Monday July, 14 2008

1) U.S. trade gap narrows in May

July 11, 2008: 9:05 AM EDT

WASHINGTON (AP) -- The United States' trade deficit narrowed in May as exports - including industrial supplies and consumer goods - climbed to all-time highs.

The latest snapshot of trade activity, reported by the Commerce Department on Friday, showed that the nation's trade gap decreased to $59.8 billion. That was down 1.2% from April's trade deficit and was the best showing since March.

The improvement came even as imports - including crude oil - hit new record highs.

The trade deficit narrowed in May because exports grew faster than imports.

Exports of U.S.-made goods and services totaled an all-time high of $157.6 billion in May. That marked a 0.9% increase from April. The declining value of the U.S. dollar, relative to other currencies, especially the euro, is helping to make U.S. exports cheaper and thus more attractive to foreign buyers. Growth in exports has been one of the few bright spots for the U.S. economy, which has been pounded by housing, credit and financial crises.

Imports of goods and services grew to a record of $217.3 billion in May, a 0.3% increase from the prior month.

The trade picture turned out better than many economists were anticipating. They were forecasting the trade gap to widen to $62.2 billion in May. The improvement should help give a boost to overall economic growth during the April-to-June quarter.

Crude oil imports set another record

Still, galloping energy prices are a strain on U.S. companies and on the economy as a whole.

The average price of imported crude oil soared to a record of $106.28 a barrel in May. That pushed the country's imported crude-oil bill to an all-time high of $31.2 billion. The quantity of imported crude oil actually dipped in May from April.

Crude oil prices were hovering above $143 a barrel on Friday.

The trade deficit with oil-producing nations, including Saudi Arabia, Indonesia, Nigeria and Venezuela, rose to a record of $17.9 billion in May.

Democrats criticize free trade agreements

The United States has struggled to trim its trade deficits, a source of tension between Democrats and Republicans.

The Bush administration says free-trade policies that make it easier for U.S. companies to do business in other countries are the best way to deal with the country's trade deficits.

Democrats, however, blame the president's trade policies for the trade gap and loss of millions of U.S. factory jobs over the years as U.S. companies moved production to low-wage places such as China.

On the campaign trail, GOP presidential contender John McCain supports free trade, although he has acknowledged that it is not  positive for all people. He has promised to retrain workers who lose jobs to overseas plants.

Rival Democratic candidate, Barack Obama, has said he would revisit major trade pacts such as the North America Free Trade Agreement. He said he believes in free trade but that there should be protections built in for workers.

The United States' politically sensitive trade deficit with China widened to $21 billion in May, from $20 billion in April. Last year, the United States deficit with China was the most racked up with any single country.

Trade tensions with China over the last few years have intensified on a number of fronts. Critics contend that Beijing's currency is still undervalued, making Chinese-made goods less expensive to buyers in the United States. The administration has been prodding China to do more to let its currency rise in value. Meanwhile, recalls of defective Chinese-made goods - from toys to toothpaste - have raised questions about safety.

Elsewhere in the report, exports to the European Union totaled a record $24.2 billion in May, helped by the weakened value of the U.S. dollar.

With Japan, U.S. exports to the country totaled $6.2 billion in May, the second-highest on record. Exports to Canada came to a record $24.5 billion in May.

2) Commentary by David Zwebner, CEO of CommStock Trading 

U.S. Economy
It was a volatile, news-packed day. Shares of Fannie Mae and Freddie Mac were down sharply this morning with talk that the federal government may be considering a takeover of both mortgage lenders. Treasury Secretary Paulson said that he wants to support both firms as they are. The two mortgage lenders carry $5 trillion of mortgage debt, half of U.S. mortgages.

Later in the day, Senator Dodd stepped forward to say today that Fannie Mae and Freddie Mac are both sound and well-capitalized. Also, there was unconfirmed talk that the Federal Reserve was making the discount window available to both firms.

The University of Michigan's index of consumer sentiment increased from 56.4 to 56.6 in June, better than expected. The September U.S. T-bonds fell 1.30/64ths to 115.54/64ths.

The U.S. Census Bureau said that exports increased $1.4 billion to $157.6 billion in May, while imports increased $.7 billion to $217.4 billion. The resulting $59.8 billion of net imports was down from $60.5 billion in April and less than expected.

Energies
September crude oil closed up $3.33 at $145.66, near its contract high, with ongoing concerns about militant attacks in Nigeria and political tensions with Iran. Also, unconfirmed reports that Israeli jets were over Iraq, in preparation for attacking Iran, were denied by the Pentagon and the Iraqi government.

Grains and Cotton
The USDA said that its estimate of 2008-2009 U.S. ending stocks of:
Corn was increased from 673 to 833 million bushels.
Soybeans was reduced from 175 to 140 million bushels.
Wheat was increased from 487 to 537 million bushels.
Sugar was reduced from 1,273,000 to 607,000 tons.
Cotton was reduced from 5.40 to 5.30 million bales.
The USDA said that its estimate of 2008-2009 world ending stocks of:
Corn was increased from 103 to 105 million tons.
Soybeans was reduced from 50 to 49 million tons.
Wheat was increased from 132 to 133 million tons.
Cotton was reduced from 54 to 53 million bales.

The USDA said that global wheat production will hit a record high 664 million tons in 2008-2009, a big improvement from last year's drought-stricken crop of 611 million tons. December wheat finished up 12.75 cents at $8.55.

December cotton started higher, but ended up .01 at 73.59, helped by today's reduction in the USDA's estimate of world ending stocks.

Orange juice
The USDA increased its estimate of the 2007-2008 Florida orange crop from 169 to 170 million boxes with a record high juice yield of 1.67 gallons per box at 42.0 degrees Brix. September orange juice dropped 5.85 cents to $1.2305.

Metals
August gold closed up $18.60 at $960.60, the highest close in over three months, supported by nervousness about the economy and unfounded rumors of war with Iran. September silver closed up 50 cents at $18.82, also the highest close in over three months.

Currencies
Statistics Canada said the unemployment rate increased from 6.1% to 6.2% in June and showed a net loss of 5,000 jobs, weaker than expected. The September Canadian dollar ended down .09 at 98.97.

Industrial production in India was up 3.8% in May from a year ago, the smallest annual gain in six years.

New home sales in New Zealand were down 42% in June from a year ago, hurt by high interest rates.

David Zwebner, CEO
CommStock Trading Ltd.
Tel: +972-(0)2 624-4963
Fax: +972-(0)2 624-4876
www.ecommstock.com

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4) Closing Prices for Friday, July 11, 2008 

Amidex: Amidex35 (Class No Load Shares), $15.84; Index, 2301.20, Daily Change,-2.16%; “A” Shares NAV, $12.22.

Global Asset Management: Capital Appreciation, $262.64; Composite Absolute Return, $917.97; Diversity, $741.51; GAMCO, $885.32; Interest Trend, $263.02; Trading IV-US$ Class, $150.10; US$ Special Bond Fund, $450.09.

Invesco: Asian Equity Core, $4.79; Bond, $25.83; Emerging Markets Bond, $19.65; European Bond, EUR 4.2655; Gilt, GBP 11.82; Global High Income, $11.55; Japanese Equity Core, $1.38; UK Equity, GBP 4.86. 

JPMorgan Fleming: JF Eastern Smaller Co., $101.35; JF Japan, JPY 17,080; JF Japan Equity, $12.82;

JF Japan OTC, JPY 1,062; JF Japan Smaller Companies, JPY 38,054; JF Japan Technology, JPY 48,974;  JF Korea, $39.14; Pacific Securities, $193.70; Pacific Smaller Companies $22.65; Global Bond & Currency, $22.16;

JF America, $42.56; JF Europe, $46.57; JF Germany, EUR 20.67; JF Global Equity, $39.68.

PCP: North America, $12.77; Europe, $20.28; Emerging Markets, $19.20; Balanced, $8.72; Aggressive, $7.35.                                                                                         

Platinum (updated once a month – June 2008 Prices): All Weather, $127.43; Equity Plus, TBA; Prot. Equity Plus, TBA; Cap. Prot. Income Plus, TBA; Cap. Prot. Income Plus A, TBA.

Scottish Provident: Adventurous 1, GBP 2.779; Balanced 1, GBP 2.302; USD Adventurous 1, $2.224;

USD Balanced 1, $2.159; USD Cautious 1, $2.059; For Preference: Baring GUF Eastern Europe, $152.81; Fidelity Funds International, $34.770; Invesco Asian Equity Core, $4.740.

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Jerusalem 91077
Tel: +972-2-6244963
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