« Oil markets set up another 'triangle' pattern | Main | Oil prices distorted by Wall St's computer trading »

BASF warns on the outlook

Bock.pngLast month, the blog suggested that CEOs might want to warn investors of the threat to earnings from high oil prices, unemployment and economic fragility.

BASF, the world's largest chemical company, have done exactly this today. New Chairman, Dr Kurt Bock warned:

"The economic risks remain: We continue to be concerned about the development of the euro as well as the debt situation in some European countries and the United States. Added to this is the persistently high oil price, which is having a negative impact on margins across our value chains and is leading to some customers being more cautious in their orders."

Investors were clearly unprepared for BASF's note of caution, and marked the share price down 5% in early trading. They clearly still believe in the SuperCycle theory, and want to believe that earnings will rise steadily over the next few years.

Dr Bock and BASF are to be congratulated for injecting a note of realism into this wishful thinking.

About

This page contains a single entry from the blog posted on July 28, 2011 4:22 PM.

The previous post in this blog was Oil markets set up another 'triangle' pattern.

The next post in this blog is Oil prices distorted by Wall St's computer trading.

Many more can be found on the main index page or by looking through the archives.