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.
Chemicals and the Economy
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.
China risks entering a debt trap as its housing bubble continues to deflate
Deflation means the real value of debt increases. This is the opposite of what happens with inflation, when its real value reduces. China’s ageing and falling population therefore risks entering a debt trap. More and more money will be needed to refinance existing debt, accelerating the slowdown in the wider economy.
2025 will be a year of ‘Known Unknowns’ – we know the problems, but not how they will play out
The collapse of Asia’s main currencies versus the US$ confirms that our world is increasingly dominated by known unknowns. We know what the key issues might be, but we can only guess at how they might turn out.
Trump’s tariff war confirms geopolitics are replacing economics as the key driver for decisions
The Perennials 55+ cohort have replaced babies as the main source of US population growth since 2005. They already own most of what they need. So the need for globalisation has disappeared. As Trump and Musk are suggesting, a period of rapid and uncomfortable change now seems to lie ahead.
China’s economy risks heading into recession as Producer Prices enter deflation
China’s problems are spreading to the rest of the world. Not only is it exporting deflation, as its Producer Prices fall. But also, and understandably, consumer countries are introducing trade barriers to protect their own industries
China’s housing market moves from boom to bust
China’s housing inventory is now at a record 25 months. Prices/demand continue to fall. And local government land sale income has already fallen 1/3rd since 2021 to $800 billion, with a further 10% fall to expected this year. And so now services are having to be cut.
The demographic and peace dividends created by the Boomer SuperCycle are disappearing
Demand patterns are now changing rapidly. We now have a demographic deficit, rather than a dividend. And the peace dividend has also disappeared.
Gasoline/diesel cars are now less than 50% of European sales as EVs and hybrids surge
These paradigm shifts are coming at the same time as the loss of the peace and demographic dividends. They are taking our world in a new direction. The likely Winners will be those companies and investors who focus on becoming demand-led.
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