The most interesting bits of corporate news out this week came from Vodafone and De Beers. These are two very different companies - mobile phone businesses drive their growth at the bottom end of the market and diamond companies at the top end. But they both said similar things; that the growth they were seeing in emerging markets was not quite compensating them for slowing sales in the West. Vodafone announced flat revenues in the UK and falling revenues in Spain. There was still growth in emerging markets but it slowed - from 12.6 per cent in the previous quarter to 9.2 per cent, while revenues per customer fell in India. De Beers repeated the theme, saying that until now the fall-off in US demand has been offset by fast growth in the likes of China and India but that it expected things to be more "challenging" from now on. So much for the idea, much loved by the City's bulls, that there is no need to worry about global growth because Asia is growing fast enough to cover any fall-off in demand from the West. It turns out there is plenty of reason to worry: Asian demand can't keep total global demand growing indefinitely - not for phones, not for diamonds and, as we seem to be learning this week, not for oil either.
The oil price is now 12 per cent off its highs. It is nice to see a hint of rationality return to at least one market. The oil bulls remain convinced that rising demand and tight supply mean the price can go up for ever - and in a straight line too. However, not only does it mean no such thing (markets are prone to sudden changes of direction) but the bulls have failed to take into account the changing balance in the equation. This bull market started just as it should have - with rising demand in a growing global economy slamming against infrastructure-related supply constraints. But today the global economy is in hideous shape and all over the west demand for fuel is falling. Sales of oversized pick-ups and SUVs have fallen 18 per cent in the US in the last year. Mastercard reports that petrol demand has been falling in the US for 13 weeks.
