Joseph Lazzaro
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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 May 16th 2008 4:29PM by Joseph Lazzaro
Filed under: Consumer experience, Commodities, Oil
With oil setting yet another record high Friday of
$127.43 per barrel and Goldman Sachs renewing traders concerns about inadequate oil supply growth, economists and business executives are becoming increasingly concerned about gasoline prices in the quarters ahead.
U.S. gasoline prices are already up more than 100% since 2004 to a national average of
about $3.78-3.83 per gallon. (Many high-cost zones, such as New York, Boston, San Francisco, and Los Angeles, are already experiencing prices well over $4 per gallon.) By any gauge, gasoline's surge is one for the record books - - rapidly approaching percentage increases registered during the first two oil shocks, in
1973-74 and
1979-80. Given the run-up, how much higher can gasoline prices rise?
First, some may ask, why the emphasis on gasoline prices? In a nutshell, economists obsess over gasoline prices because, unlike the rest of the developed world, the United States has out-sized per capita energy consumption. That's
econospeak for 'Americans use many more gallons of fuel to commute to work, do errands, etc. than their counterparts in Europe and around the world.'
Continue reading Just how high will U.S. gasoline prices rise?
Posted May 16th 2008 3:46PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Housing, Federal Reserve, Recession
Are the world's major central banks signaling an end to interest rate cut cycle?
Officials from three of the four major central banks - - all except the Bank of Japan - - have recently signaled their concern about rising inflation stemming from rate cuts implemented to stimulate demand following the credit crisis,
Bloomberg News reported Friday. The U.S. Federal Reserve, Bank of England, and European Central Bank have commented, in various phraseologies, their concerns about prices and business costs.
Economist David H. Wang told BloggingStocks investors/traders can ignore comments out of the ECB, but not the Fed's or the BOE's - - which translates to at least a rate cut pause.
"[ECB President Jean-Claude] Trichet has been on the wires commenting on the need to contain prices, but he's been doing that since, I think, 1962, so ignore that," Wang said. "But the Fed comment blitz we had earlier this week and the Bank of England comments about rising prices I think are clear signals of a rate cut pause. The central banks have implemented enough monetary stimulus, for now."
Continue reading Fed, BOE seen ending rate cut cycle, on rising inflation concerns
Posted May 16th 2008 3:31PM by Joseph Lazzaro
Filed under: International markets, Good news, Commodities, Agriculture
A modicum of good economic news, at least on the commodities front: rice prices are headed for their biggest weekly drop in four years, on the prospect that exports from Japan and Pakistan will ease concerns that a global food shortage is worsening,
Bloomberg News reported Friday.As of mid-day Friday,
rice had plunged 14% this week to $19.80 per 100 pounds.
Pakistan, the world's fifth-largest rice exporter, will allow shipment of 1 million metric tons because local needs have been met,
Bloomberg News reported Friday. India may also ease its ban on rice exports. Rice is a staple for about 50% of the world's population.
Long-term, secular factors, including expanding middle classes (who consume more calories daily than lower-income groups) in Asia and Latin America, rising oil prices (which increase farming costs), have propelled a global rise in commodity, ingredient, and food prices.
Continue reading Rice set to record biggest weekly drop since 2004 as supplies jump
Posted May 16th 2008 12:12PM by Joseph Lazzaro
Filed under: United Technologies (UTX), Stocks to Buy
Readers of this space know that selected defense contractors are my preferred plays, growing U.S. economy or not. (But let's hope it's a
growing U.S. economy). And the reason for the defense contractor bullishness is obvious enough. The geopolitical climate can change, of course, but it looks like defense, national security and anti-terrorism efforts will remain at the top of the U.S.'s concerns, for the foreseeable future.
Further, when one can combine a defense contractor with an industrial play, including commercial aviation, the potential exists for superior return on equity. And with the above in mind, United Technologies is worth a review.
United Technologies (NYSE:
UTX) is one of those handful of stocks in which you can buy 200 shares or 50 shares for your child's college fund, and then look back on it in 10 years and be very glad you did.
Here are some attributes: Leadership position in high-value-add sectors, substantial defense contracts, infrastructure/capital improvement businesses, technological leadership, diversification and operational balance, economies of scale, massive amounts of engineering talent, long history of steady earnings growth and dividend growth.
The Reuters F2008/F2009 EPS consensus estimates for UTX are $4.88/$5.45.
Continue reading United Technologies' services will be in demand awhile
Posted May 16th 2008 11:11AM by Joseph Lazzaro
Filed under: Bad news, Economic data, Recession
U.S. consumer confidence in May 2008 plunged to its lowest level in almost 28 years, an indication American adults are very concerned about the near-term health of the U.S. economy as it slides into its first recession in six years.
The
Reuters/University of Michigan Surveys of Consumers said its index of confidence fell to
59.5 in May 2008, Reuters reported Friday.It was the index's lowest reading since June 1980 -- a period also characterized by high oil/gasoline prices and a sluggish U.S. economy.
Economists
surveyed by Bloomberg News had predicted that the April 2008 index would fall to 62.5. The index stood at 63.2 in April 2008 and 69.5 in March 2008.
'An awful number'Economist Peter Dawson told BloggingStocks Friday May's consumer sentiment reading reflects conditions on the ground. "It's an awful number, but it reflects conditions on Main Street, as the typical person experiences them," Dawson said. "We've got falling home prices, record-high gas prices, rising food prices, property taxes increasing in many areas, and no job growth. It's not a happy time for Americans right now and the University of Michigan sentiment numbers reflect that."
Continue reading May consumer sentiment drops to 28-year low on falling home prices, tepid job market
Posted May 16th 2008 10:47AM by Joseph Lazzaro
Filed under: Bad news, Commodities, Oil
Oil prices rose to a record $127.43 Friday morning amid new concerns about supply and after Goldman Sachs increased its forecast to $141 per barrel for the second half of 2008.
Goldman upped its forecast by 32%, saying oil prices will average $141 in 2008 and $148 in 2009, citing supply constraints and the lack of scalable substitutes,
Bloomberg News reported Friday. Oil surged on the news before easing back to $127.33. The other major energy commodities also jumped in early Friday trading.
Heating oil added 5 cents to $3.67 per gallon,
unleaded gasoline jumped 6 cents to $3.22 per gallon, and
natural gas climbed 13 cents to $11.53 per million BTUs.
Economist Glen Langan told BloggingStocks Friday that Goldman Sachs' increasingly bullish outlook for oil is not good news for consumers or the U.S. economy.
"This is the first time that I can recall that a major investment bank has mentioned the supply dimension to oil. Up to now, we've been talking about emerging market demand, but if in fact supply will not increase at modern-day historical rates, this is not a good sign for U.S. GDP growth," Langan said. "We're counting on ample supply growth to contain these already high oil prices."
Langan said he expects oil production to grow at least 1.5-2% per year, while Goldman sees it at 1% per year. "If Goldman is correct, prices will rise to over $140 per barrel in the quarters ahead this year, and probably higher, that would put the average price of gasoline in U.S. easily over $4.25 per gallon," he said.
Continue reading Oil hits record $127.43 on supply concerns, raised Goldman forecast
Posted May 16th 2008 9:09AM by Joseph Lazzaro
Filed under: Economic data, Housing
U.S. housing starts increased 8.2% in April 2008 -- an upside surprise skewed by a 36% rise in multi-family unit construction. Housing starts totaled a 1.032 million annual rate in April 2008, the U.S. Commerce Department
announced (pdf) Friday.
Economists
surveyed by Bloomberg News had expected housing starts to total a 940,000 annualized rate in April 2008.
Still, housing starts are down 31% in the past year and single-family starts are down 42%, the largest decline for single-family starts since 1992.
Meanwhile, building permits, a measure of future construction, increased 4.9% to a 978,000 annualized rate in April 2008; single-family permits increased 4% and multi-family permits climbed 6.8% during the month.
Continue reading Housing starts surprisingly rise in April on apartment construction
Posted May 15th 2008 4:44PM by Joseph Lazzaro
Filed under: Oil, Stocks to Buy
Oil driller
Transocean, Inc. (NYSE:
RIG), whose shares have probed, but have been unable to move and stay permanently above $160 -- may have received the catalyst it needs to reach loftier price levels.
Transocean's shares jumped $8.34, ending at $155.54 after
Bloomberg News reported that
Petroleo Brasileiro (NYSE:
PBR), Brasil's state-controlled oil company, leased about 80% percent of the world's deepest-drilling offshore rigs to explore prospects. That included the Western Hemisphere's biggest discovery in decades, the Tupi field. Further, the activity of Petroleo, also known as Petrobras, is forcing up day-rates for oil rigs. PBR also closed higher Thursday, up $2.00 to $68.27.
Further, Petrobras is in talks with Transocean to extend leases as much as three years ahead of expiration, Robert Long, chief executive officer for the Houston-based RIG,
told Bloomberg News. Also, Petrobras plans to start pumping oil from Tupi in Q1 2009. Tupi is the largest oil find in North America since the 1976 Cantarelli field discovery in the Gulf of Mexico.
Continue reading Petrobras needs more oil rigs, Transocean's shares surge
Posted May 15th 2008 2:12PM by Joseph Lazzaro
Filed under: Bad news, Housing, Recession
The U.S. housing slump is creating another negative ripple effect, this one by extension, or by association, if you will, as in condo/co-op association.
Owners in condo associations are having to chip-in to pay for unexpected association maintenance, tax, and related fees when other residents enter foreclosure or are substantially behind in payments,
The New York Times reported Thursday. The Times cited the case of condo owners in a 43-story Miami, Florida condo having to ante up more money after 1 in 6 residents battled foreclosure. The additional charge: an additional $1,000 assessment and $50 more a month for cable and internet fees, on top of the regular $450 monthly maintenance.
Connecticut-based appraiser Lawrence Schmidt, not a realtor but a former 15-year condominium owner with extensive knowledge of the sector, told BloggingStocks Thursday prospective buyers need to fully-research a condo association's membership status, including record of tax payments of individual members, in addition to the standard evaluation of the condo association's maintenance fees, contractor services, and quality-of-life issues, etc. Co-op buyers must do even more research on the co-op's balance sheet, monthly budget, cash flow, outstanding mortgage, and other related financials, he said.
Continue reading Warning for condo owners: A neighbor's financial problem could be yours
Posted May 15th 2008 2:00PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Good news, Economic data
Europe's economy grew more than forecast in Q1 2008,
the European Union's statistics office announced Thursday, as Germany's economy continues to bolster the continent's results.
Euro-zone GDP increased 0.7% in Q4 2008, 0.2 percentage points above the
Bloomberg News survey consensus estimate.
Germany served as the primary economic engine, recording 1.5% in the quarter – its fastest growth in 12 years,
Bloomberg News reported Thursday. Meanwhile, France registered 0.6% GDP growth. Together, Germany and France account for about 50% of the euro-zone's GDP.
On a year-over-year basis, euro-zone GDP increased 2.2% in the 15-nation group. Growth in the 27-nation European Union increased 2.4%.
However, despite the upside GDP surprise from both the euro-zone and Germany, key economic officials downplayed the results. European Central Bank President Jean-Claude Trichet
told Reuters the news, while positive, simply confirmed what he had expected – that Q1 2008 would be good and the ensuing period slower.
A hint by Trichet?Economist David H. Wang told BloggingStocks Thursday there could be a glimmer of hope for those who favor an interest rate reduction by the ECB. It was unusual for the ECB's Trichet to reference slower growth after the release of a GDP report, he said. Trichet, an inflation hawk, regularly speaks of Europe's industrial capacity and price pressures in the context of GDP, Wang said.
"I don't know if this was a hint, or perhaps a mini-hint, regarding monetary policy," Wang said. The currency market shrugged-off Trichet's comments, with both the
euro and
British pound remaining at essentially the same levels they were earlier in the day versus the
dollar, at $1.5440 and $1.9445, respectively.
Continue reading Euro-zone Q1 GDP growth beats estimate, but slowdown still seen
Posted May 15th 2008 11:30AM by Joseph Lazzaro
Filed under: Bad news, Industry, Economic data, Recession
U.S. industrial production plunged 0.7% in April 2008,
the U.S. Federal Reserve announced Thursday, as a spectrum-wide contraction took place in the nation's factories.
Economists
surveyed by Bloomberg News had expected industrial production to decline 0.3% in April 2008.
Further, factory output plummeted 0.8% - - the largest drop in factory output since September 2005, a month that reflected the abnormal, irregular factory output reduction caused by Hurricane Katrina in the late summer of 2005. Excluding autos and auto parts, factory output declined 0.4%.
Also, capacity utilization increase declined to 79.7% in April 2008 from 80.4% in March 2008. Economists
surveyed by Bloomberg News had expected capacity utilization to total 80.1% in April 2008. Capacity utilization totaled 80.3% in February 2008.
Industrial output evaluationEconomist David H. Wang said the April 2008 industrial production statistic reflects a familiar theme in the current U.S. economic slowdown: a contracting factory sector.
Continue reading April U.S. industrial production plunges - biggest drop since Hurricane Katrina
Posted May 15th 2008 9:09AM by Joseph Lazzaro
Filed under: Bad news, Employees, Economic data, Recession
Initial U.S. jobless claims increased 6,000 to 371,000 for the week ended May 10 -- slightly above the consensus estimate,
the U.S. Labor Department announced Thursday. Claims for the previous week remained at 367,000.
Economists
surveyed by Bloomberg News had expected this week's initial jobless claims to total 370,000.
Also, the 4-week moving average decreased 1,000 to 367,000. Economists view the 4-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 this week's job report "shows that labor conditions continued to soften. We're seeing little to no evidence that small or large companies have picked-up their hiring pace."
Continue reading Jobless claims rise as job market continues to soften
Posted May 14th 2008 5:15PM by Joseph Lazzaro
Filed under: Stocks to Buy
Readers of this space know that in addition to oil / oil services, one of my preferred sectors is: infrastructure / public services. That's because despite the U.S. economic slowdown, global growth proceeds at a better-than-adequate pace, with infrastructure work playing a significant role. And with the aforementioned in mind, The Shaw Group is worth an evaluation.
The Shaw Group (NYSE:
SGR) is a leading supplier of industrial piping systems, including engineering, pipe erection and construction / maintenance services.
Analysts really like the fact that Shaw Group has also positioned itself as one of the largest engineering and construction contractors for the power generation market and as a top environmental services company. Another positive: SGR's large geographic footprint.
Analysts see 7-11% revenue growth for F2008, and 9-12% for F2009, with adequate margins.
The Reuters F2008/F2009 EPS consensus estimates for SGR are $2.30/$3.32.
Continue reading For Shaw Group, the developing world is a lucrative world
Posted May 14th 2008 4:47PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Good news, Federal Reserve
Macroeconomic factors are beginning to hint about a
change in the dollar's fortunes, pun intended, if a new survey is any indicator.
Still, that doesn't mean that the United States does not have work ahead to right its economic ship of state, so says one economist.
The Bloomberg Professional Global Confidence Index's dollar expectations component rose to 57.6 in May 2008 from 42.87 in April 2008, and 30.3 in March 2008. A reading above 50 indicates respondents expect the currency to appreciate in the next six months. The poll surveyed 3,447 Bloomberg terminal users.
In late Wednesday afternoon trading, the
dollar rose slightly against the world's other major currencies, rising about a fifth-cent to $1.5446 against the
euro, and a quarter-cent to $1.9435 against the
British pound. The dollar also rose about one-half yen to 105.35 against
Japan's yen. The dollar hit an all-time low versus the euro of $1.6018 on April 21, 2008. The euro has appreciated about 100% versus the dollar since 2000.
Continue reading Sentiment toward dollar turning bullish, survey reveals
Posted May 14th 2008 3:55PM by Joseph Lazzaro
Filed under: International markets, Commodities, Agriculture
Don't blame agricultural economists if they're feeling somewhat befuddled right now concerning wheat.
After two years of
record price increases among grains -- including wheat -- and amid a global commodities price surge, and more than a month after predictions of wheat and bread shortages capable of producing social unrest, the U.S. Government is now predicting a global wheat production recovery for 2008.
U.S. wheat production to riseThe
U.S. Department of Agriculture's latest estimate predicts that 2008 world wheat production will increase considerably, including an 8% increase in U.S. production to 656 million tons.
The USDA said good weather and record-high prices that have increased incentives to plant and farm effectively are the primary factors behind wheat's expected large harvest this year,
Reuters reported Wednesday.
Wheat traded down 22 cents at $7.73 per bushel in Wednesday afternoon trading. Wheat has declined more than 20% since hitting a record-high $12.82 per bushel on March 12, 2008.
Continue reading Large wheat harvest unlikely to lower U.S. bread, pasta, pizza prices
Next Page >
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Oil hits record $127.43 on supply concerns, raised Goldman forecast
