“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 […]
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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.
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 […]
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 […]
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 […]
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 […]
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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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.