Coal miners used to take a canary with them, to help detect poisonous fumes. If the canary stopped singing, then they knew there was a problem. This led to the concept of “the canary in the coalmine acting as a warning of danger”. Small countries can play the same role in the global economy. Last […]
Chemicals and the Economy
Operating earnings hide US economic downturn
Companies normally have 3 ways of pleasing investors: • Meet or better expectations for revenue and earnings • Cut costs to meet earnings if revenues disappoint • Focus attention on a more favourable earnings definition When things are going well, the first option is preferred. But under the pressure of a sustained economic downturn, it […]
California seals deal on $26bn deficit
California’s Governor, Arnold Schwarzenegger, has now made a provisional agreement to reduce the State’s soaring budget deficit. Its main features are a $9bn temporary cut in the education budget, plus multi-$bn cuts in welfare and health programmes. The only good news is that it clears the way for oil drilling to resume off the Santa […]
US housing starts rise 3.6%
The blog is rather pleased with the performance of its new Boom/Gloom Index©, as financial markets continue to respond positively to any suggestion of “good news”. The Index is based on Ben Graham’s famous concept that markets are: • A voting machine in the short-term but • A weighing machine in the long-term It is […]
California hands out IOUs instead of cash
Source: Wall Street Journal Everybody’s favourite Christmas film is ‘Its a Wonderful Life’, in which the hero rescues a failing US bank during the Depression. But until today, the blog had never realised that a major role model for the plot-line came from Chicago in 1932. Nouriel Roubini’s blog notes that the city saw the […]
US demand bouncing along the bottom
The good news from the latest reports on US house prices and auto sales was simple – things have stopped getting worse. US house prices saw “some stabilisation in some regions” according to the S&P/Case Shiller Index for April. Whilst auto sales are clearly bouncing along the bottom, down “only” 29% in June versus May’s […]
The blog’s 2nd birthday
The blog is now 2 years old. Its readership is very loyal, and continues to grow. 64% of current readers bookmark the blog, and read it regularly. And it is now being read in 2088 cities and 111 countries – versus 1244 cities, and 89 countries, 6 months ago. Its regular readership is also very […]
Gasoline markets slip, financial markets stumble
Yesterday’s financial market action was very revealing. As Olivier Jakob of Petromatrix perceptively describes it, “liquidation on gasoline led to a correction in crude oil, which in turn pressured equity markets”. The problem is that financial markets now seem to be in circular mode: • Speculation about tighter oil markets has led to a belief […]
China and US house prices
The Financial Times today highlights the overwhelming importance of falling US house prices to the outlook for the global economy. It notes that prices are now falling by 2.2%/month, causing a $380bn wealth loss in March alone. It adds that if prices continue to fall at this rate, “the total loss in 2009 would be […]
US house prices, building permits, see record declines
US house prices are still seeing “record declines” according to today’s Case-Shiller home price index. The national price was down 19.1% from March 2008, and 32% from the Q2 2006 peak. As before, the over-built Sunbelt led the way, with Phoenix, Arizona down 36% from last year. But now, the index is picking up major […]
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