Archive | February, 2012

The changing landscape for manufacturers

The New Normal involves three major transformations in the nature of consumer markets: • The increasing size of the New Old 55+ age group in the West • Too many young people struggling with higher unemployment • Large number of people moving out of poverty in the developing world These are the great opportunities for […]

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5 Risks to China’s growth story

China’s economic growth has become more and more unbalanced over the past 10 years, as we discussed in chapter 6 of Boom, Gloom and the New Normal. Its domestic consumption is now only around a third of GDP, compared to 50% a decade ago. Instead, the leadership has focused on achieving growth via exports and […]

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Demand declines as Federal Reserve fuels oil price rise

The Wall Street Journal carried an interesting opinion piece on Friday, assessing current market conditions from the viewpoint of the film character, Forrest Gump. Gump’s key insight is that “Stupid is as stupid does”. Thus the Journal noted: “Oil staged its last price surge along with other commodity prices when the Fed revved up its […]

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Oil prices hit the top of their triangle

Oil prices are poised at a critical point. As the chart shows, the recent rally has taken them to the top of the triangle formation that has built up over the past decade. Players now need to decide if they are confident enough to push prices into higher ground. A lot of different reasons have […]

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Financial market correlation hits new peak

The US S&P 500 is the most important stock index in the world. It contains 500 different major companies, in a wide variety of industries, and has been calculated since 1957. There has never been a day when all 500 stocks moved in the same direction. This is not surprising, as good news for one […]

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US oil markets at a turning point

An excellent new report from Citi’s commodities team suggests the US supply/demand balance for crude oil is undergoing fundamental change. Importantly, they also argue that the concept of ‘peak oil is being buried’, and add: “The belief that global oil production has peaked, or is on the cusp of doing so, has underpinned much of […]

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Auto sales have slow start in January

January was not a great month for auto sales in the 3 major markets of the USA, EU and China. These amount to over 50% of global auto sales, and are a key indicator of underlying consumer demand. As the chart shows, sales were just 3m (red square), down from 3.2m (green line) in 2011: […]

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Déjà vu all over again in petchem markets

This time last year, the petchem industry stood on the edge of an unseen precipice. Life seemed good. Prices were racing ahead and demand appeared buoyant. But in reality the buyers were only buying forward to protect margins, whilst end-user demand was slowing fast. This year, the blog fears, we may be about to take […]

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Greece’s problems lead to EU auto industry job cuts

Greece’s debt default saga seems never-ending. And it is tempting to hope that it only matters to those suffering in Greece and the PIIGS countries (Portugal, Italy, Ireland, Greece, Spain). But a look at auto sales trends since 2005 gives a different picture. As the chart shows, based on ACEA data, sales in the 5 […]

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US PE exporters face more competition in Brazil

As promised, the blog looks today at the performance of US polyethylene (PE) exporters in Brazil. It was the fastest-growing of the major markets in 2011, as the wider economy benefitted from China’s demand. Since 2008, Brazil’s PE net imports have grown 78%, from 445KT to 793KT in 2011. But as the chart shows (based […]

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