Trader Talk

China Imports Costing More: Days Of "Cheap Items" Over?

Huh? Import prices from China rose 0.8 percent for the month. How did that happen? As one trader noted, "The days of importing deflation from China is over."Futures were also down as the February NY Fed survey was negative 11.7, the weakest since May 2003.


1) Abercrombie & Fitch  is one of the first retailers to report earnings. Their results are a few penny above expectations, though it seems to be due to a more favorable tax rate; comp store sales were up 1 percent. Guidance of $1.61-$1.65 for the first half of the year looks below analyst estimates of $1.73. Down 2 percent pre-open.

2) Best Buyis saying they will earn $3.05-$3.10 for full year 2008 guidance.They had previously provided earnings guidance of $3.10-$3.20 a share. Down 4 percent pre-open; Circuit city also down 2 percent. They cited "soft domestic customer traffic in January." Buried in their report was a long discussion of international sales: they are expanding aggressively in China; by the end of 2009, nearly 22 percent of the company's total retail space will be outside the U.S.

3) Goldman Sachs sours on coal. We've been telling you about the 40 percent increase in coal prices in the last month, and noting the increase in coal stocks. Goldman has noticed it too; now they are turning cautious on the whole industry. Here's the key point from their report: "Coal is abundant and, at these prices, supply will come to the market much faster than bulls may expect In addition, our supply/demand forecast for inventories indicates that they will be at high historical levels through 2009-making it hard for us to believe that pricing could go much higher from here."

Massey Energy , which was at a new high yesterday, down about 4 percent pre-open.

4) Campbell Soupreported earnings about in line with expectations; they reaffirmed the full year guidance of $2.05-$2.09.

Questions?  Comments?