Cliffs Natural Resources Inc (NYSE:CLF) reported earnings for the second quarter surged by over five times what they were the year before in the same quarter, based on strong iron ore demand and higher prices.
Profits in the quarter increased to $260.7 million, or $1.92 a share, up from $45.5 million last year, or 36 cents a share. It was still below the $2.02 a share analysts had been looking for.
The earnings also had the benefit of iron ore prices rising to their peak level over the last 12 months during the quarter, making you wonder what lies ahead in what appears to be more economic slowdown in the steel sector.
Second quarter commodity prices were solid in general, and has helped many raw materials companies look good.
Now the obvious question is where do they go from here, as the global economy looks somewhat feeble at best.
Even in a slower economy though, iron ore demand should remain fairly strong, at least in the short term, and that could bode well for Cliffs Natural Resources and other iron ore producers.
Showing posts with label Commodity Prices 2010. Show all posts
Showing posts with label Commodity Prices 2010. Show all posts
Thursday, July 29, 2010
Tuesday, July 6, 2010
JP Morgan (NYSE:JPM): Lower Commodity Prices in Third Quarter
Lower commodity prices in the third quarter should generate tremendous investment opportunities in emerging markets, according to JP Morgan (NYSE:JPM).
Emerging market stocks should go lower in the third quarter, which should result in an “extraordinary buying opportunity,” the giant financial institution stated.
“For now markets are going lower driven by a sharp correction in commodities,” said Adrian Mowat Mowat, JPMorgan’s chief Asian and emerging-markets strategist, in the report. “The third quarter of 2010 should provide an exceptional buying opportunity.”
While JPMorgan said in the report investors should "wait" at this time before putting their money in shares of emerging market companies, they added investors are probably “too pessimistic” concerning overall global growth.
Emerging market stocks should go lower in the third quarter, which should result in an “extraordinary buying opportunity,” the giant financial institution stated.
“For now markets are going lower driven by a sharp correction in commodities,” said Adrian Mowat Mowat, JPMorgan’s chief Asian and emerging-markets strategist, in the report. “The third quarter of 2010 should provide an exceptional buying opportunity.”
While JPMorgan said in the report investors should "wait" at this time before putting their money in shares of emerging market companies, they added investors are probably “too pessimistic” concerning overall global growth.
Monday, June 7, 2010
Falling Commodity Prices Suggest Ongoing Recession
The ongoing drop in commodity prices implies the recession continues on, as the decline in prices tell us demand has plummeted.
I say an ongoing recession because I've never believed we've left the recession, but only the government stimulus plans and unprecedented printing of money has kept it from being exposed for what it is.
But whether you want to call it a double-dip recession, , u-shaped recession, or something else, the fact is we're set to face more economic difficulty, and after spending trillions around the world, it has done nothing to stop the recession we've been in for several years, and now has been made worse because of the government spending that has hidden and masked the reality.
There is only one reason commodity prices will drop, and that's based on supply and demand. In this case it's all about demand, which has simply dried up.
That drying up comes from the emerging narrative of slowing demand in China, the European Union, and the United States.
The frantic attempts to spin the situation by the U.S. governments and other governments around the world are no longer believable, and we need to be ready as it hits the fan again.
If spending trillions has ended with nothing, we can be sure spending trillions more will do nothing as well, other than continue to decimate people and their spending power.
Consequently gold prices will continue to rise, as well as quality gold mining stocks, as it becomes the only place of safety that can be counted on going forward.
I say an ongoing recession because I've never believed we've left the recession, but only the government stimulus plans and unprecedented printing of money has kept it from being exposed for what it is.
But whether you want to call it a double-dip recession, , u-shaped recession, or something else, the fact is we're set to face more economic difficulty, and after spending trillions around the world, it has done nothing to stop the recession we've been in for several years, and now has been made worse because of the government spending that has hidden and masked the reality.
There is only one reason commodity prices will drop, and that's based on supply and demand. In this case it's all about demand, which has simply dried up.
That drying up comes from the emerging narrative of slowing demand in China, the European Union, and the United States.
The frantic attempts to spin the situation by the U.S. governments and other governments around the world are no longer believable, and we need to be ready as it hits the fan again.
If spending trillions has ended with nothing, we can be sure spending trillions more will do nothing as well, other than continue to decimate people and their spending power.
Consequently gold prices will continue to rise, as well as quality gold mining stocks, as it becomes the only place of safety that can be counted on going forward.
Tuesday, June 1, 2010
Commodity Collapse Close at Hand?
Not too long ago before the depth and width of the sovereign debt crisis in Europe was known, as well as the condition of the Chinese property market, along with its inflation, commodities and commodity companies were considered some of the best bets in the marketplace, and at least a mid-level recovery believed to be close at hand.
That has quickly changed in the last couple of months, with little more than gold being the one commodity that can be counted on to continue rising in price.
“As risk-taking falls, expected growth is reduced,” said Colin P. Fenton, the chief executive officer of Curium Capital Advisors LLC. “Demand for commodities is going to be softer than it might otherwise have been.”
Manufacturing in China, the U.S. and Europe dropped in May, and consequently prices for energy and industrial metals fell along with that.
One of the major commodities uses as an economic indicator is copper, and that fell 7.4 percent in May, the largest drop since January.
Some analysts say it's early in the game to see this in the numbers yet, but they expect guidance to be downwardly revised as the year goes on.
That has quickly changed in the last couple of months, with little more than gold being the one commodity that can be counted on to continue rising in price.
“As risk-taking falls, expected growth is reduced,” said Colin P. Fenton, the chief executive officer of Curium Capital Advisors LLC. “Demand for commodities is going to be softer than it might otherwise have been.”
Manufacturing in China, the U.S. and Europe dropped in May, and consequently prices for energy and industrial metals fell along with that.
One of the major commodities uses as an economic indicator is copper, and that fell 7.4 percent in May, the largest drop since January.
Some analysts say it's early in the game to see this in the numbers yet, but they expect guidance to be downwardly revised as the year goes on.
Saturday, May 22, 2010
Why Commodity Prices Remain Down
While there is no doubt the bull commodity market will continue on, as demand for raw materials isn't going to decline any time soon, we do have to look at what is causing the temporary drop in commodity prices in the midst of the bull market.
Although there are numerous variables, I only want to touch on the major ones, as most of the others are primarily offshoots of these several factors, and aren't as important in understanding the big picture.
First of all, nothing has changed in ordinary market behavior. Prices fall because demand falls. There's nothing else to it.
Having said that, we need to understand what's behind demand falling in order to grasp the implications and how to invest in response to them.
I do want to start with natural gas, not because it's actually connected to what I want to get into, but because it has unique elements outside what we're going to talk about, so I want to get that out of the way.
It's not that there isn't the potential for a lot of natural gas demand, it's that there is now so much more natural gas to supply our needs, that the sheer volume of it has changed the supply/demand picture, and prices are falling because of the enormous quantities in the U.S., and continually being discovered in other parts of the world.
So there's an oversupply for decades, if not longer, and that has changed the prices as far as natural gas goes.
Now as far as most other commodities, there's a different reason for demand falling, and that's because banks are doing little lending, and businesses are doing very little borrowing. Even though we here the occasional media story to the contrary, the truth is there is no confidence in the economy, as it has been propped up by government spending on dubious stupid and unsustainable projects and not by the private sector.
But the reason why the private sector isn't participating in the recovery, is because they, along with the banks, don't trust this so-called recovery either, and aren't trying to secure loans because there has to be projected demand for products and services, and they don't believe that the demand is out there. And no matter how hard politicians call for business loans to be made, there aren't that many buyers out there that want or need them.
So with with bankers and businesses not trusting the recovery, or that there really is one, other than taxpayer money being thrown at the problem in attempts to prop up prices, it's likely that commodity prices will continue to be under downward pressure, with occasional exceptions related to a specific commodity.
Here's another example of that to watch for, so you don't take this as a blanket statement for every commodity. I'm just talking about commodities as an overall sector will probably continue to lose value.
One exception may be aluminum. A unique factor has recently been introduced which could drive the price up because of a new source of demand, and that is the introduction of several aluminum ETFs in the latter part of the year, which will include in the holding of physical aluminum, just like gold ETFs do with physical gold.
That means there will be an increased aluminum demand that has never been there before in history; at least in the way the ETFs operate.
So near the end of 2010 and onward, we could see aluminum prices go up because Rusal, and to a lesser degree, Alcoa (NYSE:AA), will be the major providers of aluminum for the funds, and Rusal is reportedly having a difficult time coming up with enough aluminum, so Alcoa will be a secondary provider.
The point is revealing this is to understand any commodity can be an exception at one time or another, and even though the overall commodity sector will probably continue to fall in prices in the near-term, there are always exceptions, and we need to remain vigilant while understanding why prices are being pushed downward.
Once banks start releasing their money into the economy again, i.e., lending to businesses, there could be, and should be, an explosion of upward commodity price movement. Until that happens, we have to watch for anomalies in the market which could make it different for specific commodities within the sector.
Without getting into it, gold should be another exception for pretty obvious reasons, as it will continue going up for some time, and is of course unique to the overall picture concerning commodities.
Although there are numerous variables, I only want to touch on the major ones, as most of the others are primarily offshoots of these several factors, and aren't as important in understanding the big picture.
First of all, nothing has changed in ordinary market behavior. Prices fall because demand falls. There's nothing else to it.
Having said that, we need to understand what's behind demand falling in order to grasp the implications and how to invest in response to them.
I do want to start with natural gas, not because it's actually connected to what I want to get into, but because it has unique elements outside what we're going to talk about, so I want to get that out of the way.
It's not that there isn't the potential for a lot of natural gas demand, it's that there is now so much more natural gas to supply our needs, that the sheer volume of it has changed the supply/demand picture, and prices are falling because of the enormous quantities in the U.S., and continually being discovered in other parts of the world.
So there's an oversupply for decades, if not longer, and that has changed the prices as far as natural gas goes.
Now as far as most other commodities, there's a different reason for demand falling, and that's because banks are doing little lending, and businesses are doing very little borrowing. Even though we here the occasional media story to the contrary, the truth is there is no confidence in the economy, as it has been propped up by government spending on dubious stupid and unsustainable projects and not by the private sector.
But the reason why the private sector isn't participating in the recovery, is because they, along with the banks, don't trust this so-called recovery either, and aren't trying to secure loans because there has to be projected demand for products and services, and they don't believe that the demand is out there. And no matter how hard politicians call for business loans to be made, there aren't that many buyers out there that want or need them.
So with with bankers and businesses not trusting the recovery, or that there really is one, other than taxpayer money being thrown at the problem in attempts to prop up prices, it's likely that commodity prices will continue to be under downward pressure, with occasional exceptions related to a specific commodity.
Here's another example of that to watch for, so you don't take this as a blanket statement for every commodity. I'm just talking about commodities as an overall sector will probably continue to lose value.
One exception may be aluminum. A unique factor has recently been introduced which could drive the price up because of a new source of demand, and that is the introduction of several aluminum ETFs in the latter part of the year, which will include in the holding of physical aluminum, just like gold ETFs do with physical gold.
That means there will be an increased aluminum demand that has never been there before in history; at least in the way the ETFs operate.
So near the end of 2010 and onward, we could see aluminum prices go up because Rusal, and to a lesser degree, Alcoa (NYSE:AA), will be the major providers of aluminum for the funds, and Rusal is reportedly having a difficult time coming up with enough aluminum, so Alcoa will be a secondary provider.
The point is revealing this is to understand any commodity can be an exception at one time or another, and even though the overall commodity sector will probably continue to fall in prices in the near-term, there are always exceptions, and we need to remain vigilant while understanding why prices are being pushed downward.
Once banks start releasing their money into the economy again, i.e., lending to businesses, there could be, and should be, an explosion of upward commodity price movement. Until that happens, we have to watch for anomalies in the market which could make it different for specific commodities within the sector.
Without getting into it, gold should be another exception for pretty obvious reasons, as it will continue going up for some time, and is of course unique to the overall picture concerning commodities.
Monday, May 17, 2010
Commodity Prices Plunge Today
Commodity prices today are down significantly, as industrial metals led the plunge, as concerns over demand from Europe and China hinder the market.
Fighting the debt in Europe and inflation in China has optimism in commodities shake for the first time in awhile, and some companies and countries are concerned over how much the possible drop in demand will have an effect upon them.
Metals like copper, tin, zinc, lead and aluminum are all down, as traders and investors look at the near-term for the metals, and whether or not the recently expected commodity demand is sustainable over the mid-term.
This also seems to have affected the price of oil and gas, as the question now is whether or not consumers will travel and spend as much with this weighing on their minds.
Fighting the debt in Europe and inflation in China has optimism in commodities shake for the first time in awhile, and some companies and countries are concerned over how much the possible drop in demand will have an effect upon them.
Metals like copper, tin, zinc, lead and aluminum are all down, as traders and investors look at the near-term for the metals, and whether or not the recently expected commodity demand is sustainable over the mid-term.
This also seems to have affected the price of oil and gas, as the question now is whether or not consumers will travel and spend as much with this weighing on their minds.
Monday, May 3, 2010
Marc Faber: China May Collapse within the Year
Marc Faber says he sees signs China's economy may be poised for a collapse and it could possibly happen within nine months to a year.
In a television interview with Bloomberg, Faber said this:
“The market is telling you that something is not quite right. The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”
When the credit crisis exploded and American consumers stopped spending, China did the usual thing governments and central banks do, they attempted to stimulate their economy by spending billions on domestic property development and construction projects, which may account for about 60 percent of the Chinese domestic product at this time.
In the interview Faber also said the mining companies in Australia, which supply a large portion of raw materials to China, are acting "heavy," meaning they may be feeling exterior pressures of slowing demand.
It also looks like China has no intention of changing their policies either, as Finance Minister Xie Xuren said China will continue their expansion until the recovery takes hold.
One step the Chinese government has taken is to forbid taking out a mortgage on a third home while also raising interest rates on mortgages and increasing the requirements on down payments.
Estimates are that could cause the value of properties to fall by up to 20 percent in the second half of 2010 in hopes of cutting down are investing in risky real estate deals.
Faber says these measures could push investors toward the Chinese stock market, but since that's fully valued at this time, they could choose gold as their investment of choice, and who knows where that would bring the price gold to in light of the European sovereign debt crisis, which is only beginning to unfold.
Either way, if Faber is correct at the high end of his projection, the economy of China will slow, and what happens to the prices of commodities at that time when so many companies and countries have been relying upon to bring them out of the recession?
Couple all of this with the EU sovereign debt debacle and it's hard to figure how the financial press can endlessly repeat the mantra that we're in an economic recovery.
In a television interview with Bloomberg, Faber said this:
“The market is telling you that something is not quite right. The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”
When the credit crisis exploded and American consumers stopped spending, China did the usual thing governments and central banks do, they attempted to stimulate their economy by spending billions on domestic property development and construction projects, which may account for about 60 percent of the Chinese domestic product at this time.
In the interview Faber also said the mining companies in Australia, which supply a large portion of raw materials to China, are acting "heavy," meaning they may be feeling exterior pressures of slowing demand.
It also looks like China has no intention of changing their policies either, as Finance Minister Xie Xuren said China will continue their expansion until the recovery takes hold.
One step the Chinese government has taken is to forbid taking out a mortgage on a third home while also raising interest rates on mortgages and increasing the requirements on down payments.
Estimates are that could cause the value of properties to fall by up to 20 percent in the second half of 2010 in hopes of cutting down are investing in risky real estate deals.
Faber says these measures could push investors toward the Chinese stock market, but since that's fully valued at this time, they could choose gold as their investment of choice, and who knows where that would bring the price gold to in light of the European sovereign debt crisis, which is only beginning to unfold.
Either way, if Faber is correct at the high end of his projection, the economy of China will slow, and what happens to the prices of commodities at that time when so many companies and countries have been relying upon to bring them out of the recession?
Couple all of this with the EU sovereign debt debacle and it's hard to figure how the financial press can endlessly repeat the mantra that we're in an economic recovery.
Tuesday, April 6, 2010
Canadian Dollar Trading at Parity with U.S Dollar
Canadian Dollar
For the first time since July 2008, the Canadian dollar has traded at parity with the U.S. dollar, and even beyond it today.
The increasing price of crude oil and inevitable raising of interest rates in Canada are cited as the key reasons behind the increase in value of the Canadian dollar.
This is familiar territory as it relates to crude oil, as the last time the Canadian dollar was trading at parity to the U.S. dollar, oil had reached a record high of $147.27 a barrel.
With commodity prices expected to continue to skyrocket, the Canadian dollar should remain strong for years to come against the dollar, and its past behavior will no longer be the norm as it passes into an entirely new era.
This will be great for Canadian consumers who should enjoy lower prices, but a challenge to exporter, whose prices will struggle to compete on the basis of the strength of the Canadian dollar.
For the first time since July 2008, the Canadian dollar has traded at parity with the U.S. dollar, and even beyond it today.
The increasing price of crude oil and inevitable raising of interest rates in Canada are cited as the key reasons behind the increase in value of the Canadian dollar.
This is familiar territory as it relates to crude oil, as the last time the Canadian dollar was trading at parity to the U.S. dollar, oil had reached a record high of $147.27 a barrel.
With commodity prices expected to continue to skyrocket, the Canadian dollar should remain strong for years to come against the dollar, and its past behavior will no longer be the norm as it passes into an entirely new era.
This will be great for Canadian consumers who should enjoy lower prices, but a challenge to exporter, whose prices will struggle to compete on the basis of the strength of the Canadian dollar.
Thursday, April 1, 2010
Goldman Sachs (NYSE:GS): Commodity 'Price Spikes'
Commodity prices to explode upward
Goldman Sachs (NYSE:GS) said commodities may be in for “violent price spikes” as increasing demand from emerging markets leads to significant shortages. The constraints on supply is the second factor leading to the conclusion from Goldman.
Contrary to alleged manipulation of markets by speculators, the commodity price increases coming up will be related to supply, demand and storage, not investors.
Major price movements in commodities are largely related to when commodity inventories are low. When they're readily available, commodity prices are more stable.
Goldman added there's no proof or evidence currency movements affect commodity prices.
Goldman Sachs (NYSE:GS) said commodities may be in for “violent price spikes” as increasing demand from emerging markets leads to significant shortages. The constraints on supply is the second factor leading to the conclusion from Goldman.
Contrary to alleged manipulation of markets by speculators, the commodity price increases coming up will be related to supply, demand and storage, not investors.
Major price movements in commodities are largely related to when commodity inventories are low. When they're readily available, commodity prices are more stable.
Goldman added there's no proof or evidence currency movements affect commodity prices.
Friday, March 26, 2010
Commodities Rise as Greek Concerns Ease
Commodity Prices Going Up
Commodities had been taking a hit because of the indecision of Europe over the sovereign debt crisis in Greece. Now that a plan is in place to help Greece if they need it in the months ahead, commodities rebounded today in response to the news.
As far as the support from Europe, it's more of a support mechanism rather than loans offered to Greece in the present. It may or may not ever be used by Greece, but it's there as a backstop if the need ever arises. It also keeps many of the politicians in the region out of hot water with their constituents who largely opposed bailing Greece out.
If Europe is able to integrate better politically and learn from this crisis, gold should be a strong beneficiary, as it tends to move up when the euro is stronger and down when it is weaker against the U.S. dollar.
Almost all commodities responding be moving up in price on the news.
Commodities had been taking a hit because of the indecision of Europe over the sovereign debt crisis in Greece. Now that a plan is in place to help Greece if they need it in the months ahead, commodities rebounded today in response to the news.
As far as the support from Europe, it's more of a support mechanism rather than loans offered to Greece in the present. It may or may not ever be used by Greece, but it's there as a backstop if the need ever arises. It also keeps many of the politicians in the region out of hot water with their constituents who largely opposed bailing Greece out.
If Europe is able to integrate better politically and learn from this crisis, gold should be a strong beneficiary, as it tends to move up when the euro is stronger and down when it is weaker against the U.S. dollar.
Almost all commodities responding be moving up in price on the news.
Thursday, March 25, 2010
Commodity Prices Down on Greece Rescue Plans
Commodity Prices Down
Commodity prices and commodity stocks were down significantly for the day as plans to rescue Greece are implied to be in the works, underscoring the importance the market is placing on the European sovereign debt crisis and how it is affecting the euro, U.S. dollar and commodity prices.
Commodity companies taking a hit on the news of a plan for a Greece rescue include International Paper (NYSE:IP), which plunged 3.6%; Freeport McMoran Copper & Gold (NYSE:FCX), dropping 2.1%; and DuPont (NYSE:DD), falling 2.2%.
Commodity Prices Down
Commodity prices and commodity stocks were down significantly for the day as plans to rescue Greece are implied to be in the works, underscoring the importance the market is placing on the European sovereign debt crisis and how it is affecting the euro, U.S. dollar and commodity prices.
Commodity companies taking a hit on the news of a plan for a Greece rescue include International Paper (NYSE:IP), which plunged 3.6%; Freeport McMoran Copper & Gold (NYSE:FCX), dropping 2.1%; and DuPont (NYSE:DD), falling 2.2%.
Commodity Prices Down
Wednesday, March 17, 2010
Alcoa Inc. (NYSE:AA) Up On Little News
Alcoa Surges in Share Price Today
Aluminum giant Alcoa (NYSE:AA) helped lead the Dow Jones Industrial Average higher today, although little news emerged which gave a reason for the sudden spike in share price.
Also performing strong in the commodity sector was Exxon Mobil (NYSE:XOM), which also helped the Dow move higher. Exxon was easy to read as oil prices continue to go up.
It's possible with Alcoa that they were due for an upward adjustment after having a lot of downward pressure on them. We'll see if this is sustainable in any meaningful way, or just some investors attempting to guess and time the market in light of their recent performance.
Alcoa Surges in Share Price Today
Aluminum giant Alcoa (NYSE:AA) helped lead the Dow Jones Industrial Average higher today, although little news emerged which gave a reason for the sudden spike in share price.
Also performing strong in the commodity sector was Exxon Mobil (NYSE:XOM), which also helped the Dow move higher. Exxon was easy to read as oil prices continue to go up.
It's possible with Alcoa that they were due for an upward adjustment after having a lot of downward pressure on them. We'll see if this is sustainable in any meaningful way, or just some investors attempting to guess and time the market in light of their recent performance.
Alcoa Surges in Share Price Today
Thursday, March 4, 2010
JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) Chasing Commodity Investment Leaders
JPMorgan and Citigroup Looking to Commodities
Now that many of the banks and investment banks like JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) have finished shoring up their foundations and building up their reserve capital, they're looking at generating revenue, and the commodity bull market may be the best place to do that in the years ahead, as they try to catch up with competitors like Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) who make a lot of money in the sector, and are positioned well to continue doing that.
Although mergers and acquisitions and initial public offerins are expected to increase some this year, that business won't be a huge revenue generator until we truly emerge from the recession.
So commodities are one of the few growth sectors left which have a good chance of increasing revenue and profits for banks and their investment bank units.
JPMorgan and Citigroup Looking to Commodities
Now that many of the banks and investment banks like JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) have finished shoring up their foundations and building up their reserve capital, they're looking at generating revenue, and the commodity bull market may be the best place to do that in the years ahead, as they try to catch up with competitors like Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) who make a lot of money in the sector, and are positioned well to continue doing that.
Although mergers and acquisitions and initial public offerins are expected to increase some this year, that business won't be a huge revenue generator until we truly emerge from the recession.
So commodities are one of the few growth sectors left which have a good chance of increasing revenue and profits for banks and their investment bank units.
JPMorgan and Citigroup Looking to Commodities
Wednesday, March 3, 2010
Mark Mobius Likes Commodity Countries
Mark Mobius - Commodities in Emerging Markets
Emerging market guru Mark Mobius likes two things about investing in the BRIC countries, and that is consumers and commodities.
The head of Templeton Asset Management said he continues to look for strong performances from countries with strong natural resources and infrastructure and consistency in place to extract and distribute them.
With growing middle classes in BRIC nations, Mobius also likes industries prepared to service them like retail, banking and disposal product firms.
Anyone investing in BRIC economies need to have a longer term outlook to be successful says Mobius, as they are volatile and move up and down quite a bit.
Market timers and other need not apply here or you could get slaughtered from the short term fluctuations of the markets.
Mark Mobius - Commodities in Emerging Markets
Emerging market guru Mark Mobius likes two things about investing in the BRIC countries, and that is consumers and commodities.
The head of Templeton Asset Management said he continues to look for strong performances from countries with strong natural resources and infrastructure and consistency in place to extract and distribute them.
With growing middle classes in BRIC nations, Mobius also likes industries prepared to service them like retail, banking and disposal product firms.
Anyone investing in BRIC economies need to have a longer term outlook to be successful says Mobius, as they are volatile and move up and down quite a bit.
Market timers and other need not apply here or you could get slaughtered from the short term fluctuations of the markets.
Mark Mobius - Commodities in Emerging Markets
Wednesday, February 24, 2010
Charlie Munger Warns on America
Charlie Munger on Economics and America
Anyone reading Charlie Mungers parable over at Slate over the weekend should come away very sober, with the realization why precious metals like gold and silver, along with other commodities, will do well over the years ahead.
The parable by Charlie Munger attacked on two fronts. The first was the outrageous practices of the U.S. government which is out of control with its spending and taxation, and discourages entrepreneurs from flourishing when all they do is take wealth away from them and redistribute it like the growing socialist government and administration we now have.
On the private business side, Munger blasted the derivative trading of the banks which were a major part of the underlying problems many of us face.
While this is all true and accurate, we still face the consequences of the actions of the U.S. government and major banks no matter what is done in attempts to deal with the root causes.
This is why commodities will continue to be the major success story over the next decade or more, as real things will continue to be in demand, rather than things most people can't begin to understand.
Charlie Munger on Economics and America
Anyone reading Charlie Mungers parable over at Slate over the weekend should come away very sober, with the realization why precious metals like gold and silver, along with other commodities, will do well over the years ahead.
The parable by Charlie Munger attacked on two fronts. The first was the outrageous practices of the U.S. government which is out of control with its spending and taxation, and discourages entrepreneurs from flourishing when all they do is take wealth away from them and redistribute it like the growing socialist government and administration we now have.
On the private business side, Munger blasted the derivative trading of the banks which were a major part of the underlying problems many of us face.
While this is all true and accurate, we still face the consequences of the actions of the U.S. government and major banks no matter what is done in attempts to deal with the root causes.
This is why commodities will continue to be the major success story over the next decade or more, as real things will continue to be in demand, rather than things most people can't begin to understand.
Charlie Munger on Economics and America
Tuesday, February 23, 2010
Managed Commodity Assets Fall
Managed Commodity Assets Fall
Managed commodity assets fell for the first time in over a year, said Barclay's Capital, evidently based on worries over the global economy.
Overall commodity assets under management dropped to $245 billion, a $12 billion fall from the $257 billion from last month.
In what I think is a strange response to uncertainty, investors took close to $500 million out of exchange-traded funds, with the majority of that being funds backed by gold and a variety of other precious metals.
At a time when uncertainty should drive smart investors to gold, the idea that taking it out of gold and moving it to something else is ignorant and bizarre, although obviously a lot more was happening than only that in the overall commodity managed assets picture.
Managed Commodity Assets Fall
Managed commodity assets fell for the first time in over a year, said Barclay's Capital, evidently based on worries over the global economy.
Overall commodity assets under management dropped to $245 billion, a $12 billion fall from the $257 billion from last month.
In what I think is a strange response to uncertainty, investors took close to $500 million out of exchange-traded funds, with the majority of that being funds backed by gold and a variety of other precious metals.
At a time when uncertainty should drive smart investors to gold, the idea that taking it out of gold and moving it to something else is ignorant and bizarre, although obviously a lot more was happening than only that in the overall commodity managed assets picture.
Managed Commodity Assets Fall
Monday, February 15, 2010
Mining Industry: Energy Prices Rising
Commodity Prices Going Up
The mining industry has come out in force saying there is no doubt energy prices will continue to rise over the next five years, with oil increasing to over $100 a barrel.
While this will probably be true, with at least price increases at some level, the mining industry added that energy is far from the only raw material or other commodity sector poised to increase in price.
Almost every single future factor will confirm that prices for most commodities will continue to rise based on emerging markets, China, and an increasing population.
Those elements alone will push commodity prices up, even if nothing else happens.
It's only a matter of when it'll happen and with what commodity. To me, the recent tightening in China will only have an effect upon those commodities not that high in demand, as the iron ore price negotiations reveal.
Commodity Prices Going Up
The mining industry has come out in force saying there is no doubt energy prices will continue to rise over the next five years, with oil increasing to over $100 a barrel.
While this will probably be true, with at least price increases at some level, the mining industry added that energy is far from the only raw material or other commodity sector poised to increase in price.
Almost every single future factor will confirm that prices for most commodities will continue to rise based on emerging markets, China, and an increasing population.
Those elements alone will push commodity prices up, even if nothing else happens.
It's only a matter of when it'll happen and with what commodity. To me, the recent tightening in China will only have an effect upon those commodities not that high in demand, as the iron ore price negotiations reveal.
Commodity Prices Going Up
Sunday, February 14, 2010
Commodities and Sovereign Default = Opportunity
Commodities and Sovereign Default
It's interesting to read what some think will be the ruin of commodities because of the potential sovereign default from a growing number of countries, including Greece, Ireland, Spain and Portugal.
Of course the problem with ignorant writers on commodities is they're clueless as to how you make money with commodities, which is when they're on the way up or on the way down, so whether the price is going up or down for commodities is irrelevant from that point of view.
These writers only think in terms of whether or not those trying to make money on commodity prices going up are going to get clobbered, not realizing or even in some case - even knowing, that you make money either way.
For those investing in commodities, it doesn't make any difference whether you make the money on upwards or downwards price movements.
So don't forget to include that in your decision making going forward, as potential significant price movements in commodities one way or the other are always potentially great opportunities to make a lot of money.
Commodities and Sovereign Default
It's interesting to read what some think will be the ruin of commodities because of the potential sovereign default from a growing number of countries, including Greece, Ireland, Spain and Portugal.
Of course the problem with ignorant writers on commodities is they're clueless as to how you make money with commodities, which is when they're on the way up or on the way down, so whether the price is going up or down for commodities is irrelevant from that point of view.
These writers only think in terms of whether or not those trying to make money on commodity prices going up are going to get clobbered, not realizing or even in some case - even knowing, that you make money either way.
For those investing in commodities, it doesn't make any difference whether you make the money on upwards or downwards price movements.
So don't forget to include that in your decision making going forward, as potential significant price movements in commodities one way or the other are always potentially great opportunities to make a lot of money.
Commodities and Sovereign Default
Thursday, February 11, 2010
Commodities Fall on Bernanke Statement
Commodities and Interest Rates
Commodities fell today as Ben Bernanke stated in House Financial Services Committee testimony that the interest rates on direct loans to banks may be raised sometime soon.
Bernanke was quick to add that the low interest environment overall isn't going to go away, and there will continue to be an "extended period" where that is the case.
Some commodity companies like Exxon Mobil (NYSE:XOM) and Freeport-McMoRan (NYSE: FCX) fell, along with copper, which dropped for the first time in the trading week.
Gold also fell as the U.S. dollar climbed slightly on the news.
Commodities and Interest Rates
Commodities fell today as Ben Bernanke stated in House Financial Services Committee testimony that the interest rates on direct loans to banks may be raised sometime soon.
Bernanke was quick to add that the low interest environment overall isn't going to go away, and there will continue to be an "extended period" where that is the case.
Some commodity companies like Exxon Mobil (NYSE:XOM) and Freeport-McMoRan (NYSE: FCX) fell, along with copper, which dropped for the first time in the trading week.
Gold also fell as the U.S. dollar climbed slightly on the news.
Commodities and Interest Rates
BHP Billiton (NYSE: BHP) Doubles First Half Profits on Commodity Demand
BHP Billiton (NYSE: BHP)
BHP Billiton (NYSE: BHP) had a tremendous first half to their fiscal year as profits doubled on continuing demand for commodities, largely fueled by China and India.
While some try to tout this as also being fueled by European and American demand, that's not true in general, as least from the point of view of being sustainable, as many manufactures, particularly in America, were simply replenishing supplies, a major reason the recent data haven't been that exciting to economists or analysts.
That is probably reflected in the lower dividend than expected from BHP, as the one-off results in the United States won't be repeated any time soon. The company reported a divident of 42 cents for the first half, while expectations were it would come in at 44 cents. That's usually an indicator of uncertainty and unpredictability, and I would say that would largely come from slowing demand from Western countries.
Even so, some commodities will continue to flourish as growth in emerging markets resumes, and as China especially focuses on relying less on imports and more on domestic growth, which is fueling numerous infrastructure projects which will continue for years and require numerous raw materials.
“Physical demand for bulk commodities continues to be very strong in most regions,” BHP said in the statement. “Commodity markets will continue to be largely dependent on Chinese and Indian demand. In the short term, it is critical to monitor the pace of monetary tightening and the rate of loan growth for commodity intensive sectors in China.”
BHP Billiton (NYSE: BHP)
BHP Billiton (NYSE: BHP) had a tremendous first half to their fiscal year as profits doubled on continuing demand for commodities, largely fueled by China and India.
While some try to tout this as also being fueled by European and American demand, that's not true in general, as least from the point of view of being sustainable, as many manufactures, particularly in America, were simply replenishing supplies, a major reason the recent data haven't been that exciting to economists or analysts.
That is probably reflected in the lower dividend than expected from BHP, as the one-off results in the United States won't be repeated any time soon. The company reported a divident of 42 cents for the first half, while expectations were it would come in at 44 cents. That's usually an indicator of uncertainty and unpredictability, and I would say that would largely come from slowing demand from Western countries.
Even so, some commodities will continue to flourish as growth in emerging markets resumes, and as China especially focuses on relying less on imports and more on domestic growth, which is fueling numerous infrastructure projects which will continue for years and require numerous raw materials.
“Physical demand for bulk commodities continues to be very strong in most regions,” BHP said in the statement. “Commodity markets will continue to be largely dependent on Chinese and Indian demand. In the short term, it is critical to monitor the pace of monetary tightening and the rate of loan growth for commodity intensive sectors in China.”
BHP Billiton (NYSE: BHP)
Subscribe to:
Posts (Atom)