The blog in 2014

Historians will probably agree that 2014 marked a turning point for the global economy. It was the year when China’s new leadership turned away from stimulus policies, which had been based on creating a wealth effect via a lending and property bubble.  The impact of this change of direction is still hardly recognised in mainstream […]

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A Christmas wish: focus on toilets to create growth in 2015

2.5bn people in the world still lack access to toilets, according to the World Health Organisation.  That’s down just 7% from the 2.7bn people without toilets in 1990. What have we been doing over the past 20 years to allow this terrible situation to continue?  Why have we not focused on this area as a […]

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Fed jumps in to boost stock markets, yet again

Every time US stock markets weaken on a day-to-day basis, the US Federal Reserve now jumps in to support them, as the chart above shows: We saw this first on October 16, when the S&P 500 fell 5% in a week to 1862.  In jumped Fed Governor James Bullard to calm market nerves by suggesting that the Fed should […]

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US home ownership back at 1995 level as decline continues

  Conventional wisdom seemed to think the US housing report was positive this week.  But analysis of the data makes it hard to see why. One confusion comes from media use of the ‘seasonally adjusted’ number.  But why do we need an adjustment, when we have data going back to 1959?  It simply creates more potential for error.  […]

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RingOfFire Jun14

Oil prices, Russia, open new fault-lines in the ‘Ring of Fire’

One by one, the fault-lines are opening in the debt-fuelled ‘Ring of Fire’ created by the central banks.  First published in June, the map above highlights where I believe these fault-lines run: China is the epicentre of the approaching earthquake – its manufacturing industry is now contracting  Russia is in financial crisis, with interest rates at […]

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70% of China’s auto dealers unprofitable, as lending curbs bite

Would anybody have believed these charts, if one had presented them as a forecast for auto sales a few years ago?  Clearly not: Everyone knew that Europe was one of the world’s top 2 markets, and China was very small Europe’s average incomes were around $40k, whereas China’s were less than $5k even in the […]

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IEA says oil price collapse could lead to “social upheaval or financial difficulties” in H1

Today’s collapse of commodity prices has the potential to cause a major financial crisis, as I first suggested back in June.  In fact, this would now be my Base Case.  But companies and investors have been lulled into complacency by unthinking ‘conventional wisdom’. This simply ignored the obvious fact that record levels of commodity prices could only […]

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Rubber ball

Oil prices continue bouncing down the stairs to lower levels

Brent oil prices have reached the “$70/bbl and probably lower” level that I forecast in August.  So we now need to think about where they go next.  Luckily, the chart above can still guide us, as it has done since September 2010. As readers will remember, I first forecast the collapse on 18 August.  I then followed this post with a detailed analysis […]

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The China middle class myth moves us closer to protectionism

Believing conventional wisdom can destroy your profits.  One example is playing out in the oil market before our eyes. Another example is the myth that China was about to become middle class.  Yet income levels always made this impossible: More than 9 out of 10 Chinese earn less than $20/day By comparison, the basic state pension in the UK is 25% higher, at over […]

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Gulf countries risk losing US defence shield if oil prices stay high

I imagine a version of this chart has been keeping ministers awake at nights in Riyadh and the other Gulf Co-Operation Countries (GCC) in recent months.  “How did we ever allow Canada to supply more oil than OPEC to the US?” they must be worrying. ”What did we think we were doing?” This might not be quite […]

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