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The real challenge is a lack of challenge

We all remember the Hans Christian Andersen story about the Emperor with no clothes.  His subjects were told that only those who were stupid or incompetent would be unable to see his wonderful new suit. Of course, nobody wanted to appear stupid or incompetent.  So when the Emperor paraded in his new clothes, nobody wanted to tell him the obvious.  It was left to a child […]

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US jobless dominated by Blacks, Hispanics and those without high school diplomas

Financial markets today only care about one thing - whether central banks will continue to provide more low-cost financing to support higher asset prices.  Thus markets liked last Friday’s weak US jobs report.  They hoped that the US Federal Reserve would slow its tapering process as a result. This inverted logic explains why bad news for the […]

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Boom/Gloom Index tumbles as S&P 500 hits record

The stock market used to be a good leading indicator for the economy.  But that was before the central banks decided to manipulate it for their own purposes.  As then US Federal Reserve Chairman boasted 3 years ago on launching their second round of money-printing: “Policies have contributed to a stronger stock market just as […]

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August highlights

Many readers have been taking a well-earned break over the past few weeks.   As usual, therefore, the blog is highlighting key posts during August, to help you catch up as you return to the office. Economic outlook:  Great Unwinding of stimulus underway.  Q2 results show slowing growth.  US retail sales decline in line with incomes, […]

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“Serious economic cooling-off” makes China’s GDP likely to go negative, again

We all know that China’s published GDP figures are meaningless.  China’s premier, Li Keqiang, has told us so.  And common sense tells us that no country, large or small, can possibly produce accurate GDP data within 2 weeks of the end of a quarter.  Nor is it possible to believe that this data never needs to […]

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US, Japan consumer spend falls, deflation threatens Eurozone

We are now two-thirds of the way through 2014, and critical decisions are looming for companies and investors.  Do they give central banks one more chance to stimulate growth?  And are they prepared to trust policymakers to avoid a major geopolitical crisis in the Ukraine? Or do they decide that ‘enough is enough’, and that […]

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China economic rebalancing will take at least 10 years

We must all hope that new economic policies now being implemented in China are successful.  The alternative, of a debt implosion, is too awful to contemplate.  But as China’s state-owned media continually remind us, the transition is likely to prove extremely difficult. An important interview with the deputy head of the National Economic Research Institute, Wang […]

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US fracking demand creates price volatility for hydrochloric acid

Fracking has completely changed the outlook for US natural gas supplies, as the above chart from the latest Energy Information Agency 2014 annual report shows: It forecasts a 56% increase in total natural gas production from 2012 to 2040 This is largely due to growth in shale gas (green) and tight gas (brown) Shale gas output […]

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Modi highlights toilets in India’s Independence Day speech

The Indian Prime Minister’s address on Independence Day is the major event of the political year, equal to the US President’s ‘State of the Union’ speech.  It was particularly important this year as India has a new reforming prime minister in Narendra Modi. It it is thus hugely significant that top of his agenda was opening up the country […]

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The Great Unwinding of policymaker stimulus has begun

Large economies are like supertankers.  There are no brakes to use if you want to change direction in a hurry.  Instead, you have to put the engine into reverse, and hope you can slow down fast enough to avoid the rocks. That is what happened in China last month, as the new leadership began to […]

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