Tag Archives | US Federal Reserve

Inflation worries increase in China, USA

China announced yesterday that inflation had soared again last month, reaching 8.7%, versus the government target of 4.8%. Part of the increase is clearly due to the effects of recent major storms. But with the US Fed likely to cut rates soon, China remains in a difficult position. If it increases interest rates, then the […]

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Traders sell $, buy oil

‘ ‘A vicious circle now seems to be in place again, where a lower dollar inspires raw material prices to rally, which in turn increases worries about inflation’. This was how strategists at BNP Paribas summed up the US Fed Chairman’s two days of testimony to Congress last week. For the last 20 years, every […]

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4 issues driving today’s oil price

Quietly, oil has moved back to the $100/bbl level. This is quite different from January, when it first hit the magic $100/bbl number. Financial players had jumped on the trend from November as crude rose above $80/bbl, and then wanted to ‘get out at the top’. Their thinking was that a US recession would reduce […]

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Will lower interest rates help?

A reader has kindly sent me an interesting analysis from Richard Bernstein, Chief Investment Strategist at Merrill Lynch (ML)*. He argues that ‘the Fed can lower interest rates quite a lot, but they will likely have minimal impact on the economy unless credit creation grows’. Bernstein says their research indicates that US credit availability is […]

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Another day, another $17bn

News that UBS, the major investment bank, has had to follow Citigroup in raising new capital in a hurry, will have added to the CFO concerns I describe below. Massive subprime losses have forced both banks to raise a combined $24.5bn in the past fortnight. Both had previously said that their losses would only be […]

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Inflation makes a comeback

Oil prices last week rose to an all-time, inflation-adjusted, high in New York at over $92/bbl. Meanwhile food and commodity prices have continued their upward march. In China, the rate of consumer price inflation hit a decade-high of 6.5% in August. So why are we still seeing rates of around 2% reported in the USA […]

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Dow warns

Dow CEO Andrew Liveris has spelled out very clearly his concerns about the impact of the US subprime crisis and high energy prices. He said that last week’s Fed Funds cut ‘flirted with danger’ in terms of the risks it took with inflation, although it was clearly necessary in order to tackle other problem areas. […]

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One week later

A week ago, I wrote that it would be important to see if ‘the US Federal Reserve can pull a rabbit out of its hat’ at its meeting later that day. The dust has now settled on its 0.5% Fed Funds rate cut, and one can see that short term liquidity has certainly been improved, […]

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The hurricane touches down

Extraordinary events have taken place in the UK since my posting on Friday: • A bankrun took place on the 8th largest bank, Northern Rock, with lines of depositors queuing for hours outside its branches all over the weekend and Monday. • Faced with this, the UK Finance Minister was forced to announce that the […]

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To cut, or not to cut?

One of the benefits of writing this blog is that it provides the opportunity to research behind the headlines, and better understand what is really happening. Friday’s US payrolls report, which showed the first loss of US jobs for 4 years, is a classic example. Nobody in the chemical industry should have been too surprised […]

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