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 Aug 7th 2008 2:10PM by Joseph Lazzaro
Filed under: Consumer experience, Competitive strategy, Ford Motor (F), General Motors (GM)
U.S. automakers, late to recognize the sales implications of spiraling gas prices, have started to adjust their business models, in at least one modest respect: some luxury cars are now being designed to run on regular unleaded gasoline,
USA Today reported Thursday.Regular unleaded gasoline, with an 87 octane, typically costs 20-40 cents less than premium gasoline, with a 91 octane.
Ford (NYSE:
F) and
General Motors (NYSE:
GM) are encouraging dealers to promote their no-premium-gas luxury cars' potential, as a selling point for consumers with budgets pinched by $4 per gallon gasoline,
USA Today reported Thursday. Ford rose 5 cents to $4.99, while GM fell 15 cents to $10.10 in mid-day Thursday trading.
Auto mechanic Eddie Renn, based in Larchmont, N.Y., said the fact that automakers are manufacturing more cars designed to run on regular gasoline "is an improvement," but he questions why the automakers are using a lower gasoline cost as a selling point for luxury cars. Renn added that his auto repair business is not affiliated with any auto manufacturer.
Does gas price matter for luxury car owners?"If you're driving a luxury car and you're concerned about a 20 or 30 cent difference a gallon, maybe you shouldn't be driving a luxury car." Renn said. "The luxury car owners who come in here [to his gas station] aren't concerned about the price of gas, I can tell you that."
Renn said most new cars, excluding sports cars and other vehicles, are designed to run on regular gasoline. A higher percentage of older cars -- particularly those built before 2000, require a higher octane, either mid-grade gasoline (also called 'plus') with an 89 octane, or the aforementioned premium gasoline, with a 91 octane.
Continue reading In $4 gas era, U.S. automakers tout regular-gas luxury cars
Posted Aug 7th 2008 11:58AM by Joseph Lazzaro
Filed under: International markets, Forecasts, Federal Reserve, Recession
Interest rates remain on hold across the pond.
The
European Central Bank and the
Bank of England kept benchmark, short-term interest rates the same Thursday, as the major central banks chose to take a wait-and-see stance amid the competing challenges of rising inflation and slowing growth.
The ECB kept its key rate, the refinance rate, at 4.25%; the BOE, its rate on commercial bank reserves, at 5%.
The euro and British pound were little changed versus the
dollar after the decision. The
euro strengthened about three-tenths of a cent to $1.541 and the
British pound strengthened one-quarter cent to $1.9516 in Thursday afternoon trading in Europe.
Rates: tougher call for BOE
London-based economist Mark Chandler told BloggingStocks Thursday the Bank of England's circumstance is "a tougher call for monetary policy markers" than the ECB's.
"In the U.K., inflation is rising and the growth outlook is not good, whereas [continental] Europe has a better GDP outlook. So in that sense the Bank of England has a difficult task, similar to the U.S. Federal Reserve's. They have to find a way to bring down inflation from about 4% to 2% without causing a deeper contraction," Chandler said. "Given slowing growth right now, the best stance was to do nothing." The BOE has cut interest rates three times since December 2007.
Continue reading ECB, BOE keep key, short-term interest rates the same
Posted Aug 6th 2008 4:44PM by Joseph Lazzaro
Filed under: International markets, Other issues, Commodities, Oil
The oil bears' case has strengthened.
Oil failed to rally Wednesday despite a government report indicating a
draw in U.S. gasoline stocks, on concerns a slowing global economy will reduce global oil demand growth.
Oil closed down 59 cents to $118.58 per barrel. Further, oil also at one point in Wednesday's session fell to $117.25 per barrel, or to a level more than 20% below the July 11 record of $147.27. Technical analysis enthusiasts view a more than 20% price decline as a bearish signal -- a sign that the price of a stock / commodity / market is likely to trend lower.
In addition, oil bears could point to new oil community analysis to support their argument that oil prices are headed lower. Dennis Gartman, publisher of the Gartman Letter, an investor newsletter,
told CNBC Wednesday he has closed his oil-long positions and is out of the oil trade entirely. Gartman believes oil could fall below $80 per barrel.
Is the oil 'bubble' bursting? A drop substantially below $100 would suggest oil's move to near $150 was a bubble. Energy Trader Jim Dietz told BloggingStocks Wednesday he doesn't get caught up in those who try to structure the debate: he just watches oil demand statistics.
Continue reading Oil falls 20% from July record - oil 'bubble' bursting?
Posted Aug 6th 2008 3:33PM by Joseph Lazzaro
Filed under: Other issues, Consumer experience, Competitive strategy, Agriculture
One thing that can be said about the 2008 financial climate: this is not a halcyon time for investment banking professionals.
The credit market stress that has rocked U.S. and European markets this year has idled many investment bankers, syndicate and securities professionals and related financial specialists. Many have adjusted their career tracks, if they haven't already shifted to a new profession / line of work.
And what's one sector that may see an influx of displaced banking talent and/or represent a new, hot sector for dealmakers? Farming.
That's right: Farming. Two factors suggest farming may need, and attract, more talent: 1) the bullish trend for food given increased demand, and 2) the preference for locally-grown food, so says economist Glen Langan, whose specializations include agricultural economics.
"International food demand has improved food profit margins to the point where farming can compete for capital with other up-and-coming sectors," Langan said. "There's always a risk that food demand could pull back slightly on a global economic slowdown, but the long-term factors are and will remain bullish."
Continue reading That new countryside farmer may be an ex-investment banker
Posted Aug 6th 2008 2:55PM by Joseph Lazzaro
Filed under: Good news, Consumer experience, Internet, Competitive strategy, Southwest Airlines (LUV), Contl Airlines'B' (CAL), Delta Air Lines (DAL), Technology
These days in commercial aviation, airlines are finding ways to operate more efficiently amid the toughest sector conditions since the first
oil shock in 1973-74.
And while there's no love lost between passengers and the major carriers' unconventional way of increasing total consumer flying costs by adding separate baggage fees, there's one a-la-carte fee the public may be willing to pay for: a fee for internet access on airplanes.
Delta Air Lines (NYSE:
DAL) announced it will start offering broadband internet service on domestic flights as early as October,
The Washington Post reported Wednesday. Other airlines, including
Continental (NYSE:
CAL),
Southwest (NYSE:
LUV), and Virgin America are planning or testing internet services. (Delta will merge with
Northwest Airlines (NYSE:
NWA), pending U.S. Justice Department approval.)
Analysts generally credit
JetBlue (NASDAQ:
JBLU) with raising coach class amenity standards for flights in the United States when it introduced satellite TV and other services on its flights.
Delta's service will cost a $9.95 flat fee for flights lasting three hours or less and $12.95 for flights longer than three hours.
Public seen receptive to Wi-Fi fee
Stock analyst and frequent flier C. Leonard Bauer says Internet fees would be "a lucrative revenue stream" for the airlines, and ironically one that will probably be popular with the public.
Continue reading A saving grace for airlines: Wi-Fi in the sky
Posted Aug 5th 2008 4:30PM by Joseph Lazzaro
Filed under: Forecasts, Other issues, Consumer experience, Competitive strategy
What's one over-the-horizon trend that passengers (and investors) would be wise to monitor closely? Micro airlines.
Micro airlines will be small carriers that target the leisure travel market, stock analyst and frequent flier C. Leonard Bauer told BloggingStocks Tuesday.
Bauer is quick to point out that these carriers don't exist today -- the commercial aviation sector's financials can't currently support them -- but when design advances (including composites), increased engine efficiency, and a drop in oil and aviation fuel prices turn in the airline sector's favor, look for micro carriers to sprout, he predicted.
A streamlined air itinerary
Further, Bauer doesn't count current 'regional airlines' or 'express airlines' such as United Express as micro airlines because micro airlines will differ from the former in one significant way: "They'll have vastly reduced check-in times compared to regional airlines," Bauer said. "For a portion of the leisure travel public, this will be the deal-clincher." Bauer added that he doesn't own shares in nor have a rating on any airline.
Continue reading There may be a 'micro airline' on your itinerary in the near future
Posted Aug 5th 2008 12:00PM by Joseph Lazzaro
Filed under: Other issues, Federal Reserve, Recession
Talk about a call for a return to a more-accommodative monetary policy.
Investor Mark Mobius said the U.S. Federal Reserve should eventually cut its benchmark, short-term interest rate to 1% to boost the U.S. economy,
Bloomberg News reported Tuesday.
"With oil prices beginning to soften, there may be a chance for them to give a boost to the economy by lowering rates again," Mobius
told Bloomberg News Tuesday. "It think it's still in the cards, but no one really knows." Mobius oversees about $40 billion in emerging market equities as executive chairman of Templeton Asset Management Ltd.
The doubling of oil prices over the past year and the more than $480 billion in housing-related, credit market write-offs are viewed by many economists as the primary culprits in the U.S. economic slowdown, a slowdown now beginning to dampen global growth, also. Oil prices have retreated about 20% from record-highs, falling to
$118 per barrel early Tuesday morning, but unlike Mobius, economist David H. Wang isn't convinced the Fed should hit the 'accommodative button' just yet.
Too soon to lower interest rates?"I think it would be premature for the Fed to ease rates further. The Fed has used new mechanisms, including the Term Auction Facility and the Term Securities Lending Facility, to help maintain financial system liquidity and the orderly function of markets, and so as long as no further stress events occur in the credit markets, I think they should stand pat on rates," Wang said.
Continue reading Mobius: Fed should eventually cut rates to 1% to boost U.S. economy
Posted Aug 5th 2008 9:00AM by Joseph Lazzaro
Filed under: International markets, Good news, Commodities, Oil
A psychology reversal may be occurring in the oil market - a shift in sentiment that may be good news for U.S. consumers. That was how one trader characterized oil's $3.41 fall to $118.00 per barrel Tuesday in premarket trading.
Tuesday's early morning negative catalyst was a
report that
Tropical Storm Edouard will leave U.S oil rigs and refineries without significant damage, but energy trader Jim Dietz said bearish sentiment has been on the rise for about 10 days.
Beginning of psychology reversal?"Tropical storm or not, a psychology reversal is starting to occur in the oil market. There's a real concern now that a global economic slowdown is occurring and it will be reflected in oil demand figures for August and September," Dietz said. "We've had two days of a storm in the Gulf of Mexico and negative rhetoric from Iran and oil rallies couldn't hold. That's a sign of a bearish market."
Dietz said he is presently flat, or has no open energy trading positions, but added "that may change later today if the bearish trend persists."
Continue reading Oil falls to $118 as bearish sentiment grips market
Posted Aug 4th 2008 5:39PM by Joseph Lazzaro
Filed under: Bad news, JPMorgan Chase (JPM), Bank of America (BAC)
At first glance, word that the number of so-called primary government securities dealers decreased to 19 from 20 last month, may seem like a fairly esoteric concern that's removed from the typical investor and taxpayer.
But, in practice, it isn't that removed because fewer dealers means fewer firms bidding for U.S. bonds - - a circumstance likely to increase government (read: taxpayer) borrowing costs, Mark MacQueen, money manager of Sage Advisory Services
told Bloomberg News Monday.The number of authorized bond traders who make markets in U.S. Government debt decreased to 19 when the
Bank of America (NYSE:
BAC) acquired Countrywide Financial Corp.,
Bloomberg News reported. It will drop again, to 18, after
J. P. Morgan Chase (NYSE:
JPM) completes its takeover of Bear Stearns.
Economist David H. Wang agreed Monday that the bidder math is not running in the U.S. Government's favor at this juncture. "We know from basic economics that, historically, if the number of market makers declines, auctions will not be as efficient, and this will lead to higher financing costs for the U.S. Government," Wang said.
Another factor likely to drive up U.S. Government borrowing costs: the size of the U.S. Government's budget deficit, Wang said. The Congressional Budget Office projects that the Fiscal 2009 deficit will total $500 billion, up from $470 billion in Fiscal 2008, the current fiscal year, which ends September 30, 2008. (
pdf)
Continue reading Fewer U.S. Treasury dealers means likely higher U.S. Government borrowing costs
Posted Aug 4th 2008 1:50PM by Joseph Lazzaro
Filed under: Housing, Recession
During the
roaring 1990s, it was called 'merger Monday' -- due to the plethora of corporate mergers announced on the day, driven by the robust U.S. economy.
In the current sluggish (or perhaps worse) U.S. economy, it's becoming known as 'morbid Monday' -- due to the spate of unpleasant predictions publicized on the day.
Oppenheimer analyst Meredith Whitney filled the August 4 installment of the latter by predicting that housing prices will fall more than 30% and banks will remain reluctant to lend until the credit crisis wanes,
CNBC reported Monday.
To be sure, the housing sector is a jumbled, uncertain morass, so in order to provide some clarity on the sector (and to either confirm / refute several conventional wisdom points), BloggingStocks Monday corralled economists Peter Dawson and David H. Wang.
Point 1: Those states hardest hit by the housing sector, California, Florida, Nevada, will be the first to recover. Dawson: Not true. Wang: Most un-true. "You may find a $300,000 or $350,000 bargain in California or Florida, but understand that five years down the road that home may be roughly the same price in real terms, after inflation," Wang said. "Job creation in an area will determine which way house prices are going in a region in the years ahead, much more than how bad the local housing market is now."
Continue reading Dispelling a few home buying / selling myths
Posted Aug 4th 2008 12:15PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Good news, Economic data, Housing, Recession
BNP Paribas, which helped signal the global credit crisis that started one year ago this week, has emerged from the credit crunch as France's healthiest bank,
Bloomberg News reported Monday.
BNP Paribas will announce Q2 financial results this week. While earnings are expected to be lower year-over-year, they will probably be better than those of its rivals, Societe Generale SA and Credit Agricole SA, according to Bloomberg.
BNP Paribas fell 1.76 euros to 59.77 euros in Monday afternoon trading in Paris.
About a year ago, on August 9, 2007, BNP Paribas halted withdrawals from three funds that invested in subprime mortgage debt. The bank's announcement proved to be the first of dozens credit-loss and write-down announcements by banks, mortgage lenders and other institutional investors, as subprime assets went bad, due to defaults by subprime mortgage payers.
The losses and resulting credit crunch compelled the intervention by the world's major central banks. The U.S. Federal Reserve, European Central Bank, Bank of England, Swiss National Bank and Bank of Canada made hundreds of billions of dollars available in specialized loans through conventional monetary policy tools and via new, special 'facilities,' in an effort to maintain credit market liquidity and prevent bad bank/mortgage lender business models from undermining healthy sectors and the broader economies in the United States and the European Union.
Economic growth is the major concern todayLondon-based economist Mark Chandler told BloggingStocks Monday that concern about credit markets freezing up again has diminished, but concern about the impact of the housing sector's slowdown on broader economies has not.
Continue reading BNP Paribas, which signaled credit crunch, is now France's healthiest bank
Posted Aug 3rd 2008 9:10AM by Joseph Lazzaro
Filed under: Industry, Consumer experience, Southwest Airlines (LUV), AMR Corp (AMR), Contl Airlines'B' (CAL), UAL Corp (UAUA)
What's holding the airline sector back, in addition to high jet fuel prices, and keeping the likes of AMR's (NYSE: AMR) American, Delta (NYSE: DAL), UAL's (NYSE: UAUA) United, Southwest (NYSE: LUV), and Continental Airlines (NYSE: CAL) from realizing their potential?
Many economists and analysts would agree that, along with other infrastructure and related investments, the nation's air traffic control system must be upgraded, if the United States seeks an air transportation system capable of maintaining a high level of safety -- and better service -- in the 21st century's more-crowded skies.
Further, that the United States has not already replaced an essentially generation-old air traffic control technology with a modern system is a serious demerit, and one that has -- through delays, cancellations, and other problems -- taken a toll on the flying public and the major carriers.
Continue reading Skies would be a lot friendlier for airlines with better air traffic control technology
Posted Aug 2nd 2008 4:40PM by Joseph Lazzaro
Filed under: International markets, India, China, Commodities, Oil
At this juncture, investors/readers thinking about speculating a little in oil via shares in the United States Oil Fund (AMEX: USO) or via an integrated oil company should think again.
With the U.S. stock market meandering and the nation's economic doldrums continuing, the urge can build in investors, particularly those less-experienced, to try something daring.
However, the oil market is currently in a tug-of-war between the geopolitical concern-oriented bulls and the global economy slowdown-oriented bears.
In other words, the oil market is about as balanced -- or as divided -- as it has been in about two years, so says energy trader Jim Dietz. Oil closed Friday up $1.02 to $125.10 per barrel. Oil is down about 15% from its all-time high of $147.27 registered on July 11, 2008, but is still up about 100% over the past year and about 400% since 2000.
Continue reading Oil market caught in bullish-geopolitical, bearish-economy tug-of-war
Posted Aug 1st 2008 6:02PM by Joseph Lazzaro
Filed under: Other issues, Media World
Of all the market changes and losses that Wall Street has witnessed during the United States' decade of errors and descent, perhaps no loss has been as costly for investors, or as lamented, than the passing of
Louis Rukeyser. For those younger investors/readers who may not have heard of him, Rukeyser, who passed away two years ago, was the host of the Public Broadcasting System's
"Wall Street Week with Louis Rukeyser."At its core, the show, which ran with Rukeyser as host from 1970 to 2005 and was broadcast on Friday nights after the market closed, was the first weekly television series to summarize the week's often-dizzying financial and economic news in plain-spoken terms that the typical investor could understand. Simply, Louis Rukeyser defined broadcast financial news coverage and analysis, and was the face of Wall Street for a generation.
And the key to the show's success and usefulness, along with a no-nonsense format, was Rukeyser. A journalist by training, Rukeyser combined expert-level knowledge of the stock market and economics with the temperament and values of a family doctor, to create a calming, trustworthy source that viewers tuned in to religiously. The show became one of the most popular programs on PBS, at one point airing on more than 300 stations and attracting over 4.1 million viewing households.
Continue reading What this market needs is Louis Rukeyser
Posted Aug 1st 2008 5:14PM by Joseph Lazzaro
Filed under: International markets, Other issues, Politics, Agriculture
Just call it 'two steps forward, one step back' for the global trade talks.
The collapse of the
World Trade Organization's trade talks this week without an agreement is a setback, economists contacted by BloggingStocks agreed, but it is not likely likely to prevent international trade from growing in 2009.
The nine-day talks in Geneva -- aimed at completing the Doha Round -- collapsed Tuesday after the United States and the European Union could not reach an agreement with China and India on what constituted acceptable tariffs for food imports,
The New York Times reported Wednesday. The U.S. and E.U. say China and India wanted to impose prohibitively high tariffs. China and India counter that they were insisting on safeguard rules to protect their food supplies.
Economist Glen Langan told BloggingStocks the elimination of food import tariffs would have resulted in more-efficient deployment of resources, and, ultimately, lower food prices for consumer around the world, along with increased the increased commerce that trade brings. "The failure of the talks is a real loss for consumers in China, India and in the U.S. and Europe," Langan said. "It will also really hurt low cost food producers in Brazil, Argentina, Australia, New Zealand and South Africa. Ultimately, China and India will have to relent, or the west may begin to complain about free trade conditions for manufacturing and services. That manufacturing free trade policy has been the source of a considerable amount of China's and India's economic growth."
Continue reading Global trade growth seen continuing despite WTO setback
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