central banks

Currency wars kick off as Japanese yen tumbles to 35-year low; Bank of Japan spends initial $59bn to defend it

This is the 3rd time we have forewarned of an approaching crisis. Both previous times, ahead of the Great Financial Crisis and the Covid pandemic, we were told we “didn’t know what we were talking about”. And nobody did anything to avoid the looming disaster Let’s hope its “3rd time lucky” and that “this time is different”.

Currency wars kick off as Japanese yen tumbles to 35-year low; Bank of Japan spends initial $59bn to defend it Read More

Rethinking, repositioning and restructuring are now essential for industry survival

Resilience requires companies to refocus downstream and diversify their portfolio. They also need to be clear about the value proposition for their target market – are they providing Value, or Luxury? Rethinking, repositioning and restructuring are now all key to survival and future profit.

Rethinking, repositioning and restructuring are now essential for industry survival Read More

Demographics are destiny – and today’s ageing populations are creating a “replacement economy”

Demographics are taking demand patterns in completely new directions. Sustaining future growth now depends on successfully developing and implementing new policies, focused on the opportunities offered by the emergence of the Perennials 55+ cohort.

Demographics are destiny – and today’s ageing populations are creating a “replacement economy” Read More

Asia’s debt crisis starts to approach its endgame as the yen continues to tumble

Last week, the Japanese yen fell through the US$ : ¥150 level for the first time since 1990. It has now fallen by nearly 50% against the US$ in the past two years. The currency is behaving as if Japan were a 3rd world country – whereas it is actually the 3rd largest economy in the world. Clearly, something is very wrong.

Asia’s debt crisis starts to approach its endgame as the yen continues to tumble Read More

Bond markets reach “The End of the Beginning” as traders finally realise rates will be higher for longer

300+ years of Bank of England data shows that interest rates are typically inflation plus 2.5%. At today’s level, this would imply – US rates would be 3.7% + 2.5% = 6.2%: Japan would be 3.2% + 2.5% = 5.7%: Eurozone rates would be 5.3% + 2.5% = 7.8%; UK rates would be 6.7% + 2.5% = 9.2%

Bond markets reach “The End of the Beginning” as traders finally realise rates will be higher for longer Read More

Asia’s debt crisis edges nearer, as Japan’s interest rates rise and China’s property bubble bursts

Bubbles are great fun while they last. But they are much less fun when they burst. For the past 20 years, central bank stimulus has created some of the largest bubbles ever seen. But now, led by developments in Japan and China, they are bursting

Asia’s debt crisis edges nearer, as Japan’s interest rates rise and China’s property bubble bursts Read More

An Asian debt crisis would shake the global economy, now the ‘Presidential Cycle’ effect is over

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.

An Asian debt crisis would shake the global economy, now the ‘Presidential Cycle’ effect is over Read More

FT Letters - Jackson Hole comment by Paul Hodges

Today’s financial crisis confirms that “failing to plan, equals planning to fail”

Companies and investors need to invest time now on having a genuine debate about the risks ahead. The regulatory failures of the past few days highlight what can quickly go wrong, if one hasn’t war-gamed out potential risks. As the saying goes, “Failing to plan, equals planning to fail”.

Today’s financial crisis confirms that “failing to plan, equals planning to fail” Read More

Interest rates break out of their 40-year downtrend – and start creating chaos in global markets

US inflation was last at 8.3% in January 1982. And then, the 10-year yield was 14.6%. History may not be a perfect guide, but it is the best we have. So it might be worth planning for rates to go much higher than most “experts” expect, now that they have broken out of their downtrend.

Interest rates break out of their 40-year downtrend – and start creating chaos in global markets Read More

Food costs and interest rates rise as energy and fertilizer supplies are hit by the invasion

It’s going to be a very difficult winter. Most of the world will be impacted as Europe bids up energy/food prices to keep its people warm and fed. And it would never have happened if policymakers had recognised the importance of geopolitics, energy markets and demographics.

Food costs and interest rates rise as energy and fertilizer supplies are hit by the invasion Read More

“We now understand better how little we understand about inflation”, Jay Powell, US Federal Reserve Chairman

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. 

“We now understand better how little we understand about inflation”, Jay Powell, US Federal Reserve Chairman Read More

US Supreme Court throws a lifeline to Democrats for the mid-term elections

Social and political issues were always more important than economics before the SuperCycle.  And now they are resurfacing again. Does an individual woman have the right to choose what to do with her body? Or can judges tell her what she can, and can’t do? It is early days, but many women may choose to vote Democrat because of this issue in November.

US Supreme Court throws a lifeline to Democrats for the mid-term elections Read More

US stocks set for long-term decline as Fed pivots to focus on “Putinflation”

Markets have returned to the 1970s. They have to cope with “Putinflation”, recession, rising interest rates and energy prices – as well as geopolitical and nuclear risk. Unfortunately, today’s traders do not even have the experience of the 1960s as a guide, having lived in a different world for 20 years.

US stocks set for long-term decline as Fed pivots to focus on “Putinflation” Read More

The chemicals industry continues to be the best leading indicator for the global economy

Central banks and investors believed stimulus programs had created a “New Paradigm” where asset prices would always increase. Now they are starting to realise that stimulus is irrelevant against the 3 Horsemen of the Apocalypse – China’s continuing battle with the pandemic, Russia’s invasion of Ukraine, and potential famine as rising gas/fertilizer prices mean farmers can’t afford to grow their crops or feed their animals.   

The chemicals industry continues to be the best leading indicator for the global economy Read More

Time to focus on the danger of corporate and household leverage as “subprime on steroids” comes to an end

The seeming genius of many private equity funds in recent years has been based on this ability to borrow at cheap rates during the ‘up’ part of the business cycle. Now we are heading into the ‘down’ cycle. And the central banks have abandoned Bernanke Theory and are back to worrying about inflation. So today’s excess leverage means many over-leveraged companies will go bust.

Time to focus on the danger of corporate and household leverage as “subprime on steroids” comes to an end Read More

The world’s real estate bubbles start to burst, as central banks pivot to focus on inflation

Problems in the housing market aren’t just confined to the US, UK, Germany and China. The average house price/income ratio is now back to the highest level since records began. And the problem for homeowners is that potential buyers are already starting to disappear as mortgage rates rise – and affordability reduces.

The world’s real estate bubbles start to burst, as central banks pivot to focus on inflation Read More

Time for demographics to replace economics, as Evergrande’s default marks the end of the central banks’ debt bubble

It is time for the central banks to give up their outdated economic models, and focus instead on the science of demographics. Their efforts to create economic growth by ‘printing babies’ have simply created a debt bubble. This will likely now burst as Evergrande goes bankrupt.

Time for demographics to replace economics, as Evergrande’s default marks the end of the central banks’ debt bubble Read More

Chemical industry data shows reflation remains hope, not reality

Western central bankers are convinced reflation and economic growth are finally underway as a result of their $14tn stimulus programmes.  But the best leading indicator for the global economy – capacity utilisation (CU%) in the global chemical industry – is saying they are wrong.  The CU% has an 88% correlation with actual GDP growth, far […]

Chemical industry data shows reflation remains hope, not reality Read More