kapitalism som haft förmågan att öka såväl företagsamheten som det allmänna välståndet.

Det som nu väntar är en dubbel utmaning: att i samverkan med andra EU-länder hantera EUs vägval framöver och att samtidigt skapa en större beredskap för att föra ut EU-perspektiven till medborgarna.

 Janerik Larsson, senior advisor för Stiftelsen Fritt Näringsliv, Svensk Tidskrift 30 april 2021

https://www.svensktidskrift.se/sverige-star-infor-en-intensiv-eu-debatt/


That is more than were killed during either of the two atomic bombs dropped that August.

With no Luftwaffe in the way in Europe, and the B-29s’ bomb bays filled with a new American invention (napalm bombs), LeMay could send out aerial armadas of low-flying planes to devastate the virtually unprotected Japanese cities. 

His pièce de resistance was the horrendous firestorm attack upon downtown Tokyo on March 9 and 10, 1945.

More were killed than during either of the two atomic bombs dropped that August.

Amazingly, LeMay’s aerial pounding did not stop even after the two atomic bombs were dropped

Perhaps the most grotesque came in 1964, when LeMay was given Japan’s highest award to a foreigner for helping to rebuild the postwar Japanese Air Force.

Paul Kennedy, professor at Yale University and the author of numerous works including “The Rise and Fall of the Great Powers,”April 30, 2021

https://www.wsj.com/articles/the-bomber-mafia-review-architects-of-a-firestorm-11619792208?mod=djembooks


Some have questioned the military value of Dresden

https://englundmacro.blogspot.com/2020/02/some-have-questioned-military-value-of.html


Man kan inte stänga ned Bromma flygplats för tidigt

Maria Stockhaus, Moderaternas trafikpolitiska talesperson, är inne på samma linje. 




Så det blir ingen snabb nedläggning av Bromma flygplats? 

”Nej, det kan jag inte tänka mig, den tårtan åts alldeles för tidigt”, säger Anders Åkesson, trafikpolitisk talesperson för Centerpartiet.

DI 29 april 2021

https://www.di.se/nyheter/m-hotar-med-misstroende-om-bromma-laggs-ned/


There was a time when radical economic ideas came from the political right.

US, Germany, France and the UK; large majorities in the four countries are unhappy with the economic system.

Only a very small proportion, the highest was 12 per cent in the US, thought the economic system did not need to be changed.

In the aftermath of the pandemic, people cherish greater security, solidarity and resilience in the face of shocks. The left is winning the economic battle of ideas.

Chris Giles FT 29 April 2021

https://www.ft.com/content/d3c1c5c5-e601-4c46-8d3a-187e1d9a6b87


Doom: The Politics of Catastrophe by Niall Ferguson

https://englundmacro.blogspot.com/2021/04/doom-politics-of-catastrophe-by-niall.html

How the middle class became downwardly mobile

When asset prices outstrip wages in developed economies, the result is an “inheritance society”. 

The economist Thomas Piketty points out in Capital in the Twenty-First Century that what we’re seeing is a reversion to the historical norm: in most epochs, the vast bulk of wealth comes from inheritance, not work. 

Piketty says the exception was the postwar era: once the Great Depression and the second world war had decimated family wealth, there was little left to inherit.

Fifty years ago, a bank manager or teacher or lawyer was a big shot guaranteed a big house. Nowadays people in those jobs can find themselves living in their childhood bedrooms, struggling to please lesser-educated parents who control the pot of gold. 

Simon Kuper FT 29 April 2021



Simon Kuper - en av mina Gurus






Is the U.S. Student Loan Program Facing a $500 Billion Hole?

The federal budget assumes the government will recover 96 cents of every dollar borrowers default on. That sounded high to Mr. Courtney because in the private sector 20 cents would be more appropriate for defaulted consumer loans that aren’t backed by an asset.

He asked Education Department budget officials how they calculated that number. They told him that when borrowers default, the government often puts them into new loans. 

These pay off the old loans, and this is considered a recovery, even though in many cases the borrowers haven’t repaid anything and default on the new loans as well.


WSJ 29 april 2021

https://www.wsj.com/articles/is-the-u-s-student-loan-program-in-a-deep-hole-one-banker-thinks-so-11619707091




Pressträff om covid-19, 29 april 2021

Klara och tydliga diagram

https://www.youtube.com/watch?v=YnSEiQmDP2Y



Duke and Vanderbilt universities, two of the most prestigious seats of learning in the US,

are among the biggest shareholders of a company that owns a single sandwich shop in New Jersey and has a stock market valuation of $100m despite recording just $13,976 in sales last year.

“[This] is a self-parody of a Spac,” said John Coffee, a professor at Columbia University’s law school who has written about hostile takeovers. “And that is what I would expect at the end of a bubble.”

FT 30 April 2021

https://www.ft.com/content/4a6d0864-eb26-4e54-8ab5-ffad2e8166ee



Doom: The Politics of Catastrophe by Niall Ferguson

Doom seeks to understand why humanity, time and again through the ages, has failed to prepare for catastrophes, whether natural or man-made. 

Early on, Ferguson asserts that this exploration necessarily involves “the history of economics, society, culture and politics” so as to enable us to learn from the past how we can “construct social and political structures that are at least resilient and at best anti fragile”.

The vulnerability inherent in our networked world is discussed by Ferguson with an expertise that puts much contemporary comment on Covid to shame.

Douglas Alexander, a senior fellow at Harvard University’s Kennedy School of Government and a former UK cabinet minister, FT 29 April 2021

https://www.ft.com/content/30a87e18-89df-45ff-8993-fae9fb92eed3




 

2021-04-29

No matter what this is likely to be THE main topic for global financial markets in 2021

However, over the last couple of months I have become more and more convinced that particularly elevated stock prices, property prices and commodity prices reflected sharply increased inflation pressures.


I have therefore, gradually changed my view on inflation and am now quite convinced that inflation will pick up very strongly in the US. 


In fact, I now seriously fear that we are heading for double-digit inflation in the US before the end of this year.


No matter what this is likely to be THE main topic for global financial markets in 2021 and I have a hard time seeing this playing out without causing some volatility in global financial markets.


The Market Monetarist Lars Christensen 


https://marketmonetarist.com/2021/04/29/heading-for-double-digit-us-inflation/


Wesc fortsätter rusa – nu värt kring miljarden

Förvärven sker med delvis betalning i nytryckta aktier.

DI 29 april 2021

https://www.di.se/live/wesc-fortsatter-rusa-nu-vart-kring-miljarden/


Inte 1 April


Money from stock offerings is flowing into below-investment-grade companies at a pace not seen since the dot.com boom of the 1990s


SPACs, also known as blank-check companies, have issued roughly $100 billion of stock this year, a record, to buy private companies and take them public. Some SPACs are targeting companies with below-investment-grade credit ratings, hoping to use their cash piles to pay down debt and grow the businesses.


https://www.wsj.com/articles/spac-surge-pumps-up-junk-bond-market-11619170201

2021-04-28

If everybody agrees the boom is coming, why does the Fed remain so sanguine that inflation will stay close to its 2% longer-run target?

The character of current monetary policy is different, as the Fed’s gobbling up of Treasurys and mortgage-backed securities has boosted bank reserves and the monetary base 24%. 

M2 has surged 27% since the outbreak of the pandemic. Commercial banks are now in good shape and eager to lend, in contrast to their crippled state in 2009.

The Fed should be more realistic about current risks and prepare markets for a timely unwinding of its asset purchases and an eventual rise in interest rates.

Mickey D. Levy and Michael D. Bordo WSJ April 26, 2021

https://www.wsj.com/articles/the-fed-in-the-sand-as-inflation-threatens-11619455611


The process of ending the Fed’s giant bond-buying program, and subsequently raising interest rates

https://englundmacro.blogspot.com/2021/04/the-process-of-ending-feds-giant-bond.html


The value of many assets is little more than a collection of best guesses. For none is this more true than goodwill

What is goodwill? Ultimately it is simply the result of a sum. 

When one company buys another, goodwill is the difference between the appraised value of the target’s assets, minus any assumed liabilities. 

It's basically an accounting ruse to deal with a bid premium without the balance sheet becoming unbalanced. 

Now companies must cast the slide rule over their goodwill each year and work out whether it’s still worth what they thought it was. 

Spoiler: they usually find it is. 

Ben Wright Telegraph 2021

https://www.telegraph.co.uk/business/2021/04/28/unlikely-ticking-time-bomb-corporate-balance-sheets/


David Einhorn Said a Tech Stock Bubble Had Popped.

Now He Says It Hasn’t. 


https://www.institutionalinvestor.com/article/b1q6xj4rz3ddmq/David-Einhorn-Said-a-Tech-Stock-Bubble-Had-Popped-Now-He-Says-It-Hasn-t


Prisskillnaden på en villa i Bromma och en villa i Blekinge ligger i snitt på 14,8 miljoner kronor

En Båstadsadress drar upp Skåne till det näst dyraste länet att bosätta sig i. 

På Agardhsgatan, ett stenkast från vattnet, har villorna i snitt gått loss på 12,2 miljoner kronor, även bostadsrätterna har ett kvadratmeterpris på över 100.000 kronor

DI 28 april 2021

https://www.di.se/nyheter/har-ar-sveriges-dyraste-adresser/




Intellektuellt haveri från Riksbanken?

Vad är det sista svensk bostadsmarknad behöver just nu? 

Kanske tre hundra miljarder i statlig nödhjälp. 

Hur vet man att bostadsmarknaden är överhettad? Kanske när en villa i Botkyrka börjar uppföra sig som bitcoin; en villa med utgångspriset 5,9 Mkr budades upp till 9,8 Mkr

Att detta inte är en helt sund samhällsutveckling skulle nog många hålla med om. 

Undantaget tycks vara de disputerade ekonomer som utgör Riksbankens direktion. Två dagar efter att Valueguard släppte sina siffror över det rekordartade borallyt köpte Riksbanken på sig bostadsobligationer för ytterligare sex miljarder kronor.

Riksbankschefen Stefan Ingves sa länge blankt nej till blotta tanken på att stötta bostadsmarknaden med obligationsköp. Det är lätt att förstå eftersom han tillbringat merparten av sina femton år på posten med att varna för riskerna med höga huspriser.

Andreas Cervenka DI 27 april 2021

https://www.di.se/analys/intellektuellt-haveri-fran-riksbanken-makten-maste-begransas/


RE: Två kommentarer.

1. Kan Ingves säga, Jag lydde bara order?

   Riksbanken har som uppgift att hålla inflationen vid två procent.


2, Ingves har försvarat sin vägran att höja räntan med att det skulle göra att kronan steg.

   Men vi har flytande växelkurs.

   Det kan gå illa med fastighetspriserna när man låser växelkursen.

   Få vet det bättre än Ingves.


Riksbanken förlänger perioden med nollränta, och räknar med att den blir kvar i åtminstone tre år.

RE: Är dom alldeles från vettet?

https://englundmacro.blogspot.com/2021/04/riksbanken-forlanger-perioden-med.html


Did inflation targeting fail?  

Martin Wolf, Financial Times, May 5 2009

https://englundmacro.blogspot.com/2021/03/amid-wide-range-of-options-inflation.html




2021-04-27

Total bank losses from Archegos implosion exceed $10bn

FT 27 April 2021

https://www.ft.com/content/c480d5c0-ccf7-41de-8f56-03686a4556b6


Financial crises get triggered about every 10 years

https://englundmacro.blogspot.com/2021/04/financial-crises-get-triggered-about.html


What to Know About Apple’s New iPad Pro, M1 iMac, AirTags and Apple TV

https://www.wsj.com/articles/apples-new-ipad-pro-apple-tv-airtags-and-m1-imac-what-you-need-to-know-11618957932




Riksbanken förlänger perioden med nollränta, och räknar med att den blir kvar i åtminstone tre år.


https://www.svt.se/nyheter/ekonomi/riksbankens-nollranta-forlangs


RE: Är dom alldeles från vettet?


Äntligen: Riksbanken flaggar för slut på obligationsköpen

Köpen av obligationer och andra värdepapper, som syftar till att hålla ner marknadsräntorna, fortsätter enligt plan under hela 2021. 

Därefter ska Riksbanken behålla sitt innehav under åtminstone 2022 och först därefter kan bli aktuellt att minska dess storlek.

Bostadspriserna, där riksbankschefen Stefan Ingves visar bekymmer över den senaste tidens snabba uppgång.Enligt Ingves är detta dock ett problem som ligger utanför Riksbankens kontroll. 

De låga räntorna kan visserligen bidra till att bostadspriserna stiger, men någon räntehöjning är i nuvarande läge inte möjlig. Följden skulle i så fall bli en starkare krona, högre arbetslöshet och lägre inflation.

En senare fråga blir hur man ska kunna krympa sitt redan stora innehav. För att undvika störningar måste det nog ske gradvis och utan större åthävor.

Johan Schück 27 april 2031

https://johanschuck.se/riksbanken-flaggar-for-slut-pa-obligationskopen/



Reporäntan lämnades orörd på noll och köpprogrammet ändrades inte heller. 

Det innebär köp för sammanlagt 700 miljarder kronor fram till årsskiftet. 

Räntebanan, det vill säga Riksbankens egen prognos för reporäntan, visar fortsatt nollränta. Den enda förändringen var att den rent mekaniskt förlängdes med ett kvartal och nu löper till det andra kvartalet 2024.

Viktor Munkhammar 27 april 2021

https://www.di.se/analys/riksbanken-bjuder-pa-markliga-siffror/


Företagsobligationer; Under det första kvartalet emitterades papper för 51 miljarder kronor

Viktor Munkhammar DI 16 april 2021

https://englundmacro.blogspot.com/2021/04/foretagsobligationer-under-det-forsta.html


He served as a Marine guard at the U.S. Embassy in Saigon when the South Vietnamese capital fell in 1975 and, decades later, as an Army foot soldier patrolling the mountains of Afghanistan.

“The same thing that happened in Vietnam is happening here,” said Mr. Nicholas, now 68 and living in Green, Ohio.

“They’ll say we accomplished great things,” he said. “I say we accomplished nothing.”

WSJ 26 April 2021

american-vets-see-echoes-of-vietnam-in-afghanistan-withdrawal-plan-11619446397


The process of ending the Fed’s giant bond-buying program, and subsequently raising interest rates

As the economic recovery evolves from forecast to reality, the Federal Reserve will face a question that has vexed it in the past: how to signal its eventual tightening of the money spigot.

Officials will begin by debating how and when to scale back, or taper, the $120 billion-plus of Treasury and mortgage bonds the Fed has been buying each month since last June to hold down long-term borrowing costs.

WSJ 25 April 2021

https://www.wsj.com/articles/the-feds-next-test-is-breaking-the-ice-over-policy-shift-11619359200


Alla är glada. 

Utom riksbankscheferna som vet att de inte har någon plan för återgång till något slags normalitet.

https://englundmacro.blogspot.com/2021/03/for-varje-dag-som-gar-med-nollranta.html


Veteran investors are unnerved by bubble-like conditions

Wild Market Ride Lifts Everything From Lumber to Stocks to Bitcoin

Markets for everything from home-building materials to bitcoin to stocks are soaring, stirring up fresh fears that global markets are in a bubble.

Rarely have so many assets been up this much at once.


Wall Street has seen this movie before.

WSJ 25April 2021

https://www.wsj.com/articles/wild-market-ride-lifts-everything-from-lumber-to-stocks-to-bitcoin-11619343001


Home prices surge 12% in February, the biggest jump since 2006 — a $35,000 gain for median-priced homes

MarketWatch 27 april 2021

https://www.marketwatch.com/story/home-prices-are-rising-across-every-part-of-america-but-this-city-is-seeing-the-fastest-growth-11619529787


Happy days are here again!


https://www.youtube.com/watch?v=6h_GChgSv_A

Bond investing needs a complete rethink

The current liquidity level in the bond market is unique. 

The flow of money seeking a higher current return has narrowed the spreads at which corporate debt trades over government borrowing benchmarks. This has made it possible for companies with marginal credit ratings to both refinance and raise new money on very attractive terms.

Any major jolt that hits the markets, however, could undo the base for the substantial investor leverage that has made its way into them.... Central banks are watching this carefully but might not be able to control it.

Dan Fuss FT 27 April 2021

https://www.ft.com/content/c8c15f2a-174f-4550-99e8-c4b79ec12d4f


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

Niall Ferguson, FT February 10 2010

https://www.internetional.se/bondsnext.htm


A small nail can pop a big bubble.

2021-04-26

Never mind debts in Greece or Italy, it’s France (or perhaps Spain)

This month France finally overtook Italy as the Continent’s biggest debtor – and the third biggest globally.


Next, take a look at who owns it. In Italy, 70pc of government debt is owned by the Italian banks, which swiftly pass it on to the ECB. 


Half of France’s debt is held by the rest of the world: indeed, since France is now the third biggest debtor in the world after the US and Japan, and since Japanese debt is also most owned domestically, French debt is arguably the second largest traded commodity in the world.


The problem is this. If French banks owned all that paper, arms could be twisted in a panic to support tthe price. But global institutions will ditch the notes at the first sign of trouble.


No French president has been re-elected since Jacques Chirac in 2002. 


Matthew Lynn telegraph26 April 2021


https://www.telegraph.co.uk/business/2021/04/26/never-mind-debts-greece-italy-france-heading-crisis/



France’s debt pile is surprisingly high 


But market watchers and economists don’t seem bothered. 


CNBC 7 Nay 2021



https://www.cnbc.com/2021/05/07/frances-debt-pile-is-surprisingly-high-but-experts-arent-worried.html





RE: My feeling is that things are not going well in Spain.


Spanish unemployment hits 4m for first time in 5 years


https://englundmacro.blogspot.com/2021/03/spanish-unemployment-hits-4m-for-first.html




“Stock valuations are elevated right now, and a lot of good news is priced in,” says Jeffrey Buchbinder, equity strategist at LPL Financial, to clients in a note. “However, we believe valuations are quite reasonable when considering interest rates are low and we expect inflation to remain largely contained.”


Worth $12tn in 1980, global stocks and bonds are now worth nearly $370tn

But that rise may be less a result of government retreat, in the form of deregulation, than of state support, particularly bailouts and easy money from central banks.

Ruchir Sharma, Morgan Stanley Investment Management’s chief global strategist, is author of ‘The Ten Rules of Successful Nations’ FT 25 April 2021

https://englundmacro.blogspot.com/2021/04/it-is-difficult-to-maintain-fiction.html



2021-04-25

Babel 25 april 2021

Kristina Sandberg nådde den stora publiken med trilogin om hemmafrun Maj i Örnsköldsvik. I nya -självbiografiska - En ensam plats skriver hon om den stressiga, slitsamma tiden efter framgångarna med Maj, om hur hennes pappa hastigt dör och hon själv får ett svårt cancerbesked. 

2014 kom Pooneh Rohis hyllade debutroman Araben. Hennes nya roman, Hölje, skildrar nyförlösta Monas mardrömslika upplevelse.

Panelen läser Hjalmar Gullberg och veckans följetong handlar om Fröding och sedlighetsåtalet mot dikten En morgondröm. På scen: Miss Li. 
















It is difficult to maintain the fiction that central banks are not part of big government

The idea the state has been shrinking for 40 years is a myth

The ‘neoliberal’ era that began with Reagan and Thatcher has instead presided over ever-bigger government

Corporate bailouts have become standard procedure. Once reserved for single companies, bailouts were extended to an entire industry during the savings and loans crisis of the 80s and 90s. After 2008, they were extended to big banks and auto companies. 

During the pandemic, bailouts have been on offer to almost any company that applied.

Ruchir Sharma, Morgan Stanley Investment Management’s chief global strategist, is author of ‘The Ten Rules of Successful Nations’ FT 25 April 2021


https://www.ft.com/content/e4b2b28d-5697-4579-88cf-31f6228278e8


When the central bank starts to wind down bond purchases, the high-debt eurozone nations will be at the mercy of global capital markets

ECB now faces an awkward question that it would rather not have to answer: how to justify the continuation of emergency bond purchases once growth is humming and key sectors of the economy hit capacity constraints.

The judges said legality hinges on scale, scope, and how long the one-off scheme lasts. It was a clear hint that the court will not allow the recovery fund to become a trojan horse for permanent fiscal union

This may have potent consequences since global investors are purchasing Italian and Club Med bonds enthusiastically on the loose assumption that the recovery fund is indeed a cloak for a future EU debt union.

Ambrose Evans-Pritchard Telegraph 22 April 2021

https://www.telegraph.co.uk/business/2021/04/22/europes-boom-finally-coming-beware-ecb-sting-tail/


Prof Lucke's case invokes Article 311 of the Treaties.

Ambrose Evans-Pritchard Telegraph 1 April 2021

https://englundmacro.blogspot.com/2021/04/with-750bn-recovery-fund-europes.html

Today, freely floating exchange rates suit most large countries better than the late economists Richard Cooper, Robert Mundell, and John Williamson thought

Williamson also championed another intermediate regime, the target zone, under which countries keep their exchange rates within pre-specified bands. He repeatedly updated his proposals to apply the target zone even to the dollar, euro, yen, and other major currencies.

But these arrangements were most popular among emerging markets. Many mixed and matched Williamson’s proposals – falling under the rubric of basket, band, and crawl (BBC) – as Botswana and Singapore still do today.

Richard Cooper; an active role at the 1978 Bonn Summit of G7 leaders. There, Germany, Japan, and the US agreed to act as locomotives, simultaneously pulling the rest of the world economy out of stagnation. At this time, Cooper gave the world the term “locomotive theory,” referring to coordinated fiscal expansion across countries.


Jeffrey Frankel, Professor of Capital Formation and Growth at Harvard University, previously served as a member of President Bill Clinton’s Council of Economic Advisers 21 April 2021

https://www.project-syndicate.org/commentary/cooper-mundell-williamson-exchange-rate-regimes-by-jeffrey-frankel-2021-04


Economist John Williamson Set; Coiner of term Washington Consensus

One example of collective error, he said, came in the years of speculation in complex derivatives leading up to the 2008 financial crisis: 

“We were over-mesmerized by assuming that the financial people knew what they were doing.”

WSJ 20 April 2021

https://www.wsj.com/articles/economist-john-williamson-set-off-an-unintended-uproar-11618924115


A new Washington consensus

https://englundmacro.blogspot.com/2021/04/a-new-washington-consensus.html


Robert Mundell

http://www.nejtillemu.com/mundell.htm





Inflation might be the way out of the debt crisis

A year ago, central banks and governments were forced to take unprecedented measures in real time to avert a 1929-style depression. The resulting skyrocketing debt will doubtless weigh on future generations, but, for now, it seems the only game in town to reboot national economies by making them even more debt addicted.

For this entire house of cards not to crumble, growth and inflation need to be restored. 

At the outset of the crisis, the Fed’s bold action — including large-scale financing of government debt — was timely. Now it is hard not to see it will lead to a de-anchoring of inflation expectations and a revival of the spectre of a 1970s-style growth in prices.

The writer is group chief investment officer at Amundi

FT 8 April 2021

https://www.ft.com/content/c7ebe679-3373-4f01-94fe-015bf80c4d3b


Investors plough money into US inflation-protected bond funds

Tips funds enjoy 29 consecutive weeks of inflows

FT 23 April 2021

https://www.ft.com/content/951002b3-5938-41e3-9294-d7b7db38156f


Volcker startade sedelpressarna, inte Greenspan

https://englundmacro.blogspot.com/2014/04/volcker-startade-sedelpressarna-inte.html

2021-04-23

The psychology of a stock market bubble

Worry about a bubble is widespread at the top of a bubble

Robert Shiller, the Yale finance professor and Nobel laureate. According to him, a bubble is “a market situation in which news of price increases spurs investor enthusiasm which spreads by psychological contagion from person to person, bringing in a larger and larger class of investors, who, despite doubts about fundamental value, are drawn to the investment partly through envy of others’ successes and partly through a gambler’s excitement.”  

Needless to say, things don’t go up forever. Those who nevertheless continue to invest in such an environment do so with the implicit assumption that they will be able to recognize it, in advance, when the bubble is about to pop—and therefore able to leave the party before everyone else. 

Mark Hulbert MarketWatch 21 April 2021 

https://www.marketwatch.com/story/the-psychology-of-a-stock-market-bubble-11619198164

 

Why the next bear market could shave 35% off the Dow

Mark Hulbert MarketWatch June 14, 2019 

https://englundmacro.blogspot.com/2019/06/why-next-bear-market-could-shave-35-off.html


Coelis allokeringschef Erik Lundkvist varnar för att aktiemarknaden springer rakt in i en börsbubbla

Det riskerar att sluta med kraftiga ras. 

Det är dock högst osannolikt att Fed höjer räntan i närtid så det finns fortfarande pengar att tjäna på börsen, enligt Erik Lundkvist. 

- Uppgångarna kommer inte att vara lika stora som de senaste tretton månaderna men börsen står högre vid årsskiftet

- Det viktigaste i det här läget är att våga vara fullinvesterad i aktier och inte sälja när det kommer korrektioner. Man ska snarare köpa dippen”

DI 21 april 2021

https://www.di.se/nyheter/experten-da-brister-bubblan-alla-pusselbitar-finns-dar/



The Fed’s zero-interest rate policy has unfortunately led to bubbles everywhere

The Fed’s zero-interest rate policy—absolutely necessary to prevent a depression during the Covid crisis (and it did)—has unfortunately led to bubbles everywhere

... shell companies, non-fungible tokens (NFTs), a gaggle of competing cryptocurrencies, etc…. 

Today’s speculators (and many hedge fund managers) are no different than the hapless day traders who lost their shirts in 2000. Now, like then (and as in every bubble since the Tulpenmanie in 1637, the original NFT craze), the speculators said the others “just don’t get it.” 

Well, there’s nothing to get when there’s no there there—“there” being intrinsic economic value.

As they say, it takes a whole new generation to forget the prior one's mistakes

James Berman Forbes 1 April 2031

https://www.forbes.com/sites/jamesberman/2021/04/01/a-reckoning-in-bubble-assets-is-coming/


In fact, the decade between the 2008 financial crisis and this one saw the creation of a vast asset price bubble in just about everything. 

That bubble is now bursting

Rana Foroohar FT 19 April 2020

https://englundmacro.blogspot.com/2020/04/the-doomsday-dollar-scenario-both.html


Tulipmania in the Netherlands in the 1630s

https://www.internetional.se/enenkeltulipan.htm



Whether you have a doctorate in economics or not, it is a guess how it will work out

Don’t let anyone tell you otherwise. The U.S. economy is going through a unprecedented period after having been shut down by government decree.

In the immortal words of former Secretary of Defense Donald Rumsfeld, there are a lot of “known unknowns” out there.

What will returning to the office even be like?

Where will the workforce live?

Will robots take more jobs?

Which companies are zombies?

Will Americans save more money in case of future troubles?

What will happen to inflation in 2022?

Greg Robb senior reporter for MarketWatch 22 April 2021

https://www.marketwatch.com/story/zombies-robots-and-big-unknowns-lurk-as-the-u-s-economy-recovers-from-pandemic-11619105504


Donald Rumsfeld; known unknowns

https://englundmacro.blogspot.com/2011/02/donald-rumsfeld-known-unknowns.html




$260 billion wiped off cryptocurrency market in 24 hours as bitcoin plunges below $50,000

 CNBC 23 april 2021

https://www.cnbc.com/2021/04/23/bitcoin-btc-price-plunges-as-260-billion-wiped-off-cryptocurrencies.html


In 2008, in a wonkish paper that bore no relation to any sci-fi, the enigmatic Satoshi Nakamoto launched Bitcoin


2021-04-22

Is this a bigger bubble that the tech dot com bubble of 1999/2000?

The Money GPS Youtube 22 April 2020

https://www.youtube.com/watch?v=epnrREWuwlI


Corporate Debt Domino Effect Has Begun.

The Money GPS Youtube 5 April 2020

https://englundmacro.blogspot.com/2020/04/what-happens-when-stock-buybacks-drop.html



“this time is different”

A pliant US Federal Reserve, massive consumer savings, substantial free cash flow generation, powerful government spending, money on the sidelines with negative real bond yields are the fodder that allegedly can sustain the rally even after a gain of nearly 90 per cent from 2020 lows.

The last time we saw such an upbeat zeitgeist that did not coincide with an immediate equity market correction was in 1999 when the dotcom bubble was in full bloom.

Tobias Levkovich FT 22 April 2021

The writer has been Chief US Equity Strategist for Citi since 2001


https://www.ft.com/content/eba424d5-185a-4d6c-805d-4a4a9e199f89


The EU’s future hinges on Italy’s recovery fund reforms

Economic reform programme that is to be powered by some €200bn in EU grants and loans.

Italy’s political parties are weak and often influenced by segments of the elite that benefit from the status quo.

Andrea Lorenzo Capussela 

author of ‘The Political Economy of Italy’s Decline’

FT 21 April 2021

https://www.ft.com/content/37854580-7ae0-42e6-b375-02c422d60882


PM aims to use share of EU pandemic recovery funds for digitalisation and high-speed rail

https://www.ft.com/content/29d4b262-fb4a-46be-b504-6689e0eec994


Prodi: It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created."

https://englundmacro.blogspot.com/2021/04/eu-landerna-forsoker-kuppa-igenom-en.html





2021-04-21

Värtahamnen

En del av Norra Djurgårdsstaden.

I Värtahamnen växer en ny stadsdel fram

https://www.youtube.com/watch?v=cYh6O_ViEAU



Germany’s constitutional court has removed a key obstacle

to the creation of the EU post-pandemic recovery fund by rejecting an emergency motion to stop the country ratifying the bloc’s main crisis-fighting programme.

The judges said the main complaint was “not inadmissible per se, nor clearly without merit”. But it said that based on a “summary review” it was unlikely that the court would find that the recovery fund violated the German constitution.

FT 21 April 2021

https://www.ft.com/content/1dd47402-2639-4c17-918d-87458b7bf910


Germany’s constitutional court has removed a key obstacle With the €750bn Recovery Fund, Europe’s leaders have unwittingly created a device to explode their own project

https://englundmacro.blogspot.com/2021/04/with-750bn-recovery-fund-europes.html



GameStop to Tesla: investor Jeremy Grantham on 'crazy' markets

 

FT Youtube 26 February 2921

https://www.youtube.com/watch?v=Y_yRgMgBis0


Why Grantham Says the Next Crash Will Rival 1929, 2000

https://englundmacro.blogspot.com/2021/03/why-grantham-says-next-crash-will-rival.html

Klas Eklund lugnar oroliga aktieägare i Ekonomibyrån

Ganska exakt i mitten av programmet.

https://www.svtplay.se/video/30886318/ekonomibyran/ekonomibyran-sasong-3-dopad-bors?id=KqWVD6N

Ett tredje fel gjorde finansministern när hon sa att statens stora stödinsatser under covidkrisen var möjliga för att vi tidigare hade ”sparat i ladorna”

När Magdalena Andersson varnar för att Sverige kan hamna i samma läge som de krisande euroländerna visar hon bristande insikt om finanspolitikens grundläggande villkor. 

Så länge Sverige lånar i sin egen valuta utan fast växelkurs kan Riksbanken avvärja sådana kriser. 

Det finns ingen osynlig gräns som Sverige plötsligt kan korsa och bli som Grekland bara för att vi ökar vår statsskuld. Skillnaden mellan vår valutaregim och euroländernas är inte kvantitativ utan kvalitativ. 

Det är inte en gradskillnad utan en utan en artskillnad.

Max Jerneck DI 20 april 2021

https://www.di.se/debatt/sparpolitiken-bygger-pa-missforstand/

Max Jerneck är forskare vid Center for Sustainability Research, Handelshögskolan i Stockholm


Warren Buffet 2020 You Do not default with You own currency /MMT EMU/ samt dito Englund 2011

https://englundmacro.blogspot.com/2021/04/warren-buffet-2020-you-do-not-default.html

Netflix har väl varit bra, har varit, under pandemin.

Men Netflix värderas av börsen till 243 miljarder dollar.




Räknat på kursen 8,40 är det drygt 2000 miljarder kronor. 

Låter mycket.

Rolf Englund på Facebook 20 april 20.00 


2021-04-20

Boom för bostäder – i hela västvärlden

Sverige liknar däremot Norge med kraftigt stigande priser under många år innan det globala rallyt drog igång i fjol.  


– Fortfarande finns det utrymme för lite högre bostadspriser i Sverige, men någonstans under 2020-talet är det svårt att tänka sig fortsatta prisuppgångar på samma sätt. 


I bästa fall kommer prisläget då att plana ut. I värsta fall blir det en större korrektion, säger Johan Javéus chefsstrateg för SEB



Johan Hellekant SvD 15 april 2021


https://www.svd.se/boom-for-bostader--i-hela-vastvarlden



Bubblor planar inte ut


https://englundmacro.blogspot.com/2014/01/bubblor-planar-inte-ut.html



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."


https://englundmacro.blogspot.com/2014/01/anders-borg-och-irving-fisher-om-att.html




2021-04-19

Babel; Tone Schunnesson (född 1988) har gått på Biskops Arnös författarskola

Tone Schunnesson (född 1988) har gått på Biskops Arnös författarskola och läser nu filosofi på Södertörns högskola. ”Tripprapporter” är hennes debut. 

En barndom bland missbrukande vuxna och en vuxentillvaro kantad av stölder, knark, och onani framför webbkameran. 

Det är ont om ljusa minnen då huvudpersonen i Tone Schunnessons debutroman blickar bakåt. Befriande, men också spretigt och osammanhållet skriver Viola Bao om ”Tripprapporter”:

- Problemet är att jag inte riktigt får någon djupare förståelse eller känsla för huvudpersonen. Ångesten eller smärtan gestaltas inte tillräckligt djupgående för att jag ska förstå vad som lockar i det destruktiva, och inte heller det sublima i ruset. En historia om hennes avgörande relation till pappan flimrar förbi tillfälligt, men får inte förankring i texten. Det finns ingen framåtrörelse, ingen inre utveckling eller brytpunkt, inga lärdomar dras av något, vilket gör texten statisk och monoton.

Viola Bao SvD 2016-9-05

https://www.svd.se/en-befriande-osympatisk-och-sjalvupptagen-kvinna



Babel Jessica





Problemet med kulturen i Sverige är att det inte finns tillräckligt mycket bra kultur för att fylla alla kultursidor i tidningarna och alla kulturprogram i SvT och Radion.





2021-04-18

I dag hånar jag Olle Wästberg

Vi övertog en krisekonomi och efter ett halvår var budgetunderskottet över 100 miljarder

Dessutom hotades den fasta växelkursen som var ett ankare i den ekonomiska politiken. 

Valutautflödet blev allt större. 

Den ekonomiska krisen började lösas genom tre betydande överenskommelser mellan den borgerliga regeringen och den socialdemokratiska oppositionen... När sedan Socialdemokraterna vann valet 1994 och Göran Persson tog över som finansminister genomförde de alla dessa besparingar för att skapa budgetbalans och minska statsskulden. 

Att samla i ladorna, det vill säga öka de offentliga överskotten är centralt. 

Tidigare statssekreteraren på Finansdepartementet Olle Wästberg DI 15 april 2021

https://www.di.se/debatt/staten-maste-snabbt-fa-starkare-statsfinanser/


"Efter mer än fem år som svensk generalkonsul i New York är jag numera 

generaldirektör för Svenska institutet".


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

https://www.internetional.se/ollew.htm


- En felaktig analys låg i botten på den första uppgörelsen mellan oss och regeringen", menade Allan Larsson [i Visby på söndagen]. Man trodde att det var de dåliga statsfinanserna som rubbat tilltron och orsakat valutaspekulationen. I verkligheten var det finanskrisen, anser Allan Larsson i dag.

DN-ledare 93-07-19

https://www.internetional.se/allanl.htm


Göran Persson om 90-talet: Vi gjorde mycket fel, naturligtvis. Kanske borde vi ha sparat lite mindre.

SvD 7 maj 2017

https://englundmacro.blogspot.com/2017/05/goran-persson-om-90-talet-vi-gjorde_7.html


Kronkursförsvaret 1992

https://www.internetional.se/iccab92.htm