European olefins move to monthly pricing

The blog warmly welcomes the move by players in the European olefins market to re-engage with monthly pricing. The rationale for its support is based upon the conclusion of the major report that International eChem produced 3 years ago, Pricing for Profit: “The cumulative impact of the current pricing mechanisms has caused the wider marketplace […]

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A final push on the piece of string

Yesterday the US Fed cut interest rates to an all-time low of 0% – 0.25%. Once again, Wall Street celebrated with a major rally, even though the move had more symbolic than practical purpose. It made it appear that the authorities were “doing something”, even though the evidence of previous rate cuts indicates they have […]

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UK housing starts “lowest since 1924″

The UK is expected to build just 135,000 houses this year, compared to 203,500 in 2007. This is the lowest level since 1924, when 87.000 houses were being built (excluding the war period). The outlook for 2009 is also poor, as many current projects date from before the start of the financial crisis. In turn, […]

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Lesson from Japan

Japan went through its “bubble years” in the 1980′s, with the Nikkei index peaking at 39000 (versus 8664 today). The blog well remembers standing in front of Tokyo’s Imperial Palace in Tokyo in 1988, when its land was said to be worth more than all of California. Since then, housing and stock market bubbles have […]

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Is this a V, U, W, or L-shaped recession?

There is now general agreement that we are in a global recession. The World Bank’s new ‘Global Economic Prospects’ report expects global GDP growth of only 2.5% this year, and just 0.9% growth for 2009. This is well below the 3% level that signals recession. And the Bank also forecasts that world trade will contract […]

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One rule for banks, another for manufacturers

The excellent Gretchen Morgenson makes a good point in her New York Times column today. As she puts it, “here in Bailout Nation, you’ll be surprised to learn, some of us are more equal than others”. Her argument is that Congress is operating to double standards. Last week, it refused to support $14bn of lending […]

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Soros on leverage

George Soros is one of the most successful investors in recent decades. The blog came across today a report of Soros’ graphic description of the dangers of having too much debt in a business, or personally: “Leverage was like driving along a straight, clear freeway with a sharp spike pointing from the centre of the […]

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The Age of Austerity

The world’s major retailers, particularly Wal-Mart and Tesco, keep a very close finger on the global economic pulse. They spotted looming recession 18 months ago – long before it became more widely apparent this year. Yesterday, Wal-Mart’s UK head went further, referring to “the dawning of the age of austerity”. He added that “this won’t […]

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INEOS obtains covenant waivers

INEOS has now confirmed that it has obtained the required covenant waivers from its banks. They had little choice, as pushing INEOS into bankruptcy would have destroyed value on a massive scale for everyone concerned. But as the blog expected, lenders successfully demanded an increased interest charge in exchange for their consent. Investors’ attention will […]

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European auto industry shuts down

Several European chemical companies have been undertaking surveys of likely near-term demand from the auto sector, and have been kind enough to share their conclusions with the blog. The results are not encouraging. It appears that every European car producer has announced plans for an extended Christmas shutdown of at least 2 weeks, compared to […]

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