The State of the Growth Engine

Contradictory macro- and microeconomic observations in today’s economy are a norm, and the recent earnings season in the U.S. only adds to the uncertainty. Unfortunately, wishful thinking is not a way out this time either: putting the pieces of puzzle together reveals the state of economy that is not new. One of the biggest

The Small Data Item With Large Consequences For Chemicals And Beyond

In the heaps of Producer Price Data issued by BLS, there was one curious item in September – an unusual price shift. Corroborated by the industry sources, the shift can become a catalyst for many changes beyond petrochemicals. Most of the supply chain will suffer, but there are few companies that might benefit.

The Gem In Monsanto’s Earnings Announcement And How To Build On It

Earnings season provides incredible insights into global supply chains. Monsanto’s earnings release was by far the most insightful last week in terms of implications for many companies. In many ways, there is no need to forecast – the reliability of conclusions (and trades) is a necessary outcome of what Monsanto disclosed. The earnings

Brexit And Pound Decline: Impact From Pharmaceuticals To Jet Engines

The most tangible impact of Brexit so far has been the falling sterling. Near 15% decline of the currency since the vote should in theory create problems for many US competitors. Due to the peculiar nature of the British economy, the outcome is a little more unexpected. A few months ago, when I

From OPEC To Deutsche Bank: Wider Implications

Two very significant events in the week will have implications beyond their immediate markets. OPEC’s agreement to cut production, although ineffective in itself, is a trigger for something more significant. Deutsche Bank was magically saved by accommodating stance of DoJ, yet the episode highlights the vulnerabilities and the mechanism of a global financial distress.

Counterparty Risk: When CDS Spreads and Ratings Are Not Enough

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As the recent Deutsche Bank episode illustrates, counterparty risk management for pension funds and insurance companies should be based on more proactive and comprehensive assessment of all risks relating to the counterparty. Many Boards and investment committees, undoubtedly, have revisited their exposure to Deutsche Bank at some point during the episode and have had to

The Prisoner’s Dilemma And Carmakers’ Profits

Managing market volumes and prices of steel with administrative resources proves difficult. A combination of two dilemmas is likely to result in lower steel prices. Car manufacturers stand to benefit from lower raw material prices, but what about other risks? It is remarkable how telling prices in multiple commodity markets can be. Often, those

Bid For Monsanto: Impact Beyond Seeds And Agrochemicals

Bayer’s bid for Monsanto is yet another evidence of a seismic shift in the supply chain power balance: consolidation in agrochemicals and seeds markets. The supply chain becomes even more unbalanced, with concentration even high both down- and upstream from farmers. Resulting competitive dynamic extremely bearish for farms, farm economics, and as an extension, for

Five Trends Shaping Long-Term Asset Returns

Lower savings rate, structurally high unemployment, reversing globalization, over-regulation and volatile energy prices define the future of asset prices and returns. Equities will enter a period of stagnant returns, while interest rates will remain low-negative. Over the past decade there has been a seismic shift in the willingness, ability and the mandate of investment professionals

Global Supply Chains To Support Ethanol Margins

Summary Using global supply network indicators it is possible to find the most favourable markets. Structural changes in commodity prices suggest that the ideal industry is positioned as a supplier of energy-related products and consumer of agricultural commodities. Ethanol producers are the best match; with a six-moth view these companies are likely to experience continuously