Something very strange is happening in US stock markets, as the above chart highlights: It shows weekly (blue line) and average quarterly (red line) volatility in the US S&P 500 Index since 1928 Both are very close to 43-year lows, going back to September 1973, at 1.7% and 1.6% respectively This seems quite […]
Chemicals and the Economy
US pensioners pay the price for Fed’s monetary policy failure
There was one bit of good news this week. For the first time since the financial crisis began, a Governor of the US Federal Reserve acknowledged that today’s demographic changes are having a major impact on the US economy. John Williams, of the San Francisco Fed, argued that: “Shifting demographics….(mean that) interest rates are going […]
Boom/Gloom Index suggests volatile August may lie ahead
It may be an idea to keep your smartphone charged and within reach, if you are planning a trip to the beach this month. Certainly market behaviour since June has been more and more skittish. The experts, after all, were telling us that central banks were certain to do more major stimulus efforts to boost […]
Global stock markets weaken as Great Unwinding of stimulus continues
It is 7 years since global stock markets bottomed after the 2008 financial crash. But as my regular 6-monthly update on their performance shows, it has been a very mixed picture since then. The chart shows how prices have moved since their pre-2008 peak in the world’s 8 major markets, and in the US 30-year […]
Common sense continues to elude central banks as they battle demographic cliff
Central banks are in a losing battle, as they try to reverse the inevitable slowdown created by the arrival of the demographic cliff. Last year’s 5% fall in global GDP in current dollars tells its own story. Common sense would tell them they can’t possibly win. After all, how do you persuade New Olders in […]
Financial markets feel impact of the Great Unwinding
Its not been a great start to the year for those who have trusted in conventional wisdom: Western stock markets have been reeling, with the US S&P 500 Index down sharply since Monday It has been the worst opening for world stock markets since 2008 – not a good year for investors China’s currency has […]
Great Unwinding creates Great Divergence in financial markets
Most traders prefer to be with the crowd – then, at least, they can’t be personally blamed if things go wrong. Instead, they can claim that “nobody could have seen the change coming”. So as we approach year-end, many traders are becoming very nervous as the Great Unwinding of policymaker stimulus means that markets start […]
Phase 2 of the Great Unwinding of policymaker stimulus begins
Greece, Iran, China – suddenly real world issues are starting to dominate the headlines. And few people now believe that printing more money is the way to solve these issues. Instead, political leaders are being forced to take the hard decisions they have ducked for so long. Financial markets are clearly reflecting the change. They […]
Volatility rises as central bank policies prove wishful thinking
Q1 was very difficult for many companies and investors. They had wanted to believe since 2009 that central banks could somehow control the global economy: The oil price would always be $100/bbl The US $ would always remain weak Central banks would always be able to stimulate growth in the economy Stock markets would always go up in the […]
Boom/Gloom Index suggests S&P 500 close to its peak
How long can the juggler keep all the balls in the air? That is the question that compels us to stand in the square and watch her skill at work. We have the same fascination watching central bankers at work – they similarly aim to keep financial markets aloft, to create their desired ‘wealth effect’. But we know that […]
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