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Crisis Nov14a

Danger and Opportunity await as the financial Crisis returns

The Great Unwinding began with the change of economic direction in China.  So it makes good sense for businesses and investors to view developments with a Chinese perspective in mind.  This is particularly relevant as the Chinese word for Crisis contains 2 characters - Danger and Opportunity – as the picture shows. DANGER It is not hard to identify the key Danger from the […]

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Boom/Gloom Index suggests S&P 500 close to its peak

How long can the juggler keep all the balls in the air? That is the question that compels us to stand in the square and watch her skill at work. We have the same fascination watching central bankers at work – they similarly aim to keep financial markets aloft, to create their desired ‘wealth effect’. But we know that […]

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China sees $13.5bn of fake September ‘collateral trade’ invoices

China’s ‘collateral trade’ is still a major force in world markets for iron ore, copper and even plastics such as polyethylene.  September’s data suggests $13.5bn of fake invoices added 56% to the value of China’s exports to Hong Kong, as property developers strove to raise cash to finish their buildings. Full details of the trade […]

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“Welcome to the New Normal”

A blog reader has kindly sent the above cartoon from the financial pages of The Telegraph newspaper today. Clearly investors are beginning to share the blog’s analysis.

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Unwinding

IMF says economic growth may never return to pre-crisis levels

The Great Unwinding of policymakers’ failed stimulus programmes is now clearly underway in the global economy.  The headlines this week all focused on the latest International Monetary Fund (IMF) report: “IMF says economic growth may never return to pre-crisis levels.” And then, in response, the US Federal Reserve suddenly realised that the US economy was not […]

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Interest rate outlook more uncertain as Bill Gross leaves PIMCO

Last week’s departure of Bill Gross from his role as Chief Investment Officer at PIMCO is likely to prove a turning point for interest rates in the West, and probably around the world. Gross founded PIMCO (Pacific Investment Management Co) more than 40 years ago.  During this time he built its assets under management to around $2tn.   That is […]

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Polymer markets at risk if China’s ‘collateral trade’ unwinds

Global metal markets are at growing risk from developments in China’s ‘collateral trade’, as yesterday’s post highlighted.  Worryingly, so are products such as polyethylene and ethylene glycol, as it seems likely these have also been used as collateral more recently.  This will be bad news for producers already suffering from slowing demand: China’s economy continues to weaken as the […]

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China’s $10bn trade deal fraud hits iron ore and copper markets

Iron ore prices on China’s futures market were at 5-year lows yesterday.  Copper prices also weakened in Australia.  This adds to the blog’s concern that China’s ‘collateral trade’ market is getting closer and closer to its ‘moment of truth’. This will come as an awful shock to most outside observers, who have been led to believe China’s vast imports […]

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US Fed governor agrees it helped fund Alibaba bubble

The last days of a bubble are always the most fun.  And Alibaba’s New York market debut last Friday will be one of those to treasure and report to the grandchildren in decades to come.  There were so many elements to enjoy: The investment bankers got the price wrong by 40%, but will still walk away with […]

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US ethylene outages boost European and Asian PE producers

Polymer traders must be already counting their end-of-year bonuses, as the value of the US$ rises whilst crude oil prices weaken.  The biggest bonuses will likely go to polyethylene (PE) traders competing with US producers. The reason is that US ethylene spot prices are currently at record levels.  An astonishing 10% of US ethylene capacity has been out […]

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