Englund

... S&P 500 still posts worst month since March 2020 CNBC 31 January 2022 https://www.cnbc.com/2022/01/30/stock-market-futures-open-to-close-news.html  

Periods of extreme valuation in the stock market don’t really happen very often.  The basic driver has been much the same: the ability of investors to believe absolutely in something that always turns out to be impossible.  This always ends badly. Think 1901, 1921, 1929, 1966, 2000, 2007, briefly 2020 and possibly right now. The only question is how fast it ends badly.  Price-to-earnings ratio at about 40, more than double its long-term average. Merryn Somerset Webb FT 28 Januay 2022 https://www.ft.com/content/0f763575-ac5f-4a20-a6a8-279e4613e048   US market is more overvalued than in 1929, 1973 and 2007  Merryn Somerset Webb FT 28 December 2021 https://englundmacro.blogspot.com/2021/12/us-market-is-more-overvalued-than-in.html   Sommaren 1991 hälsade jag på min gamle gode vän Sven Rydenfelt. Vi talade om fastighetskrisen som då startat på allvar, och den tanklösa överbelåningen. Ja, det är ju märkligt att människor inte tänker på vad som hände 1907, sa Rydenfelt Nils-Eric Sandberg, DN

 if reimposed, would threaten the recovery The Rubicon of joint borrowing for cross-border transfers has been crossed. Yet rules cannot just be ignored in a union that is a body of law more than anything else. Martin Sandbu FT 30 January 2022 https://www.ft.com/content/d19facb7-ffd2-492a-b36a-6188c96e19e3 Draghi and Macron: The EU’s fiscal rules must be reformed - "an enhanced fiscal framework"  FT 23 December 2021 https://englundmacro.blogspot.com/2021/12/draghi-and-macron-eus-fiscal-rules-must.html

 it was equally difficult to imagine that inflation could be vanquished after the brutal experience of the 1960s and 1970s.  For the longer run, I suggest that the building blocks are in place for a change in inflation regime. Society is ready for this, and financial markets are not.  The best summary of where we now stand that I have read this weekend comes from Francis Yared, of Deutsche Bank AG. I commend his following analysis:  The main drivers that have historically generated a regime shift in inflation are in place. Historically, regime shifts in inflation have been driven by fiscal policy (Great Society of Johnson in the mid-60s), monetary policy (Volcker in the late 70s), oil shocks (to the upside in 70s and downside in the mid-80s and 2014), globalization in both labor and goods markets (late 90s) and technology (late 90s). If we look at the situation today, we had an unprecedented easing of fiscal policy and a shift in monetary policy with AIT. The combination of the two is

The longstanding negative correlation between stock and bond prices is an artifact of the low-inflation environment of the past 30 years. Consider that any 100-basis-point increase in long-term bond yields leads to a 10% fall in the market price. By 1982, the S&P 500 price-to-earnings ratio was eight, whereas today it is above 30.  There are at least three options for hedging the fixed-income component of a 60/40 portfolio. The first is to invest in inflation-indexed bonds or in short-term government bonds whose yields reprice rapidly in response to higher inflation Nouriel Roubini Project Syndicate 26 January 2022 https://www.project-syndicate.org/commentary/inflation-will-hurt-both-stocks-and-bonds-by-nouriel-roubini-2022-01 Central banks’ resolve will be tested if policy-rate hikes lead to shocks  Nouriel Roubini Project Syndicate December 2021 https://englundmacro.blogspot.com/2022/01/central-banks-resolve-will-be-tested-if.html  

 I happended to find this on my computer. Many people say that we are in a New Era, where the porridge is neither too cold, neither too warm, and that is why we now, at least in the US, can have high growth without inflation. In the New Era Keynes is dead. https://internetional.se/egoomnewera.htm

That’s the catch in all this.  In the current easing cycle, the Fed first pushed the real federal funds rate below zero in November 2019. That means a likely -2% to -3% rate in December 2022 would mark a 38-month period of extraordinary monetary accommodation, during which the real federal funds rate averaged -3.1%.  Stephen S. Roach Project Syndicate 24 January 2022 https://www.project-syndicate.org/commentary/federal-reserve-mad-scramble-to-control-inflation-by-stephen-s-roach-2022-01 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 blog 5 december 2009 https://englundmacro.blogspot.com/2014/08/skriande-uppenbart.html

   As global temperatures, populations and incomes rise in countries like India and China, the number of AC units in operation worldwide could jump from nearly 2 billion today to 5.6 billion by 2050, according to the International Energy Agency.   " By 2050, estimates say that just space cooling will account for 30% to 50% of peak electricity [load] in many countries. Today the average is 15%," said Riahi. "So you're going to have grid failures."  Deutsche Welle 25 January 2022 https://www.dw.com/en/climate-emergency-keeping-homes-cool-on-a-warming-planet/a-59933154 No weather event affects the power system more than heatwaves. The biggest impact on electricity demand, by far, is from air conditioners https://englundmacro.blogspot.com/2020/11/no-weather-event-affects-power-system.html  

Så sent som i oktober trodde finansmarknaderna att Fed bara skulle höja räntan från 0 till 0,25 procent under hela 2022.  Nu tror de flesta att Fed stegvis kommer att höja styrräntan till 1 procent, kanske rent av 1,5 procent, till och med årets slut. Carl Johan von Seth DN 27 januari 2022 https://www.dn.se/ekonomi/carl-johan-von-seth-darfor-far-fed-varldens-borser-att-darra-i-forskrackelse/

The Fed chair made no new commitments, but his message was loud and clear enough to drive a massive reversal.  Powell is admitting that the Fed doesn’t know how quickly it can get inflation under control (it’s not alone in this), and is maintaining maximum discretion for the months ahead. He declined invitations to rule out hiking at every meeting, or raising by more than 25 basis points at a time.  Here is what happened to the S&P 500 and the 10-year Treasury yield, minute-by-minute through the day. The red line marks the FOMC’s announcement at 2 p.m. The bond market still thinks that the Fed will beat inflation without breaking anything.  The strength of the reaction to Powell’s press conference was driven in large part by the prior speculation that the market selloff would force him into offering a “dovish olive branch” and walk back some hawkish speculation.  That he deliberately and conspicuously refused to rule out any of the options that worry the market showed that the “str

– Det var ett klokt och bra besked i rätt tonläge, säger hon. Hon påpekar att Fed-chefen kom med ungefär samma budskap nu som i december. Och förklarat att inflationen ska bekämpas, men i en lugn takt. – De kommer inte att rusa iväg och det är något som aktiemarknaden ville höra, säger Annika Winsth. SvD 26 januari 2022 https://www.svd.se/fed-lamnar-rantan-oforandrad-fhzg   Fed’s Jay Powell refuses to rule out string of aggressive rate rises Hawkish stance from US central bank chair sparks sharp stock market sell-off FT 26 January 2022 https://www.ft.com/content/0f195295-7ff2-4d0c-b5ce-43aa5a4b1223

“There’s only a certain amount of cheap oil, cheap nickel, cheap copper, and we are beginning to hit some of those boundaries,” said Grantham, co-founder of Boston asset manager GMO. “Climate change is coming with heavy floods, serious droughts and higher temperatures -- none of these make farming easier. So, we’re going to live in a world of bottlenecks and shortages and price spikes everywhere.” Grantham, 83, insists that’s all inevitable because, along with the scarcity of raw materials, baby boomers are retiring, birth rates are declining, emerging markets are maturing and geopolitical tensions are flaring -- all trends decades in the making and almost unstoppable. Bloomberg 26 January 2022 https://www.bloomberg.com/news/articles/2022-01-26/grantham-has-an-even-scarier-prediction-than-his-crash-call U.S. market approaches end of ‘superbubble,’ says Jeremy Grantham  Blooomberg 20 January 2022 https://englundmacro.blogspot.com/2022/01/us-market-approaches-end-of-superbubble.html  

Expectation that risky assets will mostly go up seems to have been broken. Ultra-speculative assets are leading the way down, but robust corporate balance sheets could put a floor under prices. Cathie Wood’s ARK Innovation ETF Cryptocurrencies Comparisons to the bursting of the dot-com bubble, which knocked almost 83% off the Nasdaq 100, are inevitable. The Fed is poised to end its purchases of Treasury and mortgage bonds quickly and raise interest rates as soon as March Fed put is in doubt now. Or maybe what’s being questioned is just how bad the market selloff has to get before the central bank changes course.  S&P 500 companies had about $2.4 trillion in cash and short-term securities  The giant companies in the market have plenty to spend on buybacks of their own shares if they fall too much Michael P. Regan Bloomberg 26 January 2022 https://www.bloomberg.com/news/articles/2022-01-26/is-the-stock-market-crashing-2022-stress-test-has-companies-crypto-scrambling

  The value of imports increased to $258.3 billion Exports advanced to $157.3 billion. Bloomberg 26 January 2022 https://www.bloomberg.com/news/articles/2022-01-26/u-s-goods-trade-gap-widens-to-fresh-record-as-imports-jump US Trade deficit in goods tops $1 trillion in 2021 for first time For all of 2021, the trade gap in goods rose to $1.08 trillion from $893.5 billion in the prior year.  The deficit in 2020 had also been a record high. MarketWatch 26 January 2022 https://www.marketwatch.com/story/u-s-trade-deficit-in-goods-top-1-trillion-in-2021-for-first-time-ever-11643205222

The U.S. stock market historically has not performed more poorly after dropping below the 200-day moving average than it does at any other time. Mark Hulbert MarketWatch 25 January 2022 https://www.marketwatch.com/story/surprised-by-mondays-market-recovery-whenever-the-dow-and-the-s-p-500-fall-below-this-key-support-level-stocks-typically-come-roaring-back-11643104365

This leg of the selloff has been led by the largest stocks which had previously proved immune, particularly the internet platform groups still generally known by the FANG moniker. As I’ve mentioned often, stocks in the U.S. look hugely expensive by any metric that doesn’t take into account historically low interest rates, so it’s logical that stocks will fall as rates rise.  Those high valuations also mean that there’s potentially a long way to go down. What can we rely on to halt the decline? Monday and Tuesday showed that there’s still a phalanx of investors ready to “buy the dip” at all times — but in aggregate they haven’t yet been able to stop a substantial drop and now seem to be ranged against “sell the bump” traders.  John Authers Bloomberg 26 January 2022 https://www.bloomberg.com/opinion/articles/2022-01-26/falls-in-equities-give-powell-fed-the-chance-to-walk-back-instant-hawkishness

Far more important than such forecasts are the assumptions on which they rest. The risks lie on the downside, as the fund also notes.  As the update to the Global Financial Stability Report adds, financial markets show “stretched valuations” — a nice understatement. Moreover, the “normal” to which we may return is not the old one. The world has changed. Martin Wolf FT 25 January 2022 https://www.ft.com/content/f681bdeb-f93a-4ec4-8356-77caf70f1c28  

“Systematic,” in this context, means a framework where policy tools such as the level of the fed funds rate maintain a reasonably stable and predictable relationship with observable economic data such as inflation, employment, and the “output gap” between real gross domestic product and its estimated full-employment potential.  In 1993, Stanford economist John Taylor proposed a systematic framework The Fed has encouraged a decade of yield-seeking speculation, as investors try to avoid being among the holders of $6tn in zero-interest hot potatoes... an all-asset speculative bubble that may now leave investors with little but return-free risk.  Valuations still stand near record extremes.  John Hussman FT 26 January 2022 https://www.ft.com/content/ece92145-443d-4e94-bfa9-7fe06cb9c00a When the time comes to ask the question – “What triggered the crash?” – remember that this is the least important question. A market crash requires nothing more than a shift in investor psychology from carel

Det kan vara klokt att se över sin aktieportfölj och vikta om innehavet, beroende på hur sparandet ser ut, anser Shoka Åhrman, sparekonom på pensionsbolaget SPP Aktieanalytiker och sparekonomer säger att det finns risk för att börsen kan fortsätta vara skakig under det kommande året.  SvD 25 januari 2022 https://www.svd.se/experter-risk-att-borsen-fortsatter-vara-skakig   Positiv till börsen och den kan mycket väl stiga mer Shoka Åhrman och Maria Landeborn SvD 11 maj 2021 https://englundmacro.blogspot.com/2021/05/jag-ar-anda-fortsatt-positiv-till.html

To hold down the size of their monthly payments as home values continue to rise, record numbers of mortgage applicants are opting to take out loans that offer the lowest initial interest rates.  The problem with these loans, known as variable-rate mortgages, is that their rates automatically rise along with the country's benchmark borrowing cost. Canada ranks as the word's second most overheated market Sverige på tredje plats före Norge och UK. Bloomberg 24 Januari 2022 https://www.bloomberg.com/news/features/2022-01-24/will-interest-rates-rise-in-2022-canada-s-red-hot-housing-market-bets-not

During the last two days of last week, there was a clear trading pattern — stocks rose in the morning, and then tumbled into the close as traders took the opportunity to get out.  Now it was time for the pattern to invert.  Stocks sold off massively at the opening in Wall Street. European shares closed down heavily for the day, but then the U.S. staged a great boomerang rally, to leave most of the main indexes higher than where they started.  Some people made a lot of money. Some others, presumably, lost a lot.  Is it possible this will prove the moment of revulsion that ends another alarum for tech stocks? Yes, it is. But there’s no particular reason to be confident about that.  The underlying trend of getting out of the most speculative stocks has stayed in place. John Authers January 25, 2022 https://www.bloomberg.com/opinion/articles/2022-01-25/stock-market-s-boomerang-rally-hints-at-deeper-troubles   Panic-like selling emerges Monday as stock market tumbles https://englundmacro.bl

Efter en ovanligt skakig start på börsåret 2022 kom raset många befarat: på en dag raderades mer än fyra procent av Stockholmsbörsens värde. I studion: sparekonomen Joakim Bornold. Programledare Carolina Neurath. SvT 24 januari 2022 https://www.svtplay.se/ekonomibyran På Söderberg & Partners får Joakim Bornold rollen som Sparekonom https://www.soderbergpartners.se/newsroom/pressreleaser/soderberg--partners-rekryterar-joakim-bornold/  

https://www.youtube.com/watch?v=q6i5eMM11G4   https://www.internetional.se/biggleslinks.htm

Dow skids over 1,000 points   MarketWatch Jan. 24, 2022 at 12:28 p.m. ET  https://www.marketwatch.com/story/panic-like-selling-emerges-monday-as-stock-market-tumbles-and-dow-skids-over-1-000-points-11643045301   Stocks mount stunning comeback on Monday with Dow closing in the green after earlier 1,000-point loss https://www.cnbc.com/2022/01/23/stock-market-futures-open-to-close-news.html

Morgan Stanley’s Michael Wilson is the latest to claim his warnings were spot on. If anything, the retreat has further to go, Wilson and his colleagues wrote in a note, borrowing again from Game of Thrones to warn that “winter is here,” with concerns about a slowing economy poised to take over from jitters over Federal Reserve policy as the main force pulling stocks lower. Bloomberg 24 January 2022 https://www.bloomberg.com/news/articles/2022-01-24/morgan-stanley-s-michael-wilson-says-winter-is-here-for-stocks

The cryptocurrency market had around $130 billion wiped off its value over the last 24 hours as major digital coins continued their multi-day sell-off. https://www.cnbc.com/2022/01/24/bitcoin-ether-fall-as-130-billion-wiped-off-cryptocurrency-markets-.html Bitcoin backar med över 7 procent.  ”Den senaste tiden har det blivit allt mer tydligt att det är en risk-tillgång”, säger Erik Lundkvist, kapitalförvaltningschef på Coel DI 24 januari 2022, 12:43 https://www.di.se/live/bitcoin-fortsatter-falla-el-salvador-har-kopt-i-dippen/

Räknat i börsvärde är mer än 30 miljarder kronor utraderat under måndagen, och hela riskkapitalbolaget värderas nu till drygt 350 miljarder kronor. En doldismiljardär som hör till Stockholmsbörsens mer erfarna placerare med flera decennier på marknaden i ryggen tar avstamp i börsvärdet när han reflekterar kring måndagsraset i en kommentar DI. ”EQT:s värdering om som mest överstigande 500 miljarder kronor har ju lämnat all fundamental logik bakom sig. Bolaget värderas väsentligt högre än sina internationella 'peers', men framför allt är värderingen i förhållande till intjäning och reella underliggande värden extremt aggressiv”, skriver han i ett mejl DI 24 januari 2022, 15:17 https://www.di.se/live/placerare-om-raset-i-eqt-hoga-varderingen-har-lamnat-all-fundamental-logik/   Totalt har cirka 1.900 miljarder gått upp i rök på Stockholmsbörsen i år Bland de mer namnkunniga aktierna som har rasat i år märks riskkapitalbolaget EQT -8,20% som har inlett året med ett kursras på 27,5 p

Even after the recent sell-off, markets and technology stocks in particular are still up significantly from two years ago.  The “correction” is aptly named: valuations of some of these companies got out of hand relative to their underlying earnings. A minor fall will add some needed discipline to the market, reminding investors that share prices can go both ways FT Editorial 21 January 2022 https://www.ft.com/content/40c18871-ec98-48f7-bd43-96eaa26d6108  “Correction” The standard definition that a “correction” in an index is any fall from peak to trough of 10% or more. I have no idea where this definition comes from, and I don’t think it’s of any use.  https://englundmacro.blogspot.com/2022/01/correction.html        Cathie Wood’s flagship Ark fund is on the cusp of being overtaken by Warren Buffett in the post-pandemic performance table, reflecting a dramatic shift in fortunes between the two prominent investors. Ark Invest’s Innovation exchange traded fund — known by its stock market

The models of Grantham, Hussman and others might show that the stock market could fall by 40% or 50%, but would the Fed ever let this happen?  Ever since Alan Greenspan, there has been an apparent Fed “put option” that cushions the fall. John Authers Bloomberg 24 January 2022 https://www.bloomberg.com/opinion/articles/2022-01-24/our-stock-market-bubble-biases-deserve-the-closest-scrutiny Where’s That ‘Fed Put’? Dip Buyers Confront the Market’s New Reality Bloomberg 21 Januiary 2022 https://englundmacro.blogspot.com/2022/01/wheres-that-fed-put.html Fed still has its foot on the accelerator: real interest rates after taking into account inflation are extremely negative. While it is on course to stop its quantitative easing stimulus programme at the end of this quarter, it continues to inject funds into a marketplace sloshing with liquidity. Mohamed El-Erian FT 24 January 2022 https://www.ft.com/content/6bed7dff-f5e2-4105-a948-449f2d80ad32  

SvD 24 januari  11:54 https://www.svd.se/borsveckan-ser-ut-att-borja-nedat Hon är sparekonom och strateg på Danske Bank Maria Landeborn spår att ett globalt aktieindex kan stiga med runt 5 procent i år, men att skillnaderna mellan olika sektorer och regioner kan bli stora SvD 12 januari 2022 https://englundmacro.blogspot.com/2022/01/isaksons-grundtips-ar-att-sitta-lugnt-i.html – Det är lätt att känna att man vill trycka på säljknappen, men risken är då att man inte riktigt kommer in igen, säger Nordnets sparekonom Frida Bratt. SvT 24 januari 2022 https://www.svt.se/nyheter/ekonomi/lista-det-ska-du-gora-om-borsen-falle r Det är alldeles för tidigt att prata om en börskrasch. Att värdet av aktier svänger hör faktiskt till det normala Börsen, enligt det breda indexet OMXSPI, står nu på ungefär samma nivå som den gjorde i början av oktober. Men det står ändå betydligt högre än jämfört med ett år sedan. Därmed inte sagt att vi inte kan stå för en lång utförslöpa.  DN 24 januai 2022 https://

Värt att notera är att techjättarna har en mycket stor vikt i både amerikanska index och globala index och raset drabbar alltså även dig som sitter med en global indexfond i din pension. Kliver man bak och tittar hur aktierna gått från sina toppnoteringar (dagsavslut) ser det ut som följer: Cornucopia 23 januari 2022 https://cornucopia.cornubot.se/2022/01/angest-nar-faangst-och-techbubblan.htm l  

 ...  behind China and India. But the gap is greater than the ranking implies. According to Worldometer, as of 2020 China had 1.44 billion people, India 1.38 billion, and the US 331 million. In other words, by population China is more than four times larger than the US. So is India.  Together they represent about 36% of humanity, the US only about 4%.  John Mauldin 21 January 2022 https://www.mauldineconomics.com/frontlinethoughts/beijings-dilemmas

After falling for a fourth day in a row on Friday, the stock market suffered its worst week in nearly two year   What happens next comes from an established playbook. As William McChesney Martin, a former Fed chairman, said in 1955, the central bank finds itself acting as the adult in the room, “who has ordered the punch bowl removed just when the party was really warming up.” The mood of the markets shifted on Jan. 5, Mr. Yardeni said, when Fed officials released the minutes of their December policymaking meeting, NYT 21 January 2022 https://www.nytimes.com/2022/01/21/business/economy/stock-markets-down-inflation.html

Dip Buyers Confront the Market’s New Reality Bloomberg 21 Januiary 2022 https://www.bloomberg.com/news/articles/2022-01-21/where-s-that-fed-put-scorched-dip-buyers-confront-new-reality The Plunge Protection Team - The Stock Market's Da Vinci Code March 19, 1988 President Reagan, established the “Working Group on Financial Markets.” https://englundmacro.blogspot.com/2021/12/the-plunge-protection-team-stock.html   What Is the Plunge Protection Team?  https://www.investopedia.com/terms/p/plunge-protection-team.asp

... ytterligare 220 miljarder i Nordamerikafonder och nästan 400 miljarder i fonder som både investerar i Sverige och globalt, enligt statistik från Fondbolagens förening. SvD 21 januari 2022 https://www.svd.se/sa-slar-techbolagens-ras-mot-din-ekonomi Fondbolagens förening https://www.fondbolagen.se/

In antiquity, animal entrails — ideally, the liver of a sacrificed sheep — would be scrutinized for clues of things to come.  In the postwar U.S., professional economists seeking to predict inflation opted for something a little less sanguinary: the Phillips Curve, named for the economist William Phillips. In 2001, two economists at the University of California at Los Angeles — Andrew Atkeson and Lee Ohanian — published a paper based on an experiment that compared the predictive prowess of the Phillips Curve to a model that was simple to the point of parody: forecasting next year’s inflation by averaging the previous four quarters’ rates. In other words, next year’s inflation will be the same as the previous year’s. That’s it. Marie Diron and Benoit Mojon. Their comparative “model” was even simpler: take a central bank’s inflation target and then use that number as a consistent prediction for inflation every single year. Asking other people what they think will happen. While the profes

The standard definition that a “correction” in an index is any fall from peak to trough of 10% or more. I have no idea where this definition comes from, and I don’t think it’s of any use.  So why do I have a problem with saying that a “correction” is any fall of 10%? First, it’s arbitrary.  Second, and more importantly, the word implies that afterward, the market is “correct,” that whatever the problem was has been “corrected.” That is dangerously misleading. It doesn’t look to me as though we’ve corrected anything yet. If a correction means correcting for fundamental valuation, there is a lot more to be done The average Nasdaq 100 stock is now no higher than it was last February. The market has been led by the largest companies, and that the correction has further to go I draw two tentative conclusions. First, this selloff was above all indiscriminate. It has all the hallmarks of a top-down move to get out of equities.  Second, the collapse into the close suggests miserable sentiment.

  Fredag 21 januari 2022 Vid stängning hade Dow Jones handlats ned 1,3 procent. Nasdaqs kompositindex hade backat 2,7 procent och  S&P 500 tappat 1,9 procent. DI fredag 21 januari 2022, 22:02 https://www.di.se/live/tekniksektorn-tyngde-pressat-wall-street-kraftiga-fall-i-twitter-och-amazon/ Stockholmsbörsen föll 2 procent Sedan årsskiftet har OMXSPI-indexet backat med cirka 9 procent, inklusive fredagens handel. Även storbolagslistan OMXS30 har startat året med nedgång på cirka 5 procent. Främst beror börsfallet på att centralbankerna, med amerikanska Fed i täten, börjat trappa ned på sina stödköp. Det säger Molly Guggenheimer, strateg på Danske Bank. SvD 21 januari 2021 https://www.svd.se/stockholmsborsen-faller-over-2-procent   Generellt tycker jag att börsuppgången är väldigt välgrundad, säger Molly Guggenheimer, aktiestrateg på Danske Bank SvD/TT 28 juni 2021  https://www.svd.se/borsen-2021-det-kan-gora-slut-pa-festen/i/senaste/om/naringsliv For the first time in the U.S. we ha

Forecasting inflation is a staple of macroeconomic modeling, yet virtually all economists’ predictions for the United States in 2021 were way off the mark.  This dismal performance reflected a collective failure to take economic models seriously enough, as well as other analytical shortcomings. In 2008, as the global financial crisis was ravaging economies everywhere, Queen Elizabeth II, visiting the London School of Economics, famously asked, “Why did nobody see it coming?”  Forecasts based on extrapolation from the recent past are nearly always as good as, or better than, those based on more sophisticated modeling.  To think that a stimulus of this magnitude would not cause inflation required believing either that such a huge adjustment was possible within a matter of months, or that fiscal policy is ineffective and does not increase aggregate demand. Both views are implausible. I therefore expect another year of significant US inflation, maybe not as high as in 2021 but plausibly in

     1. Frågan om EMU är inte alls teknisk. Den handlar inte om att byta utseende på sedlarna och att man skall slippa växla pengar när man åker till Mallorca. Ytterst handlar EMU om Europa, snabbt, skall bli en ny stat där gamla länder som Sverige, England, Tyskland och Frankrike skall bli delstater.     2. En gemensam valuta leder till en gemensam ränta. En gemensam ränta i ett så stort och heterogent område kommer att bli en felaktig ränta för olika regioner. I dag är det t ex överhettning på Irland, men "underhettning" i Tyskland. Ända är räntan för företag och villaägare densamma i Irland och Tyskland. Detta skapar spänningar och krav på stora centralt beslutade transfereringar, något som i sin tur tvingar fram en stark central makt till Bryssel och/eller Frankfurt.     3. Svenska folket lurades i folkomröstningen om EU-medlemskapet. Nejdå, det handlar inte om EMU, det skall vi behandla senare, sade Ja-sägarna, något som har intygats av t ex Janerik Larsson.     4. Att g

This currency strength is unsustainable. Sterling is arguably as over-valued today as it was in those halcyon days before the global financial crisis, when homeowners in Croydon and Beckenham were dollar millionaires, and the British middle classes could afford a hotel bill in Switzerland. Ambrose Evans-Pritchard Telegraph 20 January 2022 https://www.telegraph.co.uk/business/2022/01/19/falling-pound-will-next-inflation-shock/

If it doesn’t, then the rosy precedents from the last four decades that rising rates don’t hurt share prices are invalid.  If inflation is low and doesn’t subsequently increase much, then higher rates don’t hurt stocks, yes.  But inflation isn’t low, and we have a lot of money betting on it coming down quickly. If that doesn’t happen, markets have a lot more adjustment ahead of them.  John Authers Bloomberg 20 January 2022 https://www.bloomberg.com/opinion/articles/2022-01-20/small-caps-may-hold-value-for-investors-seeking-safety-in-rolling-correction The bond market’s forecasts have not moved. Indeed, the implicit forecast for inflation over the next 10 years has dropped a little this year and is back below 2.5%  John Authers Bloomberg 19 January 2022 https://englundmacro.blogspot.com/2022/01/what-could-possibly-go-wrong.html  

Marknaden har nu alltså börjat tvivla på Riksbankens ränteprognos och även flera storbanker tror nu att banken kommer att höja räntan tidigare än Riksbankens egen prognos. SvD 19 januari 2022 https://www.svd.se/marknaden-spar-hojd-ranta-i-host Riksbanken förlänger perioden med nollränta åtminstone fram till tredje kvartalet 2024 SvD /TT 1 juli 2021 RE: Är dom alldeles från vettet? Englund blogg 27 april 2021                     https://englundmacro.blogspot.com/2021/07/riksbanken-forlanger-perioden-med.html

In the bond market, the shift upward in yields is growing dramatic. In nominal terms, the 10-year Treasury yield is at last back where it was at the beginning of 2020, before the pandemic. The real yield is still much lower, but has risen almost 50 basis points since its low near the end of last year     The bond market’s forecasts have not moved. Indeed, the implicit forecast for inflation over the next 10 years has dropped a little this year and is back below 2.5%  The markets are based on the assumption that rates will have to rise, but will do their job of bringing inflation under control Cathie Wood’s famous ARK Innovation ETF  Then there’s China. The long-feared debt implosion caused by chronic over-investment in real estate since the Great Financial Crisis appears finally to be happening.  The greatest risk to the scenario that both stocks and rates can move higher is our old friend inflation. There have only been two hiking campaigns this century. The first, started by Alan Gre

Men aktiemarknaden styrs just nu av ”reptilhjärnan” och vänder snart upp igen, enligt Erik Pensers kapitalförvaltningschef Jonas Thulin. ”Man ska ha is i magen och inte ryckas med i baisset”, säger han  DI  18 januari 2022, 16:12 https://www.di.se/nyheter/proffset-om-borsfrossan-styrs-av-reptilhjarnan/   Att börsen är skakig för tillfället är ingen anledning att vänta med att investera sina pengar, anser Maria Landeborn.  DI 15 januari 2022 https://www.di.se/nyheter/sparproffsen-kopkraften-rasar-sa-inflationssakrar-du-ditt-kapital/ Stocks fell across the board and Treasury yields surged amid a ramp-up in speculation that central banks will have to boost interest rates sooner than earlier anticipated. All but one of the 11 industry groups in the S&P 500 fell, while the Dow Jones Industrial Average had its biggest daily decline since November. The tech-heavy Nasdaq 100 sank more than 2.5%, Bloomberg 18 January 2022 https://www.bloomberg.com/news/articles/2022-01-17/stocks-set-for-cau

... setting up another year of booming profits for global cargo carriers — and leaving smaller companies and their customers from Spain to Sri Lanka paying more for just about everything. The spot rate for a 40-foot container to the U.S. from Asia topped $20,000 last year, including surcharges and premiums, up from less than $2,000 a few years ago Bloomberg 18 January 2022 https://www.bloomberg.com/news/features/2022-01-18/supply-chain-crisis-helped-shipping-companies-reap-150-billion-in-2021

 Åtta stridsflygare gjorde över 30 spaningsräder in över Sovjetimperiet mot militära mål.  Sovjet sände upp Mig-jaktplan efter inkräktarna – men svenskarna hann undan. DN 2021 https://www.dn.se/sverige/svenska-stridspiloter-flog-in-bakom-jarnridan/ https://internetional.se/Biggles.html

Forty years ago, Ann Barr and I wrote The Official Sloane Ranger Handbook, a guide to the styles and stances of a particular subset of the British upper-middle classes FT 14 January 2022 https://www.ft.com/content/42381958-4f0a-4075-aff1-9c036ffc09a5 The Official Sloane Ranger Handbook: The First Guide to What Really Matters in Life Hardcover – January 1, 1983 https://www.amazon.com/Official-Sloane-Ranger-Handbook-Matters/dp/0207145261 Im 1982, The Official Sloane Ranger Handbook, an era-defining little work of humorous social anthropology, became an unlikely chart-topping success Sloane Rangers typically lived in the Chelsea area of London, near Sloane Square, (hence the name). . https://www.townandcountrymag.com/society/money-and-power/a10356763/sloane-ranger-handbook-princess-diana/

Han varnar för en upprepning av börsfallet 2018 när index rasade 20 procent. Pandemibörsens raketbränsle varken varit teknologitrender, återöppningsekonomin eller stimulans från negativa realräntor.  Den överlägset största drivkraften är i stället centralbankernas gigantiska stödköp av obligationer, som stöttat marknaden med astronomiska likviditetstillskott DI 14 januari 2022 https://www.di.se/analys/storbankens-strateg-varnar-for-mer-borsras/ This year’s swift moves in equity markets have had literally nothing to do with corporate fundamentals John Authers Bloomberg 12 januari 2022 https://englundmacro.blogspot.com/2022/01/this-years-swift-moves-in-equity.html Lawrence Summers - challenging for the Fed executing a soft landing https://englundmacro.blogspot.com/2022/01/lawrence-summers-challenging-for-fed.html

  Ukraine cyber-attack: Russia to blame for hack, says Kyiv BBC 14 January 2022 https://www.bbc.com/news/world-europe-59992531 Bevakningsplutonen på Gotland patrullerar nu hamnen i Visby, andra viktiga hamnar och Visby flygplats. – Flygplatsen och hamnarna är av mycket stor betydelse för hela samhället på Gotland. Och det är viktigt att visa både gotlänningarna och andra länder att vi är ett aktivt försvar som anpassar vårt försvar efter situationen. SvT PUBLICERAD 13 JANUARI 2022 https://www.svt.se/nyheter/lokalt/ost/militar-upptrappning-patruller-i-hamnar-och-pa-visby-flygplats Here’s what a Russian invasion of Ukraine would mean for markets https://www.marketwatch.com/story/what-a-russian-invasion-of-ukraine-would-mean-for-markets-11642185717 Stockholmsbörsen fortsatte att tappa mark på fredagen och stängde nära dagslägsta.  En mörkröd börsvecka kan läggas till handlingarna. DI 14 januari 2022 https://www.di.se/live/stockholmsborsen-avslutade-dyster-vecka-i-moll/ Danmarks tidigare f

The bears are always too early and the bulls, who have been conditioned to buy every dip, stay too long at the party. “From 1995 to 2000, I watched some of the shrewdest managers get annihilated shorting the dot-com bubble,” he said.  “By the end, they all went out of business. I then watched the next five years destroy all the long managers who had ridden the euphoria to the upside, until most of the aggressive ones were also sent packing.” Kevin Muir Bloomberg 7 december 2021  https://www.bloomberg.com/opinion/articles/2021-12-07/stock-market-the-ugly-truth-about-bubbles-is-everyone-loses

Bond investors continue to forecast a hot economy that is poised to buckle under the strain of even limited interest-rate increases Unconventional monetary stimulus does little to affect the real economy. Monetary injections are trapped within the financial system and result in limited economic growth. The market is predicting the Fed will boost rates by around 50 basis points to 75 basis points less than the previous cycle high before the economy or markets force another easing cycle. Kevin Muir Bloomberg 12 januari 2022 https://www.bloomberg.com/opinion/articles/2022-01-12/the-bond-market-refuses-to-accept-economic-reality

 Nobody has issued any new results so far — although that will change over the next few weeks. It also remains the case that stocks looked massively expensive compared to their fundamentals a year ago, and appear even more so now. Does this imply that people like me who spend a lot of time pointing out how stocks have become unmoored from their fundamentals are in fact missing the point? Michael Howell, who runs Crossborder Capital Ltd. in London. Howell is a champion of valuing and predicting markets using liquidity measures, an exercise that ignores corporate fundamentals altogether and therefore often feels uncomfortable.  But he’s not saying that markets should behave like this, merely that they do.   “World stock market gyrations over the period have been entirely explained by movements in ‘liquidity.’ The stability in the P/L ratio is remarkable and suggests that there is a consistent ‘asset allocation’ going on so that when Central Banks thrown in more cash, a set proportion goe

The specter of inflation is once again stalking the world, after a long period of dormancy during which policymakers were more likely to be preoccupied by price deflation. Now, old debates have resurfaced on how best to restore price stability. Under current circumstances, then, policymakers in developed countries should not over-react to the spike in inflation. As the historian Adam Tooze has argued, transitory inflation calls for a restrained response, whether through regulation or monetary policy. Dani Rodrik Project Syndicate 11 January 2022 https://www.project-syndicate.org/commentary/correct-policies-to-fight-inflation-depend-on-context-by-dani-rodrik-2022-01

That screeching sound you hear will be the ECB slamming the brakes on balance-sheet expansion. Broadly speaking, the ECB currently has three programs:  a long-standing Asset Purchase Program (APP),  the Pandemic Emergency Purchase Program (PEPP) and  a third incarnation of a plan to encourage banks to lend to the real economy known as targeted longer-term refinancing operations, or TLTRO. The central bank has said it will intervene if yield spreads widen in unjustifiable ways. With what, though? And what counts as unjustifiable? The biggest concern is Italy The second is for Italy to leave the euro. From an Italian perspective, this would have the advantage of imposing losses on creditor countries such as Germany via outstanding balances in the Target 2 “settlement” system. Former ECB president and current Italian Prime Minister Mario Draghi and Emmanuel Macron, the embattled French president who is up for election in the spring, signed a joint letter just before Christmas implicitly c

A more nuanced review of Mr. Volcker’s government life shows he was less austere and more pragmatic than his reputation—and his own memory, suggest. In fact, he regularly bent or rewrote the rules to cope with the chaos enveloping the world. Mr. Volcker, then undersecretary of the U.S. Treasury, was tasked by President Richard Nixon with closing the gold window. Upon assuming the Fed chairmanship in 1979, Mr. Volcker sought creative ways to defeat inflation, and decided to target the money supply. That led to wild gyrations in interest rates and two recessions in short order that devastated the economy. In 1982, he began slashing rates even though inflation was still in high single digits. He feared high rates were destabilizing the world-financial system. Throughout 1982 he became increasingly worried Mexico would default, imperiling the dozens of big U.S. banks that had lent to it.  Mr. Volcker worried that if Continental Illinois failed, depositors would flee other big banks in simi

 Ever since the US central bank stepped in to support the economy and markets in the wake of the financial crisis, it has consistently stepped back from the brink when push came to shove.  The last time it tried to get policy back to normal between 2017 and 2019, it waited two years from its first interest rate hike before trying to reduce the size of its then $4.5 trillion balance sheet. Even so, it was forced to abandon the attempt after getting rid of just $600m worth of bonds. Investors are betting that it will lose its nerve again this time, but they may be wrong to do so.  Tom Stevenson Telegraph 12 January 2022 https://www.telegraph.co.uk/business/2022/01/12/cure-spiralling-inflation-threatens-market-crash/

om Ryssland accepterade ett enande av Tyskland.  Dagen därpå ska den dåvarande tyska kanslern Helmut Kohl ha lovat Gorbatjov att Nato inte skulle expandera till det som då var Östtyskland. Löftet upprepades av Natos generalsekreterare den 17 maj samma år.  Det beskrivs i en ny bok /Not One Inch: America, Russia, and the Making of the Cold War Stalemate/ av historikern Mary Elise Sarotte, som refereras av The Guardian. https://www.theguardian.com/world/2022/jan/12/russias-belief-in-nato-betrayal-and-why-it-matters-today Louis Gave, chef för analyshuset Gavekal i Hongkong, skriver på onsdagen att det är osannolikt att Vladimir Putin verkligen vill anfalla Ukraina, och att ett krig mellan Ryssland och Nato är överdriven spekulation. ”Mest troligt är at Putin bara vill att västerländerna garanterar att Ukraina förblir ett neutralt land, liknande som Finland var under kalla kriget”, skriver han. DI 12 January 2022 https://www.di.se/nyheter/brutet-lofte-fran-kalla-krigets-slut-spokar-i-ukrai

Despite the strong gain, stock market futures rose after the news while government bond yields were mostly negative. CNBC 12 January 2022 https://www.cnbc.com/2022/01/12/cpi-december-2021-.html Interest rates aren’t really the right tool to control inflation When the problem is lack of supply, the Fed’s tool kit is useless Credit growth has been anemic despite very low interest rates. Real household debt has increased just 2.2% annualized since the pandemic began while business borrowing is growing at the slowest pace in eight years, even after businesses loaded up on cheap pandemic loans early in 2020. Raising rates would have little impact on the economy because credit growth is already weak. It doesn’t look as if easy credit is the problem. Rex Nutting MarketWatch Jan. 12, 2022   https://www.marketwatch.com/story/raising-interest-rates-would-do-nothing-to-control-inflation-11641936876

 "If I've made myself too clear, you must have misunderstood me," he once told a business audience.  https://www.independent.co.uk/news/business/if-i-ve-made-myself-too-clear-you-must-have-misunderstood-me-1328606.html As he once famously remarked: “I know you think you understand what you thought I said but I’m not sure you realise that what you heard is not what I meant.”  https://englundmacro.blogspot.com/2021/11/andrew-bailey-governor-bank-of-england.html

Global equity markets were worth about $150 trillion at the end of 2021, having doubled in value since March 2020.  The broad S&P 500 index of U.S. stocks even managed to go up on the day the Fed announced it would be tapering off its bond purchases faster to clear the runway for rate liftoff. Many emerging-market economies will face a difficult choice Ziad Daoud of Bloomberg Economics has identified five that are especially vulnerable to rising U.S. rates: Brazil, Egypt, Argentina, South Africa, and Turkey, or the Beasts Fed’s latest forecasts for the unemployment rate and core inflation as consistent with six hikes. But even that would barely take the main U.S. policy rate above 1% by yearend, well below inflation and below the pre-Covid level. It’s been more than four decades since the U.S. saw a wage-price spiral. For America’s hourly workers, pay has barely kept up with inflation since the 1980s Then inflation will start gravitating back toward the Fed’s long-term goal of 2%.

Inflation is expected to reach 7% at the end of 2021 – then fall steadily He portrayed those steps as a move away from an ultra-expansionary emergency policy put in place to fight the pandemic, not as a shift to a restrictive stance aimed at cooling off an over-heating economy.  He told the Senate Banking Committee. “It really should not have negative effects on the employment rate.” Former Treasury Secretary Lawrence Summers are likely to take little comfort from Powell’s words. “There isn’t going to be a path to less inflation without a cooler labor market,” the Harvard University professor and paid Bloomberg contributor said last week. Bloomberg 11 January 2022 https://www.bloomberg.com/news/articles/2022-01-11/powell-makes-case-for-fed-curbing-inflation-while-doing-no-harm US technology stocks rose on Tuesday after a sell-off in the $22tn Treasury bond market finally ran out of steam, as Federal Reserve Chair Jay Powell made assurances that the central bank would act to curb inflat

Two-year U.S. yields surpassed 0.94% on Tuesday, hitting levels last seen before the pandemic, as money markets moved toward pricing in four rate increases from the Federal Reserve this year.  Yet the Bloomberg Dollar Spot Index has failed to budge much above a six-week low seen at the end of 2021.  Bloomberg 11 January 2022 https://www.bloomberg.com/news/articles/2022-01-11/dollar-s-once-solid-link-to-higher-bond-yields-is-breaking-down “The dollar’s peak is definitely behind us,” The dollar is likely to keep weakening as the hypothesis of a wider U.S. deficit and a broader global recovery favoring assets outside America is now starting to play out, investors say.  Bloomberg 13 January 2022 https://www.bloomberg.com/news/articles/2022-01-13/dollar-peak-bets-see-funds-switching-to-emerging-stocks-gold What was interesting, however, was a sharp selloff for the dollar, triggered the moment the data came out. By day’s end, the Bloomberg broad dollar index had suffered its worst daily decl

 Maria Landeborn, aktiestrateg på Danske Bank, ser en tydlig anledning till den svaga börsutvecklingen. – Det som orsakat oron på aktiemarknaden är stigande räntor, säger hon. Maria Landeborn spår att ett globalt aktieindex kan stiga med runt 5 procent i år, men att skillnaderna mellan olika sektorer och regioner kan bli stora. Mattias Isakson, chefsstrateg på Swedbank, tror också att börsen har mer att ge – Vi kommer att få se aktiemarknader, både i Sverige och USA, som står 10 till 20 procent högre än vad de gör nu. Peter Malmqvist: till hösten kan det smälla till igen om centralbanker tvingas höja räntan – Trettio till fyrtio procent är vad jag kallar för en börskrasch och det skulle jag mycket väl kunna tänka mig. SvD 12 januari 2022 https://www.svd.se/svajig-start-borsen-kan-tappa-40-procent-i-host Maria Landeborn, börsanalytiker på Danske Bank,  ser ränteuppgången som ett tecken på att marknaden ser positivt på framtiden. Räntorna brukar ju att stiga när ekonomin går bättre och v

Fed officials have pronounced that the Phillips curve is dead because unemployment is below its “natural rate” (where the economy is at a full employment level). That supposedly meant higher employment rates are no longer an important factor driving inflation higher. Research that I presented with co-authors at the US Monetary Policy Forum several years ago suggests that the Phillips curve is not dead, but rather is hibernating. Unfortunately, past economic research indicates that the natural rate of unemployment is a number that is notoriously hard to estimate Fed needs to recognise the flaws in its monetary policy framework and return to more pre-emptive policies to control inflation.  If it doesn’t, the outcome will not only be persistent inflation well above the 2 per cent objective, but eventually far higher interest rates to drive inflation back down, which will do serious harm to the economy. Frederic Mishkin 10 January 2022 https://www.ft.com/content/f14f140d-3351-426c-a999-3b1

 in the bond, credit, and stock markets. With such a massive build-up of private and public debt, markets may not be able to digest higher borrowing costs.  If there is a tantrum, central banks would find themselves in a debt trap and probably would reverse course. That would make an upward shift in inflation expectations likely, with inflation becoming endemic. Nouriel Roubini Project Syndicate December 2021 https://www.project-syndicate.org/commentary/economic-market-outlook-2022-by-nouriel-roubini-2021-12

The white male characters around whom Houellebecq's books ultimately revolve are always miserable. He spares them no humiliation and no weaknesses. He allows them neither illusions nor person. https://www.dw.com/en/michel-houellebecqs-new-novel-annihilate-to-be-his-last/a-60387437

Morgan Stanley says investors were assuming just five months ago that there would be no US rate rise until April 2023. Today markets are pricing the first rise within a couple of month Quantitative tightening (QT) is coming much sooner than expected. The jump in US headline inflation to 6.8pc is what finally caused the dam to break at the Fed, complemented by the 23pc rise in house prices over the last year, more extreme than the subprime bubble before 2008. Powell’s attempt to unwind asset purchases by $50bn a month in late 2018 set off violent moves on Wall Street and led to global contagion. He capitulated. The FAAMG quintet of Facebook, Apple, Amazon, Alphabet, and Microsoft have yet to buckle but they too are vulnerable to a profits squeeze. They have ballooned to $10 trillion of market capitalisation during Covid Lord Mervyn King, ex-Governor of the Bank of England, says “the intellectual foundation of central bank policy” has been found wanting. Money has disappeared from modern

  MarketWatch 10 January 2022 https://www.marketwatch.com/story/nasdaq-composite-in-jeopardy-of-a-key-long-term-trend-line-for-first-time-in-nearly-2-years-11641830305