Commodity Price Outlook – July 2016

By: Paul Young, CPA, CGADate: July 24, 2016

Disclaimer• This presentation is on view of commodity Prices

Paul Young - Presenter

Bio• CPA/CGA• 25 years of experience in Academia, Industry and Financial solutions• Youtube Channel -

https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

Agenda• Key Commodity Prices• Commodity Price Index / Scotia Bank• Commodity Price/RBC• Growth/CPI rates by select countries• China/PMI• USA/PMI• G20 summit

Commodity Prices

Source: BMO

Commodity Prices

Source: Scotiabank

Commodity Price

Source: RBC

Commodity Price

Source: RBC

Commodity Price

Source: RBC

Commodity Price

Source: RBC

Growth Rates

Source: Scotiabank

China – PMI IndexChina’s official factory gauge retreated to the dividing line between improvement and deterioration last month, while a measure of services perked up, underscoring the two-speed pace of growth in the world’s second-largest economy.Key Points• Manufacturing purchasing managers

index at 50 in June, matching economist estimates in a Bloomberg survey and dropping from 50.1

• Non-manufacturing PMI was at 53.7, compared with 53.1 in May

• Labor market components of both PMI gauges decreased: Manufacturing employment fell to 47.9 while the services reading dropped to 48.7

• Separate manufacturing PMI reading from Caixin Media and Markit Economics fell to 48.6 in June from 49.2 in May

• Numbers above 50 indicate improving conditions

Source: Bloomberg

USA - PMI• U.S. manufacturing activity hit a nine-month high in July and factories hired at the best rate in a year, the latest sign that the

once-battered sector has turned the corner thanks largely to domestic demand.• The purchasing managers’ flash index compiled by data provider Markit rose to 52.9 this month from 51.3 in June. The flash

reading, marking the best reading since October, is based on about 85% of survey responses that go into the final report.• Economists surveyed by The Wall Street Journal expected the gauge to edge up to 51.9. Readings above 50 represent

expansion, while prints below that level reflect contracting activity.• Domestic markets remained the main driver of growth, Markit said, pushing new orders to a nine-month high. Survey

respondents commented on strong sales, the launch of new products and favorable domestic economic conditions, according to the report.

• Exports increased from June, but at a slower pace than domestic orders. Many U.S. factories have been counting on U.S. customers for improvement in recent months, as solid housing and auto markets drive spending on manufactured goods. At the same time, the strong U.S. dollar–which got an extra boost in the wake of Brexit–has hurt U.S. firms abroad because the currency makes their goods more expensive.

• Source: http://www.hellenicshippingnews.com/markit-flash-manufacturing-pmi-rises-to-52-9-in-july/

OECD Summit – G20• The world's leading economies have discussed how to take advantage of their lower debt costs to spend more on investment as a way to boost weak

economic growth, the head of the Organisation for Economic Co-operation and Development said.• "Already lower interest rates create more fiscal space," OECD Secretary General Angel Gurria told Reuters on Sunday on the sidelines of a meeting of

finance ministers and central bank governors from the Group of 20 economies.• "The average cost of debt takes some time to show the full impact of interest rates because it's not only (over) six months, it's over several years."• The G20 is trying to find new ways to inject more energy into the world economy after extraordinary measures by central banks, which have cut

interest rates close to zero, or below in some cases, produced only lacklustre growth.• The focus has turned more squarely to what governments can do through increased spending and reforms to make their economies more efficient.• China, Japan and Britain have already started easing their fiscal stance or hinted at plans to do so.• Japanese Prime Minister Shinzo Abe, taking advantage of the Bank of Japan's negative interest rates, has ordered his government to unveil a large

spending package by the end of this month, including a so-called fiscal investment and loan programme aimed at spurring private-sector investment.• However, high levels of public debt in many countries represent a limit on big increases in spending.• Governments could leverage their spending by inviting private investors to back up their financing. "Maybe a little bit of public finance will detonate a

lot more of private finance," he said.• In that spirit, the European Union has created in the middle of last year a fund of 21 billion euros ($23.04 billion), which is to attract private capital to

generate a total of 315 billion euros in investment over three years in various infrastructure, and research and development projects in the 28-nation block.

• The fund exceeded targets already in its first year thanks to unexpectedly strong demand from small business and co-financing from the private sector.

• Source: http://finance.yahoo.com/news/rock-bottom-rates-creates-fiscal-053232069.html

Links/Sources:• http://www.slideshare.net/paulyoungcga/is-global-economic-stimulus

-required-to-support-slow-world-economic-growth• http://www.slideshare.net/paulyoungcga/why-is-the-world-heading-f

or-slow-economic-growth