Sat 7 May

MMT and its implication for inflation

MMT says that governments can keep printing money and investing it to take up the slack in the economy until it hits full employment. Knowing whether there is real inflation, or just random disconnected price spikes is hard to know, and …

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The rise of the administrative state

I recently finished reading “The Managerial Revolution” by James Burnham. It’s not a business book, but a book about political theory. It was written in 1941, in the middle of the second world war, when it looked as though Hitler would win, and …

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Today in markets

Even though some Russian missiles hit targets (well, places) in Poland, the market had a risk-on tone today. PMI readings supported the ‘inflation under control’ narrative, which pushed commodities, equities and bonds up. The biggest impact is on shorted names: $WMT (Walmart) was up by 6.5 …

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Wrap

Significant global economic uncertainties in the coming months made OPEC cut on Monday its estimate of global oil demand growth for this year and next, in the fifth reduction of consumption forecasts since April.

OPEC revised down each of its 2022 and 2023 oil demand growth forecasts by 100 …

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Mid Terms Results

Initial indications seem to be that the Republicans have taken Congress, but the Dems have held onto control of the Senate. The party discipline in US politics has broken down so much that maybe this doesn’t matter, but it’ll be difficult to increase taxes or …

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An ageing planet and the future path of interest rates

The Economist has a special report about ageing societies and mounting public sector debt.

It’s hard to summarize fully, but the argument is that it’s hard for governments to contain spending when their populations are ageing and demand …

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Today’s random thoughts

• Paul Singer of Elliott Management has warned that hyperinflation is around the corner. Clearly, it’s not all about supply bottlenecks, but CB’s don’t like to take the blame.
• Everyone hates copper, uranium, gold, silver. Maybe it’s time to go long some producers …

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FOMC day

The long-expected hike of 75bp arrived. From Newsquawk:

Stocks and Treasuries were lower while the dollar was bid with markets continuing to react to Wednesday’s hawkish press conference from Fed Chair Powell. Aside from Powell, we saw the BoE and Norges bank rate decisions where the former …

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2022-11-01

Has the time come for corporate debt to have its time in the sun?

SOM Macro Strategies argues in its latest newsletter that higer rates will benefit corporate credit. The idea seems to be that interest cost is fully allowable, and that as CBs pause the current tightening cycle …

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Scary Stuff

China is a scary place Insanely, investment in real estate in China is running at over 18% of GDP. Much of it is financed by banks, which are behemoths, but running on tiny sliver of equity. The slightest pause in the price of real estate would make 2008 …

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