Central bank policy-making is becoming more and more dysfunctional, as German Finance Minister Wolfgang Schäuble‘s comments highlighted on Friday: “The debt financed growth model has reached its limits. It is even causing new problems, raising debt, causing bubbles and excessive risk taking, zombifying the economy….and may have laid the foundation for the next crisis.” One clear sign […]
Chemicals and the Economy
Brexit poll creates UK, euro interest rate rise risk
Financial markets are very bad at evaluating political risk. They assume people will always be rational, and expect a ‘business as usual’ scenario to continue. But as we all know, people are not always rational. And emotion, as today over immigration may cloud their judgement. This week has seen the first signs of this complacency […]
China power demand surge ends as Old Normal economy slows
The decline in China’s electricity consumption growth highlights the remarkable slowdown underway in its Old Normal economy, as the chart shows: Consumption growth took off in 2009 under the influence of the stimulus programme It rose 6.5% in 2009, and then accelerated further in 2010 when it was up 14.7% 2011 growth stayed at double-digit […]
Oil prices remain at pre-2005 levels as inventories rise
Its mid-winter in Russia, and the snow is deep in some parts of Moscow. Meanwhile in Venezuela the economy is close to meltdown, and its hard to find even essentials in Caracas. So it is no real surprise that this month saw their Oil Ministers head for “important discussions” in the warmer climate of the […]
If only the central banks could print babies
The Financial Times has kindly printed my letter below, arguing that central bank stimulus can’t restore growth to previous Super Cycle levels. Sir, John Plender’s excellent analysis “Central banks’ waning credibility is the real threat to confidence” (Insight, February 17) highlights the need for a new narrative to explain the economic slowdown of recent years. […]
Auto sales slump in Japan, Brazil and Russia as China slows
China’s slowdown is continuing to reverberate around the world. One way of measuring this is to look at auto sales in countries closely linked to China’s market such as Japan, Russia and Brazil. As the chart shows, they did well during China’s stimulus period, but they are struggling now. By comparison, more self-sufficient India has […]
Tokyo, Shanghai stock markets fall; yen rises 8% in 2 weeks
Pity poor Janet Yellen, you might say. The head of the US Federal Reserve told the Senate last week that she had been “quite surprised” by the collapse of oil prices since mid-2014. And she added that the rise of the US$ was similarly “not something that we had expected” (you can see the testimony […]
Smartphones head for price war as China sales fall 4% in Q4
We all now carry around a mini-computer in our pockets – one with more power than those which controlled Apollo 11 when Neil Amstrong first walked on the moon in 1969. In certain parts of the world, there are now more smartphones than toilets, according to Time magazine. This is raising the spectre of market […]
IEA says market “awash with oil” – debunks bullish myths
Oil markets are the proverbial “canary in the coalmine”. They are showing us what happens when the rose-tinted glasses provided by stimulus policy are removed. Now markets have to return to their true role of price discovery, based on the fundamentals of supply and demand. This makes them very dangerous indeed. Some large players in […]
The World’s Economy Soared Last Year (or Plunged)
ECONOMIC TRENDS Danny Hakim @dannyhakim FEB. 8, 2016 “LONDON — Did global output rise or fall last year?” That’s the critical question asked by the New York Times today. It follows my recent blog post, suggesting we shouldn’t ignore the fact that IMF data shows a record $3.8tn fall in global GDP last year, when […]
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