Great Unwinding

The blog in 2015

2015 was the year when companies and markets began to feel the impact of the Great Unwinding of stimulus policies. The blog’s readership has increased significantly as a result, as people began to abandon the consensus wisdom which had so clearly failed – once again – to provide a reliable guide to the outlook. The […]

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Deflation returns to the major economies as stimulus fails, again

Next week, I will publish my annual Budget Outlook, covering the 2016-2018 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 Crisis 2009′s ‘Budgeting […]

Deflation returns to the major economies as stimulus fails, again Read More

China fooled the world, and now comes the Great Unwinding

The global commodity super-bubble is coming to an end, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog It is exactly a year since we forecast that a Great Unwinding of stimulus policies was underway, due to a major slowdown in China. As we warned on beyondbrics: Oil and commodity prices are […]

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Contagion hits financial markets as Great Unwinding continues

Crude oil prices continued to fall towards $30/bbl last week.  Markets are finally starting to recognise, as the BBC reported last year, that ‘China fooled the world‘ with its stimulus programme. It had not suddenly become middle-class by Western standards in 2009.  Instead, aided by developed country stimulus policies, its own stimulus had helped create […]

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Oil price rally a “Head Fake” says International Energy Agency

Why wouldn’t oil prices return to their long-term average around $30/bbl?  After all,  the world is facing a long-term energy supply glut.  The latest monthly report from the International Energy Agency (IEA) confirms my view that the recent rally has simply been a trading coup: “HEAD FAKE “Behind the façade of stability, the rebalancing triggered by the price […]

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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 […]

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The blog in 2014

Historians will probably agree that 2014 marked a turning point for the global economy. It was the year when China’s new leadership turned away from stimulus policies, which had been based on creating a wealth effect via a lending and property bubble.  The impact of this change of direction is still hardly recognised in mainstream […]

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Danger and Opportunity await as the financial Crisis returns

The Great Unwinding began with the change of economic direction in China.  So it makes good sense for businesses and investors to view developments with a Chinese perspective in mind.  This is particularly relevant as the Chinese word for Crisis contains 2 characters – Danger and Opportunity – as the picture shows. DANGER It is not hard to identify the key Danger from the […]

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Oil price collapse, US$ rise confirm Great Unwinding underway

Stock markets are floating ever higher on an ocean of central bank money printing.  But something else is happening in the real world where we all live and work.  Since August, I have been warning that the Great Unwinding of this policymaker stimulus is now underway.  The chart above highlights how my 2 core forecasts have now been confirmed: Brent Oil […]

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Great Unwinding leads to major chemical market downturn

It is now almost 3 months since I suggested the Great Unwinding was about to hit oil and chemical markets.  As the chart above shows, there has since been a major collapse in most of the markets in our benchmark portfolio.  Given their role as leading indicators for the global economy, this major downturn is extremely worrying: […]

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Budgeting for the Cycle of Deflation

There is no “business as usual” scenario possible for the 2015-2017 Budget period.  Over the past 15 years (since the ”dotcom bubble” burst in 2000), policymakers have provided increasing amounts of stimulus to support the economy.  Now, finally, we are in the endgame, as the Great Unwinding takes place. This presents us all with major challenges: Most executives and investors under […]

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The Great Unwinding of policymaker stimulus is under way

The blog’s latest post for the Financial Times, published on the BeyondBrics blog is below.Oct 20, 2014 10:48am By Paul Hodges of International eChem Two months ago, very few people believed that markets were about to tumble. But on 18 August we published our Great Unwinding analysis. Since then, its forecasts have begun to come true, […]

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Oil prices have further to fall as Great Unwinding continues

Oil prices are highly likely to fall further, not rebound, over the next few months.  That is the blog’s conclusion to its 3-part analysis of likely developments in oil markets. Having looked at the outlook for oil supply and demand over the past 2 days, today’s post looks at the key question of ‘what does this mean for oil […]

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Chemical markets highlight economic downturn now underway

The chemical industry remains the best leading indicator for the global economy.  The only problem is that most policymakers continue to ignore its obvious message about the failure of their stimulus policies to restore growth. 2 months ago the blog highlighted how its IeC Downturn Monitor was indicating that: “Markets appear to be continuing to move, slowly but […]

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IMF says economic growth may never return to pre-crisis levels

The Great Unwinding of policymakers’ failed stimulus programmes is now clearly underway in the global economy.  The headlines this week all focused on the latest International Monetary Fund (IMF) report: “IMF says economic growth may never return to pre-crisis levels.” And then, in response, the US Federal Reserve suddenly realised that the US economy was not […]

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Equity markets under pressure as Boom/Gloom Index signals Great Unwinding

Whisper it quietly if you are walking past the imposing Federal Reserve building in Washington DC, so as not to disturb the occupants.  They believe that their efforts to boost financial markets have had their effect, and that the real economy, in which we all live and work, will now recover. But what if the […]

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