Thursday’s child has far to go

Currencies, Economic growth, Financial Events, Leverage, Oil markets

The past two Thursdays have seen extraordinary things happen in financial markets.

Last Thursday, BNP Paribas suspended redemptions on 3 of its funds, forcing the ECB to inject €95bn of liquidity into the financial system. Yesterday, the largest US mortgage lender, Countrywide Financial, had to raise an emergency €11.5bn loan in order to continue trading, whilst the US$ fell over 3% against the Japanese yen from ¥116 to ¥112.

We now seem to be on the edge of a downward spiral, where all the elements that supported financial markets unwind at once:

• US house prices fall, causing lenders to restrict further loans
• Food and energy prices rise, leading inflation to reappear
• Currency markets readjust, ending the ‘carry-trade’
• Risk perceptions change, making M&A unattractive
• Volatility returns, as people sell indiscriminately

We are not yet at the point where the real economy, in which we all live and work, is necessarily going to nosedive into recession. But a few more Thursdays like these will certainly test its robustness. We could well be close to finding out, as the old English nursery rhyme says, that ‘Thursday’s child has far to go’.

PREVIOUS POST

Technorati

16/08/2007

Technorati Profile

Learn more
NEXT POST

Leverage and bad debts

17/08/2007

Some 20 years ago, after a couple of senior management jobs, I was sent off to s...

Learn more
More posts
China’s lockdown makes global debt crisis now almost certain
23/02/2020

Beijing has a population of 21.5 million, but you wouldn’t know it from this BBC video from la...

Read
Financial markets head for (another) train crash as coronavirus starts to impact
17/02/2020

China’s industrial heartland of Hubei (pop 59m) and its capital Wuhan (pop 11m) have now been ...

Read
Coronavirus disruptions make global recession almost certain
11/02/2020

Last month, our Hong Kong-based pH Report colleague, Daniël de Blocq van Scheltinga, warned of the ...

Read
Your A to Z Guide to the Brexit trade negotiations
02/02/2020

A. Article 50 of the Lisbon Treaty set out the rules for leaving the European Union. As with most ne...

Read
Contingency planning is essential in 2020 as “synchronised slowdown” continues
12/01/2020

The IMF has now confirmed that the world economy has moved into the synchronised slowdown that I for...

Read
Will stock markets see a Minsky Moment in 2020?
05/01/2020

Few investors now remember the days when price discovery was thought to be the key role of stock mar...

Read
Chart of the Decade – the Fed’s support for the S&P 500 will end with a debt crisis
22/12/2019

Each year, there has been only one possible candidate for Chart of the Year.  Last year it was the ...

Read
Boris Johnson will have to disappoint someone in 2020 as the UK finally leaves the EU
15/12/2019

Finally, after three and a half years, the UK has reached “the end of the beginning” wit...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more