C-MACC Macro Matters

Graham Copley

Find me on:

Recent Posts

So Long, Farewell

Oct 20, 2022 5:50:50 PM / by Graham Copley posted in Inflation, UK, prime minister, politics, Liz Truss

0 Comments

We highlight our commentary from today's daily report on the most recent event in UK politics, the exit of now former Prime Minister Liz Truss. We previously called it as a high probability that she would have the shortest tenure in UK's Prime Minister history.

Read More

There's No Proxy For A Major Conflict In An Interconnected World

Feb 24, 2022 2:01:42 PM / by Graham Copley posted in semiconductors, Russia, Economy, Ukraine, global economy, solar panels, Caterpillar, durable goods

0 Comments

The Russia/Ukraine conflict is the first major aggression that we have seen in the developed world since the 1930s/40s. There has been local conflict around ethnic differences – most notably in the Balkans – but this is different. There is no precedent for how this might play out as the global economy is far more intertwined today than it was 80 years ago. Countries are very dependent on other countries for critical consumer staples and critical durable goods. By critical durable goods, we do not mean more toasters or iPhones, we mean air conditioners, auto parts, generator parts, and other electrical equipment – also solar panels. Specifically, note the weakness in Caterpillar’s stock, not because the demand for its goods is weak, but because it is too reliant on Russia for equipment. Escalation in the tensions in Europe, especially any move that brings China into the mix – proactively from China or as a consequence of its alignment with Russia - and then disrupts trade, will expose critical supply chain holes, much worse than we have seen for semiconductors this year.

Read More

Labor Shortages Add To Both Manufacturing And Inflation Woes

Jan 14, 2022 2:44:48 PM / by Graham Copley posted in Raw Materials, Inflation, Chemical Industry, manufacturing, trucking, labor shortages, COVID, Building Products, transport fuel, Labor, construction

0 Comments

The number of headlines in today's daily report talking about labor shortages is increasing rapidly and the constraints that it is placing on the economy are moving well beyond the airline and restaurant industries. In our Sunday Thematic (to be found here), we will look a little deeper at what effect this could have on the chemical industry beyond what Sherwin Williams noted for 1Q 2022. At a 30,000 foot level, the more people that are contagious and isolating, the less overall economic activity there is, which at the margin would negatively impact transport fuel demand beyond the more quantifiable jet fuel drop associated with flight cancellations. The more significant issues will be with businesses that cannot operate without a minimum number of trained staff and we note the following pharmacy headline Walgreens, CVS Shut Some Pharmacies on Weekends as Omicron Strains Staffing as a good example. Trucking and other delivery services could face constraints because of driver availability but this will just create backlog rather than broader economic harm. Failure to get critical raw materials may impact the ability to operate for select manufacturers, but we saw some chain inventory build in the 4th quarter of 2021 and this should limit this risk.

Read More

A Further Swing Towards Services Spending May Not Curb Wage Growth, But Could Hurt Materials Demand

Nov 2, 2021 3:53:11 PM / by Graham Copley posted in Chemicals, Inflation, Supply Chain, consumer spending, shortages, COVID, services, materials surplus, demand, inventory surplus, travel

0 Comments

This is a topic for a more detailed report, but we question whether rising inflation, supply chain panics, and more drastic government action to try and tame labor shortages and price increases could bump into a step down in demand, exposing a significant inventory surplus – sitting between producers all over the world and consumers, mainly in the west. We are seeing travel restrictions lifted all over the world over the last couple of months as the vaccination program has brought COVID under more manageable control in many countries/regions and as leaders conclude that we just have to live with whatever residual there may be. Now, this could all change if COVID surges through the winter in the northern hemisphere, but if it does not, we could see that shift in consumer spending from goods to services that we were discussing a year ago. So far we have only seen a partial shift, and as the chart below shows we are not back to the pre-COVID trend yet. A swing would create different problems and likely not end the labor shortages based on recent experiences in restaurants that were not busy, but could not keep up, and based on some of the staff issues that the airlines are having because they are running too leanly to have the ability to pivot if weather throws them a curveball.  

Read More

Will Panic Buying & Inflation Drive A US Credit Bubble Eventually?...

Oct 20, 2021 2:49:36 PM / by Graham Copley posted in Inflation, consumer spending, shortages, credit cards, COVID, US consumer, consumer credit, interest rates

0 Comments

We talk about inflation several times a week (and it features in many of the headlines in yesterday's daily report), but the effect that shortages, perceived or otherwise, are having on the US consumer, is significant, as buying remains high, fueled in part by rising consumer credit.  COVID reduced consumer credit levels from a record high, just before COVID began, but it is climbing back again, and offers of low credit and new credit cards with new features appear every day.  Inflation could have two effects – it could increase the cost of credit-based purchases, so increasing credit card debt, and it could eventually lead to a tightening of credit and higher rates, which might increase the credit default rate and exaggerate the negative economic impact of higher interest rates in general.  In our attempts to combat the effects of COVID, overcome a constrained supply chain, and keep economies moving, we may be setting up a credit bubble (not this year and probably not in 2022) that comes back to bite us later.

Read More

All I Want For Christmas Is Not Available

Oct 13, 2021 2:56:31 PM / by Graham Copley posted in consumer spending, transportation, Shortage, UK gasoline, food price inflation

0 Comments

Welcome to the first C-MACC macro blog. These will be less frequent than our industry and ESG blogs, and we will only publish when we feel we are making more sense than, or at least as much sense as everyone else.  

Read More

Subscribe Here!

Posts by Topic

See all