Investors on Wall Street are no longer bothering with the boring detail of company performance. That’s the conclusion from a new study by Barclays Capital, on the correlation between movements in the S&P 500 and individual stocks. Instead, they are piling into the ‘correlation trade’, as high-speed computers now often account for over 60% of […]
Chemicals and the Economy
Japan leads round of competitive devaluations
The blog remains very concerned that, overall, the economic policies adopted during the current Crisis are leading the world economy to the worst possible outcome. This outcome is totally predictable. Indeed it has been predicted by reputable experts for some years. Yet most policymakers still seem intent on dealing with symptoms rather than causes. As […]
Oil prices in longest-ever period of contango
Oil markets are now in their longest-ever period of contango. This is when prices for future months are higher than current levels. According to Bloomberg, they have now been in contango for a record 656 days. Keeping a barrel of crude in a tank on land costs 60 – 70 US cents/month, whilst hiring a […]
“Impatience can ruin a whole life”
Anyone running a chemical company knows that the benefits of certain key decisions can take years to develop. Many companies had to support their nascent pharma businesses for 20 years, before steady profits began to flow. Whilst major complexes can easily take 10 years from inception to completion. Yet in recent years, investors have become […]
August highlights
Many readers have been taking a well-deserved break over the past few weeks. As usual, therefore, the blog is highlighting key posts during August, to help you catch up as you return to the office. August has been surprisingly busy: Force Majeure reports show worrying increase highlighted the worrying rise in force majeures, which may […]
Questions to the chemical market genie
With the Chairman of the US Federal Reserve saying the outlook is “unusually uncertain“, its time to summon the chemical market genie. Of course, rubbing the lamp is not always successful. And if the genie does arrive, one can only ask 3 questions. So rather than risk wasting them, the blog has learnt to spend […]
The “real bottom line” in the Financial Times
The blog has had a letter published in the FT this morning, which readers might like to see. It focuses on the problem of using EBITDA measures when analysing a company’s performance. It suggests that analysts should move away from their current reliance on this measure, which ignores the impact of important areas such as […]
US 3 year interest rates back to 1940’s levels
High quality 3 year government bond yields are now less than 1%, as shown in the above chart from thechartstore.com of the US Treasury market. US rates have not been this low since the 1940’s and 1950’s. This has also led to a major rally in corporate bonds, based on increasing fears of a double-dip […]
The Drawn-Out Downtrend phase of the Crisis begins
“Humankind cannot bear very much reality” TS Eliot, 4 Quartets, 1936 Who now remembers the stock market rally that followed 1929’s initial collapse? By November 1929, the US Dow Jones Index had fallen to 195 from its September high of 386. But by April it had rallied 52% to 297. At the time, this seemed […]
US junk bond issue hits record as GDP slows
As noted by a blog reader last week, retail investors are throwing caution to the winds. Unwilling, or unable, to adjust their lifestyles to cope with lower interest rates on government bonds, they have rushed to instead buy higher-yielding ‘junk bonds’. These are less than normal ‘investment’ grade, and offer increased yield in exchange for […]
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