Three ETFs Supported By US Economic Growth

The US economy grew by 2 percent in the third quarter of this year and business activity accelerated in October, signs that corporate and consumer spending are holding up providing positive price support for the iShares Dow Jones US Industrials (IYJ), the Vanguard Materials ETF (VAW) and the PowerShares DB Base Metals (DBB).

According to the latest data from the Institute for Supply Management-Chicago Inc., economic expansion is at the forefront illustrated by its business barometer reading of a 60.6.  Furthermore, data suggests that output climbed at the fastest pace in the third quarter as companies are upgrading equipment and boosting output to meet enhanced increased foreign and domestic demand. 

Three Materials ETFs To Cash In On Gold’s Luster

As a result of waning confidence in global growth and currency instability, investors continue to seek gold as a safe haven, pushing the shiny metal to record levels.

On Friday, gold soared passed the $1,260 per ounce mark, pushing gold futures up nearly 15 percent year-to-date and there is positive support indicating that the metal wants to go higher.

From a demand perspective, not only are risk-averse investors turning to gold, but central banks are as well.  According to data released by the World Gold Council, nations around the world are gobbling up gold in an attempt to decrease risk and mitigate the effects of a country’s economic policies. 

Four Ways To Play Boost In Manufacturing

Strong growth overseas and a pickup in U.S. demand have lead to an optimistic future for industrial production and have some insiders suggesting that manufacturing will be at the forefront of the economic recovery.

Recently, reports from the New York and Philadelphia Federal Banks have indicated that manufacturing has accelerated at a faster pace than expected in the month of April.  The Federal Reserve Bank of New York’s general economic index climbed to a 31.9 from a 22.9 in March, marking the ninth consecutive month of growth.  Additionally, the Federal Reserve Bank of Philadelphia’s general economic index rose to a 20.2 in April from an 18.9 in March, marking the eight consecutive month of expansion. 

To further add to the appeal of industrials, factory orders in April increased to 29.5 from 25.4 in March and shipments rose to 32.1 from 25.6 during the same time period.  Additionally, the Federal Reserve stated that overall factory production rose 0.9% after increasing 0.2% in February, as the production of consumer goods rose 2%, primarily driven by gains in automobiles, furniture and electronics. 

On the manufacturing side, the Institute for Supply Chain Management’s manufacturing gauge rose to its highest level since July 2004, to a 59.6 in March, indicating that manufacturing is expanding.  

An indicator suggesting that manufacturing and industrials will likely continue to shine can be found in supply and demand variances seen in the metals markets.  According to the London Metal Exchange, stockpiles of copper, aluminum, nickel, zinc and tin continue to decline.  Global demand for these metals has been increasing and slowly eating away at supply.  In fact, according to Sumitomo Metal Mining Co., one of the world’s largest producers of nickel, world demand for nickel will exceed supply in 2010, the first time this has occurred since 2006.

Copper Expected To Shine in 2010

By Kevin Grewal

In 2009, copper soared to record levels and the strength in the base metal is expected to remain sustainable in 2010.

One force that has contributed to the strength of copper and is expected to continue to support the metals strength is China.  China implemented a $585 billion stimulus package in 2009 which was infrastructure based and resulted in the country buying massive amounts of the metal spurring supply and demand forces to impact prices.