debt

Financial markets enter their Convulsion phase

Many companies and investors are still comparing today’s downturn to the 9-month hiccups seen after the 1990/91 Gulf War and the 2000/1 dotcom crash. In reality, however, this is wishful thinking, as the IMF highlighted last week in its World Economic Outlook: “The Great Lockdown: Worst Economic Downturn Since the Great Depression” One key question,

Paradigm shifts create Winners and Losers

MY ANNUAL BUDGET OUTLOOK WILL BE PUBLISHED NEXT WEEK Next week, I will publish my annual Budget Outlook, covering the 2020-2022 period. The aim, as always, will be to challenge conventional wisdom when this seems to be heading in the wrong direction. Before publishing the new Outlook each year, I always like to review my

$50bn hole appears in New York financial markets – Fed is “looking into it”

Most people would quickly notice if $50 went missing from their purse or wallet. They would certainly notice if $50k suddenly disappeared from their bank account. But a fortnight ago, it took the New York Federal Reserve more than a day to notice that $50bn was missing from the money markets it was supposed to

G7 births hit new record low, below Depression level in 1933

If a country doesn’t have any babies, then in time it won’t have an economy. But that’s not how the central banks see it. For the past 20 years, through subprime and now their stimulus policies, they have believed they could effectively “print babies”.  Even today, they are still lining up to take global interest

From subprime to stimulus…and now social division

The blog has now been running for 12 years since the first post was written from Thailand at the end of June 2007. And quite a lot has happened since then: There was the 2008 financial crisis, one of the blog’s early forecasting successes This led to the publication of ‘Boom, Gloom and the New

Don’t get carried away by Beijing’s stimulus

Residential construction work in Qingdao, China. Government stimulus is unlikely to deliver the economic boost of previous years © Bloomberg China’s falling producer price index suggests it could soon be exporting deflation, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog On the surface, this year’s jump in China’s total

Déjà vu all over again for oil markets as recession risks rise

Back in 2015, veteran Saudi Oil Minister Ali  Naimi was very clear about Saudi’s need to adopt a market share-based pricing policy: “Saudi Arabia cut output in 1980s to support prices. I was responsible for production at Aramco at that time, and I saw how prices fell, so we lost on output and on prices

Chemical output signals trouble for global economy

A petrochemical plant on the outskirts of Shanghai. Chinese chemical industry production has been negative on a year-to-date basis since February Falling output in China and slowing growth globally suggest difficult years ahead, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog Chemicals are the best leading indicator for the

Boomer SuperCycle unique in human history – Deutsche Bank

“The 1950-2000 period is like no other in human or financial history in terms of population growth, economic growth, inflation or asset prices.” This quote isn’t from ‘Boom, Gloom and the New Normal: How Western BabyBoomers are Changing Demand Patterns, Again‘, the very popular ebook that John Richardson and I published in 2011.  Nor is […]

The post Boomer SuperCycle unique in human history – Deutsche Bank appeared first on Chemicals & The Economy.

Time to recognise the economic impact of ageing populations

Is global economic growth really controlled by monetary policy and interest rates?  Can you create constant growth simply by adjusting government tax and spending policy?  Do we know enough about how the economy operates to be able to do this?  Or has something more fundamental been at work in recent decades, to create the extraordinary […]

The post Time to recognise the economic impact of ageing populations appeared first on Chemicals & The Economy.

China’s lending bubble is history

As China’s shadow banking is reined in, the impact on the global economy is already clear, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog China’s shadow banking sector has been a major source of speculative lending to the global economy. But 2018 has seen it entering its […]

The post China’s lending bubble is history appeared first on Chemicals & The Economy.

The return of volatility is the key market risk for 2018

We are living in a strange world. As in 2007 – 2008, financial news continues to be euphoric, yet the general news is increasingly gloomy. As Nobel Prizewinner Richard Thaler, has warned, “We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping.” Both views […]

The post The return of volatility is the key market risk for 2018 appeared first on Chemicals & The Economy.

China’s central bank governor warns of ‘Minsky Moment’ risk

The world is coming to the end of probably the greatest financial bubble ever seen.  Since the financial crisis began in 2008, central banks in China, the USA, Europe, the UK and Japan have created over $30tn of debt. China has created more than half of this debt as the chart shows, and its total debt […]

The post China’s central bank governor warns of ‘Minsky Moment’ risk appeared first on Chemicals & The Economy.

Suspense rises as Great Unwinding becomes the Great Reckoning

“There is a distinct difference between “suspense” and “surprise.”  Alfred Hitchcock It is now 2 years since the start of the Great Unwinding of policymaker stimulus.  On 15 August 2014, Brent was at $105/bbl, and the US$ Index was at 81. Since then, as the chart shows, Brent oil prices have fallen 53%, whilst the […]

Global GDP sees record fall in 2015 as world hits “demographic cliff”

Central bankers remain in Denial about the failure of their stimulus policies.  Yet new IMF data for global GDP shows GDP fell by $3.8tn in 2015 – the biggest fall on record – as the world hits the “demographic cliff”.  We have now seen 2 record falls in 6 years, as the previous record was $3.3tn […]

Inflation turns to deflation as stimulus debt now has to be repaid

Its not what we know that causes the major problems.  Its what we think we know, but don’t. We know, for example, that markets balance supply and demand by shifting prices up and down.  Too much demand and/or too little supply, will mean higher prices and inflation.  This is what happened as the BabyBoom took place: Medical […]

Stimulus proves no solution for today’s economic slowdown

“Central banks have to be mindful that too long a period of very low interest rates can have undesirable consequences in the context of ageing societies. For pensioners, and those saving ahead of retirement, low interest rates may not be an inducement to bring consumption forward. They may on the contrary be an inducement to […]

“Sell in May and go away?” as US/German bond yields jump

A strange thing happened to German 10-year interest rates last week – they rose quite sharply, by a further 0.2%. That may not sound a lot, but it is when the starting point is so low.  On 20 April, they were at 0.07%, and on Friday they closed at 0.37% – for a total rise […]

Japan’s government debt now $100k per person

Debt, debt, glorious debt,      Nothing quite like it for cooling the blood.      So follow me, follow, down to the hollow                                                             And there let us wallow in glorious debt  (apologies to Flanders & Swann) It seems impossible today, but until the year 2000 most Western countries were reducing their debt burdens.  Thus President Bill Clinton boasted […]

Mckinsey says global debt now 3x global GDP, and rising

A major new report from consultants McKinsey confirms my concerns over the dramatic increase in global debt levels since stimulus policies began in 2008.   As their chart above highlights: Global debt has risen by $57tn to $199tn since 2007, nearly 3x global GDP Government debt is up by $25tn, with three-quarters of this in the developed […]

Greece and the Eurozone head for showdown over debt issue

We all learnt one crucial lesson from Syriza’s victory in the Greek election last week – voters can halt the European Central Bank (ECB).  Or in other words, protest coalitions can trump elite consensus.  In places like Spain and France, this effect may not work through immediately, but it is being absorbed. Thus Greece and the Eurozone crisis […]

Stock markets focus on central banks, ignore debt default risk

Some extraordinary things are happening in global chemical markets.  They indicate something is very wrong in the real world outside financial markets.  The chart above highlights some key developments since 18 August when the Great Unwinding of policymaker stimulus began: Brent oil prices have halved and are down 51% (blue) Naphtha, the main feedstock for the global industry, has also halved […]

Qingdao probe the ‘straw on the camel’s back’ for world markets

The blog’s new Research Note in the ‘Your Compass on China’ series highlights the way that China’s commodity imports have been used to finance its housing bubble.  This is clearly a shock for investors, who have till now believed the imports were a sign of its superior economic policies and long-term growth prospects. The Qingdao probe could […]

Next ACS webinar on Thursday 5 June

“Not with a bang but with a whimper”. The blog’s 6-monthly webinar for the American Chemical Society (ACS) takes place next Thursday, 5 June, at 14.00 Eastern Summer Time.  And once again, the ACS has kindly arranged for blog readers to register for it free of charge. As feared in last December’s Year-end Review, the promised economic […]

Political earthquake hits Europe in EU elections

A political earthquake hit Europe in the European Union elections on Sunday night: For the first time since the War, mainstream parties were beaten in major countries In France, the National Front won 25% of the vote, with conservatives 21% and ruling socialist party only 14% In the UK, the Independence Party (UKIP) won 28%, […]

Growth remains below SuperCycle trend, whilst debt is building

Whisper it quietly, so as not to disturb policymakers’ dreams.  But the charts above from the Financial Times confirm, as if proof were needed, that their policies of the past 5 years haven’t worked. The charts compare trends in economic growth in the world’s two largest economies, the Eurozone and the USA.   As the arrows indicate, both are […]

The eurozone debt crisis is no nearer solution

The Eurozone crisis has been quiet since the summer of 2012, as the markets waited for the German election.  But now this has occurred, it is unlikely that the problem can continue to be ignored. It is easy to forget the drama of May 2012, when the blog correctly forecast a crisis was about to occur in […]

Markets slow as debt worries increase

The blog is becoming worried about the likely outlook for Q2. Sentiment now seems to be weakening alongside the fundamentals of supply/demand:

• Fundamentals. The start of 2013 has been a disappointment. Demand has shown some recovery after the …

Markets weaken as real problems remain unsolved

It is hard to be very optimistic about the demand outlook for Q2.

Demand in Q1 was lacklustre, even though it should have been the strongest quarter of the year. H1 is seasonally strong, and Q1 also benefited from Easter being in Q2. Equally, the Ch…

Greek default just ‘end of the beginning’ in debt crisis

Yesterday saw the world’s largest ever sovereign debt default, when Greece finally carried through a €206bn ($272bn) restructuring. Yet only the eurozone leaders believe this will solve Greece’s problems and those of the other PIIGS (Portugal, Irela…

EU’s PE industry could benefit from cluster strategy

Europe’s polyethylene (PE) trade presents a fascinating patchwork, based on its geographic and historical trading position, overlaid with its multi-ownership structure.

This is highlighted in the above chart (based based on trade data for the January-…

Protectionism moves closer as countries try to devalue

A year ago, a panicked Federal Reserve introduced its QE2 programme. One of its key aims was to kick-start US growth via driving down the value of the US$ and boosting exports.

Since then:

• The US$ has fallen, and US exports have increased
• …