Volatility is one of the blog’s key themes for the next few years, as the world transitions to slower growth and a more regional economy. And the chart above from the latest ICIS pricing Asian ethylene margin report highlights this new trend very well: Margins jumped 42% last week to reach $290/t, based on naphtha […]
Chemicals and the Economy
A little bit of China stimulus goes a long way in housing
It was only a “mini-stimulus” that was delivered by China’s new leaders in July. Well, thank goodness it wasn’t more, to judge by the above chart from Albert Edwards at SocGen. It shows how house price inflation has jumped in 69 of China’s 70 main cities between March and September: In March (orange column) inflation […]
Income and age will determine American’s future housing needs
Affordability is the key factor in today’s markets. And nowhere is this more true than in US housing. The subprime lending boom of the early 2000s is now long finished. And US GDP growth averages just 1.7% since 2000. So understanding the detailed picture of income levels is becoming critically important for forecasting future demand. Housing used […]
One in three US adults now in the New Old 55+ generation
“Its only when the tide goes out that you learn who’s been swimming naked.” We may soon discover the meaning of this wisdom from Warren Buffett, one of the world’s leading investors. The reason is that the macro trends that have driven growth in the global chemical sector are now turning. For the past five […]
Bank of England boosts UK house prices as foreign buyers flood into central London
Last week saw new Bank of England governor, Mark Carney, follow the lead of US Fed Chairman Ben Bernanke on trying to deliver a ‘quick fix’ for the economy by boosting asset prices – particularly house prices and stock market levels. But as the Bank of England chart shows, this means trying to return the ratio of house prices to earnings back […]
US housing starts stumble as rental demand weakens
US housing is core to the US economy. And as the US economy is 22% of the global economy, developments in housing matter to all of us. We learnt this during the subprime Crisis, when the blog’s warnings that the supposed boom was an illusion were ignored until too late. Now the same problem is developing again. Thus […]
Underwater mortgages temporarily support US house prices
US investors are continuing to excite themselves over the potential for a re-run of the sub-prime housing boom from 2003-7. Thus they welcomed last week’s news of higher house prices with a major rally, after having ignored earlier reports of a slower pace in housing starts themselves. As the chart shows: • Starts dropped back […]
90% of new US mortgage bonds now government guaranteed
It would be nice to believe that a sustained recovery was now underway in the US housing market. But unfortunately, there is little evidence to confirm the claims now being made. As the chart of prices from the S&P Case-Shiller index shows: • February prices (red square) remain in the same range seen since the […]
Aging US BabyBoomers mean new home boom unlikely
Is a recovery underway in the US housing market? Investors on Wall Street certainly think so. One over-excited fund manager called the blog recently to exclaim “housing starts were at 500k, now they are at 900k, and they’ll be back to 2 million within a year or two”. His definition of a pessimist was someone […]
US house prices unlikely to drive economic recovery
When ‘everybody knows’ something, experience has taught the blog to become very suspicious. And when everybody knows that rising US house prices are certain to drive a US economic recovery, it becomes very suspicious: • For a start, as the above chart shows, the prices shown in the authoritative S&P Case-Shiller Index haven’t actually risen […]
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