Tag Archives | financial markets

Market volatility jumps as Great Unwinding continues

As I have feared, major volatility is developing in financial and chemical markets, as the Great Unwinding of policymaker stimulus continues.  The chart above shows the dramatic increase in the benchmark portfolio since the Unwinding began in mid-August: There was very little volatility from January until August, with prices generally remaining within +/- 10% Volatility then […]

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Hedge funds moving away from ‘buy on the dips’ strategy

In recent years, financial markets have believed that “everything is for the best in this best of all possible worlds“.  Good news has taken markets higher.  So has bad news – as investors assume policymakers will apply more stimulus. As a result, a whole generation of managers and analysts has grown up without having to learn the fundamentals of supply/demand analysis.  And […]

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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 […]

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China’s president highlights ‘new normal’ of economic growth

China’s President Xi Jinping became the first world leader to highlight the move into a “new normal” at the weekend: “China is still in a significant period of strategic opportunity. We must boost our confidence, adapt to the new normal condition based on the characteristics of China’s economic growth in the current phase and stay cool-minded” “Through […]

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China’s struggle for a new economy

“To most outsiders the language of official declarations is mind-numbing. Yet, having listened to Premier Li Keqiang and vice-premier Zhang Gaoli, I found (their plans) at least analytically convincing. They clearly recognise the need for decisive action in response to the challenges faced. What they want to do also makes good sense both on economic […]

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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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US oil inventories remain near record levels

Once upon a time, financial markets reflected supply and demand balances. Some players, the speculators, would use them to try and anticipate changes in these balances. Some players, the producers and consumers, used them to help stabilise their margins. From time to time, the balance between the stabilisers and the speculators would be lost. Markets […]

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Oil “would be $30/bbl” without financial speculators

The blog’s argument that oil prices are now being entirely driven by financial market speculation has won support from one of the main state oil trading companies. ICIS news reports that the CEO of SOCAR Trading (State Oil Company of Azerbaijan Republic) claimed that the “rise in crude and other commodity prices, resulted principally from […]

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UK to tax bank bonuses at 90%

“The more things change, the more they stay the same“. Or, as the blog’s French-speaking readership might say, “plus ça change, plus c’est la même chose“. When the blog started work in the chemical industry, in 1978, it was possible to pay up to 114% of one’s income as tax in the UK, if one […]

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UK to tax bankers’ bonuses

UK Finance Minister Alistair Darling is widely reported today as being about to announce a ‘super-tax’ on bonuses paid to bankers working in the UK. The government’s argument, notes the BBC’s Robert Peston, is that “Investment banks are making exceptional profits, as a result of the intervention of government and the Bank of England to […]

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