Englund

 ... because it performs so many roles. For a start, it constitutes the capitalisation or discount rate without which valuation is impossible. Infflation is back, and along with it a widespread obsession about the future direction of interest rates. This is hardly surprising. In the past, a dose of tight money has brought prices under control. However, interest’s role in ensuring price stability is just one of its many functions. Our neglect of those other functions explains why the financial markets are in such a jumpy state today. James Grant, the founder of Grant’s Interest Rate Observer, calls interest the “universal price” because it performs so many roles. For a start, it constitutes the capitalisation or discount rate without which valuation is impossible. As every business student learns, a company’s present value is calculated by discounting future cash flows.  “Anticipation is always at a discount”, said the Scotsman John Law in the early 18th century. The Austrian e...

Federal Reserve chairman Jerome Powell today acknowledged that he doesn’t understand inflation. See below. This is somewhat alarming given the fact that the Fed’s is given operational independence to ensure price stability.  If Powell doesn’t have a model for understanding why should the Fed been independent? Lars Christensen 29 June 2022 https://marketmonetarist.com/2022/06/29/a-simple-model-for-inflation-that-jerome-powell-should-understand/

  Som lägst var OMXSPI nere på indexnivån 727,48 vilket var nytt årslägsta  Facit under årets sex första månader blev minus 29,2 procent. The S&P 500 fell more than 20%, marking its worst first half of a year since 1970. The Dow just booked its worst first half since 1962.  https://www.marketwatch.com/story/whats-next-for-the-stock-market-after-the-worst-1st-half-since-1970-heres-the-history-11656503671 Markets Had a Terrible First Half of 2022. It Can Get Worse https://www.wsj.com/articles/markets-had-a-terrible-first-half-of-2022-it-can-get-worse-11656734432

Vad gäller Inflationen spår Riksbanken att denna kommer ligga kvar över 7 procent under resten av 2022.   DI 30 juni 2022 https://www.di.se/live/riksbanken-hojer-styrrantan-till-0-75-procent/ OBS att 0,75 procents ränta inte är hög. Den är låg. Långt under den förväntade inflationen.

  When investors realised that lending to Greece was way riskier than lending to Germany, they freaked out. Borrowing costs for European governments diverged. The euro tottered. Super Mario saved the day with his power ballad “whatever it takes”.  However, this third solution relied on easy money, meaning it was temporary. “whatever it takes” would rapidly become “whatever, it’s fake.”  Facing record euro-area consumer inflation, at 8.1%, the ECB will raise interest rates by 25 basis points next month. Lord help us.  What, then, should the euro do?   The euro is a downside risk. It is a potentially unsafe, unsound, and unnatural experiment.  Rather than long-term prosperity, the euro might have enabled little more than unsustainable debt burps in the Palazzo delle Finanze. That suggests shrinking, and a smaller fiscal club. Or just ending it altogether.  If it looks like the single currency will implode, the ECB Berlin may step in to save the sing...

 ”Vi vet att konjunkturen kommer få en smäll av centralbankernas räntehöjningar, och därför handlar oron nu mycket om den sämre konjunkturens inverkan på bolagens förväntade vinster”, säger Frida Bratt, sparekonom på Nordnet. Köplistan hos nätmäklarna Nordnet och Avanza toppas av Ilija Batljans krisande fastighetsjätte SBB, för andra månaden i rad. ”SBB genomgår nu en förtroendekris på aktie- och obligationsmarknaden, efter bland annat ifrågasatta värderingar och tidvis märklig kommunikation. Men från privatspararna är förtroendet fortsatt högt”, säger Frida Bratt. DI 30 juni 2022 https://www.di.se/nyheter/branda-sparare-litar-pa-batljan-tar-hem-vinst-i-juniraketer/ – 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

Central banks will eventually wimp out and accept higher inflation – followed by stagflation – once a hard landing becomes imminent, because they will be worried about the damage of a recession and a debt trap, owing to an excessive build-up of private and public liabilities after years of low interest rates. In typical plain-vanilla recessions, US and global equities tend to fall by about 35%.  But, because the next recession will be both stagflationary and accompanied by a financial crisis, the crash in equity markets could be closer to 50%. Nouriel Roubini Project Syndicate 29 June 2022 https://www.project-syndicate.org/commentary/stagflationary-debt-crisis-by-nouriel-roubini-2022-06  

 

Bloomberg 29 June 2022 https://www.bloomberg.com/news/articles/2022-06-29/ecb-gets-inflation-whiplash-with-spain-at-10-germany-slowing Federal Reserve Chair Jerome Powell made that clear that the real concern is that the US might be facing sustained higher inflation well above the Fed’s 2% target. Bloomberg 29 June 2022 https://www.bloomberg.com/opinion/articles/2022-06-29/never-mind-peak-inflation-fed-s-powell-wisely-eyes-the-long-term

 When Wall Street collapsed in 2008, triggering the global Great Recession, various explanations were offered: regulatory capture by financiers who had replaced industrialists in the capitalist pecking order; a cultural proclivity toward risky finance; failure by politicians and economists to distinguish between a new paradigm and a massive bubble; and other theories, too.  All were valid, but none went to the heart of the matter. So, what is really going on?  My answer: A half-century long power play, led by corporations, Wall Street, governments, and central banks, has gone badly wrong. As a result, the West’s authorities now face an impossible choice:  Push conglomerates and even states into cascading bankruptcies, or allow inflation to go unchecked. For 50 years, the US economy has sustained the net exports of Europe, Japan, South Korea, then China and other emerging economies The lion’s share of those foreigners’ profits rushed to Wall Street in search of higher...

 ... from -2% of GDP in the first quarter of 2020 to -4.8% in the first quarter of 2022, with the just-reported data for early 2022 revealing the second-sharpest quarterly deterioration since 1960. America’s current-account deficit hasn’t been this large since mid-2008 in the depths of the global financial crisis. Surprisingly, domestic saving has since rebounded good reason to believe that interest rates would remain uncomfortably low. As a result, the US current-account adjustment would be increasingly concentrated in the sharp depreciation of an overvalued dollar.  (But ...) Stephen S. Roach Project Syndicate 27 June 2022 https://www.project-syndicate.org/commentary/why-post-pandemic-dollar-strengthened-not-weakened-by-stephen-s-roach-2022-06

Having rightly worried about the Fed both underestimating the threat of inflation and failing to evolve its policy stance in a timely manner, markets now feel that a late central bank scrambling to play catch-up risks sending the US economy into recession. Mohamed El-Erian FT 29 June 2022 The risk of a flip-flopping Fed | Financial Times (ft.com)

 The Fed needs to remove the heat from demand without prompting an accident among mortgage financiers. The key question now is whether the sector can be brought into some kind of even keel without causing an accident along the way. And which parts of the financial system might be the most vulnerable. Just as money market mutual funds developed to allow investors to avoid paying for deposit insurance, as they would have to do on funds held in banks, so non-bank financial institutions have been able to seize yet more business that would once have been done by traditional lenders.  Most non-Americans will only have heard of two; and very few Americans will have heard of all of them John Authers 29 June 2022 https://www.bloomberg.com/opinion/articles/2022-06-29/housing-market-disquiet-grows-with-price-data-mortgage-tremors Englunds lag 3 (Inflation and the housing market) Räntan (A) är vad som behövs för att stoppa inflationen. Räntan (B) är den som gör att bostadsmarknaden kollap...

 I M2 finns en salig blandning med bolag där Castellum och Corem är dominerande. Att både belåna fastigheter och ägarbolaget var en fantastisk affär när kurserna rusade.  Men hävstången fungerar även åt det andra hållet  Värde är en sak, men det viktiga är ändå alltid kassaflödet. Magnus Dagel DI 28 juni 2022 https://www.di.se/analys/nu-slar-dubbelbelaningen-tillbaka-mot-arnhult/

 

There is a longer-term question that matters, too: Once inflation is finally brought under control, do we return to the post-2009 secular stagnation, or will there be a new paradigm?  He sees the threat of recession, even with 10-year bond yields at just over 3%, as strong evidence that he is right that the U.S. and the world can’t cope with higher rates. “The fact that such low rates seem to be causing a recession is quite prohibitive,”  I differ I think secular stagnation is less likely,  and I think Western governments will be more willing to spend than in the aftermath of the 2008-2009 recession.  James Mackintosh  WSJ 27 June 2022 https://www.wsj.com/articles/larry-summers-nailed-inflation-but-is-he-right-on-what-comes-next-11656343688

 ... and alternatives have yet to emerge Economists have struggled to explain how inflation suddenly shot from around 2% before the pandemic to 8.6% in May. Outside of a handful of individuals, economists have thus far devoted remarkably little attention to how their theories and models got inflation so wrong.  This would be understandable if economists had only missed by a bit.  They didn’t.  Inflation at the end of last year was more than double the median projection among economists surveyed eight months earlier and well above the highest forecast. Greg Ip WSJ 15 June 2022  https://www.wsj.com/articles/on-inflation-economics-has-some-explaining-to-do-11655294432

Rikard Westerberg Cambridge University Press:  23 June 2022 https://www.cambridge.org/core/journals/enterprise-and-society/article/from-marxist-venture-to-venture-capitalists-the-swedish-wageearner-funds-and-the-market-turn-19831994/A3EA6060B9A66F27C32D1CEDC065CC04 Socialists at the Gate /Timbro och dess föregångare/ Swedish Business and the Defense of Free Enterprise, 1940–1985  Rikard Westerberg  Dissertation for the Degree of Doctor of Philosophy, Ph.D., in Business Administration. Stockholm School of Economics, 2020  https://englundmacro.blogspot.com/2020/11/socialists-at-gate-timbro-och-dess.html

– Det är de högsta temperaturerna man har uppmätt sedan man började mäta för 122 år sedan. Om en miljard indier skaffar luftkonditionering, vilket man vill göra när det är så här varmt.... SvT 28 juni2022 https://www.svt.se/nyheter/ny-rapport-storre-befolkning-bidrar-till-mer-varmebolja In 2050, as much energy will be used for world air conditioning as the whole of China uses today to produce all its electricity. https://englundmacro.blogspot.com/2020/11/no-weather-event-affects-power-system.html Värmeböljorna vi ser nu är bara en början Det skriver vetenskapsjournalisten Izabella Rosengren, aktuell med boken ”Hetta”. SvD 27 juni 2022 https://englundmacro.blogspot.com/2022/06/varmeboljorna-vi-ser-nu-ar-bara-en.html

 Investopedia 26 June 2022 https://www.investopedia.com/ask/answers/063015/what-are-major-laws-acts-regulating-financial-institutions-were-created-response-2008-financial.asp

Båda datortyperna har för- och nackdelar, men på vissa områden är Mac-datorer helt enkelt bättre. https://pctidningen.se/dator/det-har-ar-mac-funktioner-som-vi-saknar-i-windows  

At the June 15 emergency meeting, the ECB announced it will reinvest maturing bonds “flexibly” under its pandemic emergency purchase programme (Pepp). But the mechanism for reinvestment is unclear.  The second existing tool is Outright Monetary Transactions (OMT). Created during the 2012 debt crisis, OMT involves the ECB buying a country’s sovereign debt in the secondary markets — as long as that country has agreed to strict conditionality. It has never been used ECB governing council has tasked staff with devising a new tool to address fragmentation. They hope to announce it at the next policy meeting on July 21. I fear it will come up short To overcome opposition from northern European countries concerned about moral hazard and avoid legal challenges, the anti-fragmentation tool must have conditions Italy has about €200bn in debt to roll over later this year and an additional €305bn next year. Megan Greene Senior fellow at Harvard Kennedy School and chief economist at Kroll FT 28...

 Hedge fund manager Michael Burry issued a tweet Monday suggesting that the Federal Reserve may pause or even reverse its campaign of interest-rate hikes What he’s referring to with the “Bullwhip Effect” is the deflationary effects of retailers holding too much inventory. The theory is that they will eventually have to drop prices to relieve themselves of the goods they have stockpiled. In previous inflationary periods, the Fed had to boost interest rates above the rate of inflation to bring inflation down. That may not be the case this time.  As laughable as it may seem, there may still actually be a transitory element to current inflation that was a function of quantitative easing, government spending and pandemic hoarding. So, if Burry is speculating that the Fed may pause rate hikes, when would that be? Bloomberg 27 June 2022 https://www.bloomberg.com/opinion/articles/2022-06-27/michael-burry-s-bullwhip-tweet-deserves-serious-attention Michael Burry, the founder of Scion A...

Det skriver vetenskapsjournalisten Izabella Rosengren, aktuell med boken ”Hetta”. SvD 27 juni 2022 https://www.svd.se/a/0G29M0/sa-paverkas-vi-av-varme-blir-korkade-och-arga https://www.bokus.com/bok/9789179651879/hetta/ Bland annat i Indien och Pakistan där värmeböljor med temperaturer över 40 grader i skuggan är direkt livshotande.    – Det är mycket allvarligt. Om man har långvarig hög temperatur så kommer det bli svårt för människor att bo där, säger Deliang Chen.   Halv miljard riskerar drabbas Deliang Chen är en av författarna till den nyligen publicerade artikeln Future Population Exposure to Daytime and Nighttime Heat Waves in South Asia  https://agupubs.onlinelibrary.wiley.com/doi/10.1029/2021EF002511 där forskare för första gången har studerat hur sambandet mellan extremvärme och tätt befolkade områden påverkar klimatkrisen.    SvT 28 juni 2022 https://www.svt.se/nyheter/vetenskap/ny-forskning-visar-fem-extra-varmeboljor-per-ar

   Fastighetssektorn lyfte på måndagen – med SBB i topp. 

 Desenio som säljer affischer via nätet, noterades den 25 februari 2021 till teckningskurs 72 kronor och därmed ett värde på 10,7 miljarder kronor. Två månader efter introduktionen ansåg Carnegies och ABG:s analytiker att kursen borde upp till 105 respektive 110 kronor, motsvarande ett värde på 16-17 miljarder. På torsdagen handlades aktien strax över 2 kronor, en nedgång på omkring 98 procent. DI 23 juni 2022  Färska analytiker bakom köpråden på börsfloppen Desenio (di.se)  

By the first quarter of the year the increase in American house prices over the previous two years, at 37%, was the fastest on record. That rapid growth is a problem because it feeds into rents, which in turn contribute to headline inflation.  Cooling a hot property market by just enough to quell inflation is one thing.  Deflating a bubble without popping it is another.  The Economist 23 June 2022 https://www.economist.com/finance-and-economics/2022/06/23/can-the-fed-pull-off-a-controlled-slowdown-of-the-housing-market   Home ownership - the West’s biggest economic-policy mistake It is an obsession that undermines growth, fairness and public faith in capitalism A trillion dollars of dud mortgages blew up the financial system in 2007-08.  But just as pernicious is the creeping dysfunction that housing has created over decades: vibrant cities without space to grow; ageing homeowners sitting in half-empty homes who are keen to protect their view;  and a genera...

 ... where rapid price rises are normal, dominate daily life and are difficult to quell, the Bank for International Settlements warned  In its annual report, the BIS said these transitions to high-inflation environments happened rarely, but were very hard to reverse. Chris Giles FT 26 June 2022 https://www.ft.com/content/b937e023-c86c-4b07-b40d-a3266d84f149 BIS Annual Economic Report 2022 https://www.bis.org/publ/arpdf/ar2022e.htm BIS Annual Economic Report 2021  https://www.bis.org/publ/arpdf/ar2021e.htm

Despite an inflation rate in excess of 8%, futures show traders are betting the target federal funds rate won’t rise much beyond 3% from the current range of 1.50% to 1.75%.  Powell said that by the end of the year, the Fed’s policy rate “will be pretty close to where some of the Taylor Rule iterations are.” That’s 4.93% based on current estimates, or more than 3 percentage points above the current fed funds rate. So, while traders rush to hedge for a recession that has yet to arrive, they forget that the fight against inflation is far from over.  Jenny Paris Bloomberg 24 juni 2022  https://www.bloomberg.com/opinion/articles/2022-06-24/bond-traders-are-reading-the-federal-reserve-wrong-yet-again Jenny Paris is executive editor at Bloomberg News for global bond, currency and emerging markets.  She has previously worked at the Wall Street Journal and Dow Jones Newswires covering the euro zone crisis and as a managing editor for Asia equity markets Aktiestrategen Molly ...

 The European Central Bank is faced with a dilemma.  It needs to tighten monetary policy in order to rein in unexpectedly high inflation and at the same time prevent fragmentation of financial markets across the eurozone. Lorenzo Bini Smaghi FT 24 June 2022  https://www.ft.com/content/7b9f7761-4b7a-4707-9252-d639ab9c3aee The writer is chair of Société Générale and a former member of the executive board of the European Central Bank Société Générale is France's third largest bank by total assets after BNP Paribas and Crédit Agricole.

U.S. stock indexes rallied after weak economic data softened investors’ expectations of coming interest-rate increases Rate-hike expectations edged down as investors priced in a higher probability of softer Fed moves in the months ahead.  Markets now expect a rate cut in the second half of next year.  WSJ 24 June 2022 https://www.wsj.com/articles/global-stocks-markets-dow-update-06-24-2022-11656055923 Traders are starting to price out any Fed action on rates beyond the December meeting,  scaling back the additional tightening they expect and flirting with the possibility of cuts by in 2023.  But they are still grappling with the question of what comes next if an economic downturn takes hold.  https://www.bloomberg.com/news/articles/2022-06-23/stocks-set-for-steady-asia-open-amid-bond-rally-markets-wrap The biggest story in markets at the moment is the fall in Treasury yields.  The 10-year has gone from 3.5 per cent to under 3.1 per cent since last Tuesday....

Dow Gains More Than 800 Points https://englundmacro.blogspot.com/2022/06/dow-gains-more-than-800-points.html  

  “We can’t fail on this. We really have to get inflation down,” Mr. Powell said during the second of two days of testimony.  “We’re going to want to see evidence that it really is coming down before we declare ‘mission accomplished,’ ” he told the House Financial Services Committee. In the mid-1970s, the Fed raised rates aggressively but, in hindsight, backed off too soon and failed to break the back of high inflation, forcing stiffer action later. WSJ 23 June 2022 https://www.wsj.com/articles/feds-jerome-powell-to-head-to-the-house-with-interest-rates-in-focus-11655976603 Central banks try to find the right response to a problem they did not think could happen Chris Giles FT 23 June 2022 https://englundmacro.blogspot.com/2022/06/central-banks-try-to-find-right.html

 From the US and UK to New Zealand and the Czech Republic, the world economy is facing yet another threat: the unraveling of a massive housing boom.  Global monetary tightening is squeezing homebuyers, which could create a ripple effect that would deepen an economic slump. To be sure, a 2008-style collapse is unlikely.  Lenders have tightened standards, household savings are still robust and many countries still have housing shortages.  Labor markets are also strong, providing an important buffer. Bloomberg 22 juni 2022  https://www.bloomberg.com/news/features/2022-06-21/cooling-real-estate-markets-in-us-uk-risk-deeper-global-economic-slump

  Vid stängning hade storbolagsindexet OMXS30 handlats ned med 1,6 procent  Stockholmsbörsen stänger på årslägsta inför midsommarhelgen

 I Fastators styrelse sitter flera namnkunniga profiler som tidigare statsministern Carl Bildt och före detta S-ministern Björn Rosengren. Femte största ägare är den tidigare M-ledaren Ulf Adelsohn. Vd är fastighetsprofilen Knut Pousette. DI 23 juni 2022, 14:54 https://www.di.se/live/profiltungt-fastighetsbolag-drar-sig-ur-affar-med-dios-far-inte-finansiering/

The national median listing price for active listings was $447,000 in May 2022, up 17.6% compared to last year, and an increase of 35.4% vs. May 2020 Renting has also become less affordable.   Rents were up 12% nationally in the first quarter of this year, and higher in some metro areas. MarketWatch 22 June 2022 https://www.marketwatch.com/story/these-5-charts-reveal-the-craziness-of-housing-market-during-the-pandemic-and-its-not-over-yet-11655915246

endangering drinking supplies for nearly 25 million Americans. It was the US’s worst heatwave since, well, May.  As heatwaves get longer, the US will eventually suffer one that lasts weeks. When that happens, says Klinenberg, the country’s aged electrical grids may not cope with rising demand.  If grids fail, food will rot, residents of high-storey apartment buildings risk being trapped without elevators, and it won’t be possible to pump water to people living above the sixth floor. Simon Kuper 23 June 2022 https://www.ft.com/content/48f20f75-92aa-40d5-8063-13a32fceac36  

Some of the rise in inflation is still temporary, but much will need to be squeezed from economies without anyone knowing exactly how much pressure to apply. This means the dangers of excessive tightening are as great as continuing to do too little, too late. In such a difficult world, no one should rule out recessions in the year ahead. The Fed is probably correct to raise interest rates hard, but the truth is that we really don’t know. Chris Giles FT 23 June 2022 https://www.ft.com/content/f6cc9826-b31c-42d4-93da-8f71c9ddd32a The May 2007 BoE annual report, endorsed by Lord King, then the Bank’s governor, said financial stability risks “appeared to be low”.  It was almost the eve of the financial crisis.  https://englundmacro.blogspot.com/2016/03/top-10-hits-and-misses-from-lord-kings.html

It will also close some 150 branches, bringing its network to just over 1,200 branches. After the bank teetered near failure, Rome spent some EUR5.4 billion to nationalize it in 2017, equivalent to more than $6 billion at the time. MarketWatch 23 June 2022 https://www.marketwatch.com/story/italy-s-monte-dei-paschi-plans-2-64-billion-capital-increase-to-revamp-business-271655969855 More about Banca Monte dei Paschi di Siena https://englundmacro.blogspot.com/search?q=monte

 ”Jag tror vi har nått botten och att börsen står 10 procent högre om 3-6 månader”, säger hon till Affärsvärlden. https://www.dagensps.se/bors-finans/strateg-borsen-gar-upp-i-sommar-kopvarda-aktier/   Molly Guggenheimer https://englundmacro.blogspot.com/2022/05/guggenheimer.html

 I stället ägnar de sig till exempel åt en extra semester­vecka, återbetalning för stora elräkningar, tävlar om lägsta bensin­priset, tävlar om extra pengar till dem med lägsta pensionen. Våra politiker har ofta talat om att Sverige behöver en ny skatte­reform. Detta har hittills stannat vid fagert tal.  Klas Eklund har nyligen presenterat utmärkta förslag för att täcka helheten. Sverige har haft minusränta i åtta år. Resultatet är att börsen löper amok, priset på bostäder i storstäder är utan rim och reson.  Göran Collert tidigare ordförande Förenings­sparbanken Sverker Lerheden tidigare vd Tornet, filantrop Lars Strandberg tidigare vd Spintab SvD debatt 17 jumi 2022 https://www.svd.se/a/eEQpbR/debattorer-las-cervenka-och-gor-sen-om-skattesystemet ”Sverige är på väg mot en bostadskrasch” Myndigheter och politiker har ungefär ett år på sig att agera innan de tvingas ta hand om en finanskris.  Göran Collert, Sverker Lerheden och Roland Petersson SvD 28 maj 2018 https:...

 

 Here’s a chart of the real interest rate — the interest rate minus the expected rate of inflation — on 10-year United States government bonds since the 1960s. So, is the claim that the Fed was consistently setting interest below this natural rate? If so, where was the runaway inflation?  In fact, until 2021, inflation consistently came in more or less at the Fed’s target of 2 percent a year. But why was the natural rate so low? The immediate answer is the Fed learned from experience that it had to keep rates low to keep the economy from slipping into recession. Since 2000, and especially since the global financial crisis, businesses have persistently been unwilling to maintain a level of investment spending that used all the money households wanted to save, unless interest rates were very low. This condition has the unfortunate name “secular stagnation” What causes secular stagnation? The best guess is that it’s largely about demography. Once inflation is back down to 2 to 3 ...

 

Moscow warns it will 'take actions' after alliance member blocks trains carrying goods to Russia's Kaliningrad territory Lithuanian Foreign Minister Gabrielius Landsbergis said his country was simply implementing sanctions imposed by the EU.  He said the measures implemented were taken after 'consultation with the European Commission and under its guidelines.' Daily Mail 20 June 2022 https://www.dailymail.co.uk/news/article-10934333/Russia-warns-actions-against-NATO-member-Lithuania-blocking-sanctioned-goods.html The secretary of Russia’s Security Council threatened retaliation in a growing standoff with the EU after Lithuania blocked transit to Kaliningrad Russia “will certainly respond to such hostile actions” and appropriate measures will be taken soon The government in Vilnius halted transit deliveries in line with EU sanctions barring the supply of steel and other ferrous metal products from Russia. The list will be expanded to include cement next month under a...

Men på bara ett halvår har nu aktien nästan halverats i värde. DI 20 juni 2022 https://www.di.se/nyheter/fastighetsmiljardaren-varnar-for-fastighetskris-och-boprisras-en-tvarnit/

 ECB’s support for the sovereign bond market has always been conditional on consistency with its mandate of price stability. It was the threat of deflation in 2012, and during the pandemic, which gave the ECB the all-clear to provide the limitless support required to halt a panic. Inflation in Europe is a game-changer, and markets know this.  Sovereign spread targeting by a central bank has never been done before. The ECB will need to provide answers in the next few weeks, or markets will draw their own conclusions. Eric Lonergan FT 21 June 2022 https://www.ft.com/content/7cfb85d3-c77a-496f-9934-450f2314d311 We’re witnessing the start of the second euro crisis https://englundmacro.blogspot.com/2022/06/were-witnessing-start-of-second-euro.html

 This week it became a reality. FT 17 June 2022 https://www.ft.com/content/2da439ba-87d8-4a48-80ca-b6452d48669a Is Lithuania on the verge of dragging NATO into Ukraine war?  Moscow warns it will 'take actions' after alliance member blocks trains carrying goods to Russia's Kaliningrad territory https://www.dailymail.co.uk/news/article-10934333/Russia-warns-actions-against-NATO-member-Lithuania-blocking-sanctioned-goods.html

 When unleveraged investments fall, the people holding them lose some of their wealth. Relatively well-off people who hold investment assets are now relatively less well-off.  When leveraged investments fall, companies and their lenders can go bust. The need to pay off the debt can prompt fire sales elsewhere.  Bloomberg’s index of US office property real estate investment trusts, or REITs, is slightly lower now than it was 20 years ago, and almost back to the lows it hit during the worst of the pandemic in 2020 Chart Typical 30-year mortgage rates are now a whisker below 6%, and approaching the pre-crisis high of 2006: chart This is uncomfortably reminiscent of the conditions that triggered the global financial crisis.  if there is one further pocket of speculation in the world that could cause damage when it bursts, it’s British housing, particularly in London. John Authers Bloomberg 21 juni 2022  https://www.bloomberg.com/opinion/articles/2022-06-21/property-...

Passerelle clauses in the EU Treaties: Opportunities for more flexible supranational decision-making https://www.europarl.europa.eu/thinktank/en/document/EPRS_STU(2020)659420 Regeringen, samarbetspartierna och oppositionen anser att förslaget om att stats- och regeringscheferna ska kunna avskaffa vetot tillhör det mest svårsmälta i den nya grundlagen.  Förslaget, som går under benämningen passerellen, bör helst förpassas till papperskorgen, är den samstämmiga svenska uppfattningen. I går skickade statsrådsberedningen ett brev till ordförandelandet Italien där ståndpunkten klargörs. Plocka bort eller arbeta om förslaget lyder det svenska kravet. – Om den inte slopas måste man hitta ett sätt att inte gå förbi riksdagen, förklarar statsminister Göran Persson som ”inte tycker om” förslaget. SvD 22 oktober 2003 https://www.svd.se/a/ef32e524-458c-39da-a51d-af06938946ed/eu-lag-far-nej-av-regeringen Övergångsklausul, eller passerell (franska: passerelle, övergång),   är en klausul i E...

Under the "stress test" exercise established following the 2007-2009 financial crisis, the Fed tests banks' balance sheets against a hypothetical severe economic downturn, the elements of which change annually. The results dictate how much capital banks need to be healthy and how much they can return to shareholders via share buybacks and dividends. Reuters 20 June 2022 https://www.reuters.com/business/finance/whats-new-with-feds-bank-stress-tests-2022-2022-06-20/ US banks’ ability to ride out downturn in spotlight as recession fears grow FT 21 June 2022 https://www.ft.com/content/c4dda7ee-a5b9-4d33-b27c-06067a4a5f34 Big US banks should raise $200bn in capital now Neel Kashkari FT 16 April 2020 https://englundmacro.blogspot.com/2020/04/big-us-banks-should-raise-200bn-in.html Banks at IntCom https://www.internetional.se/banks.htm

SEB:s valutaanalytiker bedömer att dollarn respektive euron borde kosta omkring 8 respektive 9,50 kronor Nils Åkesson DI 20 juni 2022 Nice charts https://www.di.se/analys/uselt-facit-for-den-svenska-skvalpvalutan/

 

 A plunge in shares in Italian banks, sparked by rising government bond yields, has reawakened memories of the 2011-12 debt crisis and rekindled concerns over lenders' vulnerability to sovereign risks. The sovereign-bank link, which became a "doom loop" of mutually reinforcing risks a decade ago, compounds problems for Italian lenders, which are down by a fifth this year, nearly twice the loss of the wider European   Nudged by regulators to diversify sovereign risks, Intesa and UniCredit have cut domestic bond holdings to 70%-80% as a proportion of their core capital. Reuters 20 June 2022 Analysis: Italian banks' government debt risks: real or just deja-vu? | Reuters  Lagarde Restates ECB Hiking Plan  The measure is meant to be finalized before the ECB’s Governing Council next scheduled policy meeting on July 20-21, people familiar with the matter have said. Lagarde said that work is under way, and declined to divulge details on how it’s supposed to function....

An Economist’s Outlook: Essays by John H. Makin from a Transformative Era The late John Makin was one of what seems a dying breed: a thoughtful, well-informed and open-minded conservative economist.    The Federal Reserve from the Great Inflation to COVID-19 by Ben Bernanke Can’t We Just Print More Money?: Economics in Ten Simple Questions If you feel you should understand how economists think but have no idea where to start, this book is the answer. Reshaping Capitalism to Save Humanity from Climate Catastrophe by Alessio Terzi   Unshackling India: Hard Truths and Clear Choices for Economic Revival  by Ajay Chhibber and Salman Anees Soz India will soon be the world’s most populous country. But will it also be a prosperous one?   Martin Wolf FT 20 June 2022 https://www.ft.com/content/636d4bcb-816f-485e-bff2-bb8dc6cefe22

 Chart from John Authers Bloomberg 17 juni 2022 https://www.bloomberg.com/opinion/articles/2022-06-17/post-lehman-recovery-makes-contrarian-case-for-buying-stocks A fascinating aspect of the financial markets is that long-term returns are driven almost entirely by math, while short-term returns are driven almost entirely by psychology. It’s useful to consider both. Hussman Market Comment June 2022 https://www.hussmanfunds.com/comment/mc220601/ 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.    Undoubtedly, some “catalyst” will be found, but the mistake will be in believing that the collapse is caused by that piece of “bad” news. The important question to ask is “What drove the bubble?” That’s where the lessons are.  John P. Hussman, Ph.D. President, Hussman I...

   Ur Catilinas sammansvärjning av Göran Hägg

Investors and economists think policymakers will struggle to avoid imposing pain, from rising unemployment to economic stagnation. Whatever it takes? The ECB has a challenge of a more existential kind. FT 17 June 2022 https://www.ft.com/content/6532b026-e007-441b-b9dd-ffd5619504d7  If history is any guide, the selloff might still be in its early stages The S&P 500 is trading at 15,4 times its next 12 months of expected earnings, according to FactSet, just a hair below its 15-year average of 15,7. David Kelly, chief global strategist at J.P. Morgan Asset Management, said  “I wouldn’t be surprised if within a year, we’re having a meeting where the Fed is considering cutting rates,” WSJ 20 juni 2022 https://www.wsj.com/articles/stocks-historically-dont-bottom-out-until-the-fed-eases-11655594823?mod=hp_lead_pos2 ECB sought to stave off a resurgent sovereign-debt crisis with the promise of a new tool Bloomberg 15 June 2022 https://englundmacro.blogspot.com/2022/06/ecb-sought-to...

 Risk of US Unemployment Needing to Climb Toward 6% “I would be very, very surprised if we saw inflation come down to 2.5% without also having seen a recession,” Summers also said.  The more likely scenario is that the recession won’t bring consumer-price gains “all the way down” to 2.5% -- “that’s why I think the central tendency is towards stagflation.” Bloomberg 17 June 2022 https://www.bloomberg.com/news/articles/2022-06-17/summers-sees-risk-of-us-unemployment-needing-to-climb-toward-6 This is not a cyclical phenomenon  It is a secular regime change forced on reluctant central banks by inflation that has got well ahead of them and threatens livelihoods, worsens inequality and undermines financial stability. As it is late, this shift comes with a heightened risk of collateral damage and unintended consequences. Mohamed El-Erian FT 20 June 2022 https://www.ft.com/content/77665e8d-e3bb-4fc7-8547-b368c8b90f47  What is stagflation, and might it make a comeback? A comb...

 Arthur Burns Federal chair from 1970‒1978.   Burns made a rather dramatic (at least looking at it now) mea culpa speech in September 1979.  “Economic life is subject to all sorts of surprises and disturbances—business recessions, labor unrest, foreign troubles, monopolistic shocks, elections, and governmental upsets. One or another such development, especially a business recession, could readily overwhelm and topple a gradualist timetable for curbing inflation. That has happened in the past and it may happen again.” Here’s a chart of the federal funds rate in Volcker’s first term. Note those near-vertical lines. These 50‒75 basis point moves people now consider “aggressive” are mild in comparison. The Volcker Fed had multiple hikes of 100 bps or more. Volcker rewarded Jimmy Carter’s appointment by giving him an immediate recession going into 1980. Then they took fed funds 1,000 points higher in the second half of 1980, helping cost Carter the election and welcoming ...

Europe does not face fresh sovereign debt crisis, says eurogroup chief Since the region’s last debt crisis, the EU has bolstered its bank regulation with the creation of a pan-European supervisor and crisis-fighting infrastructure through a common resolution mechanism when lenders fail. The European Central Bank has new tools to buy government bonds. Lawmakers created a recovery fund backed by common debt during the pandemic. FT 20 June 2022 https://www.ft.com/content/e1379996-223d-463a-9c96-b660776d9207 President Christine Lagarde told euro-area finance ministers Thursday that the tool will kick in if the borrowing costs for weaker nations rise too far or too fast “Like its predecessors, the new ECB backstop will likely face legal challenges focusing on a possible violation of the prohibition of monetary financing, the principle of proportionality, and possibly the prohibition of privileged access,” Bloomberg 17 June 2022 https://www.bloomberg.com/news/articles/2022-06-17/ecb-tool-to-...