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2022-01-31

Stocks rally to end a dismal January, but

... 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
 

Proper bubbles involve people convincing themselves that a high-profit, low-inflation environment will be permanent

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 1996-10-18

https://internetional.se/nesrydenfelt.htm

 
In the fall of 1907, it took J.P. Morgan just eight weeks to resolve a credit crisis similar to ours. 

WSJ 29/9 2008

https://www.internetional.se/1907.htm



 

EU fiscal rules reflect outdated economic thinking and...

 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’s hard to believe in a return to inflation as a significant factor in life for the first time in four decades, but ...

 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 proverbial helicopter money – which is the textbook way of generating inflation. 

Also, the climate transition is a slow-moving negative supply shock – i.e. it is about incorporating in production prices the cost of carbon emissions. As it disproportionately impacts low-income households, it will require significant fiscal support. This will be a tailwind for inflation.

Finally, peak globalization in terms of labor and goods is probably behind us. This started before Covid with Brexit, tariff wars and restrictions on immigration, and Covid exacerbated this trend.
The technology shock is the only remaining disinflationary force. So of all the historical drivers of a regime shift in inflation, fiscal policy, monetary policy, supply shock to oil prices, globalization and technology, all of them but the latter are supportive of structurally higher inflation.  

We made this assessment early last year, and it has since been confirmed by the data. I would highlight in particular the domestically generated inflation: inflation expectations, wages and rent.

Amen to all of that. The destination, almost certainly, is a new, higher inflation regime. 

The route by which we get there remains deeply uncertain.

John Authers Bloomberg 31 January 2022

https://www.bloomberg.com/opinion/articles/2022-01-31/powell-s-indecision-leaves-markets-confused-while-tightening-hasn-t-yet-begun




2022-01-30

Inflation Will Hurt Both Stocks and Bonds

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
 

2022-01-28

Rolf Englund about New Era, June 29, 1999

 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

2022-01-27

Real federal funds rate in negative territory at -2% to -3% at the end of this year

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


Air conditioners units in operation worldwide could jump from nearly 2 billion today to 5.6 billion by 2050

 

 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
 

Nu tror de flesta att Fed stegvis kommer att höja styrräntan till 1 procent, kanske rent av 1,5 procent

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/

John Authers What a day.

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 “strike price” of the Fed’s “put option” under the stock market (in other words, the index level at which the Fed would feel compelled to ease up) is lower than traders had thought. 

John Authers Bloomberg 27 January 2022

https://www.bloomberg.com/opinion/articles/2022-01-27/stock-markets-don-t-like-listening-to-fed-s-powell-after-inflation-meeting

Annika Winsth, chefekonom på Nordea, ger Fed-chefen Jerome Powell ett högt betyg

– 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

2022-01-26

Jeremy Grantham says ‘Goldilocks’ era of past 25 years is ending

“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
 

S&P 500 companies about $2.4 trillion in cash and short-term securities

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

December US goods trade deficit unexpectedly expands to $101 billion - $1 trillion in 2021

 

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



Mark Hulbert 200-day moving average

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

John Authers Stocks in the U.S. look hugely expensive

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

Martin Wolf IMF’s World Economic Outlook Update

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

 

John Hussman The policy error the Fed made by abandoning a systematic policy

“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 careless speculation to even modest risk-aversion.  

Hussman 2021-07-16

https://englundmacro.blogspot.com/2021/07/what-triggered-crash-hussman-funds.html


Who’s Afraid of Rules-Based Monetary Policy?
John B. Taylor

https://englundmacro.blogspot.com/2020/10/whos-afraid-of-rules-based-monetary.html


2022-01-25

Shoka Åhrman, sparekonom på pensionsbolaget SPP

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

Canadian homeowners’ gamble could backfire if rates increase more than one percentage point

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

A great boomerang rally

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.blogspot.com/2022/01/panic-like-selling-emerges-monday-as.html


2022-01-24

Är detta början på den börskrasch vissa varnat för, eller är det bara ett hack i kurvan?

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/

 

Spitfire Mk1 to Mk24

https://www.youtube.com/watch?v=q6i5eMM11G4

 

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

Panic-like selling emerges Monday as stock market tumbles

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


One after the other, stock market bears say their calls have finally been vindicated

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

Bitcoin backar

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/


EQT:s aktie faller dubbelt så mycket som index

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 procent. Därmed har drygt 130 miljarder kronor, motsvarande ett helt Alfa Laval, gått upp i rök.

https://www.di.se/nyheter/fjolarsraketer-i-botten-storbolagen-som-gatt-bast-och-samst-i-ar/


23 miljarder kronor. Till en liten grupp privatpersoner. På en enda dag. Det blev resultatet när 58 delägare - så kallade “partners” - i det börsnoterade riskkapital­bolaget EQT genomförde en samlad aktieförsäljning i veckan.

Men det som verkligen gjorde affären till veckans händelse på Stockholmsbörsen var sättet som försäljningen genomfördes på.

SvD 11 september 2021

https://englundmacro.blogspot.com/2021/09/swedens-not-only-one-of-best-performing.html

The “correction”

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 ticker ARKK — smashed most of its competitors in 2020, thanks to Wood’s aggressive bets on high-growth, disruptive companies like carmaker Tesla. 

That attracted billions of dollars from investors, lifting Ark Invest’s overall assets to a peak of $61bn early last year and helped make Wood the face of the bull run. 

Robin Wigglesworth FT 22 January 2022

https://www.ft.com/content/42bb6639-79a0-48da-9f21-01f33e7370f9

 

 Ark Invest founder’s flagship fund is down 27% this year

https://www.ft.com/content/303466b5-959f-4d14-b022-51ed2a2f446f

 

 

The stock market could fall by 40% or 50%, but would the Fed ever let this happen?

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

 

I de här turbulenta tiderna är Maria Landeborns råd till småspararna tydligt: sitt still i båten

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-faller



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://www.dn.se/ekonomi/dan-lucas-nedgangen-en-reaktion-pa-fallen-i-usa-men-for-tidigt-att-prata-om-borskrasch/


Karl Hedberg, aktiechef på Carnegie Private Banking, säger till Di att han är något förvånad över att det är så stora kursrörelser på måndagen.

”Jag tror fortfarande att det kommer vara rätt att köpa rekylen, men jag tro att tajmingen kommer att vara svår. Att gå emot den fallande trenden tror jag kommer att vara rätt även i det här fallet.”

DI 24 januari 2022, 12:11

https://www.di.se/nyheter/aktiemaklaren-darfor-faller-borsen/

2022-01-23

I fredags gick FAANGST inget vidare

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.html

 

2022-01-22

Ranked by population, the United States is the world’s third largest country,

 ...  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

The Markets Tremble as the Fed’s Lifeline Fades

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

Where’s That ‘Fed Put’?

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


Svenskar hade vid årsskiftet nästan 2 000 miljarder kronor i globalfonder

... 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/

2022-01-21

Non-Accelerating Inflation Rate of Unemployment, shortened to the unlovely acronym Nairu

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 professionals have a better track record over the very long term, there is an embarrassingly long stretch of time, 1984 to 2006, where average Americans narrowly edged out the professionals.

Stephen Mihm Bloomberg 21 January 2022

https://www.bloomberg.com/opinion/articles/2022-01-21/inflation-forecasting-is-a-truly-dismal-science

 

Yes, There Is a Trade-Off Between Inflation and Unemployment 

https://englundmacro.blogspot.com/2019/09/yes-there-is-trade-off-between.html

 

Why Did Almost Nobody See Inflation Coming? 

https://englundmacro.blogspot.com/2022/01/why-did-almost-nobody-see-inflation.html

“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. 


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. Faced with an up market after a couple of tough days, people could have delighted that “buy the dip” was in force, and jumped on the bandwagon. Instead, they decided this was an opportunity to get out. 

John Authers Bloomberg 21 January 2022, 6:51 AM GMT+1


https://www.bloomberg.com/opinion/articles/2022-01-21/-correction-means-more-for-netflix-and-peloton-than-the-nasdaq-100


U.S. market approaches end of ‘superbubble,’ says Jeremy Grantham

 

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 have simultaneous bubbles across all major asset classes,” said Grantham, co-founder of investment firm GMO, in a paper Thursday. 

He estimated wealth losses could total $35 trillion in the U.S. should valuations across major asset classes return two-thirds of the way to historical norms.

“One of the main reasons I deplore superbubbles — and resent the Fed and other financial authorities for allowing and facilitating them — is the underrecognized damage that bubbles cause as they deflate,” said Grantham.

MarketWatch 20  January 2022 at 7:05 p.m. ET 

https://www.marketwatch.com/story/good-luck-well-all-need-it-u-s-market-approaches-end-of-superbubble-says-jeremy-grantham-11642723516

 Jeremy Grantham, the famed investor who for decades has been calling market bubbles, said the historic collapse in stocks he predicted a year ago is underway and even intervention by the Federal Reserve can’t prevent an eventual plunge of almost 50%.

Blooomberg 20 January 2022

https://www.bloomberg.com/news/articles/2022-01-20/grantham-doubles-down-on-crash-call-says-selloff-has-started

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

https://englundmacro.blogspot.com/2021/04/gamestop-to-tesla-investor-jeremy.html 

Jim Cramer says the stock market is getting closer to forming a bottom

CNBC 20 January 7:31 PM EST

https://www.cnbc.com/2022/01/20/jim-cramer-says-the-stock-market-is-getting-closer-to-forming-a-bottom.html


2022-01-20

Why Did Almost Nobody See Inflation Coming?

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 the 3-4% range. But the most important forecasting lesson from last year is humility.

Jason Furman Project Syndicate 17 January  2022

https://www.project-syndicate.org/commentary/2021-us-inflation-forecasting-errors-economic-models-by-jason-furman-2022-01

Jason Furman, Professor of the Practice of Economic Policy at the Harvard Kennedy School and Senior Fellow at the Peterson Institute for International Economics, is a former chair of President Barack Obama’s Council of Economic Advisers.

 'Why did nobody notice it?' 

https://www.dailymail.co.uk/news/article-1083290/Its-awful--Why-did-coming--The-Queen-gives-verdict-global-credit-crunch.html

 
Her Majesty’s question ("If these things were so large, how come everyone missed them?")
Chris Giles, FT, November 25 2008 

https://www.internetional.se/skuldfragan.htm#goodarticle

 
Economic theory discredited

- Economics may be dismal, but it is not a science


https://www.internetional.se/aztopics.htm#economictheory



EMU leder till att Sverige blir en delstat i Euroland Ego år 2000

     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 genomföra EMU är att göra ett fullskaleexperiment på 300 miljoner människor. Om, eller snarare sagt när, det går illa och systemet havererar kommer 300 miljoner människor att utsättas för stora och onödiga påfrestningar. Man har anledning att tro att innan EMU uppges så kommer de styrande att kämpa lika tappert för Euron som Lars Tobisson och andra kämpade för den fasta svenska växelkursen.

    5. Innan de styrande uppger den svenska statens suveränitet bör det svenska folket få säga sitt om detta. Frågan om EMU kan inte jämställas med max-taxa på dagis.
Rolf Englund replik SvD 2000-02-03

http://www.nejtillemu.com/folkomrostningellerej.htm#LFT

 


The Bank of England’s trade-weighted index for sterling has risen 8pc since mid-2020

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/

Financial markets are still priced on the assumption that inflation will soon go away

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
 

2022-01-19

Marknaden spår höjd ränta i höst

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



What Could Possibly Go Wrong?

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 Greenspan, was so regular and predictable that it had minimal effect; the second, undertaken by Janet Yellen, didn’t last long.

It’s also worth remembering that stocks do tend to go up most of the time. That’s why we all spend so much time looking at the stock market. 

The most important part of the bet that markets are now making is that inflation will indeed come down without too much coaxing.

John Authers Bloomberg 19 January 2022

https://www.bloomberg.com/opinion/articles/2022-01-19/markets-decide-rates-will-be-different-this-time-but-inflation-is-less-clear


2022-01-18

Stockholmsbörsen faller rejält och närmar sig en regelrätt korrektion på 10 procent från toppen

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-cautious-start-yen-dips-before-boj-markets-wrap


Stockholmsbörsen har sedan årsskiftet tappat över 8 procent


Skälet till att rekylen nu främst sker i USA, Köpenhamn- och Stockholmsbörsen är att dessa marknader stack iväg på ett närmast unikt sätt under börsuppgången i oktober och fram till årsskiftet. 


Dessutom har dessa tre aktiemarknader med en börsuppgång på 40 procent jämfört med före Coronapandemin utklassat övriga aktiemarknader med omkring 20 procentenheter. 


Det finns dock skäl att ta de senaste veckornas börsskakningar på allvar.


DI  18 januari 2022, 18:00


https://www.di.se/nyheter/nu-betalar-vi-notan-efter-borsfesten/






Ocean shipping rates are expected to stay elevated well into 2022

... 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



2022-01-17

En omfattande militär svensk operation 1958

 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

2022-01-16

The Official Sloane Ranger Handbook - The First Guide to What Really Matters in Life

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/


2022-01-14

Citis strateg Matt King är inte helt bekväm med marknadens tro på en mjuklandning

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


Detta kan bli en minnesvärd dag

 



Ukraine cyber-attack: Russia to blame for hack, says Kyiv

BBC 14 January 2022



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





Stockholmsbörsen fortsatte att tappa mark på fredagen och stängde nära dagslägsta. 
En mörkröd börsvecka kan läggas till handlingarna.

DI 14 januari 2022



Danmarks tidigare försvarsminister misstänks för landsförräderi

SvT 14 januari2022




In hindsight, bubbles always seem obvious and easy to trade

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


The bond market is wrong

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


This year’s swift moves in equity markets have had literally nothing to do with corporate fundamentals

 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 goes into equities. Hence, when they take it out… whoops!”

John Authers Bloomberg 12 januari 2022 

https://www.bloomberg.com/opinion/articles/2022-01-12/the-psychology-of-7-hides-other-inflation-data-as-rates-weigh-on-traders


2022-01-13

The only valid answer to policy questions in economics is: “It depends.”

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


Italy’s bloated debt load may finally doom the experiment with Europe’s shared currency

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 calling for the transfer of all euro zone government debt since 2007 to such an agency. 


Richard Cookson Bloomberg 11 januari 2022

https://www.bloomberg.com/opinion/articles/2022-01-11/the-euro-is-facing-a-make-or-break-year

 

Volcker was less austere and more pragmatic than his reputation

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 similar circumstances.

‘What this country needs to shake us up and give us a little discipline is a good bank failure. But please, God, not in my district.’”

For all his public disapproval, if Mr. Volcker had been running the Fed for the past 10 years, he would have made many of the same decisions his successors did.

Greg Ip WSJ 9 December 2019

https://www.wsj.com/articles/a-remembrance-the-pragmatism-of-paul-volcker-11575928095?mod=article_inline


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

- In the United States, the return to demand management began as early as the summer of 1982, when a three-year recession and the bankruptcy of the Mexican government persuaded the Fed that its experiment with monetarism had gone too far.







Fed has consistently stepped back from the brink when push came to shove.

 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/


2022-01-12

Vladimir Putin hävdar att den dåvarande amerikanska utrikesministern James Baker 9 februari 1990 lovade Sovjetledaren Gorbatjov att Nato aldrig skulle expandera österut...

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-ukrainakonflikt/

M. E. Sarotte is the Kravis Professor of Historical Studies at Johns Hopkins University, a member of the Council on Foreign Relations, and the author, among other books, of The Collapse: The Accidental Opening of the Berlin Wall.

A leading expert on foreign policy reveals how tensions between America, NATO, and Russia transformed geopolitics in a Foreign Affairs Best Book of 2021

 “Sarotte is the unofficial dean of ‘end of Cold War’ studies. . . . With her latest book, she tackles head-on the not-controversial-at-all questions about NATO’s eastward growth and the effect it had on Russia’s relations with the west.”—Daniel W. Drezner, Washington Post

https://yalebooks.yale.edu/book/9780300259933/not-one-inch

 

PROMISES MADE, PROMISES BROKEN?

https://warontherocks.com/2019/11/promises-made-promises-broken-what-yeltsin-was-told-about-nato-in-1993-and-why-it-matters-2/

En för mig okänd källa. Man hittar mycket när man googlar.




Inflation rises 7% over the past year, highest since 1982

Despite the strong gain, stock market futures rose after the news while government bond yields were mostly negative.

CNBC 12 January 2022


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  



Obfuscation is a central banker's tool. Greenspan has turned it into an art form

 "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


If they’re right, policymakers will have managed to steer the U.S. economy to a soft landing

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%. If they’re right, policymakers will have managed to steer the U.S. economy to a soft landing and avoid a recession. If they’re wrong, 2023 will be the year we all pay the price.

Stephanie Flanders Bloomberg 12 januari 2022 

https://www.bloomberg.com/news/features/2022-01-12/central-banks-not-covid-will-drive-global-economies-in-2022


About Stephanie

https://englundmacro.blogspot.com/2012/01/bbc-stephanie-om-s.html


Lawrence Summers - challenging for the Fed executing a soft landing

Bloomberg 7 January 2022

https://englundmacro.blogspot.com/2022/01/lawrence-summers-challenging-for-fed.html





Powell Makes Case for Fed Curbing Inflation While Doing No Harm

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 inflation before it gets out of control.


 

Stocks rebounded from a five-day slide after Jerome Powell reassured investors the Federal Reserve will tamp down inflation as the economy continues to recover.

 “If we have to raise interest rates more over time, we will,” 

The S&P 500 halted a five-day slide, the Nasdaq 100 outperformed major benchmarks and dollar fell.

Bloomberg 10 January 2022





The dollar is starting to decouple from the Treasury yields

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 decline since last May. Only one day in 2021 saw the dollar fall as much as Wednesday

John Authers 13 January 2022







Isaksons grundtips är att sitta lugnt i båten

 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 vice versa. 

– I grund och botten handlar det om ljusare utsikter och det är ju positivt, säger Maria Landeborn.

https://englundmacro.blogspot.com/2021/02/current-bond-market-selloff-worse-than.html


2022-01-11

Fed’s view of the Phillips curve

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



Death of the Phillips curve - Nonsens.

If the economy takes off above Stall Speed the Philips Curve will be back.

Englund 2017


Central banks’ resolve will be tested if policy-rate hikes lead to shocks

 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

Michel Houellebecq completes his writer's quest: to portray a dying white patriarchy

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


The US Federal Reserve has switched almost overnight from friend to foe

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 models of inflation.

https://mcusercontent.com/78302034f23041fbbcab0ac6d/files/e7f2eb61-cd67-08cb-7100-778606807d6e/Lord_King_J_IIMR_Annual_Public_Lecture_J_November_2021.pdf


Why Do We Think That Inflation Expectations Matter for Inflation?

Jeremy B. Rudd Federal Reserve Board September 23, 2021

The paper began with a quote from Dashiel Hammett: “Nobody thinks clearly, no matter what they pretend. That’s why people hang on so tight to their beliefs and opinions.”

Among the false beliefs is the Fed assumption that inflation expectations give prior warning of actual inflation.

https://www.federalreserve.gov/econres/feds/files/2021062pap.pdf


Ambrose Evans-Pritchard Telegraph 11 January 2022

https://www.telegraph.co.uk/business/2022/01/11/end-liquidity-supernova-central-banks/

 

2022-01-10

Nasdaq on the verge of closing below its long-term 200-day moving average


 

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

Steg för steg gå från en demokrati som gör halt vid gamla nationsgränser

Steg för steg gå från en demokrati som gör halt vid gamla nationsgränser till en som byggs också på den europeiska nivån.

Där federalismens principer säkrar både maktdelning och decentralisering.

Det gamla nationella folkhemmets dagar är över. Politiken handlar inte längre om ett folk, en nation, en stat och en lösning.

Carl Bildt DN Debatt 14/11 2004

http://www.nejtillemu.com/cab.htm#stegforsteg




Why Godot Is About to Arrive

The narrative of surging 10-year yields signaling a major crash gets told again and again. 

One day, it might even happen.

Alan Greenspan said back in 2005 that the failure of long yields to rise was a “conundrum.” 

A big spike in 10-year yields has been the single biggest fear of asset allocators for two decades, and for one reason or another it never happens.

Lucy never lets Charlie Brown kick the ball, and Godot never arrives. 

In the same way, we never see the decisive move upward in bond yields that brings down the edifice of modern finance based on cheap money. The more that people like me warn that it could happen, the more it ends up not happening. 

It’s not difficult to keep inflation down when a significant segment of the workforce can be dragooned into taking minimal wage raises for a decade. If that paradigm is finally shifting, then the possibility of higher inflation, and higher yields to deal with it is very much alive

John Authers Bloomberg 10 januari 2022 

https://www.bloomberg.com/opinion/articles/2022-01-10/up-next-on-10-year-treasury-yields-it-s-either-the-red-sox-or-godot


Conundrum

https://www.internetional.se/conundrum.html



Worst Week for the 30-Year Long Bond in 49 Years

The long-bond lost 9.35%!! 

The 10-year note finished it worst week in 42 years, with a total return loss of 4.24%. 

Mish 10 January 2022

https://mishtalk.com/economics/worst-week-for-the-30-year-long-bond-in-49-years



Fed Unites Left and Right

 At this year’s annual meeting of the American Economic Association, prominent economists from both sides of the political spectrum argued that the Fed is behind the curve in the battle to contain an outburst of inflation

Nobel Prize laureate Joseph Stiglitz, who was chief White House economist for Democratic President Bill Clinton, called for caution

Bloomberg 9 January 2022

https://www.bloomberg.com/news/articles/2022-01-09/fed-unites-left-and-right-in-warning-it-s-behind-inflation-curve