Each year, it seems there is only one candidate for Chart of the Year. And 2020 is no exception. It has to be the CAPE Index developed by Nobel Prize winner, Prof Robert Shiller. As the chart shows, it is nearly at an all-time high with Tesla’s addition to the S&P 500. Only the peak […]
Chemicals and the Economy
Interest rates and London house prices begin return to reality
Global interest rates have fallen dramatically over the past 25 years, as the chart shows for government 10-year bonds: UK rates peaked at 9% in 1995 and are now down at 1%: US rates peaked at 8% and are now at 2% German rates peaked at 8% and are now down to 0%: […]
Monetary policy reaches sell-by date for managing the economy
Monetary policy used to be the main focus for running the economy. If demand and inflation rose too quickly, then interest rates would be raised to cool things down. When demand and inflation slowed, interest rates would be reduced to encourage “pent-up demand” to return. After the start of the Financial Crisis, central banks promised […]
Italy’s referendum is next test for Eurozone stability
Italy was one of the 6 founding members of the European Union (EU) in 1957, along with France, the Netherlands, W Germany, Belgium and Luxembourg. Its referendum next month will therefore be a critical test of whether the Eurozone and EU can survive the pressure from the Populists. If the Populists win, then the future […]
Central banks defy slowing global economy by destroying markets’ power of price discovery
Markets have one main function in life – price discovery. If I want to buy, and you want to sell, the existence of a market allows us to discover the price at which the market will balance in terms of supply and demand. History, however, provides many examples of times when rulers decided they knew […]
Bank of England’s new stimulus policy creates bankruptcy risk for corporate pension funds
The Western BabyBoomers (born between 1946-70), have been one of the luckiest generations in history. By and large, they have escaped the major wars that have plagued society down the ages. They have also lived in a world where living standards and material wealth have made astonishing gains. Equally priceless has been the rise in […]
Boom/Gloom Index suggests volatile August may lie ahead
It may be an idea to keep your smartphone charged and within reach, if you are planning a trip to the beach this month. Certainly market behaviour since June has been more and more skittish. The experts, after all, were telling us that central banks were certain to do more major stimulus efforts to boost […]
UK’s Brexit referendum is about peace and prosperity
40 years ago, the vast majority of the British people were in favour of joining the European Economic Community. 67% voted in favour, in the 1975 referendum to confirm the UK’s entry. Virtually all mainstream politicians were in support, with only the left-wing of the Labour Party strongly anti on the grounds that it was […]
Oil market speculators profit as central banks hand out free cash
Oil markets are entering a very dangerous phase. Already, many US energy companies have gone bankrupt, having believed that $100/bbl prices would justify their drilling costs. Now the pain is moving downstream. The problem is the central banks. Hedge funds have piled into the oil futures markets since January, betting that there would be lots […]
“Debt-financed growth model has reached its limits”, admits German finance minister
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 […]
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