The
#WeeklyWintersberger
'The Middle'
1. European PMIs & EU politics
2. Germany continues to struggle
3. US PMIs signal continuing strength
4. Bonds: deep recession, everything else is bearish
More:
Have a great summer!
Wow! German producer prices rose 45.8% YoY, much more than the 37.2% expected. In Europe, it's hard to see a peak in inflation. Expect higher inflation rates down the road.
The main reason, in my opinion, why Germany and Austria are so dependent on Russian gas is that they wanted to be the pioneers of renewables, abandoned coal & rejected nuclear. And they didn’t think about proper risk management (several suppliers)
So, politics failed, as always.
#Austria
is a funny country: to 'dampen' inflation pressures, ppl will receive a € 500 'climate bonus' by September (the initial plan was in October). Gov says it's financed by a CO2 tax, kicking in October. Funny, right?
Funnier: 300k ppl, randomly chosen, get the bonus today.
🇩🇪 Germany again had to import electricity in October. Since it quit nuclear, there were z-e-r-o months where it produced enough electricity for domestic electricity consumption 👇
(pic h/t
@simhaas
)
Debt levels are the real problem for the Fed when it comes to fighting inflation. An argument that Powell might neither be an Arthur Burns nor a Paul Volcker but more of a mix of Marriner S. Eccles, Thomas B. McCabe & William McChesney Martin (Fed chairs between 1945 - 1970).
Remember when everyone & their mother championed Spain's interventionism to control CPI?
Yet, most forget such interventions can only artificially reduce CPI temporarily, as they don't lead to additional supply & only leads to a higher CPI down the road.
Core CPI unaffected.
Lagarde: 'We were fighting deflation, and inflation came out of nowhere!'
Here's the Eurozone Core Monetary Union Index of Consumer Prices (2015=100). I cannot identify deflation - can you?
Sehr geehrte
@BMeinl
!
Morgen wird im
#OeNR
über die
#Impfpflicht
abgestimmt. Diese ist, frei nach Ihrem Vorgänger, ein 'totes Pferd', & wird zu einer Blamage werden. Gehen Sie heute Abend nochmal in sich, und stimmen Sie morgen wie eine Liberale ab: mit Nein.
Schönen Abend!
According to the Taylor-Rule, the Fed would need to hike interest rates up to 9%.
I can assure you, that won't happen because something would break before. But just imagine how epic the recession would be if that happened.
Some argued that in a recession, demand will collapse faster than supply. But let's assume European manufacturing partly shuts down, production is falling, but people receive unemployment benefits & extra free money. What is falling faster, supply or demand? I tend to say supply.
The euro is on its way to becoming an EM currency, as the US is ready to fight Russia down to the very last European. Parity soon, but be prepared that the euro can go much lower.
Thanks, ECB!
10y Bund Futures (white) vs. Dax (blue). The last two times when stocks and bonds disagreed: were 2000 and 2008.
The current divergence looks more like 2000.
Former BoE governor Mervyn King with a truth bomb:
CBs relied on forecasting models that ignore the money supply. He pointed out that excessive money supply relative to output historically led to inflation, thrashing CBs for ignoring broad money growth.
Link below 👇
'European power prices are not expensive by chance, but by design. The exponential increase in subsidies, regulated costs and the price of CO2 emission rights are political decisions.'
So many people are wrongfully blaming the rate hikes for the current problems. No, the problem was the artificially low-interest rates prior, and that was when the problems got created.
The Spanish government thinks about implementing a four day work week & the Germans are going to pay for it.
Of course the "recovery" fund money will be invested wisely and will spur growth...
Just laughable!
Exactly. Monetary aggregates (like M2) might be too narrow in a world where everyone can trade stocks against cash on their phone within minutes.
That’s why a re-acceleration (among other influences) may seem likely. When markets react to the reality, we should see a bear
The Cleveland Fed updated their inflation nowcast this morning.
August CPI is now projected at 0.79%, pushing the YoY to 3.82%.
September CPI is now projected at 0.45%, pushing the YoY to 3.91%.
Driving this has been the rise in gasoline prices.
Yes, the Cleveland Fed has
If you support the idea of a United States of Europe, you’re advocating for:
- more centralization
- more regulation
- Joint debt & liability
- mass surveillance
I fail to see how any of these align with classical liberal principles or are the solution to our problems.
'...the ECB really is no longer the ECB anymore. The Green Transition is primarily a political project, so the ECB’s new mandate to also combat climate change is evidence that any pretense of political independence of the ECB has now been trashed'
@m_grill
@a_nnaschneider
Sie wissen es vielleicht nicht: Libertär ist die amerikanische Version von 'klassisch Liberal', weil die Demokraten den Begriff 'Liberals' als Synonym für Linksliberalismus etabliert haben.
Die Anarchokapitalisten (die Sie hier meinen) sind nur eine Gruppe unter den Libertären.
The EU agreement on an oil price cap, coordinated with G7 and others, will reduce Russia’s revenues significantly.
It will help us stabilise global energy prices, benefitting emerging economies around the world.
In 2018, the 2y started falling before the Fed ended its hiking cycle. The 2y reversed recently, probably because market expectations on rate hikes were too aggressive. But, in '18, we already saw 8 hikes, this time only 1. I think the Fed can't hike above 1.5% until sth breaks.
A sooner-than-expected recession might cause a deflationary shock, but even that won't bring consumer prices down to their long-term trend. Prices must remain constant for the rest of the decade to get there.
A deep dive into inflation and an outlook -> see the pinned tweet
Lockheed Martin has surged to new all-time highs since the war started. Always remember: military aid (regardless of which country gets it) means that you transfer government money to the weapon industry.
The days of Germany as Europe's economic powerhouse are ending due to high energy costs, high inflation, and questionable plans for more EU regulation.
(Chart:
@Schuldensuehner
)
Lockdown-policies by governments more and more remind me of monetary policy by central banks: If it doesn't work at all or as expected it simply wasn't enough according to them.
#moar
Today, we are in this rare environment where the Fed hikes interest rates, but the deficit continues to grow as a share of GDP.
This works against monetary tightening.
Net investments into Germany last year 👇
-$131.8bn
($11bn inflows vs. $142bn outflows)
Robert Habeck‘s economic policies shallow the German industrial base. Lower growth and tough times ahead for Germany.
(source: ZDF, Handelsblatt)
We've been in an economic war for six months now. Everyone talks about how to reduce the demand for gas, electricity, etc. But still, very few talk about what can be done on the supply side to lower the price. No fracking in Europe, no more nuclear. Just solar, wind & hope...
Dieses Gespräch muss man gesehen haben:
If you are able to understand German then watch this highly interesting interview with Friedrich August von Hayek:
Interesting.
German journalists in
2021: racist conspiracy theorists who believe in fake news protest against covid lockdowns & hold the silent majority hostage. Censor them!
2022: brave people protest against lockdowns, call for freedom & censorship. We support freedom!
Do not count on central banks to tighten. Yields will not rise because of talking about tightening but rather will rise because of accelerating inflation. The transitory talk is just wishful thinking and hope that words become reality.
The situation is different to past 2008...
I am astonished that so many people in the investment community fall for MMT.
Maybe, it's time to reshare this piece by
@dlacalle_IA
. The title says it all:
'MMT Is Fake Economics'
Mises half Kollegen bei ihrer Flucht vor den Nazis, er selbst wurde von den Nazis gejagt & floh unter gefährlichen Umständen in die USA.
Ihm die Unterstützung v. Diktaturen nachzusagen ist schlechter Stil.
Außerdem: Mises starb 1973, 1 Monat nach Pinochets Putsch.
Absurd:
@OrtnerOnline
fordert ökonom Schulbildung, um Demokratie zu stärken, u empfiehlt ausgerechnet Hayek u Mises, die Diktaturen in Chile u Ö unterstützten, weil sie Freiheit wirtschaftl Eliten durch Demokratie, Sozialstaat u Gewerkschaft bedroht sahen.
In England, surveillance of Omicron found just 75 deaths among 212,019 confirmed cases. That's a 0.03% case fatality rate and that's deaths "with" positive test up to 28 days prior to death. Infection fatality rate of flu is ~0.1%.
UK has since stopped publishing surveillance.
Translation: we will hand out your money to net-zero businesses, whether they’re productive or not.
Green bubble in the making. You can even question whether it’s helping the planet.
The fight against climate change is a must.
A must for our planet.
A must for our economic prosperity.
And a must for our strategic independence.
With the Green Deal Industrial Plan, we want to enhance the competitiveness of Europe's net-zero industry.
#EUIndustrialStrategy
That's what artificially low yields in the US created: A record number of zombie companies. It will be pretty hard for them to survive an environment of rising yields.
(chart source:
@JonathanBaird88
on Linkedin)
"Schon längst ist für jeden, der es sehen will, überdeutlich, dass es nicht um das Erreichen eines Inflationsziels geht, sondern um den Erhalt der Eurozone mittels einer Schuldenunion – über den Umweg der EZB-Bilanz."
Lesenswerter Text von
@thinkBTO
This is the US Consumer Price Index, and the deviation from the trend shows the damage that it has done. Inflation is a tax that affects low-income groups the most.
The Fed aims to return price growth to the same rate as post-2000, but it clearly hasn't succeeded yet.
Bond markets want to tell something about the economy. Tapering, NFP above expectations; still 10y yields down sharply. That’s the anticipation of a slowdown in my opinion.
@vonderleyen
What about freezing the Azerbaijan FX reserves, stopping gas imports, and send money to Armenia?
Anything else would be hypocritical, wouldn't it?