This weekend, Biden’s first trip to the Middle East attracted much attention.
The melon-eating masses are all waiting to see what effect this oil price cut will have. In fact, it doesn’t seem to have any effect! Saudi Arabia has made a statement: It is temporarily unable to increase production!
On the one hand, there is high inflation, and on the other hand, lobbying is fruitless. Biden is embarrassed!
Under high inflation, the Federal Reserve is bound to accelerate its tightening of monetary policy, which will further exacerbate the risk of economic recession. Because of this, many people in the industry believe that as concerns about economic recession heat up, the downward cycle of commodities has begun, and there are constant discussions about “inflection points” and “top theories.”
Perhaps the market’s sentiment and pessimistic expectations can cool down Biden’s “anxiety.”
Since the beginning of June, against the background of the resonance between macroeconomics and fundamentals, commodities have plummeted, performing a rare plummeting trend. Wind data shows that on June 8, the indexes of various sectors generally “peaked”, with the Wind commodity index being the highest at 1563.5, the precious metal index at 1231.8, the non-ferrous metal index at 2030.7, the coal, coke, steel ore index at 859.3, and the chemical index at 770.2. The oil and fat index is 2137.4. As of July 15, the indexes of various sectors have generally fallen back to lows. Among them, the Wind commodity index fell to 1199.0, a decrease of more than 23.3%; the precious metals index was 1114.0, a decrease of 9.6%; the non-ferrous metals index was 1510.5, a decrease of 25.6%; coal, coke and steel The mining index was 612.9, a decrease of more than 28%; the chemical index was 594.2, a decrease of 22.9%; the oils and fats index fell to 1580.0, a decrease of 26%. Overall, the coal, coke, steel ore, oils and oils, and non-ferrous metals sectors have seen a more pronounced decline.
Commodities are in the third downward cycle of this century
“The commodity cycle is a direct result of the macro cycle, which is a cycle of monetary policy and economic trends.” Shi Jialiang, a macro analyst at Founder Medium-term Futures, said that whether it is an up cycle or a down cycle, it will be accompanied by the easing and tightening of monetary policy, the economic Of course, there are also supply-side impacts such as supply-side structural reform and the impact of the epidemic.
In this regard, Xiao Lanlan, deputy director of Zijin Tianfeng Futures Research Institute, also explained that generally speaking, when commodity prices are low, production companies suffer losses, leading to a lack of investment willingness. At a certain stage, supply elasticity will be insufficient and it will be difficult to meet demand; When commodity prices are high, investment expenditures will increase, and various projects will be launched one after another to increase supply in the future, leading to overcapacity and falling prices from high levels, thus forming a commodity cycle over and over again.
In her view, commodities have experienced two complete cycles from 2001 to 2022, and are currently undergoing a third cycle.
According to Xiao Lanlan, the first two cycles were from 2001 to 2008 and 2009 to 2015. In the first round of the cycle, the main reason for the increase came from defects in supply capacity. In the 1990s, the prices of oil and mineral products have remained at a low level, reducing the enthusiasm of capital to invest in the resource industry. After China’s accession to the WTO, China’s demand for the import of primary raw materials such as crude oil and metal minerals increased significantly. This bull market ended with the global financial crisis in 2008.
“In order to get rid of the crisis, the world started to adopt loose monetary policies. During the recovery of the world economy, commodity prices gradually recovered, starting a second round of the cycle. However, since 2011, the global economic growth has slowed down, and countries have begun to enter a cycle of raising interest rates in response. High inflation and the European debt crisis are escalating at this time. After experiencing the expansion of production capacity and shrinking demand, the supply of commodities has gradually become oversupplied, starting a bear market in the past five years.” Xiao Lanlan said.
At the beginning of 2016, supply-side structural reforms eliminated excess production capacity, and the demand-side “monetization of shed reform” brought a new round of demand in the real estate market, resulting in rising commodity prices. Subsequently, the epidemic that began at the end of 2019 caused prices to fall to lows again. Subsequently, global loose monetary policies stimulated demand, and there was a shortage in the supply of raw materials. Recently, in order to deal with high inflation, the Federal Reserve has entered into the process of raising interest rates and shrinking its balance sheet, global currencies will be tightened across the board, and supply has improved under high prices. Commodities are currently in the downward phase of their third cycle.
“This round of commodity bull market has emerged under the influence of factors such as the impact of the epidemic on the supply side, the ultra-loose policies adopted by major central banks around the world such as the Federal Reserve, and the strong recovery of the economy.” Shi Jialiang said that once major central banks such as the Federal Reserve and other global central banks begin to tighten Concerns about monetary policy and economic recession have intensified, and the commodity bull market is coming to an end and has begun to enter a downward cycle.
In his view, this round of cyclical changes lies in the Federal Reserve’s accelerated tightening of monetary policy, which in turn intensifies the risk of economic recession, thus causing commodities to enter a downward cycle. “If geopolitical conflicts do not occur, commodities will enter the downward cycle earlier, and the recession will not be as severe as currently feared.” Shi Jialiang believes that geopolitical conflicts delay the starting point of the commodity downward cycle, but intensify the economic The expected depth of the recession.
In fact, since June, the market has been concerned about the cycle”Japan made a series of claims and accusations against Iran during its visit to the Middle East. The statement stated that these false remarks by Biden are baseless and are in line with the U.S. policy of continuing to incite and create tension in the region.
The statement condemned that the United States continues to interfere in the internal affairs of regional countries, has repeatedly launched military occupations and aggressions, and sold weapons on a large scale. The United States is trying to create tension and crisis in the region.
The statement also condemned that Israel has continued to violate the rights of the Palestinian people over the past decades, while the United States has always provided “blind and unlimited support” to the Israeli regime.
Regarding Iran’s nuclear program, Kanani emphasized Iran’s strategic policy of peaceful use of nuclear technology within the international legal framework and said that Iran will insist on continuing negotiations to lift sanctions.
The statement mentioned that Iran welcomes dialogue and cooperation with regional neighbors to provide constructive measures for regional security, peace, stability and development.
Russian plane crashes, Russian defense minister instructs to step up military operations
According to TASS news agency, an An-2 light aircraft crashed in the Kuban region of southern Russia on the night of July 15, local time, killing a pilot and a passenger. According to reports, the plane crashed after hitting a power transmission tower. It was initially determined that the accident was caused by pilot error.
The Russian Ministry of Defense said on July 16 that Defense Minister Sergei Shoigu instructed the Russian military to step up operations in all directions to prevent Ukraine from launching large-scale missile and artillery attacks on Donbas and other places. The Ukrainian military stated on the same day that the Russian army was concentrating its efforts on controlling the two cities of Seversk and Bakhmut in the Donetsk region.
Ukrainian Defense Minister Reznikov said on social media on the 15th that Ukraine had received the first batch of M270 multiple rocket launchers from foreign aid. He did not disclose the number of countries assisting rocket launchers and the number of equipment.
The General Staff of the Ukrainian Armed Forces said on social media on the 16th that conflicts in various parts of Ukraine continued that day. In the direction of Bakhmut, the Russian army launched air strikes near Berestovo and other places. Luhansk Region Military Administrator Sergei Gedai said on social media on the 16th that the Russian army launched multiple missile attacks and artillery shelling on the Lischichansk-Bakhmut highway area.
Russian Defense Ministry spokesman Konashenkov said on the 16th that the Russian army shot down two MiG-29 fighter jets in two residential areas in Nikolayev Oblast and Dnipropetrovsk Oblast. A Su-25 fighter jet was shot down in the city of Sksk.
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