The real challenge is a lack of challenge

We all remember the Hans Christian Andersen story about the Emperor with no clothes.  His subjects were told that only those who were stupid or incompetent would be unable to see his wonderful new suit. Of course, nobody wanted to appear stupid or incompetent.  So when the Emperor paraded in his new clothes, nobody wanted to tell him the obvious.  It was left to a child […]

Continue Reading

Russian downturn causes GM, Ford U-turn; EU slows despite discounts

August is a holiday month for Europe’s statisticians.  So we had to wait until yesterday for a combined summary of July and August’s EU auto sales.  As the chart shows, they indicate a new slowdown is underway after the more encouraging volumes at the start of the year: Sales were up only 5.6% in July and 2.1% in August (red square), […]

Continue Reading

Shiller warning suggests S&P 500 bubble coming to an end

Nobel Prizewinner Prof Robert Shiller correctly forecast the dot-com collapse in 2000, and the 2008 financial Crisis, using the chart above.  Now he is warning we risk a 3rd collapse. The problem is that Western central banks have undertaken the largest financial experiment in history.  Their policy has been to boost financial markets, particularly the US S&P 500 - the world’s […]

Continue Reading

US PVC exports tumble as demand weakens in key markets

The US PVC industry is hitting new problems, to add to the post-2006 collapse of the US housing market. Yet only 10 years ago, it was riding high.  Demand into housing (the main outlet) was at record levels thanks to subprime lending, and PVC production had just hit a record 7.3 million tonnes. Even after the financial Crisis, global […]

Continue Reading
Unwinding

Great Unwinding sees dollar rise, oil prices fall

The day after our China Economic Transformation webinar last week, Premier Li Keqiang confirmed its key message: “There’s already a lot of money in the pool, and we can’t rely on monetary stimulus to spur economic growth…Facing the New Normal state of the Chinese economy, we have remained level-headed and taken steps to tackle deep-seated challenges….in the […]

Continue Reading

Global stock markets still depend on low-cost money for support

The blog’s 6-monthly review of global stock markets highlights the narrow nature of the advance since September 2008, when the blog first began analysing developments.  It shows their performance since the pre-Crisis peak for each market, and the performance of the US 30-year Treasury bond. Remarkably, only the US, India, Germany and the UK stock markets […]

Continue Reading

US reaches ‘peak car’ moment as incentives, inventories rise, whilst fewer Americans carry driving licenses

The blog’s suggestion back in March that now would be a good time for US readers to buy a new car is looking more and more prescient.  As the head of American Honda explained to investors last month: “In addition to a heavy reliance on fleet sales to boost volumes, we are seeing some of our […]

Continue Reading

Great Unwinding of policymaker stimulus creates interest rate risk

Interest rate risk is rising in the developed economies as the Great Unwinding of policymaker stimulus continues.  Since the blog first highlighted this Unwinding last month: Oil prices have continued to tumble, with Brent now down over $15/bbl from its late-June peak The US$ has continued to rise from multi-year lows versus the yen, euro and pound And of course, […]

Continue Reading

US jobless dominated by Blacks, Hispanics and those without high school diplomas

Financial markets today only care about one thing - whether central banks will continue to provide more low-cost financing to support higher asset prices.  Thus markets liked last Friday’s weak US jobs report.  They hoped that the US Federal Reserve would slow its tapering process as a result. This inverted logic explains why bad news for the […]

Continue Reading

China Transformation webinar tomorrow

Today is Mid-Autumn Festival day in China, held to celebrate the harvest.  Traditionally it features the exchange of moon cakes filled with lotus paste and egg yolks, whilst children go to lantern parades. But in recent years, it has also become synonymous with corruption.   Silver moon cakes, as pictured above, became a common gift for […]

Continue Reading