Borrowing makes a lot of sense when interest rates and inflation are low. But now, both are returning to more normal levels. This will increase default risk, as companies and people with too much debt find it more difficult to make their repayments.
Chemicals and the Economy
President Trump’s tariff war and planned tax cuts reawaken the ‘bond vigilantes’
Republicans are racing to finish the draft budget by Memorial Day at the end of the month. Bond investors can be forgiven for getting nervous about who is going to pay the bill for Trump’s tariff war and tax cuts.
Sell in May, and go away?
President Trump’s Tariff War will soon lead to empty shelves at Wal-Mart, Target, Home Depot and many other stores this month. The famous saying “Well in May and go away” might be a prudent policy for investors.
Oil prices fall out of their ‘triangle’ as Trump’s trade war risks global recession
The Energy Transition is well underway California can now run for weeks at a time on 100% renewables. But President Trump’s ‘drill, baby, drill’ policy is hoping to turn back the clock. Oil markets market volatility is therefore inevitable, and will add to the volatility he has created in the economy and financial markets.
President Trump’s trade war risks crashing the global economy
Clearly, the US is most at risk from all these changes. Its ‘soft power’ depends on its global reputation. And its ‘hard power’ depends on its global alliances. But President Reagan’s warning applies to all of us: “Then the worst happens: Markets shrink and collapse; businesses and industries shut down; and millions of people lose their jobs.”
Europe may win if tariff war persists’
European producers may end up seeing major benefits. Local demand is clearly set for major expansion as a result of the recent massive German and EU spending packages. And competition will move to a more ‘local-for-local’ basis as tariffs remove the basis for globalisation.
Europe’s new defence and infrastructure spend will be a game-changer for its economy
History shows that moves towards European integration has been turbo-charged by the need to respond to crisis. Or as German philosopher, Friedrich Nietzsche, once noted: “What doesn’t kill me, makes me stronger”.
Brent falls out of its triangle – for the third time
Oil markets are warning of rising economic and political risk. Prudent companies and investors will be preparing for difficult times ahead, whilst still hoping for the best.
“There are decades where nothing happens; and there are weeks where decades happen” VIadimir Lenin
We are now back in a world where geopolitics, not economics, drives decision-making. It is a world of shifting alliances. And so defence spending is set to be a key growth area for the future as Cold War 2.0 begins.
6 ‘Rules for Success’ as tariff wars and Europe’s Clean Industrial Deal begin
The Rules for doing business have to change. As NATO’s leader, Mark Rutte, has warned, Europe needs to “Raise defense spending or start learning Russian”
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