Special Report: 9.2.2009
Posted by Web Master
on Wednesday, September 02, 2009
COPPER KNOCKS ON THE DOOR OF THREE BUCKS
…but is anyone gonna answer?
The last time TedMag’s Special Report visited copper—a column posted Feb. 26, following another posted one week earlier, but written a bit earlier—the conclusion was:
It seems rational to believe that copper’s per-pound price will hang around $1.50 per pound in 2009, with risks to the downside.
Hah! Serves me right for using “rational” with a commodity. Last week, the per-pound price was awfully close to $3 (it last vaulted that hurdle in September 2008). What’s the buzz? A quick review: China’s copper consumption did not dip. And: Forecasts (see the Feb. 26 column) might have been the work of dart-wielding monkeys!
What will happen in the next 16 months? Here are two recent reports:
On Purchasing.com, Tom Stundza—whose efforts should command respect—wrote (July 28): “Copper’s price run hinges on 2nd-half Chinese demand.”
Tom wrote that “the 2009 year-to-date LME average is $1.90.” LME = London Metal Exchange. We’ve since added a month of still-higher prices, haven’t we?
Point a gun to my head and force me to make a call on copper’s price, and I’d say—shoot! But I do think it’s going to move lower. Why? Three reasons:
- Tom’s piece ended with this: “suggestions from [various Asian sources] that China’s restocking is coming to an end hasn’t had a big impact on copper price futures yet.” One thing we’ve all learned in the 1999-2009 period is that if something should matter, but hasn’t yet mattered, we should…wait.
- The Chinese stimulus program, which was more efficient than ours (you’d expect Communists to excel, comparatively, at juicing a command economy), will run out soon. In fact, the Chinese government has done some restraining of late.
- Finally, the Baltic Dry Index has taken a tumble. Here’s a link to a three-year BDI chart on Bloomberg.com. You can monkey around with it (use the rectangles near the top); when I did that on Aug. 26, the chart showed a one-month decline from the 3,500 level to below 2,500. That indicates greatly reduced demand for shipping—which would tend to make you short-term gloomy on things like copper.
NZEB: RELEASE GETS SOME NOTICE
Here’s where you can find more
Electrical Contractor magazine included an article on Net Zero Energy buildings in its July issue, and emitted a press release on it in July. Here’s how it ran on Reuters.com.
Here’s the article itself. It weighs in at 1,300 words. One quote from within it:
“Trust that costs will come down, efficiencies will rise and payback for alternative energy strategies will shorten… Most of our solar clients are comfortable with a payback of 10 years or so. Solar also helps bring in electrical business.”
Back in late March, your humble columnist flew to San Francisco to attend ASHRAE’s NZEB conference. The result, on TedMag.com, was two columns (about 3,000 words):
Perspire Now! Or Sweat A Lot More Later—this column noted that the NZEB “movement” was all about global warming. Since global warming is going to happen—if it indeed is happening—based more on what ensues in India and China, the column said, we need to prove we’re serious. If the global warming people ARE serious, the May 7 column said, they should propose that the U.S. give up air conditioning—to prove to the Chinese and Indians that we’ll sacrifice something if they do what we’re asking of them.
Zero Is As Zero Does—this May 14 column provided more information about NZEB and included a section detailing my problem with the whole idea. The beef: It doesn’t go far enough fast enough. To wit:
How much of an impact will this new-construction change have on building energy use between 2030 and 2049 (i.e., the first 20 years of NZEBs) on the commercial front?
Answer: 1.5% x 20 = 30%. Our national building stock at the start of 2050, under this extremely hypothetical scenario, would be 70% old wasteful buildings and 30% NZEBs.
Therein lies a rather obvious problem with the NZEB idea: It’s not going to happen fast enough, primarily because the attack here is on newly designed buildings.
If you are into thinking about NZEBs and such—and you should be, because all of this will impact electrical construction—you might also page all the way back to January, to the column titled John The Baptist, In A Suit. That one was about Ed Mazria.
CONSTRUCTION NEWS & DATA
Employment, workforce, housing $ help.
Headline in Engineering News-Record (you can’t get this now without paying, so no link): “Construction unemployment is double the U.S. average.” Info in this Aug. 12 report, based on the Bureau of Labor Statistics’ July national employment data:
- Construction lost 76,000 jobs in July.
- Average monthly job losses (April-May-June) = 73,000, so July’s right in there.
- Since the recession started, construction has lost 1.3 million jobs.
- Construction’s jobless rate is “almost double” the nation’s overall rate.
That report led TedMag to look at the data. Actual unemployment in the United States, as given in Table A-12 (the U-6 rate), ran to 16.8% in July, not seasonally adjusted. It was 10.8% in July 2008. That counts the underemployed and folks who would like to work but who are not currently looking (“discouraged workers”). Table A-11 gave the construction industry’s unemployment rate as 18.2%, so it’s actually higher than the U-6 rate.
We checked historical data, too. July preliminary employment of “production workers” (field folks) in Construction was 4,924,000, down from 6,202,000 in July 2007. But that July 2007 number was AN ALL-TIME HIGH. Does that qualify as good news or bad news?
What about “production workers” in electrical contracting? This number is one month behind the major numbers. So: Employment of field workers in the EC industry in June was 639,100 (subject to revision), down 89,900 from June 2008 (-12.33%). Peak employment in the EC biz happened in September 2000, at 784,100.
Workforce issues—the June 29 issue of Engineering News-Record (story also inaccessible for free, so no link) talks about problems a-coming in the construction workforce. Yes, you’ve heard this before (especially from me, about electricians). What did the article say? Someone from the Nuclear Energy Institute “expects to see four to six nuclear facilities operating by 2016, another 10 by 2020, and another 30 in 2030.” Hey, folks, nuclear power plants EAT construction workers by the hundreds, and employ them for long periods of time (taking them off the market for other building tasks). AND: Guess which kind of construction worker the nukes especially like to employ for, like, forever?
Builders and government subsidies—I usually like the National Association of Home Builders. The reason, I guess, is that I think building houses is pretty neat. I also like the way the NAHB has treated me over the years (no, they’ve never hired me!). It’s impossible, though, to have followed construction for this long and not noticed that the NAHB is generally AGAINST government intervention, higher taxes, and bigger deficits. So how to explain this front-page article in the Aug.17 issue of Nation’s Building News, which encourages NAHB members to advocate for an extension (beyond Dec. 2, 2009) of the $8,000 housing tax credit for first-time buyers? Apparently, some government intervention IS good. It’s just this kind of “what’s good for me is really good for everybody” thinking that is drowning our nation in debt. End of sermon.
MARKETS LIE LIKE DOGS
What you see, what you get
Did you know that the Federal Reserve Board essentially printed money to make sure that a recent Treasury Department bond auction went well? You might not be surprised at this, but it wasn’t really reported anywhere. Except here. Yes, this isn’t the easiest thing to understand, and you might (like me) have to re-read what this fellow Chris Martenson posted to that web page. But you, as a taxpayer, business executive, and investor, SHOULD know what’s going on.
ON ANOTHER FRONT: Back when I used to actually invest in stocks, my personal policy was to avoid shares of companies that bought back their own stock. I know—there are a lot of companies in the electrical/datacom industry that do this, and here I am…dissing them. Forget me. Read this Business Week article, which notes that IBM (to name one) has spent $73 billion in the years 2000-2008 to buy back its own stock. Here’s where IBM’s stock has gone in the past decade, from www.BigCharts.com…nowhere.
Of course, you might argue that it’s been supported by $73 billion in buys, and might otherwise be a lot lower. So what? If I like IBM, and the stock dips—I buy MORE!
Is there nothing happening in the businesses in which IBM competes where that money could have been invested with a decent return for investors (better than what’s happened in the stock market in those years?). The article’s author suggests banning “buybacks by big corporations using them solely to manipulate their share prices”—restated a few breaths later as “buybacks that help top executives reap outsized pay rewards.”
IT’S STILL A DEPRESSION
…despite what you’ve heard
It will surprise you that your humble reporter STILL thinks we’re in a Depression. Some evidence:
- Recently, I read a report on how the Baltic nations (Estonia, Latvia, and Lithuania) were in a Depression. The unemployment rates cited for those nations were just a tiny bit higher than the U-6 unemployment rate here in the United States.
- Then, there’s the graphic below. Does this look like a Recession or a Depression to you? The chart was done by the U.S. Treasury Department, and it provides info on “Withheld Income & Employment Taxes.” Source: Matt Trivisonno’s blog
- Wait: What about all of those upticks in various data you’ve seen reported in the news? They ARE upticks. Such things should be eyed carefully to make sure they are not just minor evidence—what might be called “a dead cat bounce.”
Footnotes to Stuff Above
CHINA—read this article, which starts with: “An outspoken Communist Party official in China has confirmed long-held suspicions that GDP data was being massaged.” The headline: “Build a bridge, pull it down, rebuild.”
CONSTRUCTION—here’s what the Cleveland Fed said (Aug. 27) about the first revision to the Q2 estimate for GDP. I’ve bolded the key phrase for TedMag visitors: “Real GDP was virtually unchanged…[but] there were some interesting moves in the components.
“…Nonresidential investment in structures was revised down from an 8.8% decrease to a 15% decline, helping to pull the growth rate in overall BFI down by 2% to—10.9% (which is still a substantial improvement over the first quarter’s 39.2% decrease)…“
Note from Joe: “BFI” isn’t a waste company, it’s “business fixed investment.”
COPPER—I recently received an email on Copper in January through June 2008, from the U.S. Geological Survey. I’m not sure how much value these data have when they are more than one year behind. I know why they are late (we’ve cut the parts of our government that do things like this). Go here and find copper, and you’ll see we used to get Monthly reports on copper; now it’s six months at a time, and on a significant delay.
MAZRIA—note that this “John The Baptist” guy recently took home the “2009 Hanley Award for Leadership in Sustainable Housing” from Hanley-Wood, the company that publishes Builder magazine (among others).
STUFF YOU MIGHT WANNA READ
Linkfest No. 4
“Is the Sun Setting on Solar Stocks” was a “guest post” (Aug. 13) on the Naked Capitalism blog. The writer’s bullish on the stocks and, “if prices fall further, I will add more.”
Architects sleep in nursing homes. You’re going to really, really like this article, from The Dallas Morning News. The quote from one (58-year-old) architect, who apparently spent 24 hours in the “shoes” of a nursing home resident: “It opens your eyes to some practical ways to improve a building’s design.” Hurray!
MEP Technologies for Eco-Effective Buildings. MEP = mechanical, electrical, plumbing. According to Building Design & Construction’s brief, this is an AIA course, offered for free online. I scanned the course and liked this specific quote, in a section on LEDs: “Quite often, if it sounds too good to be true, it is.”
Are you ready for ‘intelligent’ kitchen cabinets? This CE Pro headline is from The Jetsons, right? Concepts that seemed out of this world:
- Motion sensors enable cabinets to “automatically fold and disappear.” What?
- Doors can “rise and fall vertically, concealing or revealing contents.” What??
- You can program cabinets to “open in unison.” What???
You can access a video on these things, the article says—and you should, Editor Jasson Knott wrote, because “you have to see it to believe it.”
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Joe Salimando of EFJ Enterprises is a consultant, web content provider, and wordsmith based in Oakton, Va. To contact him, call 703-255-1428. See also The EleBlog.
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Personal Disclaimer: The appearance of the ambling pachyderm is indicative of the writer’s obsession with elephants, not his political leanings.
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IMPORTANT NOTE: THIS COLUMN REFLECTS ONLY THE OPINIONS OF ITS AUTHOR AND DOES NOT REFLECT THE OPINIONS OR POLICIES OF NAED, TED MAGAZINE, OR THE ADVERTISERS ON THE TEDMAG WEB SITE.
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