- Manufacturing declines for third straight month - The Institute for Supply Management's factory index contracted to 49.6 last month from 49.8 in July, its lowest level since July 2009. Economists are worried that the looming fiscal cliff could deter businesses from spending in the upcoming months. "As I look at this and try to find some rays of sunshine, it's quite difficult," Bradley Holcomb, chairman of the ISM survey, told Bloomberg News on a conference call. "I would characterize this as a sobering picture of U.S. manufacturing right now without any clear signs of immediate improvement."
- Construction spending falls - Construction spending fell 0.9% in July to a seasonally adjusted annual rate of $834 billion, the Commerce Department said Tuesday. Economists had expected a 0.5% gain. Private residential construction fell 1.6%, private non-residential construction fell 0.9% and public construction spending fell 0.4%. Compared with July 2011 spending is up 9.3%.
For those unfamiliar with the strategy, dollar-cost averaging - also known as constant-dollar investing - involves the regular purchase of a smaller fixed-dollar amount worth of shares over time, as opposed to the lump-sum purchase of a large number of shares at once. For example, rather than buy $1,200 worth of shares of fictitious company XYZ in January, you might buy $100 worth of XYZ shares each month for the full year.
The technique offers several advantages for fund investors:
- Because you are investing a fixed-dollar amount at regular intervals, you don't have to be concerned with trying to time the markets.
- Since the fixed-dollar amount you invest buys more shares when prices are low and fewer when they are high, your average cost basis levels out over time. This reduces the risk that you might pay too high a price by making a lump-sum purchase at the wrong time.
- The lower average cost basis mutes the impact of short-term volatility on your existing holdings.
- You can build a sizable position in a single fund, even if you never have a large sum of money to invest at any one time.
Thanks to the general downtrend in the market, the May 6 "flash crash," and the rapid subsequent rebound, U.S. Steel shares fell from a 52-week high of $70.95 on April 6 to just $52.81 at the market close on Friday, May 14.
Indications of some new life in the construction sector and an uptick in autos would seem to indicate that steel demand could rise - which would be especially good for U.S. Steel, which supplies both businesses.
You've got $10,000 to work with.
As these emerging economies - especially China and India -grow, there is a strong trend toward urbanization. People are leaving the countryside for the cities in droves in order to reap the promise of the global economy. This secular process alone places huge demands on the existing infrastructure.
This growth is also boosting manufacturing and energy needs. China has surpassed the United States in both car production and energy consumption. And India's Tata Motors Ltd. (NYSE ADR: TTM) launched the cheapest car in the world, the Nano, which costs roughly $2,500. The critically acclaimed vehicle's mass appeal and affordability is creating additional congestion on India's famously overcrowded streets. Adding more fuel to the global-demand fire, most emerging economies implemented a strong dose of infrastructure spending within their budgets as a result of the global financial crisis of 2008.
The result of all that infrastructure development, urbanization and increased consumer affluence is a myriad of new road, bridge and building construction, additional urban development, and stepped-up production of cars, home appliances and other consumer goods. All of these developments require two key ingredients to become reality: Steel and energy.
Most analysts, including President Barack Obama, are predicting a strong May jobs report due out today (Friday) with more than 500,000 new jobs added to the U.S. economy.
"We expect to see strong jobs growth in Friday's report." Obama predicted in a speech in Pittsburg on Wednesday.
Indeed, the report sends a very clear message: While the March report is consistent with a gradually improving labor market, the numbers hardly convey a sense of an economy that's zooming its way back to health.
Still, as we'll see, this employment scenario could be a good one for U.S. stocks.
But that's truly not the case. The tiger does not waste his energy showing his strength. Instead, it sees the future and knows precisely when to pounce on its prey. Those who can see past the great wall of today and look into the future - much like our wise friend, the tiger - understand just what it takes to be successful.
If we were to analyze the growth potential for the worldwide construction industry, we would find that Japan's Komatsu Ltd. (OTC ADR: KMTUY) and the U.S.-based Caterpillar Inc. (NYSE: CAT) are best-positioned for global success.
To help us interpret the jobs report of last week, I turned to my favorite independent labor analysts, Philippa Dunne and Doug Henwood. Here's their view of the latest numbers, which they considered the most positive in months - despite the many problems highlighted by the latest jobs report.