Americans Take 3-Trillion-Mile Road Trip As Dollar Corrects
Frank Holmes | May 11, 2015 03:25PM ET
The busy summer travel season is at our doorstep and with that comes stronger fuel demand.
Back in March I shared the fact that Americans drove a record 3.05 trillion miles on U.S. highways in January 2015 for the 12-month period, with even more expected this year. Now the International Air Transport Association (IATA) revealed that international passenger traffic in March
Besides the dollar depreciation, much of this growth derives from the hope that manufacturing in China, the world’s biggest purchaser of copper, is set to pick up. The HSBC China Manufacturing PMI fell for the second consecutive month in April to 48.9, which indicates contraction in the manufacturing sector. But global investors and commodity traders are optimistic that China’s central bank will launch a fresh round of fiscal stimulus to spur purchasing and manufacturing. I’ve observed in the past that the Asian country is quick to respond to economic indicators such as the purchasing managers’ index.
Because of its ubiquity in building construction, electronic products and transportation equipment, copper is a useful barometer of economic growth.
Several mining companies that have exposure to the red metal are performing well year-to-date. Colorado-based Newmont Mining Corporation (NYSE:NEM) is up 38 percent for the year; Australia-based Northern Star Resources Ltd (ASX:NST), 40 percent.
Agribusiness stocks have also drawn investors’ attention lately, as mergers and acquisitions (M&A) chatter has intensified. Last Friday, Syngenta AG (NYSE:SYT), the giant Swiss producer of not only seeds but also herbicides and insecticides, formally turned down a $45 billion takeover by rival Monsanto Company (NYSE:MON). As I’ve discussed before, such offers and deals have typically made the stock of the company being considered for purchase more attractive.
In the past, ramped-up M&A activity has also suggested that a bottom has been or will soon be reached. We saw this in the oil industry, with Halliburton (NYSE:HAL) acquiring Baker Hughes (NYSE:BHI) last November and Royal Dutch Shell (NYSE:RDSa) taking over rival BG Group (OTC:BRGYY) in April.
As Yogi Berra quipped: It’s déjà vu all over again.
Disclosure: Past performance does not guarantee future results.
Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. Because the Global Resources Fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.
Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors.
The Chinese HSBC Manufacturing PMI is a composite indicator designed to provide an overall view of activity in the manufacturing sector and acts as an leading indicator for the whole economy. When the PMI is below 50.0 this indicates that the manufacturing economy is declining and a value above 50.0 indicates an expansion of the manufacturing economy.
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Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Global Resources Fund, Gold and Precious Metals Fund and World Precious Minerals Fund as a percentage of net assets as of 3/31/2015: Baker Hughes Inc. 0.23% in Global Resources Fund; Newmont Mining Corp. 1.10% in Gold and Precious Metals Fund, 0.06% in World Precious Minerals Fund; Northern Star Resources Ltd. 5.52% in Gold and Precious Metals Fund, 0.59% in World Precious Minerals Fund; Syngenta AG 3.07% in Global Resources Fund; Monsanto Co. 3.17% in Global Resources Fund; Halliburton Company (NYSE:HAL) 0.00%; Royal Dutch Shell PLC 2.97% in Global Resources Fund; BG Group PLC 0.00%.
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