Tag Archives | central banks

‘Bubble, bubble, toil and trouble’ as China, West’s policy diverge

Sometimes its good to take a step back from the day-to-day markets, and focus on the bigger picture.  Thus the chart looks at how markets have moved since the start of 2008 when the sub-prime bubble came to an end: Prices peaked in June/July 2008 as oil peaked at $147/bbl (blue line) and naphtha at $1147/t […]

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RingOfFire Jun14

China’s earthquake opens fault-lines in debt-fuelled ‘ring of fire’

We can all hope that China’s ‘collateral trade’ turns out not to be as big a problem as seems likely.  But history shows that this type of problem has a way of escalating once people start investigating more closely. Thus state-owned Citic revealed yesterday that it has lost $40m in the Qingdao scandal, as half of its […]

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Network effect leaves central banks fighting the real world

The blog first learnt about the network effect in the late 1990s, during the successful launch of the eBusiness platforms CheMatch and then ChemConnect.   Its Silicon Valley colleagues patiently explained that markets tended to move in predictable stages, once a new concept or product was launched: Everyone would initially jump on the bandwagon, not wanting […]

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Index Jun14

Financial market melt-up takes S&P 500 to new record

A year ago, the blog suggested that financial markets were reaching their most dangerous ‘melt-up’ stage, driven by investor complacency about the ability of central banks to protect them from any downturn.  This analysis was confirmed in November, when absurdly high prices were paid for works of modern art, smashing previous records. Gillian Tett of the Financial Times (another of […]

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Markets remain “volatile and challenging” says BASF chairman

Nothing has really changed over the past year.  That seems to be the key conclusion from the blog’s quarterly summary of company results for Q1. A year ago, BASF noted that “achieving our earnings target is significantly more challenging today than we had expected”.  This month, chairman Kurt Bock “warned the markets will remain volatile and […]

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Leaders need to “see around corners” in today’s VUCA world

The number “42″ was the answer to “the ultimate question of life” in the classic novel ‘The Hitchhiker’s Guide to the Universe’.  Yet as the supercomputer providing this answer then explained, it was a pointless exercise as nobody understood the meaning of the original question. The world’s policymakers are in the same position, although they don’t yet realise this.  They […]

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Demographics drive demand and fertility rates have fallen

A major debate is underway in Eurozone financial markets about the imminent approach of deflation.  As the chart above shows, Eurozone inflation has ben falling steadily for the past 2 years.  Yet most still fail to recognise that today’s demographics make this development more or less inevitable.  The Financial Times has kindly printed  the blog’s […]

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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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“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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Global economy approaches a T-junction

Intuition’s great benefit is that it provides a different perspective.  Thus the intuitive concept behind the launch of the IeC Downturn Monitor was that April 2011 would prove a watershed moment for policymakers’ Recovery Scenario after 2008′s financial crisis.  Their Scenario essentially had two elements: Acting as a ‘lender of last resort’ when the major banks stopped lending to each other and the […]

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