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European and Asian buyers need to worry about whether US exports of transport fuels will continue in the autumn as the US midterm elections loom. The risk is that the White House won’t want the domestic market to go short to support exports.
Oil product shortages and price hikes seem inevitable as Gulf War moves into 6th month Read More
Two major wars are underway in Europe and the Arabian Gulf. The IEA continues to warn that they have already created “the largest energy supply disruption in history”. And now, it seems financial markets are waking up to the major risks created by the $2.6tn AI bubble
If Trump now walks away, he will leave Iran with control of Hormuz. But he will need a lot of ‘boots on the ground’ to invade a country of 93 million people.. As history confirms, air power alone is unlikely to win the war
Brent returns to $100/bbl, with 25% of global output now impacted by war Read More
Apple’s massive price rises highlight demand destruction in action. Suddenly, prices are going up, not down. The longer the wars and the AI bubble continue, the more prices and inflation will rise as supplies reduce
Smartphone sales collapse confirms War and AI-related demand destruction is now underway Read More
We are nearing crunch time for vital energy supplies of transport fuels and natural gas. Europe’s gas storage for the winter was just 28% full when refilling for the winter began in April. And around the world, energy supplies are getting tighter by the day.
Hormuz fighting, Russia’s fuel crisis, highlight risks to global fuel and gas supplies Read More
There are major upside risks on crude oil and product pricing as we head into H2. Inventories are very low, with no margin for error. And nobody knows whether the current US-Iran talks will actually end in a long-term agreement.
Major upside risks remain for oil and product pricing in H2 Read More
Financial markets think the oil crisis created by the Hormuz closure is over. But in reality, the risk of major shortages by Q4 is actually increasing. Oil inventories are near tank bottoms. And Hormuz transits are still only a fraction of the pre-invasion level.
Ras Laffan explosion, Iranian/US attacks, confirm restart risks for Hormuz plants Read More
The question is whether normal volumes of oil and gas will now start to flow again though the Strait? If they don’t, then an increasing number of major storage points will join Cushing in being at ‘tank bottoms’. And rationing will start to become inevitable, as the IEA warned in April.
Trump confirms oil reserves are down to just 4 weeks Read More
Oil companies are warning that “the US Strategic Petroleum Reserve is going to be precariously low. What comes next is higher prices. We are getting closer to the bottom. July is likely the pain point when the market turns.”
Hormuz closure pressures global oil reserves and food supplies Read More
The World Bank, IMF, IEA and WTO have all warned that the crisis risks spiralling out of control:
“If shipping flows do not return to normal, continued rapid depletion of global oil inventories ahead of peak summer oil demand in the Northern Hemisphere would present increasing risks for fuel security, market conditions, and broader economic resilience.”
Global risks rise as Hormuz remains shut and supply chains start to buckle Read More
US inflation risks are rising as the Hormuz closure enters its 4th month. Inflation rose to 3.8% in April. It was just 2.4% in February before the US/Israel war began. And the upward trend is set to continue
US inflation risks rise as Hormuz closure enters 4th month Read More
Financial markets are assuming the Strait will reopen this month, and free passage resume in June. If this is delayed, the risks of a global downturn to rival 2008 are rising.
Hopes rise for an early return to free passage in the Strait of Hormuz Read More
Petrochemical prices are warning of major inflation risks ahead due to the crisis in the Strait. They confirm we need to move back to a world of ‘local-for-local’ supply chains. The question is how quickly these can be put in place?
Petchem price rises confirm inflation risk as Strait of Hormuz remains closed Read More
China is potentially in the ‘eye of the storm’ as component prices rise. This will force its manufacturers to raise their prices – just as the Strait of Hormuz closure forces consumers to cutback spending.
Strait of Hormuz closure adds to smartphone downturn Read More
As with Covid in March 2020, a ‘wake-up call’ is now about to hit most Western governments. Critical oil and gas-based products are at increasing risk of becoming unaffordable, or unobtainable.
Oil and product prices set to be ‘higher for longer’ as Hormuz remains closed Read More
The IMF is warning that “Heightened macro risks and the prospect of tighter monetary policy could trigger a sudden repricing by financial markets—with much lower asset valuations, higher risk premia, more capital flight, and dollar appreciation”.
IMF warns on inflation and recession risks, as Iran war continues Read More
Europe is facing its first major supply crisis, on jet fuel. Prices have already doubled. And now the IEA is warning, “Several European countries may start to face shortages of jet fuel in the next 6 weeks”.
Iran war starts to threaten key parts of the global economy Read More
The history of energy crises suggests that today’s supply chain surge will likely be followed by recession. Buyers will suddenly start destocking again, as they realise consumer demand was actually slowing, whilst they were busy increasing inventory.
We are likely entering a very difficult few months. As the IEA warns, major changes in our lifestyles will be needed unless the war ends soon and the Strait of Hormuz reopens.
The biggest energy supply shock in history has reached the one-month mark Read More
Smartphone markets are essentially acting as the ‘canary in the coalmine’, warning us that the global economy is still only at the start of suffering a major shock.
Hormuz crisis, memory-chip costs, will reshape the smartphone market Read More
Today’s oil/natural gas price rises will likely repeat previous ‘boom and bust’ cycles. Companies therefore need to (a) prepare for the short-term ‘boom’ and (b) plan in detail for the potential recessionary ‘bust’ which will follow it.
Strait of Hormuz closure risks major economic impact Read More
The Middle East crisis highlights the need for Europe to rebuild its competitive edge. This will need new business models, to address today’s market needs. This will create major new opportunities for forward looking companies
EU’s new ‘One Europe, One Market’ strategy set to challenge China, USA Read More
The Strait of Hormuz has never been closed before. So we are in uncharted waters. And President Trump’s plan to provide naval escorts to reopen it, creates a new element of risk. What would happen if an Iranian drone hit a US warship?
Middle East turmoil highlights risks to energy and food supply – and Saudi’s water Read More
Chemical company results are confirming the severity of the crisis. If Europe wants to maintain a viable chemical industry, it therefore needs to accelerate its proposed Industry Acceleration Act. Hopefully, it will be published this week, and action will follow very quickly
Chemical company results confirm scale of industry crisis Read More
As the BBC warns: “The greatest danger now is that President Trump, having amassed this powerful force close to Iran’s borders, decides he must act or lose face, and a war begins with no clear end-state and with unpredictable and potentially damaging repercussions.”
As German Chancellor Merz emphasized, “Two or three years ago we would probably not have had a discussion similar to the one we have had today.. We are confronted by a completely new geopolitical situation and we are willing to stand up to this geopolitical reality. But Europe will be able to hold its own only if we are competitive.”
European leaders rally to support crisis-hit chemicals industry Read More
If Europe’s chemical industry disappears, the whole economy will be at risk. This week’s Antwerp Summit needs to focus on kick-starting its recovery.
Antwerp EU Summit holds key to Europe’s chemical industry future Read More
Chemicals contribute to 96% of manufactured goods. So if the Commission and governments don’t now provide major support at this time of crisis, the whole European economy will be at risk.
Europeans are the only ones still operating on the basis of a rules-based international order. As France’s President Macron warned last week, we have to be much more realistic. We need “to protect our chemical industry, our industries – because they are being literally killed.”
INEOS bond price slide confirms chemicals are in Crisis Read More
Future demand for chemicals is no longer going to be based on a multiple of GDP growth. Instead, companies need to develop new offerings that help customers to ‘do more with less’.
Stimulus debt has created a K-shaped economy. The top 10% of US earners account for nearly half of all consumer spending, as the chart shows from JP Morgan.
Reckoning looms for central bank stimulus as demographic crisis builds Read More
2008 saw the US subprime crisis become the Great Financial Crisis. Now 2026 seems set to be the year when China hopes to solve its ‘subprime on steroids’ crisis. But its fundamental problem – the lack of babies – seems as far from solution as ever.
US automakers have been around a long time. It is too early to write them off. But Trump’s EV restrictions and their lack of robotaxi options suggests they risk running out of road sooner rather than later.
US automakers running out of road due to lack of EV and robotaxi options Read More
Yesterday’s world is fast disappearing. Future Winners will be those who develop the new business models needed today.
One door opens as another closes for the chemical industry Read More
Please join us for the next ACS Chemicals & Economy webinar next Thursday – Responding to Uncertainty
ACS Chemistry & the Economy webinar next Thursday – Responding to Uncertainty Read More
Tariffs, like interest rate changes, will take 12-18 months to work through the global economy. As always, the chemicals industry is providing early warning of what is around the corner in 2026.
President Trump’s tariffs change chemical industry business models Read More
A second Asian Financial Crisis would be a much bigger issue than in 1997. It would quickly impact 3 of the world’s Top 5 economies. And it would quickly panic investors in N America and Europe. Unfortunately, there are still no signs that policymakers realise the risks they are running.
An Asian Financial Crisis 2.0? More warning signs appear Read More
The good news is that change is finally starting to happen. Last week, the European Parliament voted to simplify reporting for most companies. It also accepted the need to balance its Green Deal ambitions with the need for Europe’s economy to remain competitive.
INEOS files anti-dumping suits as European chemicals crisis worsens Read More
Today’s key issue is that we are seeing the end of the ‘middle market’. We are now returning to a world where companies compete on Value or Luxury. The highly profitable middle market of ‘affordable luxury’ is disappearing.
iPhone captures Luxury market whilst Samsung’s Galaxy competes with low-cost Value players Read More
The key issue is that demand growth is slowing due to the rise of the Perennials 55+ generation. They are a ‘replacement economy’. And the major disruption underway in trade patterns increases the risk of buying imports.
Services become key as markets return to a more local-for-local focus Read More
As legendary investor Warren Buffett warned long ago, a lot of problems can be hidden during a boom. The risk is that we may now be about to relearn the message of his famous quote:
“Only when the tide goes out do you discover who’s been swimming naked.”
“When you see one cockroach, there are probably more.” Jamie Dimon, JP Morgan CEO Read More
It is hard to accept the IEA’s belief that petchems can drive future oil market growth. Demographics mean that global petchem demand is probably already close to peaking. And ethane is an increasingly competitive alternative to high-priced oil and naphtha
Wishful thinking prompts IEA’s belief that petchems can drive oil demand growth Read More
Oil prices seem likely to continue under pressure. Inventories are at near-record levels. President Trump’s Trade War is slowing the global/US economy. And his Gaza peace deal creates the potential of a new Iran nuclear deal. Houthi attacks in the Red Sea may also reduce
Today’s oil market appears calm – but risks are rising under the surface Read More
The chemical industry is critical for the entire European economy. As the European Commission itself has acknowledged, “the sector is vital to Europe’s economy, underpinning the manufacture of almost all goods”
Companies have to focus on managing the things they can control. Essentially, this involves a return to the national/regional business model that operated until 1989
Survival is the first priority for European chemicals Read More
As the EU Commission President warned earlier this month, “Battlelines for a new world order based on power are being drawn right now. Yes, Europe must fight.”
The chemicals industry is key to winning this fight. It is now time for governments to step up and support it.
Petrochemicals has become a major battlefield for producers in China, the USA and the Middle East. They are the ‘elephants in the market’. And so it makes sense for Europe to focus instead on ‘local-for-local’ opportunities.
The end of globalisation creates new opportunities for European companies Read More
The good news is that we do know what needs to be done. But so far, the necessary sense of urgency is missing at government level. The industry can’t afford another 2 years of talking. It needs action and support now, if it is to survive.
European chemical companies face critical decisions about their future Read More
We are living through a 3rd paradigm shift since the end of World War 2. Today’s risks have been building for some time. But like the story of the frog in the saucepan, the world has been slow to notice that the water is starting to boil.
The problems have been mounting for years. The difference today is that time is running out. New business models based on a return to local-for-local production are now essential. And the industry also needs to pivot to a more service-based and solution-oriented approach
Slowing demand and tariffs add to Europe’s chemical industry crisis Read More
Dow Chemical’s Q2 results highlight the risks. It lost $801m and halved the dividend. And its CEO called for action to “restore competitive dynamics”
Europe’s salt-based chemical industry confirms major downturn Read More
Europe cannot allow its chemical industry to close. That would risk the collapse of its economy as the European Commission confirms. So we are likely heading back to the Trade Wars of the 1930s, with protectionism the probable outcome.
Oil market volatility is likely to continue. But OPEC’s need to regain market share also makes it likely that prices will continue to decline. This is good news for the global economy – and geopolitically as it means Russia will have less money to spend on its Ukraine war.
Oil price volatility highlights underlying market weakness Read More
House market crashes usually start slowly, as sellers hold out for a price recovery that never comes. But then, the risk is that prices begin to slide as the 3Ds – Divorce, Debt and Death – create forced sellers.
Transport is responsible for millions of jobs and 60% of oil demand. China’s auto market matters more than anywhere else. Unfortunately, it’s outlook seems very uncertain. It has the best Electric Vehicle technology in the world. But now, companies are in a major fight for survival
China’s auto industry seems set to be the next bubble Read More
It would seem prudent to plan for further escalation of the military and trade wars in H2. Countries will likely continue to join trading blocs to counter Trump’s tariff war. And defence spend will further increase as the Middle East/Ukraine wars escalate
Middle East and Ukraine wars add to trade war risks for the global economy Read More
Geopolitics have now replaced economics as the key driver for decisions. We are going back to the world of the Cold War before the fall of the Berlin Wall in 1989. It seems likely to be a very bumpy ride.
Chemicals hit as Trump’s Tariff War becomes a Trade War Read More
Major paradigm shifts are never easy. Tesla’s example shows how even well-funded start-ups can lose the plot. But the benefits of robotaxis are very real for most people, if they can be realised.
Robotaxis take to the road in China, USA and now Europe Read More
Roman Emperors used to distract people with “bread and circuses”. Today, it seems Bitcoin is playing this role. The Tariff War is at major risk of repeating 1930’s Smoot Hawley Tariff Act. It introduced tariffs to “protect” the economy. And it led directly to the Great Depression.
Borrowing makes a lot of sense when interest rates and inflation are low. But now, both are returning to more normal levels. This will increase default risk, as companies and people with too much debt find it difficult to make their repayments.
Bond vigilantes start to push interest rates higher – and impact auto/housing markets Read More
Republicans are racing to finish the draft budget by Memorial Day at the end of the month. Bond investors can be forgiven for getting nervous about who is going to pay the bill for Trump’s tariff war and tax cuts.
President Trump’s tariff war and planned tax cuts reawaken the ‘bond vigilantes’ Read More
China is Trump’s main target. He has claimed that China will pay the extra cost. But US consumers know better. They rushed to buy in March before prices rose. Q1 US sales were up 12% as Apple flew-in 1.5m iPhones ahead of the start of the tariffs.
President Trump’s Tariff War will soon lead to empty shelves at Wal-Mart, Target, Home Depot and many other stores this month. The famous saying “Well in May and go away” might be a prudent policy for investors.
Last week, the CEOs of Wal-Mart, Target & Home Depot told Trump that “His tariff and trade policy could disrupt supply chains, raise prices and empty shelves.” They suggested the disruptions would become obvious in early May – only 2 weeks away.
Trump’s Tariff War risks empty US shelves at Wal-Mart, Target, Home Depot Read More
The key issue for your Action Plan is to focus on demand. 3 key questions dominate. Will your customers survive the Tariff War? Will your suppliers survive the Tariff War? What can you do to help them survive?
Companies have less than 90 days to plan for the Trump 2.0 Tariff War Read More
President Trump’s ‘drill, baby, drill’ policy is hoping to turn back the clock on the Energy Transition. Oil market volatility is therefore inevitable, and will add to the volatility he has created in the economy and financial markets.
Oil prices fall out of their ‘triangle’ as Trump’s trade war risks global recession Read More
The US economy is most at risk from the new policy. But President Reagan’s warning applies to every country trading with the US: “Then the worst happens: Markets shrink and collapse; businesses and industries shut down; and millions of people lose their jobs.”
President Trump’s trade war risks crashing the global economy Read More
European producers may end up seeing major benefits. Local demand is clearly set for major expansion as a result of the recent massive German and EU spending packages. And competition will move to a more ‘local-for-local’ basis as tariffs remove the basis for globalisation.
Trump’s tariffs may help ‘Make Europe Great Again!’ Read More
History shows that moves towards European integration have often been turbo-charged by the need to respond to crisis. Or as German philosopher, Friedrich Nietzsche, once noted: “What doesn’t kill me, makes me stronger”.
Europe’s new defence and infrastructure spend will be a game-changer for its economy Read More
Oil markets are warning of rising economic and political risk. Prudent companies and investors will be preparing for difficult times ahead, whilst still hoping for the best.
Brent falls out of its triangle – for the third time Read More
We are back in a world where geopolitics, not economics, drives decision-making. It is a world of shifting alliances. And so defence spending is set to be a key growth area for the future as Cold War 2.0 begins.
The Rules for doing business have to change. As NATO’s leader, Mark Rutte, has warned, Europe needs to “Raise defense spending or start learning Russian”
6 ‘Rules for Success’ as tariff wars and Europe’s Clean Industrial Deal begin Read More
Commodity prices tend to go from boom to bust, and back again. The reason is that it takes years to build new capacity. Yet market conditions can change in months. So it would be no surprise at all if US natural gas markets now move back into another boom, and help to set off another round of inflation. .
US natural gas prices surge as La Niña replaces El Niño Read More
Living longer should be a great opportunity for all of us. Today’s problem is that policymakers around the world have refused to accept that demographics are destiny. All of us now have to face the challenge of unwinding the mess they have made.
China’s property crash has already destroyed $18tn of household wealth – where next? Read More
The smartphone market highlights how consumers are refocusing on ‘value for money’. Sales are falling as people hold onto their phones for longer. And more people are now happy to buy a cheaper used model.
Smartphone sales confirm that ‘value for money’ is starting to drive consumer demand Read More
“The Dumbest Trade War in History. Trump will impose 25% tariffs on Canada and Mexico for no good reason.” Wall Street Journal editorial
Deflation means the real value of debt increases. This is the opposite of what happens with inflation, when its real value reduces. China’s ageing and falling population therefore risks entering a debt trap. More and more money will be needed to refinance existing debt, accelerating the slowdown in the wider economy.
China risks entering a debt trap as its housing bubble continues to deflate Read More
Time is not on Europe’s side. Hopefully, this crisis will lead policymakers to take the urgent actions that are now essential.
Europe’s chemical industry, and its economy, faces existential challenge Read More
The collapse of Asia’s main currencies versus the US$ confirms that our world is increasingly dominated by known unknowns. We know what the key issues might be, but we can only guess at how they might turn out.
Europe is expected to have its coldest winter since Russia’s invasion of Ukraine, with the continent already dipping deeper than usual into gas storage as temperatures plummet.
Europe has been built through crisis since the end of World War 2. Today’s economic and political crises require a similar focus on reinvention.
Europe’s economy loses its “engine”, as France follows Germany into political turmoil Read More
Please join me for the next ACS Chemicals & Economy webinar on Wednesday, at 2pm Eastern Standard Time, USA
Ageing BabyBoomers have been the main source of US population growth since 2005. So the need for global supply chains in disappearing, as the Boomers already own most of what they need. Trump’s tariff war means rapid and uncomfortable change now seems to lie ahead
Today’s population growth is mainly due to increasing life expectancy, not babies being born. And these Perennials 55+ are the most under-served generation in history. Companies who pivot to meet their needs are likely to be very successful
Companies need to refocus to avoid over-capacity problems ahead Read More
The world’s most successful investor, Warren Buffett, has been selling his shares. Apple was once half of his equity portfolio. But over the past year, he has sold 2/3rds of his holding. And Buffett doesn’t normally sell shares when he thinks the company will do well.
Smartphone markets could see major changes as Trump rolls out his tariffs Read More
Demographic changes are transforming the nature of demand in all major industries. The highly-profitable middle market is disappearing. Companies and investors need to abandon ‘business as usual’ strategies and refocus on these major changes.
Voter enthusiasm is usually key to election victory. And it is clear that Trump’s focus on immigration is enthusing many voters. But logic suggests that Kamala Harris’ focus on women’s reproductive rights makes her best placed to win, potentially with a larger majority than the polls suggest.
Markets are finally rediscovering their core role of price discovery. The US 10-year rate has risen 0.5% since the Fed cut its rate by 0.5%. And so the clock is now ticking for the biggest stock market bubble of our lifetimes.
NVIDIA moves to new highs, whilst nearly half of major US companies have no earnings Read More
2025 is likely to be a make-or-break year for many European automakers. Chinese companies can already export profitably into Europe, despite the new tariffs. And they will soon be opening European plants to avoid the tariffs altogether
China’s cheap, well-made, Electric Vehicles take centre stage at Paris Motor Show Read More
The key is to rethink the business and become demand-led. And the good news is that companies are now starting to explore this option.
Chemicals industry starts to focus on Reinvention options at Berlin conference Read More
The real “October surprise” for markets might be to find out that central banks are powerless against today’s major geopolitical risks.
Oil market developments need very careful attention. If prices do now fall below $50/bbl, then central banks will likely rush to make major cuts in interest rates. And that will make deflation even more likely.
Deflation risks rise as OPEC aims to regain market share and cut oil prices Read More
China’s problems are spreading to the rest of the world. Not only is it exporting deflation, as its Producer Prices fall. But also, and understandably, consumer countries are introducing trade barriers to protect their own industries
China’s economy risks heading into recession as its Producer Prices enter deflation Read More
Oil traders have built a record bearish position in oil futures, as they expect consumption growth to stay weak. So it would be no surprise at all to see prices fall towards the $50/bbl level.
Chinese auto companies see Europe as a major opportunity. They are already investing in local plants to avoid import tariffs. European legacy companies such as VW need to move quickly to head off the threat. But their culture is slow-moving and cautious. They risk becoming Losers in today’s New Normal market.
VW’s troubles highlight challenges facing Europe’s auto industry Read More
The global auto market is going through major change. Gasoline/diesel cars seem set for major decline as the market transitions to EVs. In turn, business models are also set to change as the focus moves from “precision engineering” to “software”.
Smartphones highlight major shifts underway in consumer markets. The cost of living crisis means people are only buying what they “need”, and cutting back on what they only “want”. And today’s ageing populations mean there are fewer young people to make their “first purchase”.
Apple loses its Top 5 position in China as price competition intensifies Read More
OPEC+ countries have been playing the geopolitical card for the past 2 years. But their output cuts have allowed US producers to gain market share, with production up 1.2mbd. The hurricane season may support prices for a while. But the risks are all to the downside. And, of course, today’s higher prices are also helping to accelerate the energy transition.
Europe faces major geopolitical threats. In the East, the EU faces an existential challenges from Russia’s Ukraine invasion and its “no limits” partnership with China. In the West, there is rising uncertainty over Donald Trump’s support for Europe if he became president
European voters rally to the centre as external threats increase Read More
The critical test is now ahead – making it happen. Companies, investors and policymakers need to borrow Winston Churchill’s famous motto, “Action this Day”.
As Sir Jim Ratcliffe has highlighted, the penalty for doing nothing will be closure.
The Houthi attacks and increased hurricane risks highlight how geopolitics are replacing economics as the key driver for decisions. Global supply chains are increasingly being replaced by local-for-local operations as producers aim to improve reliability and control costs.
Hurricanes, Houthis, pressure global supply chains and add to inflation risk Read More
The two super-critical ‘dividends’ of the past 30 years are now reversing. The ‘demographic dividend’ of constant growth and low inflation created by the BabyBoom generation has ended, along with the ‘peace dividend’ created by the end of the Cold War in 1989
It’s our 17th birthday – and the world is looking very different from when we started Read More
Nvidia is a good company. And AI has proved useful for decades – flying planes, for example. But Silicon Valley is also very good at hype. And so Nvidia’s share price is more likely to follow Cisco’s path, than to keep climbing forever.
Stock market bubbles follow the same pattern, as Nvidia and Cisco confirm Read More
Europe and the USA are unlikely to handover the EV market to China.
The next few years will likely be a bumpy ride for anyone involved in the auto industry and its supply chains.
Car Wars begin as US, EU and Turkey impose duties on Chinese electric vehicles Read More
Please join me for the next ACS Chemicals & Economy webinar on Thursday, at 2pm Eastern Standard Time, USA
OPEC would have been better advised to keep prices low to reduce non-OPEC supply and support demand. Instead, they are likely to face some difficult pricing decisions later in the year, if global growth continues to slow.
OPEC starts to refocus on market share as demand growth weakens Read More
Both elections could well prove the most important in decades. The EU faces major crises with Russia’s invasion and the risk of deindustrialisation. The UK also faces crises – on the economy, the health service and governance. And both know that November’s US election may add to their challenges.
EU and UK elections will likely set new course for Europe, as geopolitical tensions rise Read More
Geopolitics are starting to fragment the global economy again. Economics are no longer the key driver for decisions. And so we need to refocus on the geopolitical risks ahead.
Chemical prices start to slide in Asia and Europe, as summer slowdown starts early Read More
China’s housing inventory is now at a record 25 months. Prices/demand continue to fall. And local government land sale income has already fallen 1/3rd since 2021 to $800bn, with a further 10% fall to expected this year. And Daiwa suggest total local government debt has already reached $14tn.
Q1 data showed that many consumers are tightening their belts and focusing on value for money. But investors don’t yet seem to have noticed, and are still bidding up Apple’s share price to euphoric levels.
Smartphone sales continue to slow as consumer demand patterns change Read More
This is the 3rd time we have forewarned of an approaching crisis. Both previous times, ahead of the Great Financial Crisis and the Covid pandemic, we were told we “didn’t know what we were talking about”. And nobody did anything to avoid the looming disaster Let’s hope its “3rd time lucky” and that “this time is different”.
As Hemingway noted, everyone is your friend when things are going well. But as countries and individuals are now starting to discover, the hangover when the party ends can be a painful experience.
The world is now moving from today’s “Continuous Instability” into “Growing Disruption”. Real wars are already escalating in Europe and the Middle East. Trade wars are beginning. And Demand Patterns in key industries such as autos are starting to change very rapidly.
Policymakers in the West and the East now find themselves adrift in increasingly stormy seas, without a compass. Their 2 key policy tools on trade and inflation have proved to be wrong. New thinking on the role of central banks is urgently required.
US Treasury Secretaries change their minds on trade and inflation policies Read More
The oil price has rallied 22% over the past 4 months, since it bottomed at $74/bbl. And slowly but surely, traders are being forced to realise that geopolitics are replacing economics as the key driver for world markets.
Oil and financial markets start to wake up to geopolitical reality Read More
Future Winners in today’s New Normal world will be those companies that realise that the key question is no longer, “Do we have low-cost supply?” It is instead “Do we have a customer who is willing and able to buy from us”.
Risks rise for petrochemical producers as trade tensions mount Read More
“The entire commercial real estate space has to reset. No one really knows where the values are…You can’t raise rates this quickly and not expect a financial shock. We’re already working on transactions at 50% on the dollar: the equity is wiped out and half of the loan is wiped out.”
All happy property owners are alike, each unhappy owner is unhappy in their own way Read More
Automakers have very little time – maybe as little as 5 years – to reposition themselves to meet today’s market needs. They need to develop an integrated EV supply chain. And they also need to follow Stellantis’ lead and go back to selling affordable cars costing €25k.
Western automakers face a race to catch up as Chinese EVs arrive Read More
Resilience requires companies to refocus downstream and diversify their portfolio. They also need to be clear about the value proposition for their target market – are they providing Value, or Luxury? Rethinking, repositioning and restructuring are now all key to survival and future profit.
Rethinking, repositioning and restructuring are now essential for industry survival Read More
Restructuring, repositioning and rethinking are now essential for the industry’s survival.
The Antwerp Declaration is set to transform Europe’s chemical industry Read More
We are living in very uncertain times. Major wars are underway in Ukraine and Middle East. And the concept of ‘Business as Usual’ is returning to the 1970s model – of disruption and military conflicts.
Demand patterns are changing rapidly. We now have a demographic deficit, rather than a dividend. And the peace dividend has also disappeared.
The demographic and peace dividends created by the Boomer SuperCycle are disappearing Read More
These changes in demand patterns are not just impacting Apple and the smartphone market. They are already impacting suppliers to the market. And they are also starting to impact a vast range of other major consumer markets.
Used smartphones take 21% of global sales; Samsung declines as middle market disappears Read More
The mobility market is repeating the transformation seen a century ago, when cars replaced stagecoaches. Autos are the world’s largest manufacturing industry, employing millions of people directly and in supply chains.
Those companies that learn to ride the wave will likely be very successful for years to come.
The energy transition powers ahead, as Electric Vehicle sales continue to ramp up Read More
The growing disruption in the Suez and Panama Canals is set to encourage more companies to move to ‘local for local’ supply chains. These are not only more resilient, but also make firms more agile – and reduce their carbon emissions.
These paradigm shifts are coming at the same time as the loss of the peace and demographic dividends. They are taking our world in a new direction.
The likely Winners will be those companies and investors who focus on becoming demand-led.
Gasoline/diesel cars are now less than 50% of European sales as EVs and hybrids surge Read More
The next few years are therefore likely to be very different from anything that we have known in our working lives. Scenario planning is therefore essential in the face of this uncertainty.
Demographics are taking demand patterns in completely new directions. Sustaining future growth now depends on successfully developing and implementing new policies, focused on the opportunities offered by the emergence of the Perennials 55+ cohort.
China and most Middle Income countries seem destined to grow old before they become rich. As Pew Foundation data shows, China has just 23m people who earn >$50/day in $2011. India has only 2m.
Middle Income countries face a real risk of “growing old before they become rich” Read More
Join Paul Hodges of New Normal Consulting and Mark Jones of MJPhD, LLC as they share data and their observations on what is affecting the chemical economy, what tough decisions lie ahead, and predict the factors that will shape industry in the near future.
Chemistry and the Economy: Looking forward to 2024? Read More
We don’t often use the word “impossible” in the newsletter. But in this case, it is clearly impossible for GDP to continue to grow in the major Western economies.
Demographics are destiny for the global economy, as central banks start to realise Read More
“Every year of the baby steps we’ve been taking up to this point means that we need to be taking bigger leaps with each following year, if we are to stay in this race. The science is absolutely clear.”
COP 28 needs to see words translated into action, as carbon emissions have to peak in 2025 Read More
investors are hoping Fed Chairman Jay Powell will soon signal a dramatic interest rate cut. And so they are positioning for a ‘Santa Claus’ rally. But most adults know that Santa Claus doesn’t really exist.
Investors hope (again) for interest rate cuts and a ‘Santa Claus rally’ Read More
Essentially, the central banks thought that unlimited amounts of free money could reverse the impact of ageing populations. WeWork’s bankruptcy suggests that the bills for this mistake are now coming due, after 20 years of what the Wall Street Journal called “The most reckless monetary and fiscal experiment in history”
WeWork’s bankruptcy marks the beginning of the end for the stimulus economy Read More
The smartphone market highlights how companies are responding very differently to the economic slowdown. Samsung is adding features such as ‘foldables’. But Apple is building services business to provide annuity revenue for the future.
Q3 smartphone market confirms need to build Services revenue as consumer sales slow Read More
Last week, the Japanese yen fell through the US$ : ¥150 level for the first time since 1990. It has now fallen by nearly 50% against the US$ in the past two years. The currency is behaving as if Japan were a 3rd world country – whereas it is actually the 3rd largest economy in the world. Clearly, something is very wrong.
Asia’s debt crisis starts to approach its endgame as the yen continues to tumble Read More
Unfortunately, the problems look set to get worse rather than better. And the oil price rise caused by the Israel/Gaza crisis adds to the problems caused by the Ukraine invasion. A difficult winter, and 2024, lie ahead.
“Chemicals are present in 95% of manufactured goods. The chemical industry is Europe’s hungriest industrial energy consumer and the 3rd biggest emitter of CO2 emissions. It now stands on the verge of one of the greatest tipping points and challenges in its history: the transition to carbon neutrality.”
US 10-year interest rates are the world’s benchmark “risk-free” market. And as the chart shows, their yield has risen from 3.25% on 4 June to peak at 4.88% on Friday. Prices move inversely to yield. So that means prices have fallen 50% in 4 months.
Central banks start to lose control of interest rates, and housing markets feel the pain Read More
The paradigm shifts are already starting to impact most businesses. China is also changing, and will no longer power global growth. So there are no ‘Business as Usual’ options for the future. Instead, companies have to develop new business models for today’s New Normal world.
Companies must be bold and transform, as paradigm shifts reshape the business world Read More
300+ years of Bank of England data shows that interest rates are typically inflation plus 2.5%. At today’s level, this would imply – US rates would be 3.7% + 2.5% = 6.2%: Japan would be 3.2% + 2.5% = 5.7%: Eurozone rates would be 5.3% + 2.5% = 7.8%; UK rates would be 6.7% + 2.5% = 9.2%
Economists might like to believe that inflation is somehow a monetary phenomenon. But as we are all likely to learn to our cost over the winter, food and energy prices are critical for most people. Oil prices are already rising. And food prices are joining them.
Food prices set for further rise as energy and fertilizer costs increase Read More
It’s too soon to talk of an actual energy crisis. But as the charts showing Brent oil and European natural gas prices confirm, it is certainly time to start planning for the possibility. Oil prices have recently risen 25%. And Europe risks gas shortages if there is a cold winter
Energy markets could be heading towards a new crisis Read More
Most Americans can’t qualify for a mortgage today with prices and interest rates at generation-highs. Yet housing starts average a post-2007 record of 1.5m/month. Logic therefore suggests the US housing market is heading for a repeat of the 2008 crisis
US interest rate rises start to threaten the housing market bubble Read More
Bubbles are great fun while they last. But they are much less fun when they burst. For the past 20 years, central bank stimulus has created some of the largest bubbles ever seen. But now, led by developments in Japan and China, they are bursting
Investors need to prepare for much slower, or maybe even negative growth and deflation. Optimistically, one can hope this paradigm shift will be good news for Net Zero investments. But it also makes it more difficult to reduce the vast debts created by recent stimulus programmes.
Investors should pack a copy of the Old Testament for the beach Read More
The downturn in the global smartphone market highlights the need for companies to focus on the Value segment and Services as the Middle Market disappears. iPhones are now 49% of the booming second-hand market, allowing Apple to gain more Services revenue via its App Store.
Smartphone decline highlights the end of the profitable BabyBoomer-led ‘middle-market’ Read More
The losses sitting on central bank balance sheets are starting to soar to eye-watering levels. The US Federal Reserve is sitting on a “mark-to-market” loss of $911bn. The UK taxpayer has already handed over £150bn ($192bn) to cover the Bank of England’s losses.
Central banks leak $bns as losses from their stimulus policies start to soar Read More
The chemical industry is now starting to warn us of a new risk. Europe is already suffering from a cost of living crisis. And people simply can’t afford to pay even higher prices for energy. At a certain point, therefore, demand may simply collapse, and usher in deflation
Europe’s chemicals market highlights move into recession, and risk of future deflation Read More
Taylor Swift’s concerts are creating massive short-term demand as people reconnect after lockdowns. But the chemical industry is warning that deflation could be round the corner, due to the over-capacity created by 20 years of stimulus
Chemicals confirm deflationary pressures are building around the world Read More
The chemical industry is the best leading indicator for the global economy. What is it telling us about the outlook for the rest of 2023, and 2024?
A celebrity, with money to burn, might buy an NFT to use as an avatar. But it seems “really, really weird” that NFT trading reached billions of dollars at the peak of the mania. One wonders what will happen when reality starts to return to the valuations of the 10 FAANMG+ stocks currently boosting the S&P 500.
‘Bored Ape’ prices tumble as the tech bubble continues to unwind Read More
Either chemical markets are wrong or the financial markets are wrong, and obviously we think it’s the latter. People thought China was going to bounce back rapidly after Covid but China’s growth since 2008 was the product of massive stimulus and property speculation which couldn’t go on forever.
Chemicals, financial markets reach a fork in the road Read More
Central banks have spent 15 years telling us that debt and demographics “don’t matter”. They claimed they could always create demand via stimulus. But now the policy has run out of road. Homeowners who thought mortgage rates would stay low forever, will be the ones to suffer
Bond yields start to go back to the future as stimulus policies unwind Read More
The Ukraine war highlights how the real world can often be a very messy place. Issues such as geopolitics and demographics aren’t easy to understand. It can be hard to understand the detail of how key industries and markets are operating.
So it’s no surprise that most policymakers have preferred to stay in the world of theory.
The good news for consumers is that the move to renewables is already set to save European consumers €100bn in 2021-23. The technologies needed in terms of wind, water, solar and storage can successfully deliver the cheaper and more reliable energy supply needed to support the global economy.
OPEC struggles with lower demand as the war accelerates the move to renewables Read More
Food prices have stayed high due to the disruption caused by the war. They are unlikely to fall back quickly as the war continues and economic volatility intensifies.
Food prices set to remain volatile as the war continues and fertilizer costs remain high Read More
Essentially, China’s move to self-sufficiency, and the need to deal with the issue of plastic waste, means there is no ‘business as usual’ option. Winners and Losers are already starting to emerge, as companies react to the challenges of today’s New Normal world.
The Presidential Cycle is now over. Instead, worries about the recession and the US debt ceiling talks are moving centre-stage. But Asian currency markets are sending a warning signal. A rising US dollar and US interest rates, and a falling yen and yuan, could soon raise the risks of a major Asian debt crisis.
Cheap used phones priced at <$200 are now the only growth area in the smartphone market. Companies who just sell hardware are now set to be Losers as their profits tumble. Companies like Apple, with a strong brand and service offering, will be long-term Winners.
Smartphone sales hit new low as world moves into its first “demand recession” Read More
Doing nothing is no longer an option. The plastics industry has a game-changing opportunity to take a global lead in developing a circular economy. It now needs to focus on developing the new products and services needed to create the new business model.
Plastics industry reaches ‘make up your mind time’ on recycling and single-use products Read More
Chemicals are telling us that all the world’s major economies are in a major downturn. And the downturn is starting to accelerate as companies cut back spending and fire people. Real estate, autos and other key areas are already suffering along with the banking system.
Chemical industry results confirm major recession is underway Read More
It seems highly likely that the Rebound rally is ending, and the market Downtrend is about to resume. Time spent on researching the paradigm shifts that will take us into the New Normal will likely prove very profitable for the future
Stock markets on the brink as the end of ‘Presidential Cycle’ support looms Read More
The problem is that most economic models were originally built in the 1960s/70s, when people still died around pension age, and are out-of-date
Stimulus programmes have created a major debt crisis, as the money cannot be repaid Read More
We have reached the endgame for today’s business models. Management teams need to start thinking ‘out of the box’ and develop new business models and strategies for the New Normal world.
Recycling can secure the future for US chemical companies Read More
“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.”
Its ‘Minsky Moment’ time again as investors start to worry about return of capital Read More
Companies and investors need to invest time now on having a genuine debate about the risks ahead. The regulatory failures of the past few days highlight what can quickly go wrong, if one hasn’t war-gamed out potential risks. As the saying goes, “Failing to plan, equals planning to fail”.
Today’s financial crisis confirms that “failing to plan, equals planning to fail” Read More
Everyone will now lose out as China’s real estate bubble continues to burst. The speculators who bought apartments they couldn’t afford will go bust. The new capacity built to supply the bubble will have to close down. And the millions of people who invested in China’s “growth miracle” will lose their shirts.
As the World Food Programme warns, “High fertilizer prices could turn the current food affordability crisis into a food availability crisis, with production of maize, rice, soybean and wheat all falling in 2022.”
Food prices hit record level as fertilizer costs/availability reduce farm output Read More
Portugal is showing the way. Despite 6 months of drought last year, 57% of its electricity came from renewables. And its clean energy focus means it is becoming “one of the cheapest markets in Europe”. CO2 emissions will also have reduced by 75% in 2030 versus 2021.
As the photos from New York in 1900 and 1913 remind us, transitions happen very quickly once they get underway. One day, we are saying “it will never happen”. The next, we are telling our friends “I can’t understand why it took so long”. So it seems safe to assume that the auto industry will see major change in the next few years.
The next car you buy will probably be Electric, and you may not need to buy another Read More
Russia’s invasion has dramatically accelerated the need to transition from fossil fuels to renewables, and from single-use plastics to recycled product. In turn, this will create Winners & Losers. Some companies will decide to take advantage of the new opportunity. Others will continue to hope the issue will go away.
Plastics recycling starts to take off, and potential Winners & Losers emerge Read More
The smartphone market has now been in decline for 5 years. And whilst the Fed would clearly love to get stocks racing to the moon again, history suggests that Apple’s CFO is likely to be right when auggesting that cost control, not innovation, is likely to be key for the future.
Japan has wasted trillions of yen with its failed stimulus programmes. Had it devoted even a tenth of this money to developing a proper Retraining programme for people in their 50s/60s, it wouldn’t now be facing a major debt and currency crisis. The rest of the Western world needs to rapidly learn from its mistake.
The ‘digitalization of everything’ has transformed the global economy over the past 30 years. The rise of the internet is just one example. Now electrification is set to have a similar impact, starting with the world’s largest manufacturing industry. Fasten your seatbelts for the ride!
Global auto fleet goes electric as “the electrification of everything” begins Read More
‘Business as usual’ has been a great strategy for the past 40 years. But nothing lasts forever. It has now – like the central banks’ stimulus policies – hit the inevitable brick wall.
Now, we are all starting to suffer for the central banks mistake in adopting Bernanke Theory. The bubbles they created are finally starting to burst as interest rates return to more normal levels. This will be very painful for all those who trusted them to manage the economy.
“FANGs” lose their teeth as stock markets relearn their key role of price discovery Read More
Nobody knows how markets will develop. But past performance is the best guide that we have. This is why our Sentiment Index is my Chart of the year for 2022.
Chart of the Year – Our Sentiment Index proved a great guide to the S&P 500 in 2022 Read More
Please join me for my free ACS webinar on Thursday, December 15, 2022 @ 2-3pm ET.
Break glass in case of emergency – the 2023 outlook for the economy Read More
Winners and Losers are becoming inevitable in the world’s largest manufacturing industry. Companies and their suppliers have to manage fixed costs to survive the recession. But they also have to invest in EV/AVs if they want to have a business in the future.
Last week’s UN Conference confirmed that curbs on the production of virgin plastics are clearly on the way. Plastics companies have the technology and expertise needed to make advanced recycling of plastics a major success. They now need to accelerate their commitment if they want to remain a growth industry for the future.
The World Cup runs till December 18. That’s a long time for Chinese viewers to ask themselves “Why am I still locked down, when the rest of the world is living a normal life again”? And in the background, the real estate bubble continues to burst.
Underlying growth has been slowing since 2000 as more people joined the Perennials generation. Now, the bursting of the central bank stimulus bubbles – combined with the impact of Russia’s invasion – will likely cause the global economy to go ex-growth.
Global economy set to go ex-growth as world population hits 8bn Read More
Apple symbolises the major changes underway in the economy. Its stock price is in decline as central bank stimulus disappears. And its profits are threatened as pressure builds on its supply chain and pricing.
Apple’s China problems highlight smartphone market downturn Read More
The chemicals industry is a bellwether for the global economy and its message couldn’t be any clearer:
A severe global recession is imminent.
Since January, investors have begun to realise that the FAANG stocks were just as over-valued in December as during the dotcom bubble. Of course, hope springs eternal as we saw this month. History suggests we will see several ‘false dawns’ before the market finally bottoms.
FAANG stock prices start to tumble as the tech bubble begins to burst Read More
Food shortages and price rises are inevitable next year. So we all need to reduce the 25% of food now thrown away each year in the developed world. And in the developing world, we need to reduce the 25% lost due to logistics and storage failures. The less we waste, the more there will be to eat.
Buyers’ confidence has been key to the rise in house prices over the past decade. But that is now disappearing as central banks are forced to refocus on inflation risks, and interest & mortgage rates start to return to more normal levels.
Global housing markets risk major downturn, as interest rates return to more normal levels Read More
Russia’s invasion is a major wake-up call about the danger of assuming business will always be “as usual”. The window for investing in future growth is starting to close. As Hemingway warned in “Fiesta”, major changes (such as Net Zero) occur “gradually, then suddenly”.
US inflation was last at 8.3% in January 1982. And then, the 10-year yield was 14.6%. History may not be a perfect guide, but it is the best we have. So it might be worth planning for rates to go much higher than most “experts” expect, now that they have broken out of their downtrend.
Most commentators chose to ignore the warnings on inflation and recession provided by chemical industry data. As a result, they have been blindsided by the speed and scale of the S&P 500’s downturn. But the Sentiment Index has proved far more reliable.
Consumers around the world are tightening their purses and cutting back on non-essentials as the impact of the 4 Horsemen of the Apocalypse – Covid, the war, food shortages and rising interest rates – increases.
Smartphone sales go ex-growth as consumers cut back Read More
Truss will be the first UK premier since Churchill to operate without the Queen in support. And as Robert Shrimsley had already noted in the Financial Times: “Few would envy Truss this moment. She is going to have to be one of the great premiers just to be a merely good one.”
Queen Elizabeth’s death marks the end of an era for the UK Read More
It’s going to be a very difficult winter. Most of the world will be impacted as Europe bids up energy/food prices to keep its people warm and fed. And it would never have happened if policymakers had recognised the importance of geopolitics, energy markets and demographics.
The problems began with the supply chain crisis caused by the pandemic. Russia’s war in Ukraine then created a further challenge. And now we face the risk of famine as fertiliser costs become unaffordable. Central bankers at their annual Jackson Hole get-together should therefore focus on preparing for the arrival of a potential Fourth Horseman of the Apocalypse, in the shape of a major financial crisis.
Jackson Hole is a chance to prepare for a financial shock Read More
As the head of Germany’s Employers’ Associations warned last month: “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”.
Millions of people around the world are already having to cutback on buying food for their families due to today’s high prices. By wintertime, the risk is that they will have to choose between buying food or heating their homes.
IMF warns the risks “for the economy are overwhelmingly tilted to the downside” Read More
The US is moving into recession as the Atlanta Fed chart confirms. Chemicals have been warning of this for some time. But policymakers and commentators remain in Denial about the economy. They prefer to focus on their computer models, and ignore the real world outside their window.
But now, the bubble is starting to deflate, as the zero-Covid policy cripples the economy. GDP grew just 0.4% in Q2. Beijing is issuing record amount of debt, but confidence has gone. Prices for unsold apartments are being discounted. And developers’ cashflow is being hit by mortgage strikes for unfinished apartments.