Englund

In a year where billions get the chance to cast a ballot, people here would be giving their verdict on the presidency of Volodymyr Zelensky. Five years ago, the man whose talents as an actor, comedian and producer had made him a household name in Ukraine was propelled into office.  But with Russian forces still inside the country and millions of Ukrainians displaced from their homes, fighting on the frontlines, or living overseas, there is no election in sight. Opinion polls suggest there is little appetite among Ukrainians for a vote - just 15% of respondents told the Kyiv International Institute of Sociology last month the country should hold an election. Oleksiy Koshel, of the Committee of Voters of Ukraine, a pressure group which seeks to uphold democratic rights, sees clear-eyed political calculation at work.  He believes Zelensky’s team initially wanted to hold elections because the president’s support was so high. But as his ratings started to slip towards the end of the year so

 Buying insurance is no substitute for loss-absorbing equity. The foundation of a resilient financial system is simple: Require banks to have ample equity, the ultimate all-purpose capital. Banks typically operate with as little equity as possible, mostly for bad reasons. More debt, or leverage, boosts certain measures of profitability in good times (and magnifies losses in bad times).  Before the 2008 crisis, they did so in part by buying inexpensive loss insurance from third parties, notably American International Group AIG. This time around, the name has changed — the insurance is now called synthetic (or significant) risk transfer — but the basic idea hasn’t.  Bloomberg editorial 25 March 2024 https://www.bloomberg.com/opinion/articles/2024-03-25/synthetic-transfer-won-t-make-banks-risks-disappear Banks Are Back Into Credit Derivatives Barclays struck a $1.1 billion deal with Blackstone this week to offload risks in its US credit-card business  https://englundmacro.blogspot.com/202

Let’s call it what it really is: a debt subsidy for the wealthy. The simple fact is that the mortgage interest deduction does not increase homeownership and was not created with that goal in mind.  It is a holdover from tax policy dating back to 1913 to deduct all interest expense from income, a policy intended for businesses and farms.   The 1986 tax reform limited personal interest deductions to mortgages (but adding a cap), arguably because President Ronald Reagan and Congress were not willing to take on the likely pushback from the National Association of Realtors and homeowners who enjoyed the deduction. he policy's weakness is exposed by who benefits. The only households that can claim the deduction are those that itemize expenses, and they are predominantly in higher income tax brackets.  This cohort generally doesn't need to rely on the deduction to buy a home and service the mortgage, so it only serves to push up the amount of debt they can take on and, as a result, ho

Fed policymakers currently think inflation, while still present, is much improved.  They are looking at inflation’s growth rate, which (using CPI) has indeed fallen from 9% in June 2022 to a still-high 3.2% now. The average person, however, notices their grocery bill is quite a bit higher than it was two years ago. The fact it’s rising somewhat slower than it was is little comfort.  There are hundreds if not more of mostly young ladies on TikTok complaining about not being able to survive on their income.  Rather than smiling (as Boomers sometimes do to “younger” generations), pay attention to what they are complaining about: food, rent, energy, transportation. We who pay attention to economic details are not normal. Most people don’t know what “CPI” stands for, nor do they know who the Fed chair is or why it matters what the Fed does to their money. They naturally have other things on their minds. This matters because the average consumer doesn’t look at benchmarks. They perceive infl

 and if Ukraine is defeated by Russia, nobody in Europe will be able to feel safe. "I don't want to scare anyone, but war is no longer a concept from the past," he told European media. "It's real and it started over two years ago." Mr Tusk, a former president of the European Council, When he was Polish prime minister for the first time, from 2007 to 2014, he said few other European leaders beyond Poland and the Baltic states realised Russia was a potential threat. He praised several European leaders and highlighted the importance of security co-operation between Poland, France and Germany - an alliance known as the Weimar Triangle. BBC 29 March 2024 https://www.bbc.com/news/world-europe-68692195

Although it frequently intervened to oust elected governments, many Pakistanis saw this as salvation from the country’s blundering politicians.  The military has suffered a catastrophic loss of prestige after the populist former prime minister Imran Khan directly challenged its influence. In response, Mr. Khan was ousted and jailed, and his party — despite winning the most parliamentary seats in a divisive February election — was shut out of a new civilian government It is common knowledge in Pakistani political circles that significant portions of the military leadership, powerful military families and rank-and-file officers are sympathetic to Mr. Khan’s right-wing, anti-American vision for the country, which included aligning Pakistan more closely with China and Russia.  Whether this internal rift can be healed will ultimately decide the direction and stability of Pakistan, which has nuclear arms and is the world’s fifth most populous. Army unity looks likely to hold for the time bei

So much information on the newly launched Copernicus Climate Change Service atlas that my laptop started to overheat As well as all the past data, it predicts where the climate is going and how soon we will breach the 1.5C “limit”, and then 2C.  You can call up the region where you live, so it is specific to what is happening to you and your family – and all the more disturbing for that. A separate part called Climate Pulse intended particularly for journalists is easier to operate. Looking at the mass of information, there is only one conclusion: we are running out of time Guardian 29 March 2024 https://www.theguardian.com/news/2024/mar/29/copernicus-online-portal-offers-terrifying-view-climate-emergency

  https://www.bloomberg.com/news/articles/2024-03-27/stock-market-today-dow-s-p-live-updates Det har varit många tunga år för oss björnar https://englundmacro.blogspot.com/2022/06/det-har-varit-manga-tunga-ar-for-oss.html Vi björnar ser lugnt tiden an med tillförsikt https://englundmacro.blogspot.com/2024/03/vi-bjornar-ser-lugnt-tiden-med.html

Från att börsvärdet som mest varit drygt 3,1 miljarder kronor våren 2017 har det rasat till omkring 90 miljoner. Di går igenom hela historien bakom lyxbyggarens uppgång och fall Jesper Mothander DI 28 mars 2024 https://www.di.se/nyheter/monument-over-korthuset-som-foll/

 Jersey är ett självstyrande brittiskt territorium som tillsammans med grannön Guernsey blivit kända för sina stora finansiella industrier.  Ön har i regel en företagsskatt på noll procent, med några få undantag, och likaledes beskattas inte kapitalvinster över huvud taget. Sverige och många andra länder har ett avtal med Jersey om att dela information gällande till exempel medel på bankkonton, inkomster, transaktioner och ägaruppgifter.  ”De var tidigt ute att träffa avtal med Sverige. På många sätt har Jersey varit ett föredöme för många andra länder, informationsutbytet har fungerat över förväntan” DI 26 mars 024 https://www.di.se/digital/klarnas-flyttplan-startar-bolag-pa-kanalon-jersey/ Artificiell intelligens, AI, hjälper nu Klarna i jakten att vända fjolårets stora förlust på 10,4 miljarder kronor till vinst. https://englundmacro.blogspot.com/2023/10/artificiell-intelligens-ai-hjalper-nu.html A Sunny Place for a Shady Online Business https://englundmacro.blogspot.com/2021/12/a-s

Belief in a hard landing in the US is over.  Doubters may now predict a soft one, but markets are positioned for no landing at all. Stock market bears have given up. That shouldn’t be a surprise after the S&P 500 has closed at yet another all-time high. I ts current run without a pullback of even as much as 2% now stretches to five months.  But the details of just how they came to throw in the towel, and what they now expect, are a little surprising. The key economic call is that a recession within the next 12 months is no longer viewed as a certainty. At present, it appears the bond market still thinks there’s a recession coming, while only about a third of economists agree. To be clear, if we really are out of the economic woods, and the US can get through this cycle without a recession — that’s amazing. John Authers Bloomberg 28 mars 2024   https://www.bloomberg.com/opinion/articles/2024-03-28/stock-market-bears-finally-throw-in-the-towel-on-a-hard-landing Vi björnar ser lugnt t

  Riksbankens beslut att lämna styrräntan oförändrad på 4,0 procent och ställa en lägre ränta i utsikt, kanske, har utlöst stor glädje. Som i USA där marknaden jublar över att räntan kanske kommer att sänkas med 0,25 procent kanske TRE gånger det kommande året. https://englundmacro.blogspot.com/2024/03/riksbanken-lamnar-styrrantan-oforandrad.html Kanske bankekonomer, fastighetsmäklare och aktiemarknaden och deras närstående har ett egenintresse av att framställa det så? Men det borde inte vara centralbankernas uppgift att se till att räntan är låg och tillgångspriserna höga.  Don’t count on Fed to ride to the rescue of a faltering stock market -- at least not yet (englundmacro.blogspot.com) 28 mars förmiddag - Riksbankens mål om 2,0 procents inflation tillkom i all hast för litet mer än 20 år sedan. Inflationsmålet skulle inte ha funnits där, om Sverige hade klarat att hålla fast växelkurs. Johan Schück, DN Did inflation targeting fail? Martin Wolf, Financial Times, May 5 2009 https://

Momentum stocks are outperforming S&P 500 by widest margin since 2008.  Up 20.8% since the start of the year, compared with a rise of 9.7% for the S&P 500. The MSCI momentum index is valued at nearly 29 times expected 2024 earnings of its components.  That is its highest since late May 2021, when the meme-stock craze was in full swing MarketWatch 27 March 2024 https://www.marketwatch.com/story/momentum-stocks-are-outperforming-s-p-500-by-widest-margin-since-2008-investors-should-be-concerned-332c47ce The average S&P 500 stock is as overvalued as the ‘Magnificent Seven,’ Goldman says The equal-weight S&P 500 is now trading at 17 times forward earnings, 13% above Goldman’s estimate of fair value https://www.marketwatch.com/story/the-average-s-p-500-stock-is-as-overvalued-as-the-magnificent-seven-goldman-says-168d57e7 Riksbanken lämnar styrräntan oförändrad på 4,0 procent En familj med ett bolån på några miljoner kronor kan spara flera tusen kronor varje månad.  SvD ledare

On the flight deck of the USS Dwight D. Eisenhower aircraft carrier on operation  in the Southern Red Sea, on March 19. The success of the Iran-backed rebel group in stymying the world’s most sophisticated militaries is the latest setback for Washington’s efforts to limit the spread of a regional conflict that began with Hamas’ deadly attack on Israel on Oct. 7. Admiral Marc Miguez, commander of the flotilla, concedes the US and its allies have more work to do. “It’s a quite binary situation,” Rolf Habben Jansen, chief executive officer of Hapag-Lloyd AG said on an earnings call this month. “It is either safe for our people or it is not. As long as it is not safe, we will not send our people through the Red Sea.” Iranian supplies are getting through. Iran has also sent advisers, including specialists in laying mines at sea, according to people familiar with the situation. The Houthis are “putting it all together and assembling,” General Michael Kurilla, commander of the US Central Comm

 ”Om inflationsutsikterna fortsätter att vara gynnsamma kan styrräntan troligen sänkas i maj eller juni”, skriver Riksbanken. DI 27 mars 2024 https://www.di.se/live/riksbanken-lamnas-styr/ https://www.riksbank.se/sv/press-och-publicerat/nyheter-och-pressmeddelanden/pressmeddelanden/2024/styrrantan-oforandrad-pa-4-procent2/ Även om styrräntan lämnas oförändrad, uppdaterar Riksbanken sin prognos för ränteutvecklingen framåt.  I början av valåret 2026 spås styrräntan vara 1,3 procentenheter lägre än i dag För hushållen har denna till synes marginella justering stor betydelse i vardagen. En familj med ett bolån på några miljoner kronor kan spara flera tusen kronor varje månad.  De tusenlapparna kan vara hela skillnaden mellan ett gott och ett begränsat liv. SvD ledare 27 mars 2024 https://www.svd.se/a/BW57E7/sverige-har-varkanslor-for-ulf-kristersson Det tydliga beskedet om en räntesänkning före sommaren kommer ge bostadsmarknaden skjuts – och kan leda till prislyft.  Det tror Alexandra St

His controversial comment about boots on the ground earned an instant and very public recrimination from German Chancellor Olaf Scholz and angered US officials By forcing Berlin to publicly rule out the possibility of sending troops, Macron managed to dispel what lingering ambiguity there had been about the whereabouts of allies’ red lines, according to a senior US official. Nor were the comments very smart from the standpoint of operational security — according to separate officials who also spoke to Bloomberg on condition of anonymity — especially given that several countries already, quietly, have some personnel in Ukraine. His Africa strategy is in tatters as France struggles to convince nations in the Sahel region to tolerate the presence of a former colonial power.  https://www.bloomberg.com/news/articles/2024-03-27/macron-wants-to-be-europe-s-de-facto-leader-on-foreign-policy-is-it-working Joseph Borell Commission Vice-President in charge of coordinating the external action of t

https://englundmacro.blogspot.com/2024/03/goldman-sachs-spar-att-borsen-ska-sta.html Here’s what history tells us about Corrections https://www.marketwatch.com/story/what-could-spark-the-next-stock-market-selloff-heres-what-history-tells-us-c3a0423e

Di:s beräkningar visar att den kinesiska storägaren Li Shufus nu tjänat 33 miljarder kronor på innehavet under drygt 6 år – långt mer än de 20 miljarder kronor som Christer Gardells Cevian tjänade på elva år.  Bara i veckan erhåller Geely nästan 2,5 miljarder i utdelningar från AB Volvo.  Beskedet slog ned som en bomb i julhelgen 2017. Christer Gardells aktivistfond Cevian hade sålt sitt stora innehav i AB Volvo till kinesiska Geely.  Det var en post som utmanade makten i AB Volvo då den motsvarade 8,2 procent av kapitalet men hela 15,6 procent av rösterna.  Geelys fina affär i AB Volvo står i skarp kontrast till den svaga utvecklingen i Volvo Cars de senaste tre åren där den kinesiska biljätten är huvudägare.  Vid börsnoteringen hösten 2021 var värdet på Geelys aktier 132 miljarder kronor vilket nu krympt till 87 miljarder. Samtidigt köpte Geely Volvo Cars väldigt billigt för bara 13 miljarder kronor 2010 och har mångdubblat värdet sedan dess, trots nedgången de senaste åren. Magnus D

As of Tuesday, the yield on the benchmark 10-year U.S. Treasury note was 4.233%, up from 3.860% at the end of last year.  As a result, the average rate on a 30-year fixed mortgage has also ticked higher, as has the cost of borrowing in the corporate-bond market. The climb has surprised many on Wall Street, who had expected yields to fall Sam Goldfarb Wall Street Journal 26 March 2024 https://www.wsj.com/finance/investing/treasury-yields-rising-fed-interest-rate-expectations-4a157a85

The challenge of retreating without tipping into a recession, or allowing price rises to return.  For central bankers — stranded with policy rates far too high for their comfort but reluctant to take the risk of cutting them — the analogy /with Descending a mountain/ is doubly uncomfortable.  Descending a mountain is more hazardous than the ascent. That’s when accidents happen. To track the climbdown, Points of Return is launching The Year of Descending Dangerously, a suite of indicators that we will update monthly.  The chances are that it will take longer and move more slowly than many now seem to anticipate John Authers et al. Bloomberg 26 March 2024  https://www.bloomberg.com/graphics/2024-opinion-rate-cuts-covid-inflation-central-banks/ The phrase “nasty, brutish, and short” originates from Thomas Hobbes’ book Leviathan (1651) Bing AI

 San Diego saw the biggest increase in home prices Home prices in the 20 major U.S. metro markets were up 6.6% in the last 12 months ending in January. A broader measure of home prices, the national index, rose 0.4% in January and was also up 6% over the past year.  The annual increase was the fastest since 2022  MarketWatch 26 March 2024 US Mortgage rates back at 7% - 30 år - inte tre månader... Has Fed Hit the Brakes Hard Enough? https://englundmacro.blogspot.com/2024/03/has-fed-hit-brakes-hard-enough.html  

  Gissningsleken om hur konjunkturen ska utvecklas på kort sikt är sällan särskilt lönsam. Ur ett makroperspektiv är det bättre att försöka bedöma risken för de farligaste fällorna.  För aktieinvesterare gäller det att alltid svara på den viktigaste frågan – finns det överhängande risker för en snar finanskris?  Mitt tydliga svar är nej.  Olyckskorpar kunde tidigare kraxa om att vissa svenska banker hade alltför stor utlåning till fastigheter, men dessa röster har i allt väsentligt tystats av de senaste kvartalsrapporterna.  Samma bild gäller i de allra flesta länder i västvärlden.  Henrik Mitelman DI 26 mars 2024  https://www.di.se/analys/makrofallan-som-riskerar-skaka-borsen/

Europe’s economy is under attack from all sides (economist.com) EU to release €6.3 billion in aid to Poland - nu när Tusk, tidigare ordförande i Europeiska rådet, kommit till makten https://englundmacro.blogspot.com/2024/02/eu-to-release-63-billion-in-aid-to.html Later it was the turn of the   walls, and the Germans brought down the real wall in Berlin." Walesa was the chairman of the Solidarity trade union in communist Poland from 1980 to 1990 and later became the first elected president of democratic Poland, serving from 1990 to 1995.  He was awarded the Nobel Peace Prize for his contributions to freedom and democracy. Deutsche Well 23 March 2024 Parliamentary elections were held in Poland in 1989 to elect members of the Sejm and the recreated Senate.  The first round took place on 4 June, with a second round on 18 June.  They were the first elections in the country since the Communist Polish United Workers Party abandoned its monopoly of power in April 1989. Not all parliamenta

Article 23 is final confirmation of China’s shocking breach of faith with Britain. Beijing solemnly pledged, 40 years ago, to respect Hong Kong’s autonomy.  The 1984 Sino-British joint declaration agreed the “one country, two systems” principle would continue in force for at least 50 years after the 1997 handover.  China’s post-pandemic economic slump, exacerbated by Xi’s private sector squeeze, is adding to Hong Kong’s woes.  The stock market has lost nearly half its value in three years.  The property sector is in crisis, besieged by debt and raised interest rates.  For many in Asia, Singapore is the new business destination of choice. https://www.theguardian.com/commentisfree/2024/mar/23/xi-jinping-seals-hong-kong-fate-as-failed-state How the World’s Priciest Property Market Stumbled Reversal of fortune for Hong Kong’s housing market is a symbol of the city’s malaise https://englundmacro.blogspot.com/2024/03/china-evergrande-fraudulently-boosted.html

Putin changed the course of the Syrian civil war when he intervened in 2015, supporting President Bashar al-Assad against the opposition and Islamic State. The war began in 2011 after a pro-democracy uprising against al-Assad's authoritarian rule quickly expanded to fully fledged infighting, with Islamic State seizing large parts of Syria and Iraq by 2013. At its height, Islamic State held about a third of Syria and 40 per cent of Iraq, but by the end of 2017 it had lost 95 per cent of its territory. 23 march 2024 https://www.abc.net.au/news/2024-03-23/what-is-isis-k-moscow-terror-attack/103623852 https://www.abc.net.au/news BBC 31 July 2014 https://www.bbc.com/news/world-middle-east-28560449 Two decades ago, the United States invaded Iraq, sending 130,000 US troops into a sovereign country to overthrow its government. Joe Biden, then chairman of the Senate foreign relations committee, voted to authorize the war, a decision he came to regret. Today another large, world-shaking inva

  Projectile points found at the archaeological site, Shinfa-Metema 1,  in the lowlands of northwest Ethiopia The most significant dispersal of Homo sapiens, our own species — which ultimately led to modern humans living in every corner of the globe — took place around 70,000 to 50,000 years ago. About 74,000 years ago, Sumatra’s Mount Toba experienced a super-eruption, one of the largest in Earth’s history.  Some scientists have suspected a volcanic winter resulting from the eruption was a big enough shift to wipe out most early humans   But now a cutting-edge study on an archaeological site in northwest Ethiopia once occupied by early modern humans has added to a growing body of evidence that suggests the event might not have been so apocalyptic. Instead, the new research found humans in that location, known as Shinfa-Metema 1, adapted to the arid conditions brought on by the volcanic eruption in a way that may have facilitated humanity’s pivotal migration out of Africa to the rest o

26 mars 2024  S&P 500 Turns Lower in Final 30 Minutes of Trading “As momentum slows and breadth diverges, we believe the S&P 500 could benefit from a healthy pullback of at least 5% toward its 50-day moving average — a level last tested in early November,” said Craig Johnson at Piper Sandler. Stock Market Today: Dow, S&P Live Updates for March 26 - Bloomberg DI  USA-börserna handlades inledningsvis upp under tisdagen, men föll ned under nollan under kvällen.  Dow Jones industriindex föll 0,1 procent medan breda S&P 500 sjönk 0,3 procent.  Nasdaq Composite stängde på minus 0,4 procent.  Nätforumet Reddit, som börsnoterades förra veckan, rusade 9,1 procent. Aktien stängde på 65,23 dollar, att jämföra med 34 dollar per aktie i erbjudandet inför noteringen.  https://www.di.se/live/wall-street-stangde-pa-minus-trumps-mediebolag-rusade-i-borsdebuten/ 25 mars 2024 DI Efter en lugn inledning på veckan stängde samtliga USA-index på rött.  Dow Jones industriindex avslutade måndag

Genom det gällande Lissabon-fördraget är uppdraget som ordförandeland numera begränsat.  Det finns en så kallad ”permanent EU-president” som leder och sätter dagordningen för alla toppmöten, för närvarande Charles Michel. Det finns också en så kallad ”hög representant” för EU:s utrikespolitik, just nu Josep Borell. Rolf Gustavsson SvD 23 mars 2024   Partiledarna, Lissabon och EU-parlamentets växande makt (englundmacro.blogspot.com) ... säger Nabila Massrali, talesperson för EU:s utrikestjänst Joseph Borell Commission Vice-President in charge of coordinating the external action of the European Union. The EU Intelligence and Situation Centre (EU INTCEN) - a "civilian intelligence function" of the European Union https://englundmacro.blogspot.com/2023/08/sager-nabila-massrali-talesperson-for.html

LLMs read documents then calculate, letter by letter, word by word, how bits of information usually go together.  This requires many millions of computations. Note also, the power isn’t just for the microchips. Running so many calculations so quickly generates heat. The disposing of it requires cooling systems which consume yet more power (and sometimes massive amounts of water—another not-cheap resource). You begin to see the challenge. AI generates enormous new energy demand on top of everything else. This is pure growth, not the replacement for something that will go away—at least not yet. It’s hard to get to Net Zero when we keep inventing new technologies that consume ever larger amounts of energy. The goalposts keep moving. We are also shifting some energy demand from direct burning (gasoline, heating oil) to electric vehicles and heating systems. The amount consumed may not change much but it puts more strain on the electric grid.  US electricity demand growth has tripled since

Another surprise: it’s very good at assimilating people Although the popular image of a migrant is a desperate young man floating across the English Channel, Britain’s foreign-born residents are frequently middle-class and slightly more female than male.  They quickly get up to speed economically, and their children do strikingly well in school.  The government makes no effort to disperse immigrants from ghettos, as, say, the Danish government does.  Yet they disperse themselves anyway. The Economist 18 March 2024

The trumpeter of all this positive thinking, and more that we shall address below, is Francis J. Gavin, a history professor at Johns Hopkins University and veteran adviser to governments.  He is, in short, no quack. His new book, or perhaps long essay, is entitled The Taming of Scarcity and The Problems of Plenty. We citizens of rich societies are spoiled; we have elevated the cult of self to manic proportions: “Venerating individualism and encouraging self-crafted identities can weaken the bonds of larger collective enterprises, leaving people isolated, lonely, vulnerable and, at times, dangerously alienated.” In the age of plenty, it becomes more difficult to persuade people to subordinate their immediate personal desires and interests to the service of the community or the nation.  Moreover, those in charge lack power to deliver many of the outcomes that the people want The author reserves his gravest warnings for the failure of governments in general, and of the US government in pa