Global economic outlook has seldom been brighter

    TORONTO, July 5 /CNW/ - CIBC (CM: TSX; NYSE) - While recent market
jitters saw investors jump in and out of the equity market in June, CIBC World
Markets forecasts the underlying strength in the global energy and commodity
sectors will see the TSX hit its target of 15,000 by year end.
    CIBC World Markets' latest Canadian Portfolio Strategy Outlook report
attributes market instability in June to investor concerns over rising
inflation, central bank rate tightening and anxieties about the U.S. subprime
loan market. But the bank believes that strong market fundamentals will
outweigh these concerns.
    "While banks and other interest-sensitive stocks have taken it on the
chin, most of the adjustment in bond yields should be behind us," says Jeff
Rubin, Chief Strategist and Chief Economist at CIBC World Markets. "A summer
hike from the Bank of Canada is unlikely to mark the beginning of a full
fledged tightening cycle, in view of the moderating impact of a rising
Canadian dollar on both domestic growth and import prices.
    "While a final verdict on the subprime market won't be known for several
quarters, the global economic outlook has seldom been brighter, bringing
strong support to energy and most commodity markets."
    The report notes that soaring demand for oil in the developing world -
where carbon emissions don't yet matter - has helped push crude prices above
US$70 a barrel and will drive prices to record highs this year. Mr. Rubin also
believes that rising crude prices are likely to be the catalyst for renewed
mergers and acquisition activity in Canada's energy patch, particularly among
those with extensive oil sands exposure. The bank remains 3 1/2 percentage
points overweight in the energy sector of its strategy portfolio.
    Soaring energy prices and concerns over carbon emissions have also
benefited key segments in the industrial sector, such as railways and transit
and rail equipment manufacturers. Rail is nine times more fuel efficient than
its main freight competitor, trucking, and hence is a source of much less
greenhouse gas emissions. In addition, manufacturers of rail and transit
equipment are benefiting from the recent plans to ramp up mass transit as
cities around the world attempt to reduce vehicle emissions. As a result, CIBC
World Markets has added a percentage point of weighting to the industrial
sector.
    The complete CIBC World Markets report is available at:
http://research.cibcwm.com/economic_public/download/psjul07.pdf.

    CIBC World Markets is the wholesale and corporate banking arm of CIBC,
providing a range of integrated credit and capital markets products,
investment banking, and merchant banking to clients in key financial markets
in North America and around the world. We provide innovative capital solutions
and advisory expertise across a wide range of industries as well as top-ranked
research for our corporate, government and institutional clients.