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Chemicals and the Economy

UK’s ageing population causes earnings to decline

The UK economy appears to be recovering well from the financial crisis.  But appearances can be deceptive. Certainly employment has risen for both men and women since 2009, and the jobless rate has fallen.  But new data yesterday from the Office for National Statistics highlights how, despite these achievements, total incomes have been falling in real […]

Q2 results highlight continued uncertainty over outlook

The chemical industry continues to be the best leading indicator we have for the global economy. Whilst stock markets were continuing to move higher during H1, its depressed level of capacity utilisation was signalling that the economy was far more fragile than generally realised. Company results for Q2 reflect this concern. Of course some, tied […]

US stock markets weaken as bond yields signal deflation is near

Increasing volatility in major Western financial markets suggests they are struggling to maintain their momentum. It is certainly hard to be very optimistic about the outlook for the major Western stock markets this year.  The reason is that investors are still failing to think about political risk.  They continue to believe, as they did a year ago, […]

Earnings disappoint again, as companies face challenge of slowing global growth

Most of today’s executives and policymakers grew up during the SuperCycle.  Many therefore continue to believe that a return to constant growth is somehow inevitable.   Sadly, of course, they are doomed to disappointment.      And disappointment is the predominant message from the blog’s usual quarterly review of company results.  Thus BASF note that “achieving our earnings target […]

Working women changed Western economy after 1970

Household consumption is 60% of western GDP. So any economic forecast that simply assumes it will always increase is likely to prove badly wrong as BabyBoomers move into retirement. Of equal importance is the impact of women’s role in the workforce. They added a major boost to demand during the Supercycle, as dual-income households became […]

CEOs start to warn on the outlook

European ethylene contract prices (CP) can be excellent indicators of profitability trends in the industry. Buyers were caught short during December, as inventories had been run down for year-end reasons. So when crude prices started rising, they had to rush to cover their positions. The panic was particularly strong as most companies had set sales […]

Q1 results confirm impact of high oil prices

A month ago, the blog suggested that chemical companies would “report excellent results for Q1“. Its regular quarterly round-up, below, shows this expectation has been confirmed. The blog was also pleased to see Huntsman CEO, Peter Huntsman, warn about the growing risks from high oil prices, unemployment, and economic fragility. As it noted last month, […]

P/E ratios drop back to more realistic levels

Source: www.chartoftheday.comThe price/earnings (P/E) ratio is the most fundamental measure of stock market value. If investors are optimistic, they will pay a high price per unit of earnings. If they are cautious, then the ratio will be lower. Thus the above chart from chartoftheday.com highlights a very significant secular change underway in investor mindsets. It […]

The “real bottom line” in the Financial Times

The blog has had a letter published in the FT this morning, which readers might like to see. It focuses on the problem of using EBITDA measures when analysing a company’s performance. It suggests that analysts should move away from their current reliance on this measure, which ignores the impact of important areas such as […]

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