The US Federal Reserve has provided a wonderful new example of the problems with spreadsheets. It also shows how a naive belief in the credibility of any computer-generated output has come to over-ride common sense. In turn, policy can become based on myth, rather than reality. The chart above from the Wall Street Journal shows […]
Tag Archives | US Federal Reserve
Today the blog ends its review of the VUCA world with A for Ambiguity. The global economy often seemed to be on auto-pilot during the 25 years of the economic Supercycle between 1982-2007. The chart above shows US GDP since 1929 (when records began), with the pink columns showing the official dates for recession: • […]
The Wall Street Journal carried an interesting opinion piece on Friday, assessing current market conditions from the viewpoint of the film character, Forrest Gump. Gump’s key insight is that “Stupid is as stupid does”. Thus the Journal noted: “Oil staged its last price surge along with other commodity prices when the Fed revved up its […]
This time last year, the petchem industry stood on the edge of an unseen precipice. Life seemed good. Prices were racing ahead and demand appeared buoyant. But in reality the buyers were only buying forward to protect margins, whilst end-user demand was slowing fast. This year, the blog fears, we may be about to take […]
Today’s 419 point fall on the Dow Jones Average, and $6/bbl fall in WTI crude oil prices, may not be just another example of the wild volatility that has come to seem normal in financial markets. It may also mark the end of an era. Since 1994, the US Federal Reserve has used all its […]
The chairman of the US Federal Reserve, Ben Bernanke, has issued a sober update on the current state of the US economy. Expressing his disappointment that growth this year “has been somewhat slower than expected“, he then listed a number of key problem areas: • “Supply chain disruptions” caused by the Japan disaster • “The […]
Last November, the Chairman of the US Federal Reserve justified his $600bn QE2 programme to boost financial markets by claiming “higher stock prices will boost consumer wealth and help increase confidence“, whilst also leading to “lower mortgage rates“. And stock prices have indeed risen. As the above chart from PetroMatrix shows, there has been an […]
The Financial Times reports two interesting facts: • Japan’s leading seismologist warned Tokyo Electric Power in June 2009 that “tsunamis of a completely different scale have come before” in the region of the Fukushima Daiichi nuclear plant. One, in 869, had “destroyed a castle“. But no changes were made to the plant’s defences. • The […]
The blog has worried for some time about the growing dominance of super-computers in financial markets. Their activities are based on arbitrage between markets, not on fundamental analysis. And their power means that no financial market now knows what it is actually pricing. The headlines above, from today’s Bloomberg Energy page, highlight the issue. Even […]
After the events of the past few days in Egypt, it seems timely to look at the latest state of the ‘correlation trade’ currently ruling global financial markets. As the chart shows, prices for WTI crude oil (green line), continue to follow those of the S&P 500 (blue) in most remarkable fashion. The trade is […]
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Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry.
The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such as oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts.
Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.