Meanwhile on the markets

The recent weeks brought some noteworthy developments on financial markets, some particularly worth highlighting and commenting on. Observations of how markets behave leads me to conclude my academic grasp of economic theorems is being rendered obsolete, while new paradigms unfold…

1. Interest rates

In early March Poland’s monetary authorities decreased the policy rate by 50 basis points, to (yet another) record-low 1.50%. In terms of historical levels of central bank’s rates, the current level appears hazardously low, however put into broader perspective, Poland’s monetary policy does not come out as extremely easy. Absolute level of interest rates is among the highest in the EU and oddly enough, real interest rates have not been that high since many years. Current real rate is around 3% (1.50% policy rate + 1.60% y/y deflation), while in the past years inflation-adjusted interest rates would not seldom run into negative territory. Do notice this reasoning bears some simplification, since inflation records are backward-looking while interest rates as of today refer to future periods and time mismatch exists.

The Polish central bank’s governor has also stressed there was no room for further monetary easing and over the coming months monetary authorities would take the “wait and see” approach. The only justification for such scale of monetary loosening is the ongoing deflation, which however is spurred by factors beyond central bank’s control. By slashing interest rates to record-low levels the central bank only adjusted its policy to evolution of price level in the economy (the question remains whether NBP would be capable of swiftly reacting to increasing inflation). Lower interest rates will not kick-start the economy, as it is expanding in a healthy and sustainable pace, consumption will also not be much stimulated, since propensities to spend, save and borrow are driven by several other more meaningful factors than monetary policy. Consequently, the most aggrieved by the recent rate cut are depositors whose savings do not grow as fast as they would like to be.

The other group hit are banks. They “suffer” (i.e. fall short of their shareholders’ expectations towards profits reaped in Poland) because rate decrease is followed by drop in cap on interest rates they are allowed to charge borrowers which is 4 times central bank’s lending rate, now 4 times 2.50%, i.e. 10%. Evidently banks find several ways of circumventing the regulation. Quite recently I learnt an up-front fee for a cash loan is on average 10% these days. In practice it means if you want to borrow let’s say 10,000 PLN you either effectively have to borrow 11,000 (and pay interest on it) or effectively get only 9,000 (but pay interest on 10,000). Banks will pass the unfavourable impact of monetary policy to their clients, as they will do with an increased deposit insurance fund contribution. The fund, intact between 2001 and 2014, has been recently depleted by 3 billion PLN to fund payments to depositors who had entrusted their money to insolvent credit unions (since October 2012 covered by deposit insurance system and the same rules of financial supervision as banks). The fraudulent activity of credit unions has been harnessed for full-blown mud-slinging in the current presidential campaign, yet this is a topic for another post…

Worth also mentioning the financial watchdog issued a warning to banks against evaluating mortgage loan applicants creditworthiness based on current interest rates and show clients stress simulations, i.e. how their instalments would rise if interest rates increased by a specific number of basis points. A commendable move, given currently granted mortgage loans could turn out to be a time bomb akin to CHF-denominated mortgages foisted upon client when the Swiss France cost not much above 2 PLN. Seven years ago Polish central bank’s policy rate was 6%. Unless a new paradigm emerges (i.e. interest rates higher than zero being an abnormal phenomenon), return of interest rates to such level within 25 or 30 years when mortgage loan is to be repaid, is definitely conceivable.

2. Stock market

Since taking up the job with the New Factory I am subject to stringent restrictions on trading, hence in order to avoid requesting approval for each single transaction, reporting transactions ex-post after each trade, reporting not executed trades and submitting breakdowns of orders and transactions at the end of each reporting period, I terminated my brokerage account and spare myself adrenaline by putting all my money into saving accounts and term deposits.

WIG, the broad market index covering almost the entire universe of stocks listed on Warsaw Stock Exchange, performed quite well in the first quarter of this year. It must be noted this index is a total return index, i.e. takes into account dividend income, in contrast to for instance WIG20, covering 20 biggest in terms of market capitalisation companies on WSE.

For this index I deliberately have chosen 10Y time interval for comparison, to illustrate for over two years the index has been in a clearly sideways trend. WIG20 is a price index, hence its readouts fail to reflect dividend income distributed to shareholders, which may make up a large portion of income, since many of index’s components are state-controlled cash cows whose dividends are a vital source of money to the government budget. Yet the chart clearly indicates those who invested in the index portfolio four years ago might not have broken even, even despite reaping several generous dividends.

Conclusions: the discrepancy between broad-market WIG index and blue-chip WIG20 index reflects not only differences in calculation formula but also the fact smaller companies outperform larger. WIG is hence a better business cycle gauge, yet not only because of its width. WIG20 composition is quite specific and not well-diversified. Banks have a large weight in the index, besides mining, oil and gas and electricity are strongly represented in the WIG20, making the index undesirably reliant on sentiments in a few industries and to regulatory and market environment having substantial impact on earnings of companies underlying the index.

3. Currency market

USD/PLN, here the pair purposely presented over 10Y horizon, has recently hit its 10-year high of 3.95 (some 0.05 higher than in memorable February 2009). The psychological barrier of 4.00 has not been even neared. Unlike six years ago, it was not the weakness of Polish zloty, but the strength of the US currency that drove USD/PLN quotations to exorbitantly high levels.

Polish currency recently has been amazingly stable as never before in its history which is well illustrated by EUR/PLN quotations. For more than two years, EUR/PLN has not broken out of quite narrow range from 4.00 to 4.30, while most of the time it stayed between 4.10 and 4.20. Such volatility is characteristic for mature markets. What also needs to be underlined, level on which the exchange rate has stabilised is neutral for the Polish economy, i.e. it well strikes balance between ensuring competitiveness of Polish exports and fending off prohibitive prices of imported goods. The issue of EUR adoption in Poland is also intensively exploited in the presidential campaign.

The divergence between skyrocketing USD/PLN and fairly stable EUR/PLN must lie on cross pair, EUR/USD. Quotes of the most liquid currency pair in the world dropped for a moment below 1.05 in the second week of March, thus also hitting 10Y low and then bounced back, yet remain below 1.10. The quaint FX rate movement reflects relative strength of the US economy and imminent monetary tightening (although Fed’s declaration interest rates will not be jacked up very soon brought appreciation of USD to a halt) as well as doldrums in which the EU economy is, compounded by increased scale of quantitative easing pursued by the ECB.

And for the very end, CHF/PLN quotations for which in my view the most relevant period for observation is three months. After shooting up on 15 January 2015, the Swiss currency slowly depreciated and CHF/PLN levelled off around 3.90, some 8% higher than before the SNB spun its currency out of control. For the indebted in CHF, impact of rising CHF/PLN has been well offset by negative LIBOR (currently near –0.85%) Polish banking sector’s concerted spread decrease (banks have not done it off their own bat, but have been coerced by financial sector watchdog). Mortgage debts of many households are now some 8% higher than in late 2014, yet their monthly debt service cash flow has not been hit.

4. Commodities

For sake of brevity I will focus only on crude oil prices that were searching for trough in second and third decade of January 2015. The subsequent rebound was a typical reaction of speculators to clearly oversold market. The scale of incline in the first half of February 2015 was impressive, since Brent oil price went up by some 30% within two weeks. In March oil quotations were very volatile, best proven by price fluctuations over the last two trading days. On 26 March oil went up by 5% in the wake of news of military action in Yemen to retreat by 5% on 27 March and wipe out almost the whole price increase from the previous day.

The question which naturally comes up these days is where the markets are heading. The only answer that naturally comes up to my mind is “I have no idea”. The most intensive period of my study of economics fell into 2008-2010, the run-up to the financial crisis, its most severe phase and early recovery. Near-zero interest rates at that time were considered a temporary measure employed to buoy up economies. Today, after six and a half years of ultra-loose monetary policies and no prospect of returning to long-term average levels of interest rates in developed economies one should ask what the current level of neutral interest rate in Taylor rule equation is.

I cannot even tell you in which phase of the traditionally defined business cycle we are. In Poland in 2000s we could witness recovery, early upswing, late upswing and downturn, in second half of 2009 we saw recovery, late upswing was in 2011, then the Polish economy slowed to record sluggish growth in 1Q2013. Are we now in early upswing or in late upswing? Needless to say, with hindsight it is easier to judge. But if we bear in mind stock market is said to be good indicator of future trends in the economy and it has been flat or mildly rising in the past months, economic growth should slightly accelerate. Economists’ forecasts in unison foresee a period of flat, but stable growth of 3% - 4% until 2017. Overly optimistic? Economists’ dreams of smoothed out business cycle fluctuations coming true? Time will only tell. One thing I am pretty sure of is that there might be many external shocks which may shatter all plausible projections. Keep the faith though.

M2

Just for the record – quite possibly today morning we witnessed the last gasp of winter in Warsaw. After several days of spring-like weather, last night brought frost and light dusting of snow. Skies cleared up around 8 a.m. and all the snow disappeared by midday. Next week temperature is foreseen to shoot up to nearly +20C. Roll on spring!

Again, a belated post, partly compiled almost two weeks ago, shortly after the opening of the second underground line, slightly updated and extended today.

Making it ot the anything but grand opening of the second underground line two weeks ago was out of question, so I tried it out the next day, on Monday morning. I was not the only one to document (photos by Szajsung) the first ride – see a much broader coverage by Michael (the fellow blogger visited all stations east of Świętokrzyska).

To the right – one of passages between the first and the second line on Świętokrzyska station. When first using this link, I was unaware of the existence of another far more convenient passage between the lines, which is faster, does not require passengers to go through ticket gates and on top is well-hidden. Despite this one flaw, I have to admit generally the signage is up to the mark in the stations of second underground line.

I took a train to the western end of the line, to Rondo Daszyńskiego station. This formerly industrial part of Warsaw is rapidly turning into a business district with hundreds thousands square metres of office space in use and under construction. The underground trains will definitely facilitate transport for thousand of corpo-workers having to get here and from here, making it much friendlier location to work than ghastly Służewiec Przemysłowy. I took the snap just from the entrance to the station, however to properly depict the modern office-districts landscape, I should have taken the photo from the south-eastern corner of Rondo Daszyńskiego.

The east-bound carriages running in the morning from Rondo Daszyńskiego were nearly empty. It does not imply that second underground line runs idle. According to recently published statistics its trains carry on average 106,701 passengers per day (vs. roughly half a million taking the first, much longer line). Besides, it takes time before passengers change their habits and get convinced to the fastest possible way of moving around town.

As pointed up by many, on the first working day most escalators on newly opened Rondo ONZ station were broken down. True, this was a nuisance, however technical crews swiftly mended the machinery and during the subsequent two weeks I did not notice a single technical defect. When it comes to technicalities, I also noticed many passengers encountered problems handling new glass-made ticket gates (seemingly so simple to use). Fortunately, the transport authority envisaged such situations and sent several assistants to help passengers find their way in newly opened facilities. I only wonder how long before the more complicated gates begin to pack up since their technical complexity and thus potential for defects is much higher than in old gates on first line stations.

To the right – view towards the station entrance to the station, photo taken in the vicinity of Rondo ONZ. For many corpo-workers keeping late hours in Rondo 1 and other nearby office buildings the underground trains should mean commuting improvement. From my perspective, the time saved thanks to it is less than five minutes. Compared to the previous route, i.e. taking a tram between Metro Pole Mokotowskie and Rondo ONZ (six stops), riding the underground does not requite waiting on the traffic light to cross two streets on Rondo ONZ, moreover the underground is not halted by traffic lights on intersections along the way. Having to swing east and change trains, rather than moving slower, but straight ahead, takes the gloss of smoother rides by underground. I will defnitely appreciate the underground during inclement or extreme weather. Taking a shelter will be preferable to being exposed to over +25C heat, less than -10C chill, downpours or heavy snow.

Now looking forward to opening the rebuilt park and ride facility near Metro Stokłosy. The huge car park for almost 400 cars, 100 bikes and bus terminus have been finished a few weeks ago and since then have been waiting for better days, fenced off from hundreds of potential users. In early February I ventured there to see the development had been completed and asked a security guard whether he knew the opening date. He only shrugged his shoulders and shared my discontent with the fact no one can use the new car park. From what I heard on the radio last week, the general contractor is to put all finishing touches and fix minor glitches by the end of March and then technical inspections are to set about. Feasible opening date – second week of April (the one after Easter.)

Grandma

My paternal grandmother was born on 3 November 1925 in the village of Skolimow, today a part of Konstancin-Jeziorna in a poor family. Before the outbreak of World War II she completed seven-year primary school. During the Nazi occupation her family's penury even worsened, since grandma's father was killed by Germans in February 1943.

After the end of the war she met my grandfather. They got married in October 1948; almost one year after the nuptials ceremony she gave brith to my father. Four years later my uncle was born.

She spent most of her adult life sharing her time between running the house, bringing up sons and work in shoe polish factory in Konstancin.

In mid 1980s she retired to help my aunt and uncle look after my cousin and then to take care of her ailing mother, the only great grandparent I barely remember, who died in March 1991. Her younger brother died in January 2011, while she stayed in good health, both physically and mentally fit despite quite advanced age.

In the recent years she was the first to look after my grandfather after his several stays in the hospital. His recovery has to be credited to her dedication and sacrifice, made at the expense of neglected progressing osteoporosis which sent her nearly bed-ridden in July 2014. Fortunately, for next over half a year she could get up from bed from time to time and still remained fully mentally sound almost until her very last days. 

Grandma passed away today, aged 89. She was survived by a husband, two sons, two grandsons and one great grandson.

I shall remember the last words grandma told me on 21 February, during our last conversation when she was entirely conscious: Przestań się wreszcie uczyć i znajdź sobie dziewczynę, bo jak rodzice umrą, to zostaniesz sam na świecie i umrzesz też sam. Home truth. Grandma tended to be coarse at times... The priest who came a week later with last rites sighed and told grandma she should be happy to be surrounded by the family, since more and more often he sees elderly people who do have children and grandchildren, departing in solitude.

Winter timeline 2014/2015

Just for the record – the recent winter was preceded by an abnormally warm autumn. Key milestones in the run-up to the proper winter were:

24 September 2014

When the morning was cold enough (below +10C) to wear a coat for the first time since early May.

4 October 2014

First ground frost on the suburbs of Warsaw, official reading from Okęcie weather station however, reported day-time low of +1.5C.

14 October 2014

The last time I could go to work in a suit only (day-time low of +12.9C), hardly ever possible in October.

23 October 2014

Temperature drop compels me take out an overcoat from the closet (+3C in the morning).

24 October 2014

A mass of Arctic air comes over. First proper frost (-2.6C). Mornings are frosty until 30 October.

5 November 2014 and 6 November 2014

Two extraordinarily balmy and clement days with day-time highs of respectively +18.5C and +18.6C, 0.3C short of Warsaw’s temperature record for November set on 1 November 2001.

19 November 2014 – 22 November 2014

First whiff of winter in north-eastern Poland. Warsaw is intact by snowfalls (I have not witnessed a single snowflake), but 200 km from the capital of Poland snow cover reached almost 20 centimetres.

25 November 2014

Overnight sleet / snow blizzard brings… less than a centimetre of wet snow, which by late morning melts, since the temperature is above freezing. I would not call it a proper winter. I believe it is a freak of late autumn; gloomy, foggy late autumn.

26 November 2014 – 27 November 2014

Chilly, gloomy, wet (but almost without precipitation, except for some little sleet and few snowflakes), temperature near zero.

28 November 2014 – 30November 2014

Not a full blown, yet it’s winter. Below-freezing temperatures all time round are amplified by easterly gusty winds, so while –5C is normally bearable, it feels like below –15C. Not a single snowflake falls on the ground, yet we could do with some snow to protect earth from freezing deep.

November 2014 stood a chance of being the warmest since records began (it would have to beat the +7.5C record of November 1926). However the extraordinarily hot first half was followed by chilly second half and the last days brought temperature several degrees below long-term averages. All in all, the temperature over the whole month averaged out +4.8C, vs. long-term mean of +3.2, so November 2014 was categorised as warm. Stats:

- month-time high: +18.6C on 6 November 2014

- month-time low: –8.0C on 30 November 2014 (cold, but on 30 November 2010 temperature dropped to –11.5C)

- the warmest day: 6 November 2014 (daily average of +13.7C)

- the coldest day: 30 November 2014 (daily average of –6.7C)

1 December 2014 – 3 December 2014

Three snow-free, yet frosty days, with the middle one enriched with magnificent sunshine. Between –7C and 0C.

4 December 2014 – 5 December 2014

Getting warmer, light frost at night, slightly above freezing during the day. No proper winter in sight.

6 December 2014 – 7 December 2014

Dull weekend. Cloudy, with freezing drizzle at times, temperature very close to +1C. Worth noting freezing precipitation hinders lives of motorists and pedestrians in most parts of Poland, leaving the capital nearly unaffected.

8 December 2014 – 9 December 2014

Temperature swings up and down, cutting across freezing point. Damp, yet without noteworthy precipitation.

10 December 2014

Night brings thick fogs which, when temperature drops to –5C set hard rime and make roads treacherously slippery. Drivers have to watch out…

11 December 2014 – 12 December 2014

Thaw takes over… Brought be southerly wind, blowing more gustily hour by hour.

13 December 2014

Southerly winds do not ease up, but keep temperature higher than +5C all over the day… No forecast mentions any sign of proper winter by the end of the year.

14 December 2014 – 25 December 2014

Warm (up to +12C, all the time above freezing), windy (speed up to 90 kmph) and rainy (on 22 and 23 December Warsaw got more drenching than in September, October and November in total). Actually no sign of winter…

26 December 2014

Winter gently marks its presence. Overnight rain turns into heavy snow, yet little of it lingers on the ground. Alas, some of the precipitation turns into ice. Around noon skies clear up and Warsaw enjoys a few hours of sunshine. –4C in the afternoon.

27 December 2014 – 29 December 2014

Forecasters get it wrong. On each consecutive day it is supposed to be –5C over the day and sunny, in fact the temperature fails to rise above –7C and skies are overcast. To boot it snows a bit. Yet 1 or 2 centimetres of snow do not give sufficient protection from freezing up to soil and plants.

30 December 2014

Finally skier clear over and scarce sunbeams brighten up the day. The drawback is temperature, –11C in the morning and no higher than –8C in early afternoon and dropping to –10C after sunset.

31 December 2014

Last days of the year lay bare very poor performance of meteorologists. Mere two days earlier they predicted double-digit frost on New Year’s night. For the last day of the year they predicted freezing drizzle and fortunately got it wrong as well. The outturn is that winter falls back to give way to late autumn (or is it pre-spring?).

December 2014 was slightly warm. Average temperature in Warsaw was +0.8C (vs. long-term average of –0.7C) and exactly as high as in December 2008. Temperature tended to go into both extreme, snow was seen seldom and in scarce amounts. Stats:

- month-time high: +11.9C on 19 December 2014

- month-time low: –11.0C on 30 December 2014 (could have been worse)

- the warmest day: 19 December 2014 (daily average of +9.5C)

- the coldest day: 30 December 2014 (daily average of –8.4C)

1 January 2015 – 3 January 2015

Thaw comes over. Ugly, rainy and particularly windy, hence warmth cannot be even felt.

4 January 2015

After a relatively sunny day, a snow blizzard hits around 4 p.m. It brings little snow, but the white powder lingers despite +2C temperature. Winds have waned a bit, but still are gusty.

5 January 2015

Yesterday’s snow is gone. Between –1C and +1C, rather sunny, winds further wane. At 9:20 p.m. a veritable blizzard hits Warsaw and brings some three centimetres of snow within half an hour. Some of it melts since it’s still +1C. Despite evening hour and long weekend, snow plays havoc with the traffic.

6 January 2015

Perfect winter. Light dusting of snow, cloudless skies from dawn to dusk, still air, day-time high of –6C. This short-lasting winter incident has been brought in by anti-cyclone, drawing in continental air to Poland. Why we enjoy single-digit frost, temperature in Eastern Ukraine drops well below –20C at nights.

7 January 2015

Indeed, –12C at the crack of dawn. Skies cloud over around midday, but it doesn’t snow. No warmer than –6C, but thaw’s in the offing.

8 January 2015

-4C in the morning, but +1C in late afternoon. Winter incident lasted two and a half days…

9 January 2015

Overnight snow and freezing rain falling in positive temperature on frozen ground make several ice rinks. Besides, thaw is in overdrive. In rains, the wind blows… Late autumn returns.

10 January 2015

+4C and rainy. Another winter storm draws in. After sunset gusts of wind get more intense, rain pours down and temperatures shoots up to +12C…

11 January 2015 – 18 January 2015

Big thaw. Above zero all the time, with short exceptions of tiny morning frosts, temperatures reaching up to +10C, sometimes sunny, sometimes cloudy, odd drizzle, at times windy.

19 January 2015

After eight days with no trace of winter freezing for in the morning (-2C) seems noteworthy.

20 January 2015

Little flurry in the morning, 0C. Over the day temperature goes up and within a few hours the snow melts… Just another gentle whiff of winter.

21 January 2015 – 22 January 2015

If in the brightest moments of the previous week it felt like early spring, these days it feels like the third decade of November…

23 January 2015 – 24 January 2015

Occasional sleet and freezing drizzle. Near 0C. Temperature has actually settled near 0C and in the coming day is unlikely to deviate from the point of freezing.

25 January 2015

It snowed all night but little of the white powder lingered since temperature was just above 0C. It snows all day but snow cover begins to accumulate in late afternoon when temperature reaches –1C. By evening some one centimetre of snow lies on the ground.

26 January 2015 – 30 January 2015

Temperature hovering around zero, deviating by no more than 4 degrees upward nor downward. Occasional flurry, however they tend to occur when it is above freezing, hence snowflakes do not catch eye for more than two or three hours.

31 January 2015

I dare to say this has not been foreseen. Temperature typical: 0C, thick, wet snow falls from the sky. Slush on the roads. By 9 a.m. it ceases to snow, by midday some of it melts, but white cover linger till late evening.

January 2015 was warm. Average temperature in Warsaw was +1.4C (vs. long-term average of –1.9C). Weather in that month could be described as mild winter (note month-time low was remarkably high) with one episode of abnormal warmth in the second decade. Still it failed to beat January 1983 and January 2007, when mean temperatures stood above +3.0C. Stats:

- month-time high: +11.5C on 10 January 2015

- month-time low: –12.5C on 7 January 2015 (within 3 days temperature rose by 24 degrees!)

- the warmest day: 13 January 2015 (daily average of +7.2C)

- the coldest day: 7 January 2015 (daily average of –8.5C)

1 February 2015

Spirit lifting-weather. Cloud-free sky from dawn to dusk, nine hours of sunshine a temperature reaching up to +4C… First whiff of spring in the air, but it’s just a short spell of fine weather. Mild winter about to return soon.

2 February 2015 – 4 February 2015

Weather having a tilt at winter, since average daily temperatures are below zero, yet since fine weather continues, sunbeams warm up air in afternoons up to +3C. All snows melt…

5 February 2015

Overnight supply of fresh snow brings some one centimetre of flurry. Worth noting we haven’t seen a proper snowfall playing havoc with the traffic this winter. Below zero this time…

6 February 2015

Quite nice light winter. Not above zero even during the sunny afternoon, short of new snow…

7 February 2015

Little snow has fallen overnight, some snowflakes fly around before midday as well, most of it melts. In the afternoon wind picks up speed and its gusts become audible. Before long more white powder is to come.

8 February 2015

Forecasters warned of snow blizzard bringing up to 10 centimetres of fresh snow. In fact sunny intervals take turns with intermittent snow showers… Because temperature oscillates around freezing, snow disappears quickly.

9 February 2015

Snow shower commences shortly before 6 a.m. and continues incessantly until midday. At times precipitation is quite intense and snow cover reaches record-high (this winter) level of 4 (four) centimetres. In the afternoon when temperatures rises to +1C it turns into slush. Drizzle in the evening.

10 February 2015 – 12 February 2015

Grey, miserable, yet dry and relatively warm (not a moment with sub-zero temperature)… Pre-spring?

13 February 2015 – 14 February 2015

First whiff of veritable spring. Not a single cloud occluding clear, blue skies means large temperature fluctuations – mornings bring frost of some –4C, but sunbeams quickly warm the air up to almost double digits in afternoons.

15 February 2015

Marvellous weather was forecast to continued, while the actual weather is a huge letdown. Low-lying clouds make the day dull, temperature does not rise above 0C, chilly wind makes being in the open air unpleasant…

16 February 2015 – 18 February 2015

Again sunny, yet these days chilly. Around –5C shortly before sunrise, slightly above zero during afternoon hours…

19 February 2015

Morning brings +1C, but beware. Before dawn rain has fallen on cold ground and froze up. Roads and pavements which have not been salted are not just slippery, they are dangerously slippery. And then it gets warmer…

20 February 2015 – 28 February 2015

Just like in the same period in 2014. Not a sign of winter in sight, yet not a proper spring. Sunny days commence with frosty mornings, while if the weather is dull, it can well above zero all the time. But during the whole period temperature never reached double digits...

February 2015 was slightly warm. Average temperature in Warsaw was +1.1C (vs. long-term average of –1.0C), it might come as surprise this February turned out to have been colder than +1.8C measured in February 2014, and was far from +3.6C reported in 2002 or +3.1C in 2008, not to mention record-high +4.6C measured in 1990. Stats:

- month-time high: +9.4C on 20 February 2015

- month-time low: –6.0C on 17 February 2015

- the warmest day: 26 February 2015 (daily average of +5.6C)

- the coldest day: 6 February 2015 (daily average of –2.5C)

1 March 2015

Almost -4C before dawn, but then temperature shoots up to +10C. Worth mentioning dry spells continues and we could do with some precipitation as dried-up soil longs for rain.

2 March 2015

A noteworthy event is the first storm this year which breaks out over Warsaw in the afternoon when temperature reaches +6C. The last day when it's balmy before a short relapse of near-winter.

3 March 2015

Light frost in the morning, sunshine before midday, two snow blizzards in the afternoon. +4C so the snow doesn't linger.

4 March 2015

Morning greets Warsaw with sleet, then thick, wet snowflakes which later turn into drizzle. +1C in the morning and warmer over the day, so whatever falls quickly disappears.

5 March 2015 – 6 March 2015

Frosty, foggy mornings, dull and chilly days. Drifting between winter and spring.

7 March 2015

Morning brings positive temperature which goes up to almost double digits in the afternoon, yet sky remains overcast...

8 March 2015

Enough is enough (+13C, but sky is overcast, at odds with weather forecasts predicting clear-blue skies). Time to declare the winter is over. Long-term forecasts in unison foresee above-average temperature in the coming two weeks, sub-zero temperatures might sometimes appear in the mornings, yet I'm pretty sure the winter will not return for one simple reason: it has nowhere to come from. In Russia and in Scandinavia winter has fallen back.

Winter of 2014/15 was beyond all doubt the mildest documented on the series of winter timelines. Two figures best prove its mildness: the lowest temperature was only -12.5C (in warm winter 2007/08 it was around -13C, a year earlier temperature once dropped to -15C), the highest snow cover: mere 4 centimetres. So in short: almost snow-free, warm, but with steady temperature far from heat records. Looking forward to witnessing more such winters.

Ul. Mleczarska – some progress visible

Over three months since my recent posting on modernisation of ul. Mleczarska little was going on in the site. Despite mild winter pace of works was sluggish until mid-February, when temperature crept above zero for good and works grew apace. The completion deadline of 30 June 2015 seems achievable.

Much has been done on the southern end of the development, between intersection with ul. Syrenki and intersection with ul. Sękocińska (on Piaseczno side) and ul. Słoneczna (in Stara Iwiczna) – curbs have been laid on both sides and new pavement put up. The very road is formally open for drivers and apart ripping the old tarmac, no steps have been taken towards building a brand new road.

I have no idea what the ditch on the western side on the road has been dug for. The posts for more than sure carry telephone wires, the out-of-ark infrastructure of Telekompromitacja Polska. In the background – a recently modernised natural gas pumping station. Gmina Lesznowola keep moving ahead!

A Marian shrine (whose presence in this place could be traced back to pre-WW2 decades) at the corner of ul. Mleczarska and ul. Sękocińska has been covered with protective foil and moved a few metres further west. If works are carried on swiftly, in May local grannies might gather here to pray.

The ditch extends further north. If I were to bet what its purpose is, my two guesses would be either sewerage, or, more probably, putting underground electricity wires. Given how overhead electricity wires are prone to freaks of weather, possibly many low-voltage line should run beneath the ground to ensure continuity of supplies during storms or heavy snowfalls. Note amount of rubbished scattered around... Shame!

The pavement on the eastern side of the street is an absolute novelty on the section north of ul. Sękocińska and its appearance probably is going to be the biggest upside of the modernisation. Pedestrians will finally be able to walk there safely, without having to dodge sideways when a vehicle comes near. To the left – a fine example of Polish squalor. What makes people keep so much gratuitous “wealth” on their properties?

In the foreground – railway crossing, where tracks running to Siekierki power plant cut across ul. Mleczarska. The crossing is to be refit somehow as well. In the background – two mammoth (and some littler) mounds of earth amassed to raise terrain under the newly built street, especially in the vicinity of the crossing where ascent is to be less steep.

Further up the road little has moved on since my visit in late November. Again I wonder what makes people in cars worth several thousand zlotys take such bumpy paths and risk damage of suspensions of their cars. Is saving a few minutes, a few zlotys and a few kilometres really worth it?

A closer look at earth mounds reveals the one in the distance has been already depleted. Lots of soil however still awaits being used up. I'd be curious to find out who the land west of ul. Mleczarska belongs. Given its superior location, millions of zlotys lie here, so why no one bother to bow down and pick it up by selling these plots. Zoning plans for this area have been enacted and the only drawback is the vicinity of railway tracks, however this should be bearable, given how infrequently coal trains run here.

Apart from ripping the asphalt and stocking up mounds of earth or sand, little has been done on the intersection of ul. Mleczarska and ul. Energetyczna where a sizeable roundabout is to be built. I appreciate some infrastructure solutions in gmina Lesznowola are well ahead of their times, even if at first glance they seem absurd.

The north-most section between ul. Energetyczna and ul. Raszyńska exhibits the lowest progress of works. Some pipes have been left on a field west of the street, tarmac has been ripped halfway and reaching terraced houses to the right is still possible without having to flounder in mud (but from the other end).

Next photo coverage expected around Easter.