Tag Archives | stimulus

Oil prices break out of their triangle – downwards

The Great Unwinding of the central banks stimulus policies is underway, as discussed last week.  Oil markets have been one of the first to feel the change, as the chart shows, with prices finally falling out of the ‘triangle’ shape built up since 2008.  The value of the US$, interest rates and the S&P 500 […]

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The Great Unwinding of policymaker stimulus has begun

Large economies are like supertankers.  There are no brakes to use if you want to change direction in a hurry.  Instead, you have to put the engine into reverse, and hope you can slow down fast enough to avoid the rocks. That is what happened in China last month, as the new leadership began to […]

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China’s waning stimulus spells trouble for the world’s biggest car market

The blog’s latest post for the Financial Times, published on the BeyondBrics blog is below. By Paul Hodges of International eChem China’s July lending level of just Rmb 385bn ($62.6bn) has surprised financial markets, which were expecting an increase in stimulus. But bigger surprises may lie ahead. The strong link between lending and passenger car sales […]

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China’s housing market enters New Normal as prices slide

Markets appear to be continuing to move, slowly but surely, into their expected ‘scary phase’.  The reason is the massive distortions that have been created in financial markets, and in China’s housing market, by the $35tn+ of stimulus from governments and central banks since 2009. Unwinding these distortions will not be simple.  The stimulus has not returned us […]

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Global auto markets depend on China for growth

Global auto markets have started to move in new directions.  That much is clear from comment by the major national auto associations.  This will be a shock to manufacturers, who have over-expanded production.  Price wars and capacity cutbacks are inevitable if the industry forecasts are correct. The chart  starts from 2005, and shows the 7 major […]

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$20tn US, China stimulus and lending – but recovery elusive

Despite all the positive headlines, the world’s two largest economies have failed to deliver sustained recovery, even though the 2 governments have now spent a combined $20tn in stimulus and lending. US STIMULUS REACHES $10tn The US government and Federal Reserve have spent $10tn since the Great Recession began in 2008.  Federal deficits have increased by $6.27tn, whilst […]

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China’s commodity imports have financed its property bubble

Today, the blog launches a major new Research Note in the ‘Your Compass on China’ series, produced in association with leading Hong Kong-based financial advisory firm Polarwide. Titled ‘Here today and gone tomorrow – a simple guide to China’s world of trade finance’, it is probably the single most important paper it will publish all […]

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Chemical and oil prices still lower than 3 years ago

Its now 3 years since the blog suggested on 2 May 2011: “They don’t ring bells at market turning points.  Otherwise, we could all retire to the Bahamas.   But there is growing anecdotal evidence, from chemical buyers and the main retailers, that we may have reached at least a temporary market peak.  And Brent crude oil […]

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US home ownership falls back to 1995 levels, as Boomers retire

US housing demand used to be a major support for the US economy.  But that was in the days when millions of new BabyBoomer families wanted to set up home in the suburbs and raise a family.  The rule was simple – if prices were high, you just drove 10 miles down the freeway to find a […]

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China’s polyester market flashes red warning signals

China’s polyester market seems to be trying to tell us something quite important about the real state of China’s economy, as the chart above shows for the main raw material, PTA (terephthalic acid): It focuses on the margin between PTA prices and naphtha feedstock (Singapore basis) Normally this is a premium between $200/t – $300/t as shows […]

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