We help companies and investors to manage today’s crisis, and to begin building a robust and sustainable future for their business in tomorrow’s Net Zero world.
“Prepare for possibilities and probabilities, not calling one course of action, since I’ve never seen anyone call it. I would be quite cautious about what might happen next year”. Jamie Dimon, JP Morgan CEO, 25 October 2023
“We are facing the biggest crisis the post-war Federal Republic has ever had. We have to be honest and say: First of all, we will lose the prosperity that we have had for years.”German Employers Association President, Rainer Dulger, 13 July 2022
“We have to pay attention to traditional indicators while also monitoring empirical data and what we expect to happen in terms of geopolitics, energy price developments and demographics.”European Central Bank President, Christine Lagarde, 25 August 2022
“You can’t run the most reckless monetary and fiscal experiment in history without the bill eventually coming due. The first invoice arrived as inflation. The second has come as a financial panic, with economic damage that may not end with Silicon Valley Bank.”Wall Street Journal editorial, 12 March 2023
The chemical industry is the best leading indicator for the global economy, due to its size, geographic reach and early position in the value chain
The industry is now warning of recession and massive over-capacity as central banks’ stimulus programme finally unwind.
Risk management is key to survival, and future success
Based on a wide range of potential outcomes, will be key to success given today’s levels of volatility. We can no longer simply tweak a base case to reflect whether we are feeling marginally more optimistic or pessimistic.
The impact of aging populations on demand
Rising life expectancy means that an entirely new generation, the Perennials 55+, are now the main source of population growth in the world, and 9 of the Top 10 economies. This creates a major headwind for growth, as they already own most of what they need and their incomes decline as they move into retirement.
China is changing
Its economy has been ‘subprime on steroids’ since 2009. It led the global economy out of recession, but its $43tn of stimulus means real estate now accounts for 29% of GDP – and the bubble is now clearly starting to burst with sales and prices already in a downturn.
Russia’s invasion, and OPEC+’s decision to target higher oil prices by reducing output, highlights the paradigm shift underway. This creates major risks for companies and investors, as we can no longer automatically assume that economics will drive rational decisions.
Invest for the future
Auto markets highlight the exponential nature of the changes underway. Electric Vehicles accounted for 18% of the global market in 2022 versus just 4% in 2020. And an increasing number of major states nave mandated the end of new gasoline/diesel car sales by 2030/35.
Some of these changes are already becoming obvious, such as rising levels of debt and the threat of inflation. Others are still to appear. These relate to the way behaviour is changing in response to the Covid pandemic and the Ukraine war in 5 key areas where major paradigm shifts are underway:
The lockdowns have broken down the inertia surrounding work and home-based routines…
Global supply chains have proved very fragile during the pandemic. They have collapsed…
Energy markets are seeing a major paradigm shift, with the pandemic and the Ukraine war accelerating the shift to renewables…
The need to reshore supply chains in a world of potential energy abundance suggests that moves towards a circular economy will accelerate…
Many manufacturing operations still operate as they would have done 500 years ago, or even 50 years ago…
Governments are refocusing on fiscal policy instead of monetary policy as the debt bubbles created by central bank stimulus begin to burst.
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