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Chemicals and the Economy

The great ‘Deflation Shock’ is coming closer

  The world is about to be hit by a demand shock equivalent to 1973’s supply shock.  Yet, astonishingly, most commentators remain so focused on central bank activity, that they have completely missed what is happening.  Here’s how it is playing out. You may remember the ‘The pH Report‘ forecast in early December that: “Oil prices […]

Bond investors embrace the 3 Normals

Sometimes the blog gets lucky with its timing.  That was certainly the case when it spoke to the world’s leading bond investors last week.  Just an hour before, they had been shocked by news that US GDP had fallen by 2.9% in Q1, far worse than earlier estimates.  And nobody believed the official excuse that […]

Japan’s debt now $80k for every man, woman and child

Question:  Why will Starbucks reduce the menu price for its venti green-tea frappucino in Japan next Tuesday, when the price is actually going up? Answer:  Because the government hopes the lower menu price will fool people into thinking the price has gone down It is, of course, a nonsense.  And no doubt most Japanese will be quite annoyed that […]

Deflation gets closer in Europe, USA and China

Demographics drives demand.  If it doesn’t, then its hard to think what does.  So forecasting economic growth depends on two key variables: If you have lots of young people in your adult population, then you should have fast growth If you have lots of older people, then you will be lucky to have any growth […]

Deflation far more likely than inflation

The last in the blog’s series on things that we think we know, but may not, looks at the prospects for inflation.  A new survey this week of the world’s wealthiest individuals summed up the consensus view: “If there are two factors that make the rich stand out, on this survey, it is their fear […]

“Deflation fears spark shock ECB rate cut”

The mention of deflation in the above front page headline of Friday’s Financial Times will not have surprised blog readers.  But it appears that not enough people in the European Central Bank read the blog, as the FT went on to report the ECB’s sense of “shock” at the thought that deflation could now be just around the corner. This highlights the enormous […]

China lending jumps to hit $380bn Q1 target

China’s leaders have a lot to worry about. The purge of Bo Xilai has now been followed by news of his wife being suspected of murder. This makes the run-up to October’s leadership transition even more difficult. Only 3 months ago, Bo was being tipped by some to join the Politburo, and even to become […]

China’s producers lose pricing power

China’s economy is slowing rather fast. That’s the only conclusion to be drawn from the above chart. It shows a major collapse in producer price inflation (PPI), from July’s 7.5% peak to just 2.7% in November. The decline from September’s 6.5% level has been particularly dramatic, with the index down nearly 2/3rds in just 2 […]

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