The paradigm shifts are already starting to impact most businesses. China is also changing, and will no longer power global growth. So there are no ‘Business as Usual’ options for the future. Instead, companies have to develop new business models for today’s New Normal world.
Chemicals and the Economy
300+ years of Bank of England data shows that interest rates are typically inflation plus 2.5%. At today’s level, this would imply – US rates would be 3.7% + 2.5% = 6.2%: Japan would be 3.2% + 2.5% = 5.7%: Eurozone rates would be 5.3% + 2.5% = 7.8%; UK rates would be 6.7% + 2.5% = 9.2%
Economists might like to believe that inflation is somehow a monetary phenomenon. But as we are all likely to learn to our cost over the winter, food and energy prices are critical for most people. Oil prices are already rising. And food prices are joining them.
It’s too soon to talk of an actual energy crisis. But as the charts showing Brent oil and European natural gas prices confirm, it is certainly time to start planning for the possibility: Oil prices have recently risen 25%. And Europe risks gas shortages if there is a cold winter
Most Americans can’t qualify for a mortgage today with prices and interest rates at generation-highs. Yet housing starts average a post-2007 record of 1.5m/month. Logic therefore suggests the US housing market could be heading for a repeat of the 2008 crisis
Bubbles are great fun while they last. But they are much less fun when they burst. For the past 20 years, central bank stimulus has created some of the largest bubbles ever seen. But now, led by developments in Japan and China, they are bursting
Companies need to prepare for much slower, or maybe even negative growth and deflation. Optimistically, one can hope this paradigm shift will be good news for Net Zero investments. But it also makes it more difficult to reduce the vast debts created by recent stimulus programmes.
The blog returns on 27 August
The downturn in the global smartphone market highlights the need for companies to focus on the Value segment and Services as the Middle Market disappears. iPhones are now 49% of the booming second-hand market, allowing Apple to gain more Services revenue via its App Store.
The losses sitting on central bank balance sheets are starting to soar to eye-watering levels. The US Federal Reserve is sitting on a “mark-to-market” loss of $911bn. The UK taxpayer has already handed over £150bn ($192bn) to cover the Bank of England’s losses.