Yield plunge spurs advance in stocks, credit, emerging markets
Investors see scope for more gains with Fed cuts on horizon
Yield plunge spurs advance in stocks, credit, emerging markets
Investors see scope for more gains with Fed cuts on horizon
Sannolikheten för att Europeiska centralbanken (ECB) efter aprilmötet 2024 har sänkt sina styrräntor med 25 punkter (0,25 procentenheter) är nu i princip 100 procent, om man tittar på prissättningen på räntemarknaden.
Samtidigt börjar allt fler tro att sänkningen kommer redan i mars, där sannolikheten just nu är uppe i 45 procent för en sänkning.
Synen på ECB-räntan nästa år har förändrats snabbt bland spekulanter och investerare
Marknaden säker: ECB sänker i april | SvD
The row underscores the awkward position that Euroclear has found itself in over how to apply western sanctions on assets linked to Russia and its allies over the invasion of Ukraine.
The settlement house is one of the pillars of the global capital market, tracking and finalising millions of securities trades a day.
It has been withholding payments to and from sanctioned entities in Russia and elsewhere, and has earned more than €3bn this year to October in income related to frozen Russian assets.
EU leaders plan to spend the money on helping the recovery in Ukraine.
FT 30 November 2023
https://www.ft.com/content/64807c8a-f764-4620-a900-d22e83cb4920
According to our simulations, having her own currency would have helped the export of Finland to recover from the GFC and also from the long recession of 2012-2015.
Moreover, the depreciation of the markka, combined with the strong growth of the world economy in 2016-2018, would have pushed our exports to new heights.
At the Q1 2020, if we had remained in markka, our exports would have been more than 40 percent higher than what they are now.
Euro, markka and the exports of Finland
2020-06-13 by Tuomas Malinen Eurozone, Recession, Uncategorized
There has been a lively debate on the effect of national currencies on the economic performance of the members of the Eurozone. In 2012, we published a report, where we simulated the potential development of the export of Finland, if we had remained in our own currency, markka. Now we have updated those simulations.
Our updated simulations draw a very straight-forward picture. According to them, our export would have been more than 40 percent higher in Q1 2020, if we had remained in markka.
https://gnseconomics.com/2020/06/13/euro-markka-and-the-export-of-finland/
"Få har ännu uppmärksammat att EU:s och Sveriges säkerhet nu tvingar fram en utvidgning vars framgång är helt avhängig en stark europeisk centralbank."
Det skriver Stefan Fölster på SvD Debatt.
Haken är att dessa åtta länder, och flera nuvarande EU-länder, för en svajig makroekonomisk politik och brister när det gäller rättsstatlighet och korruption.
Hittills har endast de starka maktmedlen som ECB har fått sedan 2012 kunnat förmå länder att genomföra nödvändiga reformer.
Därför är en stark europeisk centralbank ett viktigt europeiskt och svenskt säkerhetsintresse.
Sammantaget finns nu mycket goda säkerhetsskäl att främja en stark europeisk centralbank som Sverige helst också skall ha inflytande i.
Stefan Fölster, senior fellow och rapportförfattare vid tankesmedjan Frivärld.
https://www.svd.se/a/BWaB6G/stefan-folster-euron-nodvandig-for-sveriges-sakerhet
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EU:s decembertoppmöte
EU-länderna ska försöka enas om extrapengar till budgeten och eventuell förhandlingsstart om medlemskap med Ukraina och Moldavien.
Man inleder med att träffa sina kollegor från de EU-sugna länderna på västra Balkan: Albanien, Bosnien och Hercegovina, Kosovo, Montenegro, Nordmakedonien och Serbien.
https://www.svd.se/a/Q7vojV/dubbelt-toppmote-i-eu
Mrs von der Leyen blundered badly in linking Ukraine aid to the EU budget, hoping to use the war as a rocket booster for other ambitions.
Everything is instead crashing around her.
Ambrose
EU förbereder ett katastrofalt misstag
https://englundmacro.blogspot.com/2023/10/eu-forbereder-ett-katastrofalt-misstag.html
Frivärld
Frivärlds huvudfinansiär och huvudman är Stiftelsen Fritt Näringsliv.
Stefan Fölster, Svenskt Näringsliv: "Det är egentligen inte en Greklandskris utan en bankkris"
https://englundmacro.blogspot.com/2011/06/stefan-folster-svenskt-naringsliv-det.html
Home Prices Hit Fresh Record in September
S&P CoreLogic Case-Shiller National Home Price Index rose 3.9% from a year earlier
https://www.wsj.com/economy/housing/home-prices-rose-to-record-in-september-0203b125
Looks like Fed is all but done in hiking cycle: Jamieson Coote
Swaps are pricing a full percentage point of cuts by end-2024
OECD says markets wrong on interest rate cuts
Organisation expects borrowing costs in UK and eurozone to stay high until 2025
https://www.ft.com/content/6d626236-e316-493c-978c-7a15c9fbd400
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How to balance FOMO against overcrowding in the same index-distorting tech giants.
This chart from Apollo Group’s Torsten Slok compares an “S&P 7” index with an S&P 493 that includes all the rest. The gap is astonishing:
FI fastighetsbolagen kan behöva minska skulderna med 100 miljarder
https://www.di.se/live/fi-varnar-fastighetsbolagen-kan-behova-minska-skulderna-med-100-miljarder/
FI bedömer att det osäkra läge vi befinner oss i kommer att fortsätta ett tag framöver.
Företag och hushåll anpassar sig fortfarande till de högre räntorna och vi har inte fullt ut sett effekterna i det finansiella systemet och ekonomin som helhet.
https://www.di.se/live/fi-har-inte-fullt-ut-sett-effekterna-av-hogre-rantor/
Stabiliteten i det finansiella systemet (2023:2):
Anpassningen till ett högre ränteläge inte klar
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Elisabeth Svantessons utredning
Hennes parti tycks inleda ett fotbyte om överskottsmålet. Det är klokt.
Moderaterna har länge stått för det sista betydande motståndet mot ett sänkt överskottsmål. Trots att argumenten tryter.
Retoriken att väl tilltagna skyddsvallar alltid behövs för nästa globala chockvåg ekar tom, när dagens urstarka offentliga finanser mer än väl skulle klara både akuta krisåtgärder och att bygga för framtiden.
Nils Åkesson
Överskottsmålet i de offentliga finanserna ska nu ses över.
Regeringen tillsätter nu en parlamentarisk kommitté som ska analysera hur det ska fungera framöver.
En aspekt är hur finanspolitiken och penningpolitiken ska samspela, det vill säga om överskottsmålet ska anpassas till penningpolitiken.
Riksdagen har tidigare fastställt att nivån på överskottsmålet ska uppgå till en tredjedels procent av BNP i genomsnitt över en konjunkturcykel.
Elisabeth Svantesson (M) tycker att målet har ”tjänat Sverige väl”.
https://www.svd.se/a/JQdzpJ/kommitte-ska-se-over-overskottsmalet
Finansplan – utdrag ur budgetpropositionen för 2024
Publicerad 20 september 2023
Finanspolitiken är i linje med överskottsmålet
Överskottsmålet är ett mål för den offentliga sektorns finansiella sparande. Det finansiella sparandet ska enligt målet i genomsnitt uppgå till en tredjedels procent av BNP över en konjunkturcykel. Målet följs främst upp med det strukturella sparandet.
En avvikelse från överskottsmålet anses föreligga om det strukturella sparandet tydligt avviker från målnivån det innevarande eller det närmast följande året, dvs. budgetåret.
Under de senaste årens kriser har den ekonomiska politiken präglats av extra ändringsbudgetar. I många fall har det varit motiverat eftersom det har funnits ett behov av skyndsamma åtgärder, men det är viktigt att den ordnade budgetprocessen vidhålls.
Det har dock funnits en oro att den samlade budgetprocessen håller på att urholkas.
Över tid har stabila förutsättningar för den svenska ekonomiska politiken tjänat Sverige väl och det har därför varit viktigt för regeringen att återgå till en ordnad budgetprocess. Att säkra ett brett stöd för den ekonomiska politiken skapar förutsägbarhet och stabilitet. Ordning och reda i de offentliga finanserna är en grundförutsättning för en långsiktigt hållbar ekonomisk politik.
För 2023 och 2024 bedöms det strukturella sparandet vara i linje med överskottsmålets nivå. Regeringen bedömer därför att överskottsmålet uppnås. Den aktuella prognosen bygger på beslutade och aviserade reformer och visar på ett förstärkt strukturellt sparande även längre fram i prognosperioden (se tabell 1.3).
Finanspolitiken bidrar till att få ner inflationen
Genom att styra finanspolitiken mot överskottsmålet möjliggör regeringen för penningpolitiken att verka så att inflationen inte stannar kvar på en hög nivå.
”Magdalena Andersson fick rätt. De stora satsningarna är möjliga för att vi har sparat i ladorna under de goda åren.”
https://englundmacro.blogspot.com/2023/05/alla-gor-plotsligt-helt-om-och-ansluter.html
The Illusion of Knowledg
There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know. – John Kenneth Galbraith
The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge. – Daniel J. Boorstin
At one point, the host posed a series of questions: What’s your expectation regarding inflation? Will there be a recession, and if so, how bad? How will the war in Ukraine end? What do you think is going to happen in Taiwan? What’s likely to be the impact of the 2022 and ’24 U.S. elections? I listened as a variety of opinions were expressed.
Regular readers of my memos can imagine what went through my mind: “Not one person in this room is an expert on foreign affairs or politics. No one present has particular knowledge of these topics, and certainly not more than the average intelligent person who read this morning’s news.”
None of the thoughts expressed, even on economic matters, seemed much more persuasive than the others, and I was absolutely convinced that none were capable of improving investment results.
And that’s the point.
https://www.oaktreecapital.com/insights/memo/the-illusion-of-knowledge
Ukraine’s new enemy: war fatigue in the West
The balance of power in Congress is held by an isolationist wing of the Republican party, especially in the House of Representatives, where one of their sympathisers now serves as the speaker.
Twice since September Congress has passed a “continuing resolution” to avoid a shutdown of the federal government; and twice it excluded new aid for Ukraine.
The Senate is trying to unlock the assistance in December, before a shutdown looms again in January.
President Joe Biden has requested a supplemental budget of $106bn, of which $61bn is for Ukraine
Since Russia’s invasion America has provided about $75bn in overall aid to Ukraine, and European countries collectively have delivered more than $100bn
https://www.economist.com/europe/2023/11/27/ukraines-new-enemy-war-fatigue-in-the-west
Ukraine and its allies must face, not fear, the war’s current reality.
They should accept and prepare for a multiyear war and for the long-term containment of Russia instead of hoping for either a quick Ukrainian triumph or, absent that, an imminent negotiated solution.
https://www.foreignaffairs.com/ukraine/containment-strategy-ukraine
There is a real danger that a fickle and distracted West will let Vladimir Putin get away
with his conquests in Ukraine, with frightening implications for the credibility of the liberal democracies and the Nato security system in Europe.
Mr Bond has called for a suspension of the Maastricht deficit rules, allowing for wholesale rearmament and a partial “war economy” until Russia is defeated, and universally seen to be defeated.
Nothing of the sort is happening. Rules are rules. Brussels and Berlin insist that the machinery of fiscal contraction must come back into force in January. Any extra spending on defence must be offset by retrenchment elsewhere.
Ukraine is still waiting for F-16 fighter jets. The US and Germany are still withholding cruise missiles.
Mr Rachman said Mrs von der Leyen blundered badly in linking Ukraine aid to the EU budget, hoping to use the war as a rocket booster for other ambitions. Everything is instead crashing around her.
Ambrose Evans-Pritchard
The fiscal drama in Germany makes Europe’s monetary union even less workable. It demolishes any last hope that Berlin will let the EU’s €800bn Recovery Fund evolve into a proto-EU treasury.
There will be no joint debt issuance to underpin the euro, and no Hamiltonian fiscal union. The gaping hole in the construction of the single currency will remain.
The debt ratios of Germany and France will diverge ever further, putting intolerable strain on the EU’s central axis.
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China’s Energy Revolution
Nations will be urged at COP28 to triple renewable energy capacity this decade. The world’s top polluter is already on track, propelled by President Xi Jinping’s strategy to use remote regions to host vast green projects.
It’s a campaign that promises an upheaval across the energy sector: curbing China’s demand for fossil fuels, trimming its reliance on energy imports and steering the world’s biggest polluter toward a feasible path to zero out its greenhouse gas emissions.
https://www.bloomberg.com/graphics/2023-china-solar-wind-power-cop28/
China’s carbon emissions have either peaked already or will do this winter,
seven years ahead of schedule. They may plateau for a year or two but will then go into exponential decline for mechanical and unstoppable reasons.
The country’s target of net zero by 2060 is likely to be achieved a decade earlier than previously assumed, and perhaps earlier than in Europe.
This is a remarkable turn of events.
Ambrose Evans-Pritchard
China’s CO2 emissions may be falling already, in a watershed moment for the world (telegraph.co.uk)
Global carbon emissions from energy use may peak next year. But...
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China Scrambles to Contain a Looming Zhongzhi Shadow-Bank Meltdown
Over the summer, Zhongrong International Trust, which is part of the group, defaulted on many of its high-yielding investment products and fueled fears of financial contagion from China’s worsening property downturn.
In September, two large state-owned financial institutions stepped in to provide assistance to Zhongrong, which had around $108 billion of assets under management at the end of 2022.
Turmoil at Zhongzhi sparks alarm over China’s $3tn shadow financing industry
https://englundmacro.blogspot.com/2023/08/can-rest-of-globe-expand-if-china-is.html
Investors See Interest-Rate Cuts Coming Soon, Recession or Not
Recent data has fueled bets that cuts could come under a variety of circumstances
many worried that yields were being driven higher by a surge in new Treasurys needed to fund a growing federal budget deficit, not just by a strong economy and bets on higher-for-longer rates.
Sam Goldfarb WSJ
The Long-lasting Effects of 2021’s Zero Interest Rates
As we all know, the Fed hiked aggressively in 2022, and continued to do so for longer than most had expected this year. Higher interest rates should mean higher costs of servicing debt for companies. The problem, illustrated by Saravelos, is that big companies had enough time in 2020 and 2021 to negotiate very low fixed rates.
The debate revolves over how long rates stay at current levels.
If they truly remain higher for longer, they’ll bite eventually.
Monetary tightening hasn’t bitten at all yet. That doesn’t mean it never will.
European Commission Vice President Vera Jourova sees an effective anti-graft system emerging in Ukraine
as the war-torn nation looks toward opening membership talks with the bloc.
“Ukraine is doing everything to strengthen the fight against corruption,” Jourova said during a press briefing in Kyiv after her meetings with the country’s prime minister, justice minister and chiefs of anti-graft institutions.
ECB officials may soon revisit their €1.7 trillion pandemic bond portfolio
and reconsider how long they will replace maturing securities, President Christine Lagarde said.
“We have indicated that we would continue reinvesting until at least 2024,”
TILTRO and Target
https://englundmacro.blogspot.com/2023/10/jacques-de-larosiere-unless-new.html
APP och PEPP
https://englundmacro.blogspot.com/2022/09/raise-three-key-ecb-interest-rates-by.html
The Ridiculous Sideline Cash Myth
It is impossible for money to flow from cash into stocks or bonds because for every buyer of an asset there is a seller of that asset
so the amount of cash on the sidelines never changes due to such transactions.
Individuals can differentiate where they hold cash moving it from a checking account to a money market fund that yields more interest, but that is the full extent of it.
Buying stocks, bonds, or even houses with cash does not impact the amount of sideline cash. It simply transfers the cash from one holder to another holder.
Mish
Spotpris per månad i elområde 3 (Stockholm). Öre per kilowattimme.
https://www.dn.se/ekonomi/carl-johan-von-seth-sa-klarade-vi-energikrisen-trots-domedagsprofetiorna/
Audiobooks Just Got Cheaper
Spotify’s new offering for eligible Premium users is changing the medium’s economics
https://www.wsj.com/tech/personal-tech/the-new-economics-of-buying-or-renting-audiobooks-cd5bfaae
Retorik - Rhetoric
Invented by educators and philosophers in ancient Greece, the discipline of rhetoric — originally defined as the study of persuasion and now more commonly known as the art of public speaking — remained the cornerstone of education until the 1700s.
Across Western Europe, students from about the age of 12 onward learned logic, social skills, critical thinking and speech techniques as a single, integrated discipline by means of a 14-step verbal and cognitive curriculum known as the progymnasmata.
you’ve ever noticed that it’s not necessarily the most knowledgeable or pedigreed people who lead but the best communicator
https://www.nytimes.com/2023/11/27/opinion/disconnection-polarization-speech.html
Retorik är läran om talekonsten, såväl i teorin som i praktiken, och den utvecklades under antiken på 400-talet f.Kr.
Den mest välkända definitionen kommer från Aristoteles som beskrev retoriken som "konsten att vad det än gäller finna det som är bäst ägnat att övertyga"
https://sv.wikipedia.org/wiki/Retorik
Retorik i tiden av Göran Hägg
Retorik i tiden är tänkt både som en underhållande historiebok och en användbar handbok. Exemplen börjar i antiken, med bland annat Ciceros försvar för en misstänkt giftmördare och Jesu Bergspredikan, och sträcker sig fram till kung Carl XVI Gustafs tsunamital och Barack Obamas accepterande av nomineringen till presidentkandidat
https://www.bokus.com/bok/9789113098722/retorik-i-tiden-23-historiska-recept-for-framgang/
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German President Frank-Walter Steinmeier met with German-Palestinians who were evacuated
from Gaza recently. At a reception in Berlin, they had the chance to share their stories. More than 200 German nationals have left Gaza through the Rafah border crossing to Egypt.
https://www.dw.com/en/germanys-president-meets-evacuated-german-palestinians/video-67549598
Ukraine: the new fissures in a society under strain
No one will quite say it, but the fear in Kyiv is that their war will be “forgotten” and the west’s supply of funds and arms will slow. Then there is the concern that Donald Trump will win re-election in the US and promptly do a deal with Putin to end the war. Is the clock ticking, I asked? “
This clock has been ticking for us since 2014,” said Shmyhal, referring to the year Putin annexed Crimea and irredentists seized a chunk of the eastern Donbas.
(Visitors soon learn to refer to February 2022 not as “the invasion” but as the “full-scale invasion”.)
Att ukrainarna kan fortsatta att överraska råder det inga tvivel om. Inte heller att de kan vinna.
Det är upp till oss i Europa och USA att ge dem förutsättningarna att göra det.
25/11
https://www.dn.se/ledare/ukrainarna-har-overraskat-tva-ganger-de-kan-gora-det-igen/
Medan Ukraina firade triumfer på slagfältet turnerade Zelenskyj som en rockstjärna över hela västvärlden.
Han gjorde ett bejublat framträdande i amerikanska kongressen och fick stående ovationer över tretton gånger.
Samtidigt får Zelenskyj kritik bland annat för att ha tryckt på att Ukraina måste återta Bachmut, en sönderbombad stad norr om Donetsk. En resultatlös symbolkamp som har lett till enorma förluster i människoliv.
När de ukrainska truppernas överbefälhavare Valeryj Zaluzjnyj i en intervju till The Economist sade att motoffensiven har kört fast svarade Zelenskyj att något dödläge inte existerar. Att en president offentligt påstår att hans överbefälhavare har fel ger ett oprofessionellt intryck i krig.
26(11
https://www.dn.se/varlden/zelenskyjs-uppforsbacke-blir-bara-langre/
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Russia Suffers Heavy Drone Attack Including Strikes on Moscow
Excluding recent attacks on the Crimean peninsula annexed by Moscow in 2014, the overnight strikes were the heaviest targeted at Russia in at least two months. It was the first time Moscow was targeted since the summer.
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Tyskland - Regeringen planerar att lägga fram ett förslag om nationellt nödläge – för att komma runt skuldregler i grundlagen.
https://www.di.se/live/tyskt-budgetkaos-nodlage-kan-utlosas/
“The stupid thing is now in the constitution and you can’t get rid of it.”
When Germany enshrined a “debt brake” in its constitution in 2009, it was celebrated as a victory for fiscal rectitude and a definitive break with the profligacy of the past.
https://englundmacro.blogspot.com/2023/11/rod-oppning-red-opening-23-november-2023.html
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Första AP-Fonden ger miljard till fastighetsbolag
I WIllhems kvartalsrapport, som publicerades på fredagen, framgår att ägaren Första AP-Fonden kommer att göra ett ovillkorat aktieägartillskott på 1 miljard kronor under det fjärde kvartalet som ett led i att behålla kreditbetyget.
”Vårt absoluta fokus nu är att säkerställa att nyckeltalen framåt fortsatt står starka”, skriver Willhems vd Mariette Hilmersson i rapporten.
https://www.di.se/live/forsta-ap-fonden-ger-miljard-till-fastighetsbolag-ska-sakra-kreditbetyg/
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Big News: Argentine will abolish their currency and adopt the US Dollar.
Ha! That it was the countries witch adopted the Euro has done.
They gave up their printing press.
Friheten att kunna göra detta var ett av skälen att inte gå med i valutaunionen EMU.
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Veteran anti-Islam populist leader Geert Wilders has won a dramatic victory in the Dutch general election
After 25 years in parliament, his Freedom party (PVV) is set to win 37 seats, well ahead of his nearest rival, a left-wing alliance.
His win has shaken Dutch politics and it will send a shock across Europe too.
https://www.bbc.com/news/world-europe-67504272
Far-Right Won the Dutch Election: Here’s What You Need to Know
Chinese shadow bank says it has ‘huge’ debt and can’t pay its bills
Zhongrong International Trust, a trust company partially owned by Zhongzhi Enterprise Group
reigniting fears that the country’s long-running real estate slump may be spilling over into the $3 trillion shadow banking sector.
said in the letter that the scale of its debt was “huge.” It pegged its total liabilities at up to 460 billion yuan ($65 billion), against assets of 200 billion yuan.
“Since the group’s assets are concentrated in debt and equity investments and have a long duration, collection is difficult, the expected recoverable amount is low, liquidity is exhausted, and asset impairment is serious,”
China’s $138 Billion Shadow Bank
Turmoil at Zhongzhi sparks alarm over China’s $3tn shadow financing industry
https://englundmacro.blogspot.com/2023/08/can-rest-of-globe-expand-if-china-is.html
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