Englund

 

Morgan Stanley strategist Srikanth Sankaran in a new note.  He points out that while junk-rated bonds have traditionally been the credit market’s first to crack as economic conditions deteriorate, that position may now be filled by the more than $1 trillion worth of floating-rate loans. These leveraged loans were supposed to be big winners for investors as interest rates rise, since they reset to keep up with benchmark rates set by the Federal Reserve and therefore offer the possibility of higher returns.  Some analysts have warned that companies which have borrowed using leveraged loans will face higher bills that could threaten their ability to repay. Bloomberg 30 August 2022 https://www.bloomberg.com/news/articles/2022-08-30/there-s-a-new-recession-canary-in-the-coalmine-morgan-stanley-says Fotnot Canary in the coal mine An allusion to caged canaries (birds) that miners would carry down into the mine tunnels with them.  If dangerous gases such as carbon monoxide collec...

Policymakers have not confronted anything like this for four decades. If the planned tightening of monetary policy is likely to generate a recession in the US, what might happen in Europe?  A central point is that these were intellectual mistakes. So, in my view, has been the lack of attention paid to monetary data. --- As inflation rises, the monetarist dog is having its day. https://www.ft.com/content/0cd1d666-8842-4c82-8344-07c4e433a408   --- Martin Wolf FT 30 August 2022 https://www.ft.com/content/b2ca227e-9fd2-4f47-8a35-18b176a864f0 German inflation hits 40-year high of 8.8 per cent FT 30 August 2022 https://www.ft.com/content/7ac09a84-0322-45c8-9167-3c24ddb06525  

 

 The new Prime Minister will also preside over one of the most liberal and open immigration systems among the developed economies, and considerably more open in key respects than the large EU states.  The actual regime established by Boris Johnson for work visas and the resettlement of legal refugees is strikingly expansionary. The latest UK Immigration Statistics in the year to June show that a record 1.1 million people were issued visas to live in this country, a 70pc rise on pre-Brexit levels. Educated Indians lead the way. The Rwanda camp for illegal migrants, if it ever happens, is an odd distraction within the greater picture.  The post-Brexit system stops one particular category: uncontrolled flows of cheap labour from the EU. But it is welcoming for another category: skilled migrants from any part of the world, so long as they meet wage and education thresholds. Ambrose Evans-Pritchard Telegraph 29 August 2022 https://www.telegraph.co.uk/business/2022/08/29/britai...

V har höjt den föreslagna insättningsgränsen från 1 till 2 miljoner kronor, vilket Bratt tolkar som att även V har insett att sparformen är populär även bland vanligare sparare. Dagens PS 30 augusti 2022 https://www.dagensps.se/privatekonomi/frida-bratt-bara-v-och-mp-vill-begransa-isk/ Landeborn Landeborn & Bratt https://englundmacro.blogspot.com/2022/08/landeborn-landeborn-bratt.html

i SVT programmet Agenda den 13 februari 2022. Därmed finns det inga ovillkorliga hinder att exportera krigsmateriel till en stat som befinner sig i väpnad konflikt. I propositionen uttrycks också vikten av att göra en helhetsbedömning där alla faktorer vägs in och där Sveriges utrikes- och försvarspolitik spelar en viktig roll. Det finns dessutom exempel på att utförseltillstånd har beviljats där villkorligt hinder förelåg. 2003 beviljades utförseltillstånd i samband med USA:s och Storbritanniens deltagande i den väpnade konflikten i Irak. Då gjordes en helhetsbedömning och nationens eget intresse hade förtur. https://www.riksdagen.se/sv/dokument-lagar/dokument/ku-anmalan/granskning-av-utrikesministern-med-anledning-av_H9A1dnr1394 Statsminister Andersson beskrev stödet som tvådelat: – Den första delen är ett nytt militärt stöd, på 500 miljoner kronor. Innehållet i det nya stödpaketet motsvarar era förfrågningar och ska komplettera donationer från andra nationer. Ett beslut i frågan kom...

 

Speaking at the annual gathering of central bankers in Jackson Hole, Wyoming, many said that the global economy was entering a new and tougher era. “At least over the next five years, monetary policymaking is going to be much more challenging than it was in the two decades before the pandemic struck,” Gita Gopinath, the IMF’s deputy managing director, told the Financial Times. Cutting through the buoyant atmosphere among Jackson Hole attendees was the overarching concern that the world and the economic relationships that underpin it had fundamentally changed. Complicating matters are doubts about just how much policy tightening is needed in the face of unpredictable gyrations in supply and, in turn, prices. The next few years are at risk of being known as the “Great Volatility” — in contrast with the past two decades, which economists called the “Great Moderation” The 2 per cent inflation target  came up repeatedly throughout the conference, with economists suggesting that it may n...

 En fortsatt nedgång är att vänta, enligt Danske Banks seniorekonom Maria Landeborn. – Uppenbarligen räds inte Fed en recession om det är vad som krävs, säger hon. SvD/TT 28 augusti 2022 https://www.svd.se/a/g6XjR9/rakna-med-fortsatt-borsras-efter-fed-beskedet   Vårt huvudscenario är fortfarande att detta är en tillfällig marknadsoro”, säger Maria Landeborn, seniorstrateg på Danske Bank. DI 14 februari 2022 https://englundmacro.blogspot.com/2022/02/sparprofilerna-manar-till-lugn-i.html I de här turbulenta tiderna är Maria Landeborns råd till småspararna tydligt: sitt still i båten SvD 24 januari 2022 – 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://englundmacro.blogspot.com/2022/01/i-de-har-turbulenta-tiderna-ar-maria.html NOBODY KNOWS ANYTHING https://englundmacro.blogspot.com/2021/09/nobody-knows-anything.html

Fed watchers noted that “Keeping At It” — a phrase Powell used twice in his speech — is the title of Volcker’s 2018 memoir, which was published just over a year before he died. FT 26 August 2022 https://www.ft.com/content/f2a6d9ac-24de-4e10-8fd6-924e8a45b047 The Federal Open Market Committee's (FOMC) overarching focus right now is to bring inflation back down to our 2 percent goal https://www.federalreserve.gov/newsevents/speech/powell20220826a.htm Last week, I received a poignant invitation: Paul Volcker, the legendary former chairman of the US Federal Reserve, asked me to visit his apartment to discuss his legacy. Mr Volcker is publishing his memoir. The release of Keeping At It was initially scheduled for late November but the publisher has rushed the date forward to October because the former Fed chair is ill.  Gillian Tett FT 25 October 2018 https://englundmacro.blogspot.com/2018/10/last-week-i-received-poignant.html Michael Burry of ‘Big Short’ Fame Says ‘Silliness’ in Market...

  Fed’s Powell says bringing down inflation will cause pain to households and businesses in Jackson Hole speech Fed will keep at task of lowering inflation ‘until the job is done,’ chairman says https://www.marketwatch.com/story/feds-powell-in-blunt-remarks-at-jackson-hole-says-bringing-down-inflation-will-cause-pain-to-households-and-businesses-11661522428

The rate of inflation over the past year dropped to 6.3% from 6.8% https://www.marketwatch.com/story/inflation-falls-in-july-for-first-time-in-two-plus-years-key-gauge-shows-due-to-falling-gas-prices-11661517617 Why are official interest rates so low if inflation is dangerously high? https://englundmacro.blogspot.com/2022/08/why-are-official-interest-rates-so-low.html Nice chart https://www.wsj.com/articles/inflation-eased-in-july-according-to-the-feds-preferred-measure-11661519584

 Investors should take note of some intriguing research floating around the edge of the Jackson Hole meeting about the importance of storytelling in monetary policy.  After the 2008 financial crisis, Robert Shiller, the Nobel Prize-winning economist, urged his colleagues to study how “narratives” shape sentiment and thus economic trends. And one encouraging post-crisis development in economics is that a swelling number of young behavioural finance economists have heeded Shiller’s call.  So if I were his speechwriter, I would  argue that inflation will fall when rates go up, and promise to keep raising those rates until price growth is at a sensible level.  That will not be politically popular ahead of a crucial midterm election. But it is at least a crystal clear message — or it would be if the Fed actually does it. Gillian Tett FT 25 August 2022 https://www.ft.com/content/756f605a-7ae3-469a-8a68-78ee41ea8b4f Gillian Tett is chair of the editorial board and edit...

 There are two extremely obvious things going on that have confused people about Fed policy. They are:  1. How is inflation going to fall as rapidly as the Fed assumes, even before it has raised interest rates only to around the neutral level? 2. How has the Fed picked the level to which it thinks inflation will fall on its own before monetary policy has to do the rest of the work? In these projections, the Fed focuses on the PCE deflator, not the CPI, a gauge for which inflation has gone even crazier than in this PCE. The Fed sees headline PCE at 4.4% at end 2022, 2.65% at end 2023 and at 2.25% at end 2024.  On what planet would any sane, experienced securities market investor think that the Fed would stop hiking rates at 2.5% with inflation so high? I cannot answer that.  Robert Brusca MarketWatch Aug. 25, 2022 https://www.marketwatch.com/story/the-federal-reserves-powell-has-a-lot-of-explaining-to-do-11661445167 Styrränta och inflation https://englundmacro.blogspo...

that owe their origins to climate change.  Losing waterways means a serious risk to shipping routes, agriculture, energy supplies — even drinking water. Rivers that have been critical to commerce for centuries are now shriveled, threatening the global movement of chemicals, fuel, food and other commodities. Bloomberg 26 augusti 2022  https://www.bloomberg.com/news/features/2022-08-26/why-are-rivers-drying-up-climate-change-turns-waterways-into-dust Europe’s Drought May Be Continent’s Worst in at Least 500 Years https://www.bloomberg.com/news/articles/2022-08-23/europe-s-drought-may-be-continent-s-worst-in-at-least-500-years The world's rivers are drying up from extreme weather. See how six look from space https://englundmacro.blogspot.com/2022/08/the-worlds-rivers-are-drying-up-from.html  

 

 det största tappet sedan mätningarna började 1996. Det motsvarar 6,7 procent av totalen på 3.281 miljarder kronor. Henrik Ek DI 25 augusti 2022 https://www.di.se/live/vardet-pa-bostadsratter-rasar-dramatiskt/ SCB 2021-07-01

The short answer is ‘yes’ MarketWatch Aug. 25, 2022  https://www.marketwatch.com/story/does-the-fed-need-to-kill-the-rally-in-stocks-to-achieve-its-policy-goals-the-short-answer-is-yes-11661435522

Policy makers need to acknowledge their past mistakes, as well as detail the trade-off between growth and inflation. At the European Central Bank’s forum in Sintra, Portugal in June, Powell admitted that "we now understand better how little we understand about inflation.”  More candor is needed now on how the inflationary monster was so underestimated, and how far policy makers are willing to go in sacrificing growth — and jobs — to tame it. The global central bank reaction to the pandemic prevented a major recession, but the stimulus was left in place for far too long. Marcus Ashworth Bloomberg 25 augusti 2022 https://www.bloomberg.com/opinion/articles/2022-08-25/jackson-hole-should-be-a-mea-culpa-for-central-bankers Fed Policy Framework built for last war still yields lessons for the next Unveiled at the Fed’s Jackson Hole forum in August of 2020, after an 18-month review, the new approach was aimed at a specific peril: How to beat the weak inflation that had long dogged central...

At a time of roaring inflation, bonds that hedge price pressures sound like a winner. In reality, they’ve been a disaster.   The Global Inflation-Linked Bond Index has plunged 17% in 2022 -- the worst-performing of the 20 key fixed-income benchmarks offered by Bloomberg.  These inflation funds have a high sensitivity to changes in interest rates as they are stuffed with linkers that have long maturities. You may not be happy if you expected to be protected from inflation given the rise in rates will have obliterated that. -- Tanvir Sandhu, chief global derivatives strategist at Bloomberg Intelligence Bloomberg 23 augusti 2022 https://www.bloomberg.com/news/articles/2022-08-22/inflation-is-a-terrible-bet-in-the-case-of-linkers-plunging-17 Varning för realräntefonder Värst är realräntefonderna, som ger förlust långsiktigt oavsett hur hög inflationen blir. Den senaste auktionen hos Riksgälden gav en snittränta på -2,02 procent per år för realränteobligationer med sju års löp...

 I början av 1969, då de ännu inte 30 år gamla  Fischer var diplomat och aktieplacerare vid sidan av, Penser hans mäklare på en annan firma. De föreslog att de båda skulle anställas på lilla Langenskiölds, utan lön men med fet provision på affärerna. – Ni kommer i grevens tid, sa friherren, för jag hade precis tänkt lägga ned firman. https://www.svd.se/a/L5v9w1/penser-fischer-och-langenskiold-vackte-borsen-efter-kreugerkraschen Tomas Fischer https://www.internetional.se/fischerpolt.htm

The Fed is determined to break Wall Street’s torrid and unwelcome rally, a bear-trap variant if ever there was one. Fed is openly irritated that markets have jumped the gun. It thinks investors have misunderstood the unscripted comments by Mr Powell as evidence of an early “pivot” in the interest rate cycle and a licence for fresh excess in tech stocks and frothy asset markets across the world.  It wishes to push up junk yield spreads and restore some Schumpeterian discipline to corporate finance. It wishes to tighten financial conditions as a mechanism for choking inflation.   It intends to accelerate the pace of quantitative tightening (QT) in September with $95bn of monthly bond sales. It intends to drain liquidity from the world’s dollarised financial system, and the rest of us can drop dead. Fight this Fed if you dare. The effect will be overwhelmed once QT begins in earnest next month. That is when the real trouble begins.  Over the last three months M1 money h...

 

 

Colorado River, The Yangtze River, Rhine, Po, Loire, Danube,  CNN August 20, 2022 https://edition.cnn.com/2022/08/20/world/rivers-lakes-drying-up-drought-climate-cmd-intl/index.html Extreme heat is slamming the world's three biggest economies all at once CNN Business August 18, 2022 https://edition.cnn.com/2022/08/18/business/heatwave-global-economy/index.html From the Rhine to the Tigris https://englundmacro.blogspot.com/2022/ 08/the-rain-in-spain.html 40 Million People Rely on the Colorado River. It’s Drying Up Fast https://englundmacro.blogspot.com/2021/08/40-million-people-rely-on-colorado.html Grundvattnet i Kalifornien https://englundmacro.blogspot.com/2021/05/grundvattnet-i-kalifornien.html

It’s not enough to just build renewable power. But just increasing the amount of clean power generation isn’t enough. We also need to be able to transmit the power.  And for various reasons, the existing power grid we have in the US isn’t up for that task. We speak with Rob Gramlich, founder and president of Grid Strategies, about what a modern supergrid would look like and how we can get there. Bloomberg 18 August 2022 https://www.bloomberg.com/news/articles/2022-08-18/transcript-why-we-need-to-build-a-more-robust-power-grid The importance of the grid, and just how much work needs to be done. Unless the U.S. and other developed countries reinvent their electricity grids, the revolution in clean energy that has given us radically cheaper solar and wind power will be for naught.  Solar panels and wind turbines are coming online at a record pace, and clean energy is getting cheaper and more reliable than ever before. But clean power sources are often situated far from cities whe...

Hans Wallmark svarar: M har hela tiden sagt att det tidigare resultatet från folkomröstningen gäller. Och att det inte är aktuellt med någon omprövning förrän det finns en tydlig viljeinriktning från svenska folkets sida. Nu är det väl någonstans runt 10 procent som vill se euron införde i Sverige. Rolf till Hans Wallmark Tack för svar. "en tydlig viljeinriktning från svenska folkets sida" Men du har därmed inte sagt att denna det svenska folkets vilja skall komma till uttryck genom en folkomröstning. Det bli bara halvt rätt. Duger inte.  19 augusti 2022  Min fråga var den här. Moderaterna tiger om EMU och Euron Detta hittar jag när jag söker hos moderaterna om euron och EMU. Den långa texten om EUs förtjänster innehåller inte ett ord om det. Euron och EMU ger 0 träffar när jag söker. Ping Hans Wallmark kan Du lova att Sverige inte går med i euron utan föregående folkomröstning? https://englundmacro.blogspot.com/2022/08/moderaterna-tiger-om-emu-och-euron.html  

  Fastighetssektorn hade en tung dag https://www.di.se/live/stockholmsborsen-stangde-i-rott-fastigheter-foll-tungt/

Edwards noted approvingly the recent commentary from Bob Prince, the co-chief investment officer at hedge fund giant Bridgewater, who expects a multi-year secular tightening cycle. Edwards calls the new phase a “great melt.” “In essence Bob Prince is saying that we are currently in only the first phase of a multi-year secular tightening cycle to address the after-effects from combining monetary and fiscal policy in a reckless fashion.    Bob notes that investors have mistakenly discounted only one quick tightening cycle and so they are going to be mightily surprised,” says Edwards. MarketWatch 18 August 2022 https://www.marketwatch.com/story/socgen-strategist-albert-edwards-declares-the-ice-age-is-over-bring-on-the-great-melt-11660820048 What does this mean? “Carnage awaits,” Edwards wrote There is no “carnage” yet, as investors appear to be in the buying mood. MarketWatch 28 October 2019 https://englundmacro.blogspot.com/2019/10/noted-bear-albert-edwars-earns-our.html

 – Bolagen har haft en kraftig tillväxt samtidigt som de skjutit över mycket av sin finansiering på kapitalmarknaden. Det kan bli en utmaning när de nu vill återgå till bankfinansiering, säger han. Det riktiga svaret på hur det går, kommer först när svenska fastighetsbolag visar hur de lyckas refinansiera sina billiga eurolån. Först ut är just Balder, som har ett eurolån på motsvarande 3,5 miljarder kronor som löper ut i mars 2023. Joel Dahlberg SvD 19 augusti 2022 https://www.svd.se/a/dnokqq/fastighetsbolag-riskerar-hamna-i-kreditkris En mer oroande utveckling är den på obligationsmarknaden, säger Kerstin Hessius, vd på Tredje AP-fonden https://englundmacro.blogspot.com/2022/07/en-mer-oroande-utveckling-ar-den-pa.html

 Wall Street thinks it’s bluffing. This could spell trouble for both of them.  WSJ 18 August 2022 https://www.wsj.com/articles/in-high-stakes-inflation-game-wall-street-bets-the-fed-is-bluffing-11660830685 Jerome Powell really means what he says When they said that “there was little evidence to date that inflation pressures were subsiding,” they meant it.  When they said that inflation “would likely stay uncomfortably high for some time,” they meant it. Fed’s Bullard says he is leaning toward backing 0.75 percentage point hike in September MarktWatch 18 August 2022 https://www.marketwatch.com/story/the-fed-is-not-getting-cold-feet-about-wrestling-inflation-to-the-ground-so-stop-misreading-its-minutes-11660851861 Fed’s Bullard Favoring 0.75-Percentage-Point, says he isn’t ready to say inflation surge has peaked  WSJ 18 August 2022 https://www.wsj.com/articles/feds-bullard-leans-toward-favoring-0-75-percentage-point-september-rate-rise-11660842768 The bullish interpret...

  The Federal Reserve says it is going to keep raising interest rates.  Wall Street thinks it’s bluffing. https://englundmacro.blogspot.com/2022/08/the-federal-reserve-says-it-is-going-to.html

 Detta hittar jag när jag söker hos moderaterna om euron och EMU. Den långa texten om EUs förtjänster innehåller inte ett ord om det. Euron och EMU ger 0 träffar när jag söker. Ping Hans Wallmark kan Du lova att Sverige inte går med i euron utan föregående folkomröstning? Så länge vi har vår egen valuta kan vi liksom UK, om vi vill, lämna tåget sm går mott en federal stat. Om detta borde det talas om inför ett val.  https://moderaterna.se/var-politik/eu/ Rolf Englund på Facebook 17 augusti 2022 Ni som tiger kan gärna läsa denna bok. https://www.bokus.com/bok/9789100177799/medloparna-en-berattelse-om-europas-glomska/

Det har väl inte fått den uppmärksamhet det anstår en grundlagsförändring. En av de som tiger är Hans Wallmark. --- Riksdagen beslutade den 2 juni 2022 dels att anta ändringarna i grundlagen som vilande, dels att behandla förslaget om ny riksbankslag och övriga lagändringar efter valet i september. För att ändra en grundlag krävs att riksdagen fattar två beslut med likadant innehåll och att det hålls val till riksdagen mellan de två besluten. Det första beslutet innebär att grundlagsförslaget antas som vilande. Genom det andra beslutet antas grundlagsförslaget slutligt. Vid samma tillfälle planerar riksdagen att besluta om den nya riksbankslagen och de andra lagarna. Hela det nya legala ramverket för Riksbanken ska enligt regeringens förslag börja gälla den 1 januari 2023. https://www.riksbank.se/sv/om-riksbanken/styrdokument/riksbankslagen/forslag-till-ny-riksbankslag/  

 but also wanted to gauge how their monetary tightening was working toward curbing US inflation. “As the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation,” according to minutes of the Federal Open Market Committee’s July 26-27 meeting released Wednesday in Washington.  “Many participants remarked that, in view of the constantly changing nature of the economic environment and the existence of long and variable lags in monetary policy’s effect on the economy, there was also a risk that the committee could tighten the stance of policy by more than necessary to restore price stability,” the minutes showed.  Following the release, two-year Treasury yields and the dollar pared gains, while US stocks trimmed losses. Bloomberg 17 augusti 2022  https://www.bloomberg.com/news/articles/2022-08-17/f...

 

 How Spain is coping with the heat https://www.dw.com/en/spain-coping-with-the-heat/a-62826918 På sina resor han förnam, hur väl försynens nåd reglerat,  som floder överallt placerat där stora städer stryka fram. - Falstaff, fakir skrifter av Axel Wallengren. From the Rhine to the Tigris Global warming disturbs the jet and gulf streams that used to reliably circulate our atmosphere and oceans. Lake Mead — where the Hoover Dam blocks whatever remains of the Colorado River — is drying into a puddle and displaying everything from sunken boats to dead bodies. As these rivers, from the Yangtze to the Colorado, slowly evaporate — their water molecules destined to inundate islets or coastlines elsewhere in the world — the emphasis among scientists and policymakers is shifting to “adaptation.”  We’ll certainly need a lot of that.  Andreas Kluth Bloomberg 17 augusti 2022 https://www.bloomberg.com/opinion/articles/2022-08-17/rhine-tigris-river-water-levels-are-grave-climate-ch...

 

Vår prognos för Riksbanken är att styrräntan uppgår till 2,25 procent under våren 2023 och att de därefter pausar ytterligare höjningar.  Det betyder rörliga boräntor på knappt 4 procent.  Handelsbanken 16 augusti 2022 https://newsletter.handelsbanken.se/article/434B5C477243475D40734043504B71/31314897/7152558 https://www.dagensps.se/privatekonomi/bostad/sa-hoga-borantor-bor-svenskarna-rakna-med/ Styrränta och inflation https://englundmacro.blogspot.com/2022/08/styrranta-och-inflation.html

 The Panic of 1907  The Great Depression The Treasury-Fed Accord The Volcker Shock The 1987 Stock Market Plunge Sept. 11 The Global Financial Crisis and Great Recession The Covid-19 Pandemic Tom Orlik and David Wilcox Bloomberg 16 augusti 2022 https://www.bloomberg.com/news/features/2022-08-15/how-the-federal-reserve-responded-to-8-economic-crises Ja, det är ju märkligt att människor inte tänker på vad som hände 1907 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://www.internetional.se/nesrydenfelt.htm