It’s fallen more slowly than the headline number and suggests inflation is likely to persist for some time.
The core PCE rate is viewed by the Fed as the best predictor of future inflation trends.
MarketWatch 30 juni 2023
2023-06-30
Risken för en brutal fastighetskrasch är begränsad
enligt bedömare som riksbankschefen Erik Thedéen, chefsekonomerna Annika Winsth och Klas Eklund samt Skandiabasen Frans Lindelöw.
På frågan om direktionen tar hänsyn till fastighetsbolagen inför besluten blir svaret nekande.
”Men Riksbanken står alltid inför ett val om vi ska gå snabbt fram eller gradvis, vi har valt det senare. Men vi sitter inte och studerar fastighetsbolagens balansräkningar innan vi höjer räntan.”
Någon fastighetskris som liknar 1990-talets utslagning, där staten fick gå in och rädda delar av fastighets- och banksektorn, ser Mannheimer Swartlings seniorekonom Klas Eklund inte framför sig.
”Vi kommer att se nedvärderingar under ett par kvartal till. Anpassningen till högre räntor och en annan prisnivå på fastigheter går gradvis och under rätt så kontrollerade former.” säger Kristin Magnusson Bernard, vd Första AP-fonden.
Hans Bolander DI 30 juni 2023
https://www.di.se/nyheter/tungviktarnas-dom-begransad-risk-for-fastighetskrasch/
How Scared Should You Be About Commercial Real Estate?
If troubles hit banks and the wider economy, they will probably start in offices you wouldn’t want to work in, let alone own
Federal Reserve’s bank stress test released this week assumed a worst-case scenario where commercial real-estate prices drop 40%, with falls concentrated in office and retail. REIT investors think that for offices, and to a lesser extent retail, the stress is already here.
The rest of commercial real estate is doing OK
James Mackintosh WSJ 30 June 2023
https://www.wsj.com/articles/how-scared-should-you-be-about-commercial-real-estate-1ba0f913
Miami Land Sale Collapses Amid Commercial Real-Estate Slowdown
The roughly $30 trillion market for U.S. government debt
Government-bond yields climbed in the second quarter of the year
Matt Grossman WSJ 30 June 2023
https://www.wsj.com/articles/treasury-yields-resume-climb-as-investors-bet-on-growth-5d157f69
The 2% inflation target should be subject to public scrutiny and judged against the demands of the moment
To achieve the disinflationary purge without putting the financial system at risk, the banker to the central bankers, the Bank for International Settlements, is now advocating that fiscal policy must also join the fight, to further squeeze aggregate demand.
To this is where we have arrived in 2023: to bring inflation back to 2 per cent while preserving the banks, common sense insists that we need higher interest rates for longer, plus austerity. And, at this point, you have to ask whether western elites have learnt anything from the last decade and a half.
Adam Tooze FT 29 June 2023
https://www.ft.com/content/2e2c5a23-af05-4124-ac6b-73e34651a5de
Rubriker skall ha täckning i texten. Inflationsfall i EU?
Den positiva utvecklingen beror främst på en nedgång i energipriserna
Däremot stiger fortfarande priserna för mat, alkohol och tobak med nästan 12 procent.
Kärninflationen steg från 5,3 procent i maj till 5,4 procent i juni. Det är kärninflationen som Europeiska centralbanken främst tittar på inför sina räntebeslut.
DI 30 juni 2023
https://www.di.se/live/nytt-stort-inflationsfall-i-eu/
Euro-Area Core Inflation Quickens Again in Setback for ECB
- Underlying gauge rises to 5.4%, overshadowing headline slowing
60 procent av Stockholmsbörsens bolag har avkastat negativt 2023 och den svaga kronan
Att index, OMX SPI, ändå är upp beror på att många stora industribolag har gått starkt. Exempel: ABB, Atlas Copco, Husqvarna och SSAB. Börsjättarna väger tungt i index och de har alla gynnats av en svag krona.
Hela fastighetssektorn är hårt drabbad, byggsektorn likaså, samt bolag med hög skuldsättning och generellt många mindre bolag med exponering mot Sverige.
Både Handelsbanken och SEB står på minus. Nordea och Swedbank är marginellt bättre.
– Bankerna borde vara gynnade i den här miljön – med högre räntor. Men deras kurser har pressats av oron i fastighetssektorn. Framför allt utländska investerare är oroliga för om de svenska bankerna kommer att drabbas vid en eventuell fastighetssmäll.
SvD 28 juni 2023
https://www.svd.se/a/4olkvV/varning-for-lagtryck-pa-stockholmsborsen-i-sommar
”Det har blivit allt tydligare att den svaga kronan är ett problem för Sverige”, säger Jan-Olof Jacke, vd på Svenskt Näringsliv.
DI 29 juni 2023
https://englundmacro.blogspot.com/2023/06/lars-calmfors-nu-ar-han-en-av.html
Bank of America $100bn loss after big bet in bond market
according to data from the Federal Deposit Insurance Corporation. The sum far exceeds unrealised bond market losses reported by its largest peers.
BofA has said it has no plans to sell the underwater bonds, avoiding crystallised losses that for now exist only on paper.
BofA has $370bn in cash and is not facing any SVB-like liquidity crunch.
BofA, like other peers, also fared well in the Fed’s annual stress tests, the results of which were released on Wednesday.
A BofA spokesperson declined to comment.
FT 29 June 2023
https://www.ft.com/content/df4f343c-5666-43a2-ba01-ef315bfb119a
Big US banks would lose $541bn in doomsday scenario, predicts Fed
Annual stress tests show lenders with more than enough capital to weather economic catastrophe
https://www.ft.com/content/6d1d2087-9188-4378-bd59-f87c5adc593f
Yesterday the 23 big banks subject to the stress tests all passed
https://englundmacro.blogspot.com/2023/06/yesterday-23-big-banks-subject-to.html
Yesterday the 23 big banks subject to the stress tests all passed
Fed’s official stress tests are a public exercise designed to make sure — and tell everyone — that the banking system could survive another 2008.
Here are the Fed’s press release and the full results.
One of the banks that passed is the US arm of Credit Suisse Group AG, which survived the Fed’s hypothetical stress scenario just fine but which vanished due to the stress of real life.
Matt Levine Bloomberg 29 juni 2023
https://www.bloomberg.com/opinion/articles/2023-06-29/the-big-banks-aren-t-stressed
Here are the Fed’s press release
https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230628a.htm
and the full results.
https://www.federalreserve.gov/publications/files/2023-dfast-results-20230628.pdf
The Federal Reserve gave the biggest U.S. banks a clean bill of health
in its annual stress test, saying they would be able to continue lending to households and businesses even in a severe recession.
This year’s stress test measured the 34 biggest banks’ ability to maintain strong capital levels in a hypothetical recession marked by sharply higher unemployment and a steep decline in stock prices.
WSJ 23 June 2023
Largest US banks boost dividends after passing stress tests
JPMorgan Chase, Goldman Sachs, Morgan Stanley and Wells Fargo are among the large US banks that are planning higher payouts to shareholders after government-mandated stress tests this week indicated they will be subject to lighter capital requirements.
FT 1 July 2023
Bank of America $100bn loss after big bet in bond market
BofA has $370bn in cash and is not facing any SVB-like liquidity crunch.
Englund: Bank of America $100bn loss after big bet in bond market (englundmacro.blogspot.com)
Much Higher for Much Longer
Confidence in the economy now seems so strong that stocks can continue to rally even as investors reluctantly conclude that this also means that lower interest rates will be long delayed.
And Thursday’s data download, which showed the economy to be startlingly strong, had a perfect 2023 reaction — yields rose sharply, but didn’t stop the stock market from rising.
All of this comes before Friday’s announcement of PCE inflation, the Fed’s preferred target.
There are several ways to calculate “real” interest rates, after inflation is taken into account, but all have in common that the Fed still seems somewhat lenient.,
Inflation expectations is more concerning. Joshi experimented with a “Bayesian” approach, https://www.elmhurst.edu/blog/thomas-bayes/
It certainly looks as though people simply project the past long into the future, even if they don’t realize they’re doing it.
If Joshi is right about this, and behavioral economists have long established that as humans we do indeed tend to project the past into the future, the implication is that monetary policy will need to get much tighter, and the Fed is going to have to force a recession.
John Authers Bloomberg Friday 30 juni 2023
Why the bulls are running and the consumers are buying
Consumes and investors feel rich because they are rich.
https://englundmacro.blogspot.com/2023/06/why-bulls-are-running-and-consumers-are.html
2023-06-29
10-year Treasury yield has remained in a narrow range near its current level of 3.75%
There’s little reason for it to stay there, and many reasons to expect it to move considerably higher.
Fed also appear to be increasing their estimate of the “neutral” rate that neither restrains nor boosts the economy, suggesting that a higher fed funds rate will be required to combat any given level of inflation.
How high, then, might Treasury yields go? Let’s put together the pieces.
Suppose the Fed’s short-term interest-rate target, adjusted for inflation, averages about 1% over the next decade. Inflation averages 2.5%, and the bond risk premium is one percentage point.
In sum, this suggests a 10-year Treasury note yield of 4.5%. And that’s a conservative estimate
Bill Dudley Bloomberg 29 juni 2023
Bets on bond renaissance frustrated by stubbornly high inflation
FT 26 June 2023
Ränta och KPI
Den senaste inflationssiffran (KPIF) föll tillbaka till 6,7 procent i maj.
Den reala räntan, den viktigaste av räntor
Midsommarkrisen 2.0
Vid midsommartid 1941 angrep Hitler-Tyskland och deras allierade, däribland Finland, Sovjetunionen.
Tyskarna ville transitera trupper via Sverige till Finland. Det har blivit de mest omdebatterade beslutet i modern svensk historieskrivning.
Nu skulle väl en liknande framställning vara en ren rutinfråga.
Opinionen i Sverige var delad. Det fanns en stark tyskvänlig opinion inom näringsliv och officerskår.
Sverige borde komma att ingå i det stora Europeiska Riket ansåg många.
I dag är det åter en stark EU-vänlig opinion som har liknande förhoppningar.
Det finns till och med en partiledare och regeringsmedlem som vill uppge den svenska kronan utan att dessförinnan fråga folket.
Han vill att riksdagen skall genomföra vad som liknar en statskupp för att därigenom göra Sverige till en delstat.
Det är den svenska utrikespolitikens eviga fråga.
Skall vi följa Tyskland eller skall vi följa England?
Förr var liberalerna mot att följa Tyskland.
Rolf Englund 29 juni 2023
---
Den svenska utrikespolitikens eviga fråga.
Skall vi följa Tyskland eller skall vi följa England.
Englund blogg 23 februari 2016
Liberalernas partiledare Johan Pehrson öppnar nu för att införa euron i Sverige. Någon folkomröstning behövs inte
https://englundmacro.blogspot.com/2023/06/liberalernas-partiledare-johan-pehrson.html
Euron är en politiskt laddad fråga
I den mån det förekommer en svensk debatt återkommer man alltid till folkomröstningen för 20 år sedan då svenskarna sa nej.
Men Sverige är inte samma land som 2003. Det finns starka skäl att åter utreda eurons för- och nackdelar. Att Moderaterna ser positivt på en utredning är välkommet. Regeringen bör tillsätta den snarast.
Ledare:Henrik Westman DI 29 juni 2023, 15:44
https://www.di.se/ledare/utred-euron-innan-sverige-blir-ett-kronvrak/
Liberalernas partiledare Johan Pehrson öppnar nu för att införa euron i Sverige. Någon folkomröstning behövs inte
https://englundmacro.blogspot.com/2023/06/liberalernas-partiledare-johan-pehrson.html
Lars Calmfors upprepade sin önskan om att Sverige går med i euron.
Men folket vill något annat. Enligt en undersökning av Statistiska centralbyrån i maj vill bara 30 procent av svenskarna gå med i euron. Bland partierna är det bara Liberalerna som vill gå med – trots den svaga kronan.
Johan Carlström SvD 29 juni 2023
https://www.svd.se/a/BWeaaG/priset-for-en-starkare-krona-kan-innebara-hogre-arbetsloshet
Lars Calmfors – nu är han en av förespråkarna för den gemensamma europeiska valutan
SvT 29 juni 2023
https://englundmacro.blogspot.com/2023/06/lars-calmfors-nu-ar-han-en-av.html
Lars Calmfors – nu är han en av förespråkarna för den gemensamma europeiska valutan
– Någonting som vi inte förutsåg var mönstret att kronan alltid verkar försvagas vid internationella kriser.
SvT 29 juni 2023
Lars Calmfors, vår meste EU-utredare och chef för Finanspolitiska Rådet, har på DN Debatt i dag 15/1 2010 lyckats komma fram till slutsatsen att Sverige nu bör gå med i EMU.
- De mest aktiva EMU-förespråkarna har närmast velat förlöjliga argumentet om asymmetriska störningar. Men argumentet måste uppenbarligen även fortsättningsvis tas på största allvar.
Hur skall nu ekonomiprofessorn Calmfors komma fram till att vi bör gå med i EMU?
Det gör han genom att ta av sig sin professorshatt och sätta på sig amatörhatten.
- Utifrån ett mer allmäneuropeiskt perspektiv är det berättigat att ställa frågan om det verkligen är önskvärt att Sverige, när alla drabbas av ekonomisk kris, ska vinna fördelar på andras bekostnad genom en svag valuta.
- Framför allt kan man se det som ett övergripande värde att ett svenskt deltagande i eurosamarbetet kan antas bidra till ökad politisk integration i Europa.
Hade Calmfors varit lite modigare hade han skrivit rent ut, och inte bara implicit, att EMU inte är bra för Sverige.
Men det lönar sig föga att vara modig i Sverige.
Bättre då att uttala sig för ett europeiskt samarbete, att bli samarbetsman, eller kollaboratör, som det heter med ett finare ord.
https://www.internetional.se/emucalm.html#allvar
Det vore bra för Sverige att byta ut kronorna till euron
En svensk anslutning till valutaunionen utreddes 1995/96 av ekonomer och statsvetare i EMU-utredningen med mig som ordförande. EMU-utredningens slutsats var att fördelarna av ett inträde i valutaunionen på sikt skulle överväga nackdelarna. Men vi avrådde från en anslutning redan vid starten 1999.
I folkomröstningen 2003 röstade jag för euron.
Jag landar även i dag i att fördelarna med en övergång till euron överväger nackdelarna. Det viktigaste för mig är då att Sverige i en osäker situation för Europa kan bidra till mer politiskt samarbete. Och att den förlust av nationell suveränitet som skulle bli följden är liten i förhållande till vad ett Natomedlemskap betyder. Men kalkylen är svår. Det är lätt att komma till olika slutsatser.
EMU-frågan kan vänta lite till.
Lars Calmfors 19 januari 2023
https://www.dn.se/ledare/lars-calmfors-det-vore-bra-for-sverige-att-byta-ut-kronorna-till-euro/
”Det har blivit allt tydligare att den svaga kronan är ett problem för Sverige”, säger Jan-Olof Jacke, vd på Svenskt Näringsliv.
DI 29 juni 2023
https://www.di.se/live/nytt-men-kort-bottenrekord-for-kronan-efter-rantebeskedet/
RE:
Det som Calmfors låtsas som om han inte förstår är att med euron blir det hart när omöjligt att hoppa av det tåg som rusar emot ett nytt Romarrike som kan komma att sluta som en annan ekonomisk, politisk och monetär union; Jugoslavien.
- Jag vill inte ha en federativ utveckling. Svenska folket har inte gått med i en federation.
- Logiken i det hela rör sig i federativ riktning... Sch! säger Kohl åt mig när jag tar upp det
Prodi, Göran Persson och federalismen
https://englundmacro.blogspot.com/2021/09/dags-for-en-fornyad-debatt-om-ett.html
https://englundmacro.blogspot.com/2020/05/prodi-goran-persson-och-federalismen.html
2023-06-28
Powell “Although policy is restrictive it may not be restrictive enough
and it has not been restrictive for long enough,”
Powell said Wednesday during a panel hosted by the European Central Bank forum in Sintra, Portugal.
Dr Doom Roubini: A Mild Global Contraction Is Coming
We are still likely to encounter a tropical storm that could cause significant damage.
Much will depend on how major central banks confront the trilemma of simultaneously maintaining price, growth, and financial stability.
Even a short and shallow recession – let alone a hard landing – would cause significant declines in US and global equities.
And if central banks were then to blink, the resulting increase in inflation expectations would drive up long-term bond yields and eventually hurt stock prices
Nouriel Roubini Project Syndicate 27 june 2023
De tre aktieproffsen har varnat för kraftiga börsras – som ännu inte inträffat. Men de har inte övergett övertygelsen om att en krasch hotar framöver.
David Bagge, investerare och twitterprofil, Peter Malmqvist, analytiker, och Johan Isaksson, investerare och poddare.
DI 28 juni 2023
https://www.di.se/nyheter/borspessimisterna-star-fast-vid-sina-kraschvarningar/
Riksbanken sitter på 5 miljarder i lån till svenska fastighetsbolag,
200 miljoner bara till pressade SBB. Detta efter stödköp under pandemin.
Nu varnar Louis Landeman på Danske Bank för att Riksbankens avveckling av låneportföljen kan förvärra krisen.
Johan Carlström SvD 24 juni 2023
https://www.svd.se/a/zEe4B5/riksbankens-dilemma-ager-manga-obligationer
Fastighetsutvecklaren Serneke har köpts upp av fastighetsbolaget Doxa
https://englundmacro.blogspot.com/2023/06/fastighetsutvecklaren-serneke-har-kopts.html
2% Inflation. A steady rate of 4% simply isn’t sustainable politically
For a long time the focus was on the risk of underreaction, such as when the US had too little monetary and fiscal stimulus following the 2008 financial crisis. That was a myopic perspective, and so those commentators wanted an inflation target of say 4% to limit the possibility of aggregate demand shortfalls in the future.
At the time, expansionary advocates believed that it would fill an output gap rather than boost prices, and neither markets nor most economists expected anything like the resulting inflation rates. It is likely that these same mistaken beliefs would have prevailed at a starting point of a 4% inflation rate.
The “liquidity trap” arguments for a 4% inflation rate are complex, and I strongly suspect they are not political winners, given the unpopularity of inflation. For better or worse, this is no longer a world in which elites can simply do what they deem best, without much popular support.
Tyler Cowen Bloomberg 26 juni 2023
Why the bulls are running and the consumers are buying
Consumes and investors feel rich because they are rich.
ZIRP and QE
Global liquidity is once again expanding
So much then for central bank quantitative tightening, the much-mooted unwinding of the massive stimulus programmes to support markets and economies.
In a world of excessive debt, large central bank balance sheets are a necessity. So, forget QT, quantitative easing is coming back. The pool of global liquidity — which we estimate to be about $170bn — is not going to shrink significantly any time soon.
The CBO estimates that Fed holdings of US Treasuries will have to rise to $7.5tn by 2033 from current levels of nearly $5tn.
No QT here, but worse, these CBO spending projections are likely too low. More realistic numbers point to required Fed Treasury holdings of at least $10tn.
Michael Howell FT 28 June 2023
https://www.ft.com/content/6d14cad1-00f2-4d39-969f-c01ae1860d34
The writer is managing director at Crossborder Capital and author of
‘Capital Wars: The Rise of Global Liquidity’
https://www.amazon.com/Capital-Wars-Rise-Global-Liquidity/dp/3030392872
2023-06-27
2012 kostade en svensk och en dansk krona nästan lika mycket,
men nu får den som växlar in 100 danska kronor hos Riksbanken 158 svenska tillbaka.
SvD 27 juni 2023
https://www.svd.se/a/76oj04/svaga-kronan-ture-pendlar-till-danmark-tjanar-tio-procent-mer
Central banks must accept the “uncomfortable truth”
that they may have to tolerate a longer period of inflation above their 2 per cent target in order to avert a financial crisis the deputy head of the IMF Gita Gopinath told the European Central Bank’s annual conference in Sintra
FT 27 June 2023
https://www.ft.com/content/7d3276bb-8ef8-444c-8356-2792a6f58a24
OECD:s rekommendationer om att avreglera hyresmarknaden, fasa ut ränteavdraget och införa en fastighetsskatt...
... tycker Elisabeth Svantesson inte känns aktuella.
– Det vore ju något av det sämsta man kunde göra just nu. Jag tycker det är dåligt även i andra tider, säger hon om att fasa ut ränteavdraget.
– Det är inte en väg vi och våra samarbetspartier kommer att gå, tillägger hon.
TT/SvD 20 juni 2023
https://www.svd.se/a/xgdmMp/finansministern-kan-bli-krisstod-till-bonder
OECD Report
Sweden projection note OECD Economic Outlook June 2023 by OECD - Issuu
”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
Riksbanken måste få bukt med KPI-inflationen och realräntan...
... annars kommer den redan hårt straffade kronan att rasa ännu mer, enligt en analys.
Hans förhoppning är att Riksbanken går fram med 50-punktshöjning av styrräntan i veckan då inflationen enligt KPI är mycket högre än vad som sägs.
Sverige är ”duktiga på att förfina siffrorna” och låtsas att KPI är 6,7 procent för maj.
https://www.dagensps.se/bors-finans/valuta/analys-kronan-ser-ut-att-falla-pladask/
Det långt kvar till 2% och kronan ser ut att falla
fram tills att någon på allvar vågar justera realräntan som fortfarande är minus 6.2%
Lagarde in Sintra, Portugal “Macroeconomic stabilisation in a volatile inflation environment”
The Governing Council has provided orientation on both dimensions. It has stated clearly that “future decisions will ensure that the key ECB interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2% medium-term target and will be kept at those levels for as long as necessary”.
we will have to bring rates to “sufficiently restrictive” levels and keep them there “for as long as necessary”.
inflation has already dropped by 42 percentage points from its peak last summer.
the second phase of the inflation process is now starting to become stronger.
All this means that we will face several years of rising nominal wages
Barring a material change to the outlook, we will continue to increase rates in July.
Uncertainty about transmission arises from the fact that the euro area has not been through a sustained phase of rate hikes since the mid-2000s and has never seen rates rise so quickly. And this raises the question of how quickly and forcefully monetary policy will be transmitted to firms – via interest-sensitive spending – and households, via mortgage payments.
First, we need to bring rates into “sufficiently restrictive” territory to lock in our policy tightening.
Second, we need to communicate clearly that we will stay “at those levels for as long as necessary”.
Lagarde Sintra, 27 June 2023
https://www.ecb.europa.eu/press/key/date/2023/html/ecb.sp230627~b8694e47c8.en.html
“The New Empire: Europe in the 21st Century”
Imperial history is one long catalogue of crime in the intellectual and political mind of the Anglosphere. Academics dare not utter a word on the moral complexity of empires for fear of campus anathema.
Even the Wall Street Journal, usually quick to scorn wokery, can blithely lump together the British Empire, the Nazis, and Pol Pot in the same sentence. Three and half centuries of world history are reduced to genocide, and nobody bats an eyelid.
Europe, by contrast, is refreshingly immune to this ideological virus. The idea of empire as an organising form of politics is enjoying a rehabilitation in Brussels, pushed by the court philosophers at the Justus Lipsius HQ, and picked up avidly by exponents of a muscular “sovereign Europe” to match China and America.
Bruno Le Maire, France’s finance minister, penned a book four years ago entitled “The New Empire: Europe in the 21st Century”, warning that the EU will be reduced to a vassal unless it equips itself with the full machinery of a superpower. By empire he means a liberal democratic variant able to defend itself on every front, ensconced in a fortress Pax Europa.
Ambrose Evans-Pritchard Telegraph 15 June 2023
https://www.telegraph.co.uk/business/2023/06/15/imperialism-taboo-britain-extraordinary-europe/
"det Östliga partnerskapet – en politik syftande till att förstärka och fördjupa EU:s relationer med de sex östliga grannländerna Armenien, Azerbajdzjan, Georgien, Moldavien, Ukraina och Vitryssland.", enligt ett PM från Regeringskansliet till Riksdagen.
https://englundmacro.blogspot.com/2023/06/landerna-pa-vastra-balkan-moldavien.html
2023-06-26
The ‘soft landing’ stock bulls promise is more likely a double-dip recession
The unusual policy response to the COVID pandemic.
Had global authorities not acted, the sudden economic halt would have amounted to a slowdown of Great Depression proportions. Instead, we saw an unprecedented level of fiscal and monetary stimulus.
While the programs could have been better designed with full hindsight, it was imperfect battlefield surgery designed to keep the patient alive.
The global economy is now paying the price of those stimulus programs in the form of unwelcome inflation.
The closest analogy for current circumstances is the double-dip U.S. recession in the early 1980s.
The bear market didn’t end until August 1982, when the Mexican peso crisis caused the U.S. Federal Reserve to relent and ease.
Investors at that time were afforded the opportunity to buy the market at a single-digit P/E and the August 1982 bottom turned out to be a generational low.
Fast forward 40 years. Median wage growth is moderating but it’s still very high at 6.3%. The soft landing mirage. The Fed’s main challenge is getting inflation down to 2%, or near 2%.
Monetary policy is a blunt tool, and it’s virtually certain to induce a recession.
Cam Hui MarketWatch 26 June 2023
Cam Hui writes the investment blog Humble Student of the Markets, where this article first appeared.
https://humblestudentofthemarkets.com/
Dow’s bear market low of 777 points in August 1982.
Det datum som angavs som utgångspunkt för uppgången på börsen i New York var den 12 augusti 1982. Vad var det då, frågar man sig, som hände fredagen den 13 augusti, som satte fart på världens aktiebörser.
Jo, det som hände den dagen var att Mexiko förklarade att man inte längre kunde betala sin utlandsskulder. Det var /den dåvarande/ skuldkrisens födelsedag
https://englundmacro.blogspot.com/2022/05/volcker-if-i-had-known-what-was-going.html
Jag har skrivit en bok om det.
https://www.internetional.se/re82bok.htm
Bundesbank may need recapitalisation to cover bond-buying losses
Germany’s federal audit office has warned the Bundesbank may need a bailout to cover losses arising from the European Central Bank’s bond-buying scheme, potentially throwing a spanner in the ECB’s plans to carry out similar programmes in the future.
“The possible Bundesbank losses are substantial and could necessitate a recapitalisation of the [bank] with budgetary funds,” said the report by the audit office, the Bundesrechnungshof, which has been seen by the Financial Times.
Purchasing vast amounts of bonds to lower borrowing costs, known as quantitative easing, has long been controversial in Germany. The Bundesbank argued against it in 2015, when the eurozone’s central bank launched its bond buying, but it was outvoted at the ECB.
FT 26 June 2023
https://www.ft.com/content/46d3952a-5ee2-431a-8430-4a71e530cbce
CPI inflation, housing prices are the elephant in the room, the hippo in the pool
I’ve often thought it would be fun to convene a therapy group of weather forecasters and economic forecasters. Both face the same frustration: Everybody wants a clear, simple answer they can’t possibly give, because they don’t know. Then they get blamed for being wrong anyway.
I’ve been trying to explain inflation in this way. Yes, inflation is high. Yes, inflation is falling. Yes, inflation will stay elevated. And yes, inflation could rise again. All these can be simultaneously correct, and I think they are. But that doesn't mean they all will happen.
Today I want to expand on this muddle-through inflation forecast.
There’s a specific reason I think inflation will improve from where it was a year ago, but not drop back to pre-COVID levels (at least for a while). Inflation from here is all about housing (and to some extent services, but those prices can fall as fast as they rose).
And, as you’ll see, the housing sector has changed a lot in the last few years.
When we talk about CPI inflation, housing prices are roughly one-third of the conversation. It’s not just one item on a list. Housing is the 800-pound gorilla, the elephant in the room, the hippo in the pool.
It dominates everything else including food with 13.4% and energy at just under 7%.
If housing prices are going one way, it’s very hard for total CPI to go the other way.
John Mauldin 23 June 2023
https://www.mauldineconomics.com/frontlinethoughts/a-funny-kind-of-recession
Central banks face agonising choices.
What they do next will reverberate across financial markets, threatening uncertainty and upheaval for workers, bosses and pensioners.
Equity investors are hoping that central banks can return inflation to their 2% targets without inducing a recession. But history suggests that bringing inflation down will be painful.
The costs of inducing a recession, together with the longer term pressures on inflation, suggest another scenario: that central banks seek to evade their nightmarish trade-off, by raising rates less than is needed to hit their targets and instead living with higher inflation of, say, 3% or 4%.
They are likely to steer a course between high inflation and recession. Investors seem to believe that this can still end well, but the chances are that it won’t.
The Economist 22 June 2023
https://www.economist.com/leaders/2023/06/22/investors-must-prepare-for-sustained-higher-inflation
Alfa Romeo
Alfa bildades 1910 och är en förkortning för Anonima Lombarda Fabbrica Automobili. Tilläggsnamnet Romeo kom tio år senare, när en napolitansk entreprenör tog över.
Närskådar man emblemet i grillen ser man att den kronbeklädda ormen håller på att sluka ett människohuvud. Symbolen är hämtad från den italienska familjen Viscontis vapensköld, släkten som basade över Milano under medeltiden. Andra halvan utgörs av Milanos rödvita flagga.
Instegspriset för Tonale med utrustningsnivån Ti är 574 000 kronor.
För 594 000 kronor får man den maxutrustade utrustningsnivån Veloce som bland annat ger 19-tumsfälgar, alcantara även på instrumentpanelen, stora rattpaddlar att växla med, kraftigare rödmålade Brembobromsar och adaptivt chassi.
Detta är utöver en redan väldigt generös grundutrustning som innehåller eluppvärmd ratt och eluppvärmda stolar, elbaklucka, adaptiv farthållare och filhållningsassistans. Därtill nyckellös entré, infällbara backspeglar, läderratt, trådlös mobilladdning – och mycket mer.
https://www.svd.se/a/kE1kqa/test-alfa-romeo-tonale-plug-in-hybrid-q4-alfas-forsta-laddbara
alfaromeo.se/history
Litquidity - ‘The market is beyond satire. You can’t make it up’
Litquidity’s viral posts are comedic cocaine to banking executives and trading floor interns, hoovered up by those who love Wall Street and those who love to hate it. His humour bites at everything from monetary policy to bad loafers.
Madison Darbyshire FT 23 June 2023
https://www.ft.com/content/822e9ab7-3351-4833-a8fc-5436d898c627
Madison Darbyshire
https://www.ft.com/madison-darbyshire
Putin, Lenin and Prigozhin
In 1905, the Russian fleet’s disastrous performance in a war with Japan helped inspire a failed revolution. In 1917, angry soldiers came home from World War I and launched another, more famous revolution.
Putin alluded to that moment in his brief television appearance this morning. At that moment, he said, “arguments behind the army’s back turned out to be the greatest catastrophe, [leading to] destruction of the army and the state, loss of huge territories, resulting in a tragedy and a civil war.”
Anne Applebaum The Atlantic JUNE 24, 2023
https://www.theatlantic.com/international/archive/2023/06/russia-civil-war-wagner-putin-coup/674517/
Here is the text of the Russian president’s emergency address as Wagner chief leads armed rebellion
“It’s a strike in the back of our country and our people. Exactly this strike was dealt in 1917 when the country was in world war one, but its victory was stolen. Intrigues, and arguments behind the army’s back turned out to be the greatest catastrophe, destruction of the army and the state, loss of huge territories, resulting in a tragedy and a civil war. Russians were killing Russians, brothers killing brothers. But the beneficiaries were various political chevaliers of fortune and foreign powers who divided the country, and tore it into parts.
Yanis Varoufakis @yanisvaroufakis 24 juni
Putin has outdone himself: He dared compare Prigozhin to Lenin, making the absurd comparison of Wagner's mutiny to the Bolsheviks' principled stance against the inhuman WW1. A reminder to leftists who erred into tolerating Putin: He always hated the Left!
2023-06-25
France doesn’t want automatic debt-reduction rules. Never did.
Instead, in 1997, France insisted on adding the word “growth” to Germany’s idea for a “stability” pact. The result was the Stability and Growth Pact (SGP).
Thus, an insane contradiction was born, one now lurking at the very heart of Europe. Think about it. Stability and Growth? Deflationary and Inflationary policies? Not even the title makes sense.
The SGP was supposed to enforce the 1992 Maastricht rules: deficits at no more than 3 per cent of GDP, and debt no higher than 60 per cent.
Of course, these rules were quickly broken.
And then, of course, came Covid. The general escape clause of the SGP was activated, which: . . . allows the Commission and the Council to depart from the budgetary requirements that would normally apply.
Unsurprisingly, many European budget deficits are today greater than 3 per cent…
Edward Price FT 23 June 2023
https://www.ft.com/content/043654b4-b5c1-4770-9d6d-6194336608a5
The economy will not get back to 2 per cent inflation without a sharp slowdown and higher unemployment
Like it or not (I certainly do not)
Why not just give up on the target and accept, say, 4 or 5 per cent inflation?
The answer is that if a country abandons its solemn promise to stabilise the value of the currency as soon as it becomes hard to deliver, other commitments must also be devalued.
Martin Wolf FT 25 June 2023
https://www.ft.com/content/83026a79-2ac9-40e8-94e7-efee443e8d8d
Powell Wins Over Bond Traders
Once aggressive bets for Fed rate cuts in 2023 are unwound
Traders have scrapped once-aggressive wagers that the Federal Reserve chief would pivot to easing policy before the end of this year, reflecting deeply diminished expectations that the central bank’s rate hikes are poised to set off a sharp recession.
Bond yields have risen back toward levels seen before the panic sown by Silicon Valley Bank’s collapse.
Bloomberg 24 June 2023
https://www.dw.com/en/ecb-says-finishing-line-in-sight-on-inflation-interest/a-66025101
Europe’s bank resolution authority
“We need [policymakers] to come back to the drawing board on the issue of funding in resolution,” said Laboureix, whose institution is charged with safely winding down large or systemic eurozone banks that run into difficulty, a group that currently numbers 115.
FT 25 June 2023
https://www.ft.com/content/25c680cd-6850-4a34-b009-fb98ec76a46d
Dominique Laboureix's speech: The challenges of the European supervisory and resolution framework
Speeches | Wednesday, 17 May 2023
Single Resolution Fund
https://www.srb.europa.eu/en/single-resolution-fund
The EU authorities do not have the legal power to conduct the sort of rescue measures just concocted by the US Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation, acting in concert.
The Bank Recovery and Resolution Directive (BRRD) does not allow national governments to bail out uninsured depositors in a crisis.
https://englundmacro.blogspot.com/2023/05/who-exactly-is-responsible-for-bank.html
BIS: Historically, many high-inflation episodes were followed by a banking crisis
Research presented in the report also showed that In recent decades, monetary and fiscal policy gradually moved toward the boundaries of a so-called “region of stability,” as “they were often relied upon as de facto engines of growth.”
Monetary and fiscal policy: safeguarding stability and trust
https://www.bis.org/publ/arpdf/ar2023e2.htm
BIS Annual Economic Report 2023
https://www.bis.org/press/p230625.htm
TV series called Reilly, Ace of Spies
Riley was a spy who lived a life of adventure and danger. He was born in Russia, but worked for different countries, including Britain, Germany and Japan. He was involved in many important events of the early 20th century, such as the Russo-Japanese War, the First World War and the Russian Revolution.
He tried to overthrow the Bolsheviks in 1918, but failed and escaped. He was later lured back to Russia by a fake plot and executed by the Soviet secret police in 1925.
His story was made into a TV series called Reilly, Ace of Spies in 1983.
By ChatGPT
24 June 2023
See also
https://en.wikipedia.org/wiki/Reilly,_Ace_of_Spies
Vi flyger på weekendresor och fyller pooler som om ingenting har hänt
psalm nummer 201, ”En vänlig grönskas rika dräkt”.
Wirsén var, då han skrev sitt enda mästerverk, influerad av Jesaja, den bibliska profeten vars barska budskap får dagens civilisationskritiker att låta som grönmålande muntergökar på Ulf Kristerssons klimatkonferens.
Något av det mest skrämmande är den skuldmedvetna tystnad som är på väg att sänka sig över denna framtid.
Åven de människor som är aktivt intresserade av eller mycket bekymrade över klimatförändringarna har en tendens att inte tala om dem med sina vänner och bekanta i vardagslivet. Och att skälet är att de, i sin tur, aldrig hör den omtalas av andra, vilket förstärker den negativa spiralen.
Det faktum att människor inte talar högt om klimatkrisen skapar intrycket av att ingen oroas av den. Om alla agerar som om ingenting har hänt, då verkar heller ingenting ha hänt.
Björn Wiman DN 25 juni 2023
2023-06-24
Annie Lööf. Vartenda hårstrå ligger blankt och leendet är detsamma på varenda bild
Dags för ”Den oantastliga Annie Lööf” att sommarprata.
SvD 24 juni 2023
https://www.svd.se/a/wAk9KM/annie-loofs-sommarprat-partiledarens-sjalvbild-sprack
Annie Johansson har bytt namn
Annie Johansson (C) ångrar ett politiskt beslut:
att hon röstade nej till att byta krona mot euro 2003
Lööf är dubbelmoralen personifierad
"Men problem med den moraliska kompassen är allvarligare än kunskapsluckor. De sistnämnda kan ju trotsallt repareras ganska lätt."
2023-06-23
What to say about house prices at a dinner party
Here are the most popular misconceptions I hear about home ownership at dinner parties. You will see why the invites stopped.
Stuart Kirk FT 23 June 2023
https://www.ft.com/content/2a42bcf8-1ad4-4860-9035-923383100058
Stuart Kirk writes about investing for FT Weekend. He held roles in banking, asset management and consulting over a 20-year career, and ran the Lex Column in a previous incarnation at the FT.
Shame on the Bank of England...
... for bowing to pressure from inflation headbangers and joining the grotesquely-mistimed monetary stampede.
Having stoked an inflationary storm by monetising the post-pandemic recovery with zero rates and extra lacings of QE, it is now committing the opposite error at the worst moment in the cycle by over-tightening into a deepening global downturn.
You don’t have to be a monetarist to see danger in the precipitous contraction of all key measures of the money supply over recent months, even adjusting for the legacy stock of pandemic savings. The key aggregates never came close to turning negative in this way during the 1970s.
The Bank of England and its acolytes have a bad habit of misrepresenting what serious monetarists actually say. It propagates strawman arguments based on a pidgin caricature of the quantity theory of money – an approach best expounded by Keynes (yes, Keynes) in his Tract on Monetary Reform.
Ambrose Evans-Pritchard Telegraph 22 June 2023
The Bank of England increased its key interest rate by a half-point
Most economists expected a quarter-point move.
MarketWatch 22 June 2023
https://www.marketwatch.com/articles/bank-of-england-rate-hike-meeting-today-c3025a0f
The World’s Empty Office Buildings Have Become a Debt Time Bomb
From San Francisco to Hong Kong, higher interest rates and falling property values
Bloomberg 23 juni 2023
The ‘Extend and Pretend’ Real Estate Strategy Is Running Out of Time
Patrick Clark Bloomberg 23 juni 2023
U.S. stocks head for punishing selloff as ‘unknown unknowns’ could drag market lower, JPMorgan analysts warn
After standing by their bearish view on the market all year, a team led by JPM Chief Global Markets Strategist Marko Kolanovic is warning clients that U.S. stocks could be headed for selloff due to some murky, unseen catalyst, according to a research note shared with MarketWatch on Thursday.
Simply put, investors might soon wake up to the realization that equity valuations are too elevated once the economy starts to slow. JPM expects the long-anticipated recession could begin during the fourth quarter, or first quarter of 2024.
“Unknown unknowns” is a phrase used by former Defense Secretary Donald Rumsfeld in a 2002 news briefing, where he said: “There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know.”
MarketWatch 22 June 2023
Defense Secretary Donald Rumsfeld in a 2002 news briefing
https://www.youtube.com/watch?v=REWeBzGuzCc
Defense Secretary Donald H. Rumsfeld and Vietnamese Minister of Defense Gen. Pham Van Tra participate in a ceremony officially welcoming Rumsfeld to Hanoi
Vem vann Vietnam-kriget? (internetional.se)
Liberalernas partiledare Johan Pehrson öppnar nu för att införa euron i Sverige. Någon folkomröstning behövs inte, anser partiledaren.
I samband med folkomröstningen 2003 var det 55,9 procent som röstade nej för att gå med i valutaunionen, EMU.
En folkomröstning är inte nödvändig nu om det finns majoritet i riksdagen, säger Pehrson i intervjun med Aftonbladet:
”Det är absolut inte nödvändigt. Sverige blev medlem i EU via en folkomröstning, sedan var det tydligt att det ingår en skyldighet att ingå i euron. Men vi hade en folkomröstning (om EMU) och EU låter oss vara för att EU har respekt för det. Men vi borde vilja gå med, med stor glöd och passion”, säger han.
TT/DI 22 juni 2023
https://www.di.se/nyheter/liberalerna-infor-euron-utan-folkomrostning/
Johan Pehrson (L): Det återstår att få med sig befolkningen och en ny folkomröstning om euron krävs
DI 18 mars 2023
https://englundmacro.blogspot.com/2023/03/johan-pehrson-l-det-aterstar-att-fa-med.html
Man skall aldrig, aldrig, lita på en folkpartist.
Däremot skall man ställa frågan om till vilken kurs de anser att kronan skall för evigt knytas till euron.
Heatwave: China capital
The city is experiencing a prolonged heatwave with extreme temperatures to persist until the end of June.
The hottest June day since record keeping began in 1961.
Last month, the country's largest city Shanghai, with 25 million people living on the east coast, recorded its hottest May day in a century.
More than 21 million people live in Beijing, the nation's capital in the north.
On Thursday, a weather station in the city's north recorded a high of 41.8C.
BBC 22 June 2023
Beijing heatwave: China capital records hottest June day in 60 years - BBC News
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