Wednesday, October 29, 2014

(Almost) Everything We Think About Managing Millennials is Wrong. Here's Why.

Today’s workplace should look more like a jazz band (yes, that’s a pic of me) rather than a Dilbert-style bureaucracy that looks more like a dysfunctional marching band. As Dilbert pointed out (in the best selling management book of all time) our approach to talent management is deeply flawed.
But meaningful change is beginning to happen. The digital revolution is enabling new models of collaboration that lead to better innovation and higher performance. A new generation of young workers (The Millennials or The Net Generation as I’ve called them) is entering the workforce and bringing a new culture. And the new business environment demands something better. This requires a rethinking of talent management.
The current model of talent management is recruit, train, manage, retain and evaluate the performance of employees. In the future smart companies won’t do any of this. Work will look more like a jazz ensemble where hierarchy is replaced by creativity, sense-and-respond, peer-to-peer, collaboration, empowerment and improvisation.
1. Don’t Recruit: Initiate Relationships and Engage The Best Talent.
In the old model of human resources, potential new hires were solicited using one-way broadcast advertising methods, such as newspaper classified ads. Today advertising to attract young people is a waste of time and money. Companies can use social media to influence this generation about their company and get to know them.
Old-style job interviews were much like interrogations in which potential employees were grilled on their strengths and weaknesses, knowledge and skills, sometimes being asked to perform tests that are terrible predictors of effectiveness. This approach should be completely revised. Employers who seek to identify, attract, and hire the best talent should see the process as a dialogue.
And starting early, even in high school, companies can use challenges, projects, part-time jobs, internships, summer employment, and the like to get to know the best and brightest. When it’s time to hire them there is no “recruiting” to be done, as you have already engaged the people who you want. It’s simply a boundary change, where you bring your collaborator inside the boundaries of your firm.
2. Don’t Train: Create Work-Learning Environments.
Working and learning in the knowledge economy are basically the same thing. What are you doing right now reading this book? Working or learning?
So rather than sending off employees to separate training and educational activities, why not use the new media to increase the learning component of their work? Rather than training them, engage them in rich working-learning environments for life-long learning.
At my company our “training” strategy is three words: “Everyone must blog.” In doing so everyone learns how to research, write well, defend his or her ideas, and collaborate and engage with the world.
The Net Generation in particular will respond well if mentored and coached to contribute to corporate policies, strategy, and business performance. Thus, employers must use creativity and flexibility when organizing the first few months of work to expose the new employees to various leaders, work situations, and work content. Greater transparency, exposure to, and interactivity with, the broader organization during this initiation phase will lead to a win-win outcome. Companies that make the effort will benefit from less turnover, shorter ramp-up speeds, higher levels of engagement, and earlier and greater returns on their investments in employees.
How could your company increase the learning component of work?
3. Don’t Manage: Collaborate.
The Dilbertian enterprise is divided into the governors and the governed. At the top is the supreme governor and at the bottom the permanently governed. In between are those that alternate. These bureaucracies are slow. Employees are supervised and isolated in silos where knowledge is not shared.
Increasingly traditional approaches to supervision and management are not effective. Good managers build teams and engage employees through distributing authority, power, and accountability. A growing number of firms are decentralizing their decision-making function, communicating in a peer-to-peer fashion, and embracing new technologies that empower employees to communicate easily and openly with people inside and outside the firm. In doing so, they are creating a new corporate meritocracy that is sweeping away the hierarchical silos in its path and connecting internal teams to a wealth of external networks.
Collaboration is a two-way street. Work styles, workflow models, workday and workplace parameters, career paths, and professional development offerings should be examined and potentially retooled by organizations to maximize fit with the generational mix of employees.
How could your company move from a supervision model to one of true collaboration?
4. Don’t Retain: Evolve Lasting Relationships.
In today’s volatile work environment you can’t retain talent like you retain fluids.
Talent doesn’t need to be inside the boundaries of your enterprise. The Internet drops transaction and collaboration costs and companies can find uniquely qualified minds to create value anywhere. This opens a new world of relationships between talent and firms. Using the analogy of the university’s alumni network, companies should think of employees as a web of contacts. They should be perceived as networks, with a wealth of knowledge about the company’s inner workings, which possess the opportunity to add great value, even after leaving the company. Social networking, communities of practice, and other Web platforms allow employees and ex-employees alike to exchange resources and disseminate information. Net-Generation employees will embrace this kind of thinking as it comes naturally to them, having grown up on online communities such as Facebook.
Some of my best talent is not inside the boundaries of my company. How could your company become a network rather than a fortress for talent?
5. Don’t Do Annual Reviews: Improve Performance Real-time
If you’re a manager, you may have noticed that your twenty-something employees need plenty of feedback. It’s part of their mind-set, and is honed by a lifetime of immersion in interactive digital technologies. This has had a profound effect on the Net Generation’s mental habits and their way of doing things. They’ve grown up to expect two-way conversation, not lectures from a parent, teacher, or employer. They’re used to constant and quick feedback from friends about everything—their homework, a new gadget, and now, their job.
The annual performance appraisal, in which the boss tells the underling how he or she rates against corporate objectives, makes little sense for young employees. It’s often a one-way “appraisal”—boss to employee—that usually downplays the employee’s wishes and desires. It happens once a year—long after the performance took place. It rewards or punishes individual performance—not the collaboration that the new workforce treasures. It’s more about compensation and promotions than about improving performance.
So how do you give feedback to a generation that has an insatiable desire for it? How do you do it in a way that makes sense to people under 30?
There are new software packages, such as Work.com, that offer tools to enable real-time feedback. Instead of waiting an entire year to find out what managers think of them, employees can send out a quick (50 words or less) question to people they trust—a manager, a co-worker sitting in the meeting, even a client, or a supplier. Baby Boomers like me still wonder whether software like this will make our e-mail inboxes overflow with requests for “advice.” But I think managers will stop complaining once they see that employees are using this information to quickly improve their performance.
This is the second piece written for LinkedIn based on The Digital Economy, 20th Anniversary Edition by Don Tapscott, released October 24, 2014.
Don Tapscott is the author of 15 books and rated by Thinkers50 as one of the top five living business thinkers in the world. He also plays keyboards in the band Men in Suits. On Twitter @dtapscott.
Top Photo: Daniel Ehrenworth, MiddlePhoto: Teddy James / Flickr and LinkedIn

The Biggest Career Killer of All Time: The Performance Review

“Jenny … One other thing that I wanted to mention. You need to be aware of the time that you come in to the office. We usually get to the office before nine a.m., and I’ve noticed that sometimes you come in five or ten minutes late. It’s okay to come in late sometimes because we all have those days, but you should really get to the office before nine. It’s not a huge deal, but something I just wanted to let you know. You are still doing a great job, and I appreciate your work.”
Do you know who was giving Jenny this advice?
Her manager.
And do you know when she gave Jenny this advice?
During her annual performance review.
Do you know where this was happening?
At Starbucks.
Her manager is giving her the results of her year-end performance in a public coffee shop. I know, because I was sitting at the table next to them as an innocent bystander.
What do you think Jenny is thinking right now while her manager is telling her this?
I don’t know, but I’ll take a guess. It’s probably something like this:
“Whoa! Whoa here! When I joined the company you told me that it didn’t matter what time I come to work as long as I get my work done! And now I’m being dinged because I show up to work five minutes late? You do realize I show up late because I’m up at seven answering emails for an hour before I get ready to come to work, and my train doesn’t get here until nine! And wait a minute here! You’re telling me this in a public coffee shop? Ugh, I hate this job with a passion. Seriously, I’d do anything to end my misery right now.”
Sound familiar?
If Jenny’s manager isn’t even smart enough to conduct her performance review in a private place, why should Jenny suffer?
What else did Jenny’s manager say about her? Does it really matter? Do you really think Jenny remembers any of the good stuff that was said about her? All she remembers is how she has to change her entire morning just so she can “get to work on time.”
I don’t know Jenny, but I would guess that the next six months went something like this:
  • Month 1: Gets up at 7:00 a.m. Only answers emails for thirty minutes. Gets to work on time
  • Month 2: Gets up at 7:30 am. Doesn’t answer emails in the morning anymore. Gets to work on time.
  • Month 3: Gets up at 7:30 a.m. Hits the snooze button and really gets up at 8:00 a.m. Gets to work ten minutes late. Takes the back door so her manager won’t notice.
  • Month 4: Gets up at 8:00 a.m. Sends her manager random emails during her commute so her boss thinks she is working. Gets to work 15 minutes late. Takes longer lunch breaks.
  • Month 5: Gets up at 9:00 a.m. Works remotely more often.
  • Month 6: “I really need a job. I can’t do this anymore.”
Six months of lost potential because of one stupid comment about showing up to work on time.
What’s the solution to performance reviews?
Fortunately, there are a few companies that recognize this issue.
“Adobe ended performance reviews in 2012, after the employer noticed greater employee turnover after the annual reviews. In an interview with Human Resource Executive, Donna Morris, Senior Vice president of People Resources at Adobe, says that the reviews were an outdated process and made people feel like they were labeled.”
The problem is that most companies won’t be adopting this policy any time soon. So it’s up to you as an employee to be proactive.
Here’s what I do as an employee and consultant:
Schedule regular check-ins. I go out of my way to get feedback from my manager every two weeks. I put this on my client manager’s calendar as a recurring event.
Subject: “Bi-Weekly Checkup – Manage Expectations”
Hi Jane – Let’s use this 30-minute meeting to discuss my performance and overall status of my projects. This will help me keep you updated as well as to understand how I can manage your expectations.
I NEVER wait for feedback. I always actively push for open feedback. Since I pursue this activity, I receive feedback that I would never get in a more formalized approach.
During the meeting I ask the following questions:
  • “How are you doing?”
  • “Here’s my latest status…”
  • “Is there anything I should be doing better?”
  • “How can I help you?"
I am someone who gives performance reviews. How can I give constructive negative feedback without ruining someone’s day?
Harvard Business review has a great article that covers this question in great detail.
My favorite excerpt is this:
If you’re delivering some particularly hard-to-hear news, consider giving the person the rest of the afternoon off. Studies have shown that top performers are especially vulnerable to major setbacks. Show compassion not by softening the blow with false praise, but by giving bad news straight and then offering some breathing room.
Long story short -- You are going to ruin their day. If you deliver it properly, they will come back the next day without a sour taste in their mouth. You want to help their career, not kill it.
How can I accept negative feedback without ruining my career?
I'm sure plenty of books have been written about this exact topic, so I really can't do this question any justice.
Here is what I do when I receive negative feedback:
  1. Get temporarily hurt. Yes, I have feelings.
  2. Understand WHY I received the negative feedback. I'll ask questions to the person providing the feedback to provide specific examples that back up the negative comments.
  3. Understand more about the person who gave me the negative feedback. A lot of times I will receive feedback from someone I know isn't true, but I will still try to understand why that particular person gave me that feedback.
  4. Take action to fix it.
  5. Go back to being normal.
I have a 24 hour rule. From the moment I receive negative feedback in my career or life, I have 24 hours to go back to normal even if the negative feedback was unjustified. This has helped me come back stronger.
-------------------------
PLEASE follow me or add me on LinkedIn.
I am the author of the book Fire Me I Beg You.
If you want to learn how to quit your job and win at life, join my free Summer of Quitting Course. You also get the first chapter of my book for free.
If you want me to speak at your company or next event, please e-mail me at robbie@firemeibegyou.com
If you or your company needs help with something and you think I can help, email me at robbie@firemeibegyou.com
If you don't want me to speak at your next event, or think I can help you or your company - You can still email me. I'll take any positive and negative feedback you have to offer. Just know that in 24 hours, it will be like it never happened.
If you don't want to email me, leave a nice comment below. I also accept miserable mean comments as well. Those are my favorite.

W3C Declares HTML5 Standard Complete


More than four years ago, Steve Jobs declared war on Flash and heralded HTML5 as the way to go. You could be forgiven if you thought the HTML5 standard — the follow-up to 1997’s HTML 4 — has long been set in stone, given that developers, browser vendors and the press have been talking about it for years now. In reality, however, HTML5 was still in flux — until today. The W3C today published its Recommendation of HTML5 — the final version of the standard after years of adding features and making changes to it.
As a user, you won’t notice any changes. Chances are your browser already supports most HTML5 features like the 
“Today we think nothing of watching video and audio natively in the browser, and nothing of running a browser on a phone,” said Tim Berners-Lee, the W3C director, in a statement today. “We expect to be able to share photos, shop, read the news, and look up information anywhere on any device. Though they remain invisible to most users, HTML5 and the Open Web Platform are driving these growing user expectations.”
As Paul Cotton, the W3C HTML working group co-chair and Partner Group Manager at Microsoft Open Technologies told me earlier this week, he believes that the main achievements of HTML5 are that it “defines the set of interoperable HTML5 features that web developers can depend on in building their web sites.”
Any non-interoperable features the group discussed were moved to HTML 5.1 (including the controversial idea of adding support for some kinds of digital rights management right into the standard). HTML 5.1 may be released as early as next year, and the Working Group will continue to work on those features that were excluded from HTML5.
Of all the many new features in HTML5, Cotton believes that “the single most important feature of HTML5 is probably the
At some point in the standardization process, it looked like it would take as long as 2020 to get to a final recommendation. Thanks to the W3C’s “Plan 2014,” we have a final version today. As Cotton told me, though, he also believes that this was the biggest compromise the different stakeholders agreed to.
“As part of ‘plan 2014′ we also encouraged the Working Group to permit work on some controversial items to proceed on their own path in parallel to HTML5 as ‘extension specs,'” he told me. “In fact some of these extension specs were separately developed (i.e. Ruby and elements) and were folded back into HTML5 before its completion, and others like ‘long description’ are on their way to completion as separate W3C Recommendations.”
af (1)Cotton notes that the challenge for organizations like the W3C and HTML Working Group will be to keep up with the evolving environment of doing open standards and to respond to these changes.
“For example, the tools that developers use to do their day jobs today i.e. GitHub, social media, etc. are much different than five years ago, and if we want future work of the HTML Working Group to engage web developers then we need to evolve as that environment changes,” Cotton says.
Similarly, the W3C today notes in its press release that the next version of the standard needs to focus on a number of core “application foundations” like tools for security and privacy, device interactions, application lifecycle, media and real-time communications and services around the social web, payments and annotations. All of these are meant to make it easier for developers to support the web platform.
With the final recommendation for HTML5 done, the W3C will now immediately start fixing bugs, but most importantly, it’ll work on HTML 5.1.

Tuesday, February 4, 2014

Thailand court bid to annul election and unseat PM

Thailand court bid to annul election and unseat PM

Anti-government protesters march through the streets of the Chinatown area of Bangkok on 1 February 2014Despite the national symbols, deep divisions have been exposed in the country in recent months

Related Stories

Thailand's main opposition party has petitioned the Constitutional Court to annul Sunday's general election.
The Democrat Party's petition also calls for the dissolution of the ruling Pheu Thai party.
It argues that the polls violated the constitution on several grounds, including that they were not completed in one day.
The government blames opposition polling station blockades for the delays.

Thailand's troubles

  • Sep 2006: Army ousts Thaksin Shinawatra
  • Dec 2007: Pro-Thaksin party wins election
  • Aug 2008: Thaksin flees Thailand
  • Dec 2008: Huge anti-Thaksin protests; court bans ruling party; Abhisit Vejjajiva comes to power
  • Mar-May 2010: Huge pro-Thaksin protests; dozens killed in army crackdown
  • Jul 2011: Yingluck Shinawatra, sister of Thaksin, elected PM
  • Nov 2013: Anti-government protests
  • Dec 2013: Ms Yingluck calls election
  • Jan 2014: Ms Yingluck declares state of emergency
Thailand's election law also allows voting to be re-run where it has been disrupted.
Legal experts say there is no real case for annulling the election but the Constitutional Court has a history of ruling against the party of the Prime Minister Yingluck Shinawatra.
It annulled an election eight years ago, and has twice dissolved the party and banned its top politicians from office.
The Democrats say they are confident they will win in court again.
If that happens, the prime minister's supporters in her strongholds of the north and northeast, say they will refuse to recognise whatever government replaces her.
In calling the elections the prime minister hoped to defuse large anti-government protests that began in the capital three months ago.
But the opposition boycotted them and anti-government protesters forced the closure of hundreds of polling stations in Bangkok and the south, stopping millions of people from voting and preventing the announcement of a result until special elections are held in areas that have not yet voted.
Voting was peaceful at 90% of polling stations.
Wiratana Kalayasiri, a former opposition lawmaker and head of the Democrat Party's legal team, said: "This election has violated the constitution on several counts, but mainly it was not a fair one."
"The election was not held on the same day... That is why we are seeking to nullify it," he said.
The opposition is also expected to ask the court to disqualify Pheu Thai party executives and ban cabinet members who were party candidates.
There is a deep divide between supporters of the Prime Minister and her opponents, who allege her government is corrupt and that she is a puppet of her brother, ousted Prime Minister Thaksin Shinawatra.
A billionaire, he fled into exile to avoid corruption charges after being deposed in a 2006 coup.
Anti-government protestors cheer as leader Suthep Thaugsuban speaks about the elections during his daily speech 3 February 2014 in Bangkok,ThailandAnti-government protesters have been occupying parts of Bangkok since last year
Most of the protesters, who have occupied government ministries and major intersections during their demonstrations, want the government to be replaced by an unelected "people's council'' to enact reforms ahead of new elections.
They also want the Shinawatra family's influence permanently removed from Thai politics.
The prime minister has refused to step down, arguing she was elected by a large majority, and that she is open to reform, but that such a council would be unconstitutional and undemocratic.
Rice blow
The legal bid comes as China pulls out of a contract to buy 1.2 million tonnes of rice from Thailand.
Thailand's Ministry of Commerce said the Chinese government pulled out of the deal because of an ongoing probe by the country's Anti-Corruption Commission into the Prime Minister's rice purchase policy.
The policy, in which the government buys farmers' crops at prices up to 50% higher than world prices, has been a factor in the recent anti-government protests.
Many of the protesters are urban, middle-class Thais, who allege the scheme is just a way to buy the votes of people in poorer, rural areas, with state money.
The ruling party - under various names - has won the last five elections, with strong support from its rural support base.
But now the government needs to sell its rice stocks to pay farmers, many of whom have not been paid for their October crop, and some of whom have threatened to join the anti-government demonstrations in Bangkok.
File photo: Rice stockpile in ThailandThailand has been buying rice from farmers at prices higher than world prices

Sunday, July 14, 2013

Dubai Stocks Post Longest Winning Streak in 2 Months on Stimulus

ubai stocks climbed for a seventh day, the longest winning streak in two months, tracking a global rally amid optimism central banks will continue their monetary stimulus measures.
The benchmark DFM General Index (DFMGI), the world’s third-best performer this year among 94 gauges tracked by Bloomberg, gained 2 percent at the close in Dubai to the highest close since November 2008. Abu Dhabi’s measure increased 0.9 percent.
Skyscrapers and buildings stand in the business bay development area beside the undeveloped desert which will become Mohammed Bin Rashid City, seen from the Burj Khalifa tower, in Dubai, United Arab Emirates, on May 30, 2013. Photographer: Duncan Chard/Bloomberg
Emerging-market stocks rose, extending a weekly rally, as the European Central Bank executive board member Vitor Constancio said the euro area’s slow recovery implies that policy has to stay “accommodative for a longer period of time”. U.S. stocks also rose for a third week, sending benchmark indexes to all-time highs, as Federal Reserve Chairman Ben S. Bernanke pledged sustained monetary stimulus.
“Dubai is likely up on the back of U.S. markets hitting record highs on Friday after the Fed reassured investors that it would continue to keep the floodgates of cheap money open,” said Gus Chehayeb, the Dubai-based research director for the Middle East at investment bank Exotix Ltd. “It seems the Fed is backing down after the capital markets rioted over the past two months.”
Bernanke said on July 10 that the U.S. economy will continue to need stimulus measures because of low inflation and high unemployment. China’s Finance Minister Lou Jiwei said a 6.5 percent growth rate wouldn’t be a “big problem.”

Egypt Falls

The MSCI Emerging Markets Index (SASEIDX) rose 0.3 percent to 945.36, taking its weekly gain to 3 percent. The Standard & Poor’s 500 Index (SPX) slumped as much as 5.8 percent after Bernanke signaled on May 22 that the Fed could start scaling back bond purchases as soon as September. Stocks have since recovered all those losses as data on hiring and housing bolstered confidence in the economic recovery.
Dubai Investments PJSC (DIC) jumped 7.1 percent to the highest since November 2008. Emaar Properties PJSC (EMAAR), developer of the world’s tallest tower, climbed 1.9 percent.
In Egypt, Commercial International Bank Ltd., the country’s biggest publicly traded lender, rose 1.5 percent, helping boost the benchmark EGX 30 Index at the close. The Egyptian public prosecutor’s office started an investigation of deposed Islamist President Mohamed Mursi as thousands of supporters vowed to keep up their protests until he is reinstated.
Elsewhere in the Middle East, Saudi Arabia’s Tadawul All Share Index rose 0.6 percent. Oman’s MSM30 Index and Kuwait’s gauge climbed 0.4 percent each. Israel’s benchmark TA-25 Index (TA-25) increased 0.6 percent. The yield on the nation’s benchmark 4.25 percent bonds maturing in March 2023 was unchanged at 3.78 percent.

Wednesday, November 7, 2012

Telephone Area codes

Area

Code

Area

Code

Area

Code

Colombo 011Kegalle 
035
Bandarawela 057
Jaffna021Avissawella 036Ampara 063
Mannar023Kurunegala 037Batticola 065
Vavunia024Panadura 038Matale 066
Anuradapura 025Matara 041Kalmuni 057
Trincomalee 026Ratnapura 045Kandy 081
Polonnaruwa 027Hambantota 047Galle 091
Negombo 031Hatton 051Badulla055
Chilaw 032Nuwara Eliya 052Kaluthara034
Gampaha 033Nawalapitiya 054

Wednesday, September 19, 2012

Fed Stimulus Fading as Forecasters Say Best Is Over: Commodities


The biggest advances in commodities this year may be over because of mounting concern that policy makers aren’t doing enough to bolster economic growth at a time when producers are expanding supply.
The Standard & Poor’s GSCI gauge of 24 raw materials will end the year at 677, little changed from now, based on the median of 10 investor and analyst estimates compiled by Bloomberg. The index is about 2 percent lower since the European Central Bank announced an unlimited bond-purchase program Sept. 6 and 4 percent below its level when the Federal Reservepledged a third round of debt-buying Sept. 13.
That contrasts with a 92 percent surge from the end of 2008 through June 2011 as the Fed bought $2.3 trillion of debt in two bouts of quantitative easing. The impact will probably be smaller this time, Barclays Plc says. Prices are already in a bull market, the 17-nation euro area is contracting and China has slowed for six straight quarters. Europe and China represent about 60 percent of global copper demand and about 33 percent of crude-oil consumption.
“The investment demand that might be driven by people’s changed perception after Fed action is not going to sustain a further long-term move of the commodity complex,” said Michael Aronstein, the president of Marketfield Asset Management in New York who correctly predicted the slump in prices in 2008 and the rebound in 2009. “The longer you keep prices in all of these sectors elevated, the more supply you recruit.”

Dollar Index

The S&P GSCI rose 2 percent this year, heading for a fourth consecutive annual advance. Soybeans and wheat led the gains after the worst U.S. drought since 1956. The MSCI All- Country World Index of equities jumped 13 percent and the U.S. Dollar Index, a measure against six major trading partners, dropped 1.4 percent. Treasuries returned 1.4 percent, a Bank of America Corp. index shows.
Commodity assets under management reached $406 billion at the end of July, from $399 billion at the start of the year, based on Barclays’ estimates of money tied to exchange-traded products, medium-term notes and indexes. Assets reached a record $451 billion in April 2011.Open interest, or contracts outstanding, across the members of the S&P GSCI rose 16 percent this year, data compiled by Bloomberg show.
Morgan Stanley is forecasting supply surpluses in aluminum, nickel, zinc and thermal coal in 2013 and Barclays expects a glut in lead for at least a third consecutive year. The rally in aluminum and zinc makes production cuts in China less likely, prolonging excessive production, Macquarie Group Ltd. said in a report Sept. 17.

Oil Inventories

While the Paris-based International Energy Agency anticipates record demand for oil in 2013, it said in a monthly report Sept. 12 that inventories have become “more comfortable.” Natural-gas futures tumbled 27 percent in the past year in New York as production in the U.S., the biggest producer and consumer, advanced to a record.
Gold will probably be among the biggest winners from quantitative easing, say JPMorgan Chase & Co., Standard Bank Group and Credit Suisse Group AG. Some investors buy bullion as a hedge against inflation and a weaker dollar. The metal, which reached a six-month high of $1,779.50 an ounce yesterday, will advance to a record $2,400 by the end of 2014, assuming the stimulus lasts until then, Bank of America Corp. said.
“We view owning commodities and gold in particular as more attractive post the QE3 announcement,” said Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama. “While the QE is there, it does keep the bid under commodities prices and gives them an opportunity to continue to move higher even with a sluggish economy.”

Interest Rates

Central-bank action should boost prices across precious and industrial metals, JPMorgan said in a report Sept. 14, citing a probable decline in the dollar. Gold, silver, Brent crude oil and aluminum will probably rally more than other commodities, Standard Bank said in a Sept. 17 report.
The Fed will buy $40 billion of mortgage debt a month and hold the benchmark interest rate near zero through at least mid- 2015. The ECB held its benchmark rate at a record low of 0.75 percent and said its program will target government bonds with maturities of one to three years. The Bank of Japan unexpectedly expanded its asset-purchase fund by 10 trillion yen ($126 billion) on Sept. 19. More than two-dozen nations cut market interest rates this year, data compiled by Bloomberg show.
The S&P GSCI in one year may be at 720 points, or about 6 percent higher than now, according to the Bloomberg survey. The International Monetary Fund expects global growth to accelerate to 3.9 percent next year, from 3.5 percent in 2012.

Hedge Funds

Commodities also may rally because of supply cuts. Morgan Stanley expects copper demand to outpace supply for a fourth year in 2013. The U.S. Department of Agriculture is forecasting the smallest global corn stockpiles in six years and the lowest soybean inventories in two decades after drought across the U.S. and Europe parched crops. Sanctions against Iran are crimping oil exports from what was once the second-biggest producer in the Organization of Petroleum Exporting Countries.
Hedge funds and other speculators remain bullish and held the biggest bet on rising prices in 16 months in the week ended Sept. 11, U.S. Commodity Futures Trading Commission data show. Holdings more than doubled since mid-June. That contrasts with a 95 percent reduction in the net-long position before the start of the first round of quantitative easing in December 2008.
“This is not as much as a one-way ticket as it has been in the previous two instances,” said Sean Corrigan, the chief investment strategist at Diapason Commodities Management SA in Lausanne, Switzerland, which has about $7 billion invested in commodities. “The tug of war is between how much is already priced in and how much poorer is the underlying commodity demand because the world economy is in a much worse condition now.”

Reserve Requirements

China, the biggest consumer of everything from coal to cotton to copper, set an annual growth target of 7.5 percent in March. It cut interest rates for the second time in less than a month in July and lowered reserve requirements three times between November and May. The government approved plans this month for a $158 billion subways-to-roads construction plan.
The economy of the euro area contracted 0.5 percent in the second quarter and probably won’t expand again until the second quarter of next year, according to the median of 24 economist estimates compiled by Bloomberg. The global economy is sliding into a “twilight zone,” caught between expansion and recession, and it “could go either way,” said Joachim Fels, the chief economist at Morgan Stanley in London.

Private Banking

Equities and high-yield debt probably will give greater returns than commodities, said Ashish Misra, the head of investment strategy at Lloyds TSB Banking Group in London. Its private banking unit manages about 11 billion pounds ($18 billion) of assets. Commodities have risen about fourfold since the end of 2001, during which the MSCI All-Country World Index gained 41 percent and Treasuries returned 77 percent.
“We’re heading for a period of underperformance in commodities after years of outperformance,” Misra said. “The effects of a slowdown in China and resumption of normal production trends in agriculture after this year’s drought- driven supply shocks should continue to pressure commodity prices downward.”
To contact the reporter on this story: Maria Kolesnikova in London atmkolesnikova@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter atccarpenter2@bloomberg.net