| CommStock Israel Investor Insights Newsletter
Monday, August 4, 2008
1) Oil rally loses steam: Crude prices
spike following hawkish Israeli comments, but the rally is short-lived
as traders also consider a double-edged jobs report.
By Ben Rooney,
CNNMoney.com staff writer
Last Updated: August 1, 2008: 3:11 PM EDT
NEW YORK (CNNMoney.com) -- Crude prices edged up Friday as investors
mulled a mixed report on the nation's labor market and renewed
tension between Iran and Israel.
Light, sweet crude for September delivery rose $1.02
to settle at $125.10 a barrel on the New York Mercantile Exchange,
losing most of the gains made earlier in the day.
The contract spiked more than $4 earlier following hawkish
comments by a key Israeli politician regarding Iran's alleged nuclear
weapons program.
Israeli Deputy Prime Minister Shaul Mofaz said that
Iran is on a path toward a "major breakthrough'' in its nuclear
weapons program which he called "unacceptable,'' according to
published reports.
"The Israeli news is all over the market," said Stephen
Schork, an oil industry analyst and publisher of the industry newsletter, The
Schork Report. But the rally was a "knee-jerk reaction," he
added.
Iran is OPEC's second-largest oil producer and signs
of instability in the region can cause volatility in the oil market.
Investors worry that a military conflict with Iran could
disrupt the flow of oil exports through the strategic Strait of
Hormuz and further restrict tight supplies of crude.
But prices quickly retreated as investors put Mofaz's
comments "in perspective," according to Phil Flynn, senior market
analyst at Alaron Trading. "Cooler heads are prevailing," he said.
Jobs report. Before becoming focused
on Iran, the oil market had been preoccupied with broader economic
trends, including the health of the U.S. jobs market.
The U.S. Labor Department reported earlier Friday that employers
cut jobs in July, for the seventh straight month, and that
the unemployment rate rose to a four-year high.
Payrolls shrank by 51,000 jobs in the month but economists
surveyed by Briefing.com had been forecasting a loss of 75,000
jobs.
The unemployment rate rose to 5.7% from a 5.5% reading
in June. It was the worst reading since March 2004, and slightly
worse than economists' forecast of a 5.6% rate.
"But the jobs report can be read in two different ways," Flynn
said.
It suggests that rising unemployment will continue to
undercut consumer confidence and further diminish demand for gasoline.
On the other hand, the total number of jobs lost in the month was
well below economists' expectations, suggesting that the nation's
labor market may be recovering.
"The economy is pulling us one way geopolitics pulling
us the other way," Flynn said. "It's going to be a tug-of-war
until the end of the day."
Other markets. On Wall Street, meanwhile,
the jobs report and bleak financial results from General Motors
weighed on stocks.
The ailing automaker reported a huge second-quarter
net loss of $15.5 billion due to restructuring charges and declining
sales. GM's results highlighted the challenges facing the auto
industry as a whole.
Separately, Ford Motor and Toyota Motor both reported
sharp drops in July
sales as high gas prices and a weak economy continue to plague
the already battered sector.
Crude futures often benefit from falling stock prices
as many investors see oil as a safe-haven investment.
Gas prices. Even as the auto industry
reels, gas prices have fallen for 15 days in a row, according to
motorist group AAA.
Regular unleaded gas fell
1.1 cents to a nationwide average price of $3.898 a gallon,
AAA's daily survey showed.
The average price for regular has fallen more than 21
cents since hitting a record high of $4.114 at the pump on July
16, according to AAA data.
2) Commentary by David Zwebner, CEO of CommStock
Trading
U.S. Economy
The U.S. Labor Department said that the unemployment rate increased
from 5.5% to 5.7% in July with a net loss of 51,000 jobs, not as
bad as expected. It is the highest unemployment rate since March
of 2004. The September U.S. T-bonds closed up 13/32nds at 115.29/32nds.
Non-farm payrolls in June were revised from a loss of
62,000 to a loss of 51,000.
The Institute of Supply Management's index of manufacturing
slipped from 50.2 to 50.0 in July, a little better than expected.
The June eurodollars ended down .02 at 96.72.
The U.S. Census Bureau said that construction spending
was at an annual rate of $1.082 trillion in June, down .4% from
May's pace. So far in 2008, construction spending is down 5.4%
from a year ago.
Grains and Cotton
December corn closed down 22.5 cents at $5.85 and November soybeans
fell 39 cents to $13.65 with favorable growing weather throughout
most of the Midwest. Forecasters are looking for some relief
from the heat by the middle of next week.
December cotton fell 2.61 cents to 71.89, influenced
by today's drop in grain prices.
Metals
September copper fell 8.30 cents to $3.5785, pressured by a slow
U.S. economy and possible signs of slowing in China. An index
of manufacturing in China fell from 52.0 to 48.4 in July, the
first sign of contraction since records began in 2005. Also,
London inventories of copper were up 2,250 tons today to 144,650
tons, but still down from 197,450 tons at the start of 2008.
Cocoa
An analyst at the Macquarie Bank, based in Sydney, Australia, said
that he expects world cocoa demand to outpace production for
two more years before the market finds a balance sometime in
2010. September cocoa shot up $138 to $2,996, the highest close
in two weeks.
Sugar
October sugar closed up .20 at 14.13, the highest close in over
four months, continuing to benefit from strong ethanol demand,
in spite of the recent drop in gasoline prices.
Orange juice
November orange juice fell 2.90 cents to a new contract low of
$1.0765, a victim of good growing conditions and a lack of hurricane
problems in Florida.
Energies
Iran is due to give an answer to the latest proposal from the West
on Saturday, but European officials say they are willing to wait
a few extra days, if needed. September crude oil closed up $1.02
at $125.10 with investors concerned about what will happen if
Iran refuses to stop its nuclear program.
Currencies
An index of manufacturing in the U.K. fell from 45.9 to 44.3 in
July, weaker than expected and the lowest in over nine years.
The September British pound closed down .0091 at $1.9672.
Germany's Federal Statistical Office said that retail
sales were down 1.4% in June.
An index of manufacturing in Australia slipped from
47.0 to 46.9 in July, a sign of contraction for the second consecutive
month.
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, August
1, 2008
Amidex: Amidex35 (Class No Load Shares),
$15.27; Index, 2209.26, Daily Change, -.92%; “A” Shares NAV, $11.78.
Global Asset Management: Capital
Appreciation, $262.75; Composite Absolute Return, $901.94; Diversity,
$727.30; GAMCO, $885.56; Interest Trend, $252.62; Trading IV-US$
Class, $146.37; US$ Special Bond Fund, $441.03.
Invesco: Asian Equity Core, $4.83; Bond, $25.76;
Emerging Markets Bond, $19.97; European Bond, EUR 4.3033; Gilt,
GBP 11.90; Global High Income, $11.68; Japanese Equity Core,
$1.40; UK Equity, GBP 4.83.
JPMorgan Fleming: JF Eastern Smaller
Co., $101.89; JF Japan, JPY 17,221; JF Japan Equity, $12.85;
JF Japan OTC, JPY 1,045; JF Japan Smaller Companies,
JPY 37,978; JF Japan Technology, JPY 48,596; JF Korea, $40.42;
Pacific Securities, $191.91; Pacific Smaller Companies $22.74;
Global Bond & Currency, $21.96;
JF America, $43.52; JF Europe, $46.80; JF Germany, EUR
20.90; JF Global Equity, $40.45.
PCP: North America, $11.83; Europe,
$19.06; Emerging Markets, $17.87; Balanced, $8.36; Aggressive,
$6.99.
Platinum (updated once a month – June 2008 Prices): All
Weather, $127.47; Equity Plus, $94.39; Prot. Equity Plus, $85.40;
Cap. Prot. Income Plus, $87.59; Cap. Prot. Income Plus A, $90.97.
Scottish Provident: Adventurous 1,
GBP 2.796; Balanced 1, GBP 2.298; USD Adventurous 1, $2.275;
USD Balanced 1, $2.192; USD Cautious 1, $2.064; For
Preference: Baring GUF Eastern Europe, $149.56; Fidelity
Funds International, $34.660; Invesco Asian Equity Core, $4.840.
CommStock Trading Ltd
PO Box 7777
Jerusalem 91077
Tel: +972-2-6244963
Fax: +972-2-625 9515
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