U.S. Import Prices Drop; Best Buy Net Falls 30%

Arthi Gupta
13 Sep, 2011
New York City

U.S. import prices fell but export prices rose in August. The Bank of America planned to cut 30,000 jobs and $5 billion in costs annually till 2014. The IEA lowered 2011 and 2012 oil demand growth outlook. Best Buy said quarterly net dropped 30%.

[R]9:15 AM New York – U.S. import prices fell but export prices rose in August. The Bank of America planned to cut 30,000 jobs and $5 billion in costs annually till 2014. The IEA lowered 2011 and 2012 oil demand growth outlook. Best Buy said quarterly net dropped 30%.[/R]

U.S. markets looked in early trading at the developments in the euro zone and struggled in the early trading. French banks were in focus and the sovereign debt crisis festers and ensnare wider group of banks from Greece, Ireland, Spain, Portugal and now Italy and France.

Three largest French banks have declined more than 40% in the last six weeks of trading as the access to cheap short term dollar funding keeps declining.

European markets were on the edge for the third day in a row as French banks remained in focus. U.S. based money market funds continue to trim their lending to French banks.

U.S. based money market funds decided to not renew more than $50 billion in short term loans to French banks as concerns continue to mount on the health of the banks.

The U.S. money markets still rolled over $160 billion of short term loans in August, nearly 40% lower from July, according to a research note from JP Morgan Chase.

German Chancellor Angela Merkel said in an interview to Germany''s Info on RBB radio an uncontrolled bankruptcy of Greece must be avoided. She further added that the euro could only be stable if uncontrolled processes would be prevented.

An Italian government spokesman confirmed that the country''s Finance Minister Giulio Tremonti held talks with Chinese officials earlier this month, reports said on Tuesday. However, it is still unclear whether bond purchases were discussed.

The media reports suggest that China may have considered taking stakes in Italian banks but the rising bond yields and worries about Greece held back any decision.

Separately, the Italian Treasury today sold €3.8 billion in 5-year debt at an average yield of 5.6% compared with 4.93% in a similar auction held on July 14. The bid-to-cover ratio was 1.28 times compared with 1.93 times at the previous sale.

Italy''s Prime Minister Silvio Berlusconi is set to hold talks over the austerity package with key European Union officials on Tuesday.

Berlusconi will hold talks with EU Council Chief Herman Van Rompuy in Brussels and meet EU Commission President Jose Manuel Barroso in Strasbourg, France.

The International Energy Agency lowered 2011 global oil product demand growth by 0.20 million barrels per day and slashed its 2012 outlook by 0.40 mbd.

The agency said that global oil demand this year will be 89.3 mbd on average, up 1.0 mbd year-over-year, and for 2012 demand will average 90.7 mbd, up 1.4 mbd year-over year.

Import Prices Down; Export Prices Up

The U.S. Labor Department reported that import prices declined 0.4% in August following a 0.3% increase in import prices in July. The price decline was led by a 1.8% drop in fuel prices.

Export prices rose 0.5% in August, following a decline of 0.4% in July.

BofA Proposes Jobs Cut

Bank of America Corp. plans to reduce its workforce by about 30,000 jobs over the next few years leading to net expense reductions of $5 billion per year by 2014.

The news was first reported by 123jump.com last week and noted that at least 10,000 jobs may be trimmed in the next three years. The bank confirmed the jobs reduction yesterday.

Earnings Review

Best Buy Co., Inc. ((BBY)), the specialty retailer of consumer electronics said second quarter revenue increased 0.1% to $11.35 billion from $11.34 billion in the prior-year quarter on comparable store sales decline of 2.8%. Net earnings in the quarter fell 30.3% to $177 million or 47 cents per share compared to net earnings of $254 million or 60 cents per share last year.

Cracker Barrel Old Country Store, Inc. ((CBRL)), a chain of ""Old Country Stores"" reported fourth quarter total revenue rose 0.1% to $612.94 million versus $612.48 million in the comparable period a year ago. Net income in the quarter fell 36% to $17.54 million or 75 cents per diluted share compared to net income of $27.41 million or $1.14 per share in the prior-year quarter.

IHS Inc. ((IHS)), the publicly traded business information services company reiterated 2011 revenue in a range of $1.31 billion to $1.34 billion and adjusted EBITDA of $399 million to $407 million.

Steel Dynamics, Inc. ((STLD)), the steel producer and metals recycler expects third quarter earnings to be in the range of $0.18 to $0.22 per share. The steel company also declared a quarterly cash dividend of 10 cents a share.