Helping you navigate the new normal since 2001
European and Asian buyers need to worry about whether US exports of transport fuels will continue in the autumn as the US midterm elections loom. The risk is that the White House won’t want the domestic market to go short to support exports.
Oil product shortages and price hikes seem inevitable as Gulf War moves into 6th month Read More
Two major wars are underway in Europe and the Arabian Gulf. The IEA continues to warn that they have already created “the largest energy supply disruption in history”. And now, it seems financial markets are waking up to the major risks created by the $2.6tn AI bubble
If Trump now walks away, he will leave Iran with control of Hormuz. But he will need a lot of ‘boots on the ground’ to invade a country of 93 million people.. As history confirms, air power alone is unlikely to win the war
Brent returns to $100/bbl, with 25% of global output now impacted by war Read More
Apple’s massive price rises highlight demand destruction in action. Suddenly, prices are going up, not down. The longer the wars and the AI bubble continue, the more prices and inflation will rise as supplies reduce
Smartphone sales collapse confirms War and AI-related demand destruction is now underway Read More
We are nearing crunch time for vital energy supplies of transport fuels and natural gas. Europe’s gas storage for the winter was just 28% full when refilling for the winter began in April. And around the world, energy supplies are getting tighter by the day.
Hormuz fighting, Russia’s fuel crisis, highlight risks to global fuel and gas supplies Read More
There are major upside risks on crude oil and product pricing as we head into H2. Inventories are very low, with no margin for error. And nobody knows whether the current US-Iran talks will actually end in a long-term agreement.
Major upside risks remain for oil and product pricing in H2 Read More
Financial markets think the oil crisis created by the Hormuz closure is over. But in reality, the risk of major shortages by Q4 is actually increasing. Oil inventories are near tank bottoms. And Hormuz transits are still only a fraction of the pre-invasion level.
Ras Laffan explosion, Iranian/US attacks, confirm restart risks for Hormuz plants Read More
The question is whether normal volumes of oil and gas will now start to flow again though the Strait? If they don’t, then an increasing number of major storage points will join Cushing in being at ‘tank bottoms’. And rationing will start to become inevitable, as the IEA warned in April.
Trump confirms oil reserves are down to just 4 weeks Read More
Oil companies are warning that “the US Strategic Petroleum Reserve is going to be precariously low. What comes next is higher prices. We are getting closer to the bottom. July is likely the pain point when the market turns.”
Hormuz closure pressures global oil reserves and food supplies Read More
The World Bank, IMF, IEA and WTO have all warned that the crisis risks spiralling out of control:
“If shipping flows do not return to normal, continued rapid depletion of global oil inventories ahead of peak summer oil demand in the Northern Hemisphere would present increasing risks for fuel security, market conditions, and broader economic resilience.”
Global risks rise as Hormuz remains shut and supply chains start to buckle Read More
US inflation risks are rising as the Hormuz closure enters its 4th month. Inflation rose to 3.8% in April. It was just 2.4% in February before the US/Israel war began. And the upward trend is set to continue
US inflation risks rise as Hormuz closure enters 4th month Read More
Financial markets are assuming the Strait will reopen this month, and free passage resume in June. If this is delayed, the risks of a global downturn to rival 2008 are rising.
Hopes rise for an early return to free passage in the Strait of Hormuz Read More
Petrochemical prices are warning of major inflation risks ahead due to the crisis in the Strait. They confirm we need to move back to a world of ‘local-for-local’ supply chains. The question is how quickly these can be put in place?
Petchem price rises confirm inflation risk as Strait of Hormuz remains closed Read More
As with Covid in March 2020, a ‘wake-up call’ is now about to hit most Western governments. Critical oil and gas-based products are at increasing risk of becoming unaffordable, or unobtainable.
Oil and product prices set to be ‘higher for longer’ as Hormuz remains closed Read More
The IMF is warning that “Heightened macro risks and the prospect of tighter monetary policy could trigger a sudden repricing by financial markets—with much lower asset valuations, higher risk premia, more capital flight, and dollar appreciation”.
IMF warns on inflation and recession risks, as Iran war continues Read More
Europe is facing its first major supply crisis, on jet fuel. Prices have already doubled. And now the IEA is warning, “Several European countries may start to face shortages of jet fuel in the next 6 weeks”.
Iran war starts to threaten key parts of the global economy Read More
Smartphone markets are essentially acting as the ‘canary in the coalmine’, warning us that the global economy is still only at the start of suffering a major shock.
Hormuz crisis, memory-chip costs, will reshape the smartphone market Read More
Today’s oil/natural gas price rises will likely repeat previous ‘boom and bust’ cycles. Companies therefore need to (a) prepare for the short-term ‘boom’ and (b) plan in detail for the potential recessionary ‘bust’ which will follow it.
Strait of Hormuz closure risks major economic impact Read More
The Middle East crisis highlights the need for Europe to rebuild its competitive edge. This will need new business models, to address today’s market needs. This will create major new opportunities for forward looking companies
EU’s new ‘One Europe, One Market’ strategy set to challenge China, USA Read More
As the BBC warns: “The greatest danger now is that President Trump, having amassed this powerful force close to Iran’s borders, decides he must act or lose face, and a war begins with no clear end-state and with unpredictable and potentially damaging repercussions.”
If Europe’s chemical industry disappears, the whole economy will be at risk. This week’s Antwerp Summit needs to focus on kick-starting its recovery.
Antwerp EU Summit holds key to Europe’s chemical industry future Read More
Europeans are the only ones still operating on the basis of a rules-based international order. As France’s President Macron warned last week, we have to be much more realistic. We need “to protect our chemical industry, our industries – because they are being literally killed.”
INEOS bond price slide confirms chemicals are in Crisis Read More
2008 saw the US subprime crisis become the Great Financial Crisis. Now 2026 seems set to be the year when China hopes to solve its ‘subprime on steroids’ crisis. But its fundamental problem – the lack of babies – seems as far from solution as ever.
US automakers have been around a long time. It is too early to write them off. But Trump’s EV restrictions and their lack of robotaxi options suggests they risk running out of road sooner rather than later.
US automakers running out of road due to lack of EV and robotaxi options Read More
Yesterday’s world is fast disappearing. Future Winners will be those who develop the new business models needed today.
One door opens as another closes for the chemical industry Read More
Tariffs, like interest rate changes, will take 12-18 months to work through the global economy. As always, the chemicals industry is providing early warning of what is around the corner in 2026.
President Trump’s tariffs change chemical industry business models Read More
A second Asian Financial Crisis would be a much bigger issue than in 1997. It would quickly impact 3 of the world’s Top 5 economies. And it would quickly panic investors in N America and Europe. Unfortunately, there are still no signs that policymakers realise the risks they are running.
An Asian Financial Crisis 2.0? More warning signs appear Read More
The good news is that change is finally starting to happen. Last week, the European Parliament voted to simplify reporting for most companies. It also accepted the need to balance its Green Deal ambitions with the need for Europe’s economy to remain competitive.
INEOS files anti-dumping suits as European chemicals crisis worsens Read More
Companies have to focus on managing the things they can control. Essentially, this involves a return to the national/regional business model that operated until 1989
Survival is the first priority for European chemicals Read More
As the EU Commission President warned earlier this month, “Battlelines for a new world order based on power are being drawn right now. Yes, Europe must fight.”
The chemicals industry is key to winning this fight. It is now time for governments to step up and support it.
Petrochemicals has become a major battlefield for producers in China, the USA and the Middle East. They are the ‘elephants in the market’. And so it makes sense for Europe to focus instead on ‘local-for-local’ opportunities.
The end of globalisation creates new opportunities for European companies Read More
The problems have been mounting for years. The difference today is that time is running out. New business models based on a return to local-for-local production are now essential. And the industry also needs to pivot to a more service-based and solution-oriented approach
Slowing demand and tariffs add to Europe’s chemical industry crisis Read More
Europe cannot allow its chemical industry to close. That would risk the collapse of its economy as the European Commission confirms. So we are likely heading back to the Trade Wars of the 1930s, with protectionism the probable outcome.
House market crashes usually start slowly, as sellers hold out for a price recovery that never comes. But then, the risk is that prices begin to slide as the 3Ds – Divorce, Debt and Death – create forced sellers.
Geopolitics have now replaced economics as the key driver for decisions. We are going back to the world of the Cold War before the fall of the Berlin Wall in 1989. It seems likely to be a very bumpy ride.
Chemicals hit as Trump’s Tariff War becomes a Trade War Read More
Roman Emperors used to distract people with “bread and circuses”. Today, it seems Bitcoin is playing this role. The Tariff War is at major risk of repeating 1930’s Smoot Hawley Tariff Act. It introduced tariffs to “protect” the economy. And it led directly to the Great Depression.
Borrowing makes a lot of sense when interest rates and inflation are low. But now, both are returning to more normal levels. This will increase default risk, as companies and people with too much debt find it difficult to make their repayments.
Bond vigilantes start to push interest rates higher – and impact auto/housing markets Read More
Republicans are racing to finish the draft budget by Memorial Day at the end of the month. Bond investors can be forgiven for getting nervous about who is going to pay the bill for Trump’s tariff war and tax cuts.
President Trump’s tariff war and planned tax cuts reawaken the ‘bond vigilantes’ Read More
China is Trump’s main target. He has claimed that China will pay the extra cost. But US consumers know better. They rushed to buy in March before prices rose. Q1 US sales were up 12% as Apple flew-in 1.5m iPhones ahead of the start of the tariffs.
President Trump’s Tariff War will soon lead to empty shelves at Wal-Mart, Target, Home Depot and many other stores this month. The famous saying “Well in May and go away” might be a prudent policy for investors.
Last week, the CEOs of Wal-Mart, Target & Home Depot told Trump that “His tariff and trade policy could disrupt supply chains, raise prices and empty shelves.” They suggested the disruptions would become obvious in early May – only 2 weeks away.
Trump’s Tariff War risks empty US shelves at Wal-Mart, Target, Home Depot Read More
The US economy is most at risk from the new policy. But President Reagan’s warning applies to every country trading with the US: “Then the worst happens: Markets shrink and collapse; businesses and industries shut down; and millions of people lose their jobs.”
President Trump’s trade war risks crashing the global economy Read More
We are back in a world where geopolitics, not economics, drives decision-making. It is a world of shifting alliances. And so defence spending is set to be a key growth area for the future as Cold War 2.0 begins.
The Rules for doing business have to change. As NATO’s leader, Mark Rutte, has warned, Europe needs to “Raise defense spending or start learning Russian”
6 ‘Rules for Success’ as tariff wars and Europe’s Clean Industrial Deal begin Read More
Commodity prices tend to go from boom to bust, and back again. The reason is that it takes years to build new capacity. Yet market conditions can change in months. So it would be no surprise at all if US natural gas markets now move back into another boom, and help to set off another round of inflation. .
US natural gas prices surge as La Niña replaces El Niño Read More
Living longer should be a great opportunity for all of us. Today’s problem is that policymakers around the world have refused to accept that demographics are destiny. All of us now have to face the challenge of unwinding the mess they have made.
China’s property crash has already destroyed $18tn of household wealth – where next? Read More
The smartphone market highlights how consumers are refocusing on ‘value for money’. Sales are falling as people hold onto their phones for longer. And more people are now happy to buy a cheaper used model.
Smartphone sales confirm that ‘value for money’ is starting to drive consumer demand Read More
“The Dumbest Trade War in History. Trump will impose 25% tariffs on Canada and Mexico for no good reason.” Wall Street Journal editorial
Deflation means the real value of debt increases. This is the opposite of what happens with inflation, when its real value reduces. China’s ageing and falling population therefore risks entering a debt trap. More and more money will be needed to refinance existing debt, accelerating the slowdown in the wider economy.
China risks entering a debt trap as its housing bubble continues to deflate Read More
Time is not on Europe’s side. Hopefully, this crisis will lead policymakers to take the urgent actions that are now essential.
Europe’s chemical industry, and its economy, faces existential challenge Read More
The collapse of Asia’s main currencies versus the US$ confirms that our world is increasingly dominated by known unknowns. We know what the key issues might be, but we can only guess at how they might turn out.
Europe is expected to have its coldest winter since Russia’s invasion of Ukraine, with the continent already dipping deeper than usual into gas storage as temperatures plummet.
Europe has been built through crisis since the end of World War 2. Today’s economic and political crises require a similar focus on reinvention.
Europe’s economy loses its “engine”, as France follows Germany into political turmoil Read More
Ageing BabyBoomers have been the main source of US population growth since 2005. So the need for global supply chains in disappearing, as the Boomers already own most of what they need. Trump’s tariff war means rapid and uncomfortable change now seems to lie ahead
Today’s population growth is mainly due to increasing life expectancy, not babies being born. And these Perennials 55+ are the most under-served generation in history. Companies who pivot to meet their needs are likely to be very successful
Companies need to refocus to avoid over-capacity problems ahead Read More
The world’s most successful investor, Warren Buffett, has been selling his shares. Apple was once half of his equity portfolio. But over the past year, he has sold 2/3rds of his holding. And Buffett doesn’t normally sell shares when he thinks the company will do well.
Smartphone markets could see major changes as Trump rolls out his tariffs Read More
Voter enthusiasm is usually key to election victory. And it is clear that Trump’s focus on immigration is enthusing many voters. But logic suggests that Kamala Harris’ focus on women’s reproductive rights makes her best placed to win, potentially with a larger majority than the polls suggest.
Markets are finally rediscovering their core role of price discovery. The US 10-year rate has risen 0.5% since the Fed cut its rate by 0.5%. And so the clock is now ticking for the biggest stock market bubble of our lifetimes.
NVIDIA moves to new highs, whilst nearly half of major US companies have no earnings Read More
The key is to rethink the business and become demand-led. And the good news is that companies are now starting to explore this option.
Chemicals industry starts to focus on Reinvention options at Berlin conference Read More
Oil market developments need very careful attention. If prices do now fall below $50/bbl, then central banks will likely rush to make major cuts in interest rates. And that will make deflation even more likely.
Deflation risks rise as OPEC aims to regain market share and cut oil prices Read More
OPEC+ countries have been playing the geopolitical card for the past 2 years. But their output cuts have allowed US producers to gain market share, with production up 1.2mbd. The hurricane season may support prices for a while. But the risks are all to the downside. And, of course, today’s higher prices are also helping to accelerate the energy transition.
The critical test is now ahead – making it happen. Companies, investors and policymakers need to borrow Winston Churchill’s famous motto, “Action this Day”.
As Sir Jim Ratcliffe has highlighted, the penalty for doing nothing will be closure.
Europe and the USA are unlikely to handover the EV market to China.
The next few years will likely be a bumpy ride for anyone involved in the auto industry and its supply chains.
Car Wars begin as US, EU and Turkey impose duties on Chinese electric vehicles Read More
OPEC would have been better advised to keep prices low to reduce non-OPEC supply and support demand. Instead, they are likely to face some difficult pricing decisions later in the year, if global growth continues to slow.
OPEC starts to refocus on market share as demand growth weakens Read More
Geopolitics are starting to fragment the global economy again. Economics are no longer the key driver for decisions. And so we need to refocus on the geopolitical risks ahead.
Chemical prices start to slide in Asia and Europe, as summer slowdown starts early Read More
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”.
As Hemingway noted, everyone is your friend when things are going well. But as countries and individuals are now starting to discover, the hangover when the party ends can be a painful experience.
Policymakers in the West and the East now find themselves adrift in increasingly stormy seas, without a compass. Their 2 key policy tools on trade and inflation have proved to be wrong. New thinking on the role of central banks is urgently required.
US Treasury Secretaries change their minds on trade and inflation policies Read More
The oil price has rallied 22% over the past 4 months, since it bottomed at $74/bbl. And slowly but surely, traders are being forced to realise that geopolitics are replacing economics as the key driver for world markets.
Oil and financial markets start to wake up to geopolitical reality Read More
“The entire commercial real estate space has to reset. No one really knows where the values are…You can’t raise rates this quickly and not expect a financial shock. We’re already working on transactions at 50% on the dollar: the equity is wiped out and half of the loan is wiped out.”
All happy property owners are alike, each unhappy owner is unhappy in their own way Read More
Resilience requires companies to refocus downstream and diversify their portfolio. They also need to be clear about the value proposition for their target market – are they providing Value, or Luxury? Rethinking, repositioning and restructuring are now all key to survival and future profit.
Rethinking, repositioning and restructuring are now essential for industry survival Read More
The next few years are therefore likely to be very different from anything that we have known in our working lives. Scenario planning is therefore essential in the face of this uncertainty.
investors are hoping Fed Chairman Jay Powell will soon signal a dramatic interest rate cut. And so they are positioning for a ‘Santa Claus’ rally. But most adults know that Santa Claus doesn’t really exist.
Investors hope (again) for interest rate cuts and a ‘Santa Claus rally’ Read More
Last week, the Japanese yen fell through the US$ : ¥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
Unfortunately, the problems look set to get worse rather than better. And the oil price rise caused by the Israel/Gaza crisis adds to the problems caused by the Ukraine invasion. A difficult winter, and 2024, lie ahead.
US 10-year interest rates are the world’s benchmark “risk-free” market. And as the chart shows, their yield has risen from 3.25% on 4 June to peak at 4.88% on Friday. Prices move inversely to yield. So that means prices have fallen 50% in 4 months.
Central banks start to lose control of interest rates, and housing markets feel the pain Read More
Most Americans can’t qualify for a mortgage today with prices and interest rates at generation-highs. Yet housing starts average a post-2007 record of 1.5m/month. Logic therefore suggests the US housing market is heading for a repeat of the 2008 crisis
US interest rate rises start to threaten the housing market bubble Read More
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
The chemical industry is now starting to warn us of a new risk. Europe is already suffering from a cost of living crisis. And people simply can’t afford to pay even higher prices for energy. At a certain point, therefore, demand may simply collapse, and usher in deflation
Europe’s chemicals market highlights move into recession, and risk of future deflation Read More
Either chemical markets are wrong or the financial markets are wrong, and obviously we think it’s the latter. People thought China was going to bounce back rapidly after Covid but China’s growth since 2008 was the product of massive stimulus and property speculation which couldn’t go on forever.
Chemicals, financial markets reach a fork in the road Read More
Food prices have stayed high due to the disruption caused by the war. They are unlikely to fall back quickly as the war continues and economic volatility intensifies.
Food prices set to remain volatile as the war continues and fertilizer costs remain high Read More
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.
Chemicals are telling us that all the world’s major economies are in a major downturn. And the downturn is starting to accelerate as companies cut back spending and fire people. Real estate, autos and other key areas are already suffering along with the banking system.
Chemical industry results confirm major recession is underway Read More
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
Japan has wasted trillions of yen with its failed stimulus programmes. Had it devoted even a tenth of this money to developing a proper Retraining programme for people in their 50s/60s, it wouldn’t now be facing a major debt and currency crisis. The rest of the Western world needs to rapidly learn from its mistake.
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.
“FANGs” lose their teeth as stock markets relearn their key role of price discovery Read More
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.
Chart of the Year – Our Sentiment Index proved a great guide to the S&P 500 in 2022 Read More
Buyers’ confidence has been key to the rise in house prices over the past decade. But that is now disappearing as central banks are forced to refocus on inflation risks, and interest & mortgage rates start to return to more normal levels.
Global housing markets risk major downturn, as interest rates return to more normal levels Read More
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.
As the head of Germany’s Employers’ Associations warned last month: “We are facing the biggest crisis the post-war Federal Republic has ever had. We have to be honest and say: First of all, we will lose the prosperity that we have had for years”.
The election’s timing could hardly be worse, with Johnson a caretaker premier. The UK should be working closely with the EU to combat the Russian threat to food and energy supplies. But instead, we may well see candidates attacking the EU to win constituency support
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
The history of the 1929 and 2000 downturns suggests the real pain is yet to come. Housing markets look terribly over-valued around the world, as I noted last month. And US consumer sentiment is at all-time lows. So most company earnings seem set to fall, with more than 60% of US CEOs now expecting to see a recession.
The Fed might change its mind and rush to support asset markets again. But that seems unlikely today. If it doesn’t, then debt, divorce and death will force an increasing number of people to sell their home. And if buyers continue to disappear, then sellers will have to continue cutting prices in order to try and achieve a sale, as the bubble finally bursts.
US housing bubble starts to deflate as sellers cut prices and mortgage rates rise Read More
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.
Energy and financial markets are exacerbating the risks ahead. Oil prices at current levels – as the chart confirms, they now account for more than 3% of global GDP – have historically led to recession as the chart shows. The reason is that consumers have to cut back on their discretionary spending, which drives economic growth, in order to heat their homes and travel to work and school. Today’s high levels of natural gas prices add to this risk.
We are facing a K-shaped recession. Companies and investors have a difficult time ahead. They not only have to navigate a potentially major downturn. But they also have to completely reposition their portfolios for the New Normal world that will follow.
Prepare for a K-shaped recession with Winners & Losers Read More
We can expect to see electricity prices fall along with CO2 emissions. And consumers will no longer be held to ransom by geopolitical events
As with Lehman’s bankruptcy in September 2008, there is a real risk that an Evergrande default could cause a stampede for the exits around the world.
An Evergrande default could reset the Chinese, and global, economy Read More
Central banks thought they could overcome demographic pressures from ageing populations by printing bucket-loads of money at zero interest rates to support housing and stock markets. Now they are finally realising this was wishful thinking.
Housing markets face long-term downturn as central banks abandon stimulus Read More
Tariffs are not a “silver bullet” and cannot solve the two key issues facing the US auto industry
Trump’s auto trade war adds to US demographic and debt headwinds Read More
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