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Cement Shen’s $563m ‘Peach Blossom Palace’ bankruptcy

The sight above may become more familiar as China’s new leadership seek to burst the property bubble.  It shows unfinished town houses on the Peach Blossom Palace estate in Fenghua city, south of Shanghai. They were built by local developer ‘Cement Shen’, whose Zhejiang Xingrun (ZX) property company went bust last month, owing Rmb3.5bn ($563m).  […]

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Fed Chair Yellen ignores demographics, goes back to stimulus

So, here we are again.  Each year it seems to take less and less time for the US Federal Reserve to give up on its confident New Year forecasts of economic recovery. New Fed Chair, Janet Yellen, argued in February that the weather was responsible for the economy’s poor performance.  But now she seems to have decided the […]

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China’s lending problems begin to worry wider world – too late

Suddenly, people are starting to talk about China and the risks it creates for the global economy.  There is a lifecycle to the way that such issues develop in the general consciousness, as John Mauldin has observed.  And so this development suggests that we are now well along the process, as highlighted in the chart above: […]

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Crimea referendum highlights growing geo-political risks

Markets have been remarkably calm ahead of Crimea’s planned Sunday referendum to leave Ukraine and join Russia.  Yet as Associated Press has reported: “The Group of 7 world leaders say they won’t recognize results of a referendum for the Crimea region to split from Ukraine and join Russia.  A statement from the seven nations released from […]

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5 years of stimulus have only delayed move to the New Normal

Coincidentally the blog began its 6-monthly review of global financial market performance on 7 March 2009, as the US market hit its post-Crisis bottom.  At this point, it was possible to hope that central banks would allow markets to resolve the issues that they themselves had created. After all, there would have been no subprime crash if the US Federal […]

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Central banks have “attempted to manipulate asset prices and financial makets”

“The proper role for monetary policy is to work behind the scenes to promote long-term growth and price stability, yet central banks have instead attempted to “manipulate asset prices and financial markets” to fine-tune their economies. “I do not think this is a particularly healthy state of affairs for the central banks or our economies. […]

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Sentiment weakens as US stock markets wait for more QE

Sentiment, as measured by the IeC Boom/Gloom Index has weakened considerably over the past 3 months as the chart shows: It peaked at 12 in November, hitting its highest level since before the 2008 Crisis began (blue column) It then drifted lower in December, before rallying back to 9 in the New Year But now […]

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“Reservations are no longer necessary at many high-end restaurants”

Think back a moment to September 16 2008.  Newly released transcripts analysed by the Wall Street Journal and Financial Times reveal for the first time what was really going on that day at the world’s most important central bank. Lehman Bros, one of Wall Street’s largest investment banks, had just gone bust.  Merrill Lynch, another giant, had […]

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“Bad news barrage sinks New Year consensus”

Markets stopped operating in their true role of providing price discovery sometime ago.  Instead, they became dominated by the central banks, determined to prove their theory that increased asset values can stimulate sustained economic recovery. They, of course, have the firepower to bend markets to their will.  Nobody else could have spent $16tn in this manner […]

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Aluminium shortage “temporary and artificial” says world’s largest buyer

When was the last time you told your customers that they would have to wait 570 days for delivery of material for which they have already paid? You’ve never done this?  Well, you need to take lessons from those super-smart people who own the aluminium warehouses, such as Goldman Sachs (pictured above by Reuters).  As the blog […]

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