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 […]
Tag Archives | US Federal Reserve
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 […]
In October 2008, the blog featured the US Treasury official responsible for running the $700bn TARP rescue fund. He was 35 years old, and just 6 years out of business school. Apparently there was nobody available with more experience to take on the role of “choosing which US financial institutions live, and which die“, during […]
The US Fed’s new QE2 Lifeboat programme designed to raise asset prices got off to a bad start last week, with most stock markets falling, rather than rising. It has also begun to run into major opposition from advisors to the new Republican-dominated Congress, with an open letter published Monday in the Wall Street Journal […]
US Fed Governor Kevin Warsh is one of the few policymakers to focus on reality rather than wishful thinking. He pointed out nearly 3 years ago that liquidity should not be mistaken for capital, although others continue to ignore this uncomfortable fact. Now, in advance of tomorrow’s G-20 meeting of the world’s richest economies, he […]
Last week, the blog repeated its warning that crude oil was preparing for a big move, either up or down. And prices then jumped 7%, to a two-year high of $87.49/bbl. So the ‘triangle formation’ proved its predictive power again. As the above chart shows, from Petromatrix, the driver behind the move was the Large […]
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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.