Mercedes-Benz USA posted record sales of almost 24,000
vehicles in September, up 15.6 percent year-on-year, helped by
its new C-Class model designed to attract younger customers
buying their first Mercedes.In the first nine months of 2011, its sales in the United
States were up 10.3 percent.
* Reaches deal with Blue Cross Blue Shield of Kansas City* Walgreen shares up 4.3 percent in late morning tradeOct 17 (Reuters) - Walgreen Co on Monday offered to
match or beat other pharmacies’ costs in order to stay in
Express Scripts Inc’s program for U.S. military
personnel and their families, as it tries to hold onto some of
its business with the pharmacy benefits manager.The largest U.S. drugstore chain said in June it would stop
filling prescriptions for people covered by Express Scripts at
the end of the year, after failing to agree on new contract
terms. The impasse threatens to cost Walgreen about $5 billion
in annual sales, or about 7 percent of its business.Walgreen and Express Scripts have been engaged in a public
dispute over their contract since then. Express Scripts gained
more prominence in July, when it announced a $29 billion plan
to acquire rival Medco Health Solutions Inc .Express Scripts sued Walgreen in September, alleging the
drugstore’s marketing materials about the issue were false.
Express Scripts is seeking injunctive relief.Now, Walgreen said it would give Express Scripts “an
ironclad guarantee” to match or beat the average costs per
adjusted prescription of every other pharmacy in its Department
of Defense Tricare pharmacy program. Walgreen also stood by its
earlier, rejected offer to contract separately with Express
Scripts on just Tricare.”We see this as an attempt by (Walgreen) to move the
negotiations further into the public arena, and not a good
faith effort to reach a larger agreement between the two
companies,” JP Morgan analyst Lisa Gill said in a research
note.Shares of Walgreen were up 4.3 percent at $34.42 after
rising as high as $34.44. Express Scripts’ shares slipped 0.12
percent to $40.14.DEFENSIVE PLAYSThe Tricare program serves U.S. service members, retirees
and their families. Beneficiaries can fill prescriptions at
military facility pharmacies, through a mail-order pharmacy, at
retail network pharmacies and at non-network pharmacies,
according to the plan’s Website.”As we’ve said all along, we would welcome (Walgreen) in
our network but only at rates that are right for our clients,”
an Express Scripts spokesman said.If Walgreen and Express Scripts were to reach an agreement
that included lower rates than those proposed for Tricare,
Tricare would have the option to switch to those rates,
Walgreen added.Along with its latest negotiating tactic, Walgreen last
week reached a deal to keep filling prescriptions for Blue
Cross Blue Shield of Kansas City patients, even if it is no
longer in Express Scripts’ network.That pact shows that Walgreen has been able to hold onto
some of the prescriptions it currently fills. However, it still
stands to lose out on billions of dollars in revenue if it
cannot come to terms with Express Scripts.”We understand few (Express Scripts) customers have the
ability to arrange such side deals,” Lazard Capital Markets
analyst Tom Gallucci wrote in a note. “This could suggest that
substantial risk remains for (Walgreen) in 2012 if no broad
contract” is reached.Walgreen had a stare-down last year with CVS Caremark Corp over prescription reimbursements that was similar to
its dispute with Express Scripts. Walgreen had been ready to
stop filling prescriptions for millions of CVS Caremark’s drug
plan members. The parties reached a deal after just 11 days.Walgreen said that nearly 200,000 military beneficiaries
have told it that they are concerned about not having access to
its stores as part of the Express Scripts provider network.While that number may seem large, it is just a fraction of
those who may fill prescriptions in the program; Tricare offers
coverage to 9.6 million beneficiaries.
* Banks borrow only $1.4 bln at ECB 3-mth $ loan offer* ECB swap cost caps demand after market rates easeBy Chris Reese and William JamesNEW YORK/LONDON, Oct 12 (Reuters) - The U.S. Treasury sold
$30 billion of 4-week bills at a high rate of 0.01 percent on
Wednesday, marking the first time the rate has came in above
zero in the last six such auctions.Banks had essentially been giving the Treasury
interest-free loans in the four-week maturity arena since
late-August.The last time a U.S. four-week bill auction had a rate
above zero was a $30 billion sale on Aug. 30, with the high
rate coming in then at 0.005 percent.The Treasury holds the 4-week bill auctions on a weekly
basis.The yield may have been pushed marginally higher on
Wednesday by the recent “risk-on” trade that has generally been
pushing Treasuries yields higher since early October, said Tom
Simons, money market economist with Jefferies & Co. in New
York.The Treasury’s selling of shorter-dated securities as part
of the program dubbed Operation Twist — the $400 billion bond
program intended to lower mortgage rates and other long-term
borrowing costs — may also have put some minimal upward
pressure on the 4-week bill rates, Simons said.The Treasury on Thursday sold $8.87 billion of Treasuries
maturing March 2013 through October 2013.Still, U.S. bill rates are comparatively low and have been
for months due in part to tightness of bills supply, Simons
said.”Most of the factors that have led to bills trading where
they are more technical in nature based on supply which
continually shrinks week after week,” Simons said.Recent rule changes have meant money market funds have had
to boost the amount of short-term bills they hold, “so the net
effect is it creates a significant demand for bills,” Simons
said.LOW DEMAND IN ECB DOLLAR FUNDINGMeanwhile, low demand at the ECB’s first offer of long-term
dollar funding since 2010 reflects the high cost of borrowing
from the central bank and shows that while dollar funding
remains scarce, most banks still have some market access.Banks borrowed $1.4 billion at the first of three dollar
liquidity offerings announced last month in a bid to stave off
pressure in money markets caused by a growing reluctance to
lend U.S. currency to euro zone banks.The take-up was below the $5 billion predicted by a Reuters
poll of money market traders, but in line with many analysts’
view that the 1.08 percent rate and steep collateral haircuts
made the ECB funding expensive relative to market rates.”It’s not surprising to see a small demand because the
implied cost of obtaining that funding via the ECB is higher
than the market,” said Elaine Lin, strategist at Morgan Stanley
in London.”It shows that there are only a limited number of banks
that are not able to get any market access. Anybody who has
access would rather use the market than the ECB.”Six banks bid for the three-month loans and one bidder
borrowed $500 million at the regular seven-day tender.In September, U.S. money market funds’ reluctance to lend
to euro zone banks because of exposures to troubled Greece
grabbed investors’ attention, causing a spike in dollar funding
costs and a sharp fall in banking shares.Since then the cost of swapping euros into dollars — a key
barometer of market stress — has eased off its most expensive
levels, in part thanks to the ECB’s liquidity provision. The
three-month euro/dollarcross currency basis swap last stood at around -90 basis points, compared
to -115 points on Sept. 12.The decision to implement three-month dollar tenders along
with one-year euro liquidity offerings has capped the risk that
banks could face a reoccurrence of the 2008 funding drought,
justifying a modest easing of prices, analysts said.
By Jan StrupczewskiBRUSSELS, Oct 12 (Reuters) - Euro zone industrial production
was much stronger than expected in August, data showed on
Wednesday, indicating the economic slowdown in the third quarter
might be smaller than feared.The European Union’s Statistics Office said industrial
production in the 17 countries using the euro rose 1.2 percent
month-on-month in August for a 5.3 percent year-on-year
increase.Economists polled by Reuters had expected a 0.7 percent
monthly decline in output and a 2.2 percent year-on-year
increase.”Even if production were to fall markedly in September, the
quarterly growth rate would still be higher in Q3 than in Q2,
which poses an upward risk to our forecast of the economy
contracting in Q3,” said Aline Schuiling, a Senior Economist at
ABN Amro Bank NV.But the euro zone economy will still slow down markedly and
it is likely to show already in the September output figures.”Hard industrial production data will probably show tangible
signs of weakening starting with the September figure, as
Germany has already seen two consecutive months of declining
orders, while Italy will most likely witness a large correction
after the suspicious surge in August output,” said Marco Valli,
Chief Euro zone Economist, Unicredit Research.”All this suggests a clear deterioration of the industrial
production dynamics entering the fourth quarter, and flags a
substantial risk - no less than 30 percent - that euro zone
gross domestic product will contract in the final quarter of the
year (our current forecast: flat),” Valli said.The European Commission expects economic growth in the euro
zone to slow to 0.1 percent quarter-on-quarter in the third and
fourth quarters of 2011 from 0.2 percent in the April-June
period, largely because of the negative impact on confidence
from the sovereign debt crisis.Large European manufacturers have a pessimistic view of the
last quarter of the 2011.Swedish truck maker Scania (SCVb.ST) said on Monday it would
lower its production in Europe from November due to falling
demand as government financial problems in Europe and the U.S.
have now begun to affect economic activity and have led to
hesitation among customers.Germany’s biggest steelmaker ThyssenKrupp is to
cut production at its Steel Europe unit by 500,000 tonnes in the
last quarter of 2011, a source told Reuters at the end of
September, and the world’s biggest steelmaker ArcelorMittal
said it saw a slowdown of orders from Europe.The August data showed that the annual increase in the
production of capital goods, used for investment, jumped 12.2
percent and the output of durable consumer goods, an indication
of consumer confidence, rose 2.8 percent in annual terms.In the euro zone’s biggest economy, Germany, output fell 1
percent month-on-month but was still 7.8 percent higher than a
year earlier.Ireland, which is implementing an austerity programme to
regain market confidence in its public finances, showed a
production jump of 4.4 percent month-on-month and 10.1 percent
year-on-year.
