Englund

Home https://englundmacro.blogspot.com/ https://internetional.se/ https://twitter.com/RolfEnglund1  

 Stockholmsbörsen steg under fredagen  Storbolagsindexet OMXS30 adderade 0,8 procent. OMXS30 toppades av fastighetsbolaget SBB som steg 10 procent

that borrowed in a world of 3-4% in interests with maturities in 2025 and 2026, said Eric Larsson, co-head of special situations at Alcentra, a credit-focused fund.  “When they come to refinance, you’ll see a coupon step-up from 3%-4% to maybe 9%. That’s simply not viable for most capital structures.” Brink Newsletter Bloomberg 29 September 2023 https://www.bloomberg.com/news/newsletters/2023-09-29/junk-rated-companies-are-facing-a-wall-of-debt-maturities Home https://englundmacro.blogspot.com/ https://internetional.se/ https://twitter.com/RolfEnglund1

Often they neatly fit together. Right now, not so much. The latest issue is the relationship—or not—between bonds and stocks.  On Monday, the 10-year Treasury yield closed above 4.5% for the first time since 2007, and then rose more.  On Tuesday, the equal-weighted version of the S&P 500 fell back enough to leave it down for the year so far. Investors like the strong economy and the government spending; they just don’t like the higher rates and the extra borrowing.  The confused causes might explain why there is no relationship between how expensive a stock was on a forward price/earnings multiple at the end of July and how it has moved since. The bond markets that really matter for stocks aren’t Treasurys, but corporate debt. Companies that borrowed at floating rates have been hit hard, and borrowing costs are much higher than at the start of last year James Mackintosh WSJ 29 September 2023 https://www.wsj.com/finance/stocks/bond-yields-up-stocks-down-but-somethings-missing-8c73f2

 S&P 500 is clinging to a 12% advance for the year A prolonged period of elevated rates could upend the investing strategies that prevailed during years of rock-bottom rates after the global financial crisis, when investors saw few options for returns outside the stock market. Now the central bank’s rate increases have seeded a world of yield, giving investors opportunities to earn meaningful returns with little potential downside.  The S&P 500 is on track to drop 3.4% for the quarter.   The Dow Jones Industrial Average has declined 2.2%, or about 741 points, while the tech-heavy Nasdaq Composite has tumbled 4.3%. WSJ 29 September 2023 https://www.wsj.com/finance/stocks/the-2023-stock-market-rally-sputters-in-new-world-of-yield-63134c7f TINA vs. TARA, TAPAS and TIARA https://englundmacro.blogspot.com/2023/03/tina-vs-tara-tapas-and-tiara.html Home https://englundmacro.blogspot.com/ https://internetional.se/ https://twitter.com/RolfEnglund1

Mary Beard’s new book, Emperor of Rome, the story of the society that brought us not just Julius Caesar, the first “Caesar”, but also his great nephew Octavian, later Augustus, who turned Rome from a republic into an empire Ferdinand Mount  his book Big Caesars and Little Caesars; an author who once ran Margaret Thatcher’s Downing Street policy unit The two books are very different: Mount’s learned but also journalistic; Beard’s a beautifully written product of a lifetime of deep scholarly learning. The Roman empire survived in the west alone for some 500 years Martin Wolf  Financial Times 28 September 2023 https://www.ft.com/content/b869362f-952a-42cf-9d2b-f97300d235b7 Lisa Magnusson: De som säger att de tänker på romarriket ljuger Ju äldre jag blir, desto mer ödmjuk blir jag inför skillnaderna mellan män och kvinnor. Dessa skillnader till trots vet jag en sak, och det är att ingen – utom Ida Östenberg, professor i antikens kultur, och en handfull andra specialintresserade – tänker så

  Börsen öppnar på grönt – BHG lyfter på omstrukturering (di.se) SBB i topp på munter fredagsbörs https://www.di.se/live/sbb-i-topp-pa-munter-fredagsbors/ Home https://englundmacro.blogspot.com/ https://internetional.se/

  Phasa-35 moves so slowly it can appear to be going backwards. This weird, elongated British aircraft is powered by small electric engines attached to elongated wings encasing solar panels. These capture power during the day and keep the two engines turning at night. The slow and delicate aircraft taking on spy missions - BBC News

Bank of America’s big bond losses likely widened in the current quarter due to a sharp increase in market interest rates. Bank of America was sitting on $105.8 billion of losses on a $614 billion portfolio of mostly agency mortgage securities at the end of the second quarter.  That loss could have widened by $10 billion to $15 billion in the current quarter assuming no major rate moves by the end of this week, Barron’s estimates.  MarketWatch 28 September 2023 https://www.marketwatch.com/articles/bank-of-america-bond-losses-c09aa0f6 It was duration that precipitated the regional bank failures in March, as banks that had heavily invested in longer bonds were unable to access liquidity without taking losses. John Authers Bloomberg 28 September 2023 https://englundmacro.blogspot.com/2023/09/rounding-up-usual-suspects-after-new-low.html The speed of the current selloff in U.S. government debt  i s raising the possibility of renewed trouble for banks  and other existing holders of Treasurys

 I skrivande stund har Stockholmsbörsens breda OMXSPI-index backat 0,4 procent till indexnivån 781,832 och befinner sig därmed under de 781,859 som vi avslutade 2022 på.  Viktor Mölne DI  28 september 2023, 10:33 https://www.di.se/live/arets-borsuppgang-utraderad/ Börserna i Stockholm spurtade under den avslutande handelstimmen och breda index OMXSPI stängde handeln 0,4 procent högre medan storbolagsindex OMXS30 stärktes 0,3 procent. Börsåret 2022 Både Riksbanken och amerikanska centralbanken FED började 2022 med nollränta för att avsluta året med en ränta på 2,50% för Riksbanken och 4,25 – 4,50 % för FED. Börsåret kvalar in som det sämsta sedan finanskrisens 2008, både på hemmaplan och i USA.  På breda Stockholmsbörsen sjönk snittaktien hela -50% från tidigare rekordnotering som i de allra flesta fall inföll under 2021.  På amerikanska teknikbörsen Nasdaq sjönk snittaktien hela -66%.  TINA ersätts av TARA där vi under lång tid argumenterat för att det inte funnits några reella alterna

Ten-year bonds have broken out this month, with yields surging past 4.6% in Wednesday trading. In such conditions, there’s nowhere to hide. Bloomberg’s global version of the classic 60:40 (60% stocks and 40% bonds) portfolio also appeared to hit a durable low in October. It’s now dropped back below its 200-day moving average once more, for the first time since the turn of the year: How Might We Have Known? Check out the performance of Bloomberg’s index of the Magnificent Seven — Apple Inc., Amazon.com Inc., Alphabet Inc., Meta Platforms Inc., Microsoft Corp., Nvidia Corp. and Tesla Inc. — in comparison with the S&P 500 equal-weight index, which effectively measures the average stock. Markets appeared to be rebounding early Tuesday, before a fresh tumble. If there was a catalyst for that, it came from oil.  A Possible US Government Shutdown Derivatives The Federal Reserve With hindsight, rates were left too low for too long in 2021; that made it much easier to lock in low rates. The

  27/9 Mulen morgon. Måhända det blir en surmulen öppning i Stockholm. 10-Year Treasury Yield Climbs Above 4.6% Den svenska tioårsräntan brakade på torsdagen med viss kraft igenom 3 procent. https://www.di.se/nyheter/tioarshogsta-for-den-svenska-tioarsrantan/ ‘Extreme fear’ has returned to the U.S. stock market Published: Sept. 27, 2023  https://www.marketwatch.com/story/extreme-fear-has-returned-to-the-u-s-stock-market-e317fc3b Market Extra Entire U.S. Treasury yield curve moves toward or above 5%, raising risk something may break The speed of the current selloff in U.S. government debt is raising the possibility of renewed trouble for banks and other existing holders of Treasurys, which tend to get hit hardest by rising yields.  TD Securities strategists Gennadiy Goldberg and Molly McGown said that a persistent selloff in bonds “increases the risk of ‘breaks’ similar to” those seen during the U.K.’s  liability-driven investment crisis  of last year and this year’s collapse of Silicon

 a raft of headlines are weighing on already-frail confidence in the property market.  Evergrande said it has to revisit its debt restructuring plan and a unit missed a yuan bond payment. Former executives at the defaulted real estate giant have been detained China Oceanwide Holdings Ltd. said it is facing liquidation and  Country Garden Holdings Co. is still trying to avoid a potential default. Bloomberg 26 September 2023 https://www.bloomberg.com/news/articles/2023-09-25/china-s-ailing-property-market-faces-key-test-over-golden-week China’s gigantic real estate bubble has popped, but prices still haven’t fallen much. In part, that is because of price controls which many Chinese cities imposed on housing over the past two years to keep values stable. Now China is starting to loosen the rules—with unpredictable consequences. Under the rules, which were applied in dozens of cities, local governments typically blocked developers of new homes from offering discounts of 10% to 15% or more

Globalism, climate-change alarmism and cultural self-annihilation have all come under serious challenge. Over the past 30 years, the values of Judeo-Christian belief that had inspired and sustained Western civilization and culture for centuries have been steadily replaced in a moral, cultural and political revolution of the postmodern ascendancy.  But the contradictions and implausibilities inherent in this successor creed have been increasingly exposed, and its failure to supply the needs of the people is discrediting it in the popular mind. Gerard Baker WSJ 25 September 2023 https://www.wsj.com/articles/the-new-moral-order-is-already-crumbling-climate-europe-immigration-australia-25d21439

 

 Steve Goldstein MarketWatch 27 September 2023

Man kan tro att ifall vi låst oss till euron så skulle vi ha varit 33 procent rikare i dag. Samtidigt hävdas ofta att vi inte haft någon nytta av att ha en egen riksbank eftersom vår ränta inte avvikit så mycket från Europeiska central­bankens ränta. Men dessa två argument går inte ihop.  Man kan inte samtidigt hävda att vi blivit fattigare för att kronan är svag och att det inte spelat någon roll att vi behållit kronan. Relevant är att jämföra den ekonomiska utvecklingen i Sverige med utvecklingen i eurozonen. För att jämföra reala inkomster i olika länder brukar man använda växelkurser baserade på köpkraft.  Moder Svea är den rika mostern, inte den fattiga kusinen! Italiens ekonomi växte snabbt tills man införde euron, men med euron gick man snart in i långvarig stagnation.  Krisen i Spanien är speciellt intressant då den på många sätt påminde om den svenska krisen i början på nittiotalet. Utan självständig penning­politik kunde man inte bromsa en fastighets­bubbla och relativt hög i

DI 27 September 2023 https://www.di.se/analys/darfor-har-smabolagen-kraschat/ Röd Öppning - Boken https://englundmacro.blogspot.com/2023/09/rod-oppning-boken.html Home https://englundmacro.blogspot.com/

They also rose year-on-year, and are virtually back to their all-time peak.  This wasn’t supposed to happen   Supply has much to do with this. Homeowners with an affordable mortgage fixed for many years into the future have zero incentive to sell John Authers Bloomberg 27 September 2023 https://www.bloomberg.com/opinion/articles/2023-09-27/house-prices-won-t-get-fed-relief-ai-stocks-slippage-belies-a-strong-future U.S. home prices rose in July, Case-Shiller says The S&P CoreLogic Case-Shiller 20-city house price index rose 0.9% in July, as compared with the previous month. Prices were up for the sixth month in a row. On a year-over-year basis, home prices in the 20 major metro markets in the U.S. were up 0.1% nationally.  MarketWatch 26 September 2023   https://www.marketwatch.com/story/u-s-home-prices-rose-in-july-case-shiller-says-ab106b17

 Governments need to step up clean energy supply to avoid shortages and price jumps, agency warns  Coal, oil and natural gas will all need to be replaced by clean energy at a rapid rate to keep the world on track to cut greenhouse gas emissions to net zero by 2050 FT 26 September 2023 https://www.ft.com/content/44f71221-f99f-4d44-a46d-4255c085f199 https://www.ft.com/renewable-energy Home https://englundmacro.blogspot.com/

The world’s most influential regulators are intensifying their scrutiny of a mounting potential risk to  the $25tn US government bond market.  The so-called basis trade involves playing two very similar debt prices against each other — selling futures and buying bonds — and extracting gains from the small gap between the two using borrowed money. Such risks matter because the US Treasury market underpins the global financial system. FT 26 September 2023 https://www.ft.com/content/a8348e2a-a90f-474c-baa6-8c2eb0e263c2

  Rött Slut i Stockholm Årets uppgång på Stockholmsbörsen närmar sig utraderad  efter ännu en handelsdag i röda färger. DI 26/9 2023 Rätt Slut i New York Röd Öppning - Boken https://englundmacro.blogspot.com/2023/09/rod-oppning-boken.html Home https://englundmacro.blogspot.com/

Nu har återigen en kampanj börjat för att Sverige ska ansluta sig till euron. Vi är många som vill delta i debatten.    Torsdagen den 19 november 1992 på eftermiddagen, klockan 14.30, skedde det vi hade fruktat. Efter ett mycket kostsamt försvar gav Sverige upp, och kronan fick flyta fritt emot andra valutor. Alla vi som då arbetade med räntor och valutor fick konstatera att det ”officiella” Sverige hade haft alldeles fel, och att de som varit ”lojala” med Sverige och trott på den fasta växelkursen fick betala ett mycket högt pris när kronan släpptes.  Många av de konkurser som kom i spåret av de dåliga tiderna i början av 1990-talet, var en direkt följd av den svenska devalveringen. Lån i utländsk valuta var mycket vanligt i början av 1990-talet.  Min personliga lärdom var att alla makroanalyser i princip var fel (som sa: fast valuta för evigt), och att endast ett fåtal personer hade både kompetens och framför allt ryggrad att säga som det var.  Efter devalveringen 1992 gick vi från s

Kronan stärktes med omkring 15 öre mot euron och 8 öre mot dollarn. https://www.di.se/live/surt-pa-stockholmsborsen-sbb-rusade-mot-strommen/ 10-year Treasury yield near 4.5% https://englundmacro.blogspot.com/2023/09/10-year-treasury-yield-near-45.html Röd Öppning - Boken https://englundmacro.blogspot.com/2023/09/rod-oppning-boken.html Home https://englundmacro.blogspot.com/

  WSJ 25/9 2023 https://www.wsj.com/finance/investing/why-are-tech-stocks-down-bond-yields-are-up-6c5d65a2 SE Räntan på den amerikanska tioåriga statsobligationen spränger igenom ännu en vall. DI förklarar varför detta är dåliga nyheter för börsen. Det är upp till bevis för aktier som tillgångsslag. Johan Wendel DI 25 september 2023 https://www.di.se/analys/skracksignalen-tjuter-starkare-och-pressar-borsen/ Röd Öppning - Boken https://englundmacro.blogspot.com/2023/09/rod-oppning-boken.html Home  https://englundmacro.blogspot.com/

 – Ta exemplet med en 27-åring som köpte sin första lägenhet för två år sedan utifrån de förutsättningar som gällde då, kontra 27-åringen som köpte sin första lägenhet för tio år sedan och som sedan hade åtta år av stigande marknad och så kallad bostadskarriär framför sig, säger Johanna Kull. Självklart är man ansvarig för sina egna lån, men i stället för att peka finger åt enskilda hushåll bör vi fokusera på den större bilden. Hur hamnade vi överhuvudtaget i den här situationen, resonerar Johanna Kull, sparekonom på Avanza Bank.  – Där menar jag att den expansiva penningpolitiken mitt i en högkonjunktur, tillsammans med en dålig och i många fall icke fungerande hyresmarknad spelar en avgörande roll. SvD 25 september 2023 https://www.svd.se/a/76AaLv/rantehojningarna-slar-mot-ensamstaende-foraldrar Home https://englundmacro.blogspot.com/  

But will it really help in a crisis? Banks borrow to finance most of their business. But when those loans can be pulled almost instantly – as was the case with Silicon Valley Bank’s deposits in March – executives and regulators have few options to stem the panic.  Now regulators want to mandate that federally insured lenders with $100 billion or more in assets issue long-term debt to finance a specified minimum percentage of the total.  Debtholders would be motivated to monitor banks’ financial health closely, so a sudden drop in bond prices would signal emerging concerns. Imposing losses on bondholders, even those who have been warned and compensated for the risk that they might not get all their money back, can create added stress on markets. Regulators should know by now that equity capital is the only type of funding that can reliably absorb losses — and they should require more of it.  The Editorial Board Bloomberg 19 september 2023 https://www.bloomberg.com/opinion/articles/2023-

  Book Home  Jag vaknar. Himlen är blå, även om det blåser starka kyliga vindar. Det skall bli en orkan som skall drabba den amerikanska östkusten. Det var kraftigt neråt i New York i går kväll.  -  BofA says rate concerns spark biggest stock outflows this year 10-year Treasury yield touches 4.5% for first time since 2007, enligt Bloomberg. Powell var ovanligt hökaktig och det framkom klart att i nte ens Fed vet vad räntan skall vara för att vara neutral, när den stramar åt eller när stimulerar. https://www.bloomberg.com/opinion/articles/2023-09-21/fed-meeting-powell-gets-a-break-as-markets-connect-the-dots Den som vill läsa om den neutrala räntan, Knut Wicksell är upphovsman, kan läsa här: https://englundmacro.blogspot.com/search/label/Star   “We don’t fully understand what is happening in advanced economies.” Lorenzo Bini Smaghi, the former member of the ECB’s executive board Financial Times, April 17, 2013 The repo markets mystery reminds us that we are flying blind Gillian Tett FT