Englund

Ours is an age of culture wars, identity politics, nationalism and geopolitical rivalry. It is also, as a result, an age of division, within and among countries. Despite the rise of China, the west, defined as the high-income democracies, is hugely powerful.  Over the long run, Asia is likely to become the dominant economic region of the world. However deep the rifts become, we share this planet. We still need to avoid cataclysmic wars, economic collapse and, above all, destruction of the environment. Gven the immense political and organisational challenges, the chances that humanity will prevent damaging climate change are slim. Our leaders have to rise to the occasion. Will they do so? One can only hope so. Martin Wolf FT 31 May 2022 https://www.ft.com/content/517fbdac-507a-4e55-97fd-55375c1fe1f1 Lysande

In 2014 the United States backed an uprising — in its final stages a violent uprising — against the legitimately elected Ukrainian government of Viktor Yanukovych, which was pro-Russian.  (The corruption of Mr. Yanukovych’s government has been much adduced by the rebellion’s defenders, but corruption is a perennial Ukrainian problem, even today.)  Russia, in turn, annexed Crimea, a historically Russian-speaking part of Ukraine that since the 18th century had been home to Russia’s Black Sea Fleet. One can argue about Russian claims to Crimea, but Russians take them seriously. Hundreds of thousands of Russian and Soviet fighters died defending the Crimean city of Sevastopol from European forces during two sieges — one during the Crimean War and one during World War II. The United States started arming and training Ukraine’s military, hesitantly at first under President Barack Obama. Modern hardware began flowing during the Trump administration, though, and today the country is armed to t

 

 På senaste räntemötet i april tog Ingves och hans direktion klivet upp på plusränta för första gången sedan hösten 2014. Samtidigt presenterade de en räntebana där de skissat in tre räntehöjningar på 0,25 procentenheter styck före årsskiftet. Styrräntan skulle därmed på lite drygt ett halvår höjas från dagens 0,25 till omkring 1 procent. Därefter räknar Riksbanken med fortsatta räntehöjningar, upp till strax under 2 procent om tre år. SvD/TT 31 maj 2022 https://www.svd.se/a/Ea8Rma/ingves-det-kan-bli-dubbelhojd-styrranta Riksbanken förlänger perioden med nollränta åtminstone fram till tredje kvartalet 2024    SvD /TT 1 juli 2021 https://englundmacro.blogspot.com/2022/05/de-stora-skulder-som-byggts-upp-under.html

 in the year that ended in March, up from a 20% annual rate the prior month.  March marked the highest annual rate of price growth since the index began in 1987. https://www.wsj.com/articles/home-price-growth-hit-record-in-march-11654002144

Snittsvensken känner sig väldigt trygg på arbetsmarknaden men tycker att det är olustigt när priserna stiger med 12 procent och tror att de ska lyfta med ytterligare 10 procent om ett år.  Klart att man blir bekymrad om man lever i denna vanföreställning. Hittills finns det inget i statistiken som tyder på en konsumtionskrasch.  Henrik Mitelman DI 30 maj 2022 https://www.di.se/analys/inflationen-kan-bli-riktigt-lag-redan-nasta-ar/ Den tongivande medelklassen i Sverige skulle inte klara av någon mer omfattande ränteuppgång Min gissning är att  de rörliga boräntorna toppar på 3-3,5 procent.  Det blir kännbart, men vi överlever. Räntechocken uteblir. Henrik Mitelman DI 11 april 2022 https://englundmacro.blogspot.com/2022/04/den-tongivande-medelklassen-i-sverige.html

 

Fed has started raising interest rates, which hits the value of all existing fixed-rate bonds, but also because it might start selling some of its $2.7 trillion holdings of the bonds, potentially further diminishing their value.  The housing market, which after two years of surging prices has widely been described as overheated. With the average 30-year mortgage rate rising to 5%, homeownership might now be out of reach for millions more Americans. WSJ 31 May 2022 https://www.wsj.com/articles/fed-fears-hit-mortgage-bonds-attracting-investors-11653850219

Finansinspektionen 31 maj 2022 https://www.fi.se/sv/publicerat/pressmeddelanden/2022/stigande-rantor-pressar-skuldsatta-hushall-och-foretag/ Även om räntorna stiger i rekordfart har Finansinspektionen inga planer på att komma till de skuldsatta hushållens undsättning. Nu pratar vi om att räntekostnaden kan tredubblas. I den meningen är det en ganska kraftig åtstramning vi ser, säger FI:s generaldirektör Erik Thedéen   Men även om enstaka hushåll riskerar att drabbas hårt om räntan på kort tid stiger från drygt 1 procent till upp emot 4 procent, ser FI än så länge inget hot mot det finansiella systemet.  Det är först vid en ränta på 7 procent som FI tror att en del hushåll kommer att få svårt att klara boendekostnaderna. SvD 31 maj 2022 https://www.svd.se/a/8Qa5jW/ingen-hjalp-fran-fi-fortsatta-amorteringskrav-nar-borantan-stiger 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 ap

  När både dollarn och oljan stiger Price of Crude Jumps as EU Foolishly Doubles Down On Sanctions Price of Crude Jumps as EU Foolishly Doubles Down On Sanctions - Mish Talk - Global Economic Trend Analysis

 at the same time CPI’s measure of housing costs grew by a mere 54%.  Eugene Ludwig MarketWatch 27 May 2022 https://www.marketwatch.com/story/inflation-has-been-pummeling-the-middle-class-for-decades-but-the-out-of-touch-cpi-masks-this-reality-11653671201 Eugene Ludwig, a former U.S. comptroller of the currency, is chair of the Ludwig Institute for Shared Economic Prosperity and author of “The Vanishing American Dream.“ CPI Understated? Yes, by a lot. I do not believe OER is only up 4.56%. Nor do I believe rent is only up 4.46%. Moreover, home prices are not directly in the CPI, only OER and and Rent. My Case-Shiller adjusted CPI is calculated by substituting the percentage change in the Case-Shiller national index for OER in the CPI. The result is an adjusted annual CPI rise of 11.42%.  That's a new record high for this data series. Mish 31 May 2022 https://mishtalk.com/economics/case-shiller-home-prices-reach-new-record-high-but-this-is-rear-view-mirror-look Real inflation is har

 

Economists and policy makers are worried that the Vanguard model of passive investment is hurting markets. For millions of Americans, getting into the market no longer means picking stocks or hiring a portfolio manager to pick them for you. It means pushing money into an index fund, as offered by financial giants such as Vanguard, BlackRock, and State Street, otherwise known as the Big Three. Index funds mirror the market, in other words, rather than trying to pick winners and losers within it. Actively managed investment options could make up for their higher fees with higher returns. And some do, some of the time. Yet scores of industry and academic studies stretching over decades show that trying to beat the market tends to result in lower returns than just buying the market. One primary concern comes from the analysts at Bernstein: “A supposedly capitalist economy where the only investment is passive is worse than either a centrally planned economy or an economy with active, market

när hon lockade in miljarder till sin kontroversiella investeringsstrategi.  Men när kraschen kom gick hon från världsstjärna till ifrågasatt. Tittar man fem år tillbaka i tiden hade småsparare tjänat mer pengar på att köpa en vanlig indexfond för S&P 500 än att ha Ark Invests fonder. På universitetet USC i sin hemstad träffade hon Arthur Laffer, professor i företagsekonomi och känd som mannen bakom Laffer-kurvan. SvD 27 maj 2022 https://www.svd.se/a/oWgJxm/ark-invests-cathie-wood-forlorar-miljarder-men-vagrar-ge-sig Cathie Wood says her innovation stocks are ‘way undervalued’ and recent fund losses temporary CNBC 17 February 2022 https://englundmacro.blogspot.com/2022/02/cathie-wood-says-her-innovation-stocks.html  

 Det EU-harmoniserade konsumentprisindexet, HIKP, steg 8,7 procent på årsbasis. Det är den högsta noteringen för indexet någonsin.  I april var HIKP-inflationen 7,8 procent. Väntat var 8,0 procent. Direkt DI 30 maj 2022 The surge in inflation, which is expected to hit a new 40-year high in Germany of 8 per cent, as well as rising in France, Spain and Italy when national data are released on Monday and Tuesday, has prompted policymakers to promise an imminent response. Christine Lagarde said last week it was on track to raise its deposit rate from minus 0.5 per cent to at least zero by September FT 29 May 2022 https://www.ft.com/content/9bd69366-bcf6-4ae3-a9e4-0dda1dd07249 Minusräntorna beror på försvaret av euron https://englundmacro.blogspot.com/2022/05/nollrantan-och-greklandskrisen.html ECB last summer concluded a two-year strategy review https://www.ecb.europa.eu/home/search/review/html/ecb.strategyreview_monpol_strategy_statement.en.html that was concerned mostly with the problem

With US inflation close to a 40-year high, the Federal Reserve chair knows what he needs to do.  Volcker raised US interest rates to unheard-of levels in 1980-81 Using the political cover provided by the 1978 Humphrey-Hawkins Act, which formalized the Fed’s price-stability mandate, and drawing operational support from a shift to targeting the money supply, Volcker increased its benchmark federal funds rate from 10.5% in July 1979 to 17.6% in April 1980. Volcker then reversed course during an ill-advised but short-lived experiment with credit controls in the spring of 1980, before resuming a monetary-policy tightening that eventually pushed the funds rate to a monthly peak of 19.1% in June 1981.  Only then did the fever of double-digit inflation break.   By late 1982, with the US in deep recession, annual headline CPI inflation had slipped below 4%, and the Fed started to reduce the benchmark policy rate.  Powell’s problem is all the more evident when viewed through the inflation-adjust

We now know that Team Persistent won the 2021 inflation debate   With inflation surging close to double digits, the US Federal Reserve and other central banks have conceded that the problem is not transitory, and that it must be urgently addressed by tightening monetary policy.  That has spurred another big debate: whether economic policymakers can engineer a “soft landing” for the global economy The Fed and other central banks contend that they will be able to raise their policy rates by just enough to pull the inflation rate down to their 2% target without causing a recession.  A soft-landing scenario looks like wishful thinking. Simply put, the effort to fight inflation could easily crash the economy, the markets, or both. Already, central banks’ modest amount of tightening has shaken financial markets  Yet if central banks wimp out now, the outcome will resemble the stagflationary 1970s, when a recession was accompanied by high inflation and de-anchored inflation expectations.  Tha

När man frågar någon bekant, som haft framgång på bostadsmarknaden och nu har en bostad värd ett antal miljoner, om en inte skall casha in, får man som regel svaret att man måste ju bo någonstans. Men arvingarna har inte det problemet. De bor redan någonstans, kanske i en bostad som de kunnat köpa med hjälp av föräldrarna.  Bostädernas värde handlar om väldiga belopp som skall överföras till nästa generation. Men det är inte något man gärna talar om. Allra minst i debatten om dödshjälp. Olika falla ödets lotter, heter det. Om detta handlade en artikel i Financial Times nyligen. - The neglected division in UK politics (and indeed across the rich world) isn’t between generations, but within them On the one hand are the people who will inherit assets and wealth from parents and grandparents. On the other who have no pot of familial money in their futures. Stephen Bush  FT 24 May 2022 https://www.ft.com/content/6f11e75c-5edb-4ad9-bd26-05352c40321c Jag har tidigare behandlat en näraliggande

The government had much to fear, and undertook its massive fiscal and monetary expansion to avoid the threat of riots. Interest in helicopter money was fed by more than a decade of subpar growth and interest rates that remained stuck at the zero lower bound, even in the face of vast quantitative easing. Matthew Brooker Bloomberg 28 May 2022 https://www.bloomberg.com/opinion/articles/2022-05-28/venice-has-a-400-year-old-covid-monetary-lesson-on-helicopter-money Helicopter money is a valid tool for central bankers FT View Editorial 6 April 2020 https://englundmacro.blogspot.com/2020/04/ledare-i-financial-times-oppnar-for.html  

  “While short-term inflation expectations have continued to trend upward, medium-term inflation expectations appear to have reached a plateau over the past few months, and longer-term inflation expectations have remained remarkably stable,” the researchers wrote in a blog post that was co-authored by New York Fed President John Williams. https://www.bloomberg.com/news/articles/2022-05-26/us-consumers-expect-inflation-shock-to-pass-ny-fed-survey-finds Professor Irving Fisher, October 1929: "stock prices have reached what looks like a permanently high plateau."

The sobering news is that the market had 15 separate episodes in which stocks fell at least 20 percent.  On average, these were the findings from those bear markets: Total loss from market peak: 34.8 percent. Duration of the decline until the market bottom: 264 trading days. Time required to recoup those losses after the bottom : 567 trading days. Remember, those are average figures. Tons of academic research suggests that it is fruitless to try to outsmart the market, so I use diversified low-cost index funds that track the entire stock and bond universe in the expectation of long-term gains. This approach makes sense for people with long horizons, but the earlier you need the money, the more difficult your choices will be. U.S. government I bonds, which now yield 9.62 percent, a rate that is reset every six months.  Jeff Sommer NYT 27 May 2022 https://www.nytimes.com/2022/05/27/business/stock-market-bear-bull.html I-Bonds are U.S. savings bonds whose yields are adjusted by the prevai

  Stephanie Kelton 27 May 2022 Should Congress Shrink the Deficit to Fight Inflation? (substack.com) Inflation in the United States has probably peaked I realize in saying that I risk coming across as the boy who cried “no wolf.” Markets have noticed the relatively good news on inflation. We can more or less directly calculate market expectations of inflation by looking at the “breakeven rate,” the interest rate spread between ordinary United States bonds and bonds that are indexed to protect investors against inflation.  And breakeven rates have come down a lot over the past month or two: So how have the permahawks reacted to the inflationary surge of 2021-22? With stern expressions of concern, of course. But you didn’t have to do much reading between the lines to detect a fair bit of underlying glee that this time their proclamations of doom were finally coming true. The good news is that this wave of doomsaying will probably be, um, transitory. Paul Krugman NYT 27 May 2022 https://w

 It would be an understatement to say he’s concerned. Bill’s top fear is the Federal Reserve may get so far behind the curve it can’t ever catch up. This could happen if inflation rises faster than the Fed hikes. In that case, real interest rates would actually be moving lower. Bill’s most interesting point is one I have made many times: central banks are overconfident in their own ability to control the economy. He says it more eloquently, so I’m going to quote him at length. “Mark Twain said, ‘It ain’t the things that you don’t know what gets you, it’s the things what you know for sure, what ain’t so.’ And Oliver Cromwell wrote a letter to the Scottish parliament, I think it was…  And what he said was, ‘Brothers, I beg you in the bowels of Christ, think it possible that you might be wrong.’ And this problem of people holding on to false beliefs seems to me to have been around for a very long period of time. The first question, I guess, is, do we think that the Central Bankers actuall

 Francis Hunt interviews Danielle DiMartino Booth in a must watch video Mish 27 May 2022 https://mishtalk.com/economics/end-of-the-40-year-bull-in-debt-and-a-global-depression-threat

  Stocks rise after inflation data; Dow aims to end longest weekly losing streak since 1932.  The personal consumption expenditure index rose just 0.2% in April for its smallest monthly increase in a year and a half, due largely to a decline in gas prices which have subsequently rebounded

 

 Olivier Blanchard argues that the current situation is a bump but that we will return to very low real interest rates and the same problems we had before. Fed staff forecasts of March had unemployment staying at 3.5 per cent throughout the next two years and had inflation coming down nicely to two point something. That just will not happen. 3 per cent nominal interest rates with expected inflation above 3 per cent would not strike me as sufficient to slow down the economy and decrease inflation.  Greek 10-year spread has increased by 93 basis points so far this year, and the Italian by 67 basis points over the same period. That could put the ECB in a difficult situation. Martin Wolf FT 26 May 2022 https://www.ft.com/content/e63dab63-bf41-4c43-b827-1b1736fc518d

 Owners' Equivalent Rent The CPI rent index will likely keep moving higher as the year goes on. There's still an element of catch-up in the CPI data just given the way the index is constructed. The debate among inflation forecasters is whether it finishes this year closer to say 6% YoY or 7%-7.5%. You can't say that you "understand the hardship" that inflation is causing and then tell people that if you strip out food and energy, inflation's coming down. Joe Weisenthal Bloomberg 25 maj 2022 https://www.bloomberg.com/news/articles/2022-05-25/q-a-omair-sharif-on-why-inflation-may-still-not-have-peaked

 Mr. Powell last week laid out a relatively high bar to slow down rate increases.  “This is not a time for tremendously nuanced readings of inflation,” he said. “We need to see inflation coming down in a convincing way. Until we do, we’ll keep going.” WSJ 25 May 2022 https://www.wsj.com/articles/fed-minutes-show-growing-urgency-for-tighter-monetary-policy-11653501768

Finansmarknadsminister Max Elger (S) kallar Riksbankschefen Stefan Ingves, Finansinspektionens chef Erik Thedéen och Riksgäldens chef Karolina Ekholm till ett möte i det finansiella stabilitetsrådet. Birgitta Forsberg SvD 25 maj 2022 https://www.svd.se/a/MLeQjR/regeringen-inkallar-finansiella-stabilitetsradet https://www.sou.gov.se/finansiella-stabilitetsradet/ Finansinspektionen: Klarna är inte en systemviktig bank | SvD Vi hör ofta att svenska hushåll har för mycket skulder. Vi anser att det är en alltför förenklad bild    Danske Banks bankanalytiker Andreas Håkansson släppte i veckan en rapport tillsammans med aktiestrategen Molly Guggenheimer som bemöter olyckskorparnas kraxande om skuldbergets makroekonomiska risker. DI 27 maj 2022 https://www.di.se/nyheter/rapport-skuldberget-kan-vara-en-fordel-for-sverige/   Guggenheimer https://englundmacro.blogspot.com/2022/05/guggenheimer.html    

The central bank must decide on an interest rate that will cap sky-high price growth without triggering a painful economic slowdown America’s red-hot housing market threatens to make the Fed’s job tougher. With so many buyers competing for so few available properties, home prices in the U.S. rose 18.8% last year Homeowners also have an incentive to stay put. Many don’t see where they can afford to move.  In April, the monthly mortgage payment on the typical home jumped to $1,475, assuming a 30-year fixed-rate mortgage with a 20% down payment, according to Zillow Group Inc.  That is up 34% since December and 53% from April 2021. WSJ 24 May 2022 https://www.wsj.com/articles/the-fed-searches-for-the-magic-number-to-cool-a-red-hot-u-s-housing-market-11653402996 When the Federal Reserve set out to cool the economy and slow inflation in the past, it counted on the housing market to do much of the work.  By raising interest rates, the central bank made mortgages more expensive and trimmed the

  Stockholmsbörsen stängde på dagslägsta Trots en inledning som såg positiv ut stängde indexen på minus  ”Det är väldigt volatilt”, sa Anders Rudolfsson, mäklarchef på DNB, om börsläget. Di 25 maj 2022 https://www.di.se/live/stockholmsborsen-stangde-pa-dagslagsta /

 Are we moving into a new era of higher inflation and weak growth, similar to the stagflation of the 1970s.  If so, what might this mean? The US and other high-income economies experienced almost a decade of high inflation, unstable growth and weak stock markets.  Excess demand causes supply shocks to turn into sustained inflation, as people struggle to maintain their real incomes and central banks seek to sustain real demand.  This then leads to stagflation, as people lose their faith in stable and low inflation and central banks lack the courage needed to restore it. At present, markets do not expect any such outcome.  The growth of nominal demand is vastly higher than interest rates.  Inflation will fall, but maybe only to 4 per cent or so. Higher inflation would become a new normal. The Fed would then need to act again or have to abandon its target, destabilising expectations and losing credibility.  If the 1970s taught us anything, it is that the time to throttle an inflationary u

 

  En dag I år

 En förutsättning för att ekonomin ska fungera och växa är att det finansiella systemet är stabilt och fungerar väl. Men systemet är känsligt eftersom dess centrala delar är sårbara. Exempelvis finansierar bankerna sin verksamhet på kort löptid men lånar ut på längre löptider, vilket gör dem beroende av allmänhetens och marknadens förtroende.  Om detta går förlorat kan allvarliga problem snabbt uppstå. Riksbanken: Hoten mot den finansiella stabiliteten har ökat Riksbanken stöder Finansinspektionens ambition att i närtid fortsätta höja det kontracykliska buffertvärdet för att stärka motståndskraften i banksektorn och anser vidare att det är viktigt att åtgärda bristerna på den svenska marknaden för företagsobligationer samt öka användningen av fullt ut transaktionsbaserade referensräntor. DI/Direkt 24 maj 2022  https://www.di.se/live/riksbanken-hoten-mot-den-finansiella-stabiliteten-har-okat/ Riksbankens rapport Finansiell stabilitet https://www.riksbank.se/sv/press-och-publicerat/nyhe

PIIGS-krisen (Portugal, Italien, Irland, Grekland och Spaniens skuldproblem), eurokrisen – kärt barn har många namn. Den slog till med full kraft under vårvintern år 2011, precis när riskaptiten på allvar hade repat sig efter finanskrisen 2008–2010.  Börserna bottnade i början av 2009 (efter att ha prissatt jordens undergång) och steg sedan brant till april 2011 då framför allt Greklands skuldproblematik blev uppenbar.  Det var en existentiell kris 2011–2012 och det var ganska enkelt att måla upp bilden av en katastrof som skulle få hela den monetära unionen på fall. Slut på krisen när den dåvarande ECB-chefen Mario Draghi under sommaren 2012 deklarerade att man är redo att göra ”whatever it takes”  Sedan år 2012 har vi inte brytt oss särskilt mycket om skulder, framför allt eftersom skuldbördan inte har spelat någon större roll när räntan plockades bort.  De enorma skulderna bakbinder den europeiska centralbanken och därmed Riksbanken. Varken Grekland eller något annat land klarar av

 Strategist David Rosenberg sees bear market sinking the S&P 500 to 3,300 MarketWatch 23 May 2022  https://www.marketwatch.com/story/i-feel-like-i-am-reliving-the-summer-of-2008-strategist-david-rosenberg-sees-bear-market-sinking-the-s-p-500-to-3-300-11653333623

With inflation raging, the famous ‘Fed put’ to save the day with cheap money might not be available. For more than 30 years we have become used to a reassuringly familiar pattern in business cycles.  As the economy expands, the Fed raises interest rates to curb inflationary pressures. Eventually some combination of credit squeeze or inventory over-accumulation then precipitates a downturn in the economy.  The Fed cuts rates—and in recent cycles, supplied the added sugar of quantitative easing through asset purchases—and soon there’s enough free money to revive the animal spirits and get demand moving again. Gerard Baker WSJ 23 May 2022  https://www.wsj.com/articles/rescue-from-recession-wont-be-easy-inflation-fiscal-crisis-401k-baby-formula-housing-gas-prices-federal-reserve-biden-11653337995

  6 months

The president of the European Commission, Ursula von der Leyen, and Germany’s foreign affairs minister, Annalena Baerbock, have signaled that they would support such a move, but they both know that at least one of the 27 EU member states would veto full membership for Kyiv. WSJ 22 May 2022 https://www.wsj.com/articles/why-europe-hedges-its-support-for-ukraine-russia-crude-oil-lng-gas-imports-exports-kyiv-war-eu-membership-zelensky-putin-germany-france-poland-11653247453?st=zxu83d0xzek6hko&reflink=desktopwebshare_permalink

Net bond buying set to end ‘very early’ in third quarter Governing Council has been building to raise the deposit rate from its current level of -0.5% in July. Lagarde’s comment suggests two increases of 25 basis points each at the July and September policy meetings.  Lagarde reiterated that the ECB would also be able to “design and deploy new instruments” to make sure that monetary policy is properly transmitted through the euro area.  (RE: Saving Italy, Greece, Spain, Portugal) Bloomberg 23 May 2022 https://www.bloomberg.com/news/articles/2022-05-23/lagarde-says-ecb-likely-to-exit-negative-rates-by-end-september In 2022, “extreme vigilance” means getting rates back up to zero within four months. That is still a lenient monetary policy by any definition John Authers Bloomberg 24 maj 2022 https://www.bloomberg.com/opinion/articles/2022-05-24/ecb-s-lagarde-shows-europe-has-limits-for-a-rising-dollar ECB höjer räntan i juli för första gången sedan 2011 Olof Manner, senior rådgivare på Sw

Summer in much of the Northern Hemisphere is a typical peak for electricity use. air conditioners When plants on the Texas power grid failed this month, wholesale power prices in Houston briefly jumped above the $5,000 a megawatt-hour price cap, surging 22 times higher than the average cos Bloonberg 22 May 2022 https://www.bloomberg.com/news/features/2022-05-22/summer-blackouts-bring-deadly-risk-as-heatwaves-grip-the-globe Air conditioners units in operation worldwide could jump from nearly 2 billion today to 5.6 billion by 2050 Deutsche Welle 25 January 2022 https://englundmacro.blogspot.com/2022/01/air-conditioners-units-in-operation.html

 The discussion about a target “neutral” nominal Federal Funds rate is fatuous: As long as real interest rates are negative there is no effective demand restraint emanating from monetary policy… except, perhaps, via asset prices.  And here then is the central conundrum for the Fed.  If the rise in rates and quantitative tightening is too slow, it will not constrain the inflation of goods and services prices.  On the other hand, if tightening is rapid enough to constrain demand, it might result in a collapse in a swathe of asset prices, and financial turbulence that will move from Wall Street to Main Street and elicit a sharp recession.  My bet for the present is on scenario three: stagflation. But... things could get worse. Leslie Lipschitz Barrons 23 May 2022 https://www.marketwatch.com/articles/fed-economy-soft-landing-stagflation-crash-51653086991?mod=mw_latestnews Investors are actually positioned for a relatively smooth landing scenario Bridgewater Associates’ Greg Jensen, the co-

This time when growth slows, inflation will in all likelihood still be too high for the Fed to stop tightening. The Fed seems to be hoping that inflation will fall back to its 2 per cent target despite policy interest rates remaining negative after taking into account inflation. Inflation has asserted itself as a major social and political issue for the first time in more than 40 years.  Sonal Desai FT 23 May 2022 https://www.ft.com/content/6b164dc7-0329-4efc-b19d-efe000831792 The writer is chief investment officer at Franklin Templeton Fixed Income

has climbed as high as 2 percentage points in recent weeks Italy relies heavily on Russia for its energy Optimism seen at start of 2022 is fading fast  FT 23 May 2022 https://www.ft.com/content/8dd69dbb-b476-4192-9db2-944f7e937f8f

 The constant flow of easy money out of central banks has fed serial crises for decades. Shadow banks manage $63tn in financial assets — up from $30tn a decade ago. The even bigger risk is that an accident in the markets settles the debate over how hard Fed tightening will hit the real economy.  Ruchir Sharma FT 23 May 2022  https://www.ft.com/content/d22ec352-a4a4-4f4c-832a-cb05af5110f1 The world is in a debt trap No matter what happens to near-term inflation and growth, the world is too indebted for rates to rise much higher. Ruchir Sharma FT 22 November 2021 https://englundmacro.blogspot.com/2021/11/the-world-is-in-debt-trap.html These structural changes in the way finance works may mean that markets are more prone to bouts of erratic trading and nervous breakdowns. The Economst editorial 11 May 2022 https://englundmacro.blogspot.com/2022/05/one-question-is-whether-market-slump.html The shadow banking system and The Volcker Rule https://www.internetional.se/billgrossoctober1.htm

The Money GPS 18 May 2022 (3) ⚠️ This Will Make 1970’s Look Like NOTHING ⚠️ - YouTube Once Every Hundred Years This Happens  The Money GPS 22 May 2022 https://www.youtube.com/watch?v=ecYsFORCr2E

 - Having experienced the damage that asset price bubbles can cause, we must be especially vigilant in ensuring that the recent experiences are not repeated. John P. Hussman April 2022 https://www.hussmanfunds.com/comment/mc220429/

 Vad vill Ulf Lundell? undrar Ann Heberlein. https://www.svd.se/a/WjGeza/vad-vill-ulf-lundell-ann-heberlein-laser-vardagar-6-och-7 Anledningen till att så många äktenskap slutar i skilsmässor är helt enkelt att vi gifter oss med fel person Augusti – tiden för kräftor, surströmming och skilsmässor. När vi väl får tid att vara tillsammans med den vi en gång valt att leva med upptäcker vi att vi inte gillar varandra särskilt mycket. Ann Heberlein SvD 13 augusti 2022 https://www.svd.se/a/7dEQ73/ann-heberlein-om-varfor-sa-manga-vill-skilja-sig-efter-semestern

 The risk is a series of bear-market rallies that don’t last, hurting dip buyers and further damaging investor confidence That confidence is already weak. In March 2020 that was enough, because central bankers and politicians were frightened, too. When they stepped in (Senate Approves Roughly $2 Trillion in Coronavirus Relief) it helped investors see that, with government support, companies could make it through. This time central bankers are scared not by falling markets or the economic outlook, but by inflation.  My concern is that this time could be more like 1973-1974.  1974 the Fed kept raising rates even as a recession took hold because it was running to catch up with inflation. The result was a horrible bear market interspersed with soul-destroying temporary rallies, two of 10%, two of 8% and two of 7%, each snuffed out.  It took 20 months before the low was reached If inflation comes down, the Fed won’t need to raise rates as much as it has indicated In really simple terms, tho

Water levels in two largest reservoirs at record lows as study says southwestern drought worst in 1,200 years A US power regulator this week warned that a big swath of the US was at risk of blackouts, partly as a result of drought conditions curtailing hydroelectric supplies. FT 21 May 2022 https://www.ft.com/content/9f00dfff-3a44-483f-9d5a-f58db7806046 Parts of Spain are experiencing their hottest May ever with temperatures of more than 40C in some places, according to the state weather agency, AEMET. BBC 21 May 2022 https://www.bbc.com/news/world-europe-61533719

Räntan (A) är vad som behövs för att stoppa inflationen. Räntan (B) är den som gör att bostadsmarknaden kollapsar. Om A är större än B har vi ett stort problem. The interest rate (A) is what is needed to stop inflation. The interest rate (B) is the one that causes the housing market to collapse. If A is higher than B, we have a big problem. Inflation och handelsbalans. Englunds lag 2,0. https://englundmacro.blogspot.com/2021/04/inflation-och-handelsbalans-englunds.html Englunds lag 1 Har man sagt A, måste man säga B, och har man sagt B är det svårt att säga att A var fel. 17 mars 1999 https://www.internetional.se/eso99.htm#lagen Englund's Q  How come that unemployment is rising when the recession is over? It is the productivity, Stupid For employment to rise GDP must increase more than Productivity (P), of course https://englundmacro.blogspot.com/2009/12/englunds-q-how-come-that-unemployment.html

Bring It on Home to Me · Lou Rawls https://www.youtube.com/watch?v=wJJSLUQIhIU Mercedes-Benz 300 SLR 1955 https://englundmacro.blogspot.com/2022/05/mercedes-benz-300-slr-1955.html

 It depends on their definition of the term. If it to mean a period of rising unemployment combined with inflation that’s still too high, the answer is that there’s a very good chance that we’ll suffer from that malady for at least a few months.  But if they’re referring to something like the extreme pain we suffered to close out the 1970s, it looks unlikely. 1979 to ’80 The Federal Reserve, under Paul Volcker, responded with drastically tighter monetary policy, leading to a recession and a sharp rise in unemployment Now look at the period from 2007 to the fall of 2008, just before the demise of Lehman Brothers.   While there was a severe recession — still generally known as the Great Recession — it had nothing to do with squeezing inflation out of the economy and everything to do with the fallout from a severe financial crisis. In short, inflation doesn’t seem to be entrenched; 2022 isn’t 1980. We’re probably headed for a period of weakening labor markets while inflation is still elev

  The S&P 500 rallied all the way back from a 2.3% drop . It May Be a Bear Market, But It’s Not a Panic. That’s Worrisome

We spoke with Stephanie Kelton, one of the foremost MMT economists and the author of the best-selling book “The Deficit Myth” to get her take on the macro environment, and what MMT can contribute to today's debate.  Transcripts have been lightly edited for clarity. Bloomberg 9 maj 2022 https://www.bloomberg.com/news/articles/2022-05-19/transcript-stephanie-kelton-on-mmt-and-today-s-high-inflation  

 That’s not encouraging for investors betting on the imminent exercise of a “Fed put” -- in which the central bank alters policy to prop up equity markets after a sharp decline.  Bloomberg Economics Says... “I think the Fed welcomes it. The stock market has to decline a lot more -- double the current drop -- before it will get close to wiping out the stock gains during the pandemic. This sounds callous, but declining stocks will get more people to come out of early retirement.” --Anna Wong, chief U.S. economist Bloomberg 19 May 2022 https://www.bloomberg.com/news/articles/2022-05-19/fed-plans-for-half-point-hikes-won-t-be-shaken-by-stocks-rou t If you have only been in markets for, say, 15 years,  you are seeing the collapse of everything that you have been told is true and have also observed to be true about markets. Bonds prices rising in the bad times. Mostly when things look tricky in equity markets there is a reason (or central banks at least manage to find one) to cut interest ra

The Economist editorial 19 May 2022 https://www.economist.com/leaders/2022/05/19/the-coming-food-catastrophe

 En Mercedes-Benz 300 SLR såldes nyligen av RM Sotheby´s för 135 miljoner euro, alltså cirka 1,4 miljarder kronor, i en affär som firman hävdar gör bilen till den dyraste någonsin att auktioneras ut. Modellen designades av Rudolf Uhlenhaut  DI 20 maj 2022 https://www.di.se/bil/mercedes-sald-for-1-4-miljarder-kronor/ The car was based on the company’s successful W 196 R Grand Prix car, which won two World Championships with driver Juan Manuel Fangio.  Mercedes-Benz said it will donate the proceeds to create a fund for scholarships and educational research into the environment and decarbonization. https://www.cnbc.com/2022/05/19/mercedes-benz-300-slr-uhlenhaut-coupe-sells-at-auction-for-143-million.html Mercedes-Benz CEO Ola Källenius said the scholarship fund would allow more people from around the world to follow in the footsteps of the car's creator, Rudolf Uhlenhaut. https://www.whichcar.com.au/news/mercedes-confirms-200-million-sale-of-300-slr-uhlenhaut-coupe Company design chie

 The next few months could be ugly if inflation fails to drop to tolerable levels The lesson from the 1970s is not encouraging. This continued until central banks, most notably the Volcker Fed, engineered their own recession, raising interest rates sufficiently to put millions of people out of work. From an investor point of view, this was the worst of all worlds — countercyclical inflation (stagflation) Dario Perkins MarketWatch 19 May 2022 https://www.marketwatch.com/story/the-worst-of-all-worlds-for-investors-what-if-higher-interest-rates-and-a-recession-dont-tame-inflation-11652968911

Fortsatt lågräntepolitik hotar att bygga upp nya obalanser, varnar han. DI 24 juni 2013. Ja 2013. https://www.di.se/artiklar/2013/6/24/bis-chefens-skarpa-varning/ Stefan Ingves, Viktor Munkhammar och Centralbankernas konspiration Headline inflation är nu hög och svider i konsumenternas plånböcker. Alla vet att nu är det inflation.  Se där ett gyllene tillfälle för centralbankerna att höja räntan och därmed sätta stopp för den långvariga skuldökningen hos hushåll och företag. https://englundmacro.blogspot.com/2022/04/stefan-ingves-viktor-munkhammar-och.html

Earlier this week, Ben Bernanke raised the possibility of stagflation in an interview published in the New York Times.  https://www.nytimes.com/2022/05/16/business/dealbook/bernanke-stagflation.html “Even under the benign scenario, we should have a slowing economy,” he said. “And inflation’s still too high but coming down. So there should be a period in the next year or two where growth is low, unemployment is at least up a little bit and inflation is still high.” https://www.wsj.com/articles/high-inflation-slowing-growth-raise-risk-of-global-downturn-11652908756 Ben Bernanke says the U.S. economy, for the first time since the 1970s, could be heading toward a period of stagflation Bernanke told DealBook, in an exclusive interview with Andrew ahead of Bernanke’s new book.  Bernanke says backing away from a 2 percent inflation target would be a mistake. “In everyday life, we judge the credibility of promises more by the reputations of the promise-makers than by the exact words they use,”