The chemical industry continues to be the best leading indicator that we have for the global economy. This is because it is not only the 3rd largest industry (after agriculture and energy), but also because it is truly global and impacts virtually all areas of modern-day life. The chart above therefore presents a very downbeat […]
Chemicals and the Economy
US dollar rises as investors worry low-cost money may disappear
Nobody knows how the Great Unwinding of central bank stimulus policies will develop. The world has simply never been in this position before. Thus the senior economics and business correspondent of the Financial Times, John Plender, began an article this week: “In a market where asset prices are comprehensively rigged by central bankers, rational investment […]
Bond investors embrace the 3 Normals
Sometimes the blog gets lucky with its timing. That was certainly the case when it spoke to the world’s leading bond investors last week. Just an hour before, they had been shocked by news that US GDP had fallen by 2.9% in Q1, far worse than earlier estimates. And nobody believed the official excuse that […]
ECB gives a figleaf for politicians to hide behind
It is impossible to overstate the seriousness of today’s threat from deflation. Policymakers refuse to accept that demographic change can create an economic impact. Instead, they want to believe that increasing debt can somehow stimulate growth. The Financial Times has kindly headlined the blog’s letter on this subject as its lead letter. June 10, 2014 […]
European policymakers no longer able to ignore deflation
A year ago, European policymakers and central bankers were dismissive when the blog suggested deflation was a far bigger threat than inflation – when it was speaking at the world’s major conference for bond investors. Later this month, the blog expects a different response when returning to speak at the same conference. Last week, the European Central Bank (ECB) was forced to […]
Network effect leaves central banks fighting the real world
The blog first learnt about the network effect in the late 1990s, during the successful launch of the eBusiness platforms CheMatch and then ChemConnect. Its Silicon Valley colleagues patiently explained that markets tended to move in predictable stages, once a new concept or product was launched: Everyone would initially jump on the bandwagon, not wanting […]
Financial market melt-up takes S&P 500 to new record
A year ago, the blog suggested that financial markets were reaching their most dangerous ‘melt-up’ stage, driven by investor complacency about the ability of central banks to protect them from any downturn. This analysis was confirmed in November, when absurdly high prices were paid for works of modern art, smashing previous records. Gillian Tett of the Financial Times (another of […]
Political earthquake hits Europe in EU elections
A political earthquake hit Europe in the European Union elections on Sunday night: For the first time since the War, mainstream parties were beaten in major countries In France, the National Front won 25% of the vote, with conservatives 21% and ruling socialist party only 14% In the UK, the Independence Party (UKIP) won 28%, […]
Euro elections likely to see strong vote for anti-EU parties
Its now nearly 2 years since the head of the European Central Bank (ECB) said he “was ready to do whatever it takes” to save the euro, and brought down interest rates in the weakest PIIGS economies (Portugal, Ireland, Italy, Greece, Spain). As the chart shows, this statement had a remarkable effect in financial markets: Interest rates today […]
Ageing populations create repayment risk for government bonds
Government bonds in the larger, wealthy countries of the West have traditionally been regarded as being “risk-free”. Most countries have failed to pay their debts at some time in the past, but it hasn’t happened in the post-War period for the major economies, and so investors have forgotten this can happen. This situation may well change […]
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