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Buy on the rumour, sell on the news

“Buy on the rumour, sell on the news” is the classic indication of a weak market. A lack of follow-through buying reveals that market action is not supported by fundamentals, but only by sentiment and momentum. Friday’s 2.8% fall on the US S&P 500, in reaction to Thursday’s positive US GDP number, was therefore a […]

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Companies remain cautious on the outlook

The good news is that the stabilisation seen in Q2 has been maintained. But companies remain cautious on the outlook, to judge from Q3 reports. CEOs are sceptical about the impact of government stimulus efforts in the West, and fear demand will fall back as these end. The only optimists are in China and India. […]

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Computerised trading dominates crude oil markets

The purpose of liquidity in financial markets is to enable price discovery. But when super-fast computers take over the trading, that purpose disappears. Instead, we have today’s “correlation trading“. Olivier Jakob of PetroMatrix demonstrates this with the above chart, which shows Tuesday’s detailed trading patterns in WTI and the Dow Jones Index. Clearly, they are […]

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The limits of central bank lending

Over the past year, much of the Western financial system has been on life support. Now the European Central Bank (ECB), like its peers, is grappling with the question of ‘What happens next?’ ECB Board member Lorenzo Smaghi set out the key issues yesterday: • “Our role (as a central bank) is limited to the […]

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China exports deflation as it adds capacity

China will pump loans worth $1.3trn into its economy this year, equal to 1/3rd of GDP. Equally, by tying the yuan to the US$, China has achieved a major devaluation against major currencies such as the euro. The result has been that China’s Q3 GDP rose less in “nominal” terms than in “real” terms. Normally […]

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Oil hits $80/bbl

The blog should award itself a pat on the back, now its May forecast of $80/bbl crude has come true. And it is pleased to maintain its 100% record in forecasting the direction and level of oil prices. But it still regrets the lack of substance behind the so-called ‘correlation trade’ between oil, the US$ […]

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Free Webinar next week on the Budget Outlook

The blog’s new Budget Outlook is an independent view of the key issues which will impact chemical sales and margins in 2010. Previous Outlooks have stimulated much debate within the industry. We are therefore proposing to run a free 1 hour Webinar next week for blog readers, on Thursday 29 October at 15:00 GMT (16:00 […]

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Budgeting for a new normal

2010 should be a better year for the chemical industry, as demand grows in line with a recovery in global GDP. But a quick V-shaped return to the 2003-7 Boom years in terms of volumes/margins seems unlikely. Governments will worry about budget deficits, and may well scale down support for critical end-uses such as autos […]

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Housing markets to be slow next year, US Fed

In 2006, there were 2.2 million US housing starts. These were worth $35bn of chemical sales. Currently, and even with the support of an $8k tax credit, they are running at an annual rate of just 600k, worth $10bn. This is the lowest level since records began in 1960. Even in 1975, 1981 and 1981, […]

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China gains as world trade slows

Sometimes a picture is worth 1000 words. The chart above, from the New York Times, highlights the massive changes that are taking place in world trade flows. These are of critical importance to the chemical industry, one of the world’s most globalised businesses. • Firstly, the volume of world trade has fallen to 2006 levels, […]

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