It's alarming to see the Dutch government doing absolutely nothing to get the #Groningen#NaturalGas field going again.
A thread 1/6
To be clear, the Dutch government made a big mistake by closing it down in the first place.
And now it has become impossible to move people even if it would come up with ‘an offer you can't resist.’
Understandable if people say ‘no.’
2/6
But the Dutch government can immediately start investing in repair/strengthening/restoration
This would allow some exploration but, more importantly, at least create a longer-term optionality. 3/6
Instead, the Dutch government does nothing, which means it has to send the king to the #WorldCup2022 in #Qatar to ensure the #Netherlands, with all its natural gas, gets enough LNG to keep its population from freezing. 4/6
How do you explain having to go from #Russia to #Qatar for your energy supply and not even attempting to make this is as temporary as possible? Unfortunately, that still means year's after taking the wrong decision earlier but al least it's something. 5/6
The #Netherlands and the Eurozone have a habit of hurting themselves... on purpose! Next to #energy, the regulations related to #sustainability are entirely unrealistic and directly harmful to the economy, businesses, and consumers. Where did it go wrong?
6/6
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Mortgage rates are screaming lower house prices ahead! 1/5
You asked, we answered. In a follow-up on the chart below, which understandably raises a few questions, we took an in-depth look at current US house prices vs. mortgage rates.
In addition to comparing annual nominal house price levels and mortgage rates since 1986, we also looked at:
- nominal MONTHLY data
- REAL monthly data
- both since 1971 (which includes a period of rising interest rates)
- other factors that forecast US house prices.
2/5
Mortgage rates are screaming lower house prices ahead 3/5
The relationship between REAL house prices and mortgage rates is weaker than nominal prices. However, the last eight months (orange oval) remain the clear outliers.
It's about the destination now
Forget the speed of rate hikes
Focus on the terminal rate and
how long the Fed must stay there
= how much cumulative pain is needed to crush #inflation
1/n Powell: 'If we were to overtighten, we could use our tools to support the economy later on.'
Or in other words, we are willing to risk a #recession to get the 'job done' and push #inflation to target.
1/n Interesting end to the presser with one journalist stating #equities were up after #FOMC - which was not true -
Powell repeated virtually all hawkish sentences he had made during the press conference. He cares about (tighter) financial conditions, not about equities.
#Duration works both ways! #Austria's '100-year' bond, maturing in 2120, with a duration of 46 years, is down a whopping 72% since late 2020 when global yields bottomed.
short thread 1/9
This also answers the many questions about why the value of (UK) #liability-driven investment funds, used by pension funds to match the #duration of their #liabilities, has plummeted. 2/9
Theoretically, since pension fund #liabilities and #assets both drop when #yields rise - it is not called liability matching for nothing - there shouldn't be a problem, right? 3/9
An earlier note to our clients showed that since 1950 there were just two major moves in #inflation: one up from 1955 until 1980, and one down from 1980 until last year. Before that, inflation was all over the place and more often negative. The last 70 years may be the outlier.