U.S. Deficit Widens, Import Prices Rise; World Markets Rally

Arthi Gupta
14 Mar, 2012
New York City

U.S. indexes traded sideways after mortgage applications fell for the fifth consecutive week, current account deficit widened in the fourth quarter, and import prices rose in February. Chesapeake to develop the largest integrated midstream services complex in eastern Ohio for $900 million.

[R]9:40 AM New York – U.S. indexes traded sideways after mortgage applications fell for the fifth consecutive week, current account deficit widened in the fourth quarter, and import prices rose in February. Chesapeake to develop the largest integrated midstream services complex in eastern Ohio for $900 million.[/R]

U.S. indexes traded sideways after mortgage applications fell for the fifth consecutive week, current account deficit widened in the fourth quarter, and import prices rose in February.

However, European indexes edged higher after the euro area member states today formally approved the second adjustment program for Greece, according to a statement from the president of the Eurogroup, Jean-Claude Juncker.

The member states have also authorised the EFSF to release the first instalment of €39.4 billion to be disbursed in several tranches.

Fitch Ratings upgraded Greece''s long-term foreign and local currency debt ratings to B- with ''stable'' outlook from ''Restricted Default.''

Markets in Asia and Europe continued their advances as world economic sentiment improves after a string of positive economic data from the U.S. For the year, the Nasdaq led the advance in the U.S. with a rise of 17% followed by a gain of 11% in the S&P 500.

The market index in Japan is now up 19% and in India and Hong Kong are up 16%. The benchmark indexes in Germany are up 20% in the year so far.

U.S. Mortgage Applications Drop

U.S. mortgage applications fell 2.4% in the week ending March 9, following a 1.2% drop registered the previous week, according to data released by the Mortgage Bankers Association today.

Refinancing applications declined 4.1%.

U.S. Deficit Widens, Import Prices Rise

The U.S. current-account deficit increased to $124.1 billion in the fourth quarter of 2011, from the $107.6 billion deficit in the third quarter, according to data released by the U.S. Commerce Department today, driven by a drop in the surplus of income and an increase in the goods and services deficit.

Separately, U.S. import and export prices rose in February, according to a report released by the U.S. Labor Department today, driven by a surge in fuel prices.

The import prices climbed 0.4% in February after remaining unchanged in the last two months. Excluding a 1.4% increase in the price of fuel imports, import prices actually fell 0.1% in February compared to a 0.1% rise in January.

Export prices advanced 0.4% in February following a 0.2% gain in January.

IEA Reaffirms Outlook

The International Energy Agency in its monthly Oil Market Report held its 2012 oil demand growth forecast steady at 0.8 million barrels per day to 89.90 mbd.

Tight market fundamentals and risks surrounding Iran underpin 20% rise in crude prices since December, the report said.

Chesapeake Partners with M3 Midstream and EV Energy

Chesapeake Energy Corp. entered into a partnership with M3 Midstream LLC and EV Energy Partners, L.P. to develop the largest integrated midstream services complex in eastern Ohio for about $900 million.

The complex will provide necessary infrastructure to process natural gas and natural gas liquids in the liquids-rich Utica Shale play in eastern Ohio.

Great Wolf Resorts to go Private

Great Wolf Resorts Inc. agreed to be acquired by an affiliate of Apollo Global Management, LLC for about $703 million, including assumption of the company''s outstanding debt.

Earnings Review

Blyth, Inc. ((BTH)), the maker of candles said fourth quarter net sales increased 23% to $365 million compared to $296.9 million for the comparable prior year period. Net profit in the quarter increased 17% to $25.6 million or $3.08 per diluted share compared to net profit of $21.9 million or $2.64 per share last year.

EnergySolutions, Inc. ((ES)), the provider of a range of nuclear services to government and commercial customers said fourth quarter revenue rose 4.1% to $468.5 million compared with $450.2 million in the 2010 fourth quarter. Net loss in the quarter was $202.8 million or $2.28 per diluted share compared to a net profit of $6.3 million or 7 cents per share last year.

Revenue for fiscal 2011 increased to $1,815.5 million compared with $1,752 million for fiscal year 2010. Net loss for 2011 was $196.2 million or $2.21 per share compared to a net loss of $22.0 million or 25 cents per share, for 2010.

LSI Corporation ((LSI)), the semiconductor company estimated first quarter income from continuing operations between 6 cents and 10 cents a share. Revenues are expected to be in the range of $585 million to $615 million, higher than previous estimate of $550 million to $590 million.

The Progressive Corporation ((PGR)), the auto insurance group reported net income in February declined 7% to $106.3 million from $114.1 million a year ago. Earnings per share remained at prior year''s level of 17 cents.

Net premiums written rose 6% to $1.38 billion, while net premiums earned grew 5% to $1.19 billion.