Helping you navigate the new normal
The Presidential Cycle is now over. Instead, worries about the recession and the US debt ceiling talks are moving centre-stage. But Asian currency markets are sending a warning signal. A rising US dollar and US interest rates, and a falling yen and yuan, could soon raise the risks of a major Asian debt crisis.
Cheap used phones priced at <$200 are now the only growth area in the smartphone market. Companies who just sell hardware are now set to be Losers as their profits tumble. Companies like Apple, with a strong brand and service offering, will be long-term Winners.
Now, we are all starting to suffer for the central banks mistake in adopting Bernanke Theory. The bubbles they created are finally starting to burst as interest rates return to more normal levels. This will be very painful for all those who trusted them to manage the economy.
Nobody knows how markets will develop. But past performance is the best guide that we have. This is why our Sentiment Index is my Chart of the year for 2022.
Underlying growth has been slowing since 2000 as more people joined the Perennials generation. Now, the bursting of the central bank stimulus bubbles – combined with the impact of Russia’s invasion – will likely cause the global economy to go ex-growth.
We are facing a perfect storm of global food, energy and financial crises set off by the war in Ukraine. Analysts need to stop focusing on monetary policy and the inversion of the yield curve. They need to look out of the window and start dealing with the geopolitical reality of Putinflation.
The issue is simply that investors are in a state of Denial. And so there is a growing risk of a financial crisis as reality finally dawns on them.
Our pH Report Sentiment Index has been a very reliable guide to the S&P 500 in recent years. Now it is suggesting a major downturn may be underway as the US and Chinese stimulus programmes come to an end.
We can expect to see electricity prices fall along with CO2 emissions. And consumers will no longer be held to ransom by geopolitical events
COP26 confirmed that the world is moving away from fossil fuels. OPEC’s high prices have made this move easier to afford by causing artificial shortages.
Recession may also burst today’s asset price bubbles in stock markets and housing prices – and even in more obscure assets such as art markets.
The Federal Reserve can’t control the fallout from the bursting of China’s ‘subprime on steroids’ real estate bubble
As the real estate market slows, China imports will reduce – setting off a chain reaction across the world
Much of the way the world currently works depends on uninterrupted and elevated Chinese growth.
Tariffs are not a “silver bullet” and cannot solve the two key issues facing the US auto industry
China’s ‘One Belt, One Road’ project and the need to reduce pollution have replaced “growth at any price” as key government priorities, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog Companies and …
One thing is certain about the 2017 – 2019 Budget period. ”Business as usual” is the least likely Scenario to occur. The IMF chart above highlights the key issue: for the past 5 years, all its forecasts of a return …
Why has the US dollar suddenly strengthened over the past year? What will be the impact of China’s new 5 Year Plan for 2016-2010? Will the current Climate Change Conference actually change anything? Will 2016 be ‘business as usual’, or should we look out for bumps on the road? These are some of the questions […]
Why has the US dollar suddenly strengthened over the past year? What will be the impact of China’s new 5 Year Plan for 2016-2010? Will the current Climate Change Conference actually change anything? Will 2016 be ‘business as usual’, or should we look out for bumps on the road? These are some of the questions […]
Maintaining a competitive edge in a low cost feedstock scenario is the theme of next week’s World Aromatics & Derivatives Conference in Amsterdam on 17 – 18 November. Co-organised as always with ICIS, we will benefit from the insight of key executives from the global industry including: Covestro’s Global Procurement head, Dirk Jan de With Dow Chemicals’ Corporate Chief […]
A blog reader has kindly sent me the maps above from BrilliantMaps.com. They highlight the dramatic collapse in fertility rates since 1970, which have nearly halved from a global average of 4.85 babies/woman to just 2.5 babies per woman today: Dark blue covers countries where rates are 1 – 2 babies/woman Light blue is […]
The key issue in the Greek debt crisis is easy to understand,. It is that Greece’s GDP last year was just $238bn, whilst its debts are estimated at €322bn ($365bn). So Greece is clearly going to default at some point. The problem is that no policymaker is prepared to admit this obvious fact, as […]
Chemistry & the Economy: 2014 Year-End Review Some excellent questions have already been submitted for my year-end webinar tomorrow with the American Chemical Society. Why have oil prices fallen? Will China’s growth recover in 2015 – and if so, will it be back to the ‘bad old ways’ of stimulus? Why are the stock prices […]
Above is today’s front-page headline from the Financial Times. As readers will remember, I launched a series of major posts in the blog on 18 August, forecasting a collapse of oil prices to “$70/bbl, and probably lower“, and that the US$ would see ”a strong move upwards“. The headline confirms I was right. The posts in the series were as follows: […]
The word “panic” crept in to ICIS chemical market news reports this week, as its pricing specialists surveyed the Asian market. Polyethylene (PE) was particularly highlighted, with headlines such as: China PE tumbles $30-80/tonne on panic-selling Price war in Pakistan as panic sets in among PE suppliers At the same time, ICIS was reporting that: “Middle East suppliers may […]
We had another excellent Conference in Berlin last week on the challenges and opportunities facing the global aromatics industry. These developments are starting to impact most industries as we arrive in the New Normal of lower growth, deflation and growing protectionism. Our speakers included senior executives from ExxonMobil, Shell, Dow Chemical and BASF, as well as the International […]
The day after our China Economic Transformation webinar last week, Premier Li Keqiang confirmed its key message: “There’s already a lot of money in the pool, and we can’t rely on monetary stimulus to spur economic growth…Facing the New Normal state of the Chinese economy, we have remained level-headed and taken steps to tackle deep-seated challenges….in the […]
100 years ago today, the blog’s grandfather went into action for the first time in World War 1, at the Battle of Le Cateau. A regular soldier, his Battalion had landed in France on 22 August 1914, and had then marched for 3 days from the Channel ports as part of the British Expeditionary Force (BEF) . […]
It is very hard to see how all the chemical industry’s short-term $220bn financing and refinancing needs can be achieved
This week is the blog’s 6th birthday. Remarkably, its audience remains extremely loyal, with around half reading it weekly and a quarter on a daily basis. It is also global, now being read in 150 countries. The top 10 countries …
The blog’s latest post for the Financial Times FT Data blog is published today.
The blog’s regular look at October’s auto sales in the 3 main markets (China, US, EU) shows growth is slowing, not accelerating.
China’s sales were lower than September, as the subsidy ended on small engine cars. Its pace of growth is also slowing….
The blog’s old friend, Judith Hackitt, stirred up the media this week. She attacked the Wimbledon tennis authorities for stopping Centre Court TV broadcasts when the grass is wet, on ‘health and safety’ grounds. Hackitt now runs the UK’s Health …
The blog sends its congratulations to Beth Tweddle, new world champion in the gymnastic floor exercises. It had the pleasure of working with her father, Jerry Tweddle (now with Ineos), for many years at ICI. Beth is everything that a …
A year ago today, China banned the issue of free plastic bags from supermarkets, shops and open markets. And it seems the ban has had considerable success. Supermarkets have used 66% fewer bags, according to government figures. The ban has …
With public holidays in many parts of the world this weekend, my colleague Andy Gibbins has kindly collated a new selection of credit crunch jokes: You know it’s a credit crunch when… • The cashpoint (ATM) asks if you can …
China’s exports continue to disappoint. They fell 18% in January and 26% in February. March showed a slightly better performance, with a 17% fall. But April was weak again, with a 23% decline in exports and imports. China’s problem today …
The combination of consumer environmentalism with retailer cost-cutting is having the expected major impact on the UK’s use of plastic bags. All the big supermarkets have been running campaigns to reduce the use of these. Some, like Marks & Spencer, …
There is little justice in today’s recession. Countries that saved hard, and avoided reckless lending, are seeing their economies collapse as fast as those that spent as if there was no tomorrow. Thus Germany is now following the path already …
One can still rely on ExxonMobil to deliver positive results, even whilst the world is collapsing around them. Friday’s report showed Q4 chemical volumes down 20%, as a result of hurricane effects and destocking. But although earnings tumbled from $1.1bn …
Saudi Arabia, the world’s largest oil producer, now seems to be moving to Phase 2 of its efforts to achieve a $75 – $100bbl price range. As the blog noted in early December, the Saudis’ initial tactic was to play …
The excellent Gretchen Morgenson makes a good point in her New York Times column today. As she puts it, “here in Bailout Nation, you’ll be surprised to learn, some of us are more equal than others”. Her argument is that …
London’s largely-male banking community has a new way to pass its time, now financial markets have collapsed. According to Lucy Kellaway at the Financial Times, many are prospecting for adulterous affairs on a website called Illicit Encounters. Lucy says she …
Two months ago, the blog noted that the credit crunch was starting to impact sport. Then the issue was high leverage, with the UK’s Football Association warning that the $5bn debts of the Premier League clubs were “high-risk”. Now, its …
The King of Saudi Arabia is the most important person in the oil industry. He controls the largest oil reserves, and is the largest single producer. Previous Kings have let their Oil Ministers do the talking at OPEC meetings, and …
Earlier this week, the blog noted GM’s dire October performance, with its US sales down 45% on last year, following the ending of its price promotions. Now, Roger Altman, the former US Treasury official who is advising GM on its …
Back in August, the blog noted that BASF chairman Jurgen Hambrecht was forecasting that “the world will still continue to grow respectably”, although he foresaw a temporary slowdown into H1 2009. Yesterday, however, this mood of relative optimism had disappeared …
Events have moved quickly in oil markets in recent days. Last week, when oil was at $80/bbl, the blog argued that OPEC risked having to defend a $50/bbl price, by delaying production cuts until its 18 November meeting. Last night, …
Finally, as the blog noted with relief last week, there is a workable plan on the table to rescue the global banking system. On Saturday, the IMF warned of potential ‘meltdown’ if the plan was not approved. In the blog’s …
The credit crunch began over a year ago. But it took until yesterday, when the UK government part-nationalised the country’s banks. for a sensible policy response to begin to emerge. Today, the excellent Gillian Tett of the Financial Times pulls …
September was another difficult month for the cornerstones of US chemical demand, autos and housing: • GM cut prices dramatically via its ‘Employee discount for everyone’ programme. But even so, sales fell 16% versus last year (blue column) • Toyota …
In today’s difficult times, everyone looks to the majors for guidance on what is happening, and what it all means for the industry. So the blog welcomes the advice given by Graham van’ t Hoff, newly appointed VP for base …
Shell’s priorities for the gathering economic storm Read More
Will Beacham of ICIS radio did a 6 minute interview with the blog this week at EPCA. It focuses on the impact of the credit crunch and the high oil price, and provides advice on how to prepare for the …
Every month, it seems, the US housing market gets worse. Spring should have provided some respite, as it is the peak time for sales. But instead, as the chart shows, the benchmark S&P/Case-Shiller house price index fell again to a …
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