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2021-12-30

Tammy Wynette - Stand By Your Man


https://www.youtube.com/watch?v=AM-b8P1yj9w


China possesses 20% of the world’s population but only 7% of its fresh water.

A decade ago, China became the world’s largest importer of agricultural goods. Its arable land has been shrinking due to degradation and overuse. 

Breakneck development has also made China the world’s largest energy importer: It buys three-quarters of its oil abroad at a time when America has become a net energy exporter.

China’s water situation is particularly grim

Much of China’s fresh water is concentrated in areas, such as Tibet

A growing source of tension in the Himalayas is China’s plan to dam key waters before they reach India, leaving that country (and Bangladesh) the losers. 

Hal Brands 29 december 2021


Hal Brands is a Bloomberg Opinion columnist, the Henry Kissinger Distinguished Professor at Johns Hopkins University’s School of Advanced International Studies, and a scholar at the American Enterprise Institute


”Varje gång jag varnat för börskrasch har jag haft fel”

KRÖNIKA · Viruset bet inte på börsen, inte inflationen heller. 

Börsåret slutade 34 procent upp. De senaste tre åren har börsen nästan fördubblat kurserna.

Det har varit de bästa tre börsåren på raken sedan den obekymrade tiden före den globala finanskrisen.

Pandemin började med börsras men sedan botten den 23 mars 2020 har börsen stigit med 116 procent.

Kommer inflationen till slut att leda till mer räntehöjningar än börsen tål?

Det kanske egentligen är bäst att inte skriva alls. Och att bara satsa pengar man inte behöver på börsen.

Kristina Lagerström SvT 30 december 2021

https://www.svt.se/nyheter/ekonomi/kronika-varje-gang-jag-varnat-om-borskrasch-har-jag-haft-fel


Margin Call - "Sell it all. Today."

https://www.youtube.com/watch?v=ISDgcB-J4fQ



Sex dagar efter att domaren dömt till myndighetens favör fick hon chefstjänsten

Hon var på jobbintervju hos Skatteverket under handläggningen av flera skattemål. 

Kammarrätten i Stockholms beslut och avgörandet var tydligt. Domaren hade varit jävig när hon som rättens ordförande dömde i skattemålen i förvaltningsdomstolen

Till hennes förmån talar att hon gått till chefsrådmannen och frågat om det fanns risk för jäv, utan att avrådas. Häpnadsväckande. Chefsrådmannens magkänsla för det uppenbara saknades tydligen.

Det handlar här således inte om en omdömeslös kvinna utan om ett grundläggande fel inom myndigheterna. 

Det gäller på flera håll i vårt lilla land. Bengt Dennis kunde sålunda gå raka vägen från Riksbanken till SEB efter att SEB kunna lösa in sina utlandslån.

Det borde naturligtvis finnas förbud eller i vart fall karantänsregler som försvårar för personer att dra fördel av en tjänst när de går vidare.


Nu underkänns ett 40-tal domar i förvaltningsdomstolen - en rättsskandal


2021-12-29

Nu underkänns ett 40-tal domar i förvaltningsdomstolen - en rättsskandal, säger advokat Nils Sköld

En domare i förvaltningsdomstolen var på jobbintervju hos Skatteverket under handläggningen av flera skattemål. Sex dagar efter att domaren dömt till myndighetens favör fick hon chefstjänsten. Nu underkänns ett 40-tal domar där företagare och enskilda har körts över på grund av jäv. ”Det är en rättsskandal”, säger advokat Nils Sköld, som tillsammans med Advokatsamfundet varnar för att opartiskheten i rättssystemet undergrävs.

På Luciadagen kom Kammarrätten i Stockholms beslut och avgörandet var tydligt. Domaren hade varit jävig när hon som rättens ordförande dömde i skattemålen i förvaltningsdomstolen samtidigt som hon sökte jobb på Skatteverket. Nu ogiltigförklaras ett 40-tal domar och målen återförvisas till förvaltningsrätten för ny prövning.

Domaren hade under handläggningen av de aktuella skattemålen sökt jobb som sektionschef hos Skatteverket och var på anställningsintervju den 11 juni 2021. Sex dagar efter att hon hade dömt till Skatteverkets fördel mot företagarna i skattemålen fick hon jobbet på myndigheten.

Drygt 60 procent av advokater i skattemål upplever att förvaltningsdomstolarna är partiska, enligt Mia Edwall Insulander, generalsekreterare i Advokatsamfundet. 

Imorgon publicerar TN en längre intervju med Skatteverkets generaldirektör Katrin Westling Palm och del två i artikelserien om rättssäkerheten för företagare i skatteprocesser.

https://www.tn.se/naringsliv/domare-fick-chefsjobb-pa-skatteverket-nu-underkanns-40-domar/


Skatteverkets generaldirektör Katrin Westling Palm och Michael Erliksson, rättschef på Skatteverket, svarar på kritiken 

https://www.tn.se/naringsliv/skatteverkets-gd-beklagar-att-foretagen-kanner-sig-overkorda/


Skatteverkets sparkade generaldirektör är fortfarande Skatteverkets generaldirektör

Dåvarande överdirektör Helena Dyrssen ringt till sin före detta kollega på regeringskansliet, tidigare /Carl Bildts/ kabinettssekreterare Frank Belfrage, för att varna honom om att Uppdrag granskning begärt ut uppgifter om honom för ett reportage om svenskar som haft obeskattade tillgångar utomlands. 

Samtalet sker med generaldirektör Ingemar Hanssons vetskap.

Den 23 februari 2017 finansminister Magdalena Andersson kallar Hansson till en möte på finansdepartementet.  

Men han fick ju inte sparken. Han omplaceras till Finansdepartementet.

Jag har letat men inte funnit någon ny chef för Skatteverket.

På Skatteverkets website är Ingemar Hansson fortfarande fem månader senare Generaldirektör.

https://englundmacro.blogspot.com/2017/07/skatteverkets-sparkade-generaldirektor.html


Alex Schulman återvänder till Filipstad

 Under flyktingvågen 2015 tog lilla Filipstad emot 2 000 nyanlända. Mycket förändrades, och många protesterade när den finaste patriciervillan byggdes om till moské.

Alex Schulman åkte dit och besökte moskén – där bodde nämligen en gång hans morfar och mormor. 

DN 2021-11-08 

https://www.dn.se/kultur/alex-schulman-atervander-till-filipstad-i-morfars-bibliotek-ar-det-bonestund/


Som barn tillbringade han otaliga somrar hos sina morföräldrar, författaren Sven Stolpe och hans hustru Karin.

–  Min mormor och morfar bodde på Allégatan här uppe och jag var här ofta. Det är nästan som en del av mitt dna på ett sätt.

Under 2015 var Filipstad en av de kommuner som tog emot flest flyktingar i förhållande till sin folkmängd

https://www.svt.se/nyheter/granskning/ug/alex-schulman-aldrig-sett-en-kommunperson-sa-nedslagen


Anna Hedenmo möter Alex Schulman i ett samtal.

https://www.svtplay.se/video/23592046/min-sanning/min-sanning-sasong-12-alex-schulman


US trade deficit in goods increased to $97.8 billion November an all-time high

U.S. imports of goods rose 4.7% to $252.4 billion

U.S. goods exports slipped 2.1% to $154.7 billion. 

MarketWatch 29 December 2021

https://www.marketwatch.com/story/u-s-trade-deficit-in-goods-jumps-17-5-to-record-97-8-billion-as-imports-surge-11640785256


US market is more overvalued than in 1929, 1973 and 2007

On a cyclically-adjusted price/earnings ratio, the US market is more overvalued than in 1929, 1973 and 2007. Inflation is rising, central bank stimulation fading and Omicron is upsetting the already fragile apple cart. Not exactly the Goldilocks scenario is it?

The relative case for equities — that they are at least cheap relative to bond yields — also won’t last long when bond yields start to rise.

2022 looks like it comes with an unusually wide range of possible outcomes.

Merryn Somerset Webb FT 28 December 2021

https://www.ft.com/content/307f729c-4ada-445c-a2cd-e1caa2e99e0c


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

Merryn Somerset Webb FT 26 October 2018

https://englundmacro.blogspot.com/2018/10/turn-off-liquidity-taps-and-ability-to.html


2021-12-28

Companies raise over $12tn

Massive bond-buying programmes launched by central banks including the Federal Reserve and European Central Bank during the depths of the pandemic have helped to push borrowing costs to historic lows. 

Coupled with the vast amounts of cash working through the financial system, the environment was extremely favourable for companies to tap new investors and lenders, bankers said.

FT 28 December 2021

https://www.ft.com/content/c656c3da-f5db-41f4-942b-1ed6de9c2d60


Corporate debt has surged $1.3 trillion since the start of 2020

https://englundmacro.blogspot.com/2021/12/corporate-debt-has-surged-13-trillion.html


2021-12-27

What Inflation in 2022 Will Teach Us About Capitalism

It’s encouraging that the bond market expects inflation to barely exceed 2% five years from now and the Fed’s interest rates not to rise even that high.

Labor’s share of GDP held stable at somewhat higher than 60% for the five decades after World War II. But it started to decline sharply after the dotcom bubble burst in 2000 and fell further after the financial crisis in 2008. 

For several years under President Barack Obama, part-time workers’ wages lagged far behind those of full-time workers, and also behind inflation

This malaise led to populist anger and the ascent of President Donald Trump.

Data produced by the Federal Reserve Bank of Atlanta show a sharp decline in real wages.

Since the pandemic, margins  now surging back to reach a level of profitability never before seen.

The story of inflation in 2022 will also be the story of whether the regime of capitalism is really changing and returning to an arguably healthier balance.

John Authers Bloomberg 27 December 2021

https://www.bloomberg.com/opinion/articles/2021-12-27/what-inflation-in-2022-will-teach-us-about-capitalism 


Factor-price equalization - Faktorprisutjämning

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


2022: Regime Change for the Global Economy?

John Authers Bloomberg 23 December 2021

https://englundmacro.blogspot.com/2021/12/2022-regime-change-for-global-economy.html


2021-12-26

Who Saw the Collapse of the USSR Coming?

On the 30th anniversary of the fall of the Soviet Union, we asked historians, economists and political analysts why it happened, and what lessons it holds for Russia’s future.

Bloomberg 24 December 2021

https://www.bloomberg.com/opinion/articles/2021-12-24/what-caused-the-soviet-union-to-collapse-30-years-ago


Anders Åslund var väl den som var mest klarsynt

https://frivarld.se/medarbetare/anders-aslund/


Det vore synd om västvärlden skulle drabbas av en djup ekonomisk kris just när Sovjetväldet håller på att vittra sönder ekonomiskt, politiskt och moraliskt.

Rolf Englund, Den Stora bankkraschen, Timbro, 1983

https://www.internetional.se/re82bok.htm


2021-12-24

2022: Regime Change for the Global Economy?

 No longer driven by minimal inflation in prices, negligible interest rates, steadily falling bond yields, growing inequality, and fantastic returns on asset prices, it’s possible that the return of rising prices in 2021 will at last force a new way of doing things.

With inflation a serious practical problem for the first time in a generation, the assumptions that “there is no alternative” to stocks, or that independent central banks can defend confidence in the currency, finally come into question.

In theory, the explosion of inflation this year should have driven a big rise in bond yields, and might well have dragged down share prices. Nothing of the kind has happened.

John Authers Bloomberg 23 December 2021

https://www.bloomberg.com/opinion/articles/2021-12-23/john-authers-looks-to-2022-plus-a-selection-of-his-best-columns-from-2021


2021-12-23

US inflation highest since 1982

12-month increase in the PCE index, the Federal Reserve’s preferred inflation gauge, jumped to 5.7% in November from 5% in the prior month. 

The core PCE rate that strips out food and energy surged to 4.7% from 4.1% on an annual basis. That’s the highest rate since 1982.

MarketWatch Dec. 23, 2021 

https://www.marketwatch.com/story/coming-up-latest-read-on-the-feds-favorite-inflation-gauge-11640265116


USA-inflationen steg något mer än väntat

https://www.di.se/nyheter/usa-inflationen-steg-nagot-mer-an-vantat/


Draghi and Macron: The EU’s fiscal rules must be reformed - "an enhanced fiscal framework"

The recovery is well on its way. The EU economy has not yet returned to its pre-pandemic path, but... We must deepen the reform agenda and accompany these transformations with large-scale investment in research, infrastructure, digitisation and defence.

Prior to the pandemic, the EU’s existing fiscal rules were already in need of reform. 

There is no doubt that we must bring down our levels of indebtedness. But we cannot expect to do this through higher taxes or unsustainable cuts in social spending, nor can we choke off growth through unviable fiscal adjustment.

We need to have more room for manoeuvre and enough key spending for the future and to ensure our sovereignty. 

Debt raised to finance such investments, which undeniably benefit the welfare of future generations and long-term growth, should be favoured by the fiscal rules, given that public spending of this sort actually contributes to debt sustainability over the long run.

Mario Draghi and Emmanuel Macron FT 23 December 2021

https://www.ft.com/content/ecbdd1ad-fcb0-4908-a29a-5a3e14185966



The quarter-century-old Stability and Growth Pact is contained in a treaty, so any amendments would have to be ratified by 27 legislatures.

In 2021 the European Commission activated an “escape clause” in the agreement, freeing countries to spend extraordinary sums to salve the human and economic pain of Covid. Nations must now agree on what will happen when the suspension ends in 2023.




It was also clear that the stability and growth pact was – as I have said before – “stupid”, not because it was mistaken in its objectives, but because it was founded on purely mathematical parameters without any discretionary powers or political instruments to enforce it.

Romano Prodi former Italian prime minister  president of the European Commission, 1999-2004 
FT May 20 2010




"I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created."

Romano Prodi, EU Commission President. Financial Times, 4 December 2001





Larry Summers Gets His ‘Told You So’ Moment on Inflation

 The former Treasury secretary explains to Bloomberg’s Stephanie Flanders how he came to the conclusion U.S. prices would skyrocket.

You sounded the alarm early in the year and were considered a bit of a crank for doing so initially. But not anymore. What did you see that others didn’t see?

Larry Summers: Stephanie, you know, I’ve been right this year, but there have been plenty of years when I’ve been wrong. 

Flanders: If wages do go up, and it’s true that we haven’t seen as much as you might have expected in the last few months. But if they, if they do go up—the last 20 years we haven’t seen a follow through from higher wages to higher inflation. Even the Fed’s own model doesn’t include much response from inflation. So why do you think this time will be different?

Bloomberg 23 december 2021

https://www.bloomberg.com/news/articles/2021-12-23/transcript-larry-summers-gets-his-told-you-so-moment-on-inflation


Government, not just during coronavirus, makes huge use of unelected experts and agencies

From the chief medical adviser to regulators of energy, communications and water, its working relies on people and organisations whose standing depends partly on a degree of independence from politicians. 

But when their views are controversial, the side that doesn’t like the pronouncement gibes that the person is unelected. The challenge is an ancient one. “Who will guard the guards themselves?” was the famous query of the satirical poet Juvenal in ancient Rome. 

It has acquired new force, though, in modern democracies which rely on a vast apparatus of bureaucrats, agencies and experts to enable the elected government to do its job.

FT 22 December 2021

https://www.ft.com/content/0c5c8d5e-811b-40aa-8cdb-f7e54bb6dea6


“There’s always somebody doing better than you,”

said Mark Gorton, the founder and chairman of high-frequency trading firm Tower Research Capital. The number of teenagers worth $20 million because they giddily loaded up on crypto can be hard on the ego. 

One way to think of it is that it is a selective currency peg: Turkey will defend the value of the lira against the dollar, but only for certain retail accounts. 

Another way to think of it is that it is a death-spiral currency peg: The ordinary way to defend a currency peg is to use your reserves of hard currency to buy your own currency and prop up the price; Turkey’s approach is apparently to print more lira the more the lira drops. That might not work!

Matt Levine Bloomberg 22 December 2021

https://www.bloomberg.com/opinion/articles/2021-12-22/wall-street-is-no-fun-anymore


Kronkursförsvaret

https://internetional.se/iccab92dir.htm

2021-12-22

China’s struggling real estate developers face a growing number of repayment deadlines in the next few months

Chinese developers face $19.8 billion in maturing offshore, U.S.-dollar denominated bonds 

in the first quarter, and $18.5 billion in the second

The Nomura analysts pointed out another looming repayment deadline for Chinese real estate developers is deferred wages for construction workers, which are due before the Lunar New Year, which kicks off on Jan. 31.

CNBC 22 December 2021

https://www.cnbc.com/2021/12/22/chinas-property-developers-have-more-than-big-bond-payments-coming-up.html

 

Dansk kvinna misstänks för penningtvätt på över 30 miljarder

 Kvinnan, som har kopplingar till Ryssland, har utelämnats till Danmark från Storbritannien och ska förhöras under dagen. Danske bank utreds i ett flertal länder efter att mer än 200 miljarder euro skickats genom bankens filial under perioden 2007–2015.

DI/TT 22 december 2021

https://www.di.se/live/dansk-kvinna-misstanks-for-penningtvatt-pa-over-30-miljarder/


Historiskt åtal rycker närmare för Bonnesen

SvD 30 november 2021

https://www.svd.se/historiskt-atal-rycker-narmare-for-bonnesen


Beslut om åtal mot Bonnesen skjuts upp

Swedbanks tidigare vd Birgitte Bonnesen har begärt, och beviljats, ytterligare tid för att yttra sig om utredningsmaterialet. 

Realtid.se 2021-11-24


Swedbank (Sparbanken och Föreningsbanken)


Germany will shut down three nuclear plants forever next week,

 slashing clean and reliable baseload power in the middle of winter and during the worst energy crisis in Europe since the Second World War.

Another three reactors will go at the end of 2022.

It is closing good plants just as Vladimir Putin prepares an invasion force on Ukraine’s border, and restricts flows of natural gas as a tool of strategic leverage.

Ambrose Evans-Pritchard Telegraph 21 December 2021


U.S. current account deficit 15-year high

 $214.8 billion last quarter. That was the largest shortfall since the third quarter of 2006.

 3.7% of gross domestic product. That was the largest share since the fourth quarter of 2008

Still, the deficit remains below a peak of 6.3% of GDP in the fourth quarter of 2005 as the United States is now a net exporter of crude oil and fuel.

Reuters 21 December 2021

https://www.reuters.com/business/us-current-account-deficit-widens-biggest-15-years-q3-2021-12-21/


Inflation och handelsbalans. Englunds lag 2,0.

https://englundmacro.blogspot.com/2021/04/inflation-och-handelsbalans-englunds.html


2021-12-21

In markets, it is always tempting to conclude that one’s victories are thanks to one’s own brilliance,

and any failures must be the fault of the Federal Reserve, passive investing or some other convenient scapegoat.

Getting it right occasionally can be thanks to skill or luck, but doing so in the long run is an almost Herculean task that the data shows is beyond the ken of most humans.

Robin Wigglesworth  FT 20 December 2021

https://www.ft.com/content/e87e5c7b-962f-4d91-912e-764cafd0ab01


Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever by Robin Wiggleswort

 Robin Wigglesworth unveils the vivid secret history of an invention Wall Street wishes was never created, bringing to life the characters behind its birth, growth, and evolution into a world-conquering phenomenon. This engrossing narrative is essential reading for anyone who wants to understand modern finance--and one of the most pressing financial uncertainties of our time.

https://bookshop.org/books/trillions-how-a-band-of-wall-street-renegades-invented-the-index-fund-and-changed-finance-forever/9780593087688


What happens if we all just become index investors?

https://englundmacro.blogspot.com/2021/09/nobody-knows-anything.html


Min gissning är att de enorma skuldbergen gör det omöjligt för centralbanker att höja räntan särskilt mycket

Marknaden räknar med att det inte går att höja räntan mer än till cirka 2 procent. Sedan tar det stopp. 

För stora länder med en egen valuta finns det ingen anledning att gråta. 

Vi har blivit så skuldsatta att ränteläget knappast kan ändras på något avgörande sätt. 

Henrik Mitelman DI 20 december 2021

https://www.di.se/analys/den-som-ar-satt-i-skuld-blir-fri/

US financial conditions are near the most accommodative on record

The fact that companies have had little trouble listing shares publicly, or tapping lenders for new credit, underscores the extraordinary levels of cash sloshing through the global financial system and presents a puzzle for Fed policymakers seeking to cool down the economy and tame inflation.

 One key reason why financial conditions remained so loose was because investors were betting that the Fed might not be able to increase interest rates as much as it hoped if economic growth slows 
FT 23 December 2021



“Pushing rates up that significantly could be pretty hard without causing much more tightening in financial conditions than they probably want to see,”



If inflation does what I think it will do, that will still leave negative real interest rates of -3%, still extraordinarily accommodative. But would markets tolerate anything tougher? Probably not.



För varje dag som går med nollränta växer problemen. Hushåll, företag och stater ökar sin skuldsättning. Alla är glada. Utom riksbankscheferna som vet att de inte har någon plan för återgång till något slags normalitet.

Hur skall detta sluta? Det kommer att sluta illa den dag räntorna stiger. Ju längre det dröjer, desto mer illa kommer det att sluta.


Saabs konkurs Oprioriterade fordringsägare föreslås får cirka 11 procent

Tillsammans med två dotterbolag hade biltillverkaren sammanlagda skulder på över 13 miljarder kronor, varav drygt 9,4 miljarder saknades när konkursen var ett faktum.

https://www.dn.se/ekonomi/saabs-konkurs-avslutas-sa-mycket-blev-over/

Saabs konkursförvaltare har fått 367 miljoner i arvode

Det var pinsamt att höra Maud Olofsson berätta om vilka bra säkerheter som Spyker hade ställt gentemot staten.

https://englundmacro.blogspot.com/2021/12/saabs-konkursforvaltare-har-fatt-367.html


Rethink of the Stability and Growth Pact

The huge public-borrowing binge needed to fund spending during the Covid-19 crisis is forcing a rethink of the European Union’s rules governing debt and deficits, exposing a political fault line over economic theory.

The quarter-century-old Stability and Growth Pact is contained in a treaty, so any amendments would have to be ratified by 27 legislatures.

The Stability and Growth Pact was forged at the dawn of the euro at the behest of the Germans, who sought a means to enforce spending restraint on their more profligate neighbors to the south. It caps deficits at 3% of gross domestic product and debt at 60% of GDP. 

In 2021 the European Commission activated an “escape clause” in the agreement, freeing countries to spend extraordinary sums to salve the human and economic pain of Covid. Nations must now agree on what will happen when the suspension ends in 2023.

Italians and the French, and including Spain and others, argues the pact’s arbitrary constraints act as a brake on economic growth and contribute to making debt loads unsustainable. Those with long memories will recall how, in its early years, its limits proved too strict even for Germany

Blooomberg 21 December 2021



RE: Alla insiktsfulla personer, kanske även Gunnar Hökmark, har från början förstått att Stabilitetspaktens regler var orimliga. Varför skapade man ändå dessa regler?

För att lura det tyska folket att överge sin älskade D-Mark.

Federalisterna är totalt samvetslösa i sin kamp för att skapa en Superstat byggd på The Treaty of Rome.



Peter Gyllenhammar ser inte längre ser några ”sunda investeringsmöjligheter” i den svenska aktie- respektive fastighetsmarknaden

 Det beror bland annat på det han kallar ”flodvågen” av förvärvsbolag som har bidragit till ”uppskruvade prisbilder”.

Peter Gyllenhammar anser att det är märkligt att marknaden värderar vissa förvärvsbolag till 30-40 gånger rörelsevinsten samtidigt som de själva värderar förvärvsobjekten till 6-10 gånger vinsten. 

DI 20 december 2021

https://www.di.se/nyheter/miljardarens-fastighetsvarning-likheter-med-kedjebrev/


The Hague will no longer act as a brake on the EU but as a locomotive

Rutte, who often relished his casting as Europe’s Mr No, now intends to be in the vanguard of European integration.

The four coalition parties now say they are open to the “modernisation” of the EU’s fiscal rules as long as its promotes fiscal sustainability and economic convergence. It is vague, but in line with the slightly more flexible approach promised by the new German coalition government.

Rutte’s fourth administration also wants to become an advocate of deeper integration, such as ending national vetoes in foreign policy, strengthening the role of the European parliament and creating EU-wide carbon and digital taxes.

“The Netherlands used to be this last stalwart of neoliberal, free trade, light-touch government thinking,”

FT 21 December 2021

https://www.ft.com/content/6cb97ae0-7eca-4551-b494-e653d2092ae4


2021-12-20

RE: Have you ever seen a support level that has supported anything?

 "if a key support level breaks to the downside, it could trigger so-called “negative gamma,” pushing markets lower in a material way... "

support levels are marked by early December lows for all three indexes — 

4,513 for the S&P 500, 

15,085 for the Nasdaq and 

2,130 for the Russell 2000. 

MarketWatch 20 December 2021

https://www.marketwatch.com/story/these-are-the-big-levels-to-watch-for-the-s-p-500-and-nasdaq-expect-wild-trade-if-they-break-warns-this-strategist-11640002294




Fed’s policy stance is actually much more dovish than it was a year ago

The remaining explanations are markets and politics.

Narayana Kocherlakota Bloomberg 20 december 2021 

https://www.bloomberg.com/opinion/articles/2021-12-20/the-fed-s-pivot-is-the-opposite-of-hawkish


Is the Fed Playing Politics With Interest Rates?

If so, look out for a 1970s-style inflationary spiral.

Narayana Kocherlakota Bloomberg 5 November 2021

https://englundmacro.blogspot.com/2021/11/dow-s-500-and-nasdaq-hit-all-time-highs.html

 

Monnet and the social market economy

The foresight of Monnet — one of the architects of the EU — has held up in this crisis as it has in past ones. The pandemic helped the EU cross the Rubicon of common borrowing for fiscal transfers.

 For two decades from the 1990s on, Europe’s governing parties — the centre-right but also the centre-left, notably under Gerhard Schröder in Germany — were seduced by a form of market fundamentalism

That governing philosophy was already wearing thin after years of fiscal austerity, under-investment, and the growing threat of climate change. The pandemic put the nail in the coffin: the obvious imperative of smart state intervention, to manage the health crisis and to support livelihoods through lockdowns, allows Europe to embrace the social market economy again.

Martin Sandbu 19 December 2021

https://www.ft.com/content/c6760232-80cc-4a25-a1a1-7315f620b63c


A new Washington consensus

The conversion by the IMF and World Bank to support the activist state would put Saul of Tarsus to shame

Martin Sandbu FT 11 April 2021

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



How Jean-Claude Juncker's grand plan for the EU was first laid out 84 years ago

In a book called The United States of Europe. It was written by a close ally of Jean Monnet


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

"I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created."

Romano Prodi, EU Commission President. 
Financial Times, 4 December 2001




2021-12-18

Officials have warned state banks not to help overleveraged developers such as Evergrande,

 but directed them to issue credit to less indebted property groups in an effort to relieve the pressure on the real estate sector. 

The industry is estimated to account for about one-third of total economic output in the country.

Chinese creditors sue Evergrande for claims totalling $13bn

 “There is no way we can repay so many creditors with our limited resources,” said an Evergrande executive, who asked not to be identified. “We will let judges decide who gets paid and how much.”

Evergrande has also issued offshore bonds totalling $19bn.

FT 16 December 2021

https://www.ft.com/content/941c0e96-ebf1-42ee-97ec-ad6764f35cbf



Saabs konkursförvaltare har fått 367 miljoner i arvode

Tio år har gått sedan Saab Automobile försattes i konkurs. Arbetet med konkursen pågår än 

https://www.svd.se/saabs-konkursforvaltare-har-fatt-367-miljoner


Konkursförvaltaren hoppas att arbetet med Saab Automobiles konkurs för tio år sedan ska kunna avslutas under 2021.

Sammanlagt saknas miljarder kronor, så det är bara en viss del av skulderna som kommer kunna betalas tillbaka.

SvD TT 9 december 2021

https://www.svd.se/saab-konkursen-kan-avslutas-fore-nyar/i/senaste/om/naringsliv


Det var pinsamt att höra Maud Olofsson berätta om vilka bra säkerheter som Spyker hade ställt gentemot staten. När det nya företaget går i konkurs kommer nog dessa säkerheter att visa sig värdelösa.

Englund blogg 2010-01-29

https://englundmacro.blogspot.com/2021/10/de-statliga-garantierna-for-lanen-till.html




2021-12-17

What is an ETF?


https://www.marketwatch.com/story/what-is-an-etf-2019-10-09


The market may not be quite convinced that the Fed can do what it outlined in its future projections

 With inflation running at a 39-year high, finding the right balance between stabilizing prices and supporting the economy will be challenging.

“Pushing rates up that significantly could be pretty hard without causing much more tightening in financial conditions than they probably want to see,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “What the market’s telling you is the Fed doesn’t have much scope to go beyond two or three hikes

CNBC 16 December 2021

https://www.cnbc.com/2021/12/16/the-federal-reserve-still-has-a-lot-of-questions-to-answer-about-its-long-term-strategy.html


China Fortune

 China Fortune Land Development Co. said it has been unable to get hold of a money manager that it gave $313 million for investment.

Fortune Land has “lost contact” with China Create Capital Ltd., a British Virgin Islands-registered firm to which it handed over $313 million in 2018 in hopes of receiving an annual return of 7%-10% through 2022

Fortune  defaulted on a $530 million dollar bond in March this year

https://www.bloomberg.com/news/articles/2021-12-16/money-manager-with-313-million-from-china-developer-disappears


A Sunny Place for a Shady Online Business

https://englundmacro.blogspot.com/2021/12/a-sunny-place-for-shady-online-business.html


Rise in main indices ‘completely misleading’ with many shares trading at 12-month lows

US stock markets are once again sailing to record peaks, yet under the surface, a strong tide is pulling down the share prices of hundreds of companies to their lowest levels of the past 12 months.

Earlier this month 1,380 stocks traded on US stock exchanges hit their lowest levels in a year.

Just five stocks — Apple, Microsoft, Nvidia, Tesla and Google parent Alphabet — have accounted for more than half of the S&P 500’s returns since April

FT 17 December 2021

https://www.ft.com/content/d248d1af-261e-47c8-9a5f-0d264cb9f83b

 

Steeply negative real rates will do nothing to fight inflation

 Generally, it’s hard to bring an inflation spike under control unless interest rates rise to a point where they’re above the rate of inflation. That, at least, is the learning of history. 

John Authers Bloomberg December 17, 2021  

https://www.bloomberg.com/opinion/articles/2021-12-17/inflation-and-omicron-end-2021-s-initial-promise-of-normality-onward-to-2022

2021-12-16

Xi Jinping Doesn’t Know What to Do After Popping a Real-Estate Bubble

He wants to raise living standards while limiting the ‘barbaric growth of capital.’ Good luck.

The long-term aim of Mr. Xi’s demolition effort is to pivot the economy away from an overreliance on housing and infrastructure investment and toward a greater emphasis on domestic consumption. 

The problem has always been what economic model would come next and how the Communist Party would manage an inevitably messy transition.

WSJ 16 December 2021

https://www.wsj.com/articles/xi-doesnt-know-property-real-estate-housing-bubble-investment-evergrande-cewc-china-11639669010

 

ECB confirmed their 1.85 trillion-euro emergency measure PEPP, will wind down in March

 The so-called Asset Purchase Program will double to 40 billion euros a month

https://www.bloomberg.com/news/articles/2021-12-16/ecb-boosts-conventional-bond-purchases-to-smooth-crisis-exit


När Hillary Clinton bryter ihop för öppen ridå

 Hillary Clintons ögonvitor skiftar mot rosa, samma nyans som hennes figursydda kavaj och läppstift. 

Clinton håller det segertal som hon aldrig fick tillfälle att ge efter det amerikanska presidentvalet 2016.

Videon, som under den gångna veckan fått viral spridning, är en del av en serie onlinelektioner man kan köpa från en amerikansk föreläsningssajt. 

https://www.youtube.com/watch?v=5qqqRpAzVRA

Samma vecka som klippet med Clinton blir viralt meddelar Bianca Ingrosso att hon efter tio säsonger lämnar ”Wahlgrens värld”.

Essy Klingberg SvD 15 december 2021

https://www.svd.se/alla-varningslampor-gar-igang-samtidigt

Så bra att hon fick användning för sitt segertal.

På valnatten smet hon iväg utan att tacka valarbetarma.

Hon hade inte förberett något nederlagstal.

Deplorables

https://en.wikipedia.org/wiki/Basket_of_deplorables


2021-12-15

Fed said accelerate the pace of its tapering, eyed three hikes of its benchmark interest rate 2022

 to 0.9% by the end of 2022, to 1.6% by the end of 2023 and 2.1% by the end of 2024.

many in the markets think that the Fed won’t be able to raise policy rates anywhere close to 2.5%.

MarketWatch 15 December 2021

https://www.marketwatch.com/story/fed-accelerates-taper-of-bond-purchases-eyes-three-interest-rate-hikes-in-2022-11639595645


If the Fed follows recent practice and raises rates a quarter point at each meeting starting in mid-2022, it might add up to a 1.25% hike by the end of next year. If inflation does what I think it will do, that will still leave negative real interest rates of -3%, still extraordinarily accommodative. 

But would markets tolerate anything tougher? Probably not.

John Mauldin 10 December 2021

https://englundmacro.blogspot.com/2021/12/imagine-you-are-jerome-powell-in-early.html


Near Zero until 2023. Really?

The market will force the Fed to act earlier, I think.

https://englundmacro.blogspot.com/2021/06/near-zero-until-2023-really.html


Havremjölkens Oatlys börsvärde har rasat med över 50 procent sedan noteringen

Oatlys debut på New York-börsen blev succéartad och hela företaget värderas nu till närmare 100 miljarder kronor. Det innebär jackpott för flera av bolagets svenska chefer, grundare och investerare.

 Brödraparet Björn Öste och Rickard Öste äger nu aktier värda 4,3 miljarder kronor.

Oatlys börsvärde placerar bolaget i samma storleksklass som industriklenoder som SCA och SKF på Stockholmsbörsen. 

 DI 21 maj 2021

https://www.di.se/digital/svenskar-blir-miljardarer-pa-oatlys-succenotering/


Kursen har rasat med över 50 procent sedan noteringen.

DN 15 December 2021

https://www.dn.se/ekonomi/oatlys-vd-efter-borsfiaskot-vi-ar-annorlunda/


This year a record $66.8bn has flowed into funds holding Treasury Inflation-Protected Securities,

 US government bonds that are indexed to inflation

BlackRock, the world’s largest asset manager, said it expected inflation will persist at higher levels than those before the coronavirus pandemic, and has an overweight position in Tips.

 FT 15 December 2021

https://www.ft.com/content/76122770-a4ac-4cee-a045-fc1a298c1d5e


Jim Cramer: Investors should favor companies with earnings

 CNBC 14 December 2021

https://www.cnbc.com/2021/12/14/jim-cramer-get-used-to-shrinking-valuations-for-high-flying-stocks.html


How the Price-To-Sales Ratio Works

https://www.investopedia.com/articles/fundamental/03/032603.asp


A Sunny Place for a Shady Online Business

 Malta, home to hundreds of betting sites and dubious oversight, is a target of an international money laundering crackdown.

Bloomberg December 14, 2021

https://www.bloomberg.com/news/features/2021-12-14/malta-europe-s-online-gambling-capital-troubled-by-money-laundering-crackdown


What the heck is happening in the Cayman Islands?

Almost 20 per cent of banks’ cross-border dollar funding is now supplied by entities based in the Cayman Islands

Gillian Tett 10 October 2019

https://englundmacro.blogspot.com/2019/10/what-heck-is-happening-in-cayman-islands.html


Den tyska affärstidningen Handelsblatt skriver att ”fler än 80 poliser”, utredare och åklagare har sökt igenom SEB:s tyska huvudkontor i Frankfurt. 

Enligt tidningens uppgifter är räden relaterad till den så kallade cumex-skandalen, som handlar om storskaliga aktielåneaffärer där syftet är att lura skattemyndigheter att betala tillbaka kapitalskatt på utdelningar trots att någon skatt aldrig har betalats.

Enligt Handelsblatt har den tyska skattemyndigheten krav på 425 miljoner euro, motsvarande 4,4 miljarder kronor, plus ränta. 

DI 15 december 2021

https://www.di.se/live/medieuppgifter-razzia-mot-seb-s-kontor-i-tyskland/



Fed will have a hard time putting the inflation genie back into the bottle without causing a recession

 “I find the idea that very gradual increases of rates will be sufficient to contain inflation to be somewhat implausible, given what is happening in the labor market,” Summers said.

He said he foresaw a GDP gap of about 3%, but the stimulus provided aid equivalent to 14% of GDP.

Former Treasury Secretary Larry Summers Market Watch 15 December 2021

https://www.marketwatch.com/story/summers-says-fed-will-struggle-to-engineer-soft-landing-as-he-frets-about-spontaneous-deflating-in-markets-11639561649


"inflationen betalar mina skulder". Nej, det är lönehöjningar som betalar dina skulder

 Det är antagligen dina boomer-föräldrar som tjatar om hur inflationen betalade av deras skulder

 Men verkligheten är att det är löneökningar som minskar din skuldbörda - både genom att göra räntorna lättare att betala, och genom att ge mer utrymme för amorteringar. 

Sedan vi släppte kronan fri under 90-talskrisen så har den ekonomiska paradigmen ändrats. 


https://cornucopia.cornubot.se/2021/12/utan-stora-loneokningar-gor-inflationen.html

2021-12-14

Det pågår forskning om smältning av ismassor vid Arktis påverkar jetströmmen.

Vad vi hittills vet är att jetströmmarna blir alltmer vågiga och slingriga. 

Det kan ge upphov till kallare och varmare klimat i vissa områden samt köldknäppar som nyligen skett i Sverige och övriga Skandinavien

SvD 14 december 2021

https://www.svd.se/extremvarmen-i-sibirien-nagot-ar-helt-galet


The Omega-Shaped Jet Stream Responsible for Europe’s Heatwave

https://englundmacro.blogspot.com/2019/06/the-omega-shaped-jet-stream-responsible.html



”Skulle betraktas som landsförräderi”

Den 19 november 1992 gav regering och Riksbank upp och släppte kronkursen. Jag /Kristina Lagerström/  var i Rosenbad och hörde dåvarande statsministern Carl Bildts sammanbitna ”Ett misslyckande ska kallas ett misslyckande”.

Det är svårt att nu nästan 30 år senare beskriva den uppskruvade stämningen i maktens korridorer hösten 1992. Men försvaret av den fasta kronkursen betraktades som ett krig. Seniora ekonomijournalister (inte jag…) som eventuellt funderade i kritiska banor kring kronförsvaret vågade inte skriva en bokstav om det. Det skulle betraktas som landsförräderi.

Inflationen har till och med underskridit målet många gånger. Och när inflationen gick över treprocentsstrecket 2008 tog Riksbanken i för mycket och höjde räntan bara några dagar innan den globala finanskrisen brakade lös.

SvT 14 december 2021

https://www.svt.se/nyheter/ekonomi/det-varsta-riksbanken-varit-med-om


"All that is necessary for the triumph of evil is that good men do nothing"


Vi har en väldigt dålig ansvarskultur i svensk politik.
Det mest flagranta exemplet är kronfallet i november 1992.
Och så kallade man detta ett misslyckande och alla satt kvar.
Det menar jag var ett stort moraliskt haveri

Barbro Hedvall i Filosofiska Rummet, 29/10 2006


“Rent of shelter”

 -- a category that makes up a third of the CPI basket of goods and services prices -- is up 3.9% from November 2020. 

That’s the most in 14 years but still pales in comparison to many private-sector metrics. That’s caught the attention of prominent voices like Lawrence Summers and Bill Ackman.


https://www.bloomberg.com/news/articles/2021-12-13/u-s-home-price-surge-looks-much-tamer-in-government-cpi-report


Faran ökat för att centralbanker 2022 begår misstag och bromsar, alternativt gasar, för mycket

Nils Åkesson DI 13 december 2021

https://www.di.se/analys/fed-s-talamod-ar-slut-nu-splittras-centralbankerna-i-tva-lager/


NOBODY KNOWS ANYTHING

https://englundmacro.blogspot.com/2021/09/nobody-knows-anything.html


2021-12-13

Low level of long-term yields in the face of the steepest inflation in decades has been a major puzzle on Wall Street,

 ... since it defies the textbook expectation that investors would demand higher payouts in return.

Ten-year yields on inflation-linked bonds fell to an all-time low of minus 1.25% last month before rebounding to about minus 1%. 

Taken at face value, that shows investors expect 10-year yields --trading at 1.44% Monday -- to trail inflation by about 1% annually over the next decade. 

Bloomberg 13 December 2021

https://www.bloomberg.com/news/articles/2021-12-13/bond-traders-stare-at-worst-real-returns-since-paul-volcker-era


Buy stocks because bonds have so low yields.

Buy bonds because the stocks are so high.

The Fed is already seriously lagging developments on the ground and their policy imperatives

First, the question is not whether some of the more powerful drivers of inflation will lose their potency; they certainly will. It is whether this happens after they plant the seeds for a broader inflation dynamic, which they are already doing.  

Second, the question is not whether this broader inflation dynamic will eventually reverse; it will. Rather, it is about limiting the damage that occurs during and after such a reversal.

Mohamed A. El-Erian Bloomberg 12

https://www.bloomberg.com/opinion/articles/2021-12-12/fed-meeting-central-bank-needs-to-go-beyond-doubling-its-taper-rate


Can the Fed Overcome Its Transitory Policy Mistake?

Mohamed A. El-Erian Project Syndicate 2 Decenber 2021

https://englundmacro.blogspot.com/2021/12/can-fed-overcome-its-transitory-policy.html


With inflation at 5% real short-term rates are at their lowest levels in four decades and deeply negative

The real rate “is arguably the most fundamental indicator of the stance of monetary policy,” wrote economists Christina Romer and David Romer in a 2004 paper.

WSJ 12 December 2021

What Could Possibly Go Wrong in 2022?

 Omicron, sticky inflation, Fed lift-off, China’s Evergrande slump, Taiwan, a run on emerging markets, hard Brexit, a fresh euro crisis, and rising food prices in a tinder-box Middle East — all these feature in a rogues’ gallery of risks.

Some things might go better than expected too, of course. Governments may decide to keep fiscal support in place. China’s latest Five Year Plan could catalyze stronger investment. Pandemic savings might fund a global spending splurge.

Recent history, from the taper tantrum of 2013 to 2018’s stocks selloff, shows how a tightening Fed spells trouble for markets.

Political Turmoil in Europe

Bloomberg 13 december 2021

https://www.bloomberg.com/news/articles/2021-12-13/omicron-inflation-evergrande-10-biggest-risks-to-the-global-economy-in-2022


2021-12-12

The ECB has bought €35bn of Greek bonds over the past two years.

Greece ECB after March the vast bond-buying scheme launched in response to the pandemic is expected to end. When it stops net purchases under the PEPP, the central bank is expected to continue buying bonds under the longer-standing Asset Purchase Programme. 

But this scheme is barred from buying junk bonds.

A Greek official said the country hoped to avoid another Deauville  

FT 12 December 2021

https://www.ft.com/content/f702bc0e-2769-4cdd-ad89-7186ac2cb6e3

The euro zone's decision to impose losses on holders of Greek government bonds has been an unmitigated disaster  breaking the unwritten rule that sovereign bonds from a developed economy are risk-free 

Simon Nixon, WSJ 7 October 2011


Corporate debt has surged $1.3 trillion since the start of 2020

 Not since Alan Greenspan’s time has the U.S. central bank tried to navigate the economy back to price stability from too-high inflation.

Powell’s challenge is to try to curb price pressures without large costs to employment or growth

“They are in a difficult position,” said Jeremy Stein, professor of economics at Harvard University and a Fed governor from 2012 to 2014. There’s just a tremendous amount of interest-rate sensitivity in markets.”

https://www.bloomberg.com/news/articles/2021-12-11/massive-u-s-debts-could-trap-powell-as-fed-fights-inflation


If the Fed follows recent practice and raises rates a quarter point at each meeting starting in mid-2022, it might add up to a 1.25% hike by the end of next year. If inflation does what I think it will do, that will still leave negative real interest rates of -3%, still extraordinarily accommodative. But would markets tolerate anything tougher? Probably not.

John Mauldin 10 December 2021

https://englundmacro.blogspot.com/2021/12/imagine-you-are-jerome-powell-in-early.html


 “Asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall,” the Fed said in its twice-yearly Financial Stability Report

https://englundmacro.blogspot.com/2021/11/fed-warns-risky-asset-prices.html


What is the purpose of monetary policy in today’s economy?

Should we still worry about government debt levels, or have we discovered (by some fluke) that we never needed to worry about this? I am generally open minded, but I do have some strong suspicions in this particular debate.

On fiscal policy and the idea that government debt becomes problematic at some precise level, the events of 2020-21 have demonstrated that much of the conventional thinking was wrong.

Far more important is what the debt is for. Debt incurred to prevent a collapse in economic activity is quite different from debt incurred simply to fund an overly ambitious government’s agenda.

On monetary policy, it was clear even before the pandemic that the post-2008 world of endless central-bank generosity had outlived its usefulness. We have long needed to get back to a relationship where inflation-adjusted interest rates bear some resemblance to potential GDP growth rates.

Jim O’Neill, a former chairman of Goldman Sachs Asset Management and a former UK treasury minister, Project Syndicate 9 December 2021

https://www.project-syndicate.org/commentary/financial-markets-trends-to-watch-2022-by-jim-o-neill-2021-12


Bird Flu More than 40 countries across Europe, Asia and Africa have seen outbreaks

It’s threatening to drive food prices, which are near record levels, even higher and boost costs for households that are already suffering from surging prices for other commodities. 

Bloomberg 11 december 2021

https://www.bloomberg.com/news/articles/2021-12-11/bird-flu-is-raging-adding-to-the-risks-for-food-inflation


A bird flu called H7N9

https://englundmacro.blogspot.com/2017/05/a-bird-flu-called-h7n9.html


The World Is Not Ready for the Next Pandemic

Time Magazine, 4 May 2017

We think 2021 has earned its place in the books as the wildest and most speculative year in US stock market history

Cathie Wood’s Ark Invest  is merely the tip of a vast iceberg of speculation that has grown to monstrous proportions over the past year. It is now starting to melt a little.

“We think 2021 has earned its place in the books as the wildest and most speculative year in US stock market history, eclipsing even 1929 and 1999. That doesn’t mean 2022 will bring a panic or a crash, maybe just a degree of sobriety,” Doug Ramsey, chief investment officer at The Leuthold Group argued.

For more than a decade, the dominant theme has been “buy the dip”.

Government bond yields are therefore likely to remain negative in real, inflation-adjusted terms for years to come. 

Robin Wigglesworth FT 10 December 2021

https://www.ft.com/content/31f60297-fe2b-4656-97a6-96b88a26530e




Era of quantitative easing is drawing to a close

arguably the greatest monetary policy experiment since John Law began dabbling with fiat paper money in France

Robin Wigglesworth, FT 8 December 2016

https://www.internetional.se/bondsnext.htm#1612end


 Squadron Leader James Bigglesworth, DSO, DFC, MC

https://internetional.se/Biggles.html


 

2021-12-11

Underlying inflation appears to be running high by recent standards, maybe around 4 percent

This in turn reflects an economy in which spending is more or less back to the prepandemic trend but production is constrained both by bottlenecks and by the withdrawal of several million Americans from the labor force.

So how long will elevated inflation last?

The secret answer (don’t tell anyone) is that we don’t know.

I still don’t see any evidence that 1970s-type stagflation

Paul Krugman NYT 10 December 2021

https://www.nytimes.com/2021/12/10/opinion/inflation-economy.html


If This Is Peak Inflation, What’s the Path Back to 2%?

https://englundmacro.blogspot.com/2021/12/if-this-is-peak-inflation-whats-path.html


A Russian attack on Ukraine would trigger some US financial sanctions

 But they might not include ending access to the Swift system.

Most economic sanctions used by US presidents are implemented under the International Emergency Economic Powers Act

The list is maintained by the Office of Foreign Assets Control of the US Treasury.

 “Swift is just one mechanism. There are other means to do direct payments between banks. They could go back to using telexes, as they did in the past.”

John Dizard FT 10 December 2021

https://www.ft.com/content/21a9b239-f68c-4821-9586-8d60b8c044f0



Imagine you are Jerome Powell in early 2020

 In understanding the Fed’s thinking, it’s important to remember monetary policy is an iterative process.

 The Federal Open Market Committee members never get a blank slate. They can’t wipe the economy clean and start over. Choices their predecessors made years and even decades ago govern what they can do now.

For example, the Fed’s decisions in 2008–2009 to drop short-term rates to near zero and then launch quantitative easing bond buying programs were unprecedented at the time.

But they “worked” well enough to keep the wheels on. The economy survived. That being said, correlation is not causation. I maintained then and I believe now that the recovery was due to businesses, both small and large, adapting to the new climate. Federal Reserve policy was a distant second.

But the problem is, Fed officials thought their policies were responsible for the recovery. 

Imagine, then, you are Jerome Powell in early 2020. You’re already struggling to deal with massive debt, bond market liquidity issues, and stagnant growth. Then you get hit with simultaneous global supply and demand shocks.

But that’s not all. To keep the wheels on, you need Wall Street banks to cooperate and help you finance the government’s large and growing debt. Otherwise, rates will spiral higher. Even worse will follow. In theory, you are their regulator, but it’s not entirely clear who has more power. The Fed can force money into the system. It can’t force banks to buy Treasury debt or lend to consumers and businesses.

One consequence of inflation is that it pushes “real” interest rates lower. Depending on your benchmark, short-term USD rates are now around -6%.

If the Fed follows recent practice and raises rates a quarter point at each meeting starting in mid-2022, it might add up to a 1.25% hike by the end of next year.

If inflation does what I think it will do, that will still leave negative real interest rates of -3%, still extraordinarily accommodative. But would markets tolerate anything tougher? Probably not.

John Mauldin 10 December 2021




12/11 China's admission to the World Trade Organization

 The world was preoccupied with the immediate aftermath of 9/11. But exactly three months later, on 11 December, the World Trade Organization (WTO) was at the centre of an event that was to cast as strong a shadow over the 21st century, changing more people's lives and livelihoods around the world than the attacks on America.

Yet few know it even happened, let alone its date. China's admission to the World Trade Organization changed the game for America, Europe and most of Asia, and indeed for any country in possession of industrially valuable resources, such as oil and metals.

China began its ascent to its current status as the world's second biggest economy - and is on a seemingly inevitable path to becoming the world's biggest.

Indeed the US trade representative responsible for negotiating China's WTO deal, Charlene Barshefsky, told a Washington International Trade Association panel this week that China's economic model "somewhat disproved" the Western view that "you can't have an innovative society, and political control"

BBC 11 December 2021

https://www.bbc.com/news/business-59610019


Det är illa att man som medborgare finner det meningslöst att höra politiker intervjuas

Sverigedemokraternas ledarskikt låter inte som att de har studerat vid ett från omvärlden avskilt institut för frasernas inlärning.

Det är illa att man som medborgare finner det meningslöst att höra politiker intervjuas. Vi kan manuset på förhand och det saknar varje uns av märg, liv och intellektuell halt. 

Man kunde lika gärna sätta dit en robot med ett mantra: vända på varje sten, människovärdet, mäns våld mot kvinnor, breda mitten, gängen ska knäckas, integrationen, klimatnödläget. 

Politikerna resonerar så gott som aldrig om hur de kommit fram till sina svar, diskuterar inte innebörden i sina begrepp (vad är till exempel integration?). 

Deras tal är fyllt av abstraktioner så nötta att de saknar innebörd.

Lena Andersson SvD 11 december 2021

https://www.svd.se/sd-gor-ratt-har-fel-och-ar-farliga


Jag anser det vara justitiemord att döma Jean-Claude Arnault till fängelse 

https://englundmacro.blogspot.com/2020/11/i-f-en-fard-fortsatter-katarina.html


Elnätet går mot katastrof

 De grundläggande problemen med vind- och solel att denna el skapar instabila nät med risken för nätkollaps samt 

att mängden vind- och sol-el som kan levereras är som minst när den behövs som mest (en kall vinterdag).

Kärnkraften är den säkraste och renaste formen av energiproduktion betydligt renare än både vind- och sol-el.

Fjärde generationens kärnkraftverk är en typ av reaktor som är mycket säker. Det enda som kan ske om man får en störning är att processen stannar av.

Fjärde generationens kraftverk ger ett avfall som är radioaktivt endast i några hundra år till skillnad från dagens kraftverks avfall som är radioaktivt i hundratusentals år.

I dagens reaktorer utnyttjar man inte allt uran, bara ca fem procent, för att producera el och värme. Med fjärde generationen används etthundra procent. Det ger att det blir ett väldigt bra energiutbyte.

Peter Ruding 2021-01-08 

https://klimatupplysningen.se/elnatet-gar-mot-katastrof/

https://klimatupplysningen.se/om-oss/


”Förbluffande tyst om de otillräckliga elnäten”

https://englundmacro.blogspot.com/2021/11/forbluffande-tyst-om-de-otillrackliga.html




2021-12-10

2004 gick Slovenien med i EU, därefter Bulgarien och Rumänien år 2007, och Kroatien 2013 - "den enda vägen framåt"

Efter Thessalonikikonferensen 2003 lovade EUs regeringschefer medlemskap i EU till de sex övriga länderna i västra Balkan (Albanien, Bosnien och Herzegovina, Kosovo, Montenegro, Norra Makedonien och Serbien). 

Detta ”Thessalonikilöfte” har förnyats flera gånger, nu senast den 6 oktober 2021 vid konferensen i slovenska Kranj. Samtalen om tillträde med Serbien och Montenegro är stoppade, och har inte ens börjat med Albanien och Norra Makedonien. Bosnien och Herzegovina väntar fortfarande på inbjudan, liksom Kosovo.

EU och staterna på Balkan ser alla tillträde som den enda vägen framåt. 

Karl-Peter Schwarz Svensk Tidskrift 10 december 2021 med fin karta

https://www.svensktidskrift.se/karl-peter-schwarz-maktspel-pa-balkan/


Släpp in Balkan och Turkiet Byt kronan mot euron 

Euron har för länge sedan bevisat sin styrka.

DN-ledare 2009-09-19

https://englundmacro.blogspot.com/2016/07/slapp-in-balkan-och-turkiet-byt-kronan.html


EU vill ingå stora samarbetsavtal med Georgien, Azerbajdzjan och Armenien.

Avtalen är en del av det östliga partnerskapet, som EU lanserade 2008
efter förslag från Polen och Sverige.


If This Is Peak Inflation, What’s the Path Back to 2%?

The most recent Bloomberg survey of economists shows an expectation for headline CPI to retreat to 3.7% in 2022 and then 2.3% in 2023. That reflects remarkable confidence in inflation auto-correcting without much immediate Fed action.

There’s been some easing in energy costs, but just as that starts to fade, housing is starting to cause headaches. Rent and what’s known as “owners’ equivalent rent” both increased 0.4% in November which comes out to an almost 5% annual rate.

Brian Chappatta Bloomberg 10 december 2021

https://www.bloomberg.com/opinion/articles/2021-12-10/november-cpi-if-this-is-peak-inflation-what-s-the-path-to-2


COVID, black swans and gray rhinos

“black swan,” used to describe high-profile, but hard-to-predict and rare events that are beyond the realm of normal expectations The phrase is sometimes used to describe the economic meltdown of 2008. Because of their character, it is suggested there’s not much we can do to avert them.

Yet a recent article in the world’s best magazine, The Economist of London, challenges the focus of many pundits and analysts on black swans.

“This kind of thinking makes things worse by encouraging fatalism, rejecting accountability, and giving the nod to short-termism and willful ignorance.” 

We should be thinking more, The Economist suggests, about “gray rhinos.”

In the world of government and policy, gray rhinos are “highly likely, high-impact risks that are a matter of when, not if,” the article states.

Gray rhinos are a “metaphor for missing the big, obvious thing that’s coming at you.” 

https://fcw.com/blogs/lectern/2021/01/kelman-covid-black-swans-gray-rhinos.aspx?m=1



2021-12-09

Economists thought inflation would be around 2.5% right now. Instead, it’s over 6%

Even by the forgiving standards of economic forecasting, that’s a miss of epic proportions

Explanations come in two schools. The demand school blames President Biden and the Federal Reserve for administering too much stimulus.

The supply school blames pandemic-related bottlenecks and supply chains.

This inflation was made possible only by strong demand interacting with restricted supply.

Greg Ip WSJ Dec. 8, 2021

https://www.wsj.com/articles/this-inflation-defies-the-old-models-11638978991

 

British homeowners have enjoyed a 3 trillion pound ($4 trillion) untaxed wealth windfall from rising property...

values over the last 20 years that is unlikely to be repeated, with the bulk of riches going to the well-off, the over 60s and those living in London.

Resolution Foundation said the surge in house prices since 2000 that has turned many homeowners into millionaires has been “driven primarily by falling interest rates.” 

Bloomberg 9 December 2021

https://www.bloomberg.com/news/articles/2021-12-09/u-k-homeowners-enjoy-a-4-trillion-untaxed-property-windfall


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 blogg 5 december 2009

https://englundmacro.blogspot.com/2014/08/skriande-uppenbart.html


Can the Fed Overcome Its Transitory Policy Mistake?

The later the Fed is in reacting properly to inflationary developments, the greater the likelihood that – by having to hit the policy brakes hard – it will end up being the main cause of the transitory inflation pattern on which unfortunately it had bet part of its credibility. 

But in being proved right in this way, the Fed would risk a damaging domestic recession, market volatility, and destabilizing spillovers for the global economy.

Mohamed A. El-Erian Project Syndicate 2 Decenber 2021

https://www.project-syndicate.org/commentary/us-federal-reserve-transitory-inflation-trap-by-mohamed-a-el-erian-2021-12


The longer central bank ‘tapering’ is delayed, the more the risk of a disruptive markets move

Mohamed A. El-Erian FT 29 September 2021

While Britain’s political class is distracted by a Downing Street party

… the world is at the most dangerous strategic juncture since the Cuban missile crisis in 1962.


The West faces escalating threats of conflict on three fronts, each separate but linked by unknown levels of collusion: Russia’s mobilisation of a strike force on Ukraine’s border, China’s "dress rehearsal" for an attack on Taiwan, and Iran’s nuclear brinkmanship. 

Ambrose Evans-Pritchard Telegraph 9 December 2021

https://www.telegraph.co.uk/business/2021/12/09/wests-nightmare-war-three-fronts/


Evergrande has officially been labeled a defaulter for the first time,

... the latest milestone in months-long financial drama that paves the way for a massive restructuring of the world’s most indebted developer.

Fitch Ratings cut the developer to restricted default over its failure to meet two coupon payments after a grace period expired on Monday

Beijing’s reluctance to bail out Evergrande sends a clear signal that the Communist Party won’t tolerate massive debt build-ups that threaten financial stability. 

Bloomberg 9 december 2021

https://www.bloomberg.com/news/articles/2021-12-09/evergrande-defaults-for-first-time-as-china-debt-strains-spread


‘The risk caused by a few real-estate firms in the short run would not undermine the market for the medium and the long run,’ said Yi Gang, governor of the People’s Bank of China.

 “Companies issuing bonds overseas and their shareholders will be urged to properly handle their debt issues and meet their debt obligation in accordance with law and market principles,” he said. “This is a market event. It should be handled in the market-oriented way, based on law.”

“The rights and the interest of creditors and shareholders will be fully respected, in accordance with their legal seniorities,” the central banker said.

WSJ 9 December 2021

https://www.wsj.com/articles/market-can-weather-evergrande-crisis-chinas-top-central-banker-says-11639040788?mod=hp_lead_pos2





Evergrande and Kaisa Default!

https://www.youtube.com/watch?v=jyvMx96zcdc


Fitch also stated on Thursday that Kaisa, another heavily indebted developer that failed to repay a $400m bond that matured on Tuesday, was in restricted default. 

Evergrande’s  international bond markets, where it has  about $19bn outstanding, compared with $12bn for Kaisa.

FT 9 December 2021

https://www.ft.com/content/6d6b1f79-52b3-49e5-aa8a-7068adec7a9d



2021-12-08

U.S. trade deficit sinks 18% in October

The trade gap shrank to $67 billion 

U.S. exports climbed to an all-time high of $224 billion. 

Imports edged up less than 1% to $291 billion, a record high.

MarketWatch 7 December 2021

https://www.marketwatch.com/story/u-s-trade-deficit-sinks-18-in-october-as-exports-surge-11638884607


12.1 million shipping containers left biggest U.S. ports empty

Dec. 8, 2021 

https://www.marketwatch.com/story/americas-new-export-problem-12-1-million-shipping-containers-left-biggest-u-s-ports-empty-11638971489



Trading in shares of Chinese real estate developer Kaisa was halted

 Evergrande looked likely to officially default for the first time.

https://www.cnbc.com/2021/12/08/trading-of-chinese-property-developer-kaisa-shares-halted-in-hong-kong.html


Beijing seeks to orchestrate slow-motion collapse for Evergrande

Officials face challenge untangling heavily indebted group while minimising damage to property sector

FT 7 December 2021

https://www.ft.com/content/21acda99-ee35-4f6d-8cfa-017d55e1bb10


"en försiktig räntehöjning i slutet av 2024"

 Jag tror väldigt mycket på den prognos vi har gjort… men osäkerheten är stor och vi får se framöver hur rätt vi kommer att ha i vår bedömning”

Det sade vice riksbankschefen Per Jansson

DI 8 december 2021

https://www.di.se/nyheter/per-jansson-inflationen-kan-toppa-pa-4-4-5-procent/


2021-12-07

“Putin wants Biden to finally face up to an unpleasant dilemma

The message is simple: Washington needs to brace itself for its partner Ukraine to be soundly defeated militarily in what would be an especially humiliating re-run of recent events in Afghanistan. 

Or it can back down and reach a compromise with Moscow over Ukraine,”

https://www.cnbc.com/2021/12/07/biden-aims-to-prevent-russia-ukraine-conflict-but-time-is-running-out.html


En ränta 2022 på säg 0,75 procentkan inte anses vara en bromskloss när inflationen förblir långt högre

Den negativa realräntan består med andra ord. Men visst ska man ha respekt för att vissa aktörer drabbas av depression när centralbanken inte längre dopar marknaden med tyngre droger varje dag.

Min största oro är faktiskt den motsatta – de långsiktiga konsekvenserna av alla stimulanser. 

Nu har vi invaggats i den sköna förhoppningen att pengar alltid ska vara gratis, åtminstone efter inflation.

Då kan allt accepteras. Det finns inga p/e-tal eller husvärderingar som inte kan motiveras med ett negativt pris på pengar. 

Henrik Mitelman DI 7 december 2021

https://www.di.se/analys/dunderhonungen-forsvinner-men-oron-ar-obefogad/




2021-12-05

A brutal bout of selling wiped billions of dollars from profitless growth companies, IPO stocks and SPACs

 Retail dip-buyers, whose willingness to stand firm amid turmoil has helped power the S&P 500 to a 21% gain in 2021, are nursing some of their worst wounds of the year as losses pile up in speculative corners. 

A hawkish turn from the Federal Reserve and the omicron variant have erased more than 10% off the market value of cryptocurrencies, $50 billion from newly public companies and 14% from a basket of meme stocks.

Bloomberg 5 December 2021

https://www.bloomberg.com/news/articles/2021-12-05/shock-to-crypto-daredevils-joins-list-of-scary-omens-in-markets


2021-12-04

All of the stocks in Cathie Wood’s Ark Innovation fund are in a bear market except 2

 more than 20% off their recent high, meaning they are in a bear market.

https://www.cnbc.com/2021/12/03/all-of-the-stocks-in-cathie-woods-ark-innovation-fund-are-in-a-bear-market-except-2.html


Chart shows year-over-year money flow into equities

 


You may notice a slight change recently.


One of two things needs to happen: either inflation needs to drop dramatically or the stock market needs to drop significantly, or some combination of the two—at least from a historical perspective. 

Depending on how you measure standard deviation, we are somewhere between 4–5 standard deviations from the mean. 

Again, dramatically higher than the Roaring 20s (well more than double) or the tech bubble (more than 50% higher).

The question of the day, and it is truly a question that I don’t have an answer to, is what will Jerome Powell do if the stock market falls 20% and inflation is still at 4%? And they haven’t even begun to raise interest rates? 

Does he follow the Fed’s mandate and lean into inflation, calling up his inner Volcker, or does he look to his unwritten mandate of giving the stock market what it wants?

Next year is truly unknown territory. 

John Mauldin 3 December 2021

https://www.mauldineconomics.com/frontlinethoughts/capital-excess


Volcker startade sedelpressarna, inte Greenspan.

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



Konferensen bör leda till ett författningsbildande konvent och till vidareutvecklingen av en federal europeisk förbundsstat




/Den tyska/ Regeringen vill också stärka EU-parlamentet exempelvis genom att ge det initiativrätt. Sålunda återkommer Tyskland till en gammal grundtanke från Konrad Adenauers och Walter Hallsteins dagar.

Målet är på nytt en europeisk federation.

Sveriges uppvaknande kan bli omskakande

Rolf Gustavsson SvD 4 december 2021




Jag Rolf Englund tror att många EU-kramare mycket väl förstår vad som pågår men väljer att bli medlöpare för den egna personliga karriären, likt Kaczmarek i den underbara filmen Cold War: 

Wiktor and Irena are pressured by bureaucrats to include pro-Communist and pro-Stalinist propaganda in their performances—in exchange, the troupe would be allowed to tour the eastern bloc. Wiktor and Irena are opposed to this, but the career-driven, opportunistic Kaczmarek agrees