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China can’t continue to use exports to compensate for its failure to resolve its demographic crisis. As a new IMF book warns, there is a growing risk of “A prolonged slowdown with weak domestic demand and deflation. The longer you wait, the bigger the problem becomes.”
EU agrees cap on China’s hybrid car imports, chemicals next on the list Read More
Europe has left it very late to start protecting its own industries. If it doesn’t move now, key industries such as chemicals and autos will continue to disappear.
EU set to launch trade ‘bazooka’ to combat Chinese imports 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
Future demand for chemicals is no longer going to be based on a multiple of GDP growth. Instead, companies need to develop new offerings that help customers to ‘do more with less’.
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
Please join us for the next ACS Chemicals & Economy webinar next Thursday – Responding to Uncertainty
ACS Chemistry & the Economy webinar next Thursday – Responding to Uncertainty 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 key issue is that demand growth is slowing due to the rise of the Perennials 55+ generation. They are a ‘replacement economy’. And the major disruption underway in trade patterns increases the risk of buying imports.
Services become key as markets return to a more local-for-local focus Read More
It is hard to accept the IEA’s belief that petchems can drive future oil market growth. Demographics mean that global petchem demand is probably already close to peaking. And ethane is an increasingly competitive alternative to high-priced oil and naphtha
Wishful thinking prompts IEA’s belief that petchems can drive oil demand growth Read More
The chemical industry is critical for the entire European economy. As the European Commission itself has acknowledged, “the sector is vital to Europe’s economy, underpinning the manufacture of almost all goods”
The good news is that we do know what needs to be done. But so far, the necessary sense of urgency is missing at government level. The industry can’t afford another 2 years of talking. It needs action and support now, if it is to survive.
European chemical companies face critical decisions about their future 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.
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
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
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 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
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
Demographic changes are transforming the nature of demand in all major industries. The highly-profitable middle market is disappearing. Companies and investors need to abandon ‘business as usual’ strategies and refocus on these major changes.
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.
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
Smartphones highlight major shifts underway in consumer markets. The cost of living crisis means people are only buying what they “need”, and cutting back on what they only “want”. And today’s ageing populations mean there are fewer young people to make their “first purchase”.
Apple loses its Top 5 position in China as price competition intensifies Read More
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.
The two super-critical ‘dividends’ of the past 30 years are now reversing. The ‘demographic dividend’ of constant growth and low inflation created by the BabyBoom generation has ended, along with the ‘peace dividend’ created by the end of the Cold War in 1989
It’s our 17th birthday – and the world is looking very different from when we started 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.
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
Restructuring, repositioning and rethinking are now essential for the industry’s survival.
The Antwerp Declaration is set to transform Europe’s chemical industry Read More
We are living in very uncertain times. Major wars are underway in Ukraine and Middle East. And the concept of ‘Business as Usual’ is returning to the 1970s model – of disruption and military conflicts.
Demand patterns are changing rapidly. We now have a demographic deficit, rather than a dividend. And the peace dividend has also disappeared.
The demographic and peace dividends created by the Boomer SuperCycle are disappearing Read More
The growing disruption in the Suez and Panama Canals is set to encourage more companies to move to ‘local for local’ supply chains. These are not only more resilient, but also make firms more agile – and reduce their carbon emissions.
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.
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.
We don’t often use the word “impossible” in the newsletter. But in this case, it is clearly impossible for GDP to continue to grow in the major Western economies.
Demographics are destiny for the global economy, as central banks start to realise Read More
Essentially, the central banks thought that unlimited amounts of free money could reverse the impact of ageing populations. WeWork’s bankruptcy suggests that the bills for this mistake are now coming due, after 20 years of what the Wall Street Journal called “The most reckless monetary and fiscal experiment in history”
WeWork’s bankruptcy marks the beginning of the end for the stimulus economy 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
Taylor Swift’s concerts are creating massive short-term demand as people reconnect after lockdowns. But the chemical industry is warning that deflation could be round the corner, due to the over-capacity created by 20 years of stimulus
Chemicals confirm deflationary pressures are building around the world Read More
Central banks have spent 15 years telling us that debt and demographics “don’t matter”. They claimed they could always create demand via stimulus. But now the policy has run out of road. Homeowners who thought mortgage rates would stay low forever, will be the ones to suffer
Bond yields start to go back to the future as stimulus policies unwind Read More
The Ukraine war highlights how the real world can often be a very messy place. Issues such as geopolitics and demographics aren’t easy to understand. It can be hard to understand the detail of how key industries and markets are operating.
So it’s no surprise that most policymakers have preferred to stay in the world of theory.
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.
Smartphone sales hit new low as world moves into its first “demand recession” Read More
‘Business as usual’ has been a great strategy for the past 40 years. But nothing lasts forever. It has now – like the central banks’ stimulus policies – hit the inevitable brick wall.
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.
Global economy set to go ex-growth as world population hits 8bn Read More
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 US is moving into recession as the Atlanta Fed chart confirms. Chemicals have been warning of this for some time. But policymakers and commentators remain in Denial about the economy. They prefer to focus on their computer models, and ignore the real world outside their window.
The transformation period is a wonderful opportunity to reset the clock and start a new race.
Industry now needs to step up, if Net Zero is to be achieved Read More
The Federal Reserve can’t control the fallout from the bursting of China’s ‘subprime on steroids’ real estate bubble
The Fed’s stock market bubble is at risk as China bursts its real estate bubble Read More
The blog has now been running for 14 years since the first post was written from Thailand at the end of June 2007. And quite a lot has happened since then: There was the 2008 financial crisis, one of the
The blog’s 14th birthday – and the New Normal world it predicted has arrived Read More
“Investing illusions can continue for a surprisingly long time”, Warren Buffett Read More
Investor mania is a classic sign of a late-stage bubble Read More
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Rising uncertainty hits market sentiment and prices Read More
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Biden’s plain-speaking will return markets to reality Read More
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2021 unlikely to see a quick return to ‘business as usual’ Read More
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OPEC and the Federal Reserve hold off reality for a (little) longer Read More
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“Everything is for the best, in this best of all possible worlds” Read More
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Yellen’s nomination for Treasury Secretary takes markets into peak “greed trade” mode Read More
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What would 4 years of President Biden mean for financial markets? Read More