At a time when money managers’ concerns have swung between record government stimulus and the potential for a new recession, investors remain bullish on commodities that beat stocks and bonds for a second year.
The benchmark Standard & Poor’s GSCI gauge advanced 20 percent, more than the 9.1 percent gain in the MSCI World Index of stocks and 5.3 percent return on a Bank of America Merrill Lynch index of Treasuries. Currency traders are betting on a stronger dollar, sending a contrarian signal because commodities moved in an opposite direction to the currency in 16 of the past 20 quarters, data compiled by Bloomberg show.
Silver, an investment and an industrial material, will jump as much as 37 percent next year, leading gains in the 15 commodities covered in a Bloomberg survey of more than 100 analysts, traders and investors. Zinc, this year’s worst- performing metal, will appreciate 21 percent. Arabica coffee, which reached a 13-year high last week, will be the weakest performer, adding no more than about 7 percent.
The strength in demand “has been a surprise considering that we’ve just come out of the worst recession since the 1930s and carnage in most asset classes,” London-based Roxana Mohammadian-Molina, one of a team of 18 analysts at Barclays Capital who correctly called the bottom in oil and copper last year, said by phone Dec. 22. The bank says U.S. natural gas, will be the only one of the 25 commodity prices it follows that will average less next year.
Stocks Short
Global stocks are still about $11 trillion short of the record $62.6 trillion of market capitalization reached in October 2007, data compiled by Bloomberg show. Over the same period, commodity assets under management rose about 80 percent to $354 billion, and will attract a total of $60 billion in new money this year, the second most after 2009, Barclays estimates.
The S&P GSCI Index is extending last year’s 50 percent advance, which also beat the 27 percent jump in the MSCI World Index and the 3.7 percent loss on Treasuries.
Investors favored raw materials this year as China, the biggest user of everything from coal to iron ore to zinc, led the recovery from the first global recession since World War II. With economies now expanding, competition for raw materials is intensifying.
U.S. growth will rise to 3.25 percent in the fourth quarter of 2011, from 2.5 percent in the first, according to the median estimates of as many as 66 economists surveyed by Bloomberg. China’s will slow to 9 percent next year from 10 percent in 2010, still three times the rate of the U.S. and six times the speed of the euro zone, the surveys show. China on Dec. 26 raised interest rates to counter inflation.
Goldman’s Picks
Commodities gaining the most will be those in which China is least self-sufficient and with the smallest spare production capacity, according to Goldman Sachs Group Inc. analysts led by London-based Jeffrey Currie. Oil, copper, cotton, soybeans and platinum are the bank’s top picks.
Goldman on Dec. 13 forecast an 18 percent advance in raw materials in 12 months, led by a 28 percent gain in precious metals. That tallies with the results of the Bloomberg survey.
Silver, the precious metal most used in industry, will rise 37 percent to as high as $40 an ounce next year from $29.1238 an ounce Dec. 24 in trading in London, the survey shows. Palladium, used in catalytic converters for cars, will jump as much as 18 percent to $900 an ounce from $764 in trading in London Dec. 24.
Silver futures for March delivery rose 53 cents, or 1.8 percent, to $29.785 an ounce at 10:14 a.m. on the Comex in New York. Palladium futures for March delivery gained $11.90, or 1.6 percent, to $779 an ounce on the New York Mercantile Exchange.
Markets in London are closed for a second day today for public holidays.
Gold Outlook
“Investors will be cycling out of gold and into silver, platinum and palladium if financial and economic conditions improve,” said Jeffrey Christian, managing director of CPM Group, a research company in New York.
Christian correctly predicted in January that gold would reach $1,400 an ounce this year and is now forecasting prices to peak at $1,550 in the first quarter before declining as low as $1,200. The median forecast in the Bloomberg survey is for a 23 percent gain to as high as $1,700. Gold reached a record $1,431.25 Dec. 7 in London and closed at $1,381.47 Dec. 24.
Gold futures for February delivery rose $18.70 or 1.4 percent, to $1,401.60 on the Comex.
The popularity of precious metals suggests investors are seeking safety as governments and central banks pump money into economies to shore up recovery.
The Federal Reserve has kept its benchmark interest rate near zero since December 2008 and plans to inject $600 billion into the economy through June by purchasing government bonds through so-called quantitative easing. It already bought $1.7 trillion of securities in a first phase that ended in March.
Fiscal ‘Concern’
“I like gold because I’m concerned that our fiscal and monetary policies don’t make any sense,” David Einhorn, the president of Greenlight Capital Inc., which manages about $6.8 billion of assets, said in an interview in New York. “It leads potentially to a risk of greater instability later.”
Investors increased precious-metals holdings by 22 percent to a record 17,390 metric tons in the 10 months to Dec. 17, data compiled by Bloomberg show. That’s worth about $111 billion, of which 84 percent is in gold and 13 percent in silver, with the remainder in platinum and palladium.
GSCI Returns
Returns for commodity investors may be lower than the spot index suggests. The S&P GSCI Total Return Index, tracking the net amount received, rose 8.4 percent this year, reflecting the cost of maintaining positions in futures markets. When longer- dated contracts cost more than those for immediate delivery, a market structure known as contango, investors pay a premium to maintain their holdings as positions expire.
Gains in commodities may evaporate if currency traders’ bets that the dollar will strengthen are right.
Contracts on the dollar appreciating against the euro are at a three-month high and the U.S. Dollar Index gauge against six counterparts rose 6 percent since Nov. 4. The inverse relationship between the currency market and commodities last month reached the highest level in more than a year, data compiled by Bloomberg show.
Commodity experts in the Bloomberg survey are betting this time will be different amid surging demand and dwindling stockpiles.
Copper Deficit
Copper use will outpace supply by 825,000 tons next year, more than twice the inventory in LME-monitored warehouses, according to Barclays Capital. Prices which reached a record $9,392 a ton on Dec. 21 in London will rise to $10,475 next year, the Bloomberg survey shows. Zinc will be the best- performing industrial metal, advancing as much as 21 percent to $2,800 a ton from $2,308 in London on Dec. 24.
Copper futures for delivery in March rose 2.25 cents, or 0.5 percent, to $4.3025 a pound on the Comex. Earlier, the metal climbed to an all-time high of $4.3195.
Demand may also come from new exchange-traded products. ETF Securities Ltd. started offering investors ETPs backed by copper, tin and nickel this month, attracting about $25 million so far. JPMorgan Chase & Co., BlackRock Inc. and Credit Suisse Group AG also plan similar products.
Weather Markets
A stronger dollar may also be trumped by weather in agricultural markets. Wheat as much as doubled since June and corn jumped 83 percent as Russia’s worst drought in at least a half century, flooding in Canada and parched fields in Kazakhstan and Europe ruined crops.
While wheat should rise as much as 17 percent to $9.13 a bushel next year from $7.83 in Chicago on Dec. 23 and corn 14 percent to $7 a bushel from $6.14, coffee was picked as likely to be the worst performer in the Bloomberg survey. Analysts see a gain of no more than 7 percent to $2.53 a pound from $2.359 a pound in New York on Dec. 23.
Wheat futures for March delivery climbed 8.5 cents, or 1.1 percent, to $7.8875 a bushel today on the Chicago Board of Trade. Corn futures for March delivery rose 3.5 cents, or 0.6 percent, to $6.1875 a bushel, the eighth straight gain. Arabica- coffee futures for March delivery rose 1.05 cent, or 0.4 percent, to $2.385 a pound on ICE Futures U.S. in New York.
“We don’t see an imminent threat to commodity prices in 2011,” said Evan Smith, who helps manage $900 million at U.S. Global Investors Inc. in San Antonio. “You will still have concern over currency stability and in emerging economies there’s the wealth effect that’s driving demand.”
Victor Pauca will have plenty of presents to unwrap on Christmas, but the 5-year-old Winston-Salem boy has already received the best gift he’ll get this year: the ability to communicate.
Victor has a rare genetic disorder that delays development of a number of skills, including speech. To help him and others with disabilities, his father, Paul, and some of his students at Wake Forest University in Winston-Salem have created an application for the iPhone and iPad that turns their touch screens into communications tools.
The VerbalVictor app allows parents and caregivers to take pictures and record phrases to go with them. These become “buttons” on the screen that Victor touches when he wants to communicate. A picture of the backyard, for example, can be accompanied by a recording of a sentence like “I want to go outside and play.” When Victor touches it, his parents or teachers know what he wants to do.
“The user records the voice, so it’s something the child’s familiar with. It’s not robotic,” Paul Pauca said.
The app, which should be for sale for $10 in Apple Inc.’s iTunes store by early next week, is one of dozens of new software products designed to make life easier for people with a range of disabilities.
The category is expanding so fast that Apple now has a separate listing for it in the App Store. More apps are added every week, ranging from Sign4Me, a sign language tutor that uses an animated avatar, to ArtikPix, a flash card-like app that helps teachers and speech therapists improve their students’ articulation of words.
“It opens up his mind to us, because he can show us what he’s thinking,” said Victor’s mother, Theresa.
Victor has a rare genetic disorder called Pitt Hopkins Syndrome, a diagnosis he shares with about 50 other people in the U.S. The ailment causes delays in cognitive abilities, motor skills, social development and language skills. Victor’s progress, in many ways, has been good _ he could walk at age 2, whereas some children with the condition can’t walk until they’re 10 or older.
The Paucas tried a number of therapeutic devices designed to help people with similar disabilities communicate. These standalone devices are often low-tech _ the one the Paucas first tried required paper printouts. Or they are expensive: a top-of-the-line model similar to the one used by famed physicist Stephen Hawking can cost about $8,200.
Paul Pauca, a computer science professor, decided that he and some of his students could do better payday lenders. Starting in January, they worked to create an app that would use the versatility of the Apple devices to make communication easier.
Because the hardware already existed, and the work was done as part of a class, there were essentially no direct costs of development. The prototype was done by late spring.
“We’re not a big-budget operation, and that allows us to sell it for $10,” said Tommy Guy, who is one of Pauca’s students and is now a Ph.D. candidate at the University of Toronto.
Jim Tobias, president of consulting firm Inclusive Technologies and an expert on disability-accessible technology, points out that VerbalVictor takes advantage of general-purpose, mass-market gadgets that cost hundreds of dollars rather than thousands.
People who already own an iPhone or iPad need to pay only $10 more for the app, “instead of taking a risk with $1,000″ with specialized machines, said Tobias, who is not involved with the project.
There are dozens of apps designed to help people with a variety of disabilities, ranging from sign language aids to apps that play back text on the screen in a clear voice to help visually impaired people navigate their phones.
The apps also offer a rich experience with bright colors, high-definition photos and crisp sound recordings that weren’t possible before mobile computing technology, Tobias said. But a potential downside exists when people start to think of the apps as a magic wand. Not every app will help every person, he said.
“I’ve been contacted by about 100 eager and enthusiastic parents in the last three or four months about things like this,” he said, “and if it doesn’t work out, they’re a little bit at a loss as to what to do next. We still need to do more to help professionals understand what’s available and what might be best suited for individuals.”
For the Paucas, who founded the Pitt Hopkins Syndrome International Network to meet and share information with other families, something as seemingly commonplace as a smart phone app has added inexpressible richness to their family life.
“He has the most positive attitude and the brightest smile,” Theresa said about Victor. “He teaches us something new every day about what we need to be thankful for.”
Canada has taken a giant and long-awaited step in protecting consumers from unsafe products.
Bill C-36 received royal assent Dec. 15. It gives Health Canada the power to order recalls of dangerous products
The Dayton International Airport saw a significant bump in traffic in September.
The number of boardings increased more than 9 percent to nearly 108,000 passengers, up from less than 99,000 during the same month last year, according to airport officials.
American Airlines (NYSE: AMR) led the way with a 41.3 percent increase for the month. Among the others adding passengers were United Airlines (NYSE: UAL), which saw a 24.5 percent increase; US Airways (NYSE: LCC), which saw a 19.1 percent increase and Delta Airlines Inc. (NYSE: DAL), which saw a 3.8 percent bump. Boardings for AirTran Airways (NYSE: AAI) were down more than 8 percent.
Cargo traffic at the airport was down more than more than 30 percent compared to the same month last year.
Because of the spike in traffic, year-to-date airport boardings continue to creep closer to level with last year, but are still down 2.7 percent.
More than 932,000 passengers have flown out of Dayton this year so far, compared with about 958,000 in the first seven months of 2009.
Facebook Inc. sent out invitations Monday to a "special event" on Wednesday morning, but hasn't offered any indication about what it plans to unveil.
This has prompted speculation that it might be ready to talk more about the so-called Facebook Phone that it originally denied it was working on.
TechCrunch has also speculated that the event might be about an iPad app for the social network, a broader launch of Facebook Credits that are used to buy virtual goods, an expansion of Facebook Places or a persistent toolbar that users could add to their browsers paydayloans.
SJW Corp. on Friday named James P. Lynch chief financial officer and treasurer of the company.
San Jose-based SJW (NYSE:SJW) was formerly an audit partner at KPMG LLP. The company said he has extensive experience providing audit service and business advice to public and privately held companies, including publically held water utility companies.
He also assisted clients with accounting and financial reporting matters, SEC registration and compliance matters, and securities offerings.
Lynch is a certified public accountant.
Arizona Public Service Co. and the Phoenix Suns are teaming up on $50,000 grants for teachers and energy exploration.
The grants, to be doled out to kindergarten through 12th-grade teachers in $2,500 increments, are intended for projects that include energy exploration using science, technology, engineering and math.
Grant applications will be accepted online through Oct. 15.
For more: http://www.aps.com/main/community/dev/CommDev_8.html.
A new online store launched by the Cronkite School of Journalism and Mass Communication at ASU is giving enables students, alumni, family and fans of the J-school a way to wear their pride — literally.
CronkiteStore.com launched at the school this week, offering an array of branded apparel and gifts with the logo of the Cronkite School at Arizona State University. Among the site's offerings are T-shirts; drinkware and gifts; and bags for carrying golf clubs, laptops and books. The online store also is expected to carry items such as Cronkite-branded Nike Dri-FIT shirts.
"The Cronkite Store offers our alumni and students a way to show school pride when they're off campus and even in the workplace," said Kelli Solomkin, director of events and alumni relations payday loan. "For the first time, they can boast being part of the Cronkite School family with clothes and products."
More items, including a section for luxury and seasonal items will be added soon, said Linda Davis, Cronkite's design
director who spearheaded the Cronkite Store project and designed the products.
The Cronkite School has 1,300 students and nearly 8,000 alumni. To shop, go to http://cronkitestore.com.
One of the nation’s top banking regulators has taken a swipe at what has become a signature piece of Senate Democrats’ Wall Street reform package: cracking down on complex financial products.
Federal Deposit of Insurance Corp. Chair Sheila Bair said she’s concerned that the Senate bill goes too far, in a letter sent Friday to the authors of the measure, Sens. Christopher Dodd, D-Conn., and Sen. Blanche Lincoln, D-Ark.
Bair is taking aim at a provision that blocks all banks from trading complex financial contracts called derivatives. The bill would force banks to spin off the desks that trade derivatives, known as swaps desks.
"One unintended outcome of this provision would be weakened, not strengthened, protection of the insured bank and the Deposit Insurance Fund, which I know is not the result any of us want," Bair wrote in the letter.
The provision in question is among key controversial hang-ups for lawmakers debating the Wall Street overhaul on the Senate floor this week.
Congress generally wants to get tougher on these complex financial products that are currently traded with no oversight, which were responsible for the taxpayer bailout at American International Group (AIG, Fortune 500). But lawmakers disagree about how much to regulate them.
The measure banning bank swaps goes farther than the so-called Volcker rule, named for former Federal Reserve Chairman Paul Volcker, which only blocks some banks from doing such trades for their own purposes and accounts, called "proprietary trading." The Dodd-Lincoln proposal blocks banks from all derivatives.
In the letter, Bair argued that banks have legitimate uses for derivatives, especially when it comes to locking in an interest rate in their financial dealings. She said that if Congress were to pass the legislation, such trading would continue "but in less regulated and more highly leveraged venues," according to the letter.
Many companies and Wall Street banks use derivatives, whose value is derived from another financial product, to cut the risk that they’ll lose money on a deal. Derivatives are also used to lock in the price of a commodity, the way farmers do with the corn they hope to sell after a harvest.
A House bill that passed in December would allow all banks to trade derivatives in a more transparent way. However that bill also allows some trades between some banks and certain companies, such as airlines, to continue without regulation.
But Senate Democrats are tougher on derivatives, in the aftermath of fraud charges that the Securities and Exchange Commission levied against Goldman Sachs (GS, Fortune 500) for selling a complex mortgage-related derivative to investors while failing to tell them that a hedge fund was betting against the product.
The bill says that banks can no longer make such complex financial trades and have access to emergency government-backed loans when they get in trouble.
However, Bair said in the letter that she believes that the Volcker rule goes far enough in accomplishing the same goal, ensuring that taxpayers won’t be stuck supporting unnecessarily risky bets.
"To be sure, there are certain activities, such as speculative derivatives trading, that should have no place in banks or bank holding companies," she wrote. "We believe the Volcker rule addresses that issue."
Spokesmen for Dodd and Lincoln didn’t return requests for comment on Monday.
SHANGHAI — It’s not quite as foldable as the vehicle that cartoon figure George Jetson pops into his briefcase as he bops into the office.
But the EN-V concept car, GM’s "automobile solution" for the future, just might fit into an apartment foyer.
General Motors and its Chinese partner SAIC are showcasing the "Electric Networked-Vehicle" launched Wednesday in their joint pavilion at the Shanghai Expo, which opens May 1 and runs for six months.
The EN-V, pronounced "envy," is GM’s latest effort to burnish its credentials as a future-focused, environmentally friendly company and shed its image as the bastion of the gas guzzling Hummer. The automaker is in the process of winding down Hummer after a deal collapsed to sell it.
The two-wheel, two-seater EN-V, which looks like an oversized vacuum cleaner, is not just about making vehicles small, lightweight and emission-free, the company says.
With the trunk-less EN-V, GM has jettisoned the traditional "three box" system and gasoline-fueled engine in place of a pure-electric minivehicle meant for city driving faxless cash advances.
Five fit in the parking space needed for one conventional vehicle, says Kevin Wale, president and managing director for GM China Group.
"GM’s vision with SAIC is petroleum-free, emission-free, accident-free and congestion-free," said Wale. "We think we can do that by combining the benefits of electricity and connectivity."
The approximately 5 foot by 5 foot EN-V appears to build on GM’s earlier work with Segway Inc. in developing the PUMA, or Personal Urban Mobility and Accessibility, vehicle. It will use the same types of battery cells as the Segway and the same battery supplier, Valence Technology Inc., said Christopher Borroni-Bird, GM’s director of advanced technology vehicle concepts.
The EN-V’s maximum speed of only 24 mph and other high-tech features reduce the need for heavy, high-stress steel, bumpers, air bags and crumple zones, Albano says.
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