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 8th 2008 3:30PM by Joseph Lazzaro
Filed under: Other issues, Economic data, Recession
New York Times (NYSE:
NYT) columnist and economist
Paul Krugman, author of
The Conscience of a Liberal, would never be confused with a loyal backer of the economic policies of President Bush.
Still, Krugman, in the academic tradition that argues that a scholar's most important word is "valid," gives President Bush credit where credit is due -- or at least a lack of blame. Krugman says it's true that the U.S. economy is a mess, but it's not true that the bad economy is entirely President Bush's fault.
Krugman outlines the unfortunate reality regarding the U.S. economy's 2001-2008 performance: recession, followed by one of the weakest recoveries since World War II, followed by another slump that technically isn't a recession yet. When President Bush leaves office, Krugman says, the U.S. economy will have created five million jobs, not nearly enough to keep up with population growth. By contrast, 22 million jobs were created during the Clinton Administration.
Continue reading NYT's Krugman: Slumping U.S. economy not entirely Bush's fault
Posted Jul 8th 2008 1:26PM by Joseph Lazzaro
Filed under: Forecasts, Housing, Federal Reserve, Recession
Macroeconomics, many economists agree, is as much an art as a science. And sometimes it requires the 'reading between the lines' skills of a
Kremlinologist during the Cold War.
Here's my reading between the lines analysis of recent Fed statements on housing: more housing-related write-offs (and pain) for certain banks and others with mortgage-backed debt.
Yellen, Bernanke speeches: Signals?The evidence: first,
San Francisco Federal Reserve President Janet Yellen, currently a non-voting member on the Fed's Open Market Committee, delivers a low-key, candid-but-not-alarmist speech Monday to the San Diego Economics Roundtable in which she warns that "things could get worse before they get better" and that problems affecting the financial system could stick around "for some time."
Economist David Wang said Yellen's speech could be interpreted "as her staking out a claim on the dovish [interest rate cut] end of the Fed" were it not for the fact that the measured, always dispassionate Yellen "is not known for politicking or embellished commentary."
Continue reading The Fed is sending a signal: More trouble ahead
Posted Jul 8th 2008 1:14PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Commodities, Oil
Oil fell more than $5 to $136 per barrel Tuesday morning as concern about a global economic slowdown prompted traders to conclude that oil demand growth may slow in the quarters ahead.
Oil fell $5.11 to $136.26 per barrel -- a drop that brought its two-day decline to more than $8. (Oil is still about 90% higher than a year ago, and about 400% higher than in 2000.)
The other major energy commodities, likewise, plunged for a second day, in early Tuesday trading.
Heating oil plummeted 14 cents to $3.83 per gallon,
unleaded gasoline fell 12 cents to $3.36 per gallon, and
natural gas plunged 45 cents to $12.53 per million BTUs.
Some bloom off the energy rose?
Economist Peter Dawson said investors and traders are taking a harder look at the energy picture, in light of recent corporate and economic data points. While underscoring that "it's always difficult to try to evaluate events in motion," Dawson said a protracted recession in the U.S. combined with a global slowdown "would take some of the bloom off the energy asset rose."
Continue reading Oil falls for second day to $136 on global slowdown concerns
Posted Jul 8th 2008 11:11AM by Joseph Lazzaro
Filed under: International markets, Bad news, Federal Natl Mtge (FNM), Lehman Br Holdings (LEH), Housing
"It's like that wave approaching the shoreline that you see in the distance and don't think is big, and then it's 100 feet in front of you and you realize it is."
That's how London-based economist Mark Chandler described Europe's perspective on the potential 'latest wave' of the housing crisis -- the research report by Lehman Brothers (NYSE:
LEH) that
Fannie Mae (NYSE:
FNM) and
Freddie Mac (NYSE:
FRE) may have to raise up to $46 billion and $29 billion in additional capital,
Bloomberg News reported.
Europe is concerned that the pair's announcement "signals another round of write-downs here in England and Europe as well as in America" Chandler told BloggingStocks Tuesday, with negative consequences for the stock market, and, equally significant, for business and consumer confidence, he said.
Europe's major stock markets declineIndeed, Europe's major stock markets did not react favorably Tuesday to the Lehman report.
London's FTSE fell 66.70 points to 5446.00,
Germany's DAX declined 104.49.35 to 6,291.71, and
France's CAC 40 fell 78.22 to 4,263.37 in Tuesday afternoon trading.
Continue reading In Europe, Fannie, Freddie status spark concern of recession
Posted Jul 8th 2008 10:10AM by Joseph Lazzaro
Filed under: Housing, Federal Reserve, Recession
U.S. Federal Reserve Chairman
Ben Bernanke said Tuesday the world's most powerful central bank may extend securities dealers' access to direct loans from the Fed into 2009 as long as emergency conditions "continue to prevail."
Bernanke, speaking Tuesday in Arlington, Virginia, at the FDIC Forum on Mortgage Lending for Low/Moderate Income Households, said "the Federal Reserve is strongly committed" to financial stability and is "considering several options, including extending the duration of our facilities for primary dealers beyond year-end."
Further, Bernanke also said the Fed would "take a leading role" in any liquidation process for a failing investment bank.
The Fed, and other U.S. Government institutions, as well as other major central banks, are in the midst of dealing with the aftereffects of the end of the housing boom in the U.S., which led to a surge in mortgage foreclosures and related asset-back defaults.
Continue reading Bernanke's speech: Good news, bad news
Posted Jul 7th 2008 6:58PM by Joseph Lazzaro
Filed under: Politics, Commodities, Oil
Apparently rock musician
Sammy Hagar is not one of U.S. Sen. John Warner's (R-Virginia) constituents.
Sen. Warner has suggested that the U.S. Congress might want to consider reimposing a national speed limit to save gasoline and possibly ease fuel prices,
The Associated Press reported.
However, Warner has not specifically sponsored legislation calling for a roll-back to 55 miles per hour: he has only asked U.S. Energy Secretary Samuel Bodman to research which speed limit would provide optimum gasoline efficiency given current technology, and also wants to know if the Bush Administration would support a Congressional effort to mandate a lower speed limit,
The AP reported.
Last 55 mph law: 1973-74The United States
last imposed a 55 mph speed limit in 1974, as part of an effort to conserve gasoline in response to the world's first oil shock, the
1973-74 oil crisis.
Continue reading U.S. Sen. John Warner talks up 55 mph national speed limit
Posted Jul 7th 2008 5:57PM by Joseph Lazzaro
Filed under: International markets, Other issues, Federal Reserve
The European Central Bank's quarter point interest rate increase has been called 'counter-productive,' 'unnecessary,' even 'self-defeating.'
All of which begs the question, why did the ECB last Thursday increase interest rates so soon? (
The ECB increased its key interest rate, the refinance rate, a quarter point to 4.25%, last Thursday.)
One argument is euro zone inflation, presently running at about a 3.7% annualized rate. That's well above the ECB's 2% inflation limit.
Continue reading Why did the European Central Bank raise interest rates so soon?
Posted Jul 7th 2008 4:32PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Federal Natl Mtge (FNM), Commodities, Oil, Federal Reserve
OPEC President Chakib Khelil Monday blamed the U.S. Federal Reserve for sky-high oil prices,
The Associated Press reported, adding that surging prices are not likely to decline.
Khelil said he believes the declining dollar has pushed oil higher and that the Fed's interest rate reductions to boost the U.S. economy are the primary reason for the dollar's decline,
the AP reported Monday.
In an effort to jump-start the U.S. economy slowed by the nation's worst housing slump in a generation, the Fed has cut short-term interest rates by 325 basis points to 2% since September 2007.
Khelil's comments did not push oil higher as of early Monday afternoon. Oil traders looked past those comments and focused on the
dollar's rise for the day versus the euro and pound, and new data points suggesting a deeper, longer U.S. recession, energy trader Jim Dietz told BloggingStocks Monday.
Oil fell $3.70 to $141.59 per barrel, with futures hitting a daily low of $140.15 earlier in the day.
Oil traders adopt 'defensive' stance
"Right now the oil market is focused on the U.S. economy not OPEC's comments, and many were spooked by the Freddie Mac and Fannie Mae announcement. Everything is in pullback mode now, oil, stocks, gold, other commodities. The mood is defensive...preserve capital, basically," Dietz said.
Fannie Mae (NYSE:
FNM) and
Freddie Mac (NYSE:
FRE) may have to raise up to $46 billion and $29 billion in capital, according to Lehman Brothers (NYSE: LEH),
Bloomberg News reported Monday. Fannie Mae fell $3.17 to $15.61 while Freddie Mac declined $2.51 to $11.99 in Monday afternoon trading.
Continue reading OPEC's president blames Fed for +$140 oil price
Posted Jul 7th 2008 3:49PM by Joseph Lazzaro
Filed under: International markets, Politics, Commodities, Agriculture
The need to fulfill promises of increased aid for Africa, and a general agreement between the United States and Russia on an approach to Iran's nuclear program took center stage as leaders from the Group of Eight industrial nations met Monday in Japan,
The Associated Press reported. President Bush, attending his last summit as a sitting U.S. president, underscored the importance of providing aid for Africa, calling on wealthy nations to provide mosquito netting and other aid to prevent needless deaths,
the AP reported.Basic items - - even equipment as basic as mosquito netting - - can reduce mortality rates in sections of Africa. Mosquito netting prevents children and others from dieing of bites from disease-carrying mosquitoes.
In 2005 the G-8 pledged to increase global aid to $130 billion, and increase assistance to Africa to $50 billion. ONE, a nonpartisan group working to end extreme poverty, predicted that the U.S. and the United Kingdom will meet their commitments, while France, Italy, Germany and Canada are off the mark,
Bloomberg News reported Monday. Increased global food aid likely
Economist Glen Langan, whose specializations include agricultural economics, said increased aid for food and agricultural development will likely be announced by G-8 leaders at the summit, or soon thereafter, due to the rising cost of food's impact on poorer nations. "The aid will be targeted to meeting basic needs first, but with an eye toward directing some funds to self-sustaining agriculture," Langan said, adding that Africa "has the potential to achieve food production gains greater than South America."
Continue reading G-8 economic powers focus on Africa aid, Iran uranium issues at summit
Posted Jul 7th 2008 12:48PM by Joseph Lazzaro
Filed under: International markets, Other issues, Middle East, Commodities, Oil
Oil fell more than $5 to about $140 per barrel Monday morning after Iran's foreign minister expressed confidence in talks with western governments regarding the nation's nuclear program,
Bloomberg News reported.
Iran's foreign minister Manouchehr Mottaki
told CNN talks are "in a new environment" and "new approaches" are possible.
A rising dollar Monday morning also helped push oil lower. The
dollar strengthened against the
euro and the
British pound on expectation G-8 industrial leaders will
verbally support the dollar at an upcoming economic summit in Japan.
Oil fell $5.14 to $140.15 per barrel Monday morning before recovering slightly to $141.30. The other major energy commodities also plunged in early Monday trading.
Heating oil plummeted 13 cents to $3.97 per gallon,
unleaded gasoline fell about 10 cents to $3.47 per gallon, and
natural gas plunged 42 cents to $13.16 per million BTUs.
Economist Glen Langan, who argues that fundamentals (primarily rising demand) are the major factors determining oil's price, said legitimate progress on the Iran uranium enrichment issue would ease traders' concerns about Iran's supply. "Iran is still OPEC's No. 2 producer and a major exporter of oil, so lasting good news with regard to Iran will ease traders minds about tensions in and near the Persian Gulf. That will take some pressure off prices," Langan said. About 20% of the world's oil flows through the Persian Gulf and the Strait of Hormuz.
Continue reading Oil falls to $140 as Iran signals confidence in talks, dollar rises
Posted Jul 7th 2008 11:11AM by Joseph Lazzaro
Filed under: International markets, Forecasts, Commodities, Oil, Federal Reserve
The dollar rose to its highest level in more than a week Monday morning on talk leaders at the
G-8 summit in Japan will support the currency in an attempt to halt rising commodity prices.
The
dollar strengthened about one-half cent versus the
euro to $1.5629 and about 1 cent versus the
British pound to $1.9659 in Monday morning trading. The dollar also rose about one-half yen to 107.66 versus
Japan's yen.
Ian Stannard, a senior currency strategist at
BNP Paribas SA (NASDAQ:
BNPQY), France's largest bank,
told Bloomberg News Monday that support for the dollar in the form of verbal invention continues, driven by the thesis that a stronger dollar, globally, is in everyone's interest.
Many economists agree that a falling and weak dollar has been a factor in rising commodity prices. Oil and other commodities tend 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, economists differ regarding the extent of the weak dollar's commodity-inflation impact, with some arguing it is only a mild factor.
'Actions speak louder than words'Further, economist Peter Dawson told BloggingStocks Monday, dollar bulls should not feel too emboldened by a verbal stance by the G-8.
Continue reading Dollar rises on talk G-8 leaders will support currency at meeting
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%
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