Helping you navigate the new normal since 2001
H1 trade date from leading provider Global Trade Information Services highlights a surprisingly weak overall export performance by US polyethylene (PE) producers. As the chart shows:…
Net export volumes (blue column) have recovered from the 2012 slowdown (green), but are
US PE exports up just 11% versus 2011, as focus shifts to Latin America Read More
China’s state media have published major revisions to reported auto sales data for H1, and for the equivalent period in 2012. As far as the blog knows, these have not been noticed elsewhere, so it seems worth providing more detail …
Most of today’s executives and policymakers grew up during the SuperCycle. Many therefore continue to believe that a return to constant growth is somehow inevitable. Sadly, of course, they are doomed to disappointment. And disappointment is the predominant message from the blog’s usual quarterly review of company results. Thus BASF note that “achieving our earnings target […]
Earnings disappoint again, as companies face challenge of slowing global growth Read More
Markets have moved into summer holiday mode in recent weeks whilst they wait for a new direction, as the chart shows. It is therefore timely to look back over developments since the start of the year:
The S&P 500 (purple) …
Markets in wait-and-see mode as holiday season arrives Read More
“Don’t fight the Fed” is one of the oldest rules in stock market investment. And it has proved valid again, as this month’s IeC Boom/Gloom Index shows:…
The Fed and other G7 central banks have poured $10tn of stimulus into
US stock markets hit record but real economy remains slow Read More
How has your company reacted to the clear signals from China’s new leadership that they intend to take the economy on a new path? Has it updated its existing contingency plan, and warned employees and shareholders that things may get very tough for a few years? If not, why not? Even companies who don’t trade directly with China […]
Australia’s tax revenue forecast dives A$33bn in 10 weeks on China slowdown Read More
June has typically been the seasonal peak for US employment. July’s data continued this trend, as the chart shows: The July figure was 135.6m, compared to 136.8m in June (blue column) It is still well below 2007′s peak of 139.1m This is the first time jobs have been lower over a 4 year period since records began in […]
US employment growth, disposable income, weaken again Read More
China’s economy is continuing to slow, as the new leadership takes power. As the chart shows of H1 performance: Electricity consumption (red line) was up 5% versus H1 2012 Bank lending was up 4% These levels are of course well below the published GDP figure of 7.5% for Q2, but the two types of data […]
Key China data suggest economic growth already less than 5% Read More
“The big picture remains unchanged. Four years after the recession officially ended, per capita output and income have yet to return to their pre-crisis highs. The recovery still ranks as the worst since World War II. And despite the modest acceleration in the past two quarters, the recovery shows little sign of gaining momentum.” The […]
Companies have clearly been cutting capital budgets, in response to the slowing global economy. That’s the only conclusion to be drawn from the blog’s 6-monthly review of force majeures, as reported by ICIS news. They have been climbing steadily for months, and June saw them at twice the June 2012 level, as the chart shows. […]
Different times demand different skills. During the SuperCycle, one could assume growth was a constant. So forecasting meant a focus on better understanding developments down the value chain in the relevant product silos. Then managers could be set ‘stretch targets’ to ensure they met expectations for revenue and profit growth. But today, as the blog has […]
“More buyers than sellers” was financier JP Morgan’s famous reply, when being asked why stock prices had risen. The same, of course, is true of inflation. During the 1970s, there were large numbers of Western BabyBoomers, and relatively few older people producing the goods that these young people wanted to consume. So inflation rose sharply, to […]
Slowing demand and over-capacity create a Cycle of Deflation Read More
Governments and central banks never spot recessions till it is too late. Thus after the 2008 Crisis, for example, it was recognised that only a few independent experts such as the blog had forewarned of the danger. Today’s situation seems potentially to be as serious as in 2008. Therefore as promised yesterday, the blog has decided to present its own analysis of the […]
In early March, the blog described itself as feeling like “a lonely voice, focused on what is really happening in the real world”. But gradually since then, the consensus view on growth and commodities regulation has begun to shift in its direction. For example, a recent New York Times article on China by Nobel Prize-winner Paul Krugman could have […]
Consensus views on growth, commodity regulation, start to change Read More
China’s polyethylene (PE) demand has seen encouraging signs of growth in H1. As the chart above shows (based on Global Trade Information Services data): Total demand is up 13% in 2013 (red column) versus 2011 (blue) Domestic production is up 7%, whilst imports are up 18% The Middle East is the biggest winner, with its sales […]
China PE demand grows as food safety worries increase Read More
US housing is core to the US economy. And as the US economy is 22% of the global economy, developments in housing matter to all of us. We learnt this during the subprime Crisis, when the blog’s warnings that the supposed boom was an illusion were ignored until too late. Now the same problem is developing again. Thus […]
US housing starts stumble as rental demand weakens Read More
The BabyBoomer-led Supercycle of economic growth meant the US suffered just 17 months of recession between 1983-2007. Now populations are ageing, and there is boundless evidence to prove that older people have lower incomes, and also spend less as they …
A $1m US retirement fund will run out for 72% of retirees Read More
The 2013 edition of the blog’s study on Sinopec* is now available, and highlights the changes that are taking place in Sinopec’s focus as the world transitions to the New Normal. Sinopec is China’s leading refining and chemical company, and its original role after 2000 was to support China’s emergence as the manufacturing capital of the world. Today, however, […]
Just as the blog feared, H2 seems to have started badly in terms of demand, and seems likely to get worse. Thus Celanese CEO, Mark Rohr, told investors that in China, “Much of the industrial chemical market there is in turmoil because demand has just not grown.” Whilst Ton Buchner, new CEO of the world’s largest […]
US oil prices rise as housing starts slip and Detroit goes bankrupt Read More
Gradually the world’s major investors are recognising that demographics are a key driver for the global economy. They are also becoming more doubtful about the ability of governments and central banks to overcome the challenges of ageing populations. Standard Life, with assets of $275bn, have thus issued a new report which focuses on exactly these issues […]
Strong aluminium markets have provided great support to caustic soda producers in recent years. PVC and construction markets have been weak, but volumes into aluminium mining have kept prices and overall chloralkali margins strong. Now this may be about to change. As the blog noted in March, aluminium prices have been supported by the behaviour of […]
Aluminium warehouse changes threaten caustic soda sales Read More
Global auto demand growth is slowing fast. H1 data for the 5 key markets of China, USA, Europe, Japan and India shows demand up just 4% (red line), versus 8% in June 2012 (green): China’s growth has been strongest at 14%. due to the lending bubble of the previous leadership US growth has been 7%, as low […]
Nissan launches low-cost Datsun range, as H1 global auto sales growth falls to 4% Read More
Unsurprisingly China’s Q2 GDP was reported at exactly the current target of 7.5% yesterday. This confirms, as premier Li noted 2 years ago, that GDP is a target for local Party members, not a calculated output. This is why it can be announced within 2 weeks of the end of the quarter. By comparison, it takes the USA a month […]
China’s new policy may “feel like cutting one’s own wrist” Read More
Last week should have been a great week for the speculators. As in July 2008, they were able to spread the rumour of imminent Middle East war and upheaval. 5 years ago it was the threat of Israel bombing Iran’s nuclear facilities, and leading to a blockade of the Straits of Hormuz. This time it […]
Speculative Brent rally lifts oil prices just $3/bbl Read More
“Doing more with less” is one of the key themes for future profit. The end of the SuperCycle means credit is hard to obtain, whilst ageing populations have less money to spend. The winners in the next decades will be those who focus on affordability. One great example of successful New Normal thinking is US […]
Chemical markets continue to provide the best real-time evidence of what is happening in the wider economy. For a while, they lost their function of price discovery, as the oil price bubble caused buyers to panic and buy forward. But this panic couldn’t last forever. Now we are seeing the reverse side of the action, […]
Butadiene price collapse sends warning on H2 demand Read More
Asset bubbles are great fun whilst they last, as the West found out during the sub-prime era. The supply of money seems endless, and prices just keep rising to the skies. Meanwhile the regulators are busy assuring everyone that ‘this time is different’ and its quite safe to invest. The problem is that so-called ‘common […]
Emerging economies risk being submerged under debt Read More
Is the health of the economy heading up or down? Financial markets are up, but unemployment is recovering at a historically slow pace. The webinar will discuss the ongoing impacts of the Great Recession on the chemical industries and the …
“Demographics is no longer a dusty concern of academics and eccentrics“, wrote columnist John Dizard in yesterday’s Financial Times.
“It’s not just state pension burdens and tax revenues that are shifting with European demographics. Corporate bond and equity issuers are …
Oliver Sacks, the neurologist and writer, is 80 years old today.
His book ‘Awakenings’, which recounted the lives of victims of New York’s encephalitis lethargica epidemic in the 1920s, was made into an Academy Award-nominated movie in 1990, starring Robin …
The blog’s latest post for the Financial Times FT Data blog is below.
July 8, 2013 10:00 am by Financial Times
By Paul Hodges
Working women supercharged western economic growth from the 1980s, as they created the phenomenon of dual-income …
And then there were two…. When history comes to be written, 29 April 2011 will have a strong claim to be selected as the date that the central bank liquidity programmes began to visibly fail.
Most executives joined the workforce …
This month’s IeC Boom/Gloom Index continues to flash warning signs over the state of global financial markets:…
The US S&P 500 Index (red line) and other markets have been supported by $10tn of central bank liquidity programmes (orange arrows) since
There has been “$33tn in fiscal and monetary stimulus” since the financial crisis began in 2007 according to Bank of America Merrill Lynch. Yet global chemical operating rates (OR%) remain well below their 91.1% average since 1987, and are also …
Latest data on China’s demand for polyethylene continues the recent trend of slow growth. The chart, based on official industry figures and Global Trade Information Services data, shows overall demand (red column) is up just 10% versus 2011 (blue). This, …
China’s polyethylene demand up 10% versus 2011, US imports drop again Read More
“The farther back you can look, the farther forward you are likely to see.” These words of wisdom from the great statesman Winston Churchill well describe the US housing market today. Luckily, thanks to the work of Prof Robert Shiller, …
Rising US interest rates will weaken house prices again Read More
The blog was speaking at 2 major financial conferences on Wednesday and Thursday last week. This provided the perfect opportunity to understand the professionals’ view of recent market events. The key conclusions were:…
All felt that the Federal Reserve was
Federal Reserve signals asset price support is ending Read More
This week is the blog’s 6th birthday. Remarkably, its audience remains extremely loyal, with around half reading it weekly and a quarter on a daily basis. It is also global, now being read in 150 countries. The top 10 countries …
The past week has seen major increases in global interest rates. This would be good news if it was due to a strong global economic recovery. But it isn’t. Yesterday, Q1 US GDP growth was revised down to 1.8%, for …
Interest rate rises add new risks for global economy Read More
Central bank policymakers and financial analysts are seemingly convinced that the US economy is already seeing a strong recovery, whilst Europe is just about to resume growth. But evidence from the auto market, the largest manufacturing industry, gives a much …
China’s new leadership are in a very difficult position. They have inherited an economy that has been run on stimulus programmes for the past 5 years. And as the head of the country’s largest developer, China Vanke, has warned, “If …
China interest rates hit 28% as property bubble targeted Read More
Financial markets fell around the world last week, as the $10tn tide of central bank liquidity began to retreat. This highlighted very clearly how central banks’ misguided policies have caused markets to lose their role of price discovery. Asian investors …
“Its only when the tide goes out, that you learn who’s been swimming naked” Read More
Human beings don’t like change, and they don’t like argument. They prefer to assume, whenever possible, that life will continue in a straight line. This preference is especially common in large companies. Change for them means having to develop new …
Time to end the ‘tyranny of consensus’ on future growth Read More
Household consumption is 60% of western GDP. So any economic forecast that simply assumes it will always increase is likely to prove badly wrong as BabyBoomers move into retirement. Of equal importance is the impact of women’s role in the …
You can lead a horse to water, but you can’t make her drink. That seems to be the critical message from the current state of US PVC export demand. This should be booming, based on the cost advantage provided by …
US PVC exports stall, despite shale gas cost advantage Read More
It is now 4 years since the blog launched its IeC Boom/Gloom Index, as a way of measuring the difference between sentiment and economic reality. Its purpose then was as follows:
“Markets are driven by two factors, sentiment and fundamentals:…
US consumer sentiment confirms Boom/Gloom Index weakness Read More
A new report from Pimco, the world’s largest bond fund manager, makes it clear they share the blog’s worries about the increasingly negative impact of western central bank policy:
“Central banks have reached a critical inflection point in which the …
Pimco warns on “negative impacts” of central bank policiy Read More
Innovation is the life-blood of the chemical industry. It is also a critical success factor as we transition to the New Normal. Many of today’s plants and processes are simply too old and too inefficient to remain competitive in a …
Last week’s US jobs report contained some good news, but not very much:
• Employment inched up again to 136m. This is still below the 2007 peak of 139m – and never before has the number of jobs failed to …
US job growth remains slow as Boomers leave the workforce Read More
Auto sales data is now available for the first 4 months of the year, covering the 5 key markets of China, US, EU, Japan and India. These account for 75% of global sales. As the chart shows:
• Demand patterns …
Global auto sales up 3%, as China’s luxury market stalls Read More
Credit where credit is due, is the blog’s motto. It would thus like to recognise the insight of co-author John Richardson in being one of the first people to warn publicly that the economies of China and India both faced …
Unique and timely insight on China from John Richardson Read More