Portugal Bonds Sale Meet Expectations; U.S. Import Prices Rise

Arthi Gupta
12 Jan, 2011
New York City

U.S. indexes edged higher after import and export prices rose and Portugal completed debt sale at a yield lower than expected. Cliffs Natural agreed to acquire Consolidated Thompson for C$4.9 billion. AIG sold stake in Nan Shan for $2.16 billion to Ruen Chen.

[R]9:35 AM New York – U.S. indexes edged higher after import and export prices rose and Portugal completed debt sale at a yield lower than expected. Cliffs Natural agreed to acquire Consolidated Thompson for C$4.9 billion. AIG sold stake in Nan Shan for $2.16 billion to Ruen Chen.[/R]

Asian markets gained on optimism about sustaining global economic recovery and European markets rose after the Portuguese government successfully sold €1.249 billion bonds on Wednesday.

Portugal sold €599 million of 10-year bonds due in 2020 at an average yield of 6.72%, as against the 6.81% at the previous sale on November 10. However, the €650 million of bonds maturing in 2014 were sold for an average yield of 5.4% compared to 4.04% in October.

The Portuguese debt management agency said the demand for the 4-year bond exceeded the offer 2.6 times and for the 10-year bonds, demand exceeded 3.2 times.

U.S. Import/Export Prices Rise

With the price of fuel imports to the U.S. showing another substantial increase in the month of December, the Labor Department released a report on Wednesday showing another notable increase in total import prices as well as a moderate increase in total export prices.

The Labor Department said that import prices rose 1.1% in December following a 1.5% increase in November. Excluding a 4.1% increase in prices for fuel imports, imports prices rose 0.3%.

Export prices increased 0.7% in December after rising 1.5% in November. Export prices increased 0.6% excluding a 1.7% increase in prices for agricultural exports.

U.S. mortgage demand rose as interest rates dropped slightly last week, according to industry data released today.

The Mortgage Bankers Association''s Market Composite Index increased 2.2% on a seasonally adjusted basis from one week earlier.

The Refinance Index increased 4.9% from the previous week. The seasonally adjusted Purchase Index decreased 3.7% from one week earlier.

Minneapolis Federal Reserve President Narayana Kocherlakota said in a speech to the Wisconsin Bankers Association in Madison that the United States economy is on the mend and will continue to recover slowly in 2011 despite weakness in housing and tight credit conditions.

Federal Reserve Bank of Philadelphia President Charles Plosser questioned the wisdom of unconventional monetary policy when financial markets were no longer disrupted. He said the Federal Reserve''s $600 billion quantitative easing program may not do much to bring down the unemployment rate and could turn out to be highly inflationary.

Oil Spill Commission Urges for Comprehensive Reforms

A President appointed commission on last year''s massive oil spill in the Gulf of Mexico released its final report on the disaster on Tuesday, calling for comprehensive reforms of both government and industry practices.

The reforms recommended by the commission include creating an independent safety agency within the Department of the Interior to oversee all aspects of offshore drilling safety.

Additionally, the commission said that the U.S. should adopt the world''s most advanced offshore drilling regulations and enforcement practices.

Commission Co- Chair William K. Reilly said, """"This disaster was almost the inevitable result of years of industry and government complacency and lack of attention to safety.""""

Airbus Secures Record Order from India-based IndiGo

Airbus, the aircraft manufacturer and a unit of European Aeronautic Defense and Space Co. signed on Tuesday the largest single firm order number for large jets in commercial aviation history valued at about $15.6 billion at catalog prices.

IndiGo, the Indian budget airline signed a contract for the purchase of 180 Airbus A320 family aircraft, with 150 A320neo''s.

Cliffs Natural Acquires Consolidated Thompson

Cliffs Natural Resources Inc., the mining and natural resources company agreed to acquire all of Consolidated Thompson Iron Mines Ltd.''s common shares for about C$4.9 billion, including net debt, in an all-cash transaction.

With this acquisition, Cliffs is expected to be one of the largest mining and natural resources companies in North America, with significant exposure to Asia.

CareFusion Sells OnSite Services Business

CareFusion Corp., the medical device company signed an agreement to sell its OnSite Services instrument management and repair business to Frazier Healthcare. The financial terms of the deal was not disclosed.

Under the sale agreement, OnSite Services will remain the preferred repair organization for CareFusion''s V. Mueller and Snowden-Pencer specialty surgical instruments.

AIG Sells Stake in Nan Shan to Taiwan-based Consortium

American International Group, Inc. announced an agreement to sell its 97.57% interest in Nan Shan Life Insurance Company, Ltd. to Ruen Chen Investment Holding Co., Ltd., a company owned 80% by the Ruentex Group, the Taiwan-based conglomerate, and 20% by Pou Chen Corporation, the Taiwan Stock Exchange-listed footwear manufacturer, for $2.16 billion in cash.

ITT Plans to Separate into Three Independent Publicly Traded Companies

ITT Corporation today announced that its board of directors unanimously approved a plan to separate the company''s businesses into three distinct publicly traded companies. The company intends to execute the plan before the end of 2011, and each company is expected to be listed on the NYSE.

Earnings Review

American Axle & Manufacturing Holdings, Inc. ((AXL)), the drivetrain systems said it estimates full-year sales in 2010 to be around $2.28 billion.

Chevron Corporation ((CVX)), the integrated oil company said it currently expects fourth quarter earnings to be higher than that of the immediately preceding third quarter, due primarily to expected improvements in upstream and downstream results.

Genzyme Corporation ((GENZ)), the biotechnology firm cut its fourth quarter earnings outlook on lower than-expected sales of its key drugs Cerezyme and Fabrazyme.

The company said it now estimates fourth quarter non-GAAP earnings to be $0.80 to $0.85 per share, compared to its prior guidance of $0.90 to $0.95 per share.

H.B. Fuller Company ((FUL)), the adhesives and specialty chemicals maker said fourth quarter net revenue for rose 5.5% to $360.24 million from $341.57 million in the same quarter last year. Net income in the quarter declined 11% to $21.9 million or 44 cents per diluted share, compared to net income of $24.6 million or 50 cents per share for the year-ago quarter.

SYNNEX Corporation ((SNX)), the business process services company reported fourth quarter revenue increased 12.3% to $2.47 billion from $2.20 billion last year. Net income in the quarter rose 26.4% to $37.53 million or $1.04 per diluted share, compared to net income of $29.68 million or 85 cents per share in the previous year.