Visar inlägg från oktober, 2022

Börsen 31 oktober 2022

  October was a good month for all the major indexes:  The Dow rose 14%--its best monthly rise since 1976.  Energy stocks lead the sector gainers.

Vilken valutakurs är rimlig att använda när lönerna ska jämföras med konkurrentländer?

Den som utgår från att växelkursen så att säga hör hemma vid och på sikt ska tillbaka till 9 kronor per euro, kan hävda att svenska kostnader inte alls är särskilt konkurrenskraftiga mot Tysklands. En naturlig följdfråga blir dock: Hur länge ska en kronförsvagning pågå för att anses vara mer än tillfällig?   Det har gått åtta år sedan kronan var i närheten av 9 kronor per euro. I dag är kursen 20 procent svagare, omkring 11 kronor per euro. Nils Åkesson DI 31 oktober 2022 Industrifacken: Svensk industri går strålande – så facken accepterar 5% reallönesänkningar Lars Wilderäng 2022-10-31

Crackpot movements that eventually fail, but not before causing serious damage

Karl Marx was a crackpot. So was the John Birch Society in its mission to fight communism “behind every tree.”  The latest is Modern Monetary Theory and unlimited dollar creation for government spending, which caused today’s runaway inflation. In the 1970s, the Club of Rome insisted that for the world to be ecologically sound, we needed a “no-growth economy.” This was as dumb as the debunked Malthus theory that population growth would outstrip food.  The disgraced Club of Rome thankfully went dormant. But it’s baaaack. The new craze is “de-growth.”  Andy Kessler WSJ 30 October 2022

Inflationstakten (HIKP) i euroområdet steg till 10,7 procent i oktober

 jämfört med 9,9 procent i september. DI 31 October 2022

Swiss National Bank posts $143 billion loss

The appreciation of the Swiss franc and rising interest rates hit its investments in gold, foreign exchange and capital markets. MarketWatch 31 October 2022 Credit Suisse and Swissair

It’s a Lagged World

Mainly because the effects of a strong dollar on trade, while they can be powerful, take a long time to materialize.  In international macroeconomics, one of my home academic fields, the general view — shaped in large part by the effects of a rising dollar in the early 1980s, then a big fall after 1985 — has been that the negative impact of a strong dollar on the trade balance takes two years or more to fully manifest.  Following that theory, here’s a plot of a measure of the average value of the dollar against other major currencies, adjusted for inflation, versus the real trade deficit as a percentage of G.D.P., in which I’ve lagged the exchange rate by eight quarters: We have yet to see anything like the full effects of Fed tightening on the economy. So does the Fed need to do more, or has it already done too much? It’s a judgment call. Over the past year, optimists like me were wrong, while pessimists were right. But past results are no guarantee of future performance. Paul Krugman

Energy in the future, where will it come from?

The question is not whether we will use considerably more energy in the future, but where will it come from? Source: Our World in Data Population is projected to grow 25% in the next 25‒30 years. Source: Anthropocene Magazine There is only so much energy that solar and wind can produce in the near term (5‒10 years).  The rest will have to be made up by traditional power sources, some of which are renewable like geothermal and hydro, some of which are carbon free like nuclear, but given the natural limits on production it still means oil and gas will remain a significant contributing factor to our energy usage. John Mauldin 28 October 2022

Börsen 28 oktober 2022

  Two-, 10- and 30-year Treasury yields finished the New York session higher on Friday, but had their biggest weekly declines in at least three months as traders considered the possibility that policy makers might back off aggressive rate hikes by year-end. Data released on Friday showed that U.S. inflation is still running hot. A measure of the September PCE price index that strips out volatile food and energy costs rose a sharp 0.5%, matching Wall Street’s expectations. The PCE is regarded as the Fed’s preferred inflation indicator.

The Wile E. Coyote moment

 He would run off the edge of a cliff, and continue running into midair. Only once he stopped, looked down, and realized that he was in midair, did he fall.  He thus gave the market the invaluable concept of a Wile E. Coyote moment, when investors realize they’ve been running without support for a long time, and prices that should have long since been gradually coming down suddenly collapse. The laws of physics make what the coyote does impossible. But markets are driven by human nature and crowd psychology.  Coyotes can defy gravity for years in the markets — but generally there comes a point when the game is up.  And this week has seen the FANGs (the acronym for the huge internet platform groups that originally stood for Facebook, Amazon, Netflix and Google when coined) respond to gravity at last. The market value of Meta has slipped by $676 billion this year John Authers Bloomberg 28 oktober 2022

Börsen 27 oktober 2022


The average rate on a 30-year fixed mortgage jumped above 7%

 Of course, mortgage rates are supposed to rise as the Federal Reserve hikes benchmark interest rates. That’s how tighter monetary policy works — by making the cost of credit more expensive.  But the average borrowing cost on a 30-year fixed-rate mortgage now far exceeds the yield on equivalent US Treasuries, with the difference between the two at the highest level on record. It’s not because people are afraid house prices are going to go down People might refinance their home loans during periods of low interest rates, or simply move and sell their house.   In times of low rates, MBS investors who get their loan principal paid back early have to reinvest that money at potentially lower yields. But the transition from low rates to higher ones means that suddenly investors are left with longer-term assets, as borrowers hold onto the lower mortgage rates they locked-in previously. In times of higher interest rates, early repayments disappear and investors don’t have as much money to inve

Much better off going with the herd

 Some value managers lost their jobs — perhaps most famously Tony Dye, who refused to hold US equities in 1999 because they were so overvalued.  He was fired from his job heading Phillips & Drew Fund Management in early March 2000, just as he was about to be proved right.  Many who kept their jobs had seen so much cash go out of the door that they regretted making the “right” call; asset managers are generally paid a percentage of their assets under management, rather than for their performance, so they’d have been much better off going with the herd. John Authers Bloomberg 27 oktober 2022 NOBODY KNOWS ANYTHING They don’t want to be what investor Mark Kritzman calls “wrong and alone.”

ECB to Double Rates - to 1.5%

The motivation is inflation that, at almost 10%, is five times the ECB’s medium-term target. Alexander Weber Bloomberg 27 oktober 2022 The euro has slumped against the dollar after the ECB vowed to keep printing money until 2024. The central bank said it will continue its programme of quantitative easing “for an extended period time”. It also said its pandemic-era bond-buying programme will continue until at least the end of 2024. Officials also toughened the terms on more than €2 trillion ($2 trillion) of ultra-cheap pandemic-era loans to banks known as TLTROs.  The agreements had become problematic after the recent rapid rate hikes allowed lenders to park TLTRO cash in ECB accounts and earn a risk-free income. Targeted long-term refinancing operation - TLTRO https://en

Klimatmålet om max 1,5 grads uppvärmning av jorden är med ”största sannolikhet ” körd

 Om inte världens ledare kommer med radikalt förnyade klimatlöften så går vi mot tre graders uppvärmning innan seklets slut. En sådan hetta kommer på många platser att leda till systemkollaps av el-och vattenförsörjning. Enda ljusglimten i lägesrapporten från FN är att världens länder kommer att öka sina utsläpp med 10,6 procent till 2030, i stället för 13,7 procent enligt förra årets prognos. Men ländernas klimatlöften är ljusår ifrån IPCC:s beräkning att utsläppen måste minska med 45 procent till 2030 för att hålla uppvärmningen kring 1,5 grad. SvT 26 oktober 2020 Climate Tipping Points May Be Triggered Bloomberg 8 september 2022 We will eventually get to net-zero emissions. Solar and wind energy, as well as storage batteries, keep getting cheaper.  We just won’t get there in time to prevent ruinous climate change. Simon Kuper FT 12 November 2020 htt

Börsen 26 October 2022


The World’s Biggest Source of Clean Energy - hydropower - Is Evaporating Fast

 From California to Germany and China, climate change-fueled heatwaves and droughts have shrunk rivers that feed giant hydropower plants. China’s Three Gorges Dam is an awe-inspiring sight, a vast barrier across the Yangtze River Dams are the world’s largest source of clean energy, yet extreme weather is making them less effective in the battle against climate change. Globally, hydropower generates more electricity than nuclear and more power than wind and solar combined.  Grid operators can use them as a dispatchable source — one that can be almost instantly switched on when it’s needed, similar to coal or gas. Except when there’s no water. The worst drought in 1,200 years this year in the US West means parched reservoirs can only churn out half of the power they normally supply to California, increasing the risk of rolling blackouts across the state. Lake Mead, the reservoir behind the Hoover Dam on the Colorado River in the Western US, provides 90% of Las Vegas’s water supply as wel

Hungary head for crisis as Brussels cuts off lifelines

Shortly after Orban’s election in April, where he soundly defeated a pro-EU coalition of all the opposition parties, the Commission froze €21bn of EU funds. Brussels accused Budapest of sliding back on the rule of law, which it said puts EU money at risk. Zoltan Kovacs, a minister and Orban’s international press spokesman, blames an ideological war between Western liberal EU member states and the Conservative East for the impasse. “This is a sign of a war of culture which is trying to suggest there is no place anymore for medium and small size countries to have a national patriotic approach,” Kovacs says. “These ideologised topics like gender and LGTBQ rights are for some reason on the top of the agenda but they are not right.” Telegraph 26 October 2022 Habsburgs picknick och slutet på järnridån och kommunismen Mer än 600 östtyskar flyr den 19 augusti 1989 från Ungern till Österrike. De

Roubini Megathreats

The Ten Trends that Imperil Our Future, and How to Survive Them Nouriel Roubini 2022-10-20 Central banks are in both a stagflation trap and a debt trap If they increase interest rates enough to bring inflation down to 2%, they will cause a severe economic hard landing.  And if they don’t – attempting instead to protect growth and jobs – they will be left increasingly far behind the curve, leading to a de-anchoring of inflation expectations and a wage-price spiral. Nouriel Roubini  Project Syndicate 15 November 2022 The Great Moderation has given way to the Great Stagflation Nouriel Roubini ProjectSyndicate 3 October 2022 https://englundmacro.blogspo

The Fed’s hope lies in a behavioral economic theory called reverse wealth effect

 US stocks extended their gains for the third day Tuesday with the S&P 500 climbing 1.7% as investors shifted their focus to the next batch of earnings and away from the numerous geopolitical risks.  It’s now regained 5% since the low set soon after the release of the latest CPI data on Oct. 13. Such a move upward is generally celebrated by traders — but they should know that stocks’ gains are robbing the Fed of the wealth effect it needs before it can pivot toward lower rates. The Fed’s hope, he said, lies in a behavioral economic theory called reverse wealth effect, in which consumers spend less as their wealth decreases. That should lead consumers to buy less stuff, particularly on big-ticket items like homes. And that should either prevent or at least slow the much-feared inflationary spiral. Same goes for the US housing market Keeping the stock market down for a while matters far more to today’s Fed under Jerome Powell than it did to the Paul Volcker Fed of the early 1980s. Un

Börsen 25 oktober 2022

  U.S. stock indexes rose on Tuesday, continuing a market rally that  propelled the Dow Jones Industrial Average to a six-week high.

Central banks are draining liquidity from the international system at a frightening pace.

This is causing serious ructions in the credit and currency markets.  It entails unknown risks through the nexus of shadow banking, already exposed in the entrails of the UK’s pension system, but ubiquitous in various forms across swaths of global finance.  Ambrose Evans-Pritchard Telegraph 25 October 2022

Carl-Johan Westholm, Timbro och skandalen med Gina Gustavsson

 Timbro anordnade i dag, den 25 oktober 2022, ett minnesseminarium tll Carl-Johan Westholms ära. Carl-Johan Westholm disputerade 1976 i statskunskap i Uppsala på avhandlingen »Ratio och universalitet. John Stuart Mill och dagens demokratidebatt.«  Han var 1978 en av grundarna av och verkställande ledamot i Ratio, då ett förlag med Uppsala universitets just avgångne rektor Torgny Segerstedt som ordförande i Ratios vetenskapliga råd. Seminariet inleddes av Gina Gustavsson, Senior lecturer and associate professor (docent) at the Department of Government, Uppsala University, Associate member of Nuffield College, Oxford University och Independent columnist in Dagens Nyheter Hennes anförande handlade till 90 procent om hennes egen bok, Det Öppna Sinnelaget - Och Dess Fiender. Hon framförde där tanken att Mills kvinna hade haft stort inflytande över hans tänkande. Hennes bok har således ett klart genusperspektiv.

Even super-tight policy is not bringing down inflation

 There are lags, sometimes long ones, between tighter monetary policy and lower inflation.  You would be brave to bet that Hikelandia’s inflation will soon be anywhere near central banks’ targets, even if conditions begin to improve. The Economist 23 October 2022 BIS: Leading economies are close to “tipping” into a high-inflation world...

Britain’s Decline From Winston Churchill to Liz Truss and Rishi Sunak

The serial implosions of four Tory prime ministers—David Cameron, Theresa May,  Boris Johnson  and Ms. Truss—made a laughingstock of what was once the most successful political party in the Western world. WSJ 24 October 2022

Börsen 24 oktober 2022

Dow Closes at Highest Level in Six Weeks  

How Cold War II Could Turn Into World War III

The Persian empire is now the Islamic Republic of Iran; one might say the Holy Roman Empire has been reincarnated in the form of the European Union, at once extensive, German-centered and weak. It is not civilizations that clash, but empires.   Biden’s plan for Russia might be described cynically as fighting to the last Ukrainian, but to what end? Ostensibly the US is determined to “support Ukraine in its fight for its freedom,” but the real goal is “to degrade Russia’s ability to wage future wars of aggression.” That is why the administration has made almost no effort to broker a cease-fire, much less peace. The White House seems to want this war to keep going, though I suspect that will change after the mid-term elections. Yet there is a much worse scenario, in which we get something closer to the 1940s, with regional conflicts coalescing into something like World War III — albeit with smaller armies, many unmanned weapons systems, and far more powerful and accurate bombs. What makes

En tredjedel av alla byggprojekt väntas skjutas upp eller ställas in

Enligt Byggfakta väntas en tredjedel av alla byggprojekt med planerad byggstart mellan 2022 och 2024 skjutas upp eller ställas in.  Den faktor som driver nyproduktionsmarknaden allra mest är tron på en positiv prisutveckling. Först då vågar man köpa någonting med inflyttning två år framåt i tiden.   DI 21 Oktober 2022

The Roman philosopher Seneca’s essay “On a Happy Life”

Full of lessons that are as pertinent today as they were two millennia ago. The Atlantic 15 September 2022

The Mississippi River Is Drying Up, Disrupting a Vital Supply Lane

 WSJ video 21 October 2022 Waterways have dried to a trickle thanks to droughts and heat waves A Third La Niña Winter Will Likely Extend Record Drought in U.S. West Warmer temperatures are also forecast for Southwest, Gulf Coast NOAA’s Climate Prediction Center on Thursday forecast a drier-than-average winter across the South, but wetter-than-average conditions for areas including the Ohio Valley, Great Lakes, northern Rockies and Pacific Northwest. WSJ 20 October 2022 NOAA’s Climate Prediction Center

Myt och verklighet konflikt i Italien

 Den retoriskt självsäkra suveräniteten krockar med det starka beroendet av kassaflöde från EU. Bakom ligger långvarig ekonomisk stagnation, hög skuldsättning och växande sociala klyftor. Giorgia Meloni, 45, efterträder Mario Draghi, 75, och tar ledningen för regering nummer 68 under efterkrigstiden.  Giorgia Meloni tar över den vacklande regeringsmakten i Italien vid en tidpunkt då det råder stormvarning över hela Europa. Förmågan att navigera i turbulensen avgör hur pass flyktigt hennes styre blir. Rolf Gustavsson  SvD 21 Oktober 2022

Euroland. After more than a decade of free credit and money printing, the whole system is just waiting to keel over.

 Europe has built a Maginot Line which might safeguard against a repeat of the sovereign debt crisis of a decade ago, but that's not where the onslaught will come from. The substantially unregulated shadow banking sector is today bigger than the entirety of the banking industry.  Who knows what nasties are incubating in its murky depths, just waiting to hatch on a wave of rising interest rates. And when they do, the European Central Bank will face exactly the same conundrum as the Bank of England.  Containing the risk of dysfunction by intervening in bond markets will run counter to the ECB's main function of fighting resurgent inflation, which requires tighter monetary policy, not the loosening implied by asset purchases.  There is a real danger that any such intervention will be seen not as safeguarding financial stability but as fiscal dominance, and therefore add to the volatility in bond markets. I can't tell you when the eruption will happen, or where it will initiall

Börsen 21 oktober 2022


The Jewish makers of modern finance have not gone unchronicled

 Tales of the super-rich never cease to fascinate. Stephen Birmingham’s “Our Crowd: The Great Jewish Families of New York” (1967) spent dozens of weeks on the bestseller list. “The Lehman Trilogy” has been staged in 24 languages. It’s not just the rags-to-riches fable that keeps the audience engrossed. There is a much deeper curiosity in those who made mountains of money and somehow managed to keep it. While the Rothschilds and Lehmans were creating markets in London, Paris and New York, a family of Baghdad Jews were extending a financial network from India and China to London and beyond.  David Sassoon treated his eight sons and six daughters equally, scrutinizing them for entrepreneurial talent. His elder sons Abdullah and Elias were sent abroad, Abdullah to Calcutta and London, Elias to Hong Kong and Shanghai. The Sassoons became British citizens.  The British held a monopoly on selling opium to China. Cotton was small beginnings. The Sassoon fortune would be made in the opium trade

The world’s deepest and most liquid fixed-income market is in big, big trouble.

 For months, traders, academics, and other analysts have fretted that the $23.7 trillion Treasurys market might be the source of the next financial crisis.  Then last week, U.S. Treasury Secretary Janet Yellen acknowledged concerns about a potential breakdown in the trading of government debt and expressed worry about “a loss of adequate liquidity in the market.”  Now, strategists at BofA Securities have identified a list of reasons why U.S. government bonds are exposed to the risk of “large scale forced selling or an external surprise” at a time when the bond market is in need of a reliable group of big buyers. “We believe the UST market is fragile and potentially one shock away from functioning challenges” arising from either “large scale forced selling or an external surprise,” said BofA strategists Mark Cabana, Ralph Axel and Adarsh Sinha. “A UST breakdown is not our base case, but it is a building tail risk.” MarketWatch 20 October 2022

Sven Hagströmer en av Sveriges främsta investerare och entreprenörer

 Året före kraschen under Svarta måndagen 1987 varnade Sven Hagströmer för börsen, vilket gjorde att han då förlorade kunder. Nu är han på nytt oroad över ekonomin. ”Det finns fortfarande fallhöjd”, säger finansmannen om börsen. Det är ohyggligt mer komplicerat i dag. Centralbankerna har balansräkningar som inte ens skådats under krigstid, där de köpt obligationer och annat för att hålla räntorna nere. Till skillnad från andra statsfinanser så har Sverige ordning på ekonomin, så där finns det krut kvar.” Hushållens höga belåning oroar honom inte lika mycket, men lånetaket på 85 procent bör hållas kvar. ”Bankerna styr utvecklingen av bopriserna, så de har en viktig roll där.” Samtidigt är det negativa realräntor när bolånen understiger inflationen.  ”Det är fortfarande väldigt billigt att låna. Riksbanken har hela tiden legat efter.” DI 21 oktober 2022

På område efter område har unionen tagit sig an makt som den inte borde ha

 I Sverige har vi inte riktigt insett detta. Vi lever fortfarande i villfarelsen att den europeiska unionen är vad vi vill att den ska vara – ett europeiskt samarbete för en starkare röst i världen, med en inre marknad som gör oss alla rikare. LÄS MER: EU-kommissionen har fått storhetsvansinne Dessvärre har EU tagit över flera politikområden på ett sätt som på allvar hotar medlemsländernas självbestämmande. EU vägrar klassa den svenska vattenkraften, en viktig komponent i vår klimatneutrala energiproduktion, som grön. Det får konsekvenser för möjligheten att producera el i Sverige. Vi har den ekonomiska politiken, och inte minst den coronafond som EU-kommissionen införde. Det var i praktiken ett sätt att rädda euron. Men trots att Sverige inte är med i eurosamarbetet tvingades vi bidra med 150 miljarder kronor. Här har den nya regeringen en viktig uppgift. Det går inte att tuffa på som vanligt. Sverige m

Stefan Ingves tid som riksbankschef

 Låt oss beskriva penningpolitiken med hjälp av tre figurer. Den första illustrerar Riksbankens styrränta, den andra Riksbankens balansräkning i förhållande till BNP och den tredje inflationen i konsumentpriser och bostadspriser. Figurerna täcker tiden från 2006 till september 2022.  Riksbankslagen från 1999 definierade  målet för penningpolitiken som att ”upprätthålla ett fast penningvärde”- inte som ett inflationsmål med en i lag inskriven exakt siffra.  Förarbetena gav Riksbanken rätt att anpassa målet efter nya omständigheter. Genom att ensidigt hålla fast vid inflationsmålet 2015 blev penningpolitiken kortsiktig snarare än långsiktig.  Fredrik N G Andersson och Lars Jonung DI 20 oktober 2022 Om Riksbanken på denna blogg Om Lars Jonung på denna blogg

Global Housing Market Pain Has Echoes of a Crash 30 Years Ago

UK Canada China Australia Sweden  Bloomberg 20 October 2022 A global house-price slump is coming It won’t blow up the financial system, but it will be scary Over the past decade owning a house has meant easy money. Prices rose reliably for years and then went bizarrely ballistic in the pandemic.  Yet today if your wealth is tied up in bricks and mortar it is time to get nervous.  In America prospective buyers have been watching, horrified, as the 30-year mortgage rate has hit 6.92%, over twice the level of a year ago and the highest since April 2002. The good news is that falling house prices will not cause an epic financial bust in America as they did 15 years ago. , Some other places, such as South Korea and the Nordic countries, have seen scarier accelerations in borrowing, with household debt of around 100% of gdp. Worldwide, homes are worth about $250trn (for compariso

Börsen 20 oktober 2022


Have the bond vigilantes who attacked the U.K. killed off modern monetary theory?

 MMT proponent Stephanie Kelton says that’s nonsense. “It does not follow that if you aren’t the world’s reserve currency, then the bond vigilantes can show up at any time and strip you of your capacity to run the government programs that you want to run,” she added.  “You want to give a tax cut, you can give a tax cut. You want to increase spending, you can increase spending. There are potential inflationary consequences and there are potential exchange rate implications. MMT never said otherwise.” MarketWatch 19 October 2022

Storbankernas medverkan i den enorma tvätten av pengar från Ryssland och forna Sovjet är en skandal

 Enbart genom Swedbank tros 3 000 miljarder kronor i misstänkta transaktioner ha passerat. Det är den hittills största kända misstänkta penningtvättshärvan i världen. Expressen 30 september 2022

Fastighetssektorn i Sverige måste nästa år återbetala 10 miljarder dollar, 111 miljarder kronor

  Refinansieringskravet uppgår, skriver nyhetsbyrån, till 41 miljarder dollar, det vill säga drygt 456 miljarder kronor, till slutet av 2026. Som orsak till att den här situationen uppstått anges obligationsaffärer med rörlig ränta och korta löptider, samtidigt som räntorna nu stigit kraftigt. Svenska banker är också hårt exponerade mot fastighetsbolagen, vilket ökar risken för spridningseffekt vid en eskalerande kris som i värsta fall slutar med en krasch. Bloomberg Dagens PS 19 Oktober 2022 Bankernas utlandslån 8.000 miljarder kronor Patricia Hedelius SvD 8 oktober 2018

“Both interest rates and inflation rates will settle down between 4% and 5%, and ...

 ... we are going to go into a stagflation in the economy,”  Thomas Peterffy, chairman and founder of Interactive Brokers   Stock-market selloff may mean another 20% drop for S&P 500 MarketWatch 19 October 2022 Why a 4% inflation target may be coming Henry Curr The Economist 6 October 2022

Börsen 19 oktober 2022


2-4-6-8! Capitulate!

 Lots of investors want the Federal Reserve to pivot, as you might have read recently. They’re almost equally desperate for markets to capitulate — give up all hope, hit rock bottom, admit that all fears are coming to fruition, and create a sound base to buy.  Compared to the last two decades, investors are 2.6 standard deviations overweight cash and three standard deviations underweight in equities. If this isn’t total capitulation, it’s nearly so. Hope is close to lost. The perception of riskiness might be driven by widespread complaints that liquidity is running out. This is the natural consequence of tighter money from the central banks and greatly increases the risk of financial accidents.  A belief that liquidity is drying up leads naturally to predictions that the Fed will soon have to execute its “pivot” and start to cut rates again.  But is this just wishful thinking? And why exactly do they expect the Fed to turn around? Increasingly, it’s because they believe markets will br

Praxis är att taket ska hållas, varför ska man annars ha det?

För att hålla det nuvarande taket skulle krävas en massiv åtstramning. Ska den nya regeringen istället – trots att den säger sig värna om ramverket – det första den gör riva upp ett riksdagsbeslut om utgiftstak? SvD fick på tisdagen inget rakt svar på frågan från den nya finansministern: – Vi återkommer i budgetfrågan, om utgiftstak och andra delar, sa Elisabeth Svantesson då. Anders Billing SvD 19 Oktober 2022 Ramverket

Lesson in Lag Time

 There’s still a lot we don’t know about how monetary policy works, and perhaps more crucially, when it will work. The Federal Reserve has been tightening for about six months now and inflation still doesn't seem to be budging.  Today inflation expectations are clearly unanchored. The Fed keeps saying inflation will be back to 2% but so far it's not The bond market has a terrible track record predicting inflation. If history is any guide, bond traders are the last to know when inflation is about to change. While interest rates seem high compared with recent history, they are actually still too low to have a big impact on economic activity. The rate that matters is the Fed's policy rate minus inflation We may be in store for another several months or even a year of high inflation accompanied by more rate increases before the Fed’s policy has any real impact on much of anything. The day we can start talking about interest rates coming down is still a long way off. Allison Sch

Banks are now sitting on record mark-to-market losses

 US banks’ securities portfolios ballooned during the pandemic, as deposits surged thanks to government support for households and businesses. With insufficient loan demand to soak up the flows, the excess fell to banks’ internal investment arms to manage.  US lenders currently have $5.66 trillion of securities on their balance sheets, alongside $3.19 trillion of uninvested cash Inconveniently, most of the banks’ inflows took place during a period of low rates Banks can hold securities in a “held-to-maturity” (HTM) bucket that prohibits them from selling, or an “available-for-sale” (AFS) bucket that allows them to trade around positions.  The advantage of “available for sale” is that it affords more flexibility in a shifting rate environment; the disadvantage is that losses have to be marked to market and deducted from the bank’s capital base. Given collapsing securities prices coupled with supersized securities portfolios, banks are now sitting on record mark-to-market losses.  Unreal