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‘End of oil’ narratives are misleading — global oil demand will remain at 90 million bpd


The world isn’t reinventing the wheel. But we’re changing how it turns, who it carries and where it’s going.

Over the next few decades we’ll be plugging in more cars, hailing and sharing them, and reminiscing about the good ol’ days of the steering wheel.

To be sure, these looming mobility changes are all exciting and impactful. But none of these nascent trends extrapolate easily into a narrative about “the end of oil,” a disruptive displacement of the fuel everyone loves to hate.

Contrary to armchair calculus, more electric vehicle (EV) sales do not equate to the world using less oil anytime soon.

In fact, whichever way you cut the spreadsheets, the numbers are pointing in the opposite direction. By 2030, less than 15 years from now, I expect around 400 million more internal combustion engines will accumulate into the global fleet of passenger cars – even after assuming that EV market penetration is accelerated with the heavy-handed help of governments around the world.

Here is an indication of the scale of vehicle accumulation: So far this year, to the end of September, over 70 million vehicles with internal combustion engines have been sold worldwide. Every new vehicle that’s sold lingers in the fleet.

Simplistic assumptions and analogies abound. A petroleum-powered vehicle is not like a cheap DVD or videocassette that gets pitched out the minute you buy a Netflix subscription. A car already on the road is an expensive asset –most often financed with debt – that’s put to work for as long as possible by a string of owners. What’s under-appreciated is that most oil-burning vehicles will resist going to the scrap yard, due to their stubborn and improving reliability (see my column Old Pistons Die Hard from October 16th.)

Another mythical assumption is that oil consumption is only about planes, trains and automobiles. At least 40 per cent of every barrel goes to other industrial uses, like heating, lubricating wheels (electrically propelled or otherwise) and petrochemicals. The developing world continues to computerize, mechanize, industrialize and all sorts of other suffixes that contain “-ize” that use more and more oil products beyond transportation. From shampoo to crayons and shoes, hundreds of household items contain refined oil products.

As a conclusion to my multi-part series on the impact of EVs on oil consumption, my figure this week shows the future of oil under three scenarios of substitution of passenger cars by electric vehicles, including the scenario that assumes that all countries will ban the sale of combustion engines by 2040. For conservatism, I’m also assuming growth in other non-transport segments will stagnate even though this is contrary to most current trends and projections.

A growing number of barrels are going to be demanded until at least the 2030s. It’s quite likely we will be using as much oil in the 2040s as we were in 2012 – a staggering 90 million barrels a day.

We can debate and squabble over whether our daily oil appetite will be 85 or 105 million barrels in 2040; or whether peak demand will occur in 2028 or 2038. These are distracting and somewhat moot metrics.

The reality is that a lot of oil is going to be consumed worldwide over the next several decades, with serious implications to pressing issues like climate change, geopolitics, energy security and investment to name a few. What is the point of misleading narratives about “the end of oil?”

For example, consider the pursuit of reducing global carbon dioxide emissions. Is that goal really being aided by harshly discounting the likelihood that consumers won’t displace their oil habit as fast as headlines suggest?

When it comes to thinking about future oil consumption, we don’t need to reinvent the wheel; we need to turn it in a different direction, away from numbers and timing that rely on more assumptions than lanes in a Texas freeway. Maybe we should focus on: What are the attributes we want from oil suppliers of the future? And equally, what are the accountabilities of oil consumers?

Financial Post

46 Comments on "‘End of oil’ narratives are misleading — global oil demand will remain at 90 million bpd"

  1. Sys1 on Sun, 5th Nov 2017 7:39 am 

    “The reality is that a lot of oil is going to be consumed worldwide over the next several decades.”
    You don’t know. By the way, several means what? 2, 3, 5, 10?

  2. dissident on Sun, 5th Nov 2017 8:46 am 

    More “demand creates supply” drivel. Next.

  3. joe on Sun, 5th Nov 2017 10:26 am 

    That’s great an all, but will we still be able to grow the worlds food supply or prevent the outbreak of water wars as the earth heats up? 400 million more engines does not say at what price. Its possible they will go to poorer economies who won’t afford the change to e.v. That implies the need for more liquidity etc but that only comes from more gdp growth which we already know probobly won’t happen as the population pyramid starts to stand on its head! Zimmerframe and colstomy bag companies will likely be the big winners in 2040.

  4. Outcast_Searcher on Sun, 5th Nov 2017 11:14 am 

    Nice to see something that uses arithmetic and looks at something approaching reality instead of the extreme scenarios — zombies next week or zero oil consumption nirvana by 2040.

    Modern society does need a LOT of oil for industry and consumer products. Therefore, saving what we have for that vs. burning it is clearly desirable.

    My question is — can it be used to make, say, plastics for medical care and lubricants, with a fairly low CO2 footprint? i.e. compared to the roubhly 20 lbs of CO2 produced for every gallon of gasoline burned for motor fuel?

    Because if the CO2 footprint for the non-burning uses is relatively low, that’s another reason we should hurry to get to the 2040 ICE ban scenario, if at all possible.

  5. Outcast_Searcher on Sun, 5th Nov 2017 11:21 am 

    Another good question might be, if the 2040 ICE production ban scenario comes to pass, what does the global crude oil demand likely look like in, say, 2060, when those engines are 99% at end of life or banned?

    That is the number that needs to have replacements, if oil gets too scarce or expensive or both, at some point.

    Can chemists come up with reasonable substitutes for most lubricants, plastics, and chemicals that come from crude oil today in, say, 40 years — if there is plenty of financial incentive? If so, that buys society more time.

    If not and crude oil does become wildly expensive, that’s a big problem.

    One can only hope that when the realities of AGW dawn on the average person by 2030 or 2040, BAU growth becomes a thing of the past.

    I’ll likely be dead before 2060 plays out — I’m just wondering about the fate of young people and their children, etc.

  6. Davy on Sun, 5th Nov 2017 11:49 am 

    OS, first we have to make it to 2040. There will be a lot of issues going into that goal without the grand chatter of a ICE ban.

  7. tahoe1780 on Sun, 5th Nov 2017 12:16 pm petroleum-based pharmaceuticals

  8. Davy on Sun, 5th Nov 2017 12:28 pm 

    OS, check your math on the co2 weight burned in a gallon of gas. I think a gallon weighs 6lbs so I am not sure how you got 20lbs unless you include all the co2 that went into making and transporting the gas.

  9. Keith McClary on Sun, 5th Nov 2017 2:30 pm 

    Davy: carbon 12, oxygen 16
    Do the stoichiometry.

  10. Davy on Sun, 5th Nov 2017 2:38 pm 

    Thanks Keith good to know. I am not a chemist.

  11. Go Speed Racer on Sun, 5th Nov 2017 5:11 pm 

    you can take away my 20 pounds of CO2
    emissions, when you pry my cold
    dead fingers off the steering wheel.

  12. dave thompson on Mon, 6th Nov 2017 12:45 am 

    I have a tire fire going now and do not have time for your BS about what to do.

  13. Cloggie on Mon, 6th Nov 2017 8:59 am 

    New German monthly renewable electricity production record in October:


    Yearly average 2017 so far:

    38.1 %

    Fine-grained German historic renewable electricity data here:

  14. Apneaman on Mon, 6th Nov 2017 9:18 pm 

    The Zombie Diseases of Climate Change

    What lurks in the Arctic’s thawing permafrost?

    “The newly active permafrost is packed with old stuff: dead plants, dead animals, mosses buried and reburied by dust and snow. This matter, long protected from decomposition by the cold, is finally rotting, and releasing gases into the atmosphere that could quicken the rate of global warming.

    This matter is also full of pathogens: bacteria and viruses long immobilized by the frost. Many of these pathogens may be able to survive a gentle thaw—and if they do, researchers warn, they could reinfect humanity.

    Climate change, in other words, could awaken Earth’s forgotten pathogens. It is one of the most bizarre symptoms of global warming. And it has already begun to happen.”

    ““At once, you are going to excavate 16 million tons of permafrost that has not been moved in a million years.”

  15. makati1 on Mon, 6th Nov 2017 9:20 pm 

    Mother Nature has only begun to wage war against the human cancer.

  16. MASTERMIND on Mon, 6th Nov 2017 9:46 pm 

    Madkat: I am going to make your day or night depending on what time it is in Asia..But here is the smoking gun when it comes to the USA’S fate…If you need convincing evidence well here you go….

  17. makati1 on Mon, 6th Nov 2017 10:06 pm 

    Thanks, MM, but that is not news to a history buff. The US has reached it shelf “pull by” date.

    BTW: It is noon here. Sunny with a temp of about 88F.

  18. Boat on Mon, 6th Nov 2017 10:09 pm 


    Germany is doing great with electricity. Why do they want a new nat gas pipeline from Russia? Why do they pack people in like sardines? Seems like no immigration and no subsidies for more than one child would be a winning scenario for no Russian gas.

  19. GregT on Mon, 6th Nov 2017 10:24 pm 

    “Germany is doing great with electricity.”

    In another 20 years or so, they might get close to being on par with British Columbia, but not likely. BC passed the 90% “renewable” electric power generation phase about 70 years ago. Fortunately for BC, they also have lots of NG. Modern industrial society does not run on “renewable” electricity. It runs on fossil fuels, and so does “electricity”.

  20. makati1 on Mon, 6th Nov 2017 11:42 pm 

    “Chinese yuan with the gold-convertibility of the pre-1971 U.S. dollar should prove an attractive alternative to the dollar for major oil exporters. Just this past month Saudi Arabia, the country at the centre of the petro-dollar arrangement, agreed to purchase S-400 air defense missile systems from Russia. By making this purchase, the Saudis are signaling that they no longer feel obliged to rely on America for their arms as laid out in the 1974 petro-dollar agreement. Might this historic first signal a repudiation of their commitment to price their oil in dollars as well?

    If so, the end of the dollar is at hand, and with it the beginning of the end of the American empire.”

    And the beat goes on…

  21. Boat on Tue, 7th Nov 2017 1:03 am 


    Wasn’t it you saying Russia and China were all in for Iran? Every post a new plan. lol.


    BC less than 5 mil people. Germany over 80 million. Nice comparable metrics. Your brilliance was missed while you were gone. Like mak, just a wealth of clairvoyant insight.

  22. makati1 on Tue, 7th Nov 2017 1:31 am 

    Boat: Yes, both ARE for Iran. Why? China is counting on Iran to make part of the new Silk Road possible and buys Iranian oil. Russia is also their ally and is selling them weapons systems and building nuclear plants there.

    AND… Both are currently in Saudi Arabia doing similar things. China is now KSA’s main oil buyer. Russia is selling weapons systems and building nuke plants in Saudi Arabia. Soon they will start negotiating in rubbles and yuan. At that point, the petrodollar will die quickly.

    And the change continues…

  23. Cloggie on Tue, 7th Nov 2017 2:30 am 

    @boat – Germany is doing great with electricity. Why do they want a new nat gas pipeline from Russia? Why do they pack people in like sardines? Seems like no immigration and no subsidies for more than one child would be a winning scenario for no Russian gas.

    As you say, Germany is doing great with electricity, but electricity is only a part of the entire energy palette. Think of space heating and transport. The plan is to have fossil phased out by 2050, an ambitious target. We are going to need that Russian gas. Besides Russia is not the enemy as you seem to suggest. Russia could be part of the solution for us Europeans to survive.

    One Child? That’s what the Germans already have, thanks to feminism insanity. It would not be so bad in itself to have a demographic weak generation or two. Germany is already overpopulated. But now they are going to use the aging of the population as a pretext to open the borders.

  24. Davy on Tue, 7th Nov 2017 2:38 am 

    “If so, the end of the dollar is at hand, and with it the beginning of the end of the American empire.”

    At the moment no alternative to the dollar at least as a replacement. The dollar will likely diminish but not be replaces especially by China’s managed Yuan.

    “The Gold-Backed-Oil-Yuan Futures Contract Myth”
    “Still the majority of global trade is conducted in US dollars, and most foreign exchange reserves are in dollars too. The share of yuan payments, compared to all other currencies, tracked by payment service provider SWIFT were under 2 % in June, down slightly from two years.”

    “The Demise Of The Dollar? Smith Warns “Don’t Hold Your Breath”
    “De-dollarization is often equated with the demise of the dollar, but this reflects a fundamental misunderstanding of the currency markets. Look, I get it: the U.S. dollar arouses emotions because it’s widely seen as one of the more potent tools of U.S. hegemony. Lots of people are hoping for the demise of the dollar, for all sorts of reasons that have nothing to do with the actual flow of currencies or the role of currencies in the global economy and foreign exchange (FX) markets. So there is a large built-in audience for any claim that the dollar is on its deathbed. I understand the emotional appeal of this, but investors and traders can’t afford to make decisions on the emotional appeal of superficial claims–not just in the FX markets, but in any markets.”

    “Note what happens to countries using gold as their currency when they run large, sustained trade deficits. All their gold is soon transferred overseas to pay for their imports. So any nation using gold as a currency can’t run trade deficits, lest their gold drain away. Nations aspiring to issue a reserve currency have the opposite problem. They need enough fresh currency to inject into the global FX markets to supply those wanting to hold their currency in reserve. This means any nation running structural trade surpluses will have difficulty issuing a reserve currency. Nations shipping goods and services overseas in surplus end up with a bunch of foreign currencies–whatever currencies their trading partners issue. This is opposite of the global markets need, i.e. a surplus (supply) of the reserve currency. Any nation that wants to issue a reserve currency has to emit enough currency into the global economy to supply the demand for reserves. One way to get that currency into the global system is run trade deficits, as the world effectively trades its goods and services in exchange for the currency. A reserve currency cannot be pegged; it must float freely on the global FX exchange”

  25. Davy on Tue, 7th Nov 2017 2:43 am 

    “AND… Both are currently in Saudi Arabia doing similar things. China is now KSA’s main oil buyer. Russia is selling weapons systems and building nuke plants in Saudi Arabia. Soon they will start negotiating in rubbles and yuan. At that point, the petrodollar will die quickly.”
    Mad kat, you might want to jot down the trade volumes you are talking about in relation to total global trade. You may want to review the reality of the petrodollar which is greatly diminished these day. Oil producers are experiencing net outflows not inflows these day. You might want to just stay out of economics and finance because you don’t have any background in it. All you are is an emotional agent of an anti-American agenda distorting the truth for personal motives.

  26. Cloggie on Tue, 7th Nov 2017 2:49 am

    Now let me see…

    Area: twice that of France
    Population: 5 million
    Geography: mountains

    BC passed the 90% “renewable” electric power generation phase about 70 years ago.

    That’s great Greg, I am happy for you. But the entire western world exhausted most opportunities for hydro, the easiest form of renewable energy, many decades ago.

    Modern industrial society does not run on “renewable” electricity.

    Not yet. 2050. Patience.

    It runs on fossil fuels, and so does “electricity”.

    Well apparently not in British Columbia, where they have 90% electricity from hydro.

    Canadians consume 15,000 kWh/year/capita, one of the highest figures in the world, even higher than the US.

    That is ten times as much as little insignificant me (1500 kWh/year)and his 6 solar panels, supplying 90% of his electricity (admittedly as a “grid-weenie”/Ghung). And I am fine with my computers, tablets, broad screen TV, fridge (60 kWh/year), freezer (200 kWh/year), washing machine (once a week 1 Kwh), electric cooking plates/oven, CV pump, 24h wifi router.

    I wonder how Canadians manage to consume 15,000 freaking kWh/year? Do they electrically heat their homes with the windows open?!

  27. Davy on Tue, 7th Nov 2017 2:54 am 

    Casino gamblers China, Russia, and Goldman left holding the bag of shit.

    “Goldman’s Asset Arm Takes Big Hit On Venezuelan Bond Bloodbath”

    “Venezuela’s plans to restructure its debts are riddled with complications. The mess of bonds issued by the country and PDVSA are hard to disentangle, and oil exports — the country’s sole financial lifeline — are vulnerable to seizures from litigious creditors. However, the biggest wrinkle is the US government’s sanctions on Venezuela, unveiled in August after the GSAM deal. In practice, they prohibit any US institutions from involvement in any Venezuelan debt restructuring. “Sanctions will prevent a conventional exchange offer,” said Lee Buchheit, a senior partner at Cleary Gottlieb, who has represented a series of countries when they restructure their debts. “It’s really not clear what Maduro has in mind, or whether he even has anything in mind.” Venezuela owes about $750m in bond arrears and is facing a further $965m of interest payments over November and December, calculates Patrick Esteruelas, global head of research at Emso Asset Management. If Caracas has run out of money — and Russia or China decline to extend more loans to Venezuela — it will have to default. But as long as US sanctions remain in place, this will push Venezuela into financial purgatory of a protracted, unresolvable debt default. “In a world where you can’t pay and you can’t restructure, all you can do is default,” Mr Koenigsberger said. “Even without the sanction, this would have been an exceptionally tough debt restructuring. It will now be exponentially harder than anything we have seen before. And I don’t think that is priced in yet.”

  28. GregT on Tue, 7th Nov 2017 9:48 am 

    “Well apparently not in British Columbia, where they have 90% electricity from hydro.”

    British Columbia s still completely reliant on fossil fuels, despite generating over 90% of it’s electricity from ‘renewable’ sources. When Germany ever reaches that same threshold, get back to us on how they also still do not rely on fossil fuels for modern industrial society, and the utilization, and the generation, of electricity.

  29. GregT on Tue, 7th Nov 2017 10:04 am 

    “I wonder how Canadians manage to consume 15,000 freaking kWh/year? Do they electrically heat their homes with the windows open?!”

    Long, very cold winters, and cheap electricity.

  30. Davy on Tue, 7th Nov 2017 10:52 am 

    Widdle g, you have a few million people. Try to put things in perspective.

  31. Cloggie on Tue, 7th Nov 2017 11:48 am 


    Here the blueprint for a 100% renewable energy base, from the German Fraunhofer Institute, no fools:

    We’ll get back to you alright.
    Keep your wallet at hand 😉

  32. GregT on Tue, 7th Nov 2017 12:15 pm 

    “Widdle g, you have a few million people. Try to put things in perspective.”

    I do not ‘have’ anybody but myself. The same as you, or anybody else for that matter.

    My perspective is not delusional, like yours is.

  33. GregT on Tue, 7th Nov 2017 12:28 pm 

    “Here the blueprint for a 100% renewable energy base, from the German Fraunhofer Institute, no fools:”

    All of those technologies require fossil fuels in resource extraction, refinement, manufacturing, transportation, installation, and maintenance. As do all of the gadgets that the supposed 100% “renewable” energy base would power. When you are able to submit evidence that no fossil fuels, or other finite resources, are required in any of the above processes, only then will you will be on to something realistic.

  34. Cloggie on Tue, 7th Nov 2017 1:21 pm 

    Sadly enough you will have to wait until 2050.
    Leave it to us.

  35. GregT on Tue, 7th Nov 2017 3:30 pm 

    Sadly enough, we don’t have until 2050.
    More of that far too little, much too late stuff.

    “Leave it to us.”

    Give us a call, when you reach the same percentage of “renewable” electric power generation, that BC reached 70 years ago.

  36. makati1 on Tue, 7th Nov 2017 6:06 pm 

    Greg, I don’t have to read Davy’s rants to know when someone is referring to them. One of his pet rants is referring to population, like that is some kind of proof of something and resources and culture don’t count. You obviously have a jump on others in “renewables” because of location and fewer consumers. He will never admit that.

    The Ps gets more than 30% of their electric from “renewables”. The US gets about 14% or less. (WIKI) The P’s “renewables” come from Hydro and Geo. Some panels and windmills. And, there is more under construction.

  37. Davy on Tue, 7th Nov 2017 6:49 pm 

    “You obviously have a jump on others in “renewables” because of location and fewer consumers. He will never admit that.”
    Mad kat, buddy, compare BC population with Germany and get back to me unless this is your ignore day. I never know which day it is because you waffle around so much. I bet you are glad to have widdle g back to watch your back. You need all the help you can get.

  38. GregT on Tue, 7th Nov 2017 8:01 pm 

    “compare BC population with Germany and get back to me”

    Compare the population of Dent County, MO to Istanbul, Turkey and get back to everyone. Equally as relevant to the discussion.

  39. Davy on Tue, 7th Nov 2017 8:12 pm 

    Widdle, you are so proud of your renewable achievement for the equivalent population of a large city. A 4.6mil population is relevant in the comparison to Germany’s don’t ya think widdle g?

  40. GregT on Tue, 7th Nov 2017 8:22 pm 

    My only renewable achievement would be installing solar panels on my house, which I don’t personally even consider to be renewable.

    What the employees of BC Hydro have done has absolutely nothing at all to do with my own personal achievements.

    More delusions on your part.

  41. Davy on Wed, 8th Nov 2017 4:23 am 

    widdle g, what does your above babble have to do with the issue of BC renewable effort compared to Germany. I would not call that delusional just dumb. You are bragging on something that is in a different league. Keep things to scale you won’t look so obtuse.

  42. Cloggie on Wed, 8th Nov 2017 4:33 am 

    For a change I am with Davy here. I’m absolutely not surprised that a fine talented European people like the Canadians immediately recognized the potential of hydro-power in Canada and realized it, just like all other fine talented European peoples in Europe and North-America did throughout the 20th century.

    Realizing hydro-power means building a wall with a hole in it, a pipeline down hill and a generator and you are good. Hydro-power is so easy and powerful that this kind of renewable energy was cheaper than oil, even at the height of the oil-age and thus implemented early, before the Club of Rome began with its warnings.

    What the Danes and Germans and others did was a little more complicated. Wind energy is not as “dense” as hydro-power and unpredictable at that. Nevertheless they managed to define a program and especially the Danes and Scots are meanwhile very advanced in realizing their renewable electricity programs. Now the real challenge comes: storage. The situation looks good. There are numerous approaches for large scale storage available that need further optimization though.

    But everybody should understand that if an industrial powerhouse like Germany can realize 38% renewable electricity in 2017, they can realize 100% a decade or 2-3 later. Hence my “optimism”.

  43. Davy on Wed, 8th Nov 2017 4:58 am 

    “But everybody should understand that if an industrial powerhouse like Germany can realize 38% renewable electricity in 2017, they can realize 100% a decade or 2-3 later. Hence my “optimism”.

    I disagree 100% is a whole different league. This is especially true in a globalized world and when you are talking continental scale. Let’s see how Euroland deals with a “HUGE” storage effort and you have yet to even go over the 50% renewable very little with transportation. Let’s see how you do when you pass the 50% mark. I say 50% but I am not sure the “percentage of transition” in this transition process where the challenges really bear down on this effort. Where will cost benefit relationships start to go negative? Where will diminishing returns kick in and where are the resource and space limits? How will behavior change? This is going to have to be a behavioral thing. How long will the sheeple Euro guy put up with the cost and the efforts at change especially if or when they hock stick? This is about a fantasy you must realize over a long period and with a huge scale. This means saying “everybody should understand” is off the mark. It should be more like “everyone should hope” and or we should be “humbled by the challenge”.

  44. Davy on Wed, 8th Nov 2017 5:30 am 

    Euroland is in the same boat with the US and its QE hangover. China is in a whole other conundrum with credit expansion and bad debt. The world is not doing well but the optimist say it is because it has to be.
    “Europe Is Booming, Except It’s Not”

    “European GDP rose 0.6% quarter-over-quarter in Q3 2017, the eighteenth consecutive increase for the Continental (EA 19) economy. That latter result is being heralded as some sort of achievement, though the 0.6% is also to a lesser degree. The truth is that neither is meaningful, and that Europe’s economy continues toward instead the abyss. At 0.6%, that doesn’t even equal the average growth rate exhibited from either the late 1990’s or middle 2000’s. Straight away one of the so-called better quarters is already below average by historical comparison. That would suggest Europe’s economy is still struggling. Because even these positive quarters are never all that positive, there can never be enough momentum let alone growth to make up for when there was clear, linear contraction. The economy shrinks and though GDP turns positive afterward, even for eighteen straight quarters, the shrinking isn’t actually concluded.”

    “The core rate at just 0.9% indicates more so the opposite possibility, continuing the global “conundrum.” Despite ongoing massive ECB intervention supposedly in euro “money”, these operations bear no correlation at all with inflation and therefore effective monetary conditions in the real economy. The lack of inflation continues to advise the non-linear contraction scenario described above with regard to the GDP gap.”

    “Even though the ECB will be tapering its bond purchases, and therefore bund purchases, too, German federal yields are trading in the “wrong” direction from what QE tapering is supposed to reflect. In fact, more negative 2s is instead indicative of higher liquidity preferences, which, for the terms of this discussion, is consistent with a struggling economy unable to generate momentum (and therefore core inflation). That’s why the “yield” moves contrary to fewer ECB purchases because that factor doesn’t matter nearly as much as the other. It’s actually been this way for several months now, going all the way back to the end of June.”

    “You don’t find any of this in mainstream discussion about Europe, only the brief mention of this inflation mystery, and the related confusion over the political situation there, all dismissed easily in the context of the future economy that (always)looks to be so bright (but never is). Because the ECB is tapering QE, that’s all that matters to set the conventional narrative. Europe is booming because Europe has to be booming. Except that it isn’t; not even close.”

  45. Davy on Wed, 8th Nov 2017 5:47 am 

    Europe is booming

    “What Risk: Deutsche Bank Ramps Up Loans Business In Desperate Scramble For Profit”

    “We have some sympathy for John Cryan, but only to the extent that he has the near impossible task of putting the biggest German bank back on a sound footing regaining market share and generating some elusive revenue growth: a virtually impossible task as long as Europe is choked by NIRP. As we noted two weeks ago, Deutsche’s 3Q 2017 results confirmed that the situation is still getting worse:”

  46. Davy on Wed, 8th Nov 2017 6:14 am 

    “Growth In China Is Slowing: What Does It Mean For Commodity Prices”

    “In summary, as observed by Tyler Durden, and supported by our work, thanks to ~$4 trillion (at least) in credit creation in 2017 – more than the rest of the developed world combined – China has been the proverbial (and debt-funded) “growth” dynamo behind the recent period of “coordinated global growth”. Yet, with the pace of credit growth slowing throughout 2017, and likely to slow further looking ahead, we see outsized risk to both Chinese bulk commodity demand, and, by a process of elimination, global bulk commodity prices. ANALYSIS: Chinese GDP was recently reported for 3Q17; and, as many expected, at +6.8% Y/Y (Exhibit 1), it was spot on Consensus estimates. However, we contend that the recent slowing in China’s credit growth (Exhibit 2), a sizeable risk to the country’s continued economic growth, is a byproduct of both: (a) more debt in China going toward rolling existing credits and recapitalizing interest vs. finding its way into the real estate/construction markets (we estimate that China’s banking system boasts ~$40tn in debt at present, up from just ~$3tn in 2006 [i.e., +1,233%] – against just ~$2tn in equity and ~$1tn in liquid reserves; by comparison, at the height of the global financial crisis [“GFC”], the US banking system had ~$16.5tn in debt and ~$1tn in equity), and (b) the Chinese government’s crack-down on runaway credit issuance (link).”

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