Röd öppning Red Opening 17 November 2023

 

I think that past experience does mean that we should tend to regard a hard landing as the default most likely outcome. 

Absent other evidence, when the Fed hikes this much, we should expect one.

After the latest unemployment numbers, Sahm wrote this piece, which is worth reading in full. This is her important health warning: 

"Indicators of economic downturns like the Sahm rule are empirical regularities from the past, not laws of nature. The pandemic was extremely disruptive, and the rebalancing of the economy has been messy and slow. That’s as true for inflation and supply chains as it is for the labor market."

This week’s data has almost all been consistent with a narrative of slowing inflation, but also slowing growth. 

Fed is now signaling that it will try to avoid a recession. Its latest “dot plot” didn’t predict 2% inflation until 2026, suggesting a long time to make the last step down to the target. Blitz suggests their runway is this long “precisely because they fear recession.”

John Authers Bloomberg 17 November 2023

https://www.bloomberg.com/opinion/articles/2023-11-17/soft-landing-or-hard-it-comes-down-to-the-pilot-the-fed

The Fed could adopt a policy of strategic hypocrisy, insisting that its target hasn’t changed while in practice allowing inflation close to 3 percent for several years; then, once it has become clear that such a policy won’t allow runaway inflation, finally change the formal target.

Paul Krugman New York Times 22 August 2023

https://englundmacro.blogspot.com/2023/08/many-economists-now-believe-that-2.html

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What’s Behind the Market’s Wild Overreactions?

On one level the market did exactly as it should: Inflation was lower than expected, so bond yields fell and stock prices rose, with rate-sensitive stocks rising the most.

But the scale of the moves was out of whack with what happened. 

Core inflation came in at 0.23% month-on-month, against Wall Street expectations of 0.3%. Year-on-year inflation was 3.2%, below the predicted 3.3%. 

Good news, for sure, but clearly not enough to justify a 5.4% leap in the Russell 2000, or even 1.9% on the S&P 500.

Tuesday was the culmination of the turn in the market narrative, from higher-for-longer interest rates back to a soft landing and rate cuts. 

I think long-run higher rates are likely as we move from a globalized world with too much stuff and a nearly unlimited supply of foreign workers and money to a more domestically focused world where both workers and savings are scarce—and so cost more. 

James Mackintosh Nov. 17, 2023 

https://www.wsj.com/finance/investing/whats-behind-the-markets-wild-overreactions-cae05ade

Röd öppning Red Opening  Tuesday  14 November 2023

https://englundmacro.blogspot.com/2023/11/rod-oppning-red-opening-14-november-2023.html

”Tittar man på värderingen så har tajmingen att investera i småbolag inte varit bättre på 15 år”, säger Johanna Ahlqvist, förvaltare på Cliens Fonder.

”Nu när vi har den första räntesänkningen på horisonten tror jag att det kan bli ett riktigt bra år för många tillgångsklasser”, säger Carl Sundblad,Cliens Småbolag.

Han tror också att oron över att ekonomin ska behöva hantera höga räntor och en svag konjunktur samtidigt snart är ett minne blott.

https://www.di.se/nyheter/forvaltarduon-basta-koplaget-i-smabolag-pa-15-ar/

Räntenedgången har resulterat i ett historiskt fastighetsrally   

Aktier där nedgångsspekulanter har flockats har därför åkt på en ordentlig blankarkross.

https://www.di.se/analys/historiskt-fastighetsrally-ger-blankarkross/

China plans to take a page from Singapore’s social housing model 

to help end a multi-year property slump that’s hammered the nation’s consumer confidence and weighed on economic growth.

Beijing has in recent weeks named two “big projects” as the center of its housing policy: building social housing and renovating run-down inner city districts. The projects have top-level political backing and could soon have 1 trillion yuan ($138 billion) or more of central government support behind them

https://www.bloomberg.com/news/articles/2023-11-17/china-puts-money-behind-singapore-model-in-major-housing-shift

Foreigners no longer have an insatiable appetite for U.S. government debt. 

That’s bad news for Washington.

“U.S. issuance is way up, and foreign demand hasn’t gone up,” said Brad Setser, senior fellow at the Council on Foreign Relations. “And in some key categories—notably Japan and China—they don’t seem likely to be net buyers going forward.”

https://www.wsj.com/finance/investing/where-have-all-the-foreign-buyers-gone-for-u-s-treasury-debt-3db75625

Forget the old slogan about there never being a better time to buy a home. 

For baby boomers, there might never be a better time to sell.

Many boomers have little or no debt on their current homes and, as an added bonus, it is easy to find ready buyers with so few homes on the market.

https://www.wsj.com/economy/housing/baby-boomer-home-ownership-3ef78dfa

The British anthropologist Robin Dunbar, drawing on studies of the brain sizes of humans and other primates, estimates a person can only maintain about 150 relationships. 

The so-called Dunbar number, he has said, “applies to quality relationships, not to acquaintances.” 

https://www.wsj.com/us-news/you-probably-know-611-people-heres-how-we-know-88dd27d9

Dunbar’s number: why my theory that humans can only maintain 150 friendships has withstood 30 years of scrutiny

https://theconversation.com/dunbars-number-why-my-theory-that-humans-can-only-maintain-150-friendships-has-withstood-30-years-of-scrutiny-160676

Dunbars tal är en föreslagen kognitiv begränsning för det antal individer en människa kan upprätthålla stabila sociala relationer med. 

Detta handlar om relationer där en individ vet vem var och en av personerna är och hur varje individ relaterar till varje annan individ.[1] Förespråkare av betydelsen hos Dunbars tal menar att grupper som är större än detta antal kräver mer restriktiva regler, lagar och kraftigare sanktioner mot normbrott för att kunna upprätthålla en stabil och sammanhållen grupp. Ingen exakt värde anges för Dunbars tal, men den vanliga approximationen är 150.

https://sv.wikipedia.org/wiki/Dunbars_tal

Dunbar’s Number: Why the Theory That Humans Can Only Maintain 150 Friendships Has Withstood 30 Years of Scrutiny

https://neurosciencenews.com/dunbars-number-social-brain-19210/

Humans Can Really Only Maintain Five Close Friends

https://www.sciencealert.com/the-latest-data-suggests-you-can-only-keep-five-close-friends

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