Business

(Reuters) -U.S. import prices posted their first decline in seven months in July, the Labor Department said on Friday, on lower costs for both fuel and nonfuel products.

Import prices fell by a more-than-expected 1.4% last month after rising 0.3% in June, the data showed. It was the largest monthly drop since April 2020. In the 12 months through July, import prices increased 8.8% after rising 10.7% in June.

Economists polled by Reuters had forecast import prices, which exclude tariffs, would decline 1.0% from June.

The report follows other tentative signs earlier this week that inflation has peaked, with U.S. consumer prices unchanged in July due to a sharp drop in the cost of gasoline, after advancing 1.3% in June, although underlying price pressures remained elevated. Producer prices also declined last month on the back of lower energy costs.

The Federal Reserve is mulling whether to raise its benchmark overnight lending rate by another 50 or 75 basis points at its next policy meeting on Sept. 20-21, as the U.S. central bank battles to cool demand across the economy and bring inflation back down to its 2% goal. The Fed has raised its policy rate by 225 basis points since March.

Imported fuel prices dropped 7.5% last month after surging 6.2% in June. Petroleum prices declined 6.8%, while the cost of imported food fell 0.9%, the largest one-month drop since November 2020.

Excluding fuel and food, import prices dropped 0.5%. These so-called core import prices decreased 0.6% in June. They rose 3.8% on a year-on-year basis in July. The strength of the U.S. dollar is helping keep a lid on core import prices.

The dollar has gained around 10% against the currencies of the United States’ main trade partners since the beginning of the year.

The report also showed export prices fell 3.3% in July after accelerating 0.7% in June. Prices for agricultural exports declined 3.0%, with the fall led by lower prices for soybeans, wheat and cotton.

Nonagricultural export prices fell 3.3%. Export prices rose 13.1% on a year-on-year basis in July after increasing 18.1% in June.

(Reporting by Lindsay Dunsmuir; Editing by Paul Simao and Mark Heinrich)

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BRASILIA (Reuters) -Brazil’s central bank chief Roberto Campos Neto said on Thursday it is not true that banks lose money with the Pix instant payment system, launched by policymakers in late 2020.

Speaking at an event hosted by Brazil’s banking lobby group Febraban, he acknowledged Pix affected revenues to some degree, since in the past banks charged people for transfer fees, while Pix is free. On the other hand, it offers new services, increases the volume of transactions and reduces cash costs for banks, said Campos Neto.

The platform, which is owned by Brazil’s central bank, has been a huge success in the country and winner of international plaudits. It recently surpassed the volume of credit and debit card transactions in the country.

Campos Neto said central bankers from other countries have asked about how Pix was implemented, and quoted them as saying their domestic banks would never collaborate.

“In Brazil, they collaborated and that’s why we have Pix. Banks understood that, in the end, it’s a win-win model.”

President Jair Bolsonaro recently criticized Febraban’s support for manifestos defending democratic institutions saying banks were dissatisfied with Pix.

Speaking about the digital currency central bank (CBDC) model being developed in Brazil, Campos Neto said he would like to see it up and running in 2024.

According to the central bank’s chief, the Brazilian CBDC will promote new business and will allow for an interaction between physical and digital money, leading banks to start looking at balance sheets in the form of tokens.

“Our central bank digital currency is nothing more than a tokenized deposit,” he said.

(Reporting by Marcela Ayres; Editing by Rosalba O’Brien and Josie Kao)

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SAO PAULO (Reuters) – JBS SA , the world’s largest meatpacker, posted an almost 10% drop in net profits, to $766 million, driven by the relative weakness of its U.S. beef and pork units in the second quarter, according to an earnings statement on Thursday.

Still, it beat analysts forecasts nE6N2XO018.

JBS reported a 4.6% fall in revenue for its U.S. beef division, which is normally the company’s cash cow, while earnings before interest, tax, depreciation and amortization, a measure of operating profitability known as EBITDA, slumped 55% compared with the same year-ago quarter.

U.S meat processors are now reeling from the effects of lower cattle availability in North America, where a drought is leading ranchers to terminate animals rather than sending them for processing.

In the second quarter, overall U.S. pork exports fell 17.7% due to a drop in demand from China, Japan and Canada, JBS said citing USDA data.

As such, results for its U.S. pork division were affected, with JBS sales for that unit dropping 3.2% on an annual basis, to 10.3 billion reais.

JBS’ Pilgrims Pride poultry united, however, provided a silver lining in the United States, as its chicken sales rose by 18.3% to 22.7 billion reais.

In Brazil, likewise, JBS’ Seara processed foods division did well.

Seara sells about 47% of its output in Brazil, and that business brought in 5 billion reais ($969.24 million) last quarter, 20% more than a year ago, JBS said.

To fend off cost inflation, Seara was able to raise prepared products prices by 19% on average, while increasing sales volumes by 5%.

At the same time, Seara’s export sales reached $1.1 billion, a 27.9% rise from the same quarter a year ago.

In Brazil, JBS beef products sales rose by almost 11% to 14.1 billion reais, in spite of a 12% fall in cattle processing because China temporarily halted imports from a large plant.

($1 = 5.1587 reais)

(Reporting by Ana Mano; Editing by Leslie Adler and Marguerita Choy)

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HOUSTON (Reuters) -U.S. oil refiner Citgo Petroleum on Thursday reported a second quarter profit that surged to $1.28 billion on higher crude processing volumes and stronger margins.

The eighth largest U.S. oil refiner’s three plants processed 776,000 barrels of oil per day (bpd), up from 732,000 bpd a year earlier, it said. Refinery utilization rates, a key measure of efficiency, rose to 101% from 95% in the first quarter this year, the company’s parent posted on Twitter.

Citgo ended the quarter with $2.2 billion in cash and proceeds from an accounts receivable securitization, according to the PDVSA ad hoc twitter posts. A spokesperson was not immediately available to comment on the tweets.

The company last year returned to profitability after back-to-back annual losses during the coronavirus pandemic. Its first quarter $245 million profit was more than 10 times the year-ago level on higher processing volumes, higher exports and stronger margins.

On Thursday, Citgo said it was offering to buy $286 million in notes due in 2024 https://www.citgo.com/newsroom/press-releases/2022/citgo-holding-inc-announces-offer-to-purchase-up-to-286-231-million-in-aggregate-principal-amount and repay nearly $483 million of a term loan facility.

Citgo, a subsidiary of Venezuelan state-run oil firm PDVSA, is run by boards appointed by Juan Guaido, whom Washington recognizes as Venezuela’s legitimate leader.

The company, which is protected by U.S. executive orders from creditors trying to seize Venezuela’s foreign assets, would be willing to resume Venezuelan heavy crude imports if the U.S. government authorizes the flow, Citgo’s CEO said in July. The crude imports are key to feeding its refineries’ deep conversion units.

(Reporting by Marianna Parraga, writing by Gary McWilliams; Editing by David Gregorio)

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By Ahmad Ghaddar

LONDON (Reuters) -Oil prices rose by over 1% on Thursday after the International Energy Agency raised its oil demand growth forecast for this year as soaring gas prices drive some consumers to switch to oil.

Brent crude futures gained $1.04, or 1.1%, to $98.44 a barrel by 0949 GMT, while U.S. West Texas Intermediate crude futures rose $1.03, or 1.1%, to $92.96.

“Natural gas and electricity prices have soared to new records, incentivising gas-to-oil switching in some countries,” the Paris-based agency said in its monthly oil report, in which it raised its outlook for 2022 demand by 380,000 barrels per day (bpd).

A rise in U.S. oil inventories last week and the resumption of crude flows on a pipeline supplying central Europe capped further price gains, however.

U.S. crude oil stocks rose by 5.5 million barrels in the most recent week, the U.S. Energy Information Administration said, more than the expected increase of 73,000 barrels.

Gasoline product supplied rose in the most recent week to 9.1 million barrels per day, though that figure still shows demand down 6% over the past four weeks compared with the year-ago period.

The premium for front-month WTI futures over barrels loading in six months’ time was pegged at $4.38 a barrel on Thursday, the lowest in four months, indicating easing tightness in prompt supplies.

The resumption of flows on the southern leg of the Russia-to-Europe Druzhba pipeline further calmed market worries over global supply.

Russian state oil pipeline monopoly Transneft restarted oil flows via the southern leg of the Druzhba oil pipeline. Ukraine had suspended Russian oil pipeline flows to parts of central Europe since early this month because Western sanctions prevented it from receiving transit fees from Moscow, Transneft said on Tuesday.

Meanwhile, physical oil prices around the world have begun to sag alongside futures, reflecting easing concerns over Russian-led supply disruptions and heightened worries about a possible global economic slowdown.

(Additinoal reporting by Muyu Xu in Singapore; editing by Kim Coghill and Jason Neely)

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By Dawn Chmielewski and Lisa Richwine

(Reuters) – Over an earnings period that appeared to signal the end of Netflix envy, Walt Disney Co restored hopes that growth in the streaming business will continue.

But Disney, which edged past Netflix as streaming leader by global subscribers last quarter, is the outlier among its media peers.

The industry-wide scramble of the last few years to copy Netflix Inc has slowed to a more deliberate pace over the last two weeks, as companies change their tune on the streaming business. Rather than placing streaming at the center of their strategy, it is now just one of several lines of business.

“We effectively have four or five or six cash registers,” Warner Bros Discovery’s CEO, David Zaslav, told analysts last week. “And in a world where things are changing and there’s a lot of uncertainty … that’s a lot more stable and a lot better than having one cash register.”

In recent earnings reports, traditional media companies touted stable and shrinking businesses like linear television as profit centers to weather economic uncertainty. Cash flow has become cool again, analysts said, replacing subscriber growth as the main metric of success in recent years.

Hollywood’s new frugality comes as rising inflation threatens consumer spending and the surge in new subscribers during the global pandemic subsides.

It also follows Netflix’s fall from grace. The company’s stock market value has tumbled to about $100 billion from a high of over $300 billion in November, as its growth has stalled.

More bleak news may be on the horizon. National advertising spending fell for the first time in June in the United States, after 15 straight months of gains, amid concerns about the possibility of a recession, according to advertising data firm SMI.

Fresh off a $43 billion merger, Warner Bros Discovery said last week the company would no longer sacrifice its traditional film and TV businesses to prop up its subscription streaming service HBO Max, in a sharp rebuke of previous management’s focus on the streaming business.

It has scrapped expensive projects such as the HBO Max science-fiction series “Demimonde” in development from “Lost” creator J.J. Abrams and the DC Comics-inspired film “Batgirl,” and took $825 million in write-offs in its second quarter.

“I think they’re crying uncle,” said LightShed Ventures media analyst Rich Greenfield of Warner Bros’ moves. “They are not in a financial position to take on the pain needed to compete.”

Bank of America Merrill Lynch media analyst Jessica Reif Ehrlich said Warner Bros Discovery is playing to its strengths.

“It’s imperative that the media companies take a holistic point of view and try to monetize their increasingly valuable content over every platform, whether it’s linear or digital,” she said.

That view is spreading across the media business.

Comcast Corp’s NBCUniversal, which invested less aggressively than its rivals, touted its prescience in not overspending on its Peacock streaming service.

Paramount Global Chief Executive Bob Bakish last week bragged about the growth of the company’s streaming service, even as he applauded the decision to delay the release of “Top Gun: Maverick” so the film could premiere exclusively in theaters. The summer blockbuster, which debuted on May 27, has yet to reach Paramount+.

THE EMPIRE STRUCK BACK

The pullback across media makes the performance and forecast of Disney – which released third-quarter earnings on Wednesday – all the more remarkable, analysts said.

“This is a pivotal moment in the streaming wars as Disney now has more direct-to-consumer video subscribers than Netflix,” said Paolo Pescatore, an analyst at research firm PP Foresight. “It feels like a two-horse race.”

Disney shares rallied 6.5% after it reaffirmed streaming profit targets and reported reaching 221 million total global streaming subscribers, surpassing for the first time streaming pioneer Netflix, which has 220.7 million subscribers

Disney, which was the first of the major media companies to restructure around chasing Netflix, has harnessed its roster of globally recognizable entertainment brands, and a robust $30 billion in content spending, to edge out Netflix.

But past may not be prologue in the streaming business, analysts warned.

“A key risk for Disney is that past subscriber growth came at a time when a number of key franchises such as Marvel and Star Wars were concluding. Huge uncertainty remains about how the next content phase will fare in drawing or retaining subscribers,” said Jamie Lumley, an analyst at Third Bridge.

(Reporting by Dawn Chmielewski and Lisa Richwine in Los Angeles; Additional reporting by Tiyashi Datta in Bengaluru; Editing by Kenneth Li and Matthew Lewis)

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By Maria Sheahan and Carolyn Cohn

BERLIN/LONDON (Reuters) – Zurich Insurance Group reported a better-than-expected 25% rise in operating profit in the first half on strong performance across the board and announced a bumper 1.8 billion Swiss francs ($1.91 billion) share buyback on Thursday, sending its shares higher.

Europe’s fifth largest insurer said it was on track to beat all its 2022 targets.

Zurich’s ability to exceed its three-year financial goals despite the COVID-19 pandemic and war in Ukraine “gives us great confidence that we can handle unexpected, unprecedented things and still deliver”, CEO Mario Greco told Reuters.

The insurer will set new three-year targets later this year which are likely to be more challenging. Some may focus on different metrics, Greco said.

Operating profit came in at $3.39 billion, with both property and casualty and life businesses outperforming.

Analysts had on average seen business operating profit at $3.28 billion, according to a company-compiled consensus forecast.

Insurers are facing weak investment performance from market falls due to the war in Ukraine and inflationary pressures are hitting their customers’ wallets.

However, rising premiums have helped commercial insurance divisions.

Zurich’s property and casualty business posted a first-half combined ratio – a measure of underwriting profitability in which a level below 100% indicates a profit – of 91.9%, a record level, thanks to higher prices and lower natural catastrophe and weather claims.

P&C premium rates rose 9% while claims inflation was around 5-6%, Greco said.

Rival Allianz’s earnings last week missed forecasts, though AXA did better than expected, boosted by health insurance sales.

Zurich said the share buyback, to start in the coming months, would offset an expected earnings dilution from the agreed sale of its German life back book.

The buyback would not affect Zurich’s dividend policy, Greco said.

Zurich’s shares were up 1.9% at 0914 GMT, versus a 0.6% rise in European insurance stocks. Barclays’ analysts described the results as “strong”, reiterating their “overweight” rating.

($1 = 0.9445 Swiss francs)

(Additonal reporting by Paul Arnold in Zurich, editing by Kirsti Knolle & Simon Cameron-Moore)

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NEW YORK (AP) — Stocks that traded heavily or had substantial price changes Wednesday:

Alcon Inc., down $3.53 to $71.94.

The eye care company trimmed its profit and revenue forecasts for the year.

Trade Desk Inc., up $19.74 to $74.24.

The digital-advertising platform operator gave investors an encouraging revenue forecast.

Akamai Technologies Inc., up 91 cents to $95.99.

The cloud services provider beat Wall Street’s second-quarter financial forecasts.

Rackspace Technology Inc., down $1.08 to $5.80.

The cloud technology company cut its earnings and revenue forecasts for the current quarter.

CyberArk Software Ltd., up $11.29 to $149.74.

The information security company beat analysts’ second-quarter earnings and revenue forecasts.

Axon Enterprise Inc., up $14.45 to $126.07.

The maker of stun guns and body cameras raised its revenue forecast for the year.

OptimizeRx Corp., down $6.68 to $15.57.

The digital health company reported weak second-quarter earnings and gave investors a discouraging revenue forecast.

Repay Holdings Corp., down $2.70 to $10.25.

The payment technology and processing company reported disappointing second-quarter earnings and revenue.

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By John McCrank

NEW YORK (Reuters) – The dollar fell broadly on Wednesday following a cooler-than-expected U.S. inflation report for July that raised expectations of a less aggressive interest rate hike cycle than previously anticipated from the Federal Reserve.

U.S. consumer prices were unchanged on a monthly basis in July as the cost of gasoline plunged, delivering the first notable sign of relief for Americans who have watched inflation climb over the past two years. [nL1N2ZL0KI]

Economists polled by Reuters had forecast a 0.2% rise in the monthly Consumer Price Index (CPI) on the heels of a roughly 20% drop in the cost of gasoline.

The dollar index, which measures the currency’s value against a basket of currencies, was down 1.025% at 105.26 at 3:15 p.m. EDT (1915 GMT).

“This is good news for FX traders, as it was a pretty clear reaction and you will probably see that there still should be some follow-through,” said Edward Moya, senior market analyst at OANDA.

The dollar was down 1.58% at 132.97 yen, with the greenback briefly down as much as 2.3% against the Japanese currency, its biggest decline since March 2020.

“In a backdrop where the market is becoming more content with FF (Fed funds) pricing, the yen’s worst days appear to be over,” analysts from TD Securities said in a client note. “A broad 130-135 range may be the new normal.”

The Fed has indicated that several monthly declines in CPI growth will be needed before it lets up on the aggressive monetary policy tightening it has delivered to tame inflation currently running at four-decade highs.

Still, traders of futures tied to the U.S. central bank’s benchmark overnight interest rate responded to Wednesday’s inflation data by slashing bets that the Fed would enact a third straight 75-basis-point hike in September, and instead would opt for a half-percentage-point increase.

“What you are seeing is the market enjoying the possibility of the Fed moving toward a less hawkish, not dovish, but slightly less hawkish stance,” said Quincy Krosby, chief global strategist at LPL Financial.

The euro climbed 0.83% to $1.0297, while sterling gained 1.16% to $1.22145, with both currencies on track for their best single-day performances since mid-June.

Minneapolis Fed President Neel Kashkari said that while the cooling in price pressures in July was “welcome,” the Fed is “far, far away from declaring victory” and needs to raise the policy rate much higher than its current 2.25%-2.50% range.

Chicago Fed President Charles Evans said inflation is still “unacceptably” high, and the Fed will likely need to lift its policy rate to 3.25%-3.50% this year and to 3.75%-4.00% by the end of next year.

The Australian dollar, seen as a barometer of risk, was up 1.74% at $0.7083.

Bitcoin, rattled by a drumbeat of cryptocurrency fund wipeouts and thefts over recent months, was up 2.1% at $23,651.

(Reporting by John McCrank in New York; Editing by John Stonestreet, Mark Potter and Paul Simao)

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WASHINGTON (AP) — Consumers struggling with skyrocketing prices for food, gas, autos and rent got a tantalizing hint of relief last month, when prices didn’t budge at all from June after 25 straight months of increases. With gas prices continuing to fall, inflation is probably slowing further this month.

So has the worst bout of inflation in four decades possibly peaked? Economists say it’s too soon to know for sure. Even if it has peaked, it will likely remain high well into next year.

Since inflation ignited early last year, it has temporarily slowed before, only to re-accelerate in later months. When that happened last fall, Federal Reserve Chair Jerome Powell was forced to jettison his description of higher prices as being merely “transitory” and to acknowledge that high inflation was proving to be chronic.

Even if some prices should keep declining, others — housing costs, for example — are almost sure to remain painfully high. And that means there’s likely still a long way to go before inflation will get anywhere close to the 2% annual pace that the Fed has targeted and that Americans were long accustomed to.

On Wednesday, the government reported that consumer inflation jumped 8.5% in July from 12 months earlier. That was an unexpectedly sharp slowdown from the 9.1% year-over-year inflation rate in June, which was the largest in four decades. But it was still quite high.

So-called core prices, which exclude the volatile food and energy categories to produce a better picture of underlying inflation, also rose more slowly: They increased 0.3% from June to July, less than the 0.7% rise from May to June. Over the past 12 months, core prices rose 5.9%, the same as in June.

Here are some questions and answers about inflation:

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WHERE IS INFLATION HEADED?

That’s hard to say, because there are multiple signs pointing in both directions.

In addition to the ongoing drops in gas prices, the cost of groceries — a huge driver of inflation for the past year — could soon rise much more slowly. Futures prices for dairy, chicken and eggs have been falling in recent weeks, according to Capital Economics, a forecasting firm. And costs for such farm commodities as wheat, corn and soybeans are also well off their springtime peaks.

Many supply chain snarls are loosening, with fewer ships moored off Southern California ports and shipping costs declining. That should help reduce the cost of furniture, cars and other goods. Prices for appliances are already falling.

In addition, Americans’ expectations for future inflation fell last month, according to a survey by the Federal Reserve Bank of New York, likely reflecting the drop in gas prices that is highly visible to most consumers.

Inflation expectations can be self-fulfilling: If people believe inflation will stay high or worsen, they’re likely to take steps — such as demanding higher pay — that can send prices higher in a self-perpetuating cycle. But the New York Fed survey found that Americans’ foresee lower inflation in future years than they did a month ago.

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ARE THERE SIGNS INFLATION COULD STAY HIGH?

Plenty. Inflation is a byproduct of broad economic trends — too much money chasing too few goods, in the classic economic view — not merely whether individual industries are struck by supply shortages or other problems.

One trend that may be keeping Fed officials up at night is that companies are still hiring workers at a voracious pace — and are willing to pay more to find the people they need. In the April-June quarter, employees’ wages and salaries, excluding government workers, jumped 1.6%, matching a two-decade high that was reached last fall.

Businesses typically pass on at least some of their higher labor costs to their customers in the form of higher prices. But if workers become more productive — if they use more technology, say, or a company streamlines operations — a business can pay more and make up for the higher costs through greater efficiency rather than through higher prices for customers.

Unfortunately, for the first half of this year, the opposite has happened: Productivity has tumbled and wages, adjusted for declining efficiency, have been growing at double-digit levels. Economists say that means further pay increases would have to be passed on to consumers through higher prices. And those price increases would fuel continued high inflation.

“This is way above anything we’ve seen since the high inflation of the early 1980s,” said Peter Hooper, head of economic research at Deutsche Bank Securities, referring to labor costs. “The danger here is that you’re entering into a wage-price spiral, that increasing wage costs are pushing up prices further and making it that much more difficult to actually bring down inflation to a more desirable level.”

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WHAT’S CAUSED THE SPIKE IN INFLATION?

Good news — mostly. When the pandemic paralyzed the economy in the spring of 2020 and lockdowns kicked in, businesses closed or cut hours and consumers stayed home as a health precaution, employers slashed a breathtaking 22 million jobs.

Everyone braced for more misery. Companies cut investment and postponed restocking. A severe recession ensued.

But instead of sinking into a prolonged downturn, the economy staged an unexpectedly rousing recovery, fueled by vast infusions of government aid and emergency intervention by the Fed, which slashed short-term interest rates.

Suddenly, businesses had to scramble to meet demand. They couldn’t hire fast enough to fill job openings or buy enough supplies to meet customer orders. As business roared back, ports and freight yards couldn’t handle the traffic. Global supply chains seized up.

With demand up and supplies down, costs jumped. And companies found that they could pass along those higher costs in the form of higher prices to consumers, many of whom had managed to pile up savings during the pandemic.

Critics blamed, in part, President Joe Biden’s $1.9 trillion coronavirus relief package, with its $1,400 checks to most households, for overheating an economy that was already sizzling on its own. Many others assigned a greater blame to supply shortages. And some argued that the Fed kept rates near zero far too long, lending fuel to runaway spending and inflated prices in stocks, homes and other assets.

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HOW ARE HIGHER PRICES AFFECTING CONSUMERS?

It’s hitting most people pretty hard, even if they have received pay raises. On average, weekly paychecks, adjusted for inflation, fell 3.6% in July compared with a year ago.

For lower-income families, economic research shows that the hit is typically harder. Poorer Americans are more likely to spend a greater proportion of their incomes on items that have increased the most in price in the past 18 months: Food, gas and rent.

There are also subtler differences that can make inflation harder for those earning less. Many people can’t afford the kind of bulk purchases of groceries that can help higher-income households economize.

Paola Becerra, 40, who lives in Stamford, Connecticut, has started to miss doctor’s appointments to use the money instead for groceries or gas.

“My groceries for just one week are now never below $100,” she said. “And I can’t buy in bulk because I don’t have a big fridge.”

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Associated Press Writer Adriana Morga contributed to this report from New York.

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