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2023-01-28

Soft Landing - Possible? Yes, it’s possible, but I wouldn’t call it likely

Right now, some economists—not a majority but more than a few—think the Fed can deliver a “soft landing.” That would mean inflation drops to a more tolerable level, unemployment doesn’t rise much from today’s historic lows, and a mild recession, if one happens at all.

Possible? Yes, it’s possible, but I wouldn’t call it likely.

I get tired of saying this, but someone obviously needs to:

“Hiking at a slower pace” is not the same as “pausing.”

“Pausing” is not the same as “cutting.”

Higher interest rates keep working even after they stop rising.

The longer they stay high, the more economic activity they suppress, the more loans get reset at less manageable levels, and the more cash that would have gone into consumer spending goes toward debt service instead. 

All this adds up and will keep adding up for a long time—possibly years.

John Mauldin 27 January 2023

https://www.mauldineconomics.com/frontlinethoughts/growth-pains


A soft landing - possible but unlikely. En mjuk landning - möjlig men osannolik

En mjuk landning - möjlig men osannolik. Wolf och Dudley

https://englundmacro.blogspot.com/2022/05/a-soft-landing-possible-but-unlikely.html




Expect a showdown between the ECB and markets - a 15-year high of 2.5%

 “We expect a showdown between the ECB and markets,” said Nomura economist Andrzej Szczepaniak. “It is clear that markets appear eager to challenge the ECB’s ‘multiple 50 basis point hikes’ mantra.”

ECB’s Lagarde Says ‘Stay the Course’ Is Her Policy Mantra

Swaps indicate a half-percentage point rate rise next Thursday is a done deal, which would take the deposit rate to a 15-year high of 2.5%. 

Yet traders see just a 70% chance of another 50 basis point hike in March and then begin to price in cuts to the key rate from around September. 

According to Florian Ielpo, head of macro at Lombard Odier Investment Managers, the ECB and Fed need to keep ramming home the message that the war on inflation isn’t over. 

“Their job is to convince markets that the rate cuts that have been priced have no place to be there,” he said.

Bloomberg 28 januari 2023

https://www.bloomberg.com/news/articles/2023-01-28/it-won-t-take-much-for-the-ecb-to-crush-rate-cut-bets-next-week




2023-01-26

US inflation set to fall sharply in the coming quarter - (M2)

 First of all, we see that in the first half of 2023, inflation drops basically equally fast in both scenarios and the reason for that is that since we have assumed a six-month lag between changes in money supply growth (and therefore in the P-gap) it will take six months before any change in monetary policy is visible in inflation.

Therefore, in the model set-up any slowdown in inflation in the coming six months will be due to the slowdown in money supply growth we saw during 2022.

The Market Monetarist 25 January 2023

https://marketmonetarist.com/2023/01/25/us-inflation-set-to-fall-sharply-in-the-coming-quarters/


The Great Recession was not caused by a banking crisis but rather by excessively tight monetary policy

The Market Monetarist 13 September 2021

https://englundmacro.blogspot.com/2021/09/the-view-of-leading-market-monetarists.html




Riksbanken chockhöjer räntan från 0 till 2,5 procent

Det handlar om hemproducerade risker, som enligt Winsth härrör från alla år med allt för låg styrränta och stödköp som tryckt ned marknadsräntor trots goda tider. Detta har eldat på skuldsättningen bland både hushåll och företag och blåst upp priserna på bostadsmarknaden.

”Det gör att svenska hushåll är väldigt räntekänsliga”, säger hon.

DI(TT 25 Januari 2025

https://www.di.se/nyheter/riksbanken-sagas-risken-ar-att-man-knacker-bostadsmarknaden/


Det skulle innebära en listränta på 5,30 procent för den rörliga 3-månadersräntan i juni, vilket är fem punkter mer än bankens senaste prognos som kom strax före julhelgen. Räntan ligger då på en nivå som banken inte haft sedan hösten 2008. Utgår man från Nordeas snittränta från december skulle den i så fall hamna på 4,43 procent.

”Den yngre generationen och många som är aktiva i bostadsmarknaden har aldrig varit i närheten av de här räntorna. Den rörliga räntan som höjdes i november har heller inte fått full effekt i plånböckerna. Det får den först i februari, och då höjer man igen. Så det kommer mer och det är jag inte helt säker på att alla hushåll har med i kalkylerna”, säger Annika Winsth.

DI 26 januari 2023


Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.

Rolf Englund blogg 5 december 2009

https://englundmacro.blogspot.com/2014/08/skriande-uppenbart.html




2023-01-25

Money Supply Shrinks for the First Time

 


Ultimately, as M2 retreats further it should continue to help cool inflation as the dip in money reserves crimps demand and lowers “capacity to support bank loans and other financing for households, firms, and financial market transactions,” said Nathan Sheets, Citi’s global chief economist.

But investors shouldn’t assume that declining M2 will automatically signal an economic slowdown, writes Merion Capital Group’s Richard Farr. M2 “needs to fall by at least another trillion dollars,” to even matter, he said.

MarketWatch Barrons 24 January 2023

https://www.marketwatch.com/articles/m2-money-supply-recession-51674569554?mod=mw_latestnews


Central Bankers Should Prioritize Growth Over Their Pride

Policymakers risk overtightening in an effort to restore their inflation-battered credibility.

Marcus Ashworth Bloomberg 24 januari 2023

https://www.bloomberg.com/opinion/articles/2023-01-24/central-bankers-should-prioritize-growth-over-dented-pride



Grantham and the Superbubble

This time last year, Grantham made an aggressive call that US stocks were in a true bubble that would soon burst. 

Grantham is more or less sticking to his guns. He thinks the bubble has only started to burst. His forecast is for a drop of between 17% and 20% in this calendar year. But...

What could possibly go wrong with his prediction?

No Recession

The Fed Pivot

John Authers Bloomberg 25 januari 2023

https://www.bloomberg.com/opinion/articles/2023-01-25/jeremy-grantham-and-bitcoin-want-you-to-cheer-up


Jeremy Grantham says ‘easiest leg’ of stock-market bubble burst is over.

S&P 500 could drop 17% in 2023 to test 3,200 level

MarketWatch 24 January 2023

https://www.marketwatch.com/story/jeremy-grantham-says-easiest-leg-of-stock-market-bubble-burst-over-heres-whats-next-11674584001?mod=home-page


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

MarketWatch 20  January 2022

https://englundmacro.blogspot.com/2022/01/us-market-approaches-end-of-superbubble.html




2023-01-24

Hoppet om en mjuklandning växer

Viktor Munkhammar DI 24 januari 2023

https://www.di.se/nyheter/hoppet-vaxer-baddat-for-guldlockslage/


This indicator may be flagging a stock crash in 2023

How the Fed and U.S. banks could bring markets down.

MarketWatch 24 January 2023


Can China fix its property crisis?

Reforms risk another wave of excess

Evergrande, the world’s most indebted developer, which collapsed in 2021, has still not produced a restructuring plan originally due in July. 

The firm’s auditor, PwC, resigned on January 16th. 

This reduction in activity has been catastrophic for China’s economy, which derives around a fifth of its gdp from the sector.

Companies began rapidly raising new debt in December—a sign that policy easing kicked off well before the government announced the new measures. Local authorities have been lowering mortgage rates, and many are now at record lows. 

The state’s bail-out funds are targeting unfinished construction. 

About 70% of homes sold since 2018 have been bought by people who already own at least one. Speculation has made Chinese homes the most expensive in the world on a price-to-income basis. 

The Economist 23 January 2023

https://www.economist.com/finance-and-economics/2023/01/23/can-china-fix-its-property-crisis





2023-01-20

For the first couple of weeks of 2023, financial markets were partying as if New Year’s Eve had never ended.

At the beginning of 2023, the market swarm collectively decided that the Fed was bound to retreat from raising rates later this year. 

Just like that, the biggest losers of 2021 took off. 

Senior Fed officials have said repeatedly they expect to raise the fed-funds rate: around 5%, or more like 6%?”. That’s the interest rate—around 4.3% this week

Remember that although interest rates have risen sharply, they’re still moderate by historical standards—and still will be unless the Fed hikes rates far higher than anyone expects. 

Jason Zweig WSJ  20 January 2023

https://www.wsj.com/articles/when-the-stock-market-and-jay-powell-are-frenemies-11674229669


Global Property Market Faces $175 Billion Debt Spiral

 A sharp drop in commercial real estate is bleeding into the real economy.

Commercial property — from offices to shopping malls — is more sensitive to economic conditions than other asset classes, said Andreas Dombret, who served on the boards of Germany’s Bundesbank and the Bank for International Settlements, adding that “in the past, when the bubble did burst, very often this was related to commercial real estate.”

“But it’s ever so hard to ruin the party,” added Dombret. “This is why regulators often shy away from introducing countercyclical buffers at the right time: when there is no stress in the real estate market.”

Bloomberg Big Take 20 januari 2023 

https://www.bloomberg.com/news/features/2023-01-20/global-real-estate-is-sitting-on-a-175-billion-debt-time-bomb


US Inflation close to annual rate of 1.7%

Inflation observed during the past six months would extend to prices rising 1.9% over the course of a year, close to the average annual rate of 1.7% between 2010 and 2020.

WSJ 20 January 2023



https://www.wsj.com/articles/consumer-prices-plateau-as-inflation-slows-to-prepandemic-levels-11674200099





2023-01-19

Perfect storm of megathreats Roubini

This perfect storm of megathreats is even more dangerous than the 1970s or the 1930s, Roubini says

MarketWatch 18 January 2023



Sleepwalking on Megathreat 

In his great interwar novel, The Magic Mountain, Thomas Mann portrays the intellectual and cultural climate – and the madness – that led to World War I. Though Mann started his manuscript before the war, he didn’t finish it until 1924, and that delay had a significant impact on the final product. His story unfolds in a sanatorium that was inspired by one he had visited in Davos, the same mountaintop site (the Schatzalp Hotel) where WEF-related galas are now held.

 Nouriel Roubini Project Syndicate 18 January 2023




Stocks Fall After Weak Economic Data Revive Recession Fears

The S&P 500 lost 62.11 points, or 1.6%, to 3928.86 with each of its 11 sectors in the red. 

The Dow Jones Industrial Average dropped 613.89 points, or 1.8%, to 33296.96. 

The Nasdaq Composite Index shed 138.10 points, or 1.2%, to 10957.01. All three major indexes gave up gains made in early trading.


Bloomberg 18 January 2023


Niklas Wykman

Finansmarknadsminister

After the recession, a new dynamism will emerge

Near-term inflationary pressures from energy, wages and rents may abate, but pushing inflation below 4% will prove tough. To keep it from spiraling up again, the Fed may have to keep the federal funds rate FF00, 0.00% near or above 5% for several years—about double what the dot-plot indicates.

However unpleasant, we endured similar inflation for several years after Paul Volcker slew his dragon in the early 1980s. And the U.S. economy is on the cusp of a more dynamic period reminiscent of the New Economy of the 1990s.

Peter Morici MarketWatch 18 January 2023

https://www.marketwatch.com/story/after-the-recession-a-new-dynamism-will-emerge-11674003396


“Inflation by all accounts, whichever way you look at it, is way too high,” Lagarde told a panel in Davos

 “We shall stay the course until such time we have moved into restrictive territory for long enough so that we can return inflation to 2% in a timely manner.”

Bloomberg 19 januari 2023

https://www.bloomberg.com/news/articles/2023-01-19/lagarde-says-inflation-way-too-high-ecb-will-stay-the-course


Markets expect the Fed to start cutting interest rates within a year as growth slows. 

But if the Fed is serious about reducing inflation to 2% and keeping it there, it will need to keep rates high until wage growth cools—even if that brings about a recession.

Should America face a downturn, it is likely to take Europe with it. 

Despite falling energy prices, the euro zone also has an underlying inflation problem, as is apparent in rising wage growth. Christine Lagarde, the head of the European Central Bank, has warned that interest rates will have to rise significantly, contrary to the more doveish expectations of investors.

The Economist 26 January 2023

https://www.economist.com/leaders/2023/01/26/the-world-economys-inflation-problem-is-easing



2023-01-18

Ray Dalio och Englunds lag 3

 Ray Dalio’s Alarming Stock Market Prediction For 2023

Hamish Hodder 103 000 prenumeranter

17 Januaey 2023

https://youtu.be/3O-lpLtOtg8?t=161


Englunds lag 3 (Inflation and the housing market)

The interest rate (A) is what is needed to stop inflation.

The interest rate (B) is the one that causes the housing market to collapse.

If A is higher than B, we have a big problem.

Englund blogg 22 May 2022

https://englundmacro.blogspot.com/2022/05/englunds-lag-3-inflation-and-housing.html

2023-01-17

A V-shaped economic rebound is now on the cards.

 China’s property curbs – the “three red lines” – have largely been lifted. All levers of policy are stimulative.

For the rest of the world, the implications are bittersweet. The risk is that surging Chinese demand for oil, gas, and commodities risks setting off another round of imported inflation before Europe and America have fully recovered. 

Strap your belts for another turbulent year.  

Ambrose Evans-Pritchard Telegraph 17 January 2023

https://www.telegraph.co.uk/business/2023/01/17/china-tells-world-maoist-madness-can-make-money0/


Finding a P/E ratio isn’t as easy as you may think

 According to the website maintained by iShares for the Russell 2000 index its current P/E is 13.28, which is well below average—suggesting that this segment of the stock market is significantly undervalued. 

According to The Wall Street Journal’s website, in contrast, the Russell 2000’s RUT, 0.26% current P/E ratio is 63.91—nearly five times the iShares’ level and well above average.

This huge difference traces primarily to how unprofitable companies’ losses are incorporated into the P/E’s calculation. The iShares P/E ignores them, while The Wall Street Journal’s data source does not. (For the record, iShares does not hide that it ignores unprofitable companies. Nevertheless, unsuspecting investors can easily overlook the footnote explaining the omission of losses.)

Mark Hulbert MarketWatch 17 January 2023 

https://www.marketwatch.com/story/finding-a-p-e-ratio-isnt-as-easy-as-you-may-think-11673969591



Det är av högsta vikt att faktiskt lyfta vår valutakurs. Då behövs två delar:

*Att Riksbanken deklarerar att den vill se en starkare krona. Det är svårbegripligt att detta ännu inte har skett. Ännu märkligare är det att Riksbanken har fortsatt att sälja kronor.

*Att regeringen tydliggör att den ser en stark krona som ett mål för sin politik. Nu har EMU-debatten seglat upp igen, men ingen behöver vänta på en eventuell folkomröstning. Statsministern och/eller finansministern kan i morgon understryka att de vill se en stark krona, att det främjar svensk ekonomi, både på lång och kort sikt. 

Valutamarknaden skulle omedelbart notera detta och lyfta kursen

Något mål för valutakursen har  inte den svenska centralbanken

En centralbank bör vara oavhängig för att kunna fatta obehagliga beslut, och inte behöva fundera på omval vart fjärde år. Det är vi nog alla överens om. Men ”regeringen har ansvaret för övergripande valutapolitiska frågor” enligt regeringsformens nionde kapitel, paragraf 12. Regeringen kan alltså ha en åsikt om kronan utan att ifrågasätta Riksbankens oberoende.

Henrik Mitelman DI 17 januari 2023

https://www.di.se/analys/en-enda-mening-racker-for-att-hejda-kronkollapsen/

En lysande artikel.





 

”Centralbankerna kan inte rädda ekonomin den här gången”, säger Blackrocks globala toppstrateg Wei Li

 



Nils Åkesson  DI  17 januari 2023

https://www.di.se/analys/toppstrategen-centralbankerna-kan-inte-radda-ekonomin-den-har-gangen/



Soft Landing eller ej? En återkommande fråga.

 

Alan Greenspan chairman Fed from 1987 to 2006. 






2023-01-15

Big banks are stuck with about $40 billion of risky debt on their books

 — blocking the M&A machine that’s enriched bankers and private-equity executives over the past decade 

Bloomberg 13 januari 2023 

https://www.bloomberg.com/news/articles/2023-01-13/wall-street-s-leveraged-loan-machine-breaks-down-with-twitter-debt-left-unsold


$65 Trillion ‘Hidden’ Debt TSUNAMI Will Wreak Havoc on Financial System

Trillions of dollars in currency swaps within shadow banks can be a concern for financial stability because shadow banks are not subject to the same regulatory oversight as traditional banks and therefore may engage in risky behavior. 

Inside the Money 15 January 2023

https://www.youtube.com/watch?v=3E8WFA4SA3g



The pillars of prosperity that supported 30 years of growth have crumbled

 Now the world has to cope with inflation, labor shortages and geopolitical unrest.

Central banks that ignored the first embers shifted forcefully into firefighting last year, unleashing the fastest, most synchronized tightening of monetary policy in two generations.

At the start of 2022, the yield on the 10-year benchmark US government bond was around 1.5%, and the market was expecting the federal fund rates to stay below 1%. 

Instead it ended the year above 4%, with 10-year yields expected to be not far short of that level throughout 2023.

Is it possible for economies to continue to grow while interest rates and joblessness are going up and both real incomes and house prices are going down? 

We are about to find out.

Stephanie Flanders Bloomberg 12 january 2023

https://www.bloomberg.com/news/articles/2023-01-12/inflation-interest-rates-muddy-2023-economic-outlook


Är det så hemskt att vi faktiskt inte vet hur vi skall undvika att den nuvarande ekonomin byggd på en allt högre belåning av stigande huspriser skall kunna brytas och ersättas med något annat, vad det nu kan vara?

Englund blogg 8 juli 2014





The IMF’s refusal to admit its errors of judgment

 The IMF’s refusal to admit its errors of judgment expose the arrogance of the global elite

It is completely unacceptable that the International Monetary Fund is refusing to appear before the Commons Treasury select committee to answer questions on its equally unacceptable intervention in Britain’s mini-fiscal crisis last autumn

I don't know, but maybe this was a reaction to the disaster of IMF involvement in the hated troika during the eurozone debt crisis, when a wholly unnecessary degree of austerity was imposed on beleaguered member states, prompting an economic contraction that dwarfed even that of the Great Depression. 

The IMF was deeply complicit in this act of economic vandalism, but in its penance, is now in danger of over-correcting the other way.

https://www.telegraph.co.uk/business/2023/01/11/imfs-refusal-admit-errors-judgment-expose-arrogance-global-elite/


The risks of a fragmenting eurozone are falling

 Despite the arrival of a hard-right Italian government under Premier Giorgia Meloni, the spread has dropped by 40 basis points since the European Central Bank’s last meeting in December

German Chancellor Olaf Scholz is calling for joint EU funding for an effort to boost European green energy. 

Bond investors were heartened by the news that the bloc’s most powerful nation was now behind joint financing that would in particular help countries with more serious deficits (such as Italy) to fund their green investments. 

Banking sector, which lost investors’ confidence more than a decade ago and has barely ever regained it, has enjoyed a rally of more than 40% since hitting lows last summer.

John Authers Bloomberg 12 January 2023

https://www.bloomberg.com/opinion/articles/2023-01-12/inflation-at-2-risks-going-too-far-too-fast


Is 2% Inflation in View?

 Economists polled by Bloomberg remain confident that inflation will be down around target by the end of this year. 

That’s encouraging — although it’s important to point out that they were equally confident that inflation would be under control by the end of last year

John Authers Bloomberg 12 January 2023

https://www.bloomberg.com/opinion/articles/2023-01-12/inflation-at-2-risks-going-too-far-too-fast


Frågan om euron eller kronan är ytterst ett politiskt ställningstagande enligt Stefan Ingves

Frågan om euron eller kronan är ytterst ett politiskt ställningstagande och inte något som går att räkna ut med nationalekonomiska modeller, enligt Stefan Ingves.

– Man kan i ett land ha vilket valutasystem som helst. Detta är inte specifikt för Sverige. Men när man har valt måste man förstå konsekvenserna av det val man har gjort. Det är egentligen det som är det långsiktigt centrala, säger han.

Euron eller kronan är inte en fråga Stefan Ingves vill ta ställning till efter sina 17 år som riksbankschef 

SvD/TT 15januari 2023



Liberalerna är för att Sverige inför euron. Regeringen, S, och Wallenberg vägrar svara

Stefan Ingves: Jag har gång på gång sagt att skuldnivån i hushållssektorn är alldeles för hög

 I en intervju med den amerikanska nyhetskanalen CNBC kommenterade Ingves Sveriges bostadsmarknad på ett sätt som hade varit otänkbart när han fortfarande var riksbankschef.

”Jag har gång på gång sagt att skuldnivån i hushållssektorn är alldeles för hög och att räkenskapens dag kommer och så småningom kommer räntorna att gå upp, och nu har de gått upp”, sa han.

”Vi har inte dolt något från centralbankens sida om de strukturella svårigheter som vi har på bostadsmarknaden. Men den politiska processen har varit sådan att det inte har funnits en vilja från den politiska sidan att reda ut dessa frågor”, sa han.

Hushållens skuldkvot, alltså skuldernas andel av den disponibla inkomsten, ligger på en historiskt hög nivå. Sedan mitten av 1990-talet har den i stort sett fördubblats.

DI Ledare:Henrik Westman 12 januari 2023

https://www.di.se/ledare/ta-ingves-tal-om-domedag-pa-allvar/


Att avveckla ränteavdragen och återinföra en rimlig fastighetsskatt vore på sin plats.

Anders Borg, SvD 2 november 2017

”Slopandet av fastighetsskatten ter sig i efterhand som ett av de mest korkade ekonomisk-politiska beslut som fattats.”

Klas Eklund, Dagens Industri 2 juli 2013

https://englundmacro.blogspot.com/2022/02/stefan-ingves-underligt-att-vi-har-en.html



Jag är en legendarisk EU-kritiker

Vem har sagt det?

P.M. Nilsson.

Konstgjord konflikt mellan s & m döljer den stora frågan

"EU går tydligt mot en federation. Men detta bör sägas rent ut och inte genomföras i smyg. Man skall inte låtsas som om den stora frågan för väljarna är om de skall rösta på den moderata listan eller den socialdemokratiska.

"Det skriver Rolf Englund, ekonom och legendarisk EU-kritiker."

Newsmill, 2009-05-25

http://www.nejtillemu.com/euvalet2009.htm#uppmuntrar


Newsmill  var en svensk debattidning som fanns 2008-2013, ägd av Bonnier Tidskrifter. Chefredaktör var P.M. Nilsson. 

Newsmill  nominerades 2009 till Stora journalistprisets kategori ”Årets förnyare” med motiveringen att Newsmill: ”vitaliserar opinionsjournalistiken, bjuder in publiken och fångar upp nya frågeställningar”. Bonnier raderade nättidningen med över 30,000 artiklar från nätet 2013.

https://newsvoice.se/category/newsmill-artiklar/


PM Nilsson är nu statssekreterare hos statsministern



Min artikel hos Newsmill var nog i huvudsak denna

Rösta inte på dom. Det bara uppmuntrar dom

Rolf Englund 2009-05-18




2023-01-14

No One Wants to Say “A Recession Is Fine”

 In theory, the Fed could balance all these moving parts and get inflation down to its 2% target without sparking recession. 

It is difficult, though, and I have no confidence they can do it. (Reminds me of the Yogi Berra quote: “In theory, it works; in practice, it doesn’t.”) 

Nor does my friend Dave Rosenberg, who sees a 100% chance of recession this year.

The recession is staring us in the face (and if it is so ‘priced-in,’ why is the consensus calling for positive EPS growth for next year?).

The Fed is driving the bus all right but is not looking through the front window. Which means what? It means we are going into an outright recession. 

A national haircut to GDP, rising unemployment, asset deflation, and looming debt defaults. This is the theme for 2023 and is typical for the year that follows the Fed tightening cycle—think 1970, 1975, 1982, 1990, 2001, and 2008.”

In macro terms, he says a big housing downturn would do more damage than a stock market crash because more people own homes than stocks, and they are more highly leveraged. 

Fortunately, we are a long way from such a drop, but it could yet happen.

John Mauldin 13 January 2023

https://www.mauldineconomics.com/frontlinethoughts/the-punchbowl-is-gone


EPS appears to be far above that long-term trend, and due to revert down toward the mean. 

John Authers Bloomberg 10 januari 2023

https://englundmacro.blogspot.com/2023/01/eps-appears-to-be-far-above-that-long.html



It's the rental part of the US housing market that's setting up for a hard landing

 While investors were focused on fears of a collapse in the homebuying industry, a crash in the apartment market has been taking shape.

All this is happening while there are more apartment units under construction than there have been in more than 50 years, which will dump even more supply onto the market. Even before accounting for the possibility of job losses and a recession in 2023, this increased supply will create more vacancies. 

The hope is the rental-market adjustment we get in 2023 is orderly — tenants get a break on rent prices, investors take some losses, the market rebalances and life moves on in 2024. 

Bloomberg 9 januari 2023

https://www.bloomberg.com/opinion/articles/2023-01-09/rental-housing-is-suddenly-headed-toward-a-hard-landing



Liberalerna är för att Sverige inför euron. Regeringen, S, och Wallenberg vägrar svara

 Regeringspartiet Liberalerna (L) är för att Sverige inför euron, enligt partiets ekonomisk-politiska talesperson Carl B Hamilton

"Tack, men vi avstår från intervju denna gång", är svaret från Finansdepartementet när TT ber om att få ställa frågor om valutaunionen till finansminister Elisabeth Svantesson (M).

Liberalernas Hamilton vill inte ha någon ny folkomröstning om euron, utan hoppas att om det blir aktuellt så skulle det gå att få till ett medlemskap i valutaunionen ändå:

– Det var en avskräckande upplevelse, folkomröstningen om euron. Den var alldeles för komplicerad och svår för att ha som folkomröstningsfråga. Det tycker jag inte att man ska ha igen.

Han utesluter inte att euro-frågan kan komma att bli skarp senare under mandatperioden.

TT har förgäves sökt Mikael Damberg, tidigare finansminister och socialdemokraternas ekonomisk-politiska talesperson för en kommentar.

Svenskt Näringsliv, med Jacob Wallenberg som ordförande, vill inte heller uttala sig i eurofrågan.

GP/TT 13 januari 2023


2023-01-13

Skiing Nowadays Just Feels Wrong

We all have different psychological mechanisms for coping with the reality of climate change.

For activists like Greta Thunberg, it seems to be depression, anxiety and rage. For others, it’s resignation. For others yet, it’s denial. And people like me cycle between all of them. 

But hardly anybody has already reached the last stage of grieving, which is acceptance.

Andreas Kluth Bloomberg 13 januari 2023 

https://www.bloomberg.com/opinion/articles/2023-01-13/skiing-and-its-resorts-are-paying-the-price-for-generations-of-ecological-sins


A Snowless Davos Tells the World’s Elite All They Need to Know

12 januari 2023

https://www.bloomberg.com/news/features/2023-01-12/davos-2023-world-s-elite-face-climate-reality-with-increasingly-snowless-slopes


Knappt någon i den svenska debatten – eller i regeringen heller, för den delen – verkar förstå omfattningen av vad som nu sker. Eller vilka konsekvenser det får för oss i Sverige.

Samtidigt klubbas klimatpolitik i ett häpnadsväckande tempo i Bryssel, när unionens mål om att nå noll nettoutsläpp till 2050 snabbt omvandlas till konkret politik. Och det var också i EU som den största svenska klimatnyheten för 2022 blev verklighet, strax före jul, utan att någon tycktes ta notis om det. I ett enda klubbslag enades unionen om en rad överenskommelser som kommer att forma både EU:s och Sveriges klimatpolitik de kommande åren. Några exempel:

Peter Alestig klimatredaktör Dagens Nyheter 11 januari 2023

https://www.dn.se/varlden/har-ar-forra-arets-storsta-och-mest-bortglomda-klimatnyhet/




Historien har visat att bostadspriserna alltid vänder uppåt igen efter nedgångar

 – Historiskt sett så är bostadsräntorna nu fortfarande låga. Det är bara att vi har vant oss vid att de ska ligga runt en procent, men tittar vi tillbaka 10-15 år så är tre, fyra eller fem procent inte alls ovanligt. 

Så man måste nog börja kalkylera på att det här är den riktiga normala nivån, säger, Hans Flink, affärsutvecklingschef på Svensk Mäklarstatistik.

SvT 13 januari 2023

https://www.svt.se/nyheter/inrikes/sa-mycket-foll-bostadspriserna-2022


Inflationstakten i Sverige

 mätt som KPIF, kom enligt SCB in på 10,2 procent i december vilket kan jämföras med 9,5 procent i november.

Analytikerna hade i snitt väntat sig att siffran skulle ha stigit till 9,7

https://www.di.se/live/klart-hogre-inflationstakt-an-vantat-i-sverige/


KPI-inflationen – där räntekostnaderna räknas med – var 12,3 procent.

– Det är en obekvämt hög siffra naturligtvis, säger Nordeas chefsanalytiker Susanne Spector.

En starkt bidragande orsak var energipriserna, som steg 28,8 procent i december jämfört med föregående månad. Samtidigt har livsmedelspriserna ökat tretton månader i rad – totalt med 18,6 procent.

Riksbankens mål är 2 procents inflation.


https://www.svd.se/a/y6890E/inflationen-steg-i-december

Happy Inflation Days Are Here Again

 What was once driven by goods prices and energy is now above all about services (which include the costs of shelter), along with erratic costs of food



The Fed’s favored statistical measures for underlying inflationary pressure all confirm a decline, although the fall is less than it appears from the headline data. 

Does the peak rate for fed funds matter that much?

Steve Sosnick, chief strategist at Interactive Brokers, suggests the answer is no. He said:

I'm less concerned about the level of the terminal rate than what happens after we get there. Whether it’s 4.75% or 5.25% isn't all that meaningful. It’s a lot higher than it was, and quite frankly much more in line with long-term historical levels than the artificially low rates we’ve gotten used to.

Overall inflation declining slightly, but still above 6% — a level it had not reached in its 25-year history until 2022. But real wage inflation is still negative:

John Authers Bloomberg 13 January 2023

https://www.bloomberg.com/opinion/articles/2023-01-13/inflation-isn-t-really-over-and-your-bacon-and-eggs-prove-it


2023-01-12

Den nya EMU-debatten saknar, än så länge, något verkligt nytt

 Det illustra, dynamiska, föränderliga 1990-talet tog slut den 14 september 2003, när 55,9 procent av väljarna röstade nej till att avskaffa den svenska kronan. Det är som att en del moderater ännu inte har tagit in det.

De fick rätt i så mycket under det långa 1990-talet. Och 2003 stod de dessutom sida vid sida med den socialdemokratiska eliten. Anna Lindh kindpussade Carl-Henric Svanberg. Ungsossar och ungmoderater hade fullt sjå att sätta sprätt på alla kampanjpengar som Birgitta Ed – fru Kristersson – hade att fördela som chef för ja-sidan.

De kunde bara inte förlora, tänkte de.

Men det var just vad de gjorde.

Christer Gardell, fondaktivisten, pläderade för ett svenskt valutabyte till euro härförleden stod den svaga kronan i centrum. Det var i alla fall ett nytt argument. 

Gunnar Hökmark, den moderate trotjänaren, som snabbt skrev en artikel till stöd för idén sjöng bara gamla refränger om Sverige som "politiskt handikappat i det europeiska samarbetet”.

https://www.di.se/debatt/debatt-sverige-bor-ga-med-i-eurosamarbetet/

Det var som om folkomröstningen aldrig ägt rum.

Den nya EMU-debatten saknar, än så länge, något verkligt nytt.

Torbjörn Nilsson  SvD 12 januari 2023

https://www.svd.se/a/pQnrPw/torbjorn-nilsson-nya-euro-ivrarna-missar-en-viktig-detalj

Torbjörn Nilsson skriver sedan tjugo år om svensk politik. Författare till bland annat ”De omänskliga”. Utsedd till ”Årets journalist” och ”Årets stilist”. En gång i tiden redaktör på nyhetsmagasinet Fokus.


S och M förbereder statskupp?

Rolf Englund 9 januari 2023

https://englundmacro.blogspot.com/2023/01/s-och-m-forbereder-statskupp.html


Has economics run out of big new ideas?

 As Tyler Cowen of George Mason University puts it: “In the last 30 years the reliability of empirical work and estimations has risen dramatically. Which is good. But few new important ideas have really been generated.”

Big advances are easier to spot in hindsight. It may even turn out that there were some hidden among the presentations at the annual meeting of the American Economic Association in New Orleans.

The most compelling evidence on the impact of monetary policy on inflation came from Christina Romer of the University of California, Berkeley, who dusted off an old-fashioned method. 

In her talk, she argued that monetary-policy changes have bigger effects on unemployment than inflation, and that it sometimes takes a few years for their main impact to be felt. 

The method used by Ms Romer and her husband and co-author, David Romer, was not a new statistical technique or even timelier data, but a “narrative approach”. 

The Romers combed through transcripts and minutes from meetings held by the Federal Open Market Committee—just as they had when they developed the method in a paper published in 1989. 

The Economist 12 January 2023

https://www.economist.com/finance-and-economics/2023/01/12/has-economics-run-out-of-big-new-ideas 

Christina Duckworth Romer is  former chair of the Council of Economic Advisers in the Obama administration. 

She resigned from her role on the Council of Economic Advisers on September 3, 2010


CHRISTINA ROMER

https://eml.berkeley.edu/~cromer/


A Snowless Davos Tells the World’s Elite All They Need to Know

As the rich and powerful gather for the World Economic Forum, these photos show how the impact of global warming is getting harder to ignore.

Bloomberg 12 January 2023

https://www.bloomberg.com/news/features/2023-01-12/davos-2023-world-s-elite-face-climate-reality-with-increasingly-snowless-slopes


Still a long way to 2 percent

 



Why Investors May Be Too Optimistic About Inflation

In December 1974, celebrated historian and sometime presidential speechwriter Arthur M. Schlesinger Jr. summed up the problem with contemporary forecasters in a single, very long sentence in The Wall Street Journal: 

“To this moment most economists, businessmen and government officials obstinately regard inflation not as the structural vulnerability of contemporary capitalism but rather as the accidental result of unlucky coincidences requiring only patience, time (and unemployment) for its alleviation.”

The new geopolitics is splitting the world into two blocs, partially reversing the globalization of the past three decades. 

On the domestic front, efforts to reduce global warming will continue to increase spending in the push to reduce fossil fuels. The International Energy Agency estimates that to reach emissions targets, very large amounts—$4 trillion a year by 2030, about triple what is currently spent—will need to be invested in alternatives to fossil fuels.

Domestic politics in the U.S. and Europe appear to have switched from free-market capitalism to more government intervention and industrial policy.

On the domestic front, there is also newfound willingness of governments to borrow and spend. The austerity that followed the global financial crisis of 2008-09 was rightly abandoned

Finally, demographics is working to push up inflation. After decades of adding tens of millions of well-educated, low-cost workers to the global economy every year, China has seen its working-age population begin to shrink. 

None of this matters if the Fed is willing to do what it takes to control inflation, points out Olivier Blanchard, a former chief economist of the International Monetary Fund now at the Peterson Institute for International Economics.

“Central banks are totally committed to getting inflation under control,” he says. “The issue is whether they go back to 2% or do they aim for something slightly higher.”

I’m less convinced that central banks will be willing to lift interest rates enough to get inflation back to superlow levels if the trends outlined above continue.

Bond markets are priced on the premise that inflation will rapidly fall back to the Fed’s 2% target and stay there, without the Fed needing to do anything really dramatic.

Markets are not prepared for the higher rates required if inflationary pressures prove persistent, as I expect. 

Worse, central bankers might not be prepared to take flak from a society that has become reliant on easy money, and may quietly accept price rises higher than their targets. 

James Mackintosh Senior columnist WSJ 11 January 2023

https://www.wsj.com/articles/investors-optimistic-inflation-11673452446


Nog är 5,7 procent fortfarande högt men med mer än ett kvartal i bagaget börjar det verkligen likna en trend att luta sig mot.

Så långt, allting gott. Vad kan pessimisterna, inte minst de ledamöter i Federal Reserve som vill hålla den hårda linjen, då peka på? Framför allt tjänsteinflationen, som fortfarande ligger på 7 procent.

Här är trenden inte lika tydlig – tvärtom steg tjänstepriserna något igen jämfört med november månad.

Det är i prognoserna för den andra halvan av året som splittringen syns. 

Terminshandeln visar att investerarna fortfarande hoppas på räntesänkningar innan året är över, på tesen att centralbanken kommer behöva göra helt om när konjunkturen viker och inflationen fortsätter att mattas av. 

Felicia Åkerman DI 12 januari 2023

https://www.di.se/nyheter/splittringen-mellan-wall-street-och-fed-kvarstar/






2023-01-11

Secular Stagnation, Not Secular Stagflation

Even if secular stagnation is our destiny, it is not likely to take the form of secular stagflation, or what Nouriel Roubini calls the “Great Stagflation” 

There are two distinct drivers of stagflation, both of which can be operative simultaneously.

The first occurs when a negative aggregate supply shock

The second type of stagflation occurs when inflation is too high and the central bank uses restrictive monetary policy to bring it down. Monetary-policy changes are known to affect underlying inflation with long, variable, and uncertain lags, whereas real (inflation-adjusted) GDP and unemployment tend to respond more swiftly.

Willem H. Buiter Project Syndicate 6 January 2023

https://www.project-syndicate.org/commentary/secular-stagnation-not-secular-stagflation-by-willem-h-buiter-2023-01


From Great Moderation to Great Stagflation

Nouriel Roubini Project Syndicate 9 August 2022

https://englundmacro.blogspot.com/2022/08/from-great-moderation-to-great.html


The dollar appears to have entered a downward trend

 


It’s notable that the 10-year Treasury yield remains barely above the 3.5% level it first reached in June, and far below its October peak of 4.33%.

John Authers Bloomberg 11 January 2023









2023-01-10

EPS appears to be far above that long-term trend,

and due to revert down toward the mean. 

This chart from the Bloomberg terminal shows that any sensible trend line suggests that recent earnings are unsustainable:



John Authers Bloomberg 10 januari 2023


BlackRock, Fidelity and Carmignac are warning

 markets are underestimating both inflation and the ultimate peak of US rates, just like a year ago.

The stakes are immense after Wall Street almost unanimously underestimated inflation’s trajectory. 

Global stocks saw $18 trillion wiped out, while the US Treasury market suffered its worst year in history. 


And yet, going by inflation swaps, expectations are again that inflation will be relatively tame and drop toward the Federal Reserve’s 2% target within a year, while money markets are betting the central bank will start cutting rates.

Bloomberg 10 January 2023

https://www.bloomberg.com/news/articles/2023-01-10/markets-are-underestimating-inflation-again-asset-managers-warn


The last 2pc to 3pc required to return inflation to the 2pc level could prove tricky

Bringing the inflation rate down 4pc to 5pc from today's elevated levels ought to be relatively straightforward from here on in; base effects alone after the shock of last year's energy crisis ensure that it is already largely pre-baked, and ought not to require significantly higher interest rates than now.


But most central banks privately admit that the last 2pc to 3pc required to return inflation to the 2pc level targeted by the Bank of England, the US Federal Reserve, and the European Central Bank could prove tricky, and might require inducing a much deeper recession than you would want.

Jeremy Warner  Telegraph 10 January 2023




“The jet stream causes all of our weather”

 The fast-moving bands of air that blow from west to east divide the cold air from the polar regions from the warmer air from the tropics, and typically occur in the mid-latitudes. However, the jet stream can develop deep waves, which push colder air southwards and warmer air northwards.

FT 9 January 2023

https://www.ft.com/content/81af6ef5-e241-4496-ac36-38d3fcfe0956


 The southern Pacific Ocean locked in its La Niña phase for three winters

 Its long duration is a problem. The large, persistent mass of cold air and high pressure influences wind patterns known as jet streams across the Pacific and the Indian Ocean. 

The Economist 18 November 2022

https://englundmacro.blogspot.com/2023/01/the-southern-pacific-ocean-locked-in.html


Europe’s String of Extreme Heat Waves Linked to Jet Stream

Bloomberg 5 July 2022

https://englundmacro.blogspot.com/2022/07/europes-string-of-extreme-heat-waves.html


Schweiz centralbank gör sin största förlust på 116 år

Bland annat har centralbanken gjort betydande förluster genom positioner i utländsk valuta.

Även bakslag i centralbankens aktie- och obligationsportfölj har bidragit till brakförlusten.

DSP 9 januari 2023

https://www.dagensps.se/bors-finans/makro/centralbankens-forlust-den-storsta-pa-116-ar/


Köer utanför banker i Schweiz - lika osannolikt som att Swissair skulle stanna på marken av pengabrist

https://englundmacro.blogspot.com/2015/01/customers-queue-around-block-to.html


Swissair was the national airline of Switzerland between its founding in 1931 and bankruptcy in 2002.

Cash reserves of Swissair filed on this day were barely sufficient to carry out the first morning flights. During the morning, fuel suppliers refused to fuel the waiting aircraft. 

https://englundmacro.blogspot.com/2022/10/credit-suisse-default-swaps-near-2009.html


2023-01-09

S och M förbereder statskupp?

Ett införande av euron är en i praktiken irreversibel process, jfr Grekland.

Då måste vi följa med på tåget mot ett federalt rike. 

De som vill avskaffa vårt lands suveränitet, i strid med tidigare folkomröstningsresultat, får faktiskt besvära sig med att fråga folkets en gång till.

Rolf Englund på Facebook 9 januari 2023


Hans Wallmark om moderaterna och euron, som svar på min fråga






Som hon påpekar vill Calmfors ha euron av politiska skäl, inte ekonomiska.
Men han är härvidlag inte mer kompetens än du och jag.




En varning från folkomröstningen

Fredrik Johansson - en moderat konsult


Han är något så ovanligt som en konsult (Hallvarsson & Halvarsson) som dessutom varit huvudsekreterare i moderaternas programkommitté.

 

Moderaterna förespråkar ett starkt och fördjupat samarbete mellan suveräna europeiska nationer - EU-skvadern




Brandförsäkringsargumentet 

Det är ett utmärkt argument, som förstås av alla villaägare som har sitt hus brandförsäkrat.

- Risken är statistiskt sett minial att huset börjar brinna, men om det sker förstörs hela ens ekonomi.

  Alltså tar man en försäkring.

- Risken för att det ska gå illa med svensk ekonomi är inte så stor om vi avsäger oss möjligheten att parera konjunkturrörelserna med vår egen penningpolitik, men om det går illa, då går det riktigt illa.

- Alltså är det bättre att stå utanför EMU.



"All that is necessary for the triumph of evil is that good men do nothing"