A major new report from consultants McKinsey confirms my concerns over the dramatic increase in global debt levels since stimulus policies began in 2008. As their chart above highlights: Global debt has risen by $57tn to $199tn since 2007, nearly 3x global GDP Government debt is up by $25tn, with three-quarters of this in the developed […]
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Increasing volatility in major Western financial markets suggests they are struggling to maintain their momentum. It is certainly hard to be very optimistic about the outlook for the major Western stock markets this year. The reason is that investors are still failing to think about political risk. They continue to believe, as they did a year ago, […]
In March 2007, the Financial Times kindly published a letter from me arguing that the US Federal Reserve seemed “to confuse being market-friendly with being friendly to markets“, and had forgotten “The famous dictum of William McChesney, the long-serving Fed chairman in the 1960s, that “the job of the Federal Reserve is to take away the punch […]
Every time US stock markets weaken on a day-to-day basis, the US Federal Reserve now jumps in to support them, as the chart above shows: We saw this first on October 16, when the S&P 500 fell 5% in a week to 1862. In jumped Fed Governor James Bullard to calm market nerves by suggesting that the Fed should […]
I had a breakfast meeting yesterday with the investment head of one of the world’s major asset managers. He wanted to understand more about our Great Unwinding concept, and our correct mid-August forecast of $70/bbl oil prices. After that, we went on to discuss two critical and related areas: Would the oil price stay at today’s […]
“The basic function of a central bank is to defend the value of the currency.” Paul Volcker was the great US central banker of our time. Unlike Alan Greenspan and Ben Bernanke, he believed in taking firm action to avoid crises, rather than trusting in financial markets to regulate themselves. He also believed that politicians had […]
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 […]
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 […]
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 […]
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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Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry.
The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts.
Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.