Western central bankers are convinced reflation and economic growth are finally underway as a result of their $14tn stimulus programmes. But the best leading indicator for the global economy – capacity utilisation (CU%) in the global chemical industry – is saying they are wrong. The CU% has an 88% correlation with actual GDP growth, far […]
Chemicals and the Economy
The global economy’s best leading indicator forecasts a downturn
If you want to know what is happening to the global economy, the chemical industry will provide the answers. It has an excellent correlation with IMF data, and also benefits from the fact it has no “political bias”. It simply tells us what is happening in real-time in the world’s 3rd largest industry. The chart […]
Forget the IMF: global chemicals are your guide to future performance
The chemical industry provides a far better guide to the economic outlook than the IMF or any economic forecaster, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog The global chemical industry has long been the best real-time indicator of the global economy. This is partly because of […]
Oil market rally under threat as Doha meeting fails to agree
Yesterday’s failure of the Doha oil producers meeting will hopefully reintroduce a note of sanity into oil markets. After all, Saudi leaders have made it clear, time and time again, that they were no longer interested in operating a cartel where they take the pain of cutting production, and everyone else gains the benefit of […]
“World faces wave of epic debt defaults” – central bank veteran
Only one central banker spotted the subprime crisis before it occurred – William White. Now he is warning that the world will have to revive the Old Testament concept of “debt jubilees“, with much of today’s debt being written off: “Debts have continued to build up over the last eight years and they have reached such […]
Greece introduces capital controls; IMF says it needs to default
This morning, Greece introduced capital controls. People can only withdraw €60/day ($65) from their bank accounts. The government has also called a referendum on Sunday, after Eurozone talks on a new bailout package collapsed. The key issue is that Greece will never be able to repay its debts. These are currently estimated at €322bn ($365bn) […]
Germany could face €86bn bill from a Greek default
Who would pay the bill, if Greece defaulted on its current €320bn debt ($340bn)? This is no longer just a theoretical question. Of course, we have all known since 2012 that Greece would never be able to repay its debt. But the EU covered up this hard truth by a ‘pretend and extend’ policy: The default deal deferred repayment […]
IMF says world seeing “a New Reality of lower potential growth”
After 6 years of largely-wasted stimulus efforts, the world’s economic advisory bodies are finally having to accept that ageing populations really do impact economic growth. The latest International Monetary Fund’s latest World Economic Outlook finally breaks half of the taboo that has stopped most economists from accepting this seemingly common sense conclusion. Its Summary argues as […]
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 […]
Budgeting for an L-shaped recovery
As companies finalise Budgets for 2013-15, many will be thinking long and hard about the implications of the IMF’s new economic forecast: “The recovery continues, but it has weakened. In advanced countries, growth is now too low to make a substantial dent in unemployment. And in major emerging market economies, growth that had been strong […]
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