China is at the start of its biggest economic shake-up since 1978, when Deng Xiaoping launched his post-Mao reform programme. President Xi Jinping’s ‘Common Prosperity’ policy aims to retain his focus on increasing living standards. But it wants to spread the wealth far more widely. The electricity rationing now underway across China highlights the need […]
Chemicals and the Economy
An Evergrande default could reset the Chinese, and global, economy
China’s economy has been ‘subprime on steroids’ since the financial crisis in 2008. And essentially, this has morphed into a giant Ponzi scheme, where some property developers used deposits paid by new buyers to finance the construction of apartments they’d already sold. Now the world’s most indebted property developer, Evergrande, has warned it may default […]
China’s lockdown makes global debt crisis now almost certain
Beijing has a population of 21.5 million, but you wouldn’t know it from this BBC video from last Thursday. Normally busy streets and transport systems are eerily empty, with food deliveries often the main traffic on the roads. It’s the same picture in industry, with the Baidu Migration Index reporting only 26% of migrant workers […]
Resilience amidst headwinds is key for H2
Resilience is set to become the key issue as we look forward to H2, as I note in a new analysis for ICIS Chemical Business. None of us have ever seen the combinations of events that are potentially ahead of us. And none of us can be sure which way they will develop. So it […]
High-flying “story stocks” hit air pockets as credit finally tightens
“Nobody could ever have seen this coming” is the normal comment after sudden share price falls. And its been earning its money over the past week as “suddenly” share prices of some of the major “story stocks” on the US market have hit air pockets, as the chart shows: Facebook was the biggest “surprise”, falling […]
Chemical industry warns of likely global recession in 2017
The chemical industry is the best leading indicator for the global economy, and it is flagging major warning signs about the outlook for 2017. As the chart above shows, based on American Chemistry Council (ACC) data: Since 2009, Capacity Utilisation (CU%) has never returned to the 91.3% averaged between 1987 – 2008 It […]
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 $100/bbl prices would justify their drilling costs. Now the pain is moving downstream. The problem is the central banks. Hedge funds have piled into the oil futures markets since January, betting that there would be lots […]
New oil price fall is matter of “when”, not “if”, as inventory builds
Financial players have become convinced in recent months that the oil price will rise. And so far, this has been a self-fulfilling prophecy. Their buying has led to oil being stored all over the world – in tankers floating at sea and in shale oil wells, as well as in storage tanks. Unsurprisingly, prices have […]
Oil price collapse, US$ rise confirm Great Unwinding underway
Stock markets are floating ever higher on an ocean of central bank money printing. But something else is happening in the real world where we all live and work. Since August, I have been warning that the Great Unwinding of this policymaker stimulus is now underway. The chart above highlights how my 2 core forecasts have now been confirmed: Brent Oil […]
Boom/Gloom Index tumbles as S&P 500 hits record
The stock market used to be a good leading indicator for the economy. But that was before the central banks decided to manipulate it for their own purposes. As then US Federal Reserve Chairman boasted 3 years ago on launching their second round of money-printing: “Policies have contributed to a stronger stock market just as […]
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