Economic Outlook &Capital Markets

Investment Counsel Association of Canada

MontrealJune 19th, 2008

Clément GignacVP Chief Economist& Strategist

Topics

1. U.S. recession in the offing: How long and deep?

2. Emerging countries: How long will the decoupling with the U.S. last?

3. Canada: Our reasons to remain “cautiously optimistic”

4. Capital markets: Where are we heading?

DisclaimerParts of this presentation contain material that may not be suitable for some viewers. National Bank of Canada leaves it to the discretion of its clients whether or not to accept the implications of this scenario.

4

Part 1:The world has changed !

A U.S. housing bubble pop and a halt to securitization activity!

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

4.0

4.1

80 82 84 86 88 90 92 94 96 98 00 02 04 06

Average 1980-2000

NBF Economic Research, Federal Reserve

Price of a single-family home as a ratio of median family income

Ratio

-80

-60

-40

-20

0

20

40

60

80

100

120

140

160

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

U.S. mortgage securitization activity suspended

Quarterly change in value outstanding ($ billion)

NBF Economy & Strategy (data via Federal Reserve)

From 4% of GDP…

…to -2.0% !

7

A recipe for bubble creation by John Kenneth Galbraith (1972)

Ingredients needed:

1- Wall Street Financial Innovation (like CDOs now) 2- Easy access to credit (ex subprime mortgages)3- Lack of disclosure by participants (off balance sheet items)

U.S.: Precautionary increase in loan-loss provisions… As % of average assets, U.S. FDIC-insured institutions

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

88 90 92 94 96 98 00 02 04 06 08

Provisions for loan lossesNet charge-offs

Source: FDIC

Credit crunch:

Implications on banks and monetary policy

550

600

650

700

750

800

850

900

950

1000

1050

1100

1150

1200

1250

2001 2002 2003 2004 2005 2006 200740

50

60

70

80

90

100

110

120

1999 2000 2001 2002 2003 2004 2005 2006 2007

Risk aversion is back = ABCP are back on banks balance sheets

NBF Economy & Strategy

CanadaU.S.$ billions $ billions

Now playing at a Wall Street theatre:“The Survivor”

Meredith Whitney, Oppenheimer analyst 15

20

25

30

35

40

45

50

55

Jun-07 Sep-07 Dec-07 Mar-08 May-08

Citigroup share price

Dividend cut predicted

Dividend cut confirmed

The Fed to the rescue:Sequence of non-traditional actions

• Dec 12, introduces the Term Auction Facility (TAF) and arranges currency swaps with ECB and Swiss National Bank, BoE and BoC.

• Dec 21, announces that TAF will continue for as long as needed.• March 7, again increases the size of TAF and initiates term repos with

primary dealers.• March 11, upgrade its Term Securities Lending Facility, up to $200 billion

of Treasury securities for 28 days against agency debt (Fannie Mae and Freddie Mac) or AAA MBS. Increases currency swap with ECB and SNB.

• March 16, cuts the discount rate by 25 bps after a Sunday meeting. Create a lending facility to US primary dealers for the first time since the Great depression on a backdrop of Bear Stearns rescue by JP Morgan

•

… and do not exclude additional bold moves from the Fed

US: CRE concentration larger than ever One third of institutions with CRE loans more than 3 times equity

0

5

10

15

20

25

30

35

40

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

300%

400%

500%

600%

FDIC-insured institutions with commercial real estateloans to total equitygreater than:

Source: FDIC

33.4%%

2008: As at March 31End of year

120

140

160

180

200

220

240

260

280

300

1999 2000 2001 2002 2003 2004 2005 2006 20072.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

06M01 06M04 06M07 06M10 07M01 07M04 07M07 07M10 08M01 08M04

Monetary Policy: Broken transmission mechanism?

%

Fed funds et Mortgage rates Spread Mortgage rate and government bonds

Basis pointsMortgage rate

Fed funds

US Economic Outlook:Choosing between 4 scenarios?

• Sub par GDP growth (1966, 1986 or 1995 episodes)

• Recession (7 times over the last 50 years)

• Stagflation (a 1973-75 commodities like the 70’s)

• Depression (US in the 30’s and Japan in the 90’s)

PS: As usual, we are trying to stay middle of the Road!!!

16

U.S. BUSINESS CYCLE

The real question is no longer whether or not the U.S. will go through a recession,

but rather how long and deep it will be

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

25.5

78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08-8

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

45

50

55

60

65

70

75

80

85

90

95

100

105

110

115

120

78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

* Deflated with CPI inflation

U.S.: Consumers feel miserable

Michigan sentiment survey and real wage bill*

Financial obligations and spending on energy as a % of disposable income

%% (y/y)

Michigan Sentiment(right)

indexWage bill

(left)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07-1

0

1

2

3

4

5

6

7

8

9

10

11

12

13

76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06

U.S. households: Time to rebuild the savings rate?

Home equity withdrawal as % of disposable income

%

Rate of saving

%

NBF Economic Research

-4

-3

-2

-1

0

1

2

3

4

5

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Global Insight

%

US: 1% increase in unemployment rate usually heralds a recessionChange over 12 months

0 2 4 6 8 10 12 14 16 18

2001

1990-91

1981-82

1980

1973-75

1969-70

1960-61

NBF Economy & Strategy (data from Datastream)

U.S.: Recessions could have different amplitude and duration

Duration in Months

Duration of GDP contraction Rise in unemployment rate

Percentage points0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

2001

1990-91

1981-82

1980

1973-75

1969-70

1960-61

Mean:9 months

Mean: 2.6 pp

Any message of hope?

0.8

1.2

1.6

2.0

2.4

2.8

3.2

3.6

4.0

4.4

4.8

5.2

5.6

2002 2003 2004 2005 2006 2007

NBF Economic Research, Datastream

US: Unprecedented amount of rate cuts in a short period of time

%

Fed funds

2-year Treasuries

23

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

1965 1970 1975 1980 1985 1990 1995 2000 2005

US: Fiscal tool remains a viable optionBudget balance a share of GDP

% of GDP

NBF Economic Research, CBO

NBFForecast

24

-6.5

-6.0

-5.5

-5.0

-4.5

-4.0

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

US: Positive contribution to growth from external sectorNet exports

% of GDP

real

Nominal

NBF Economic Research, BEA

The ongoing rates cuts, falling dollar and upcoming fiscal stimulus should prevent a

deep and prolonged US recession…

… at least for now as we believe oil price will return to $80 over the next 12 months

U.S. Economy: Bottom line

0

10

20

30

40

50

60

70

80

90

100

110

120

130

1970 1975 1980 1985 1990 1995 2000 2005

Risk factor: Geopolitics in Middle East and higher oil prices

*

OIL Price: Nominal and real

$

Réel ($ de 2006)

Nominal

U.S. Risk factor: Protectionism on the rise?

The world has changed !

The U.S. is no longer the powerhouse of the global economy

Part II: International

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

World economy: An ebbing of U.S. hegemony

% of global GDP

U.S.

BRIC

NBF Economic Research, IMF (World Economic Outlook, April 2008)

35

3

27

46

811

0

5

10

15

20

25

30

NBF Economic Research, IMF (World Economic Outlook, April 2008)

BRIC and Middle East account for half of global growth

%, share of global GDP growth

Advanced economies Emerging markets

Over half of the 3.7% increase in world GDP in 2008 to come from emerging markets !

10

20

30

40

50

60

70

80

1840 1860 1880 1900 1920 1940 1960 1960 1980

China: Industrializing very fastPercentage of population living in cities: China versus U.S.

U.S. urbanization since 1840

% of total population

Every year more than 25 million Chinese people move to cities

NBF Economic Research, Census Bureau, China Statistical Yearbook

1978

1990

2000

2004

Forecast for 2011

Commodities: A new paradigm or history likely to repeat itself

100

150

200

250

300

350

400

450

500550

1965 1970 1975 1980 1985 1990 1995 2000 2005

Any risk factors?

Emerging countries theme

0

2

4

6

8

10

12

14

16

18

78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

China: Will authorities be too complacent on growth?

% (y/y)

Emerging Asia

G7 -0.1

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

CPI inflation: Emerging Asia vs. G7 economies

Elasticity ratio of energy consumption*:China vs. G7 economies

China

Ratio (3-yr moving average)

G7 economies

* Defined as the ratio of the growth rates in energy consumption and real GDP

20

25

30

35

40

45

50

55

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2008

80

120

160

200

240

280

320

360

400

440

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06

Risk factor: Food prices

CRB foodstuff

index

% world population living in urban area

%

-6

-4

-2

0

2

4

6

8

10

12

14

16

18

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Leading indicators: Synchronized decline in momentum!!!

BRICs

World

OECD

0.5

1.5

2.5

3.5

4.5

5.5

6.5

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

%

Average 1970 – 2006

World GDP: Back to trend growth rate in 2008?Real world GDP growth

NBF economic research, IMF

Canadian Economy

Why are we much more upbeat about prospects in Canada than in the USA?

-10

-5

0

5

10

15

20

25

30

35Ire

land

Net

herla

nds U

K

Aus

tralia

Fran

ce

Nor

way

Den

mar

k

Bel

gium

Spai

n

Swed

en Italy

Japa

n US

Finl

and

Ger

man

y

Can

ada

Aus

tria

International Monetary Fund (April 2008)

Real estate: Canada not at risk according to the IMFIncrease in home prices over the period 1997-2007 not accounted by fundamentals

House price gap (%)

NBF Economic Research, Finance Canada

% of GDP

Canada: Strongest public finances in the G-7Net government debt

76

80

84

88

92

96

100

104

108

112

74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06

Net exporter of resources = Surging terms of trade Ratio of export to import prices

NBF Economic Research

0

4

8

12

16

20

24

28

32

36

40

44

48

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06-7

-6

-5

-4

-3

-2

-1

0

1

2

3

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

NBF Economic Research, Finance Canada

External sector: Canadian surplus, U.S. deficit

% of GDP

Current-account balance Foreign-held debt

% of GDP

160

200

240

280

320

360

400

440

480

520

560

600

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15

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

CAD closely ties to commoditiesCAD vs. CRB futures index

CRB ijndec

CAD/USD(right)

USD/CAD

CRB futures(left)

NBF Economy & Strategy (data from Datastream)

Warning: Economics 101

Canada has great fundamentals but our economy will not be immune from

a U.S. recession

-4

-3

-2

-1

0

1

2

3

4

5

6

7

8

9

66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06

Canada-U.S.: Business cycles in-synchReal GDP growth: Canada vs. the U.S.

NBF Economic Research

% (y/y)

3.5

3.12.9

2.6

0.5

1.8 1.81.7

1.5

1.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

ALB MAN SASK BC NS PEI NB NFLD QUE ONT

NBF Economic Research

GDP growth: Temporary soft-patch to be expected in 2008 Real GDP, 2008 forecast

%

Canadian average: 1.5%

0.8

1.2

1.6

2.0

2.4

2.8

3.2

3.6

4.0

4.4

4.8

5.2

5.6

6.0

6.4

6.8

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

NBF Economic Research, Datastream

Bottom line: BOC rate cuts not over yet in Canada

BoC overnight rate

Fed funds rate

%

ForecastsIndicators 2008 2009

GDP U.S. 1.4% 1.6%Canada 1.1% 1.9%

Inflation U.S. 3.5% 1.9%Canada 2.2% 1.4%

Current Jun. 2009

Policy rate U.S. 2.00% 2.00%Canada 3.00% 3.00%

10-year U.S. 4.19% 4.25%yield Canada 3.84% 4.02%

CAD 1.016 0.92

S&PTSX 12,80014,863

49

Capital markets:

Volatility will remain for some time

60

70

80

90

100

110

120

130

140

Apr-88 Feb-91 Jan-94 Nov-96 Oct-99 Aug-02 Jul-05 May-08

10

15

20

25

30

35

Capital markets: Volatility is back in stocks and bonds!CBOE VIX and MOVE* indexes, 40-week moving averages

Source: NBF Economic Research, Datastream

MOVE* index (L)

Index Index

VIX index (R)

* Merrill Lynch trademark product

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q1-51

Q1-54

Q1-57

Q1-60

Q1-63

Q1-66

Q1-69

Q1-72

Q1-75

Q1-78

Q1-81

Q1-84

Q1-87

Q1-90

Q1-93

Q1-96

Q1-99

Q1-02

Q1-05

Q1-08

S&P 500: Volatility is back% of trading days on which the S&P 500 has moved more than 1%

First quarter 2008

NBF Economy & Strategy (data via Datastream)

-12

-8

-4

0

4

8

12

16

20

50

100

150

250

500

1000

15002000

68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06

NBF Economic Research, Datastream

Performance of equities in five U.S. recessions S&P 500 Composite and U.S. real GDP growth

In recession periods, the S&P 500 pulls

back an average 36% from peak to trough

-36% -48% -27%

-20%

-49% -19%% q/q annualized

S&P 500 (R)

U.S. real GDP growth (L)U.S. recessions in gray

From pre-recession peak to trough

Sector rotation: Any place to hide during recessions?S&P 500 Composite recession impactIndex

-6m before recession

-3m before recession

-1m before recession

Start recession to

market trough

+3m after recession

trough

+6m after recession

trough

+9m after recession

trough

S&P 500 Comp. -4.25 -1.02 -2.48 -22.38 18.62 30.18 36.19Energy -2.14 0.77 0.86 -17.96 13.49 22.50 34.37Materials 5.94 1.58 -0.30 -24.61 20.98 35.74 46.21Industrials -0.15 0.35 -1.76 -25.93 19.13 33.25 40.53Cons. Disc. -0.93 -0.36 -3.28 -24.99 22.30 40.95 47.47Cons. Staples 6.31 1.25 0.65 -16.64 19.79 31.90 36.87Health Care 3.89 1.13 0.03 -16.77 19.64 30.27 34.26Financials 2.60 1.93 -2.87 -27.36 28.60 40.39 51.07

Banks 2.52 2.89 -2.23 -25.93 23.59 34.50 47.45IT -11.65 -5.14 -5.86 -27.05 22.12 39.04 37.27Telecom -8.21 -2.18 -6.67 -12.27 9.89 11.03 7.70Utilties -4.25 0.00 -0.68 -15.43 10.42 13.29 15.22

1970-2001 Recessions average

S&P/TSX Composite U.S. recession impactIndex

-6m before recession

start

-3m before recession

start

-1m before recession

start

Start recession to

market trough

+3m after recession

start trough

+6m after recession

start trough

+9m after recession

start trough

S&P/TSX Comp. -2.98 -0.33 -0.76 -23.31 16.03 27.73 31.37Energy 6.17 0.77 1.17 -17.93 6.56 15.25 24.24Materials 6.20 2.96 3.50 -23.49 9.44 29.09 36.48Industrials -3.93 -5.26 -0.67 -25.60 19.28 34.79 30.67Cons. Disc. -13.10 -3.36 -1.37 -18.20 19.66 29.12 37.88Cons. Staples 3.24 -2.69 2.92 -4.70 11.33 28.21 33.82Health Care 5.75 4.18 3.14 -12.00 19.45 32.92 39.16Financials 1.06 2.26 0.15 -17.26 19.34 31.83 40.70

Banks 0.28 2.96 -0.81 -15.06 19.03 31.68 40.38IT -14.03 -6.20 -12.14 -22.61 24.92 24.47 17.79Telecom -6.19 -2.96 -0.46 -11.88 11.66 10.51 14.94Utilties 0.71 1.46 1.55 -11.63 11.96 15.61 14.77

1970-2001 Recessions average

55

Capital markets currently on the edge!!!

Downside and upside risks about the same?

Equities valuation looks cheap … at first glance!!!

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

PE ratio

Shaded area = recessions

12-year low !

Equities do not look overvalued on a forward basis…S&P 500 12-month forward P/E

NBF Economic Research, Datastream,I/B/E/S

6

8

10

12

14

16

18

20

22

24

26

28

30

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

… and on a trailing basisS&P 500 & S&P/TSX 12-month trailing P/E

NBF Economic Research, Datastream,I/B/E/S

S&P/TSX

S&P 500

Shaded areas= U.S. recessions

Ratio

16.0x

15.9x

8

10

12

14

16

18

20

22

24

26

28

30

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20094

6

8

10

12

14

16

18

20

22

24

26

28

30

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

… but be aware that inflation is a headwind for PE expansion

PETrailing PEs on S&P500 and

headline CPI inflationBottom-up consensus of equity analysts

ProjectionEPS

NBF Economy & Strategy (data via Datastream and S&P)

Given the limited scope for PE

expansion in the current

environment…

CPI inflation

Current

Tech bubble

…equities will be vulnerable to

earnings downgrades

Consensus sees EPS surging 78% between now and Q4 2009 !

-30

-25

-20

-15

-10

-5

0

5

10

80 85 90 95 00 05

Shaded for recessions

US recessions = More downward earnings revisions???

Current year consensus earnings revisions, from start to end of a given year

%

YTD: -10.0%

-29.3%-24.2% -25.1%

Any message of hope?

207

176

336

86

102

204

407

306

335

485

182

488

243

245

0 100 200 300 400 500 600

Apr-60 to Feb-61

Dec-69 to Nov-70

Nov-73 to Mar-75

Jan-80 to Jul-80

Jul-81 to Nov-82

Jul-90 to Mar-91

Mar-01 to Nov-01

0 100 200 300 400 500 600

Number of days from start of the recession to market trough Total recession length

NBF Economy & Strategy (data from Datastream)

Stocks typically bottom 2/3 of the way through a recession

Days

20

40

60

80

100

120

140

160

180

200

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Credit crunch: The worst behind us?

0

40

80

120

160

200

240

280

320

360

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

CMBS spread

200

300

400

500

600

700

800

900

1000

1100

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

High-yield spreads

RMBS spread

0

20

40

60

80

100

120

140

160

180

200

220

240

260

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Investment grade spreads

Our « cautious » view onoil price and S&P/TSX

32%

19%

4% 5% 4% 5%

2% 2%

0%

3%

11%

9%

4%

11%

26%

11%

17%

4%

15%

15%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Canada US

S&P/TSX: Still heavily exposed to resourcesS&P/TSX and S&P 500 sector weights

NBF Economic Research,Datastream

S&P/TSX Resources weight: 51%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08to

date

S&P/TSX: Longest sequence of excess return in 45 yearsS&P/TSX return minus S&P 500 return in CAD

Longest winning streak in 45 years

2008 to date

NBF Economic Research, Datastream

-200

-150

-100

-50

0

50

100

150

74 75 77 78 80 82 83 85 87 88 90 92 93 95 96 98 00 01 03 05 06 08

Stock markets : How much longer can the S&P/TSX outperform the S&P 500 ?S&P/TSX and S&P 500 5-year rolling return differential (in C$)

Source: NBF Economic Research, Datastream

%

-2

0

2

4

6

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

100

200

300

400

500

Commodity prices tend to slide when growth slows for 2 years Deviation of global growth from long-term trend (3.8%) vs. Reuters/Jefferies CRB

NBF Economy & Strategy (data via Datastream, IMF)NBF Economy & Strategy forecast for 2009: 3.5%

Reuters/Jefferies CRB

World GDP growth minus 3.8%

Percentage points

?

IndexShaded areas show two or more consecutive years of below-trend global growth

-4

-3

-2

-1

0

1

2

3

4

5

6

7

8

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

Slower GDP growth = weaker oil demand = lower oil price Real world GDP growth and global oil consumption

% y/y

EIA

World GDP

Oil consumption

How long can China and India

continue to maintain

theirsubsisdies?

Indonesia, Malaysia, Bengladesh, Sri Lanka… the list isgetting longer

OPEC Surplus Crude Oil Production Capacity

0

1

2

3

4

5

6

1997 1999 2001 2003 2005 2007 2009

Millionbarrelsper day

Forecast

Note: Shaded area represents 1997-2007 average (2.5 million barrels per day)

Short-Term Energy Outlook, June 2008

Investment strategy

Preference for • Low debt companies

•Large capitalisations

•Dividend paying

•U.S. equities over S&P/TSX

Some sectors we currently favour Consumer staples, Utilities, Health care

Summary – Economic Outlook 2008-09

• International :

– Continued expansion, but at a cooler pace;– U.S.: A consumer led recession highly probable;– Fed and Capitol Hill will continue the rescue’s operation

• Canada :– Excellent fundamentals to cushion a U.S. slowdown;– Quebec and Ontario to face stiff headwinds;– BOC: On the sidelines for some time;

• Capital market:– Volatility likely to stay for some time;– U.S. equities: Downsize risk less significant than a year ago – S&P/TSX: Vulnerable to investors’ sentiment shift on commodities;

Thank you for your attention