Foreword
THE ‘EASY MONEY’ halcyon days of 2009 and 2010 are well and truly behind us. The cyclical recovery in the developed world, combined with structural growth in the emerging markets that propelled demand and prices across the commodities complex, is gone. This “recovery trade” is now a thing of the past as commodity markets become increasingly embroiled in the “risk-on, risk-off” merry-go-round.
The ‘doom and gloom’ afflicting markets comes
from the usual quarters – US debt, economic stagnation, emerging market inflation, (and, yes, food price inflation everywhere) among others. Industrial production growth just about everywhere is slowing, whether because of relapsing economies in the industrialised world or through anti-inflationary tightening in the emerging one. This macro ‘noise’ has even spilled over into the slumbering European carbon markets [see page 68].
The question on everyone’s mind is whether
or not we are likely to get some good economic news in the relatively near future or if we have to face the zombie economic aftermath of the stimulus packages. Faced with this, President Obama has promised as set of timely, targeted and temporary initiatives costing another $447 bn to boost US jobs and economic activity. The new plan – if it gets off the ground – calls for infrastructure investment. But undertaking projects of sufficient scale and scope requires careful planning and diligent project execution. Economic stimulus, on the face of it, is good for our markets. But this is no repeat of the effects of Chinese commodities buying back in those glory days.
This has been a time of notable anniversaries.
And lest we forget that it is nearly 10 years since the demise of Enron which had profound ramifications for our markets. I recently returned to the foreword I wrote back then in 2001 (when Enron’s implosion was imminent) to refresh my thinking of the time ... and here’s what I had to say in paragraph 1:
“It’s been a roller-coaster ride
in commodities of late,” I wrote. “The US economy is now in official recession, conflict in the Middle East is escalating, and the hangover which will be the
2 September 2011
euro implementation are other examples of an increasingly volatile world,” [Commodities Now, September 2001].
I could almost cut-and-paste the rest of it (with
very little editing) which shows the magnitude of the tasks of rebuilding the post-industrialised world if continued paralysis is to be avoided. At least this time round “conflict in the Middle East” involves a new generation of Arabs looking to embrace pluralism and market mechanisms.
One notable omission from that foreword was
the word China. Having just joined the WTO, China has become the commodities behemoth that no analyst could have, or did, predict. China is now the world’s largest exporter and second largest importer of goods and services. By the end of 2000, China’s merchandise exports and imports were US$250 bn and US$225 bn respectively. Ten years later and China’s merchandise exports have reached US$1,600 bn and imports US$1,400 bn. These day’s, of course, that omission is an impossibility.
... this is no repeat of the effects of Chinese commodities buying back in those glory days
In the pages that follow we will be offering
you some technical, fundamental and – yes – opinionated views of why the dynamics in this industry are again changing. We also present our special Investing in Commodities Supplement [see page 29].
50th
Another anniversary of note this year was my birthday. Now, for those of you who have
not met me [most] the picture below may not be an entirely accurate portrayal of me today. It did appear, after all, in that September 2001 edition.
Enjoy reading and I look forward to any comments or suggestions you have for our future pages – either in print or online. •
Guy Isherwood Editor-in-Chief
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96