Oil and drain reserves---Carmen (fast)
Sense of economy
Interview: Trevor Stewart Burton & Jacobsen---Miller, Liz---Fund Manager
>> Welcome back. crude oil prices fell in new york after rising above $35 a barrel for the first time since march. traders are speculating freezing temperatures in the northeast u.s. will boost demand for heating oil and drain reserves. carmen roberts is here with more on the story.
>> we have two competing weather patterns in the u.s. creating two different effects on energy. frigid temperatures in the northeast and milder weather in the central u.s. below freezing temperatures are going to sweep across upstate new york and throughout new england tomorrow. and in anticipation of that, crude oil is pushed to a high. traders bet demand for heating oil will rise and reduce inventories. they’re already at 28-year lows. crude ended lower but are still the highest since the u.s. and you can were preparing to invade iraq. and as one energy watcher tells us this market has everything going for it. brutal cold temperatures. the government’s policy is spilling into petrolium reserve, a host of problems with the oil companies and inventory.
>> the sufficientcy of supply is the worry. we’re early in the season and going to have a couple more bouts of these arctic type temperatures. temperatures we haven’t seen since 1994. that’s what the market is worried about. that’s what natural gas prices are spiking on. and that’s what heating oil is worried about as well.
>> actually natural gas prices tumbled 8% today after reaching the 10-month high on friday. prices foal day as traders speculated that above normal temperatures in the central part of the u.s. will temper demand. natural gas producers are using more technology to find more reserves. they say it’s just not enough.
>> on a macro level, there’s just not enough natural gas in this country to meet the demand. and we’re increasingly relying on imports from canada and from l.n.g. going forward.
>> the national petrolium council says there are only two key growth areas for natural gas in the lower 48 states. those are the deep water gulf and the rockies. and congress needs to pass an energy bill, giving producers more access to the reserves. meanwhile, oil and natural gas stocks zoomed up over the past year. natural gas stocks up 38%. oil company stocks are up 28%. and there does not appear to be any help coming from opec. it signaled today it probably won’t raise output when it meets next week. lane.
>> thank you. our next guest looks at the economy and then decides what stocks will benefit in the economy at that time. she recently increased her position in industrials. elizabeth miller is portfolio manager at trevor stewart burton & jacobsen joining us in our studio. as i readthat i’m sure just about any stock picker worth their salt should consider the economy in some way. but that said, you take it to another level in the way you break this down. what is your sense of it right now?
>> well, we’re buying basically economic sensitive stocks , as many investors are as you said. but our approach always, no matter where we are, starts with the economy and puts emphasis on very specific outlook. our take is that economic upturn that everyone now is embracing is really taking hold. and there’s very little that can push it off track for the next six months.
>> even with the concern about the way the dollar is falling, the concerns about the deficits and all the other issues that we’re facing. you don’t see any signs of worry?
>> i think those are potential signs of worry. but i don’t think the effects of those could derail the growth and output that has taken hold in the united states.
>> so bottom line, that is what it looks like. that said, which industry groups are you looking at now and buying now and think are the strongest bets going forward.
>> the best bet in this cycle where the economy is starting to take off is the old companies, you know, machinery companies, some of our favorites there are dover corporation and illinois tool works. they make lots of machinery that other companies buy to go make their goods.
>> we hear about how many manufacturing jobs and companies are disappearing. why invest from r for a company that makes tools for the manufacturers?
>> there isn’t a lot of grob growth. part of it is because the tooms are so efficient. a lot of it is an upcycle. and the guys are global producers, too. so we’re seeing a lot of manufacturing move off shore. and these machines go off shore with that manufacturing.
>> so the productivity story as much as an economy story.
>> absolutely. give me a sense of the other things you’re looking at. you’re also looking at media right now.
>> asset media. in the way that the economy enfolds, let’s say the machinery kind of companies come first as beneficials, and media companies are a little bit further out. so we still have some way to go. we’ve seen the machinery companies have had a good run. we think there is upside to go. the media companies haven’t yet really participated that much. we think advertising will continue to kick in as the economy gets stronger. and the companies or the conglomerates with the asset we like best. viacom which is reasonably priced, disney which is far off the bottom but i think still has quite a ways to go.
>> still a lot of distention there at disney right now within the organization.
>> there is. and that is sort of the internal. but if you look at the quality of the assets, and even though part of it is travel relatedthat, too, will benefit as the economy takes off. we’re really betting on the quality of those assets.
>> and people have more money to take vacations and they go to disney world. liz mill ir, thank you very much. portfolio manager at trevor stewart burton & jacobsen. still to come, japan’s forth largest automaker is making moves to improve its credit worthiness. mitsubishi may offer new shares to a few of the select holders.
