Consumer demand

US Supreme Court throws a lifeline to Democrats for the mid-term elections

Social and political issues were always more important than economics before the SuperCycle.  And now they are resurfacing again. Does an individual woman have the right to choose what to do with her body? Or can judges tell her what she can, and can’t do? It is early days, but many women may choose to vote Democrat because of this issue in November.

Automakers, governments, start to prepare for the launch of Autonomous Vehicles

Automakers are ahead of the game in terms of strategic planning. They soon realised the move to EVs meant their traditional business model, based on proprietary engine technology, would inevitably become obsolete. And so they quickly realised they need to pivot to focus on AVs and become software-driven. The rest of us need to catch up.

UN Environment Assembly starts endgame for single-use plastics

Plastics recycling is set to become a major new industry, based on the need to use renewable carbon. As the Nova Institute has shown, there is scope to expand production by 15x by 2050. And so if plastics companies don’t get to work now, new entrants will quickly emerge to replace them. 

The trend is your friend in the smartphone market

Two core trends are playing out in the smartphone market, now it has gone ex-growth. The weaker players are suffering major hits to their revenue and profits. And the most successful company, Apple, is busy accelerating its move into the more service-based markets of the future.

Samsung stumbles in global smartphone market as Xiaomi overtakes Apple

Smartphone sales confirm that global markets are continuing to pivot to the New Normal world. Back in 2014, Samsung dominated with its middle market positioning. But since then, its position has been squeezed as the market polarises between low-cost Chinese suppliers and Apple’s focus on adding services. Every third smartphone used to be a Samsung.

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Brand-owners start to focus on renewable carbon

The original debate on plastics recycling owed its prominence to Ellen MacArthur, the yachtswoman who was appalled by the volume of plastic waste in the oceans, as she sailed round the world. This led her to set up her Foundation, which soon began to work with the World Economic Forum in developing the New Plastics

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“One size no longer fits all” as the global smartphone market breaks down into different segments

The pandemic was very good news for some companies, with demand for online activities rocketing. But whilst many parts of the developing world are still suffering, most developed countries are now starting to reopen as vaccinations spread. Western companies are now struggling for chip supplies, due to their lack of local investment. The Chinese market

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Biden’s Earth Day Summit puts plastics recycling on the fast track

Plastics has long been the ‘odd one out’ in terms of recycling. Steel, aluminium, glass, cardboard, rubber and paper routinely have up to a 70% rate of recycling. But plastics has been stuck at around 10% for a long time. President Biden’s Earth Day Summit is likely to change this picture, and quickly. The reason

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Americans hunker down on spending as the pandemic’s impact continues

US stock markets have been hitting new records recently, as investors swoon over the likelihood that the $1400 stimulus payments will power a major surge in consumer spending. But unfortunately, the facts show this is most unlikely. The chart from the New York Federal Reserve measures consumers’ intentions with regards to the 3 stimulus cheques

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Circular economy set to replace today’s broken global supply chains

The Great Freeze in Texas has confirmed once again the problems with today’s global supply chains.  As the New York Times has highlighted: “The pandemic has disrupted every stage of the (supply chain) journey”. The problems began last year with the disruption to the global shipping container system. Millions of containers were used to ship

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Smartphone sales highlight new trends in consumer markets

Smartphone markets continue to provide early warning of the major changes taking place in consumer markets. And Q4 data confirms the old rules are becoming less and less relevant:  As the chart shows, market positioning is now all-important. Apple are stretching their lead in the ‘sweet spot’ of the value chain – design – and

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Buyers scramble for product as global supply chains breakdown

Asian LNG prices reached $32.50/MMBTU this month, up from less than $2/MMBTU in June. The Shanghai Containerised Freight Index hit $8000/TEU container (Twenty-foot Equivalent Unit), up from prior rates of $1500/TEU. In Europe, UK supermarkets have warned of containing food shortages in N Ireland due to the new Brexit trading rules. None of this would

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5 key questions for success in the New Normal

Sustainability rather than globalisation is becoming the key driver for business. And the paradigm shift this creates means that companies need to adopt new Critical Success Factors as shown above. Leadership skills will be essential at all levels of the organisation in order to stimulate the creativity and action orientation required for success. There are

US chemical companies face ‘wake-up call’ as Biden focuses on the Climate Change agenda

I worked for many years at a world-leading chemical company, ICI. But sadly, it lost its way as senior management began to focus more on financial metrics than market developments. In 2007, it disappeared. Today, other companies including the once-mighty ExxonMobil risk making similar mistakes: EM was the world’s most valuable company just 9 years ago It 

Plastics producers face a ‘wake-up call’ from both ends of the value chain

Plastics producers have had a great run over the past 60 years, as demand took off for their products. But now globalisation is being replaced by sustainability, and they risk being left with an out-of-date business model, and falling revenues. Upstream, refinery closures are gathering pace as electric vehicle sales accelerate Downstream, brand owners and

Smartphone sales confirm mid-market of ‘affordable luxury’ is disappearing

Another 3 months, another decline in global smartphone sales. And more pressure on mid-market players like Samsung, as China’s low-cost producers continue to gain market share. As the chart shows: Samsung had 35% of the global market back in 2013, but was down to 23% in Q3 Its annualised volume fell to 262 million from

Welcome to the New Normal – a look ahead to 2030

10 years ago, I took a look ahead at what we could expect in the next decade, as discussed last week. Unfortunately, we now face the major economic and social crises that the chart predicted, if policymakers continued with ‘business as usual’. This week, I want to look ahead at what we can expect to

If you don’t want to know the future, look away now

Next week, I will publish my annual Budget Outlook, covering the 2021-2023 period. It will highlight how the pandemic is accelerating major paradigm shifts in society, politics and the global economy. I have been publishing these Outlooks since 2007, and they disprove the idea that forecasting is a waste of time.  They highlight instead most

The Top 5 pandemic paradigm shifts

The Covid-19 pandemic has accelerated the fundamental changes which were already underway in global markets, as I discuss in a new interview with Will Beacham of I.C.I.S. Companies and investors need to focus on the challenges and opportunities created by 5 major paradigm shifts as we move into the New Normal. These will impact individual

Hertz goes bankrupt as non-essential consumer demand disappears

The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 102-year old Hertz rental company from filing for Chapter 11 bankruptcy protection for its US business on Friday night. Sadly, Hertz won’t be the only casualty. Its collapse instead marks the moment when the problems created by two

Smartphone sales head into decline as affordability becomes key

The smartphone sales decline accelerated in Q1, as Strategy Analytics report: “Global smartphone shipments fell 17% to reach 275m in Q1. This is the smartphone industry’s worst quarterly performance of all time. On an annualised basis, as the chart shows, global volume was down 12% to 1.36bn from the Q3 2017 peak. And, of course,

Automakers face stiff headwinds in big emerging markets

Brazil, Russia, India and China disappoint as manufacturers face investment demands of EVs © Bloomberg  Less than a third of China’s 31,000 auto dealers were profitable in the first half of 2019, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog Auto markets in the Bric countries are

Portugal shows the way to climate neutrality by 2050

“If you don’t know where you are going, any road will do”. The Irish proverb’s logic shows us the way forward on the greatest challenge that we face today, of achieving climate neutrality by 2050. As the President of the European Petrochemical Association, Marc Schuller, highlighted last month when issuing a ‘call to action’: “The

The next billion phone users will be buying $10 smart feature phones, not $1000 iPhones

Smartphone sales plateaued in Q3, down 9% since Q3 2017’s peak of 1.55bn, as the chart shows.  But the bigger threat from smart feature phones – now retailing for as little as $11 – continues to grow as Reliance and Vodacom launch new models in India and Africa. Smartphone sales are also seeing important shifts

Companies ignore the Perennials 55+ generation at their peril

Nearly a third of the the world’s High Income population are now in the Perennials 55+ generation. Yet companies mostly ignore their needs – assuming that all they want are walking sticks and sanitary pads.  Instead, they continue to focus on the relatively declining number of younger people. No wonder many companies are going bankrupt, and

Auto markets set for major disruption as Electric Vehicle sales reach tipping point

Major disruption is starting to occur in the world’s largest manufacturing industry.  Hundreds of thousands of jobs will likely be lost in the next few years in auto manufacturing and its supply chains, as consumers move over to Electric Vehicles (EVs). As the chart from Idaho National Laboratory confirms, EVs have relatively few parts –

Smartphone sales decline begins to impact global stock markets

The bad news continues for the world’s smartphone manufacturers and their suppliers.  And President Trump’s decision to add a 25% tariff on smartphone component imports from China from June 25 is unlikely to help. Morgan Stanley estimate it will add $160 to the current US iPhone XS price of $999, whilst a state-backed Chinese consumer boycott

There’s a great future for the European plastics industry in recycled plastic

Europe’s plastics industry is under major threat from the growing legislative and consumer backlash against plastic packaging. As with the global industry, its licence to operate is increasingly challenged by images of plastic rubbish polluting the world’s oceans, alongside photos of baby fish dying because their parents mistakenly fed them plastic instead of food. EU

$60bn opportunity opens up for plastics industry as need to eliminate single-use packaging grows

150 businesses representing over 20% of the global plastic packaging market have now agreed to start building a circular economy for plastics with the Ellen MacArthur Foundation. As a first step, Coca-Cola has revealed that it produced 3MT of plastic packaging in 2017 – equivalent to 200k bottles/minute, around 20% of the 500bn PET bottles used every

IKEA heads into the circular world with furniture subscription trial

“Once upon a time, Granny and Grandad used to go to a large shop on the motorway to buy their furniture. They used to stagger around carrying Billy bookshelves and Dombas wardrobes, before treating themselves to Swedish meatballs in the canteen. And then Grandad would spend the rest of the weekend trying to assemble the

Fed’s magic money tree hopes to overcome smartphone sales downturn and global recession risk

Last November, I wrote one of my “most-read posts”, titled Global smartphone recession confirms consumer downturn. The only strange thing was that most people read it several weeks later on 3 January, after Apple announced its China sales had fallen due to the economic downturn. Why did Apple and financial markets only then discover that smartphone sales

Global smartphone recession confirms consumer downturn

Q3 smartphone sales data show the global market in recession, as Strategy Analytics confirmed: “The global smartphone market has now declined for four consecutive quarters and is effectively in a recession.” The warning signs began in Q1, when the market plateaued for the first time, as discussed here in May: “The global smartphone market has

Trump’s auto trade war adds to US demographic and debt headwinds

President Trump’s auto trade tariffs are bad news for the US and global auto industry, as the chart highlights: It shows H1 sales in the 7 major markets, which account for 87% of global volume Sales in China have risen nearly 4x since 2007 from 3.1m to 11.8m this year Sales in the other 6 […]

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Plastics recycling paradigm shift will create Winners and Losers

My new analysis for iCIS Chemical Business highlights the paradigm shift now underway in the plastics industry. A paradigm shift is underway in the plastics industry as public concern mounts over the impact of plastic waste on the oceans and the environment. For 30 years, plastics producers have primarily focused upstream on securing cost-competitive feedstock supply. […]

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Apple, Xiaomi squeeze smartphone mid-market as sales plateau

The global smartphone market has finally gone ex-growth as China’s slowdown continues.  In turn, the market is starting to polarise – with Apple pushing further up-market whilst Chinese brands such as Xiaomi focus on volume.  Samsung’s middle market positioning looks increasingly under threat: The chart shows Q1 sales for Samsung, Apple, the 3 top Chinese […]

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2018 will see Winners and Losers appear in plastics markets

Two major challenges face petrochemical and polymer producers and consumers in 2018: The likely disruption created by the arrival of the ethylene/polyethylene expansions in the US The growth of the circular economy and the need to dramatically increase recycling capacity My new interview with Will Beacham, deputy editor of ICIS Chemical Business, focuses on both […]

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Goodbye to “business as usual” model for plastics

Polymer markets face two major challenges in coming months. The most immediate is the arrival of the major US shale gas-based ethylene and polyethylene expansions. The longer-term, but equally critical challenge, comes from growing public concern over plastic waste, particularly in the ocean. The EU has set out its vision for a new plastics economy, where: “All plastic packaging is reusable or […]

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West’s household spending heads for decline as population ages and trade war looms

As promised last week, today’s post looks at the impact of the ageing of the BabyBoomers on the prospects for economic growth. The fact that people are living up to a third longer than in 1950 should be something to celebrate.  But as I noted in my Financial Times letter, policymakers are in denial about the importance of […]

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Global smartphone sales slide 9% in Q4, as China tumbles 16%

Global smartphone sales have seen major growth until recently as consumers fell in love with going mobile, as the chart shows: In the critical Q4 period they jumped from 290m in 2013 to 380m in 2014, 405m in 2015 and 439m in 2016 But they then fell 9% in Q4 last year, according to Strategy […]

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Older workers are looking for something more

The Financial Times has kindly printed my letter arguing that we need new policies to help people adapt to their extra decade or more life expectancy. Sir, There is another angle to Janan Ganesh’s interesting exploration of whether “Liberals risk the charge of complacency” (February 20). This is the question of why the policy elite has […]

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London house prices risk perfect storm as interest rates rise

2000 should have been the natural end of the BabyBoomer-led economic SuperCycle. The oldest Boomer (born in 1946) was about to leave the Wealth Creator 25 – 54 age group that drives consumer spending and hence economic growth.  And since 1970, Boomer women’s fertility rates had been below replacement level (2.1 babies/woman).  So relatively fewer young people were […]

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China’s used cars put a dent in global industry

China is now developing a used car market for the first time in its history.  This means the end of global auto sales growth, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog China’s car market has been key to the recovery in global auto sales growth since […]

Top 3 Chinese smartphone brands capture global lead

China’s Top 3 manufacturers – Huawei, OPPO and Vivo – captured top position in global smartphone sales for the first time in Q1.  As the chart shows: □  They took 22.9% of the market compared to 22.7% for Samsung and 14.4% for Apple □  In terms of individual smartphone sales, OPPO’s R9s smartphone reached the […]

China’s lending bubble sees Beijing home prices jump 63%

Greed and fear are the primary emotions driving China’s housing and auto markets today, as China’s lending bubble hits new heights.  For ordinary citizens, greed is the key driver:    Average home prices in Beijing rose an eye-popping 63% between October 2015 – February 2017    In Shanghai, one enterprising estate agent (realtor) […]

UK consumers face difficult times as Brexit unwinds the housing bubble, and financial services de-cluster out of London

Brexit negotiations are likely to prove a very uncomfortable ride for UK consumers as Russell Napier of Eric, the online research platform, warned last week: □  ”Public sector debt remains at near-historic highs (in peace time!) and for the first time this public sector debt comes with a private sector bubble □  Credit card debt […]

America hits “peak gasoline” moment as demand patterns change

OPEC has a long wait ahead, if it hopes that US drivers will ever go back to SuperCycle levels of driving and gasoline consumption growth.  That’s the clear message from new data from the US Dept of Transport showing vehicle miles traveled last year.  The chart shows: □  Average number of miles driven per adult […]

Smartphone profits under threat as market goes ex-growth

The outlook is becoming clearer for the global smartphone market, and it confirms my judgement in November, when reviewing Q3 sales: “It seems likely that a focus on price and affordability will come to dominate. In turn, pricing pressures on suppliers will intensify. The key challenge facing the market is that it has gone ex-growth.” […]

Consensus wisdom defies reality around the world

“Consensus wisdom” is a handy way of keeping up with events.  Nobody like to be the person who says “I don’t know” when the boss asks a question about something important.  But unfortunately, “consensus wisdom” is often wrong, as Ipsos MORI confirm in their new ’Perils of Perception‘ survey,  As the authors note: “It highlights how […]

Midway Atoll becomes “plastic island” due to our throwaway society

Plastics have made an enormous contribution to improving our quality of life over the past 75 years.  Polyethylene (discovered in 1933), polypropylene, PVC, polystyrene, PET and many others have made our lives safer, and easier:   Plastic pipes have removed the risk of lead poisoning from our water, and helped to reduce water lost in […]

Smartphone markets see calm before the storm as volume stagnates

The global smartphone market reached a fork in the road in Q3, and that was before Samsung’s disaster with the enforced recall of the Galaxy 7 model.  What happens next is not yet clear, but it is likely that a focus on price and affordability will come to dominate.  In turn, pricing pressures on suppliers […]

Fault-lines open connecting the debt-fuelled ‘Ring of Fire’

Next week, I will publish my annual Budget Outlook, covering the 2017-2019 period. The aim, as always, is to challenge conventional wisdom when this seems to be heading in the wrong direction: The 2007 Outlook ‘Budgeting for a Downturn‘, and 2008′s ‘Budgeting for Survival’ meant I was one of the few to forecast the 2008 […]

Sustainability replaces globalisation as key driver for economy

2 weeks ago, India ratified the COP 21 Agreement.  This means the Agreement enters into force on 4 November, as 81 countries, responsible for more than 55% of greenhouse gas emissions, have now agreed to reduce emissions in line with the decisions made in Paris last December.  And last week saw another landmark Agreement, with 150 countries agreeing […]

Political risk rises as voters feel only the populists are listening

This week, the new UK premier, Theresa May, highlighted how the central banks have encouraged the populists’ rise: “We have to acknowledge some of the bad side-effects. People with assets have got richer, people without have not.” The problem, of course, goes wider than this.  The continuing failure to recover from the 2008 Financial Crisis […]

US homeownership equals all-time low as demand patterns change

It is is 10 years since the US subprime bubble began to burst, with disastrous results for the US and global economy. The US Federal Reserve  had created the bubble in the belief that higher house prices would boost the economy.  It then made a bad situation into a disaster by refusing to accept that […]

Divorce, not marriage, now fueling China’s property bubble in Shenzhen

China’s housing market has always been about marriage since it began in 1998, until recently that is.  The reason, as I noted a while ago, is that: “70% of China’s women regard “housing, a stable income and some savings” as vital for any man wanting to get married.” Women have the upper hand when it […]

EU auto sales boosted by self-registration of unsold cars

The global auto market is currently dominated by China, where sales have more than trebled over the past 10 years. But the other 6 major markets have not always done so well.  Their total sales are up just 4.3% since they peaked before the Crisis began in 2007. As the chart, showing January – August sales since […]

The digital vortex is coming to a business near you

The average smartphone now has “more computing power than the computers used during the Apollo era to put the first men on the moon.“ The question facing all of us, is “How will this power be used to disrupt our current business? We can already see some of the early impacts from the transformation taking place: □  Most […]

China’s slowdown continues as Xi “takes the pain” of reform

“What a difference a day makes“. Dinah Washington’s famous song could well be applied, with a longer timescale, to developments in China’s economy. The shape of the above chart has changed completely since it was last featured here in January 2015, as volatility has increased in China’s economy.  It shows the relationship between bank lending and […]

Smartphone sales go ex-growth as lifecycle turns down

Its been a great run for the smartphone industry, but the party is now coming to an end.  As the chart shows, global sales in H1 fell 1% versus 2016, based on Strategy Analytics data:   Samsung and Apple have both seen a major decline in their market share since 2014   Samsung have fallen […]

Auto sales and the oil price: the Great Unwinding continues

Serious questions need to be asked about the likely level of future demand growth for oil and auto sales in Emerging Markets (EMs), as I describe in my latest post for the Financial Times, published on the BeyondBrics blog  Oil market volatility has reached near-record levels in H1 this year, as the first chart shows. […]

Brexit a disaster for the UK, Europe and the world

First, the good news.  It has long been recognised that the UK economy is over-dependent on financial services, and that its housing market – particularly in London – is wildly over-priced in relation to earnings.  The Brexit vote should ensure that both these problems are solved: Many banks and financial institutions are already planning to […]

Americans drive less as auto market demand patterns change

34m Americans will be driving at least 50 miles this Memorial Day weekend, which marks the start of the summer ”driving season”.  But contrary to popular belief, the average American is driving less these days. The total number of miles driven is still increasing due to the rising US population.  But on an individual basis, people are driving 6% less […]

India’s car market plateaus as motorbike sales dominate

Motorbikes continue to dominate India’s motor vehicle market, as the chart above shows based on new data from the industry association (India’s year runs from April – March): 16.5m 2-wheelers were sold in the year, up 2% versus 2014-15, and took 2/3rds of the market 2.8m passenger cars were also sold, with volume up 7%, and had a 12% […]

Global cotton markets wait for outcome of China auctions

China’s long-promised cotton auctions have begun this week.  Their outcome will tell us a lot about President Xi Jinping’s ability to force through his New Normal changes in the economy.  It will also, of course, have major impact upon the polyester value chain, given the competition between the 2 fibres. As the slide from the […]

US home-ownership returns to 1960′s levels

US home ownership is back at levels seen briefly in the mid-1980s, and before that in the mid-1960s.  One key issue today is that while the US population is still growing, the younger population has quite a different profile from the Boomer generation, as the Pew Institute have reported. In 1980, only 1 in 10 young Boomers were […]

Smartphone sales downturn highlights financial market risks

There was no great surprise in the news that global smartphone sales fell for the first time ever in Q1.  As I suggested in February, when reviewing Q4 data: “It seems almost inevitable that global growth will now follow China and go negative”. As the chart shows, Strategy Analytics data suggests that sales fell 3% in […]

Global GDP saw record fall in 2015 – new IMF data

New data from the International Monetary Fund confirms that last year’s collapse in global GDP was even worse than first reported. As the chart shows,the fall when measured in current dollars was a record $4.7tn, versus $3.3tn in 2009.  And it was 6% in percentage terms versus 5.3% in 2009: Even more worrying is that […]

Water wars, food shortages create urgent need for new, demand-led approach

Companies and investors need to refocus on demand as the key driver for revenue and profit growth.  Supply-driven business models are no longer sufficient. ‘How do we do this?”  is the key question, as I discuss in this short video interview with ICIS deputy news editor, Tom Brown: The key is to focus on critical […]

BRIC auto sales stall as Brazil and Russia recessions worsen

Clouds are gathering over the auto industry, as the impact of the post-2008 stimulus programmes fades into history. It is hard to believe that back in 2013, only 3 years ago, analysts were confidently predicting that Russia would have become the world’s 5th largest market by 2020.  And they were similarly forecasting great things for Brazil, which […]

US auto sales head towards price war as subprime loans rise

The warnings keep coming about the underlying health of the US auto market.  But, as with the subprime housing crisis, nobody wants to listen: Last October, the US Comptroller of the Currency warned that some activity “in auto loans reminds me of what happened in mortgage-backed securities in the run-up to the crisis“ Yet auto […]

$1.8tn of stimulus later, Japan’s household spending unchanged

3 years of massive stimulus spending in Japan has had no impact on the problem it was supposed to solve.  This is highlighted by new government data on household spending for 2015, as the charts above confirm – they compare 2015 data with that for 2012, before Abenomics began: Spending was almost exactly the same […]

Demand – the New Driver for Profit

What happens to your business, or your investments, if demand fails to return to the supply-driven Comfortable Middle Scenario forecast by consensus thinking?  This is the question raised in our new Study, Demand – the New Driver for Profit (jointly produced by International eChem and ICIS).  We suggest access to low cost feedstocks on their […]

China’s PTA market moves to self-sufficiency and exports

Credit conditions are tightening day by day in China.  Companies with good payment records over many years are seeing their borrowing limits cut back.  2016 is indeed proving to be the year that President Xi Jinping “takes the pain of restructuring”. At the same time, self-sufficiency has become a key strategy for many industries, in […]

Auto sales slump in Japan, Brazil and Russia as China slows

China’s slowdown is continuing to reverberate around the world.  One way of measuring this is to look at auto sales in countries closely linked to China’s market such as Japan, Russia and Brazil.  As the chart shows, they did well during China’s stimulus period, but they are struggling now.  By comparison, more self-sufficient India has […]

Smartphones head for price war as China sales fall 4% in Q4

We all now carry around a mini-computer in our pockets – one with more power than those which controlled Apollo 11 when Neil Amstrong first walked on the moon in 1969.  In certain parts of the world, there are now more smartphones than toilets, according to Time magazine. This is raising the spectre of market […]

China’s polyethylene market creates Winners and Losers

Tens of billions of dollars have been spent over the past 6 years to produce the above chart.  And thousands of people have argued and debated around the world about what will happen to China’s polyethylene (PE) market.  It has been a key focus of attention for everyone in the petchem and polymer industry since […]

Renault’s success with Dacia highlights changes underway in European auto markets

You never meet a shy and retiring car salesman.  They are always bursting with confidence, about to sell you a tremendous deal.  So we have to expect that the companies are always going to be confident about the future – even when it looks unpromising to everyone else.  2008 is close enough, that we can […]

Further chaos ahead for cotton and polyester markets as China aims to release its cotton stocks

Cotton has been on a roller-coaster ride over the past decade – to record high prices and then partial collapse.  This was followed by China’s decision to build the world’s largest ever cotton inventory as part of its post-2009 stimulus programme, to protect cotton farmers. This inventory, being off the market, means cotton has been […]

Global car sales growth stalls without China

Where would the global auto industry be without the Chinese market?  Without China, sales in the Top 6 markets stalled last year, and were down 100k. And what will happen now China’s economy is slowing, and it is also starting to develop a large used car market for the first time?  Buyers will then have […]

Plastics lose market share to lightweight steel in US sutos

Plastics consumption in US autos is going down, not up.  Steelmakers and glass manufacturers have recaptured ground lost in the years to 2009, and are capturing new sales as auto standards demand lighter-weight cars.  And yet, if you had asked polymer suppliers about future demand in the US auto market a few years ago, they […]

Analyst hype over India’s ‘middle class’ repeats China mistake

Wishful thinking can have a very bad impact on company and investor profits. Look, for example, at the problems caused by the belief that China’s population had suddenly become middle class, based on average incomes of $2-$20/day.  Now it seems the same process of mythologising is underway with India, with ratings agency S&P suggesting yesterday that: “India […]

China’s downturn means global car sales now set to plateau

Where would the global auto industry and its suppliers be without China? That’s a question to which we will probably learn the answer over the next few years, as China’s demand growth slows to more sustainable levels under its New Normal policies.  So the chart above is a useful snapshot of market developments in the […]

UK’s ageing population causes earnings to decline

The UK economy appears to be recovering well from the financial crisis.  But appearances can be deceptive. Certainly employment has risen for both men and women since 2009, and the jobless rate has fallen.  But new data yesterday from the Office for National Statistics highlights how, despite these achievements, total incomes have been falling in real […]

Japan goes back into recession as stimulus policies fail, again

This week’s economic data from Japan confirmed, once again, that demographic changes are far more important for the economy than monetary stimulus. Japan’s premier Abe took power in 2012, promising to end the decline in Japan’s economic growth.  He appointed a new Governor for the Bank of Japan, and claimed that his “3 arrows policy” […]

China’s car market: triple shock ahead

Auto manufacturers, their suppliers and investors need to prepare themselves for a triple shock from China’s slowing economy, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog The first shock is already under way. As the chart shows, China’s slowdown has caused passenger car volumes to decline in the Bric economies – […]

Smartphone volume peaks as 4.1bn people can’t afford internet

“Technology can save the global economy”.  That was one of the claims being made by several speakers last week at the World Economic Forum’s Industrial Council meeting in Abu Dhabi.  It was based on the concept of the Fourth Industrial Revolution – and its supporters argue that it will deliver fast-paced technological change to power […]

China’s auto slowdown to push spare capacity into export markets

Where would the world’s auto industry, and its suppliers, have been without China in recent years?  And how will they manage now China’s demand for new cars is slowing fast?  These are the question troubling companies and investors as Q3 sales are analysed. The chart above shows the recent history of sales in the Top […]

1bn people joining New Old 55+ mean pension promises turn sour

How long is it before you expect to receive a pension?  How much do you hope it is going to be?  These are key questions for all of us.  And, of course, they are key for companies as well.  They can only sell to people who need – and can afford – their products and […]

Cash poor, time rich US consumers cause retail sales to plateau

US retail sales have failed to see the rise that most economists, and the US Federal Reserve, confidently forecast at the beginning of the year.  The theory was that lower oil prices would stimulate discretionary spending, and ensure that the long-promised economic recovery finally arrived. But September sales were up just 0.1% versus August, and […]

China focuses on mobile internet for domestic growth

China’s President Xi went to Seattle at the start of his recent US visit, to meet the leading US internet companies.  It was the clearest possible signal of his priorities for the future of China’s economy under his New Normal policies.  He spent half a day on the Microsoft campus, and had a private dinner […]

Auto sales downturn begins, as Top 7 markets plateau

Slowly but surely, it is becoming clear that the world’s auto market has reached its ‘peak car‘ moment.  One key piece of evidence is the above chart, which slows how volume growth has now plateaued in the Top 7 markets, as the Great Unwinding of policymaker stimulus continues: It shows the 12 month moving average […]

China’s smartphone market goes ex-growth as costs fall to $20

China has the highest smartphone penetration in the world at 62%.  It had 632m mobile subscribers, with 70% of new connections based on 4G connections.   But sales actually fell in Q2 by 4%.  This was the first time they have ever fallen and is further confirmation of the major change taking place in China under […]

Older people are being forced to spend less

The Financial Times has kindly today printed my letter below, commenting on the change taking place in demand patterns as a result of ageing populations. Sir, It was interesting to see the UK’s employment and pension ministers reminding FT readers that “by 2022, there will be 3.7m more people aged between 50 and state pension […]

Speculators exit London’s high-price property developments

London house prices are one of the major faultlines in the debt-fuelled Ring of Fire created by central banks stimulus policies: It is crazy to have created a situation where potential buyers are asked to pay hundreds of thousands of pounds to buy even very basic apartments in unfashionable area It is complete madness that […]

GM says owning a car in a city “is the last thing you should do”

Something strange is happening in the European auto market, as the above chart from the industry association shows: Normally there are seasonal patterns, with March seeing the highest sales of the year But the trend of increase or decline is normally fairly stable in either direction This year, however, both March and now June have […]

H1 auto sales fall 2% in Top 7 markets, as BRIJ sales drop 15%

Hi data for auto sales in world’s top 7 markets is confirming my suggestion last October that global auto sales had reached their “top of the mountain moment“.  Total volume was down 2.1% versus 2014, with sales in Russia and Brazil showing major downturns.  As the chart shows, the sales decline is focused on the […]

84% of world population have incomes below US poverty line

One of the great myths of our time has been that vast numbers of people in the developing world have suddenly become “middle class”.  This myth seemed to grow out of a confusion between the phrase ”middle income” and “middle class”.  Every country has people who are “middle income”.   But as we discussed in Boom, Gloom […]

China’s auto prices tumble as sales fall 3% in June

Its not a good time to be selling new cars in China.  As the chart shows: Sales fell 2% in Q2 (red line) versus 2014 (green), with June down 3.4% This is the first time sales have fallen in a quarter since Q1 2011 (pink) China’s auto dealer association said customer visits to dealers “dropped […]

Supply chain revolution is on the way

Imagine a world where your local garage uses 3D printing to provide you with a new car bumper. You have had a bump in a car park, and just want to get it fixed. Unlike today, there’ll be no more waiting for the part to arrive. The garage will simply download the design from the […]

China’s new car market goes ex-growth as used car sales take off

My latest post for the Financial Times, published on the BeyondBrics blog is below |Jun 30 17:45 By Paul Hodges of International eChem Major structural change is under way in China’s passenger car market. New car sales grew just 1.2 per cent in May, as the country develops a used car market for the first time in its history. […]

Auto sales continue their decline in Japan, Russia and Brazil

This time last year, it was still possible to believe that sales in the world’s Tier 2 auto markets were on an upward trend: Japan, the largest of the 4 markets, had seen sales slow after Q1′s boost from buying ahead of April’s sales tax increase, but the government was confident this was only temporary […]

Retail markets expose the ‘middle class’ myth in emerging economies

5 years ago, the Swiss food company Nestlé forgot everything it had ever learnt about emerging markets, and suddenly decided that Africa was just about to become ‘middle class’ by Western standards. Now it is having to pay the price for its mistake, and is cutting 15% of its workforce in the equatorial Africa region. […]

10 forecasts for the New Normal world in 2020

We seem to be approaching Stage 2 of the Great Unwinding of policymaker stimulus, as the economic implications of demographic change become ever stronger. The combination of today’s ageing populations with the collapse in fertility rates means it is totally unrealistic to expect growth rates to continue at the SuperCycle levels of the past.  They were turbo-charged by […]

London follows Paris with city-wide electric vehicles and car sharing

Greek auto sales have been racing ahead in recent weeks.  They are up 16% so far this year, as people seek ways to protect their money in the event of Greece leaving the euro.  April saw the strongest rise, with sales up an astonishing 47% versus 2014.  As The Telegraph noted: “People living in a […]

China auto sales rise just 1% as New Normal slowdown bites

The above chart was my Chart of the Year last December, under the title “China’s auto sales bubble begins to burst‘.  So it seems only sensible to update developments 6 months later. The key question, of course, is whether my headline was right?  Could it be that China was not going to deliver endless growth […]

Education key to future life expectancy gains, wealth creation

Around 1 in 3 of all babies born this year in the rich countries of the world are likely to live to be 100 years old.  Its an astonishing change, when one remembers that life expectancy was just 34 years in the West only 200 years ago. UK data provides major insight into the opportunity […]

Average US auto loan term hits record 68 months in May

May was “another fantastic month for US auto sales”.  Or, it took the industry “one month closer to an inevitable downturn”.  All depends on which analyst you talk to: Ward’s Autos called May’s sales the best since July 2005 LMC Automotive suggested growth rates were slowing, and could possibly even contract next year It also depends […]

Europe can win despite age trends

We all know that Europe has an ageing population.  Germany and Italy, for example, have median ages of 45 years.  And fertility rates have been below replacement levels for 45 years, so the relative number of higher-spending young people is reducing.  Instead, there are more and more older people, as life expectancy at age 65 […]

45-year baby drought stalls Western economic growth

200 years ago, most blog readers would have been dead at their current age.  Life expectancy in the West was just 34 years in 1820, and averaged only 24 years everywhere else.  Today, as the chart shows, Western life expectancy has risen to 79 years (red area).  In the the emerging economies, it has nearly […]

Brazilian, Russian, Japanese auto markets continue to struggle

Bill White’s important critique of the policies being followed by his former central bank colleagues echoes his warnings before the 2008 Crisis.  One of his key points is that they have focused on manipulating the value of financial assets, ratehr than on developments in the real economy: “The price of financial assets, just think of Bunds […]

India’s auto market remains dominated by motorbikes

4 years ago, India could do no wrong.  The ‘Incredible India’ campaign had captured imaginations around the world, and almost everyone seemed to believe that it was destined to become a major player in any market that it chose. Analysts were particularly excited about the potential for the auto market, with one major company suggesting: […]

Price war hits smartphone market as China’s growth goes negative

The smartphone market has been one of the ‘jewels in the crown” of the consumer electronics market.  Yet today, it is rushing headlong into the world of the New Normal.  We can all learn a lot about the outlook for the global economy from watching its development. Until recently, the history was of astonishing growth, […]

Q1 auto sales rise just 1.9% in world’s ‘Top 7′ markets

Its hard to be optimistic about the outlook for the global auto market.  The chart above of the Top 7 markets, which account for around 2/3rds of global sales, highlights the growing uncertainty.  It shows Q1 sales in 2015 (blue column) versus 2014 (blue).  Overall, these were up just 1.9% at 15.8m.  And although the […]

BRIJ auto markets continue to struggle

Q1 showed little sign of improvement in the world’s second-tier auto markets – Brazil, Russia, India, Japan. In total, their sales used to equal those of the EU, the world’s 3rd largest market.  But Q1 volumes saw a 16% decline versus 2014 levels, as the chart shows: Japan’s sales were boosted in 2014 (blue column) by buying ahead […]

China’s used car market set to drive future auto sales growth

China’s auto market is going through major change.  Tier 1 cities have imposed limits on car ownership, and car use by government officials is being severely restricted.  In addition, the lending bubble that drove major growth in recent years is coming to an end. Perhaps even more importantly for the medium term, a used car market is now developing […]

IMF says world seeing “a New Reality of lower potential growth”

After 6 years of largely-wasted stimulus efforts, the world’s economic advisory bodies are finally having to accept that ageing populations really do impact economic growth. The latest International Monetary Fund’s latest World Economic Outlook finally breaks half of the taboo that has stopped most economists from accepting this seemingly common sense conclusion.  Its Summary argues as […]

World’s demographic dividend turns to deficit as populations age

We are living in a world of ageing populations for the first time in history.  For many, this conjures up a picture of vast numbers of old people leaning on walking sticks with one hand, and swallowing mouthfuls of pills with the other. But reality is a long way from this stereotype. LIFE EXPECTANCY HAS SUDDENLY INCREASED IN […]

Americans drive less as demand patterns see major change

Americans are driving less each year.  For the first time since records began in 1970, average vehicle miles per person has been declining for over a decade.  The trend is now so well established, it is highly unlikely that the current collapse of oil prices back to normal levels will change the overall picture. This has enormous implications […]

Fertility rates have collapsed in the world’s 10 largest economies

One of the great myths of our time is that the world’s population is inevitably growing.  Almost everyone has heard that the population is certain to reach 9bn by 2050, from today’s 7.3bn. Yet births in 2013 in the G7 economies (almost half of the global economy) were at the lowest level since the Great Depression year […]

Apple captures smartphone profits as market shifts to services

Consumers clearly love smartphones.  The global market is growing fast with 380m sold in Q4, up 31% versus 2013.  But manufacturers might be forgiven for not being so sure. As the chart above shows, major change is underway in the market.  The concept of ‘affordable luxury’ is disappearing as the market polarises between affordability and luxury. Samsung’s market share has dived from […]

US housing markets weaken as home ownership levels fade

Data over the past month continues to confirm my fears that the US housing recovery is going into reverse.  The argument was summed up yesterday by S&P’s chairman, when reporting Case/Shiller housing price data for December: “The housing recovery is faltering. While prices and sales of existing homes are close to normal, construction and new home […]

BRIJ auto sales head in different directions

There has been a lot of wishful thinking over the past 15 years about the BRIC countries (Brazil, Russia, India and China).  The experts told us they were all going to become middle class overnight, and ensure that global growth continued to motor, even as the West slowed. Reality has proved rather different, of course.  This makes […]

Vast amounts of stimulus have not made China “middle class”

Debt can’t make a country middle-class overnight.  Even a massive amount of debt can’t achieve this.  Even the largest amount of debt in history can’t do this.  China’s experience since 2007, when it increased debt four-fold, proves this. As McKinsey have reported, China increased its debt from $7tn in 2007 to $28tn by the middle of […]

54000 millionaires needed to buy new London apartments

‘Nothing succeeds like excess’.  That seems to be the motto of London property developers at the moment.  According to researchers LonRes, developers are currently building or planning the staggering total of 54000 new luxury homes in central London. These will all be offered at prices of £1m ($1.5m) and higher, according to the Financial Times.  Yet just 3900 […]

BMW says China’s auto sales are heading into a New Normal

Its amazing what a lending bubble can do in the short-term, as the above chart shows.  It updates my August post for the Financial Times, and highlights the astonishing rise in China’s bank lending since 2008 on the x-axis, and the remarkable rise in auto sales on the y-axis. Official data shows average disposable income last […]

US auto sales, housing starts, will be hit by oil price collapse

The best view is always from the top of the mountain.  That’s probably why the outlook seems so promising for US auto and housing markets.  Both appear to be doing well on the surface, but dig a little deeper and concerns soon emerge. The chart above demonstrates the point, updating the data from my July post […]

Falling cotton/polyester prices create ‘deflation shock’ for consumers

Cotton prices appear to be collapsing again due to the surpluses created by central bank stimulus policies since 2009.  As the chart shows, these had initially caused prices to soar to levels not seen since the American Civil War: They reached 230c/lb in March 2011, nearly double the post-1982 peak of 117c/lb in May 1995 (blue […]

G7 births in 2013 equal Great Depression year of 1933

In 2013, there were fewer births in the G7 countries – responsible for nearly 50% of the global economy – than in any year since the Great Depression year of 1933.* As the chart also shows, 1933 was an exception.  Births bounced back immediately afterwards.  But the low figure in 2013 is part of the declining trend seen since […]

Chart of the Year – China’s auto sales bubble begins to burst

‘How China fooled the world’ was the subject of an excellent BBC documentary early in 2014 by senior editor, Robert Peston.  The BBC headline was as follows: “Now, Peston reveals what has actually happened inside China since the economic collapse in the west in 2008. It is a story of spending and investment on a scale never […]

Sanitation is the greatest challenge facing Modi

The Financial Times has kindly printed my letter, commenting on their editorial about Premier Modi’s economic policies in India. Sir, Your editorial “India’s Modi should act more decisively in 2015” (December 24) has too limited a view of the policies required to generate growth in India’s economy. With gross domestic product per capita of about […]

US home ownership back at 1995 level as decline continues

  Conventional wisdom seemed to think the US housing report was positive this week.  But analysis of the data makes it hard to see why. One confusion comes from media use of the ‘seasonally adjusted’ number.  But why do we need an adjustment, when we have data going back to 1959?  It simply creates more potential for error.  […]

70% of China’s auto dealers unprofitable, as lending curbs bite

Would anybody have believed these charts, if one had presented them as a forecast for auto sales a few years ago?  Clearly not: Everyone knew that Europe was one of the world’s top 2 markets, and China was very small Europe’s average incomes were around $40k, whereas China’s were less than $5k even in the […]

US housing fraud rises as first-time buyers priced out of market

Signs of stress seem to be appearing in the US housing market once more.  Thus the Wall Street Journal reports: “An estimated one in seven appraisals conducted from 2011 through early 2014 inflated home values by 20% or more..Bankers, appraisers and federal officials in interviews said inflated appraisals are becoming more widespread as the recovery […]

American shoppers focus on needs, not wants

Tomorrow is the great American shopping day, Black Friday.  In the past, every true American would head for the malls, to shop till they dropped.  But more and more evidence keeps emerging that consumer habits are rapidly entering the New Normal, as I discussed last week. Thus a detailed study by the Wall Street Journal highlights, as […]

Where will all the new US ethylene capacity be sold?

I worry about the $100bn+ investment that it currently being made in new US chemical output.  On paper, it seems a ‘slam dunk’ as a US College basketball player might say: Shale gas has created a massive surplus of ethane feedstocks that can provide low-cost production for export Oil prices are very high, and so all […]

Energy abundance paradigm shift in global business

UK grocery sales fall for first time since records began

Next Friday sees the start of the main shopping period in the US – ‘Black Friday’, the day after Thanksgiving.  But increasingly, consumers are giving the stores a miss.  Or even worse (from the retailers’ viewpoint) only visiting to check out products before buying them online. Thus Wal-Mart, the largest US chain, is now having to extend its Black Friday […]

Affordability the key driver for New Normal success

Change is always unwelcome and usually uncomfortable.  But it also provides us with Opportunity, as the Chinese character for Crisis highlights. The second half of our Boom, Gloom and the New Normal eBook provides detailed discussion of the Opportunity for product development, research and development, and manufacturing in the New Normal.  We also summarised the key features of the New Normal in […]

US jobs data confirms long-term decline in participation rate

Many people, including former US Federal Reserve Chairman Paul Volcker, have questioned whether it is really possible for the US Federal Reserve to use monetary policy to boost employment. What can the Fed do to ensure people get the high school diplomas they need for employment today?  What can it do to provide more jobs for Blacks […]

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China’s smartphones outsell Samsung & Apple combined in Q3

The picture on the right is the Xiaomi Mi4 smartphone. The 16GB version sells in China at Rmb 1999 ($326), and the 64GB version at Rmb 2499.  By comparison, Apple’s iPhone 6 sells for Rmb 5288. Unsurprisingly, Xiaomi is moving up the world sales league very fast.  In Q2, it jumped to 5.1% market share, from just 1.8% in Q2 […]

Global auto sales reach ‘top of the mountain’ moment

The best view is always from the top of the mountain.  And that seems where we are today in global auto markets.  They are on track for another record year.  And even better news is that sales have risen in each of the 5 major markets for the first time since 2007. The bad news is that […]

Shell CEO says Europe needs to leverage chemicals clusters

There are 2 ways to improve operating rates in an industry.  One is to increase volumes, the other is to reduce capacity.   The latest APPE data covering H1 2014 for European olefin capacity highlights how the European petrochemical industry has successfully used both mechanisms over the past year to improve its position: Ethylene volume increased to 9.8MT, versus […]

Indian Oil join campaign to build toilets in India

The blog is delighted to be able to congratulate Indian Oil (IOC) on becoming the first company to commit to building toilets in India.  In response to Premier Modi’s appeal, the chairman of India’s bggest refiner, B. Ashok, last week personally began to build toilets at a school near its refinery in Mathura in Uttar Pradesh state. IOC have […]

Subprime loans drive US auto sales growth

Major problems are developing in the US auto market.   The critical issue is that companies have been adding capacity since 2009 on the basis that demand would return to SuperCycle levels.  But it hasn’t. The result is that the mass market has become more and more competitive.  Only sales into the high margin luxury/pickup segments are actually […]

Ageing consumers from Chile to China need affordable, quality goods and services

The New Old 55+ generation is the key demographic for future consumer spending.  Their numbers are rising rapidly as global life expectancy has risen by 50% since 1950. Over the same period, global fertility rates have halved.  So there will be fewer younger people joining the wealth-creator generation of 25 – 54 year-olds that has historically driven economic […]

Russian downturn causes GM, Ford U-turn; EU slows despite discounts

August is a holiday month for Europe’s statisticians.  So we had to wait until yesterday for a combined summary of July and August’s EU auto sales.  As the chart shows, they indicate a new slowdown is underway after the more encouraging volumes at the start of the year: Sales were up only 5.6% in July and 2.1% in August (red square), […]

US PVC exports tumble as demand weakens in key markets

The US PVC industry is hitting new problems, to add to the post-2006 collapse of the US housing market. Yet only 10 years ago, it was riding high.  Demand into housing (the main outlet) was at record levels thanks to subprime lending, and PVC production had just hit a record 7.3 million tonnes. Even after the financial Crisis, global […]

China Transformation webinar tomorrow

Today is Mid-Autumn Festival day in China, held to celebrate the harvest.  Traditionally it features the exchange of moon cakes filled with lotus paste and egg yolks, whilst children go to lantern parades. But in recent years, it has also become synonymous with corruption.   Silver moon cakes, as pictured above, became a common gift for […]

August highlights

Many readers have been taking a well-earned break over the past few weeks.   As usual, therefore, the blog is highlighting key posts during August, to help you catch up as you return to the office. Economic outlook:  Great Unwinding of stimulus underway.  Q2 results show slowing growth.  US retail sales decline in line with incomes, […]

US, Japan consumer spend falls, deflation threatens Eurozone

We are now two-thirds of the way through 2014, and critical decisions are looming for companies and investors.  Do they give central banks one more chance to stimulate growth?  And are they prepared to trust policymakers to avoid a major geopolitical crisis in the Ukraine? Or do they decide that ‘enough is enough’, and that […]

Auto sales on roller-coaster ride in Japan, Russia, Brazil, India

Car sales in Japan, Russia, Brazil and India currently account for just under 1 in 5 of global sales.  Their market share peaked at 21% in 2008, but is today back at 2005′s level of 17%.  As the chart shows, it has been a roller-coaster ride for all of them: Japan’s 4.7m sales were 10% of the global total […]

Unilever says Q2 market growth slows in emerging countries, developed countries weak

The global economy really isn’t getting any better.  That’s the key conclusion from the blog’s quarterly survey of company results for Q2. Of course, some companies are doing well – either because of shale gas economics, or their own market positioning.  But consumer giant Unilever summarised the general picture very well: “Market growth continued to slow in emerging […]

US retail sales hit by declines in income and household wealth

US retail sales tell a sorry story about the state of underlying demand.  US sales at Wal-Mart, the world’s largest store chain, have failed to grow for 6 consecutive quarters, with shopper traffic falling 1.1% in Q2.  The company’s explanation for the problems is worth pondering by anyone in business: It is facing intense competition […]

China’s waning stimulus spells trouble for the world’s biggest car market

The blog’s latest post for the Financial Times, published on the BeyondBrics blog is below. By Paul Hodges of International eChem China’s July lending level of just Rmb 385bn ($62.6bn) has surprised financial markets, which were expecting an increase in stimulus. But bigger surprises may lie ahead. The strong link between lending and passenger car sales […]

China’s low-cost smartphones start to dominate global market

China’s exports are growing again.  But not because SuperCycle levels of demand have returned in the West. Instead, its companies are using their low-cost manufacturing model to take on and beat Asian and Western giants.  Developments in the global smartphone market highlight the rapidity of the change underway They confirm China’s economy is moving in exactly the […]

GM focuses on low-cost autos, as European sales remain weak

Low growth and low-cost have become the dominant features of Europe’s auto market. Europe’s modest rise in auto sales continued in June, with volumes up 4.5% versus 2013.  But as the auto association reminds us, this “is the second lowest level in the month of June since reporting began in 2003“.  And the detail of the […]

40% of US GDP growth since 2012 due to inventory build

Wild swings in key data make for great Twitter feeds.  But they don’t help the rest of us to understand what is really happening.  This week’s report on US GDP for Q2 is a good example: Q2 saw GDP up 4%, after Q1′s 2.1% decline and Q4′s 3.5% gain (blue column) But as the chart shows, the […]

China auto market to focus on low-cost, not luxury

The key to forecasting China’s auto demand since 2008 has been the level of bank lending, as the chart above shows.  This was critical in making China the world’s largest auto market.  Official data shows average disposable income was just Rmb 10k ($1600) in H1 2014, making it impossible for most people to buy a car out of income: […]

Cotton prices suffer worst crash in 55 years

Just as forecast in March, world cotton prices have crashed. Prices peaked at 97.35c/lb on 24 March, just 3 days after the post was published.  Since then, they have fallen by a third to 65c/lb.  They have now fallen for 11 straight weeks – the longest slump in 55 years, according to Bloomberg. There is no need to repeat […]

US auto sales set to decline as today’s credit bubble ends

Its really not difficult to forecast US auto sales and housing starts if you take a longer term view.  Of course, this wouldn’t suit the traders, who love the “surprise” of a monthly number being higher or lower than the previous month.  But why does everyone else put up with this nonsense? The chart above demonstrates the […]

Global auto markets depend on China for growth

Global auto markets have started to move in new directions.  That much is clear from comment by the major national auto associations.  This will be a shock to manufacturers, who have over-expanded production.  Price wars and capacity cutbacks are inevitable if the industry forecasts are correct. The chart  starts from 2005, and shows the 7 major […]

America’s New Old 55 plus are now 38% of consumer spending

Maybe the concept that spending is related to age and income is just too simple for policy makers to understand?  Could that be the reason why they insist on continuing to try to stimulate demand, despite the fact that Western and many other populations are now ageing fast? That was the blog’s thought on studying newly […]

EU auto sales stagnate as unemployment remains near record

The good news about EU auto sales, as the chart shows, is that they have stabilised above last year’s record low levels: Sales in the January – May period were up 7% (red square) versus 2013 (green line) at 5.4 million Sales in May itself were up 5% versus 2013 at 1.1m Sales have risen […]

US housing markets will never be the same again

US housing markets will never be the same again.  That’s the conclusion of a new analysis by the blog for ICB. The picture above of a typical US family from the BabyBoom days tells the story: The number of US babies born between 1946 – 64 increased by 50% versus the previous 18 years 4 million […]

Toilet provision key to Modi’s success in India

As the blog discussed last week, it seems that a new type of leader is starting to emerge in some of the world’s major countries.    Premier Narendra Modi in India, like President Xi Jinping in China, seems to be focused on achieving change – and not just on staying in power for its own sake. His […]

Network effect leaves central banks fighting the real world

The blog first learnt about the network effect in the late 1990s, during the successful launch of the eBusiness platforms CheMatch and then ChemConnect.   Its Silicon Valley colleagues patiently explained that markets tended to move in predictable stages, once a new concept or product was launched: Everyone would initially jump on the bandwagon, not wanting […]

Affordability, not affordable luxury, key trend for next 20 years

The world changes, and successful companies and people learn to change with it.  That was the blog’s experience 20 years ago in one of ICI’s most profitable business.  As an executive team, we expected recessions to take place every 3-4 years.  But we began to realise we were being too cautious in our strategies, and missing opportunities. […]

China’s PTA, PVC exports jump as it moves to preserve jobs

To assume, as they say is “to make an ass out of u and me”.  That was certainly the case last week, when financial markets assumed that China’s slightly better PMI index was a sign that its domestic economy was stabilising.  They had temporarily forgotten the key message of February’s Research Note, namely that the government would aim to […]

China auto sales depend on lending and property bubble

The above chart is the blog’s simple guide to forecasting China’s auto sales.  We know from all the data that most Chinese are far too poor to afford to buy a car out of their income.  Average per capita consumer spending in the towns is just $2600/year, after all.  While rural incomes are only a […]

London house price bubble hits the record books

The UK no longer leads the world in soccer, as next month’s World Cup will confirm.  But it can still hold its own when it comes to creating house price bubbles. China would be the obvious winner of the World Bubble Championship, with Shanghai prices at an eye-watering 29 times average earnings.  But London would have […]

Indian auto sales decline as the middle class myth disappears

India’s stock market has hit new records this week, as investors anticipate radical policy changes after election results are announced today.  And the chart above highlights a key area behind the need for change, namely the problems of the important auto market: Indian auto sales dipped in April to just 183k (red square) This is […]

Toy industry hit by lack of babies

The blog’s latest post for the Financial Times FT Data blog is below.  The industry is going through major difficulties, which is bad news not only for its suppliers of plastic and other components.  It is also a problem for China, which manufactures 70% of the world’s toys. The toy industry is going through difficult […]

Chemical and oil prices still lower than 3 years ago

Its now 3 years since the blog suggested on 2 May 2011: “They don’t ring bells at market turning points.  Otherwise, we could all retire to the Bahamas.   But there is growing anecdotal evidence, from chemical buyers and the main retailers, that we may have reached at least a temporary market peak.  And Brent crude oil […]

Consumer demand patterns change as Boomers return to cities

The ageing BabyBoomers are now leaving the suburbs in large numbers, and moving back to the cities, as the blog discussed in October.  Thus as the Wall Street Journal reports, housing needs are changing quite dramatically. The main growth area for housing is now in high-rise apartment towers built for rent: “The growth in new rental […]

Ageing BabyBoomers slow housing, auto markets

As promised yesterday, the blog today looks at the wider impact of the major changes underway in housing markets.  Driven by the ageing BabyBoomers these changes are, in effect, like throwing a series of large stones into the middle of a pool of water – the ripples spread wider and wider as the impact grows. One key […]

US home ownership falls back to 1995 levels, as Boomers retire

US housing demand used to be a major support for the US economy.  But that was in the days when millions of new BabyBoomer families wanted to set up home in the suburbs and raise a family.  The rule was simple – if prices were high, you just drove 10 miles down the freeway to find a […]

Pension promises unaffordable due to demographic change

As promised yesterday, the blog looks today at the impact of today’s rapidly ageing populations.  The key point is that global life expectancy been rising for over 40 years, whilst fertility rates have been falling.  A paradigm shift is thus inevitable, where future demand will be very different: 1970 Onwards.  Growth accelerated, as the population became concentrated in the […]

Toy industry crisis as fewer babies are born in developed world

Slowly but surely, companies seem to be learning the hard way that demographics, not central bankers, drive demand.  The blog is surprised this simple insight is still not widely understood.  But the example of the global toy market highlights the paradigm shift underway: In 1950, there were 83m children aged between 0 – 4 years in the wealthy developed […]

Global auto industry enters “peak car” era

Q1 saw record global auto sales volumes, as the chart above shows: US and EU manufacturers cut prices and offered great financing deals to boost sales Chinese buyers raced to beat new quota restrictions on the main cities Japanese consumers brought forward purchases ahead of April’s sales tax increase Only India disappointed of the 5 major markets, […]

EU auto sales boosted by 25% discounts and financing deals

When is a car sale not a car sale?  That’s the question that has been bothering the blog in the past few weeks. Of course, it wants to cheer the news that EU auto sales have seemingly recovered.  But as the chart above shows, the recovery is still very limited: Q1 sales at 3.25m (red […]

“US population is aging: older people tend to consume and spend less”

Its not just the UK that is seeing an earthquake taking place in consumer demand patterns, as the blog discussed last week.  The same earthquake is taking place in the world’s largest consumer market, the USA.  As the Wall Street Journal reports: “For the past three years running, unit sales of consumer products have been […]

“Unparalleled seismic demographic shifts now underway” in UK

What happens to demand when women stop having lots of babies, and the general population starts living very much longer? Common sense would suggest economic growth would go through 2 quite remarkable changes: Phase 1.  Growth would accelerate, as the population became concentrated in the wealth creating 25 – 54 age group, and the need […]

Price war looms in US auto market as incentives increase

The blog is awarding itself a pat on the back this morning, as its forecast last month for the US auto market seems to have proved more accurate than those of the experts. Under the heading ‘US automakers increase incentives as sales fail to boom’, it forecast: “The blog therefore suspects that March will be […]

McDonald’s starts hiring young and old as the ‘demographic cliff’ arrives

Its really not that difficult to work out that much of the world faces a ‘demographic cliff’. But very few companies seem to want to act on the implications. So hats off to McDonald’s Europe for highlighting what needs to be done. Their chief people officer, David Fairhurst, told the Financial Times this week: “The […]

US shale gas expansions highlight lack of demand

One good thing may come out of the current excitement over the US ethylene expansions being discussed on the basis of shale gas developments. Boards may decide to look at seriously at the way yesterday’s ‘demographic dividend’ has now become today’s ‘demographic deficit’.  That would be a major step forward for the US and the […]

Japan’s debt now $80k for every man, woman and child

Question:  Why will Starbucks reduce the menu price for its venti green-tea frappucino in Japan next Tuesday, when the price is actually going up? Answer:  Because the government hopes the lower menu price will fool people into thinking the price has gone down It is, of course, a nonsense.  And no doubt most Japanese will be quite annoyed that […]

US ethylene boom is a dangerous game

The blog continues to lose sleep at night worrying about the likely impact of the planned 10MT expansions of US ethylene and derivative capacity.  And it seems it is not the only one.  Since it first raised the alarm last August, it has talked to a number of senior industry executives and investors who also cannot […]