U.S. Trade Gap Falls More Than Forecast to Three-Month Low $44.8 Billion

By Alex Kowalski - Sep 8, 2011 7:48 PM GMT+0700
The U.S. trade deficit narrowed more than forecast in July, reaching a three-month low as exports climbed to a record and crude oil imports eased.
The gap shrank 13.1 percent, the most since February 2009, to $44.8 billion from a revised $51.6 billion shortfall in June, Commerce Department figures showed today in Washington. The deficit was less than all projections in a Bloomberg News survey. Exports rose 3.6 percent as companies shipped more capital goods and automobiles to overseas customers.
The global slowdown and Europe’s debt crisis have raised concerns of a diminishing international flow of goods and services the rest of this year. Sustained growth in exports may help U.S. manufacturers weather weaker demand from American consumers and businesses that’s restraining the recovery.
“Trade could add favorably to economic activity during the third quarter,” said Millan Mulraine, senior U.S. strategist at TD Securities in New York. “The slowdown in the global economy may not be as great as we thought a few months ago, which certainly is encouraging.”
First-time applications for unemployment benefits rose last week, a sign the labor market is struggling to gain traction. Jobless claims climbed by 2,000 to 414,000 in the week ended Sept. 3, Labor Department figures showed today in Washington.
Stock-index futures held losses after the reports. The contract on the Standard & Poor’s 500 Index expiring this month fell 1.1 percent to 1,186.3 at 8:48 a.m. in New York. The yield on the benchmark 10-year Treasury note fell to 1.99 percent from 2.04 percent late yesterday.

Economists’ Estimates

The trade gap was projected to shrink from an initially reported $53.1 billion in June, according to the median forecast of 74 economists surveyed by Bloomberg. Estimates ranged from deficits of $55 billion to $46 billion.
After eliminating the influence of prices to render the figures used in calculating gross domestic product, the trade deficit narrowed to a three-month low of $45.3 billion from $50.3 billion. The number was less than the $47.3 billion deficit averaged in the second quarter, indicating trade may add to growth this quarter.
Exports increased to $178 billion, boosted by sales of telecommunications equipment, civilian aircraft, autos and industrial engines. U.S. shipments of capital goods and autos and parts to overseas customers were the highest on record.
Imports fell 0.2 percent to $222.8 billion from $223.4 billion in the prior month.

Petroleum Imports

The figures showed a reduction in demand for crude oil as the price per barrel exceeded $100 in July for a fourth month. The average price of imported crude oil was $104.27 compared with $106 in June, today’s report showed. U.S. companies imported 350,657 barrels in July, the fewest since April.
Imports in July reflected $22.3 billion in shipments of auto parts, the most since February 2008. Parts deliveries from Japan have started to recover after the nation’s March earthquake and tsunami. Automobile-related goods have been entering the U.S. at about 50 percent of the rate before the natural disaster, according to Richard Steinke, executive director of the Port of Long Beach.
A labor market that stagnated in August is weighing on the ability of U.S. households to spend on goods made overseas. Payrolls were unchanged last month, and the unemployment rate held at 9.1 percent, Labor Department figures showed Sept. 2.
“While the economies in our primary markets have generally improved since the lows of the economic crisis, many consumers remain cautious,” Denise Morrison, president and chief executive officer at Campbell Soup Co. (CPB), said on a Sept. 2 conference call with analysts. “The recovery has not progressed at the pace or intensity consumers had hoped for. As a result, consumers remain careful about their purchases and feel the need for resourcefulness and vigilance.”

Campbell Profit

Campbell, the world’s biggest soup maker, said fourth- quarter profit declined 12 percent as sales dropped.
Slower growth in developed countries raises the risk manufacturers will temper production going forward. Gross domestic product in the 17-nation euro area rose 0.2 percent in three months ended June from the first quarter, when it increased 0.8 percent. Economic growth in Canada, the U.S.’s largest trading partner, shrank in the second quarter for the first time since the recession two years ago.
The trade gap with China widened to $27 billion, the highest since September, from $26.7 billion as gain in imports outpaced an increase in exports. The deficit with Canada increased to $3.2 billion from $2.8 billion, while it shrank with the European Union. Exports to South and Central America were the highest ever.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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U.S. Stocks Retreat on Increase in Jobless Claims, ECB’s Economic Outlook

By Rita Nazareth - Sep 8, 2011 8:52 PM GMT+0700

Traders work at the New York Stock Exchange on Sept. 6, 2011. Photographer: Scott Eells/Bloomberg

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Sept. 8 (Bloomberg) -- Bob Janjuah, the co-head of cross-asset allocation strategy at Nomura International Plc, talks about the global economy and financial markets. Janjuah, speaking in Hong Kong with Rishaad Salamat on Bloomberg Television's "On the Move Asia," also discusses Federal Reserve monetary policy and the European sovereign-debt crisis. (Source: Bloomberg)

U.S. stocks fell, following the biggest jump in two weeks for the Standard & Poor’s 500 Index, as jobless claims increased and the European Central Bank said risks to the economic recovery have intensified.

Financial and industrial shares fell the most among 10 groups in the S&P 500. General Electric Co. and Bank of America Corp. (BAC) dropped at least 0.6 percent, pacing losses in the Dow Jones Industrial Average. Dollar General Corp. (DG) slumped 4 percent after saying that holders will sell 25 million shares.

The S&P 500 retreated 0.3 percent to 1,194.94 at 9:51 a.m. in New York, paring earlier losses of as much as 0.7 percent. The gauge snapped a three-day decline yesterday. The Dow decreased 8.74 points, or 0.1 percent, to 11,406.12.

“This market is looking for assistance and what it wants is a wheelchair and someone to push it,” Burt White, who helps oversee $330 billion as chief investment officer at LPL Financial Corp. in Boston, said in a telephone interview. “People are hoping that central banks will deliver that. Everyone was expecting the ECB to be on hold and do nothing and yet they were hoping for something. The ECB was really in a tough spot because they made a pretty bad decision in raising rates. It’s a confidence issue in this market.”

The S&P 500 rose 2.9 percent yesterday, the largest gain since Aug. 23, as investors speculated that President Barack Obama’s plan to inject more than $300 billion into the economy will bolster growth. Obama plans to unveil his proposals for promoting job growth in an address to a joint session of Congress today.

’High Uncertainty’

U.S. stock futures extended losses as ECB President Jean- Claude Trichet resisted calls to lower interest rates even after “downside risks” to the euro area intensified. The economy faces “particularly high uncertainty,” Trichet said at a press conference in Frankfurt today. The ECB cut its growth forecasts for this year and next.

“The ECB is marching to its own tune,” Stephen Wood, who helps oversee about $163 billion as the New York-based chief market strategist for Russell Investments, said in a telephone interview. “The real world was expecting more from the ECB given that the ECB is the only entity that could do something. In the U.S., the government can alleviate some symptoms, but it’s going to be difficult in the short-term to address the unemployment issue.”

Stocks maintained losses as jobless claims rose by 2,000 to 414,000 in the week ended Sept. 3, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 405,000, according to the median forecast. The number of people on unemployment benefit rolls and those receiving extended payments fell.

Federal Reserve Chairman Ben S. Bernanke is due to speak in Minnesota today on the economic outlook at 1:30 p.m. New York time.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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Bearish Bets May Send Stocks Lower: Bartels

By Nikolaj Gammeltoft and Betty Liu - Sep 8, 2011 12:36 AM GMT+0700

U.S. stocks are likely to extend declines because hedge funds have leeway to boost bets against the world’s largest equity market, according to Bank of America Corp.’s Mary Ann Bartels.

“We still believe that hedge funds have the ability to significantly short the market,” Bartels, head of technical and market analysis in New York at Bank of America said in a Bloomberg Television interview today on “In the Loop” with Betty Liu. “It’s a bearish signal, absolutely.”

The adjusted short interest ratio, a measure of potential buying pressure, is 1.5 for the Standard & Poor’s 1500 Composite, down from 2.4 at the end of July and below its 10- year average of 2.4, Bartels wrote in a report dated Sept 5. While short interest on U.S. equities rose in August, trading volume surged, pushing down the short interest ratio and lowering the number of trading days it would take to cover all short positions in a stock or index.

“Short interest represents a floor,” said Bartels, who ranked third among analysts who study price charts in Institutional Investor’s 2010 survey. “If you have a lot of shorts, you only fall so much, and we don’t have that floor, we don’t have a safety net on the market.”

The proportion of S&P 500 shares outstanding sold short rose to the highest level since the end of November last week, climbing to 3.03 percent on Aug. 29 from 2.37 percent at the beginning of August, according to New York-based Data Explorers, which provides research on short sales and stock lending. Short selling of the gauge reached a three-year high of 5.52 percent in August 2008.

Net Short

Hedge funds and other large speculators were net short 107,913 S&P 500 Index (SPX) futures contracts in the week ended Aug. 30, wagering that the benchmark will decrease in value, according to data compiled by Bloomberg and the U.S. Commodity Futures Trading Commission. The position is the highest since September 2007, when bearish bets reached a record 127,474 contracts a month before the benchmark equity gauge peaked at an all-time high, Bloomberg data going back to 1997 show.

“What we’re most concerned about is the banking system in Europe,” Bartels said. “There is no reason to have a very long position with the positioning of the charts,” she said. Still, “the level of shorts is nowhere near where we saw in 2008 and 2009” in terms of potential buying pressure.

Stocks fell yesterday, giving the S&P 500 its longest slump in almost a month, amid concern that Europe’s debt crisis is worsening. The benchmark gauge for U.S. equities lost as much as 13 percent last month before trimming its retreat to 5.7 percent after the Federal Reserve said it will act to spur growth.

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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Casey’s, Dollar General, Hovnanian, Men’s Wearhouse: U.S. Equity Preview

By Inyoung Hwang - Sep 8, 2011 4:16 AM GMT+0700

Shares of the following companies may have unusual moves in U.S. trading tomorrow. Stock symbols are in parentheses, and prices are as of 5 p.m. in New York.

Standard & Poor’s 500 Index futures expiring in September fell less than 0.1 percent to 1,198.9.

Casey’s General Stores Inc. (CASY) : The Ankeny, Iowa- based operator of convenience stores in the U.S. Midwest reported first-quarter earnings of $1.03 a share, missing the average analyst estimate by 3 cents.

Dollar General Corp. (DG) slid 2.8 percent to $36.09. The biggest dollar store chain in the U.S. said in a regulatory filing holders will sell 25 million shares. The Goodlettsville, Tennessee-based company won’t receive any proceeds from the sale.

Hovnanian Enterprises Inc. (HOV) climbed 4.2 percent to $1.72. The largest homebuilder in New Jersey said its loss in the third-quarter was 47 cents a share, less than the 51-cent loss estimated by analysts on average.

Men’s Wearhouse Inc. (MW) declined 1.1 percent to $29.19. The retailer of men’s suits and attire forecast third- quarter adjusted earnings of as little as 64 cents a share, matching the average analyst estimate.

Smith & Wesson Holding Corp. (SWHC) : The handgun manufacturer forecast sales in the second quarter of no more than $96 million, falling short of the average analyst estimate of $107.5 million.

To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

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Freeport’s Cerro Verde Copper Miners Start 48-Hour Strike to Protest Wages

By Alex Emery - Sep 7, 2011 10:02 PM GMT+0700

Freeport-McMoRan Copper & Gold Inc. (FCX)’s Peruvian copper miners began the first of a series of strikes planned over pay increases, a union official said.

About 1,200 workers at Freeport’s Sociedad Minera Cerro Verde SAA (CVERDEC1) unit, Peru’s third-largest copper producer, began the 48-hour strike at 8:30 a.m. New York time and will hold a second strike from Sept. 14 if no accord is reached, union official William Camacho said by telephone. Workers at Freeport’s Grasberg mine in Indonesia also may strike starting Sept. 15.

“Freeport unions around the world seek to raise their wages to the same level as the rest of the mining industry,” Camacho said today from Lima. “We seek the company’s respect for the workers as they aren’t complying with our labor pact.”

Workers in Peru, Chile and Bolivia have gone on strike at copper, gold and zinc mines this year for better working conditions and a bigger share of record company earnings. Shougang Corp.’s Peru iron-ore miners began a strike Aug. 31.

Phoenix-based Freeport will continue negotiating a new labor contract, spokesman Eric Kinneberg said yesterday in an e- mailed response to questions. Cerro Verde, which is studying a $3.5 billion expansion to boost annual output 45 percent, boosted first-half output by 4 percent to 161,246 metric tons.

Copper futures for December delivery gained 6.1 cents, or 1.5 percent, to $4.117 a pound at 9:50 a.m. on the Comex in New York. A close at that price would mark the biggest gain since Aug. 31.

Copper Output Decline

Peru is the world’s third-largest copper producer behind Chile and China. Chile, which accounts for a third of global supply, may have lost 8 percent of estimated 2011 output because of strikes at mines owned by Codelco and BHP Billiton Ltd. (BHP), Codelco Chief Executive Officer Diego Hernandez said Aug. 12. Chile produced 5.42 million metric tons of copper last year.

Mine production is set to lag behind demand by 256,000 metric tons in 2011, a second year of deficit, according to Citigroup Inc. Prices have more than doubled since the end of 2008 as demand increased in China, the world’s top consumer.

Freeport rose 66 cents, or 1.5 percent, to $45.02 at 10:36 a.m. in New York trading. Cerro Verde fell 83 cents, or 2.1 percent, to $38.12 in Lima.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net.

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net.

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Gold May Decline for a Third Day as Stocks Rebound Ahead of Obama Speech

By Glenys Sim - Sep 8, 2011 6:33 AM GMT+0700

Gold may decline for a third day as global equities rallied amid optimism a plan by President Barack Obama will aid growth in the world’s largest economy, eroding demand for haven investments

Gold for immediate delivery was little changed at $1,814.65 an ounce by 6:41 a.m. Singapore time, after earlier falling as much as 0.7 percent. Bullion slumped 4.4 percent in the past two days, dropping from a record $1,921.15 on Sep. 6. Futures in New York were also little changed at $1,819.50.

“The gold price fell as investors embraced risky assets,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, said today in an e-mailed note.

Obama, who is scheduled to address Congress today, plans to propose boosting job growth by injecting more than $300 billion into the economy next year mostly through tax cuts and infrastructure spending, spurring the biggest gain yesterday in the Standard & Poor’s 500 Index in two weeks.

Platinum for immediate delivery rose 0.3 percent to $1,828 an ounce, trading back above gold after the yellow metal’s two- day slump. Cash silver fell 0.2 percent to $41.4863 an ounce while palladium was little changed at $753 an ounce.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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Crude Gains a Second Day on U.S. Stockpile Decline as Storms Threaten Gulf

By Ben Sharples - Sep 8, 2011 6:01 AM GMT+0700

Oil climbed for a second day in New York on speculation a storm building in the Gulf of Mexico poses a threat to supply in the U.S., amid shrinking crude stockpiles in the world’s biggest consumer.

Futures gained as much as 0.9 percent after the industry- funded American Petroleum Institute said inventories fell 2.97 million barrels last week. An Energy Department report today may show supplies slid 2 million barrels as Tropical Storm Lee shut output, according to a Bloomberg News survey of analysts. Another cyclone, Nate, formed off Mexico, becoming the third now churning in the Atlantic basin.

“Output outages in the Gulf of Mexico and a low pressure system over Mexico’s Bay of Campeche were the key drivers,” John Peters, a senior economist at Commonwealth Bank of Australia, said in a note today.

Crude for October delivery advanced as much as 77 cents to $90.11 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.87 at 8:47 a.m. Sydney time. The contract yesterday rose $3.32 to $89.34, the highest close since Aug. 3. Prices are 20 percent higher the past year.

Brent oil for October settlement gained $2.91, or 2.6 percent, to $115.80 on the London-based ICE Futures Europe Exchange yesterday. The European benchmark contract closed at premium of $26.46 to U.S. futures, compared with the record settlement of $26.62 on Sept. 6.

DOE Report

The Energy Department will release its weekly stockpile data at 11 a.m. today in Washington. Both the API and government reports are a day late because of the Labor Day holiday on Sept. 5.

Gasoline supplies dropped 871,000 barrels last week, according to API data. The Energy Department report may show they declined 1.4 million barrels, according to the median of 15 analyst estimates in the Bloomberg News survey.

Oil-supply totals from the API and the department have moved in the same direction 71 percent of the time in the past year. The API collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed for its weekly survey.

Nate, with winds of 45 miles (72 kilometers) per hour about 125 miles west of Campeche, Mexico, joins Hurricane Katia and Tropical Storm Maria. Nate is forecast to be a Category 1 hurricane with winds of 75 mph in two days.

Computer models suggest Nate will either go ashore in Mexico south of the oil- and gas-producing region or near Brownsville, Texas, said Travis Hartman , a meteorologist at commercial forecaster MDA EarthSat Weather in Gaithersburg, Maryland.

About 36.9 percent of U.S. oil production and 18.1 percent of natural gas output from the Gulf of Mexico has been halted after Tropical Storm Lee passed through the region, the Bureau of Ocean Energy Management, Regulation and Enforcement said yesterday. The Gulf is home to 27 percent of U.S. oil output and 6.5 percent of the country’s natural gas production.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net

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