YouSaid · the spoken record

Paul Hodges

lines on the record: 173
first: 2024-01-13
most recent: 2024-01-13
sittings or episodes: 1
sources: podcast

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“I mean, how bad do you think it'd be? Like, how high do you think the unemployment rate would go? And do you think consumption will go negative on a real basis, on a nominal basis? Because it sounds like you think it could be pretty severe.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Away from that? Are we nine months away from that? I don't know. But I think for viewers, I think it's worth keeping a very close. Well, what we're trying to do is we're trying to say, look, we see this big risk. We're generally right about big risks. For goodness sake, please try and keep an eye on it. Because if you see it actually happening, it will be too late.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Then roll over their debt, and that is the big risk. Because, and once that happens, you have a very swift downturn because suddenly everyone goes from a very optimistic mode. Hey Gap, let's go out for a beer. Yeah, it's all going well. Jack's gone bust. Oh my God. And that's the risk. I mean, it's, you know, the famous Hemingway phrase where he meets his friend Charlie and he says, hey, Charlie, how do you go bankrupt? And Charlie says, well, slowly at first and then very quickly. And that is the risk now that we have that because people are looking in the wrong direction, looking at the wrong data, when they start to look at the right data, things will unravel very quickly. Now, are we three months away from that? Are we six months?”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Okay, well, let's just sort of peel back the onion And the most likely outcome that we're going to see is two things. One is that prices themselves continue to fall. There'll be bumps and so on, you know, natural gas, there might be a problem with that gas, there might be, Middle East might push up oil prices, you know, and so on. All these things could happen. So, you know, it's foolish to try and sort of give a number. But the general direction is you've got an awful lot of supply and not that much demand. So over time, prices will go down. The corollary of that, we've had the warning sign with Silicon Valley Bank just as we had the warning signs before subprime, where somebody is left holding the baby. And in this case, what you're going to see is that the 20% of companies you can't roll over, they can't pay their interest bill out of earnings, their earnings go further down and they can't.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Price increases going down. So I see the rest of the world. I see Europe to you, Africa, China, Japan, Antarctica, everything to you on the slowdown. But in the US, when do you think it's going to show up in the hard data that the Federal Reserve really, really cares about? Federal Reserve, they look at everything, but they really care about the rate of inflation and unemployment. So the unemployment rate's at 3.7% inflation is at 3 or 4%. growth consumer demand and spending is growing at 4 or 5 percent at what point do you think this weakness is going to be seen in the hard data because i would say it hasn't been seen yet and not you but a lot of people have been calling for a recession for you know close to three years or definitely over two years and it hasn't been going in in the data and you know going back to your point about as an oil trader it's like okay you know sure but but tell me when tell me when and where you know”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“The result of that, I guess, is inflation. So, okay, nominal growth spending is high, but it's inflated away. We did have a lot of disinflation. And I think you think that there could be a deflation. So prices actually going down, not just the rate.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Up to the power to be said, no, no, this is absolutely, it's actually Alice through the looking glass. You know, you look at it, you say, this doesn't make you say, oh no, no, I'm the white queen. That's how it is. And so that's why I'm saying you completely fooled large numbers of people, large numbers of companies and so on into thinking that this demand will somehow real and that you could just print money and you would always create demand. But nobody ever asked the question, well if this was so easy to do why hasn't it been done before in the first few thousand years of human history? And the answer was people had tried they owned medieval kings before the time of the States had clipped the coinage and it was all silver and they clipped it and so you actually got less silver and so on and at the end the whole thing collapsed and they had to start again which is what's happening now.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“I'm actually agreeing with you because printing babies means that you actually do have real demand in the end. The babies grow up and they create demand, they create supply. But if you just hand out money and what Europe did after all, even more extreme than the States, was not only zero, you had zero interest rate policies, Europe had negative interest rates. So the bank was actually paying you to borrow in places like Sweden and so on. I mean, this is obvious madness.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“A lot of monetary stimulus, fiscal stimulus was very large in 2009 afterwards, but relative to the deflationary hole in the global economy, it was actually not very large. And in Europe, you had a lot of austerity. I think this time around, in the US, there was a lot of fiscal money printing. And you say central banks can't print babies. Central banks can't print demand. I think the US government printed demand. I mean, the U.S. nominal demand is so above trend. The recovery was much more than recovery, I would say.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Chemical industry, when we started, you know, prices came down every year. The product was more affordable as a result you sold more. What's wrong with that? But not in Bernanke's little academic mind. No, no, no. Making sure it doesn't happen here, which is 2003 speech. And so when you went into subprime, instead of saying, we've made a mistake here, guys, we really shouldn't do it. Let's just let this play out. So, oh no, don't worry. I'm a hero. I'm on the front page of all the magazines.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Nothing lay wrong with inflation. Some of the best periods of economic growth in the nineteenth century were due to deflation.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“and the government of Japan and he Responsible for this whole, but if anybody who's studied economics has read Galbraith, the Great Crash. And Galbraith was very clear, you know, you had mad speculation and then you had a comeuppance for it. Not in Bananki's universe No, no, no, no all that went wrong the speculation was fine all that went wrong was the Fed didn't hand out enough money to enable it to continue and so when he got the chance he decided because the demographics in two thousand were very clear that you were getting to aging populations you haven't you know the women had been having less than 2.1 babies since 1970 They'd now been having them nearly 55 years in the West So you know where that's taking you and therefore that leads you to deflation.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“If there's one person that history is going to blame for all of this, it's Ben Bernanke. Because here was this very arrogant Princeton professor who went over he could read Shirakawa, the former governor of the Bank of Japan, read his autobiography, which is very revealing about how Belanke turns up. He's still just a professor at Princeton in Lambosts. You are so stupid you don't know what you're doing all these modern tech techniques that I can tell you, and you're just not listening to me at all.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Do you think there's a difference between subprime mortgages and demographics? Because subprime mortgages, okay, the assets, they're not worth the price goes down 20 cents from a dollar to 80 cents in a day. The liability structure seizes up because all the short-term offshore very short-term shaky LIBOR financing. I just did an interview, by the way, about what a sham LIBOR was. So my brain like that I can understand, okay, it can go from the bank exists on Monday and the bank doesn't exist on Tuesday. I get that. But Denmark's very, very slow. And you don't think over 20 years the society adapts to Demand has the rate of growth of demand in Japan has fallen off a cliff, no doubt, over the past 40 years. But it's not like Japan is still producing with as much optimism as it was in 1985, right?”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“There isn't. And this is really where what Wall Street is doing is really very dangerous. At some point, if we're right, and we were right in 2008, unfortunately, if we're right about this, people are suddenly going to say wait a minute. Why did you keep telling us there was a soft landing we could have prepared for this? And you told us we didn't need to, and that loss of faith in political leadership and in government is very, very dangerous.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Questions, but we saw that with our friend President Trump, and he's having another go, as we know. And so, and it's understandable that some people say, well, I'm not going to fed up with all this. So you're now getting on top of this loss of the demographic dividend, on top of the loss of the peace dividend, and the need to spend more money, a lot of money on defense now and move up, rebuild capability very quickly because we are at war, whether we like it or not, at the same time, you're also seeing the problem that individual countries are not clear about what's happening. You haven't got a World War II support. I mean, you always had people in World War II who didn't agree with a war and so on. That was always an agreeest strike and everything else. But basically people understood what was happening and felt it was the right thing to do. There isn't that understanding at the moment.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“You have aged populations, very high proportion of them, as say close to 45% in Japan, say in Germany, Italy, and so on. So you are not going to get growth in this area. I'm not so worried about ability to pay pensions or healthcare things and so on. What I'm worried about is simply social unrest. That you're already seeing signs of this. We've had the Argentine election, for example. I mean, half the world's population goes to the polls this year. Obviously, the Russian election, not necessarily as competitive as some others. But, you know, all of them to some degree are competitive. And you look at Argentina. And what do you get when a country doesn't do very well for a while? You get populism. You get simple answers to complex.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Well, I mean, the reason why it's weak is twofold. One, the companies have overexpanded based on the false signals given by stimulus. You know, if you give people lots and lots of free money, unfortunately, present company accepted, they do stupid things with it. And, you know, the whole idea was, oh, this is real, that nobody actually bothered to go back to the demographics and say, wait a minute, actually, we've got declining populations here, we've got aging populations, we know what that means. We can all say, no, no, rah, rah. Off we go to the races. After all, it would be my successor who has to clear up the mess. I'll have got out with my share options at peak levels and so on. So we see that time and time again. That's the name of the game. You have a position where you've got a vast amount of supply in nine of the ten leading economies in the world responsible for two-thirds of global GDP.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“We will level the playing field. Every country will level the playing field one way or another. Small companies countries can't do it. They don't have the power. But a big power block like Europe, 450 million people, it could stand up and fight for itself if it wants to, and it probably does.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“No, so China is doing it because it wants jobs and security of supply. And you can see Europe's got higher costs, all sorts of things that go wrong. Now, is Europe, these are dynamic issues? Is Europe going to sit back and allow its chemical industry to be destroyed? Because if the chemical industry has destroyed a whole lot of other industrial infrastructure is destroyed as well, obviously not. Europe is not stupid. So Europe will come along with protectionism just as the states did with the IRA, and you know, you have a twenty seven point five percent tariff on Chinese electric vehicles. Why? Because we want to preserve the US car industry. Fine. So in Europe, we're moving to carbon border adjustment mechanism. So if you can't prove that you're paying the same price for your carbon as we are in Europe, then you will have to pay over money to the government.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“And that he's going to lose volume there. So it's going to put that into chemicals. It doesn't bother thinking about what's the demand for chemicals and polymers and so on. How's that worried? And I know we've got four million barrels a day and we're going to put that into chemicals. Really? How are you going to sell it? We'll sell it. The states, we've got all this natural gas. We've spent 200 billion on new plants and so on. So we're going to sell it now. We're not going to shut down.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“So FA prices are relatively low, which gives the states an advantage in this. So it can afford to carry on selling. But it's getting, you know, essentially you're seeing this roll-through pricing come across. If you're Northeast Asia, for example, or Southeast Asia, so these are big economies, after all, we're talking about Taiwan, we're talking about Japan and so on, you've built this capacity and the idea was it was basically going for export to China. And now China doesn't want it. But you can't shut down. Therefore, prices just tumble. And people say, oh, but China will cut back. And you go, why would China cut back? Because it needs to create the jobs. Everybody in the world has their own thing at the moment. The Middle East wants to retain demand for oil and gas. It recognizes electric vehicles.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“I'll answer. So it's not surprising that inflation is coming down because you've got vast overexpansion in a vast number of industries. Not every industry, if you look around, most people have fallen into this trap that they've expected China to grow like mad, and in fact it hasn't. And so all their plans, because once you've built the plant, you don't want to wring out Wall Street and say, oh, you know, we took 20 billion from you for this. Oh, we're terribly sorry, but we're going to close it down. Wouldn't do much for your CEO's share options.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“We cannot make anybody, but we'll call you when we need you. But you can't do that in chemicals because you have to take the ethane, for example. You have to take, otherwise you can't sell the natural gas or the naphtha that you use in Europe and parts of the states and Asia and so on. Again, that comes from refineries. And if you don't use the NAPFA, you don't get the gasoline, you don't get the diesel, you don't get the jet fuel. So this becomes a distressed sale. And so unlike mining where you can expect that price and supply will rebalance over a while, you can actually go for several years. It's called roll through pricing. So your upstream partner who is making money on his natural gas or is gasoline sales or whatever it is, he says, all right, how much do you need to keep running? Because I can't allow you to shut down.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“polyethylene my last investment you know tens of billions of dollars has gone into this similarly the middle east has gone into this and there's no there's no market for it because China doesn't want it it's self-sufficient no young exufficient there's no growth in Europe there's no growth in the states if you look across the world because of this mistake around the level of actual demand in China principally everybody has overinvested to the tune of about two hundred million tons and what that means in a market of five or six hundred million tons is that everyone has lost pricing power and so but unlike mining you know if I always have this idea that if you're a copper miner and the price goes down you call the miners to the mine head and you say look sorry guys”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“In the road. But if you take chemicals again, we're moving now into a world where most of the major chemical products, polyethylene, polypropylene, polyester, PVC, and so on, then China is either now a net exporter when it was the largest importer or it's moving very rapidly towards a position of balance. Look at what's happening in the States. There's expanded ethylene capacity by 40% over recent years based on the shale boom. You have shale gas, you have this product called ethane. Ethane is explosive above a certain level. You can't put it in a pipeline. Oh, very, no problem at all. We put it into a chemical cracker and we make polyethylene and we sell polyethylene to China and the situation where all of this new investment in the states in terms of producing”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“That's it. So you've got a situation now in China where they've part of this course this was due to Trump up till Trump, China had thought more or less and China are going to be the biggest economies in the world. This was set up by Kissinger and Nixon and so on and built on after that by Deng and so on and the idea was yes there will be bombs in the road but we'll always work together. Now when Trump came along with the trade war then they reconsidered and they said well if we can't rely on the states we'd better go for self sufficiency The being that the states and Northeast Asia and Southeast Asia and to a certain extent Europe had all built up expectations of major ongoing long term export business into China based on the idea of working together and overcoming the pump.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“If you start building between every little station all over the country, as you started to do, the chances of actually making any money from that or changing the strength of the economy. There was a very interesting Professor Zhang, one of the leading universities, came out with a paper where he said, you know, probably up to a quarter of the expenditure has been completely wasteful and inefficiently speaking.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“So you have a situation where people, yeah, we know what the disposable income is. It's published. We know this is the government data. So there's no reason to particularly doubt that they're under recording it. You know, if they say it's $8,000 for urban area people, it's unlikely to be $50,000. You know, if it was $50,000, they want to tell you about it. So $8,000, which 8,000 compared to $79 over 40, 50 years is pretty good. So let's remember that. What you've got.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“At the end of the day, the subprime crisis in the States was about giving people teaser loans that they couldn't actually pay when the rate went up from zero to a more normal rate. Therefore, you had the crisis. This is the same. So they were both credit. If you hadn't given, nobody, Greenspan and Bernanke hadn't given out teaser loans and Greenspan hadn't gone around saying, oh, you can't possibly have a national housing crisis in the States and so on, then you wouldn't have had subprime. Greensboro was the one giving.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“About giving people money and basically doing what America did in 2020? I think maybe China maybe philosophically disinclined to do that, but I'm setting aside practicality and what actually China would do. I'm talking about the purely how they might do it. Why would that?”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“If you don't have family formation, you don't tend to buy property. You don't need a home or whatever. No lads like ourselves can dot on someone's carpet. You know, we're happy to do it. And so on. We're not, you know, come along. We're going to go, oh, yes, okay, yes, of course. So you've got this position now where because of the one-child policy and the side effects, the unexpected side effects, they were punicking about overpopulation and so on, which is never a problem really, but everybody was panishing at the time. And so they did this. And the consequence is that you've now not only got a vast expansion of empty property, but you also have got a vast under representation of people who want to buy this property. So my question for the Chinese government is how could you get out of this? And the answer is you can't.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Or because you've got an aging population and you've got a declining population and you have an even bigger problem that because of the one child policy after 1980, people had to choose one child at the peak. You had 118 boys being born for every hundred girls. And that continued from 1980 and we've got data up till 2021. We don't have 2022 or 23 yet. But what we can see is that if you take a normal boy girl ratio, boys tend to survive better in the womb than girls. And so you normally have a ratio of 103 or 105 boys born to 100 girls. If you look at what we had, we actually had an average over that period of 114 boys. So we're short of around 90 million to 19 million. girls now if you don't have girls boys can't marry if you don't have girls and boys can't marry you you you don't have family formation”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“How do you think it plays out for China? What do you think the odds are of the Chinese government being able to restore order and I think is in a recession? I mean, their GDP growth looks good and their real GDP growth looks good because they have very low inflation or even deflation. But yeah, it all is not well in the state of Denmark. What do you think the odds are that this is a trough and that the Chinese economy will actually grow? You know, this is the 2009 in the same way 2009 US economy was in a very bad way the U.S. economy rebounded quite well, at least relative to Europe. Why won't this be that same moment for China?”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“A really dangerous situation in China have a knock-on from Japan. And I don't believe that the US or Europe could possibly be immune from any kind of downturn in those economies, because you are talking about the second and third largest economies in the world.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“And house prices in the tier one cities were fifty times earnings. You know, you and I may think that 15 times earnings in New York or London is pretty, pretty eye-popping and so, but this is three times that. And so now, of course, the bubble has burst. I mean, the former deputy head of the National Statistics Bureau gave an interview to Reuters a while ago, where he said nobody quite knows the degree of overbuilding, but it could be that there's enough empty buildings to house the entire population of China one point four billion people. And so once you lost confidence in the government, which is what's happened, you can't get confidence back, you know, I either trust, you know, it's like being pregnant. You can't be half pregnant. You either are or you aren't. And people have lost confidence because of zero COVID in the government. And so now you've got...”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“The problem is that 10, 15 years ago, you needed to move away from the process of being the manufacturing capital of the world, and instead you needed to focus on building out a social security system, a safety net. You needed to have pensions. You needed to have medical care. You needed to have all these things. Because if you don't have a state system, people have to save to cover it. They didn't do this. They instead went for stimulus. They instead went for a property bubble. Well, property at its peak was something like 50%, but about 29% of GDP.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Well, I mean Well, the problem you've got in China is that you had a development model set up by Deng Xiaoping from 1978, reform and opening up, which was based on bringing people out of absolute poverty. Urban disposable income in China in 1978, money of the day, was $79 a year. It was $39 a year in the rural areas. This is dirt poor, right? And so it's been a fantastic achievement to move forward, but you're still only at something like eight thousand dollars a year, disposable income in the urban areas, and only about three thousand in the rural areas.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Levels. So we went from zero to half a percent, and then we were forced to 1% cap. If we allowed interest rates to go to world levels, supposing they went to 3%, Japan is bankrupt. You know, you can't, you've got 200% of debt as GDP, and you've got no means of growing the GDP in order to say you've got a real problem. And once that problem has been observed, and let's face it, nobody's paying much attention to it at the moment. So, you know, I'm not expecting it to happen this afternoon. But once that problem has been observed, people are then going to say, well, wait a minute, China has got an even more debt to GDP three hundred ten, three hundred twenty.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Not doing that well, you know, I have to break it to you. The translation is not great. And so we think we are moving slowly but surely. Everything moves slowly but surely in Japan to a world where the central bank, now Bank of Japan, has to make a choice about do we keep interest rates below one percent? In which case look at the yen versus the dollar that goes if it goes through one hundred fifty because it was 100 a couple of years ago. If it goes through 150, does it stop at 151? Does it go to 175? Does it go to 200? Not overnight and so on. Is that where the markets are going to take it? And what does that do to Japan's economy if the yen goes another 20, 30 percent or whatever? That's the risk there. Or do we allow interest rates to go to more normal?”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, right. It isn't Argentina, it is Argentina as well, of course. It is Turkey as well. It is Japan. Now, this is the currency is trying to tell us something about the outlook. And people say, oh, yes, well, look at the Japanese stock market's going fine. Well, yeah, we know. I mean, let's go back to Zimbabwe, goodness, though. You know, what do you do if you've got money and your currency is falling apart? You buy stocks, because that's the nearest thing you've got for a hedge. So it's no surprise that the Nikkei index is going up. But if you buy it in dollars.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Because of the fact that you can look at the Japanese data for spending, consumer spending is about 60% or so of GDP. And if all your, you know, it's got the highest in the world proportion of people over 55, about 45% or so, you cannot therefore have economic growth because these people are replacement economies. So what are you doing? Well, you've seen if I said to you just for a moment, Chat, you know, I want to talk about a country where the currency has fallen 50% against the dollar in the last couple of years”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“To be absolutely clear, to start people off the weekend in the right frame of mind, we're talking about a major Asian debt crisis. You've got Japan, which has followed through on the Bernanke strategy since 1999, 2000, and has built up vast amount of debt, 265% of GDP, is got an aging population and a declining population. So it can't grow.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“And she looked at me and she said Oh no, no, there's no worry, but we have that in ninety seven, and it was it was you know it was a problem but we cope with it and then she paused and then she went But they're much larger now aren't they? And I went yeah they're much larger”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“as reported by retailers, as reported by the lenders, as reported by Berkeley Card and Master Card and so on and so forth all seem to suggest that the consumer is under increasing pressure. So that moves me very far from the idea of a soft landing. And I agree with you that from a US perspective, the idea of a depression sounds ridiculous. But I then want to point you at another unrecognized area of Japan and China, because after all, they are the second and third largest economy in the world. I had an interesting conversation two months ago with the deputy head of one of Europe's major central banks, and I said, you know, I'm worried about what's going on there.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Builders clearly have a risk because they're still bidding for if you look at housing permits you look at housing starts and so on they're still building quite high levels I mean remember in 2008 2000 housing starts went down to I think from memory six hundred fifty thousand and we're more than double that today so so there's quite a lot of new building going on now you would argue and I think you'd be right well there isn't a lot of immigration so you know but you know are all the houses in the right place is an interesting question are we getting squeezes in some and problems in another this is where I think the chemical industry has an advantage because we do get that kind of granularity rather than oh here's your here's your headline on the Wall Street Journal you know all this buy or sell based on that get a much more nuanced picture so so my answer to your question is that the trends in”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Is cutting back in areas and you look at spending patterns today. Yes, the car industry, the auto industry has been doing well because there were major shortages of parts of a major shortage of cars and so on and so forth. But that is now unwinding and I don't think many people we've been with the consensus on this. We don't think many people would expect to be 24 to be a banner here. We think it's going to be rather difficult. Other areas of the economy construction is really interesting in the States because as you say you've got individuals who've got 2 or 3% 30 year mortgage and they aren't moving. And so the builders, the question is who takes the risk? Is there a risk here? Obviously there is interest rates are no longer two or three percent so somebody's got a risk here. Silicon Valley obviously showed us that some of the banks have a risk”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“The job numbers as we have them and how they've been evolving, what you're seeing, I think, is that around 50% of the jobs now are part-time jobs and people are taking on two jobs to manage. You're also seeing quite a divergence between the two employment surveys. And I don't think either of them frankly are particularly accurate because they're getting very low response rates today. But, you know, maybe they are enough”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Talking about, there does seem to be a much tighter spending pattern now among most people. It would be foolish to suggest that you're in recession if people have got more money in the first half of last year than they had the previous year. I mean, that never made any sense to us. It was the opposite of China. Why would you think China with these structural problems could possibly have a boom? Oh no, it's going to have a boom. Okay, fine. Why would you think the states with this structural benefit would have a depression? Well, oh, we do. People have opinions, that's fine. But if we look at just to explain where we are today, if you look at”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT
“Well, I mean, it's relatively straightforward, I think, to explain. The San Francisco Fed did quite a lot of work on this. The IMF did quite a lot of work on this. People in the States and also in many countries in Europe actually got more money in furlough payments than they would have done if they'd been working. And you look at the savings rates and so on. And I don't think there was anybody who thought that the saving rates would come back to normal before, in other words, the furlough payment money had all been spent until the end of quarter three. There's been a debate in the last three or four months about whether the top 10% still have money and the other 90% don't, which seems we don't have enough data, but anecdotally. If you listen to what the Walmarts and the targets and all those companies are talking about.”
2024-01-13 · Forward Guidance · Paul Hodges: Overcapacity In Chemical Industry Suggests Demand Is Weakening · IDENTIFIED FROM THE TRANSCRIPT