Governments, financial markets and central banks all originally assumed the Covid-19 pandemic would be over in a few days or weeks. But it is now clear they were wrong. And unfortunately, there is little sign of a Plan B emerging. The idea was that consumers would have plenty of money in their pockets after the […]
Chemicals and the Economy
Hertz goes bankrupt as non-essential consumer demand disappears
The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 102-year old Hertz rental company from filing for Chapter 11 bankruptcy protection for its US business on Friday night. Sadly, Hertz won’t be the only casualty. Its collapse instead marks the moment when the problems created by two […]
The bill for two decades of doomed stimulus measures is due
The Financial Times kindly made my letter on the risks now associated with central bank stimulus their Lead Letter One has to agree with your editorial that deflation is now probably inevitable (“Deflation is a bigger fear than hyperinflation”, FT View, April 28). But it is still disappointing to see that the role of central […]
Financial markets enter their Convulsion phase
Many companies and investors are still comparing today’s downturn to the 9-month hiccups seen after the 1990/91 Gulf War and the 2000/1 dotcom crash. In reality, however, this is wishful thinking, as the IMF highlighted last week in its World Economic Outlook: “The Great Lockdown: Worst Economic Downturn Since the Great Depression” One key question, […]
China’s property sector is at the epicentre of the crisis
A branch of Centaline Property Agency in Hong Kong © Bloomberg Indebted Chinese property developers threaten a domino effect on western credit markets , as I describe in my latest post for the Financial Times, published on the BeyondBrics blog Second-order impacts are starting to appear as a result of China’s lockdowns. These are having […]
Will stock markets see a Minsky Moment in 2020?
Few investors now remember the days when price discovery was thought to be the key role of stock markets. Instead, we know that prices are really now set by central banks, on the model of the Politburo in the old Soviet Union. How else can one explain the above chart? It shows the US S&P […]
Chart of the Decade – the Fed’s support for the S&P 500 will end with a debt crisis
Each year, there has been only one possible candidate for Chart of the Year. Last year it was the collapse of China’s shadow banking bubble; 2017 was Bitcoin’s stratospheric rise; 2016 the near-doubling in US 10-year interest rates; and 2015 the oil price fall. This year, the ‘Chart of the Decade’ is in a league […]
Global economy hits stall speed, whilst US S&P 500 sets new records
Whisper it not to your friends in financial markets, but the global economy is moving into recession. The US stock markets keep making new highs, thanks to the support from the major western central banks. But in the real world, where the rest of us live, the best leading indicator for the global economy is […]
Oil markets hold their ‘flag shape’ for the moment, as recession risks mount
Oil markets can’t quite make up their mind as to what they want to do, as the chart confirms. The are trapped in a major ‘flag shape’. Every time they want to move sharply lower, the bulls jump in to buy on hopes of a major US-China trade deal and a strong economy. But when […]
Budgeting for paradigm shifts and a debt crisis
It is now 8 years since John Richardson and I published our 10-year forecast for 2021 in Boom, Gloom and the New Normal: How the Western BabyBoomers are Changing Demand Patterns, Again’. Remarkably, its core conclusions are very relevant today, as the summary confirms. Unfortunately, as we feared, policymakers refused to junk their out-of-date models, […]