There is no “business as usual” scenario possible for the 2015-2017 Budget period. Over the past 15 years (since the “dotcom bubble” burst in 2000), policymakers have provided increasing amounts of stimulus to support the economy. Now, finally, we are in the endgame, as the Great Unwinding takes place. This presents us all with major challenges: Most executives and investors under […]
Chemicals and the Economy
China becomes major PVC, PTA exporter for first time in history
Be very careful what you wish for. That is the key message coming out of close analysis of China’s latest trade data. Recent media reports were upbeat at news that China’s exports had increased, as it appeared to suggest Western demand was returning. But it seems nothing could be further from the truth. One major concern is that part […]
Oil prices have further to fall as Great Unwinding continues
Oil prices are highly likely to fall further, not rebound, over the next few months. That is the blog’s conclusion to its 3-part analysis of likely developments in oil markets. Having looked at the outlook for oil supply and demand over the past 2 days, today’s post looks at the key question of ‘what does this mean for oil […]
Equity markets under pressure as Boom/Gloom Index signals Great Unwinding
Whisper it quietly if you are walking past the imposing Federal Reserve building in Washington DC, so as not to disturb the occupants. They believe that their efforts to boost financial markets have had their effect, and that the real economy, in which we all live and work, will now recover. But what if the […]
Global stock markets still depend on low-cost money for support
The blog’s 6-monthly review of global stock markets highlights the narrow nature of the advance since September 2008, when the blog first began analysing developments. It shows their performance since the pre-Crisis peak for each market, and the performance of the US 30-year Treasury bond. Remarkably, only the US, India, Germany and the UK stock markets […]
Great Unwinding of policymaker stimulus creates interest rate risk
Interest rate risk is rising in the developed economies as the Great Unwinding of policymaker stimulus continues. Since the blog first highlighted this Unwinding last month: Oil prices have continued to tumble, with Brent now down over $15/bbl from its late-June peak The US$ has continued to rise from multi-year lows versus the yen, euro and pound And of course, […]
Oil prices break out of their triangle – downwards
The Great Unwinding of the central banks stimulus policies is underway, as discussed last week. Oil markets have been one of the first to feel the change, as the chart shows, with prices finally falling out of the ‘triangle’ shape built up since 2008. The value of the US$, interest rates and the S&P 500 […]
The Great Unwinding of policymaker stimulus has begun
Large economies are like supertankers. There are no brakes to use if you want to change direction in a hurry. Instead, you have to put the engine into reverse, and hope you can slow down fast enough to avoid the rocks. That is what happened in China last month, as the new leadership began to […]
China’s waning stimulus spells trouble for the world’s biggest car market
The blog’s latest post for the Financial Times, published on the BeyondBrics blog is below. By Paul Hodges of International eChem China’s July lending level of just Rmb 385bn ($62.6bn) has surprised financial markets, which were expecting an increase in stimulus. But bigger surprises may lie ahead. The strong link between lending and passenger car sales […]
China’s housing market enters New Normal as prices slide
Markets appear to be continuing to move, slowly but surely, into their expected ‘scary phase’. The reason is the massive distortions that have been created in financial markets, and in China’s housing market, by the $35tn+ of stimulus from governments and central banks since 2009. Unwinding these distortions will not be simple. The stimulus has not returned us […]
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