Currencies

UK’s May election will create major political and economic uncertainty

Nobody can guess the outcome of the UK’s general election on 7 May.  This is astonishing, as it is only 4 months away. Currently, it seems most unlikely that either of the main parties, Conservative or Labour, will be able to form a government on their own.  Indeed, 7 different outcomes have been identified as possible by the […]

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Great Unwinding of policymaker stimulus creates interest rate risk

Interest rate risk is rising in the developed economies as the Great Unwinding of policymaker stimulus continues.  Since the blog first highlighted this Unwinding last month: Oil prices have continued to tumble, with Brent now down over $15/bbl from its late-June peak The US$ has continued to rise from multi-year lows versus the yen, euro and pound And of course, […]

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“Disaster is still some way off” for Cyprus, as Germany prepares to vote

Back in April, the blog suggested that capital controls might remain for rather longer in Cyprus than the “few days or weeks” suggested by the central bank.  And a month later, the bank was still unrealistically claiming they would be lifted “as soon as possible”. Today, the blog’s own view that they could be in place “for […]

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2012 Budgets

The blog will publish its fifth annual Budget Outlook next weekend. As usual, it is therefore time to review last year’s Outlook. Past performance may not be a perfect guide to future outcomes. But it is one of the best that we have.

The blog’s 2008 O…

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Time for leadership at EPCA

The chemical industry has a turnover of $3.4trn, and is the world’s 3rd largest industry. It matters to the global economy.

Many of its leaders are about to meet next weekend in Berlin for the annual European Petrochemical Association (EPCA) meeting….

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August highlights

Many readers have been taking a well-earned break over the past few weeks. The blog also continues to gain large numbers of new readers, as the financial crisis intensifies. As usual, therefore, it is highlighting key posts during August, to help you…

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Investment banks reportedly dominated oil trading in US futures markets as prices spiked in June 2008

The investment banks have maintained a consistent focus on oil market supply disruptions and demand surges in recent years, alongside forecasts of sharply increasing prices. We discussed their role in more detail in the recently published Chapter 3 of…

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ACS webinar tomorrow

The blog was delighted to learn last night that 400 people have already registered for the next American Chemical Society ‘Chemicals and the Economy’ webinar. This takes place tomorrow, July 7, at 14:00-15:00 pm US EDT. It will focus on

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European auto sales fall 4%

EU auto sales have been a two-speed market recently. Strong growth in Germany, France, Benelux and the Netherlands kept sales moving forward versus 2010 levels. But other key markets, including the UK, Spain and Italy have been weak. April’s sales

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The $600bn man

In October 2008, the blog featured the US Treasury official responsible for running the $700bn TARP rescue fund. He was 35 years old, and just 6 years out of business school. Apparently there was nobody available with more experience to

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Budgeting for Uncertainty

When elephants fight, those around them need to be cautious. And this is the prospect for 2011-13, as the Western countries try to force the BRICs (Brazil, Russia, India and China) to export less and import more, the so-called ‘rebalancing’

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Top 10 posts in 2009

Blog readers have a wide range of interests. That is clear from the list below of the Top 10 posts in 2009. It also confirms the complexity of the chemical industry, and its fascination. In alphabetical order, it is as

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The blog in 2009

The blog is now 2.5 years old. Readership continues to grow, both within the chemical industry and its investment community. It is now read in 121 countries, and 2735 cities, versus 89 countries and 1244 cities a year ago. Readers

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The Latvian canary

Coal miners used to take a canary with them, to help detect poisonous fumes. If the canary stopped singing, then they knew there was a problem. This led to the concept of “the canary in the coalmine acting as a

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Exporting is no fun anymore

Japan and Germany are the great exporting countries of the industrialised world. They didn’t have the consumer booms seen in the USA and UK. Yet their economies are plunging, as export opportunities dry up. Yesterday, the Japanese finance minister, Kaoru

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The cycle of deflation

US fund managers Comstock Partners reported a 50+% gain on their flagship Capital Value Fund in 2008. The logic behind their out- performance is summarised in the chart, which depicts their belief that we are now in a global cycle

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The man with a plan

Yet again, as in October, ‘buy on the rumour, sell on the news’ has been the financial markets’ reaction to the latest efforts to solve the financial crisis. A 5% fall on Wall Street last night, in response to the

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Eurozone under pressure

Early last year, the blog flagged up a warning from Gillian Tett in the Financial Times that Iceland could go bankrupt, as its banks were “too big to rescue”. Yet at the time, the United Nations had listed it as

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The blog in 2008

The blog is now 18 months old. It has a truly global readership, and as shown in the above map, is now read in 1244 cities and 89 countries. Its aim has always been to identify ‘the influences that may

The blog in 2008 Read More

Lesson from Japan

Japan went through its “bubble years” in the 1980’s, with the Nikkei index peaking at 39000 (versus 8664 today). The blog well remembers standing in front of Tokyo’s Imperial Palace in Tokyo in 1988, when its land was said to

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A low-key G-20 meeting

The first-ever G-20 meeting of Heads of State was a relatively quiet event, without the presence of President-elect Obama. Two main areas seem to have been discussed: • Regulatory reform, where finance ministers have been given until the end of

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Survival tips for CFOs

The Financial Times series on surviving the downturn focuses this week on CFOs. It includes advice from Feike Sijbesma, CEO of DSM, who suggests that “you need to see how creditable your debtors are, very quickly”, and advises that “maintaining

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Russia’s economy stalls

A few months ago, Russia’s economy seemed to be recovering from its problems in the late 1990’s. High prices meant oil revenues were increasing, and the currency was strong. Now, the combination of the oil price collapse and the credit

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The “crystal blog”

The blog’s forecasting record is reviewed in ICIS Chemical Business this week. Click here if you would like a copy. The blog’s aim is to “highlight relevant information for the busy executive, and to provide relevant and actionable analysis of

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G-20 tries to support growth

The G-20 was created in 1999, after the financial crises that had hit emerging countries from 1997 onwards. It includes the G7 group of major industrial companies, plus the main emerging economies, including the BRIC countries (Brazil, Russia, India, China).

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A fistful of dollars

The US Federal Reserve used just to manage monetary policy for the 12 ‘districts’ of the USA. But now, it is going global. First, it opened unlimited “swap lines” with other G7 countries through the European Central Bank, the Bank

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A downturn, not a dip

The blog first raised this issue last December, when noting that global chemical industry production growth had already “slowed significantly”. At that time, it questioned whether “central bankers will be able to wave the magic wand that restores us to

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2009 Budgets

It is nearly time for the blog’s annual forecast of chemical industry prospects. Of course, past performance is not necessarily a guide to future outcomes. But it is one of the better guides that we have. So before publishing the

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The last few days

Many new readers have turned to the blog, to better understand what is happening in the financial world, and to chemicals demand. They might like to start with the 7 September posting, which forecast the current collapse: ‘The price of

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Iceland calls in IMF

As the blog predicted, Iceland has been forced to call on the IMF for help. Finally, the country’s leaders have recognised that their $20bn economy couldn’t support the level of debt built up during the ‘go-go’ years. The pity is

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The Swedish model

The blog has given up counting the number of US banks that have failed in recent weeks, away from the headlnes. Ken Lewis, CEO of Bank of America, predicted last month that half of all US banks would fail, and

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AIG rescued

‘A disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance,’ according to the US Federal Reserve last night. As a

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August highlights

Many readers have been out of the office during August on a well-deserved break. I am therefore highlighting below the main postings over the past month, in the hope this will help them to catch up quickly on key developments

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A sombre outlook

Housing is a vital market for chemical companies. It boomed in the US and other Western countries as credit standards were relaxed between 2003-7. Now it is at the centre of the credit crunch. Martin Feldstein, Harvard economics professor, and

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Global inflation on the rise

Pimco, the world’s largest bond investors, are worried about rising inflation. Their main concern is that many Asian and Middle Eastern countries had ‘anchored’ their currency to the US$. ‘With that anchor gone’, they comment, ‘due to the US Federal

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Interesting quotes (5)

Every now and then, a few interesting quotes come along, which seem to recent summarise developments, and set the tone for the next few months. Recent days have been a good example of this process at work: ‘The era of

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Russia’s oil trader

Increases in Russian oil supply have played a major role in balancing world oil markets, at a time when other non-OPEC sources such as the N Sea have been declining. Production rose from 6.2mbd in 1999 to 9.6mbd by 2006.

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We all make mistakes

Anthony Bolton’s investment column this weekend contains another nugget of wisdom. Coincidentally, it is linked with Archie Norman’s ‘tip for management’ which I quote below. Bolton is the UK’s most successful fund manager. And he certainly shares Norman’s sense about

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‘Too big to rescue’

Readers will know that I am a great admirer of Gillian Tett’s analyses of banking issues in the Financial Times. Today, she has another thought-provoking article, this time on the emergence of Iceland as ‘the world’s first country run like

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FT’s subprime jokes page

Those who liked my earlier posting about Margin calling, might like to look at the new online Financial Times page devoted to subprime jokes. For example, ‘What’s the definition of an optimistic investment banker?’ ‘Someone who irons 5 business shirts

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Oil price volatility rises

Volatility has been rising in the crude oil and feedstocks markets. This is because individual players have completely different strategies. In turn, this makes it difficult for chemical companies to forecast short-term feedstock costs. It also makes it difficult to

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The US$ tumbles

The US$ took a major tumble yesterday, as traders decided the Bear Stearns news meant there was little risk of central bank intervention. Against the Japanese yen it fell almost 2.5% during the day, closing at ¥97.35, as shown on

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