Green shoots begin to disappear

Index Sept09.jpg

September’s IeC Boom/Gloom Index© is slightly higher than August. But the ‘Green Shoots’ level (green line) has fallen sharply, indicating that sentiment has become less positive about the staying power of the recent rallies in financial markets. The index now includes a new reading for “frugal” (red line), as this may be worth watching in future months.

Other indicators are also showing signs that “green shoots” may be withering. China’s Shanghai index is now in a bear market, having fallen 23% from its 3471 peak on 4 August, whilst benzene (a good leading indicator for chemical markets) is down 28% since its $1060 peak.

Optimism can carry markets along for a while. But at some point, clear evidence of an upturn has to appear. And so far, as the blog found in Germany last week, there are few signs of this. September’s volumes will be a critical sign of whether recovery is really just around the corner.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. 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.

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