Steel tariffs---Erin (slow)
Trading
Interview: Gartmore Investment Management---Ehrmann, Philip--- Fund Manager
>> american steel companies are fighting to keep trade protections in place. the tariffs helped the industry avert bankruptcy and cut u.s. steel imports by 25% over the past two years. the world trade organization ruled that the steel tariffs must be removed and the european union promises to retaliate if the tariffs aren’t scalped. erin burnett has the story.
>> the countdown to a trade war with the e.u. is sparking heated debate between the white house and steel makers. the latest reports of a compromise appeared today in the “wall street journal.” the paper saying that u.s. tariffs would end next fall, that six months earlier than planned. the c.e.o. of the nation’s largest steel maker says he is unaware of any compromise and he says tariffs are still needed to save the industry.
>> what it’s done for the industry is allowed it to go through the most massive restructuring and reorganization in the last 50 years. and enabled it to get itself into a position where it can be more competitive globally.
>> since the tariffs were imposed of march of 2000, nucor’s quarterly sales have surged nearly 35%. analysts agree the tariffs have helped the entire industry. earlier today, mark parr of mcdonald investments told me -- parr says the industry is ready to survive without the tariffs thanks to consolidation. but dimicco of nucor says if president bush repeals the tariffs, they will turn to the courts.
>> nucor will continue to prosper but in a more difficult environment. if people break our trade law, we’ll go back to the i.p.c. and file trade cases.
>> the tariffs are likely to come up during president bush’s meeting this week with prime minister tony blair in london. in the meantime, industry consolidation and that economic recovery continue to fuel american steel stocks . let’s look at some here. so far this year, u.s. steel up 75%. steel dynamics and nucor also top performers. that’s the latest on this. back to you.
>> thank you very much. our next guest says the improvement in the global economy is fueling the upturn in emerging markets. and this upturn has helped his gartmore emerging markets fund gain 52% in the last 12 month, ranking it among the top 10% of all funds within that sector. let’s welcome philip ehrmann, head of pacific and emerging market equities at gartmore investment management, overseeing $800 million in assets in this investment style. talk to me about this emerging market situation and how tariffs relate to it. you like china but it seems like we have trade wars breaking out all over and even president bush today mentioned a possible limitation on the importation of fabrics now.
>> as you say, an awful lot of this is in relation to trade. global economic activity is very strong, helping drive not only a pickup in the u.s. activity but significantly and importantly a major pickup across asia. interestingly enough, tariffs tend to raise their ugly head when we get into political season and far be it from me to suggest that george bush is over in my backyard right now doing a little bit of electioneering but i venture some of the tariff rhetoric has as much to do with that as anything else and because of the strong growth in asia, profitability of the asia steel makers is strong, as well. so it’s a global phenomenon.
>> your 50% year-to-date gain, what do you attribute that to?
>> we’ve seen strong performance from one of two markets in well latin america, in particular, brazil. almost a year ago today, people were worrying about the new administration, the likely administration of ignacio lula, the forerunner of total collapse in terms of economic activity and it proved to be anything but that and the government adopted a sensible path in terms of sensible economic policy.
>> what about the future?
>> brazil will remain strong because inflation rates will fall. signs of economic activity rearing its head and earnings picking pup. china’s influence will remain strong, although the central bank there are trying to take steam out of the economy, we are not likely to see 10% growth rates from china but it will be pretty good with significant ramifications across the region.
>> we only have 45 seconds left. you said earlier that russia is moving from euphoria to pessimism. do i want to invest there?
>> you don’t want to invest in a pessimistic place until the prices are right. if everybody is negative, to be a contrarian in emerging markets is profitable.
>> one of your top holdings is taiwan semiconductor, one worth $40 billion. what is your most overweighted market in asia right now?
>> the taiwan eese market looks good to us and we’re exposed to thailand with stronger economic growth coming through.
>> thank you very much. that’s philip ehrmann, head of emerging and pacific market equities at gartmore investment management. stick with us. the chief executive of microsoft spoke out in asia earlier making a case for the fight against spam and internet security. coming up.
