CyclOpe

The 2009 « indian summer » of world economy

CyclOpeEuropean leadingresearch Instituteon commodity markets

www.cercle-cyclope.com

Professeur Philippe ChalminSeptember 2009

philippe.chalmin@dauphine.fr

CyclOpe

September 2009

Sun shines again. on equity markets. on commodities. for the real economy. thanks to emerging countries. and US out of recession

Spring or Indian Summer ?

CyclOpe

World equity markets are betting for the end of recession

© Coe-Rexecode

MONDE (39 Places) en dollar

2000 2001 2002 2003 2004 2005 2006 2007 2008 200980

100

120

140

160

180

CyclOpe

And it’s especially true in Shanghai

© Coe-Rexecode

(Shanghai B - 19.12.90=100)

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J2005 2006 2007 2008 2009

50

100

150

200

250

300

350

400

100

150

200

CyclOpe

Same story for commodities

© Coe-Rexecode

janvier 1988 = 100

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200970

500

100

150

200

300

400

CyclOpe

Back to their 2007 level

© Coe-Rexecode

janvier 1988 = 100

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J2005 2006 2007 2008 2009

100

150

200

250

300

350

400

450500

Ensemble hors métaux précieux et pétroleEnsemble y c. métaux précieux et pétrole

CyclOpeThanks to a weakening US dollar

© Coe-Rexecode

1 € = ... $

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J2005 2006 2007 2008 2009

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

CyclOpeOil back at $ 72.5 a barrel (August average)

© Coe-Rexecode

en $ par baril

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200910

20

30

40

60

80

100

130

15

PETROLE BRUT(Brent 1er terme)

CyclOpeThanks to some discipline by OPEP, Nigerian problems

and… demand

© Coe-Rexecode

en $ par baril (Brent 1er terme)

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J2005 2006 2007 2008 2009

30

45

60

75

90

105

120

135150

CyclOpeNon ferrous metals are up too

© Coe-Rexecode

janvier 1988 = 100

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J2005 2006 2007 2008 2009

100

150

200

250

300

CyclOpeLike copper

© Coe-Rexecode

en $ par tonne (LME au comptant)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20091000

2000

3000

4000

5000

6000

700080009000

CUIVRE

CyclOpeThanks to China and some good news from USA

© Coe-Rexecode

en $ par tonne (LME au comptant)

J F MAM J J A S O N D J FMAM J J A S O N D J FMAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D J2005 2006 2007 2008 2009

3000

4000

5000

6000

7000

8000

9000

10000

CyclOpeSteel prices are still low but with a better ratio of capacity

utilisation

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ALL PRODUCTS COMPOSITE PRICE (US $/tonne)

2001 2002 2003 2004 2005 2006 2007 2008 2009200

300

400

500

700

900

1100

CyclOpe

Wheat « suffers » from very good 2009 crop

© Coe-Rexecode

Euros par quintal

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20097

9

11

13

15

17

19

21

23252729

Cours mondial (Chicago)Prix de marché (France)

CyclOpe

But soybeans benefit of Chinese demand

© Coe-Rexecode

$ par boisseau (prix au comptant)

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J2005 2006 2007 2008 2009

5

6

7

8

9

10

11

1213141516

CyclOpeAnd sugar was the summer’s star

© Coe-Rexecode

cents de $ par livre

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20095

7

9

11

13

15

17

192123

CyclOpeDry bulk rates have rebounded

© Coe-Rexecode

1000 au 4 janvier 1985

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009600

11000

1000

2000

3000

4000

5500

7500

INDICE BFI/BDI

CyclOpeThanks to Chinese demand for Capesize

© Coe-Rexecode

1000 au 4 janvier 1985

J F MAM J J A S O N D J FMAM J J A S O N D J FMAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D J2005 2006 2007 2008 2009

500

2000

3500

5000

8000

12000

1000

INDICE BFI/BDI

CyclOpe

. World economy is right now out of recession

. thanks to some emerging countries

. China Q2 + 7.9 %

. India Q2 + 6,1 %

. but not all

. Russia Q2 -10,9 %

CyclOpeChinese industrial production is back on its 10 % a year path :

more than 50 millions tonnes of steel produced in july !

© Coe-Rexecode

Variations sur un an en % (mm3)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200900

5

10

15

20

25

China : Industrial Production

CyclOpeIn the US, the worst of the real estate crisis seems over : prices are

rising again

© Coe-Rexecode

Milliers par an

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009400

700

1000

1300

1600

1900

2300

U.S. : Construction

CyclOpeThe economy loses less jobs

© Coe-Rexecode

Milliers

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0

-900

-600

-300

0

300

600

U.S. : Job creation

Non agricultural sector

CyclOpeAnd the ISM index (52.9 on August 31) is back towards expansion

© Coe-Rexecode

%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200930

35

40

45

50

55

60

65

U.S. : ISM Manufacturing index

CyclOpeIn Europe, German entrepreneurs are slightly more optimistic

© Coe-Rexecode

2000=100

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200980

85

90

95

100

105

110

Germany : IFO Survey – Business climate

CyclOpeAnd French house holds are more doubt ful

© Coe-Rexecode

(soldes des réponses en %)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0

-50

-40

-30

-20

-10

0

10

France : consumer confidence

CyclOpe

GDP grorwth in the second quartet go :

. from the best China + 7.9India + 6.1

. to average Germany + 1France + 1Japan + 0.9United States - 1

. bad United King dom - 5.6Italy - 6

. and the worst Russia - 10.9Mexico - 11Estonia - 15.1Latvia - 18.6Lituania - 22.4

CyclOpe

What to expect :

. Spring. Growth in China and India. US gets out of recession in Q3. Oil at $ 70 is a gift for producing countries. The end of the financial crisis ?

. Winter

. Europe : so much unemployment

. Public deficits : who pays ?

. A weak dollar

. Transition economies in crisis

A real Indian summer : world economy is out of recession but recovery will be a long and painful process.

CyclOpe

What to expect :

. Spring. Growth in China and India. US gets out of recession in Q3. Oil at $ 70 is a gift for producing countries. The end of the financial crisis ?

. Winter

. Europe : so much unemployment

. Public deficits : who pays ?

. A weak dollar

. Transition economies in crisis

A real Indian summer : world economy is out of recession but recovery will be a long and painful process.

CyclOpe

What to expect :

. Spring. Growth in China and India. US gets out of recession in Q3. Oil at $ 70 is a gift for producing countries. The end of the financial crisis ?

. Winter

. Europe : so much unemployment

. Public deficits : who pays ?

. A weak dollar

. Transition economies in crisis

A real Indian summer : world economy is out of recession but recovery will be a long and painful process.