By the time of the next View from the Bridge in November, both China and the United States will have determined their next governments for the coming four years or more. Continuity or change? We shall have to see.
From the lubricants point of view, I return to the view that we are now about half-way through the financially-induced recession which, according to Reinhardt and Rogoff research, endure significantly longer than demand-shortage-induced recessions. Firstly homes have to de-leverage, then companies and finally governments.
In the US, house prices have picked-up for the third consecutive month. New housing sales are up 28% and car sales also rose by 13 percent year-on-year in September nearly 1.2 million, with Ford being particularly optimistic. Analysts believe sales could hit an annual total of 14.3 million, compared to 12.8 million in 2011.
To many that all may sound like some form of consumer confidence yet, at the same time, US companies are sitting with two trillion dollars on their balance sheets trying to summon up the confidence to invest or buy other businesses.
In 2009, OATS decided not just to sit on the sidelines, but to deploy our resources and invest more in the business. We added staff to help build our global database and increased our development resources. This year, with further expansion of the organisation, we have moved to new premises for the first time since the 1980s. Now we must look beyond the IMF's gloomy short-term global and UK growth predictions, focusing instead on the glimmer of hope presented by the longer-term prospect of an upturn.
After seven months of falls in German manufacturing, the rate of decline seems to be slowing and their PMI rose to 47.4 from 44.7. Still below the 50 mark, this still indicates growth. While downside risks remain, the determination being shown by the European Central Bank suggests the Euro will survive (despite all logic but there will have to be some write-offs somewhere. What Europe needs is more businesses to commit their resources in an effort to create the growth that is essential to re-build momentum.
Waiting for the US government to de-leverage could take even longer. Meanwhile, we have to wait for the impact of emission controls and CAFE regulations in transforming oil changes and reducing the overall consumer lubricants market.
As always, if you would like to comment on this, or anything else you have read in our monthly OATS Bulletin, please don't hesitate to contact us.
Sebastian Crawshaw
Chairman, OATS