There are two main views on the financial crisis that began last September. The mainstream view, as expressed by the US Federal Reserve, is that it was a problem of liquidity. Banks became frightened to lend, and so the Fed stepped in as “lender of last resort”. So given time, everything will soon be back […]
Chemicals and the Economy
Refiners’ margins come under pressure
In another sign of the economy ‘bouncing along the bottom’, US drivers appear to have returned to the road in recent months. Latest figures from the US Highway Administration show a 0.1% rise in vehicle miles travelled during May, the second consecutive month of positive growth since 2007. But this is unlikely to provide much […]
California seals deal on $26bn deficit
California’s Governor, Arnold Schwarzenegger, has now made a provisional agreement to reduce the State’s soaring budget deficit. Its main features are a $9bn temporary cut in the education budget, plus multi-$bn cuts in welfare and health programmes. The only good news is that it clears the way for oil drilling to resume off the Santa […]
Luxury brands launch half-price sales
A year ago, the blog brought news that July’s Paris fashion sales were seeing prices reduced by 70% on shoes, bags and dresses. Today, the slowing global economy is apparently leading to even more bargains. According to the Financial Times, “desperate times are forcing the likes of Armani, Dolce & Gabbana, and Jimmy Choo to […]
US housing starts rise 3.6%
The blog is rather pleased with the performance of its new Boom/Gloom Index©, as financial markets continue to respond positively to any suggestion of “good news”. The Index is based on Ben Graham’s famous concept that markets are: • A voting machine in the short-term but • A weighing machine in the long-term It is […]
Swedish bank takes over Top 50 European automotive supplier from private equity
In 2007, Sweden was the largest private equity market in Europe, as a percentage of the country’s GDP. And the local banks lent freely, as elsewhere, to fund investments. Now they, and other Nordic banks, are struggling to minimise their losses. According to Bloomberg, Sweden’s second-biggest bank, Handelsbanken, “seized parts of Plastal Group and Plastal […]
European auto sales increase versus 2008
Any improvement in the troubled auto sector is extremely good news for the chemical industry, after the battering of the past few months. Thus the blog welcomes news, as the chart shows, that European sales increased 2.4% in June, the first rise for over a year. Government support for scrapping older cars has led the […]
California hands out IOUs instead of cash
Source: Wall Street Journal Everybody’s favourite Christmas film is ‘Its a Wonderful Life’, in which the hero rescues a failing US bank during the Depression. But until today, the blog had never realised that a major role model for the plot-line came from Chicago in 1932. Nouriel Roubini’s blog notes that the city saw the […]
China’s petchem imports soar on oil price speculation
After yesterday’s post, Edwin Pang of Credit Suisse in Hong Kong has raised an interesting question over the likely rationale for China’s massive increase in petchem imports, such as polyethylene (PE), in 2009. As the chart shows, its monthly PE demand (production plus net imports), was very steady in 2007-8. It averaged 980kt in 2007, […]
Global downsizing needed to rebalance supply and demand
The chemical industry has benefited from a benign paradigm over the past 25 years: • Demographics in the west have encouraged consumption, as the baby-boom generation reached middle age • Globalisation meant this could be achieved at lower cost, by outsourcing production to lower-wage countries in the east • Workers in the east saved their […]
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