Joseph Lazzaro
New York - http://
Joseph Lazzaro is a veteran financial editor with more than 10 years in financial news and financial publishing. Lazzaro served as Managing Editor of New York-based financial news web site WallStreetItalia.com / WallStreetEurope.com for four years. Lazzaro, who holds an ABD/Ph.D. in American Government and International Economics from the University of Connecticut, also served as a News Editor for the Pulitzer Prize-winning Hartford [Connecticut] Courant, prior to graduate school. He is based in New York.
Posted Jul 3rd 2008 2:52PM by Joseph Lazzaro
Filed under: International markets, Bad news, Commodities, Oil
Another day, another oil record.
Oil easily pushed past $145 Thursday morning after traders calculated that the already weak dollar has further to fall after the
European Central Bank increased a key interest rate by a quarter point to 4.25%.
Oil rose as much as $2.28 to $145.85 per barrel -- an all-time high -- before easing back slightly to trade at $144.40 at mid-day.
Oil tends to rise when the dollar falls as investors/traders seek to preserve purchasing power of the decreased value of dollar-denominated commodities by bidding their price up. However, it's important to note that the dollar/oil correlation is not perfect: there have been instances in which the dollar fell and oil fell.
Continue reading Oil pushes past $145 on dollar decline concerns
Posted Jul 3rd 2008 12:06PM by Joseph Lazzaro
Filed under: International markets, Commodities, Federal Reserve
These days, European Central Bank President Jean-Claude Trichet isn't too popular in currency market circles, if one trader is any indication.
Trichet, a legendary inflation hawk, campaigned for and secured
a quarter-point interest rate increase Thursday, to 4.25%, in the ECB's key, short-term interest rate, the refinance rate. Many economists thought Trichet's action was premature, despite Europe's 3.7% annualized inflation rate, and that it could spell further economic slowing Europe. Unbowed, Trichet plowed ahead.
With the above as a backdrop, many currency traders, Andrew Resnick among them, plowed ahead with euro-long trades on the calculation that a higher interest rate for the euro will cause the euro to rise. Resnick went long with the euro in the euro-dollar currency pairing.
But then what did Trichet do? He stated at the regular
post-ECB rate decision press conference that he has "no bias" and that "we have no pre-commitment" to raise rates further - - signaling that one interest rate increase may be enough,
Bloomberg News reported. The result? The
euro plunged versus the
dollar after his comments: it fell 1.2 cents - - a large price move in the currency market - - to $1.5758 Thursday morning.
And with it plunged Resnick's profits for the day. All his trades were stopped-out for losses.
'Trichet is making many friends among traders'"Trichet," Resnick said, "isn't making many friends among traders, and probably not among business executives and economists as well." Resnick followed his evaluation of Trichet's social standing with several candid and frank, descriptive, colorful comments about the ECB president that can't be published here. Suffice it to say that Resnick is not happy with Trichet's two-step.
Continue reading Dollar rises vs euro after ECB's Trichet signals one rate hike may be enough
Posted Jul 3rd 2008 10:49AM by Joseph Lazzaro
Filed under: Bad news, Employees, Economic data, Recession
Initial U.S. jobless claims increased 16,000 to 404,000 for the week ended June 28,
the U.S. Labor Department announced Thursday. Claims for the previous week were revised 2,000 higher to 388,000.
Economists
surveyed by Bloomberg News had expected this week's initial jobless claims to total 385,000.
Also, the 4-week moving average increased 11,250 to 390,500. Economists view the four-week average as a better indicator of unemployment conditions, as it smooths out anomalies for strikes, holidays, or other idiosyncratic events.
Economist Peter Dawson said Thursday the jobless claims picture indicates economic conditions are worsening in the United States. "We're now above 400,000 in new claims. This is a sign the economy is stalling. Earlier, we did not see jobless claims as high as in previous slowdowns, but the job slide is accelerating, so in my view GDP will definitely be negative in Q2," Dawson said. "We've got to find a way to jump-start both jobs and demand or this economy will suffer a deeper recession."
Continue reading U.S. weekly jobless claims pass 400k, signaling further economic slowing
Posted Jul 3rd 2008 9:26AM by Joseph Lazzaro
Filed under: Bad news, Employees, Economic data, Federal Reserve, Recession
The U.S. economy lost another 62,000 jobs in June,
the U.S. Labor Department announced Thursday, as surging fuel prices forced companies in the world's largest economy to continue to cut expenses to protect profits in the face of the economic slowdown.
Meanwhile, the unemployment remained at 5.5% in June, the highest level since October 2004.
Economists
surveyed by Bloomberg News had expected the U.S. economy to shed 50,000 jobs in June. Furthermore, June was the U.S. economy's sixth straight monthly job loss. The U.S. economy lost a revised 62,000 jobs in May, up from the 49,000 earlier estimate; the U.S. economy lost 28,000 jobs in April.
The June job losses brought total job losses in 2008 to 438,000, the Labor Department said.
Meanwhile, the number of unemployed persons was unchanged at 8.5 million in June. Since March 2007, the number of unemployed persons has increased by 1.2 million, and the unemployment rate has risen by 1.5% point.
Continue reading U.S. economy sheds 62,000 jobs in June as unemployment holds at 5.5%
Posted Jul 3rd 2008 9:13AM by Joseph Lazzaro
Filed under: International markets, Forecasts, Commodities, Oil, Federal Reserve
In a move that surprised almost no one, the European Central Bank
increased its key interest rate, the refinance rate, a quarter point to 4.25%. The increase brings the refinance rate to its highest level in seven years.
The currency market, which for the most part had already factored-in the ECB rate increase, did not react initially following the decision. The
euro was virtually unchanged versus the
dollar at $1.5882.
The other major currency pairings also held their ground. The dollar was unchanged against the
pound at $1.9884 and the dollar rose slightly, up 0.10 yen to 106.25 yen, versus
Japan's yen.
Economist: Trichet 'jumped the gun'London-based economist Mark Chandler told BloggingStocks Thursday the ECB's decision was no surprise, but that doesn't decrease his disappointment with the ECB's stance.
"I afraid I'm going to really disagree with this one. I understand where [ECB President Jean-Claude] Trichet is coming from, but he's jumped the gun from my perspective. He could have waited another quarter," Chandler said. "There's a real concern now he's going to throw Europe into a recession like America, and if the dollar continues to fall against the euro, his rate increase won't lower inflation all that much. I don't like that bargain at all."
Continue reading ECB increases key interest rate a quarter point; will the Fed follow?
Posted Jul 2nd 2008 5:36PM by Joseph Lazzaro
Filed under: Major movement, Forecasts, Market matters, Economic data, Oil, DJIA, Recession
Let's just say that if the
Dow Jones Industrial Average on Thursday closes down 200 points, we'll call it a moral victory. The Dow Wednesday closed down 166.75 points to 11,215.75.
"What was that famous Bette Davis line about a bumpy night? Well, Thursday could be a bumpy day," economist Peter Dawson told BloggingStocks Wednesday.
Thursday could be very bumpy for the stock market because a series of data points -- all expected to be negative -- are converging at a traditionally difficult time of the year for the market - the start of summer.
Three data points of significanceFirst up is the
European Central Bank's interest rate decision at 7:45 a.m. EDT, at which the bank is expected to increase its key, short-term interest rate, the refinance rate, by a quarter-point to 4.25%. The ECB is trying to check inflation, Dawson said, but it may end up hurting the dollar. If the markets believe the already-weak dollar will fall further, that will increase commodity prices, including oil, "which will not be good news for stocks," he said.
Continue reading Jobs, ECB, holiday could make for bumpy Thursday -- will Dow hold at 11,000?
Posted Jul 2nd 2008 4:57PM by Joseph Lazzaro
Filed under: Commodities, Oil
The worst news Wednesday regarding oil wasn't its record high close of $143.57 per barrel. It was the dollar.
"There may be another record Thursday, and another Monday, and so on," energy trader Jim Dietz told BloggingStocks Wednesday.
The reason? Concern that the already weak dollar will fall further, Dietz said. The European Central Bank meets Thursday to vote on interest rates, with many economists expecting the ECB to increase it refinance rate by 25 basis points to 4.25%. If it does, the dollar may fall further, Dietz said.
Traders eye ECB meeting
"And if the dollar falls, that would put even more upward pressure on oil, so all eyes will be on that ECB decision," Dietz said. The ECB will announce its decision Thursday at 7:45 a.m. EDT. Oil tends to rise when the dollar falls, as investors / traders seek to preserve purchasing power of the decreased value of dollar-denominated commodities by bidding their price up. However, it's important to note that the dollar / oil correlation is not perfect: there have been instances in which the dollar fell and oil fell. Thursday won't be one of those instances, Dietz said.
"If we see a major move down by the dollar, say one cent against the euro, that will easily send us over $145 a barrel," Dietz said. As of late Wednesday afternoon, the
dollar had already fallen about nine-tenths of a cent to $1.5882 versus the
euro.Continue reading Oil closes at record $143.57 on inventory, dollar concerns
Posted Jul 2nd 2008 3:33PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Bad news, India, China, Middle East, Commodities, Oil
Many investors / traders are aware of the increasing demand for oil stemming form emerging markets economic growth. Vibrant, dynamic economies in China and India, but also in Australia and the Middle East, have been the biggest factor in
oil's four-year bull market, which has brought oil prices to a record of over $140 per barrel.
Moreover, oil sector analysts, economists and executives are counting on continual, sizable oil production increases from non-OPEC nations to help contain oil prices in the quarters and years ahead, but now it appears there may be a problem related to that assumption.
Non-OPEC, OPEC output estimates loweredThe
U.S. Energy Information Administration, the U.S. Department of Energy's statistical unit, has lowered its estimate for non-OPEC production in 2010 by 1.1 million barrels per day to 51.8 million barrels per day, from last year's forecast of 52.9 million. At the same time, the EIA lowered its 2010 OPEC production forecast by 400,000 barrels to 37.4 million.
Further, the EIA now sees 2010 global oil demand at 89.2 million -- in other words a statistical balance between daily global oil supply and demand.
Economist Glen Langan told BloggingStocks the projected production reduction is not good news for consumers in either the developed or developing worlds.
Continue reading U.S. EIA cuts 2010 global oil production estimate
Posted Jul 2nd 2008 3:07PM by Joseph Lazzaro
Filed under: Consumer experience, Commodities, Oil
U.S. gasoline consumption has declined for more than two months on a year-over-year basis,
U.S. Energy Information Administration data indicates,
From a consumer standpoint, that's not only a good thing, it may be
the only thing keeping already sky-high, $4 per gallon gasoline prices from moving even higher, says energy trader Jim Dietz.
"Lower demand is preventing gasoline sellers from raising prices even more. That's bad news for them, but it is helping consumers a little by keeping prices lower than what they would be, given the jump in oil prices," Dietz said.
Oil, which traded at $142.80 per barrel, up $1.83 on Wednesday at mid-day, is up about 100% in the past year. Meanwhile, the average price for a gallon of unleaded gasoline in the U.S.
is about $4.09 per gallon, up about 45% during the same period, according to the EIA.
"Historically, a gallon of gasoline cost two times to three times as much as a gallon of crude oil. Now that price ratio is about 1.3-to-1," Dietz said. "If the old ratio applied, gasoline would easily be 40-60 cents higher, probably more." Dietz added that he is presently flat, or has no energy trading positions open ahead of the 4th of July weekend.
Continue reading As bad as $4 gas is, consumer cutbacks preventing even higher prices
Posted Jul 2nd 2008 1:31PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Commodities, Oil, Federal Reserve
In comments made June 23 to Germany's Die Zeit but published only today, European Central President Jean-Claude Trichet warned of an "explosion" in inflation if the bank does not act decisively to counter it, Reuters reported Wednesday.
"If we are not resolute, there is a risk that inflation will explode. If we act decisively, then we can master the situation," Trichet said in the German text of comments published by weekly Die Zeit on Wednesday.
Trichet's comments appear one day before the ECB's meeting on interest rates. Many economists expect the ECB to increase its key interest rate, the refinance rate, by 25 basis points to 4.25%. (The ECB decision will be announced Thursday at 7:45 a.m. EDT.)
At issue: How to check inflation
European inflation is running at a 3.7% annualized rate, and trending up. That fact, combined with Trichet's comments published Wednesday, "all but guarantee a rate hike Thursday by the ECB," in economist David H. Wang's interpretation.
Continue reading ECB's Trichet warns of inflation 'explosion'
Posted Jul 2nd 2008 11:50AM by Joseph Lazzaro
Filed under: Forecasts, Industry, Economic data, Recession
Factory orders increased 0.6% in May, the U.S. Commerce Department announced Wednesday, on rising demand for computers and defense equipment. It was the third consecutive monthly rise in factory orders, the Commerce Department said. Excluding the often-volatile transportation component, factory orders increased 0.4%.
Economists surveyed by Bloomberg News had expected May factory orders to increase by 0.6%. Factory orders increased a revised 1.3% in April.
Economists follow the factory orders statistic because it provides one of the most comprehensive surveys of advance orders for durable goods -- how busy factories are likely to be in the period ahead. Factory orders also are a major value-added component of the U.S. economy.
In May, new orders rose 1.2%, bookings increased 0.6%, shipments rose 0.1%, and unfilled orders increased 0.1%. Also, the inventories-to-shipments ratio was virtually unchanged in May at 1.23, compared to 1.22 in April.
Continue reading May U.S. factory orders rise 0.6%, in-line with estimate
Posted Jul 2nd 2008 9:09AM by Joseph Lazzaro
Filed under: Bad news, Industry, Employees, Economic data, Housing, Recession
Non-farm private employment decreased 79,000 in June on a seasonally adjusted basis, ADP announced Wednesday in the ADP National Employment Report.
(pdf)
Meanwhile, the May estimated change in employment was revised down 15,000 to a gain of 25,000 jobs, ADP said.
In the June jobs report, employment in the service-providing sector fell 3,000, its first declined since November 2002. The goods-producing sector declined 76,000, and manufacturing employment fell 44,000, their 19th and 22nd consecutive monthly declines, respectively.
Employment among small-size businesses, defined as those with fewer than 50 workers, rose just 7,000 during the month, while employment at large businesses with more than 500 workers declined 51,000. Jobs at medium sized business, with 50-499 employees, decreased 35,000.
Continue reading Non-farm payrolls decrease 79,000 in June, ADP says
Posted Jul 1st 2008 5:34PM by Joseph Lazzaro
Filed under: International markets, Commodities, Oil
One of the major economic debates on Main Street and in Washington concerns the influence of speculators during oil's record price rise. (
Oil currently trades above $140 and is up 100% during the past year, and more than 400% since 2000).
More than one Congressional committee is investigating the role of speculators, who critics say have 'distorted' or artificially boosted oil's price -- driven it higher than a level the commodity would trade at if the price were based solely on supply and demand fundamentals.
New York Times columnist Paul Krugman, while not denying speculators have contributed to oil's record rise, nevertheless offers perhaps the strongest evidence regarding how a commodity's price can rise a great deal, without the influence of speculators. His evidence: iron ore.
Continue reading NYT's Krugman: Speculators schmeculators - demand is pushing oil higher, not traders
Posted Jul 1st 2008 3:54PM by Joseph Lazzaro
Filed under: Barrick Gold (ABX), Stocks to Buy
In a market dancing in bear market territory and with elevated inflation, it certainly doesn't hurt to own a defensive stock or two. And one that fits the bill, with an inflation hedge as a bonus, is Barrick Gold (NYSE: ABX).
Barrick Gold is the world's number one gold producer, with a 2007 production capacity of 8.1 million ounces, and 124.6 million ounces in proved/probable reserves. Analysts see a 20-30% revenue gain in 2008 for ABX, following a solid performance in 2007, due to a higher average gold price and increased production.
What's behind the gold bull market? Three factors: 1) increased use of gold in industrial and commercial applications, 2) rising demand for gold jewelry, and 3) increased reliance on gold and gold shares as an alternative investment. All three trends show only modest signs of abating in 2008. Asia-based jewelry demand looks especially promising in the immediate years ahead. The Reuters F2008/F2009 EPS consensus estimates for ABX are $2.43/$2.60.
Continue reading Barrick Gold: A defensive stock with an inflation hedge
Posted Jul 1st 2008 3:28PM by Joseph Lazzaro
Filed under: Boeing Co (BA)
Boeing, which already has delayed its new 787 Dreamliner 14 months, announced Tuesday it will know "soon" whether a supplier's damaged part on the fourth of six test planes will affect the program,
Bloomberg News reported Tuesday.The mid-body fuselage section built by Global Aeronautica LLC, a venture with Alenia North America, was damaged "by an Alenia employee not following proper work procedures" in Charleston, S.C., Boeing said,
Bloomberg News reported. Boeing said it resolved the issue, but it is currently evaluating the error's impact on the plane's timetable.
Boeing's shares (NYSE:
BA) fell 52 cents to $65.20 on the news in Tuesday morning trading.
Stock analyst C. Leonard Bauer said he's "not going to think the worst" regarding a possible timetable change, until Boeing knows definitively if it will affect production and roll-out.
Continue reading Boeing faces possible new delay for 787 due to damaged part
Next Page >
Wal-Mart's launch of $20 slimming jeans will be a huge success
Why I spent some of my stimulus check on GE
Why the dollar will keep falling
