Guten Morgen
Etwas zum Kupfermarkt, denn Aberdene hat reichlich davon:
THE HEWETT GROUP
Weekly Market Comment – May 5, 2004
In the past week, we’ve seen a decline in many sectors, including copper, which happens to be a favoured
sector of ours for the medium term. We are not pulling the plug on this sector despite this intermediate
term pullback and here is why:
From one analyst, Doug Casey, "...With the current growth rate in demand for copper running at
over 400,000 tons annually, even assuming all capacity is brought on line, within 3 to 4 years
available supply will not be able to meet world demand. Why the looming imbalance? As is so
often the case these days, look to China and India, where the rush to build the infrastructure
necessary to sustain economic growth is soaking up commodities on a global scale. It is a very
good time to start paying attention to copper..." In the event you haven`t been paying attention to
copper - and most investors have not - it is currently selling for around $1.30 per pound.
And:
May 3 (OsterDowJones) - China will lead the world`s copper demand growth over the next
decade, as the country`s consumption growth is forecast to average 10% a year in the period, said
Barclays Capital in a recent report. As a result, the country will continue to lead an accelerating
global consumption growth over the next 10 years, it said.
"China`s metal demand is being driven by rising living standards and a massive growth in
spending on infrastructure," it said in the late Friday report. Despite having increased its copper
imports by five-fold since the start of this decade, China`s consumption per capita is still low by
global standards, said Barclays. "So we see this as still only the early stages of a strong long-term
growth trend," it said.
The US Federal Reserve is now making comments that interest rates will soon be on the rise in order to
combat potential inflation, which is not a big threat yet. It is important to note, however, that never before
(or as far as anyone can remember) has the Fed raised interest rates in the middle of a US Presidential
election and with inflation not looking like it will supercede 2%, a rate increase between now and perhaps
August is therefore unlikely. By then the central bank will have four more months` worth of employment
data - enough to be sure that the surge in job creation in the first quarter of 2004 wasn`t a fluke. For now,
the job market has shown "hopeful signs," said James Glassman, an economist with J.P Morgan Chase in
New York. "But it`s still not clear at all that we`re growing at an above-trend pace."
So what does this mean for the US dollar? To take it from a seasoned investor: Billionaire Warren Buffett
is increasing his bet against the U.S. dollar and seeking acquisitions because he sees no bargains in U.S.
stocks and wants to ``rapidly deploy`` Berkshire Hathaway Inc.`s $36 billion in cash.
``Our hope is we can deploy the money in businesses that are just as good as the ones we have,`` Buffett,
73, told a crowd of 19,500 people this weekend at Berkshire`s annual shareholder meeting near its
headquarters in Omaha, Nebraska. ``We think the odds are good that we will.`` Buffett, Berkshire`s
chairman, said the U.S. Federal Reserve may be keeping interest rates too low and the trade deficit is
swelling, hurting the dollar even as the U.S. economy expands. Buffett this weekend said he increased his
investment in foreign currencies by ``more than a little bit`` this year from $12 billion at year-end.
This is more along our thoughts in that we remain cautious about the current signs of economic
growth in the US. There are still some serious issues and indicators not yet showing the required
signs of life.
In Canada, interest rates will likely begin to rise later in the year. Housing starts are expected to
continue to be very strong this year with the continued low interest rate climate and very strong
consumer confidence in the economy (which we don’t seem to see quite so strongly right now in
BC).
Mark Hewett & Colleen Gray-Hewett
Canaccord Capital Corp. (604) 643-7022
Good luck
sowhat