Macroeconomic Outlook Presented by Dr. Bruce A. Scherr Chairman of the Board Chief Executive Officer Emeritus Waterways Symposium Cincinnati, OH November 15-17, 2016
Topics Energy Macro Implications Inflation Interest Rates Exchange Rates Central Banks Global Growth US As The Centerpiece Emerged Economies Rest Of The World Risks 2 Informa Economics IEG Agribusiness Intelligence
Energy Markets 3 Informa Economics IEG Agribusiness Intelligence
1/1/1985 1/1/1986 1/1/1987 1/1/1988 1/1/1989 1/1/1990 1/1/1991 1/1/1992 1/1/1993 1/1/1994 1/1/1995 1/1/1996 1/1/1997 1/1/1998 1/1/1999 1/1/2000 1/1/2001 1/1/2002 1/1/2003 1/1/2004 1/1/2005 1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 Monthly ($/Barrel) 160 WTI Crude Oil Nearby Futures Prices 140 120 100 80 60 40 20 0 4 Informa Economics IEG Agribusiness Intelligence
18% Major Poducers Percentage of Crude Oil and Petroleum Products 16% 14% 12% 10% 8% 6% 4% 2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 US Russia Iran Iraq Saudi Arabia 5 Informa Economics IEG Agribusiness Intelligence
1/1/1985 1/1/1986 1/1/1987 1/1/1988 1/1/1989 1/1/1990 1/1/1991 1/1/1992 1/1/1993 1/1/1994 1/1/1995 1/1/1996 1/1/1997 1/1/1998 1/1/1999 1/1/2000 1/1/2001 1/1/2002 1/1/2003 1/1/2004 1/1/2005 1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 Monthly ($/Gallon) 4.00 Gasoline (RBOB) Nearby Futures Prices 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 6 Informa Economics IEG Agribusiness Intelligence
Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Natural Gas Rigs 1,800 US Rotary Rig Counts 1,600 1,400 Oil Gas 1,200 1,000 800 600 400 200 0 7 Informa Economics IEG Agribusiness Intelligence
01/08/16 01/22/16 02/05/16 02/19/16 03/04/16 03/18/16 04/01/16 04/15/16 04/29/16 05/13/16 05/27/16 06/10/16 06/24/16 07/08/16 07/22/16 08/05/16 08/19/16 09/02/16 09/16/16 09/30/16 10/14/16 10/28/16 11/11/16 11/25/16 12/09/16 12/23/16 Thousand Barrels Per Day Thousand Barrels Per Day Gasoline Product Supplied 10,000 10,000 9,500 9,500 9,000 9,000 8,500 8,500 8,000 8,000 7,500 7,500 5-Year Range 2016 Record or Previous High 8 Informa Economics IEG Agribusiness Intelligence
4-Jan 18-Jan 1-Feb 15-Feb 29-Feb 14-Mar 28-Mar 11-Apr 25-Apr 9-May 23-May 6-Jun 20-Jun 4-Jul 18-Jul 1-Aug 15-Aug 29-Aug 12-Sep 26-Sep 10-Oct 24-Oct 7-Nov 21-Nov 5-Dec 19-Dec Dollars per Gallon 3.80 3.60 3.40 US Weekly Retail Gasoline Prices Source: DOE-EIA 3.20 3.00 2.80 2.60 2.40 2.20 2.00 1.80 2014 2015 2016 5-Year Average 1.60 9 Informa Economics IEG Agribusiness Intelligence
Interest Rates 10 Informa Economics IEG Agribusiness Intelligence
Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 3 Month Libor London Interbank Offered Rate (Libor) 8 7 6 November 7, 2016 = 0.88 5 4 3 2 1 0 11 Informa Economics IEG Agribusiness Intelligence
Q1 1990 Q3 1990 Q1 1991 Q3 1991 Q1 1992 Q3 1992 Q1 1993 Q3 1993 Q1 1994 Q3 1994 Q1 1995 Q3 1995 Q1 1996 Q3 1996 Q1 1997 Q3 1997 Q1 1998 Q3 1998 Q1 1999 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Percent 9.00 8.50 8.00 7.50 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 U.S. Federal Funds Rate Source: FRB G.13 'Selected Interest Rates' Release 12 Informa Economics IEG Agribusiness Intelligence
Interest Rate (Percent) 3.50 Yield Curve: 2016 Rates as of January 11, February 8, March 2, April 20, June 30, July 20, August 29 and November 7, 2016 3.00 2.50 2.00 1.50 1.00 0.50 0.00 90-Day T Bill 5-Yr. 10-Yr. 30-Yr. Maturity January 11 February 8 March 2 April 20 June 30 July 20 August 29 November 7 13 Informa Economics IEG Agribusiness Intelligence
Exchange Rates 14 Informa Economics IEG Agribusiness Intelligence
Q1 1990 Q3 1990 Q1 1991 Q3 1991 Q1 1992 Q3 1992 Q1 1993 Q3 1993 Q1 1994 Q3 1994 Q1 1995 Q3 1995 Q1 1996 Q3 1996 Q1 1997 Q3 1997 Q1 1998 Q3 1998 Q1 1999 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 1.80 $ / Euro 1.60 1.40 1.20 1.00 0.80 0.60 15 Informa Economics IEG Agribusiness Intelligence
Q1 1990 Q3 1990 Q1 1991 Q3 1991 Q1 1992 Q3 1992 Q1 1993 Q3 1993 Q1 1994 Q3 1994 Q1 1995 Q3 1995 Q1 1996 Q3 1996 Q1 1997 Q3 1997 Q1 1998 Q3 1998 Q1 1999 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 2.2 $ / Sterling 2 1.8 1.6 1.4 1.2 1 16 Informa Economics IEG Agribusiness Intelligence
U.S. Macroeconomic Indicators 17 Informa Economics IEG Agribusiness Intelligence
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Q1 1991 Q3 1991 Q1 1992 Q3 1992 Q1 1993 Q3 1993 Q1 1994 Q3 1994 Q1 1995 Q3 1995 Q1 1996 Q3 1996 Q1 1997 Q3 1997 Q1 1998 Q3 1998 Q1 1999 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Percent U.S. Unemployment Rate 11 10 9 8 7 6 5 4 3 Source: BLS, Employment Situation 21 Informa Economics IEG Agribusiness Intelligence
Annual %CH 2003 1.854 2004 1.950 5.2 2005 2.073 6.3 2006 1.812-12.6 2007 1.342-25.9 2008 0.900-32.9 2009 0.554-38.4 2010 0.586 5.7 2011 0.612 4.5 2012 0.784 28.1 2013 0.928 18.4 2014 1.001 7.8 2015 1.107 10.7 2016 1.159 4.7 22 Informa Economics IEG Agribusiness Intelligence
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP Percent Change 3.0 Retail Sales January 2011 - September 2016 2.0 1.0 0.0-1.0-2.0-3.0 1.0 0.9 0.6 0.5 0.6 0.1-0.1 0.0 1.0 0.8 0.8 0.3 0.1 Vehicle Sales %CH 2003 16.6 2004 16.9 1.3 2005 17.0 0.5 2006 16.5-2.6 2007 16.1-2.5 2008 13.2-18.0 2009 10.4-21.2 2010 11.6 11.1 2011 12.7 10.2 2012 14.4 13.1 2013 15.5 7.9 2014 16.4 5.8 2015 17.4 5.9 2016 17.5 0.0 1.3 0.5-0.6-0.1 0.5-1.1 1.2 1.0 0.5 0.7 0.3 0.0 1.3-1.2 0.3 0.2 0.5 0.4-0.3 0.1 0.4 0.1 0.7 1.3 1.2 0.8-0.9 0.2 0.3 0.7-0.1-0.3 0.3 0.4-0.6-0.5-1.0 1.6-0.2 1.0 0.0 0.5 0.1 0.0-0.2 0.3 0.2 2011 2012 2013 2014 2015 2016 0.1-0.3-0.5 1.4 0.1 0.8 0.1 0.6-0.3 23 Informa Economics IEG Agribusiness Intelligence
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Risks 25 Informa Economics IEG Agribusiness Intelligence
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