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  It is not Prime Minister Viktor Orban’s anti-immigrant Hungary, an irritant to the European project, but in the end a marginal one. If France turns against a united Europe, the possibility of a broader unraveling of the 27-nation union grows because its core begins to dissolve. “We must be lucid about the fact that our Europe is mortal,” Mr. Macron declared in April before an audience of government ministers, European ambassadors and other dignitaries at the Sorbonne  He spoke for almost two hours but political energy had already passed to a different vision — of the nation resurgent — and Mr. Macron was not ready to see that. New York Times 29 June 2024 https://www.nytimes.com/2024/06/29/world/europe/macron-biden-france-elections.html

Hans politiska karriär har beskrivits som den snabbaste någonsin i Frankrikes moderna historia. https://englundmacro.blogspot.com/2024/06/hans-politiska-karriar-har-beskrivits.html Emmanuel Macron did write his dissertation on Niccolò Machiavelli https://englundmacro.blogspot.com/2024/06/emmanuel-macron-did-write-his.html Will French elections spark the next euro crisis? Leibniz Center for European Economic Research https://englundmacro.blogspot.com/2024/06/will-french-elections-spark-next-euro.html Berlin has made clear that it will not let the European Central Bank print money to save France. But... https://englundmacro.blogspot.com/2024/06/berlin-has-made-clear-that-it-will-not.html AI Propels Stocks to Monster First Half https://englundmacro.blogspot.com/2024/06/ai-propels-stocks-to-monster-first-half.html Housing Bubbles in America Wolf Street  https://englundmacro.blogspot.com/2024/06/housing-bubbles-in-america-wolf-street.html Interesting Times https://englundmacro.blogspot.com/

Far-right and far-left populist parties in France are making campaign promises that could cost billions.  What happens to the euro if either of these parties get voted in? Europe's second-largest economy is already groaning under a mountain of debt equaling roughly 110% of GDP. Last year, France's trade deficit was running at about 5.5% of the country's overall economic output. Both mean trouble when measured according to the EU's Maastricht Treaty, which only allows for a 3% trade deficit and a maximum sovereign debt of 60% of GDP. Things could get worse. It's estimated the campaign promises being made by the far right and far left could add as much as €20 billion ($21.4 billion) annually in new spending to the budget. Some experts have said this is a conservative estimate, and that the plans could be costlier still. The strict parameters of the Maastricht criteria were eased during the COVID epidemic and have remained more flexible since. The eurozone's latest

  Efter att ha studerat vid elitskolorna Sciences Po och École nationale d’administration tog sig Macron in i finansvärlden. Som ung miljonär bytte han bana till politiken och klättrade snabbt inom Socialistpartiet. Han blev först rådgivare åt sittande president François Hollande, och sedan ekonomiminister i hans regering 2014. Två år senare begick Macron fadersmord på Hollande. Han lanserade då sin egen kandidatur till att bli Frankrikes president och startade rörelsen ”En Marche!” (Framåt!).  Det var en ny mitten i fransk politik – socialliberal, företagsvänlig och grön. Rörelsen var starkt positiv till EU och globalisering. Hanna Törnquist SvD 29 juni 2024 https://www.svd.se/a/yE4P0e/macrons-strategi-jamfors-med-napoleons-sista-dagar – Alla här röstar på Nationell samling, säger mäklaren Marc Florin, som säljer hus i hundramiljonersklassen. Vad har fått de förmögna att ta det steget? Ännu i förra presidentvalet var det fler som röstade på Emmanuel Macron här, än på Marine Le Pen.  –

San Francisco, Seattle, Phoenix, Portland, Denver, Dallas, Las Vegas still below 2022 Peak Wolf Street 25 June 2024 https://wolfstreet.com/2024/06/25/the-most-splendid-housing-bubbles-in-america-june-2024-update-san-francisco-seattle-phoenix-portland-denver-las-vegas-dallas-below-2022-peak-new-highs-in-miami-los-angeles-san-diego-boston/

During the Crimean War (1853-56) the British and Russians dutifully paid interest to the other on old debts even as they slaughtered each other on the battlefields Attitudes, practices and legal theories have clearly changed in the last 170 years. The question is, how much?  It appears that the United States is willing to hit Russia over its invasion of Ukraine a lot harder than the Europeans are. That’s putting stress on Western alliances. What should happen to about $200 billion worth of Russian assets that are frozen in Euroar, a Belgium-based institution that processes financial transactions.  Under Euroclear’s policies, Russia isn’t entitled to interest earned on the money while it’s trapped in its system. But what about the principal? Can that legally be seized to aid in the war effort? The complication is that neither Euroclear nor Belgium nor any of the Group of 7 nations is at war with Russia.   Grab the money anyway, some Americans say. The G7 has said the assets will remain

 Det var en försöksballong, avsedd att testa hur långt västmakterna var redo att gå i försvar av sin uppblåsta retorik om internationella avtal, territoriell integritet och om små staters rätt att själva välja väg. Svaret blev precis det Putin, likt Hitler, hade räknat med. Man grymtade och vände bort blicken. Påföljande tio år blev till en lång uppvisning av tysk-fransk eftergiftspolitik. Bakom eleganta rökridåer som ”Normandieformatet” fanns en verklighet där man valde att spela med i Rysslands lögner om att inte vara inblandad. (Begreppet Normandieformatet används för den diplomatiska uppsättningen av ledare från fyra länder – Ukraina, Ryssland, Frankrike och Tyskland – som för samtal om utvecklingen av den pågående militära konflikten i östra Ukraina, också kallad Donbasskonflikten eller kriget i Donbass.) Om man hade valt att kalla spaden för en spade hade vidare förhandlingar inte varit möjliga, och för politiker med den egna karriären på spel var det naturligtvis otänkbart. Även

France is an increasingly poor country that complacently assumes it is a rich one. Where’s the money to come from?  Not from Germany, as it turns out. Its finance minister Christian Lindner has made that clear.  “A tragedy could threaten the French,” he argued on Thursday, if the deficit is not brought under control, adding that intervention by the European Central Bank (ECB) would raise “economic and ... constitutional questions’’. Until now, investors have assumed that France’s debts, now the third largest in the world after Japan and the US, were backed by the ECB and by implication the rest of the eurozone.   The German economy has been heavily damaged by losing cheap Russian gas. It has the lowest growth in the G7 and its exports to China face obliteration in an EU-led trade war The problem for Germany is that it will be very hard to stop a bailout for two reasons. First, Christine Lagarde, the president of the ECB, is French and an ally of Macron.  .  Lagarde may well emerge as t

  The giant federal debt isn’t just borrowed money. It is also lent money. Loans are two-party transactions. One side receives temporary use of cash which it agrees to repay with interest. The other gives up the current use of that cash in exchange for receiving interest.  Ideally, it works out for both… but not always. The US Treasury Department doesn’t have to visit a banker, hat in hand, when it wants to borrow money. The opposite is more accurate. Treasury holds periodic auctions to which it invites the bankers, giving them the “opportunity” to have Uncle Sam borrow their money. Who are these lenders/bondholders? The Treasury Department keeps track of this (it’s always good to know your lenders). The calculations below come from Wolf Richter of the Wolf Street blog,  https://wolfstreet.com/2024/06/23/who-holds-the-recklessly-ballooning-us-national-debt-of-34-7-trillion/ who nicely summarized the current situation last week.  I’m often asked what will happen when/if the Chinese or o

  S&P 500 has climbed 15% despite reduced hopes for Federal Reserve interest-rate cuts The AI fervor powering the stock market shows no sign of cooling down. So far, Nvidia has contributed 30% of the S&P 500’s total return Throw in Google parent Alphabet, Microsoft, Facebook parent Meta Platforms and Amazon.com, and you have accounted for well over half of the index’s return. Wall Street Journal 28 June 2024 https://www.wsj.com/finance/stocks/ai-frenzy-propels-stocks-to-monster-first-half-620229cc Goldman’s Hedge Funds Head Says It’s Time to Cut Portfolio Risk After a blistering rally driven by the biggest technology stocks pushing the S&P 500 to a string of all-time highs this year, it’s “a good time to tap the brakes,” according to Goldman Sachs Group Inc.’s Tony Pasquariello. “It’s a bull market, but the probability of a drawdown is rising,” Pasquariello, the bank’s global head of hedge fund coverage, wrote in a note to clients Friday.  “As long as the economy is growing

  Mr Macron will not settle down to a workable cohabitation with a government of his enemies. He refused to share power after losing his parliamentary majority in 2022, instead abusing a loophole in the French constitution (Article 49.3) to ram through his agenda by decree, at the limits of authentic democracy. Article 16 lets the president invoke emergency powers on his own authority, and exercise those powers at his own discretion, a combination that distinguishes France from every major country in the democratic world. Charles de Gaullle invoked Article 16 in 1961 following the Algiers putsch by retired army officers.  In theory, Article 16 requires a dual trigger. There must be both a “grave and immediate” threat and a breakdown in the regular functioning of the state.  Calling a snap election out of wounded pride and then making matters worse, hardly meets the threshold. It has become fashionable in the French and British press to compare Mr Macron’s gamble with David Cameron’s Br

Macron at Versailles https://englundmacro.blogspot.com/2024/06/macron-at-versailles.html Can Bullingdon explain the Tory defeat? Updated. https://englundmacro.blogspot.com/2024/06/can-bullingdon-explain-tory-defeat.html France and Germany are used to getting their way on the EU stage https://englundmacro.blogspot.com/2024/06/france-and-germany-are-used-to-getting.html "Policy may not be as restrictive as perceived" https://englundmacro.blogspot.com/2024/06/policy-may-not-be-as-restrictive-as.html Media om Biden-Trump https://englundmacro.blogspot.com/2024/06/media-om-biden-truma.html Stockholmsbörsen handlades med gott humör på fredagen.  https://www.di.se/live/grona-siffror-pa-borsen-millicom-i-topp-efter-avfardat-bud/   USA-index vände ner – Nike rapportrasade 20 procent (di.se) Dagens börs 27 juni 2024 https://englundmacro.blogspot.com/2024/06/dagens-bors-27-juni-2024.html CNN Fear & Greed Index https://edition.cnn.com/markets/fear-and-greed US Bond Yields https://engl

President Emmanuel Macron was in his element last month, holding court with foreign investors at a Davos-inspired conference inside the Palace of Versailles.  He wanted to discuss the rise of artificial intelligence One executive warned the voracious technology would require the world to double its energy supply. Another said AI would unleash a wave of job displacement. Beyond the gates of Versailles, many French voters have grown tired of Macron’s tendency to run France like a business rather than a country His technocratic focus on France’s ability to compete in the global marketplace has done little to placate widespread anxieties over immigration and the rising cost of living.  Macron has cast the new vote as a moment of truth for France that would reveal whether voters actually support Le Pen’s nationalist, anti-immigrant agenda.  It is a colossal bet, based on the assumption that voters choosing between a multitude of parties in the first round of voting on June 30 will eventuall

A Labour government is a necessary first step in repairing the fractures of the Union. At least part of the divorce fever in Scotland and Wales over recent years has been driven by a visceral rejection of the Bullingdon Tories. From Wikipedia: The Bullingdon Club is a private all-male dining club for Oxford University students. It is known for its wealthy members, grand banquets, and bad behaviour, including vandalism of restaurants and students' rooms.  Membership is expensive, with tailor-made uniforms, regular gourmet hospitality, and a tradition of on-the-spot payment for damage.  Some members have gone on to become leading figures within Britain's political establishment.  These include former Prime Minister David Cameron, former Chancellor of the Exchequer George Osborne, and former Prime Minister Boris Johnson. The Bullingdon is often featured in fiction and drama. Ambrose Evans-Pritchard Telegraph 7 June 2024 https://englundmacro.blogspot.com/2024/06/ambrose-i-may-have-

Federal Reserve Bank of Richmond President Thomas Barkin said the inflation battle still hasn’t been won, and the US economy is likely to remain resilient as long as unemployment remains low and asset valuations high. “The US economy, particularly its consumer, has been much more resilient to rate increases than most expected and is likely to stay so as long as valuations remain elevated, and unemployment remains low,” “given the remarkable strength we are seeing in the economy,” he said he is open to the idea that the longer run rate that keeps supply and demand in balance “has shifted up somewhat” and that policy may not be as restrictive as perceived. Bloomberg 28 June 2024 https://www.bloomberg.com/news/articles/2024-06-28/barkin-says-us-economy-is-withstanding-fed-s-battle-on-inflation  Bill Dudley: I think r* is a lot higher than the Fed recognizes https://englundmacro.blogspot.com/2024/05/bill-dudley-i-think-r-is-lot-higher.html   Desperately Seeking Restrictive https://englundm

  Other member states reacted furiously when President Emmanuel Macron and Chancellor Olaf Scholz attempted to force through a last-minute rewrite of their long-term policy priorities, according to people inside the room who asked not to be named when discussing confidential negotiations.  Almost all of France and Germany’s amendments were rejected. It’s rare that a proposal by the two biggest member states draws such a strong reaction, according to one EU diplomat. But both their leaders arrived at the summit weakened by their crushing defeats in this month’s European elections. Bloomberg 27 June 2024 https://www.bloomberg.com/news/articles/2024-06-27/macron-and-scholz-s-summit-hijack-hits-a-wall-of-angry-eu-leaders Ursula von der Leyen fortsätter som kommissionsordförande | SvD

  Det mest genanta under duellkvällen i Atlanta var ändå inte när presidenten tappade bort sig i duellen med Donald Trump. Det var istället bilderna som visade när han kom med sin fru Jill till Demokraternas efterfest, och leende vinkade till partivännerna. Till synes utan att ha en aning om att panelen på CNN – som arrangerade debatten – redan hade börjat diskutera om han inte borde kliva åt sidan och släppa fram en annan presidentkandidat för Demokraterna. SvD https://www.svd.se/a/636pzL/demokrater-vill-peta-biden-efter-haveri-i-duellen DN Karin Eriksson: Genomklappning, sammanbrott, flopp, krasch, fiasko - DN.se Before Thursday evening, many Americans had expressed concerns about Joe Biden’s age and fitness for office.  To say that this debate did not put those concerns to rest may be one of the greatest understatements of the year. The president came into the debate with a low bar to clear, and he stumbled. He was flat. He was rambling. He was unclear. BBC  https://www.bbc.com/news

MarketWatch 27 June 2024 https://www.marketwatch.com/story/trade-deficit-widens-sharply-in-may-d09b71c8 Another Terrible Trade Report Recessions (yellow highlights) tend to improve balance of trade, temporarily. https://mishtalk.com/economics/another-terrible-trade-report-plus-a-spotlight-on-not-winning-big/

  Europe faces an unusual problem: ultra-cheap energy https://englundmacro.blogspot.com/2024/06/europe-faces-unusual-problem-ultra.html What makes solar energy revolutionary is the rate of growth https://englundmacro.blogspot.com/2024/06/what-makes-solar-energy-revolutionary.html “Bank stress tests are fun. They are interesting. So is a game of Monopoly. Do not mistake either for reality,” https://englundmacro.blogspot.com/2024/06/bank-stress-tests-are-fun-they-are.html Nye ägaren Ayad Al-Saffar vände Åhléns till vinst direkt https://englundmacro.blogspot.com/2024/06/nye-agaren-ayad-al-saffar-vande-ahlens.html The U.S. trade deficit in goods widened to $100.6 billion in May För en månad således. https://englundmacro.blogspot.com/2024/06/the-us-trade-deficit-in-goods-widened.html From New England to Latin America https://englundmacro.blogspot.com/2024/06/from-new-england-to-latin-america.html Börsen 26 juni 2024 https://englundmacro.blogspot.com/2024/06/borsen-26-juni-2024.html   CNN Fe

  Owing to the rapid spread of solar power, Spanish energy is increasingly cheap. Between 11am and 7pm, the sunniest hours in a sunny country, prices often loiter near zero on wholesale markets.  Even in Germany, which by no reasonable definition is a sunny country, but which has plenty of wind, wholesale prices were negative in 301 of the 8,760 tradable hours last year. As solar panels and wind farms take over Europe, the question facing the continent’s policymakers is what to do with all the power they produce.  Sending energy to places without surpluses would require a better connected grid. The problem is that grid extensions take time and meet local opposition. On June 18th Sweden cancelled the Hansa PowerBridge, a 700-megawatt connection to Germany, over fears it would raise electricity prices for domestic consumers. The Economist 22 June 2024 https://www.economist.com/finance-and-economics/2024/06/20/europe-faces-an-unusual-problem-ultra-cheap-energy

  This extraordinary growth stems from the interplay of three simple factors. When industries make more of something, they make it more cheaply.  When things get cheaper, demand for them grows. When demand grows, more is made. In the case of solar power, demand was created and sustained by subsidies early this century for long enough that falling prices became noteworthy and, soon afterwards, predictable. The positive feedback that drives exponential growth took off on a global scale. In 2009, when installed solar capacity worldwide was 23gw, the energy experts at the IEA predicted that in the 20 years to 2030 it would increase to 244gw.  It hit that milestone in 2016, when only six of the 20 years had passed.  The people who have come closest to predicting what has actually happened have been environmentalists poo-pooed for zealotry and economic illiteracy, such as those at Greenpeace who, also in 2009, predicted 921gw of solar capacity by 2030.  Yet even that was an underestimate. Th

Sverige sänker snabbare än USA och europeiska centralbanken, säger Andrew Hollenhorst Räntesänkningarna väntas stödja ekonomin, men det slår också mot kronans värde. ”Det kommer inte stärka valutan, utan tvärtom. Det i sin tur kommer  att stödja svensk exportsektor”,    Vad gäller debatten om Sverige borde införa euro istället för kronan   ”Det är inte bara en ekonomisk fråga, utan främst en politisk och kulturell fråga. Det säger en av USA:s toppekonomer, Andrew Hollenhorst på banken Citi. https://www.di.se/nyheter/amerikansk-toppekonom-sverige-har-mest-aggressiva-rantepolitiken-i-vast/ Riksbanken lämnar som väntat styrräntan oförändrad på 3,75 procent, men flaggar för fler sänkningar: ”Förutsatt att inflationsutsikterna står sig kan styrräntan sänkas två eller tre gånger under andra halvåret”, skriver banken i pressmeddelandet. https://www.riksbank.se/sv/press-och-publicerat/nyheter-och-pressmeddelanden/pressmeddelanden/2024/styrrantan-oforandrad-pa-375-procent/ I år bedöms KPIF-infl