Once upon a time, financial markets reflected supply and demand balances. Some players, the speculators, would use them to try and anticipate changes in these balances. Some players, the producers and consumers, used them to help stabilise their margins. From time to time, the balance between the stabilisers and the speculators would be lost. Markets […]
Chemicals and the Economy
Oil “would be $30/bbl” without financial speculators
The blog’s argument that oil prices are now being entirely driven by financial market speculation has won support from one of the main state oil trading companies. ICIS news reports that the CEO of SOCAR Trading (State Oil Company of Azerbaijan Republic) claimed that the “rise in crude and other commodity prices, resulted principally from […]
UK to tax bank bonuses at 90%
“The more things change, the more they stay the same“. Or, as the blog’s French-speaking readership might say, “plus ça change, plus c’est la même chose“. When the blog started work in the chemical industry, in 1978, it was possible to pay up to 114% of one’s income as tax in the UK, if one […]
UK to tax bankers’ bonuses
UK Finance Minister Alistair Darling is widely reported today as being about to announce a ‘super-tax’ on bonuses paid to bankers working in the UK. The government’s argument, notes the BBC’s Robert Peston, is that “Investment banks are making exceptional profits, as a result of the intervention of government and the Bank of England to […]
Computerised trading dominates crude oil markets
The purpose of liquidity in financial markets is to enable price discovery. But when super-fast computers take over the trading, that purpose disappears. Instead, we have today’s “correlation trading“. Olivier Jakob of PetroMatrix demonstrates this with the above chart, which shows Tuesday’s detailed trading patterns in WTI and the Dow Jones Index. Clearly, they are […]
Sponsor a financial executive
Those who liked the blog’s earlier satirical postings on the banking crisis and subprime disaster, may enjoy this video from the Canadian show “This hour has 22 minutes”, kindly sent to me by a US reader. The sketch’s punchline – “The money you give won’t just save a life, it’ll save a lifestyle” – says […]
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 […]
Financial players increase their bets on crude
Financial investors are already quite disruptive in crude oil markets. And their influence is set to grow this year. That’s the message from surveys by Barclays Global Investors and JP Morgan. $120bn is now invested in commodities as a class, with oil a major target. Even your own pension fund may be about to invest, […]
Stress-testing the global financial system
Yesterday’s “swings in financial derivative prices were so extreme that they implied scenarios in which the core of the global liquidity system suffers a serious assault”, according to JP Morgan, the investment bank. Watch out, if current US sub-prime mortgage problems turn into a more general “flight from risk”.
The 10th anniversary of the Asian financial crisis
2 July 2007 marks the 10th anniversary of the Asian financial crisis, which began with the devaluation of the Thai baht. Visiting the country 10 years later, the situation has changed quite dramatically from those panic-stricken days.
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