Most Americans can’t qualify for a mortgage today with prices and interest rates at generation-highs. Yet housing starts average a post-2007 record of 1.5m/month. Logic therefore suggests the US housing market could be heading for a repeat of the 2008 crisis
Chemicals and the Economy
Asia’s debt crisis edges nearer, as Japan’s interest rates rise and China’s property bubble bursts
Bubbles are great fun while they last. But they are much less fun when they burst. For the past 20 years, central bank stimulus has created some of the largest bubbles ever seen. But now, led by developments in Japan and China, they are bursting
Europe’s chemicals market highlights move into recession, and risk of future deflation
The chemical industry is now starting to warn us of a new risk. Europe is already suffering from a cost of living crisis. And people simply can’t afford to pay even higher prices for energy. At a certain point, therefore, demand may simply collapse, and usher in deflation
Chemicals, financial markets reach a fork in the road
A whole generation has grown up with the idea that rates are always close to zero. And they also “know” that central banks will always print more money if needed.
Bond yields start to go back to the future as stimulus policies unwind
Central banks have spent 15 years telling us that debt and demographics “don’t matter”. They claimed they could always create demand via stimulus. But now the policy has run out of road. Homeowners and stock traders who thought rates would stay low forever, will be the ones to suffer
Japan’s premier warns of “social dysfunction” as ageing populations challenge Western and Chinese economies
Japan has wasted trillions of yen with its failed stimulus programmes. Had it devoted even a tenth of this money to developing a proper Retraining programme for people in their 50s/60s, it wouldn’t now be facing a major debt and currency crisis. The rest of the Western world needs to rapidly learn from its mistake.
FAANG stock prices start to tumble as the tech bubble begins to burst
Since January, investors have begun to realise that the FAANG stocks were just as over-valued in December as during the dotcom bubble. Of course, hope springs eternal as we saw this month. History suggests we will see several ‘false dawns’ before the market finally bottoms.
Interest rates break out of their 40-year downtrend – and start creating chaos in global markets
US inflation was last at 8.3% in January 1982. And then, the 10-year yield was 14.6. History may not be a perfect guide, but it is the best we have. So it might be worth planning for rates to go much higher than most “experts” expect, now that they have broken out of their downtrend.
Prepare for the coming crisis
As the head of Germany’s Employers’ Associations warned last month: “We are facing the biggest crisis the post-war Federal Republic has ever had. We have to be honest and say: First of all, we will lose the prosperity that we have had for years”.
“Things get to a point where you have to do the right thing”, Lord McDonald, former head of the UK Foreign Office
The election’s timing could hardly be worse, with Johnson now just a caretaker premier. Russia is threatening food and energy security by cutting fertiliser and gas supplies. The UK should be working very closely with the EU on these critical issues. But instead, we may well see candidates attack the Protocol and the EU to win constituency support.
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