recession Archives - New Normal

China’s dual circulation policy aims to reduce debt reliance

14 March 2021

Every now and then, people wake up to the fact that debt is only good news when it adds to growth. Otherwise, it simply destroys value. China is usually the case study for this analysis, as the chart confirms. It shows the rise in debt from 2002, when official data begins, versus the rise in

The post China’s dual circulation policy aims to reduce debt reliance appeared first on Chemicals and the Economy.

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Rising US interest rates, US$ and oil prices set to pressure financial markets

7 March 2021

Everyone who has ever played the Beer Distribution Game on a training course knows what is happening in supply chains today. A small increase in underlying demand is rapidly leading to a massive increase in ‘apparent demand’. As the New York Times reports, “the pandemic has disrupted every stage of the (supply chain) journey.” And

The post Rising US interest rates, US$ and oil prices set to pressure financial markets appeared first on Chemicals and the Economy.

Rising US interest rates, US$ and oil prices set to pressure financial markets Read More

Chart of the Year – CAPE Index signals negative S&P 500 returns to 2030

20 December 2020

Each year, it seems there is only one candidate for Chart of the Year. And 2020 is no exception. It has to be the CAPE Index developed by Nobel Prize winner, Prof Robert Shiller. As the chart shows, it is nearly at an all-time high with Tesla’s addition to the S&P 500. Only the peak

Chart of the Year – CAPE Index signals negative S&P 500 returns to 2030 Read More

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

25 October 2020

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

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

A new recession era to emerge

22 March 2020

Contingency planning has become mission-critical. The longer the coronavirus pandemic continues, the more it will expose the underlying fragility of today’s debt-laden global economy. Companies therefore have to move into crisis management mode, with a number of key areas requiring immediate attention: • Employee health and safety is the top priority. Governments are slowly waking

A new recession era to emerge Read More

Contingency planning is essential in 2020 as “synchronised slowdown” continues

12 January 2020

The IMF has now confirmed that the world economy has moved into the synchronised slowdown that I forecast here a year ago. Its analysis also confirms the importance of the issues highlighted then, including “rising trade barriers and increasing geopolitical tensions”, a sharp decline in manufacturing, contraction in the auto industry and structural forces such

Contingency planning is essential in 2020 as “synchronised slowdown” continues Read More

UK election offers voters no middle ground in December

3 November 2019

Pity the poor UK voters as they prepare to vote in probably the most critical election of their lives. As they battle the wind and rain to vote in the first December election for 100 years, they already know there are only 3 likely outcomes: Tory majority, Brexit by end-January, EU trade deal uncertain Labour

UK election offers voters no middle ground in December Read More

Oil market weakness suggests recession now more likely than Middle East war

11 August 2019

Oil markets remain poised between fear of recession and fear of a US attack on Iran. But gradually it seems that fears about a war are reducing, whilst President Trump’s decision to ramp up the trade war with China makes recession far more likely. The chart of Brent prices captures the current uncertainties: It shows

Oil market weakness suggests recession now more likely than Middle East war Read More

Resilience amidst headwinds is key for H2

30 June 2019

Resilience is set to become the key issue as we look forward to H2, as I note in a new analysis for ICIS Chemical Business. None of us have ever seen the combinations of events that are potentially ahead of us. And none of us can be sure which way they will develop. So it

Resilience amidst headwinds is key for H2 Read More

Recession risk rises as Iran tensions and US-China trade war build

26 May 2019

Oil markets are once again uneasily balanced between two completely different outcomes – and one again involves Iran. Back in the summer of 2008, markets were dominated by the potential for an Israeli attack on Iranian nuclear facilities, as I summarised at the time: “Nothing is certain in life, except death and taxes. But it

Recession risk rises as Iran tensions and US-China trade war build Read More

Stormy weather ahead for chemicals

24 March 2019

Four serious challenges are on the horizon for the global petrochemical industry as I describe in my latest analysis for ICIS Chemical Business and in a podcast interview with Will Beacham of ICIS. The first is the growing risk of recession, with key markets such as autos, electronics and housing all showing signs of major

Stormy weather ahead for chemicals Read More

BASF’s second profit warning highlights scale of the downturn now underway

9 December 2018

The chemical industry is easily the best leading indicator for the global economy. And thanks to Kevin Swift and his team at the American Chemistry Council, we already have data showing developments up to October, as the chart shows. It confirms that consensus hopes for a “synchronised global recovery” at the beginning of the year

BASF’s second profit warning highlights scale of the downturn now underway Read More

Budgeting for the end of “Business as Usual”

28 October 2018

Companies and investors are starting to finalise their plans for the coming year. Many are assuming that the global economy will grow by 3% – 3.5%, and are setting targets on the basis of “business as usual”. This has been a reasonable assumption for the past 25 years, as the chart confirms for the US economy:

Budgeting for the end of “Business as Usual” Read More

Oil prices flag recession risk as Iranian geopolitical tensions rise

20 May 2018

Today, we have “lies, fake news and statistics” rather than the old phrase “lies, damned lies and statistics”. But the general principle is still the same. Cynical players simply focus on the numbers that promote their argument, and ignore or challenge everything else. The easiest way for them to manipulate the statistics is to ignore […]

The post Oil prices flag recession risk as Iranian geopolitical tensions rise appeared first on Chemicals & The Economy.

Oil prices flag recession risk as Iranian geopolitical tensions rise Read More

Global auto market heads for 5% fall as stimulus impact wanes

30 January 2017

2016 data highlights one startling statistic about the world’s Top 7 auto markets. They are 85% of total world sales and as the chart shows, their overall sales growth since 2007 has been entirely due to China:  China’s sales have risen nearly four-fold since 2007, from 6.3m to 24.2m  Sales in […]

Global auto market heads for 5% fall as stimulus impact wanes Read More

Chemical industry flags rising risk of global recession in 2017, with Trump set to “clear the decks” at the start of his first term

2 December 2016

The chemical industry is the best leading indicator that we have for the global economy. It has an excellent correlation with IMF data, and also benefits from the fact it has no “political bias”. It simply tells us what is happening in real-time in the world’s 3rd largest industry. Sadly, the news is not good. […]

Chemical industry flags rising risk of global recession in 2017, with Trump set to “clear the decks” at the start of his first term Read More

Chemical industry warns of likely global recession in 2017

7 November 2016

The chemical industry is the best leading indicator for the global economy, and it is flagging major warning signs about the outlook for 2017. As the chart above shows, based on American Chemistry Council (ACC) data:  Since 2009, Capacity Utilisation (CU%) has never returned to the 91.3% averaged between 1987 – 2008  It […]

Chemical industry warns of likely global recession in 2017 Read More

Will 2014 be a repeat of 2008, but worse?

7 July 2014

Will 2014 turn out to be a repeat of 2008 for the US economy? 6 years ago, after all, not a single mainstream forecaster – including the IMF and World Bank – was forecasting a recession. Even in September 2008, the consensus was still confident about the economic outlook. Yet the National Bureau for Economic Research […]

Will 2014 be a repeat of 2008, but worse? Read More

Nobody realised the BabyBoom had happened till long after it finished

21 November 2013

Milton Friedman received a Nobel Prize for economics in 1976, partly on the basis of his analysis that ‘inflation is everywhere and always a monetary phenomenon’. It sounds an appealing insight, but of course it is wrong. The reason is that it confuses cause and effect. The above chart presents a different view, highlighting the […]

Nobody realised the BabyBoom had happened till long after it finished Read More

Ethylene demand weak as eurozone flirts with recession and deflation

19 November 2013

So this is as good as it gets in 2013. That seems to be the sad conclusion from analysis of Q3 operating rate (OR%) data for Europe’s crackers. Actual Q3 OR% inched up to 81%, which was slightly better than 2012′s 80% rate and 2009′s 79% rate. But its a very long way from the […]

Ethylene demand weak as eurozone flirts with recession and deflation Read More

Investors decide central banks may not know what they are doing

30 September 2013

The blog was speaking last week at the major Euromoney investor conference on bond markets. It followed a keynote by the head of the UK’s Debt Management Office, who noted that the Bank of England now ‘owned’ ~30% of total UK government debt compared to none in 2008 The reaction to his speech revealed just how investor […]

Investors decide central banks may not know what they are doing Read More

Key China data suggest economic growth already less than 5%

6 August 2013

China’s economy is continuing to slow, as the new leadership takes power. As the chart shows of H1 performance: Electricity consumption (red line) was up 5% versus H1 2012 Bank lending was up 4% These levels are of course well below the published GDP figure of 7.5% for Q2, but the two types of data […]

Key China data suggest economic growth already less than 5% Read More

Drug supplies cut to Greece as capital controls return to Europe

3 April 2013

Don’t be surprised if your finance team starts working even longer hours over the next few weeks. Not only will they have to worry about revising profit forecasts and working capital issues, as demand weakens in some core markets. Now they have to w…

Drug supplies cut to Greece as capital controls return to Europe Read More

S&P 500 hits new record as Kem One files for bankruptcy

1 April 2013

The divergence between the real world and financial markets was sharply clarified last week:

• The world’s major stock index, the US S&P 500, hit a record new closing high of 1569
• Sadly, Europe’s 3rd largest PVC producer, Kem One, filed for bank…

S&P 500 hits new record as Kem One files for bankruptcy Read More

Demand weakness spreads across Europe and Asia

25 March 2013

The blog was in sober mood when giving its usual New Year Outlook in January, warning that “renewed global recession appears to be the major risk facing us at the start of 2013”. Developments since then only reinforce its caution. Europe and Asia are…

Demand weakness spreads across Europe and Asia Read More

Lanxess temporarily closes plants, as demand remains slow

11 March 2013

Chemical markets continue to paint a very worrying picture of the state of the global economy. There has been no improvement in demand over the past week, since the blog first raised the alarm. Instead, plants are being temporarily closed because of …

Lanxess temporarily closes plants, as demand remains slow Read More

Company results show few signs of any upturn

2 March 2013

Economic recovery is already underway, according to the optimists who have bid up financial markets in recent weeks. But the blog’s quarterly review of company results shows little evidence of it on the ground.

Phrases such as ‘challenging’, ‘economi…

Company results show few signs of any upturn Read More

Global economy faces difficult 2013

19 January 2013

Its now 4 years since the blog published its first New Year Outlook in ICB. Then it was in a small minority when advising CEOs “to prepare for a marathon not a sprint” in dealing with the financial crisis. And very few accepted its suggestion that it…

Global economy faces difficult 2013 Read More

Q3 results remain in downward trend

15 November 2012

The blog’s quarterly survey of chemical industry results shows the downward trend continued in Q3. Some companies remain untouched by the mainstream problems, but they are now clearly in the minority:

• Bayer remain optimistic, and DuPont hopeful …

Q3 results remain in downward trend Read More

IMF warns on recession risk as Political, Social worries rise

12 November 2012

When the economy is running well, most people tend to get on with their lives. That was the case during the 1982-2007 SuperCycle, when growth was almost constant. But today’s greater economic uncertainties translate into a growing role for Political …

IMF warns on recession risk as Political, Social worries rise Read More

Buyers start selling benzene as demand disappears

29 October 2012

What happens if prices stay unaffordable for so long, that the consumer eventually stops buying? Younger readers may not remember such a period, as it last happened in the early 1980s, before the SuperCycle began. But it looks as though they may be c…

Buyers start selling benzene as demand disappears Read More

‘Moving forward in volatile times’ the motto for H2

16 August 2012

The chemical industry has a long track record as a leading indicator for the global economy. Its position in the value chain means that it sees what is happening upstream in energy markets, and downstream in consumer markets.

Anyone studying Q2 resul…

‘Moving forward in volatile times’ the motto for H2 Read More

Oil markets break out of their ‘triangle’

6 June 2012

There has never been any fundamental basis for the rise in oil prices over the past 3 years:

• At no time has there been any actual shortage of product
• In fact, inventories have always been at comfortable levels

They rose only for two reasons:
…

Oil markets break out of their ‘triangle’ Read More

Europe’s banks turn to bullfight loans

4 April 2012

The blog’s IeC Boom/Gloom sentiment indicator (blue column) continues to be neutral on the outlook. As the chart shows, this is quite unlike its performance in early 2009. Then it rose rapidly from February – accurately forecasting the major recovery…

Europe’s banks turn to bullfight loans Read More

The banana skin risk

14 January 2012

This week’s news provided more evidence to support the blog’s fear that the global economy is close to recession:

• The German economy, Europe’s motor, saw negative growth in Q4
• US retail sales grew just 0.1% in December, despite good auto sales…

The banana skin risk Read More

Oil prices hit record annual level in 2011

3 January 2012

High oil prices are a bad thing for the global economy, and for the chemical industry,

2011 was therefore a very bad year indeed.

Brent oil prices, the global benchmark, averaged $111/bbl in 2011. This is higher even than in 1979 and 1980, after adj…

Oil prices hit record annual level in 2011 Read More

2012 Budgets

15 October 2011

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…

2012 Budgets Read More

Global oil bill now 5% of GDP

12 October 2011

The world has suffered a recession every time the oil price has reached current levels. And as the blog has warned for months, this time is unlikely to be different.

The reason is captured in the above chart. This uses:

• Oil production since 19…

Global oil bill now 5% of GDP Read More

Groundhog Day again as Quarter 4 starts

10 October 2011

The great film comedy Groundhog Day saw Bill Murray doomed to repeat the same day in his life, until he learnt to become a better person. Sadly, financial markets have yet to learn from his example.

Every quarter, the investment banks produce new sto…

Groundhog Day again as Quarter 4 starts Read More

OECD warns economic growth "close to a halt"

12 September 2011

The IeC Downturn Alert has hopefully done the job for which it was intended. It was launched at the end of April, when the blog became convinced that the global economy was highly likely to enter a new downturn. It

OECD warns economic growth "close to a halt" Read More

Boom/Gloom Index suggests downturn resuming

6 September 2011

A recession is often defined as being when your neighbour loses their job. A depression is when you lose your job.

Latest industrial production data shows output is falling around the world. And US unemployment is rising again, with the wider measur…

Boom/Gloom Index suggests downturn resuming Read More

August highlights

1 September 2011

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…

August highlights Read More

US polymer demand slows as consumers cut back

31 August 2011

The above chart, from the invaluable American Chemistry Council (ACC) weekly report, highlights the scale of Q1’s inventory build in N American polymer markets (polyethylene, polypropylene, PVC).

This build took place as consumers down the value chain…

US polymer demand slows as consumers cut back Read More

Downturn continues as financial markets sink

22 August 2011

ICIS pricing is a very valuable resource, particularly at market turning points. It highlighted the start of the current downturn in April, when reporting that buyers had moved to operating on a ‘hand to mouth’ basis.

Now, its market editors are high…

Downturn continues as financial markets sink Read More

Policymakers remain in the Denial phase

20 August 2011

A year ago, the blog feared we were “still towards the beginning of the crisis”, not at its end. Sadly, its judgement seems to have been correct.

2 weeks after that post, the US Federal Reserve launched its now infamous $600bn QE2 programme. The aim…

Policymakers remain in the Denial phase Read More

Wal-Mart sends a message

17 August 2011

The blog is a great believer in the predictive power of the retail sector.

Wal-Mart and Tesco were the first to spot the downturn in the summer of 2007, a year before it became obvious to everyone else.

Now Wal-Mart’s problems are providing some impo…

Wal-Mart sends a message Read More

Boom/Gloom Index suggests markets on the edge

9 August 2011

There’s “a 50% chance that the US could slide into a new recession”, according to Harvard’s Prof Martin Feldstein. He sees the economy as “really balanced on the edge”, with housing still depressed and consumer spending flat.

The blog’s own IeC Boo…

Boom/Gloom Index suggests markets on the edge Read More