Tags: McJobs? | Maybe | Not

McJobs? Maybe Not

Tuesday, 11 April 2006 12:00 AM

The Wall Street Journal reports this morning that investors - big and small - are piling into commodities such as gold and silver, driving the metals higher.

The Journal says that the investors are relatively new to the commodities markets, using index-based strategies such as the gold ETFs and the soon-to-be-launched silver ETF that have made investing in the commodities market easier. 

Institutional money managers, according to Barclays Capital, have more than doubled their commodities holdings in three years to between $100 billon and $120 billion. In 1999, these investors held just $6 billion in commodities investments, says the firm.

A Barclays poll in February revealed that half of pension funds, hedge funds and other institutional investors had zero commodities exposure as late as 2005, says the Journal. Since then, they have allocated between 1% and 10% to commodities.

Plus, the poll indicated that these investors would be willing to remain with commodities even if they suffer a correction - seeing commodities as an inflation hedge and a diversifier for their portfolios, says the paper. Their timeframe: 40% expect to hold commodities for three years or longer, 28% plan to hang on for 18 months or more, says the poll.

Torsten de Santos, Barclays head of European Commodity Investor Solutions, says, "The market is quite secure that the money is here to stay," quotes the paper.

A number of fundamental reasons are leading the charge for gold's bull market, including the trade deficit, Iran's nuclear ambitions, and terrorism . Says the WSJ, "Gold's rise could reflect concerns that heavy borrowing in the U.S. could ultimately make investors less willing to finance that borrowing, causing the dollar's value to fall. It could also reflect worries about myriad other risks, from a jump in inflation to a destabilizing terrorist attack. 'It's the potential hedge for all the uncertainties in this new and changing world,' says Jim O'Neill, chief economist at Goldman Sachs in London."

Plus, gold's march to $600 and beyond is buoyed by investor confidence in the markets. Index funds, says the WSJ, sell contracts as they come due and buy new contracts with a future expiration date so that they do not need to take delivery of the commodity.

Kyle Cooper, director of research at IAF Advisors, explains to the WSJ that the presence of index-fund buying, "implicitly puts confidence into the markets; the sellers always know there's a buyer next month. Unless you start to get an actual liquidation of those index shares and a subsequently smaller amount of money buying next month, then I think it remains a very singular underlying support to the market."

In early trading today, gold once again breached the $600 mark, silver hit a new 23-year high of $13, and copper reached a brand-new record of $6001 a ton.

You often hear the argument that the types of jobs being created these days are more quantity than quality. Therefore, even though the unemployment rate is going down, American's standard of living will eventually fall.

But The Christian Science Monitor today refuted that argument, saying that the economy "isn't just producing jobs these days, it's producing good jobs."

The paper points to quality job opportunities from companies such as Honeywell, which plans to hire workers at $40k to $100k to work in a data-storage center, AFB International, which is looking for technicians at $30k to $40k and PhD scientists at $80k to $100k, and railroads in So. California, offering positions at $35k to $70k a year.

The Monitor says that the availability of these types of jobs indicates "movement in a positive direction" for the employment situation in the U.S.

Plus, the Monitor points to jobs in the management and professional occupations category tracked by the Labor Department. The category is "employing 1.2 million more people this month than a year ago - or about 1 in 3 new jobs in America." The highest-paying category tracked by Labor, the median paycheck for full-time workers is $937 a week, far above the median of $651.

In addition, the Economic Policy Institute, which tracks the ratio of higher-paying to lower-paying jobs, reports that the ratio has turned positive this year for the first time since 2001. That means, according to the Monitor, the new jobs tend to bring the average wage up, not down.

Overall, the U.S. added 211,000 jobs in March, and 590,000 jobs in the first quarter of this year. The unemployment rate is currently 4.7%.

Economists had expected a surplus of $5.7 billion, half that of the report says Bloomberg News. In February, China's trade surplus was $2.43 billion. Bloomberg reports that the Ministry of Commerce said that China's exports increased 28.3% in a year to a record $78.1 billion. 

The U.S.'s trade deficit with China climbed to a record $202 billion last year. That's the highest deficit ever recorded with a single country. As a result, the Bush Administration is under pressure from Congress and the American people to reduce the trade deficit with China. To that end, President Bush is expected to prod President Hu to revalue China's currency.

Currently, China's currency, the yuan, is trades in a narrow band with a basket of currencies. Until last year, the yuan was pegged to the U.S. dollar, moving in lock step with the currency. Since China de-pegged the yuan, the yuan has risen about 1.3% against the dollar, says Bloomberg. But, the U.S. believes that if China were to float its currency, it would appreciate much more against the dollar. This would send the dollar plunging, but decrease the U.S. trade deficit by making U.S. products more competitive internationally.

On the other hand, China's Commerce Minister Bo Xilai blamed the huge growth in the trade gap on the fact that the U.S. has curbed technology exports to China, says Bloomberg.

Bo also said that foreign companies, which have moved to China in droves to benefit from low wages, accounted for much of the deficit because of their exports. The Commerce Minister said that the trade surplus would have been just $20 billion to $30 billion last year if you excluded foreign-invested company exports. Confirms Bloomberg, "Almost 60% of the nation's $760 billion of exports last year were shipped by foreign-invested companies." 

Economists say that China's trade surplus isn't good for China either. "The trade surplus is a big economic problem for China because it's boosting foreign-exchange reserves and adding too much liquidity into the economy," said Paul Cavey, Hong Kong-based economist at Macquarie Bank Ltd. to Bloomberg.

So, the U.S. just may get a tiny concession from China during Hu's visit.

Is it an indictment against hybrid vehicles or a press release from General Motors?

You be the judge after checking out a new study by Bandon, Ore.-based CNW Marketing Research that claims hybrid autos consume more energy over the lifetime of the car than a Chevrolet Tahoe SUV.

"As Americans become increasingly interested in fuel economy and global warming, they are beginning to make choices about the vehicles they drive based on fuel economy and to a lesser degree emissions," says the study. "But many of those choices aren't actually the best in terms of vehicle lifetime energy usage and the cost to society over the full lifetime of a car or truck."

CNW claims it has spent that past two years digging up data on automobile energy usage from "concept to scrappage." In other words, energy used on things like plant to dealer fuel costs, employee driving distances, electricity usage per pound of material used in each vehicle and literally hundreds of other variables.

The study labels such criteria as "dollars per lifetime mile," or the Energy Cost per mile driven.

What will surely rankle hybrid drivers is CNWs findings that the much-heralded "fuel efficient" vehicles costs more in terms of overall energy consumed than comparable non-hybrid vehicles.

"For example, the Honda Accord Hybrid has an Energy Cost per Mile of $3.29 while the conventional Honda Accord is $2.18," says the study. "Put simply, over the "Dust to Dust" lifetime of the Accord Hybrid, it will require about 50 percent more energy than the non-hybrid version."

And while the industry average of all vehicles sold in the U.S. in 2005 was $2.28 cents per mile, the Hummer H3 (among most SUVs) was only $1.949 cents per mile. That figure is also lower than all currently offered hybrids and Honda Civic at $2.42 per mile.

CNW says that one of the reasons hybrids cost more than non-hybrids is the manufacture, replacement and disposal of such items as batteries, electric motors (in addition to the conventional engine), lighter weight materials and complexity of the power package.

"If a consumer is concerned about fuel economy because of family budgets or depleting oil supplies, it is perfectly logical to consider buying high-fuel-economy vehicles," says Art Spinella, president of CNW Marketing Research, Inc. "But if the concern is the broader issues such as environmental impact of energy usage, some high-mileage vehicles actually cost society more than conventional or even larger models over their lifetime."

"We believe this kind of data is important in a consumer's selection of transportation," says Spinella. "Basing purchase decisions solely on fuel economy or vehicle size does not get to the heart of the energy usage issue."

Hybrid cars have seen a rise in popularity for the past few years because of environmental concerns and lower gas mileage. U.S. car sales figures appear to back up the anecdotal evidence. Sales of the General Motors Corporation Envoy and Chevrolet Tahoe fell more than 50% in September, 2005 compared to September, 2004 while Toyota's Prius sales increased by 90% from the same period.


© 2019 Newsmax. All rights reserved.

1Like our page
The Wall Street Journal reports this morning that investors - big and small - are piling into commodities such as gold and silver, driving the metals higher. The Journal says that the investors are relatively new to the commodities markets, using index-based strategies...
Tuesday, 11 April 2006 12:00 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
© Newsmax Media, Inc.
All Rights Reserved