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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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China’s exports fall, imports collapse

China has just reported its first fall in exports for 7 years. These were still growing at 19.1% in October, but fell 2.2% in November. The suddenness of the downturn is also shown in the import figures, which were down 17.9% versus 2007. The numbers confirm the blog’s long-expressed fear that China, and the Asian […]

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Flawed thinking on financial risk

Having no risk management systems in place may be better than having the wrong systems in place. That seems to be one of the lessons from the recent financial meltdown. The reason for this apparent paradox is that awareness of risk makes people cautious. But if they wrongly believe that all risk has been removed, […]

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Insights from spell-check

A long-standing industry friend sent me an email overnight about ethylene derivative margins. Only after sending it, did he realise that spell-check had decided to change the word “derivative” to “debilitative”. But as he noted in a follow-up email, “amazing the insights of a spellchecker – I meant ‘derivative’ but maybe ‘debilitative’ is more of […]

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Dow cuts jobs, sets out future focus

Yesterday, Dow announced its new structure post the K-Dow JV and the planned acquisition of Rohm & Haas. This covered two main elements: • Implementation of November’s cost reduction announcement • Dow’s new organisation (the chart above) The cost reductions were severe, with a headline 11% of staff facing redundancy. 20 plants in “high-cost areas” […]

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Volatility rules

The end of a major trend is usually marked by a significant increase in volatility. This seems to be what is happening to the equity bull market that began back in 1982. It has weathered a number of storms over the years, as traders kept faith with the underlying trend. But this week’s Barrons, the […]

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Bankers turn to internet adultery

London’s largely-male banking community has a new way to pass its time, now financial markets have collapsed. According to Lucy Kellaway at the Financial Times, many are prospecting for adulterous affairs on a website called Illicit Encounters. Lucy says she has “picked up 247 men” since joining – including “a formerly powerful hedge fund manager, […]

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Credit crunch hits Formula One

Two months ago, the blog noted that the credit crunch was starting to impact sport. Then the issue was high leverage, with the UK’s Football Association warning that the $5bn debts of the Premier League clubs were “high-risk”. Now, its the turn of Formula One racing. Yesterday, Honda pulled out of the 2009 competition on […]

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Saudi plays hard-ball on oil prices

A month ago, with WTI at $70/bbl, the blog suggested that: “If refiners are forced to cut runs for December, then it would be hard for OPEC to cut its own production quickly enough to compensate. In that case, a $20 – $30/bbl range for crude, albeit temporarily, would not be impossible.” During November, prices […]

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Canada suspends Parliament

The downturn is starting to impact politics all over the world. As an example, take the recent sequence of events in Canada: • In October, Prime Minister Harper increased his vote, but still ended 12 seats short of a majority, after calling an early General Election • Last week, the opposition parties united against his […]

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