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U.S. trade deficit hits record $74.4 billion in March

WASHINGTON | The U.S. trade deficit surged to a record $74.4 billion in March as an improving U.S. economy drove purchases of imported foreign goods.

The deficit, the gap between what America buys from abroad and what it sells to other countries, was 5.6% greater than the February gap of $70.5 billion, the Commerce Department reported Tuesday.

Imports rose 6.3% to $274.5 billion while exports increased 6.6% to $200 billion. The U.S. imports so much more than it exports that in dollar terms, the rise in imports was greater.

The politically sensitive trade deficit with China rose 11.6% to $27.7 billion which, as usual, was the largest deficit with any single country.

Through the first three months of this year, the U.S. trade deficit totals $212.8 billion, up 64.2% from the deficit during the same period last year, a time when the U.S. economy was essentially shut down by the coronavirus pandemic.

The United States recorded a deficit for all of 2020 of $681 billion, the largest annual gap since 2008 as the coronavirus disrupted global commerce and confounded then-President Donald Trump's "America First" policies.

The U.S. economy is recovering much faster than the rest of the world and that is playing out in trade numbers as the gap widens. Americans are starting to spend again, while U.S. exporters are facing sluggish overseas demand in nations slower to recover.

"Stronger U.S. growth compared to trading partners will lead the trade deficit to grow in 2021," said Oren Klachen, lead U.S. economist. "U.S. domestic demand will keep a strong pull on imports, thanks to improved health conditions, re-openings and historic fiscal expansion."

During his four years in office, Trump pursued a get-tough trade strategy that employed punitive tariffs on other country's products as a way of wiping out America's trade deficits with the rest of the world and restoring millions of lost manufacturing jobs.

Trump sought to narrow the trade gap by imposing tariffs on imported goods on a scale not seen since the trade wars of the 1930s that contributed to pushing the United States and the rest of the world into a Great Depression.

Trump's efforts failed to alter trade imbalances and angered U.S. allies along with competitors such as China. So far, however, the Biden administration has not rolled back the Trump policies.

Vaccine sales power Pfizer through first quarter

Pfizer, buoyed by a huge jump in sales for its COVID-19 vaccine and solid performance across most of the company, is hiking its 2021 financial forecast sharply after blowing past Wall Street expectations for the first quarter.

The New York drugmaker and its German partner on the vaccine, BioNTech, continue to sign contracts with multiple countries for their two-dose shot. They reported $3.46 billion in first-quarter sales and now expect to rake in roughly $26 billion over the year, up from their prior forecast of about $15 billion.

The companies may soon receive U.S. and EU approval to give the vaccine to 12- through 15-year-olds and continue testing the vaccine in other patient groups, including pregnant women and children from six months to 11 years old.

The partners are also testing the efficacy of a booster shot of the vaccine, which may be needed — perhaps annually — to keep immunity high over time and to protect people from numerous emerging coronavirus variants that may spread more easily or be more deadly. And they're developing new vaccine versions that have a longer shelf life and don't require being kept frozen.

Pfizer on Tuesday reported net income of $4.88 billion, or 86 cents per share. That was up from $3.36 billion, or 60 cents per share, in 2020's first quarter, when the global coronavirus pandemic began triggering lockdowns, and doctor visits and new prescriptions for other medicines dropped significantly.

Adjusted earnings, excluding one-time items, jumped 48% to $5.26 billion, or 93 cents per share, far above the 79 cents Wall Street was expecting, according to a survey by Zacks Investment Research. Revenue was $14.58 billion, also easily exceeding forecasts of $13.49 billion.

The maker of the blockbuster Prevnar vaccine against pneumococcal disease said even without COVID-19 vaccine sales, it is meeting its goal of increasing revenue by at least 6% each year through 2025.

"Excluding the growth provided from (the vaccine), our revenues grew 8% operationally," Chief Executive Albert Bourla said in a prepared statement, adding, "In addition, we have achieved important clinical, regulatory and commercial milestones across our pipeline and portfolio while also continuing to increase our capacity to supply urgently-needed doses" of the COVID-19 vaccine."

Pfizer now expects to be able to deliver about 2.5 billion vaccine doses this year and already has signed contracts covering about 1.6 billion of those doses, including 200 million doses promised for the U.S. by the end of May and another 100 million doses later this year.

The company also has begun testing a pill to treat COVID-19.

Meanwhile, sales of cancer drugs jumped 18% in the quarter and sales of medicines administered in hospitals rebounded 11% as patients got treatments delayed by hesitance to go to hospitals swamped with COVID-19 patients. Sales of clot preventer Eliquis jumped 26% to $1.64 billion.

During the quarter, the U.S. Food and Drug Administration approved an additional use for Pfizer's immunoglobulin drug Panzyga, for treating a rare condition that damages peripheral nerves. The FDA also approved use of the company's Lorbrena as an initial treatment for non-small cell one cancer.

Pfizer noted the FDA is now reviewing its application for its experimental vaccine against tick-borne encephalitis, for people as young as age 1.

And while an updated version of its vaccine against pneumococcal disease awaits regulatory approval, Pfizer has begun testing the safety of administering that vaccine at the same time as a COVID-19 vaccine booster.

After an 11% profit spike, CVS outlook for 2021 grows rosy

CVS Health hiked its 2021 forecast and beat Wall Street's first-quarter expectations as a growing insurance business offset hits the health care giant took from a weak cold and flu season.

The company covered more people through Medicaid and Medicare Advantage, and adjusted operating earnings from health insurance jumped nearly 20% in the first quarter to $1.78 billion.

CVS Health said Tuesday that it also delivered more than 23 million COVID-19 tests and 17 million vaccine doses through April, which helped its drugstore business.

But the pandemic has disrupted business at CVS as well. A weak cough, cold and flu season brought on in part by mask wearing and social distancing hurt sales in both the company's drugstore business and its pharmacy benefits management operations, which run drug plans for big clients like insurers and employers.

CVS Health drugstores also faced a tough sales comparison to last year's first quarter, when customers stocked up on pharmacy supplies as the pandemic set in.

Sales from the front end, or the area outside the pharmacy, of established drugstores fell more than 11% compared to the first quarter of 2021.

Products that help customers deal with colds and the flu are usually a big factor behind first-quarter sales, said Neil Saunders, managing director of GlobalData.

"While CVS has drawn in customers on the testing and vaccination side, there is little evidence to suggest that this is spilling over into the general retail part of its business," Saunders said in an email.

However, Mizuho Securities USA analyst Ann Hynes said that the vaccine rollout should help the company's retail sales recover in the second half of the year.

CVS Health operates one of the nation's largest drugstore chains with nearly 10,000 retail locations. It's doling out vaccines at about 8,300 stores after wrapping up a campaign to vaccinate residents of nursing home and other long-term care locations.

Overall, the company's net income jumped nearly 11% to $2.22 billion in the quarter that ended March 31. Earnings adjusted for one-time gains and costs totaled $2.04 per share, and revenue grew more than 3% to $69.1 billion.

That easily beat average expectations of $1.72 per share in earnings on $68.44 billion in revenue, according to a survey by Zacks Investment Research.

CVS Health started 2021 with an earnings forecast that largely fell short of Wall Street expectations. But it said Tuesday that it now expects annual adjusted per-share earnings to range from $7.56 to $7.68.

Saudi oil firm Aramco's first-quarter profits up by 30%

DUBAI, United Arab Emirates | Saudi Aramco said Tuesday its profits soared by 30% in the first-quarter of the year, compared to last year, riding on the back of higher crude oil prices. The results come as some of the world's biggest economies are clawing their way out of recession and easing restrictions amid vaccine rollouts against COVID-19.

The company's financial results show a net income of $21.7 billion for the first three months of the year, compared to the same period in 2020 when Aramco's earnings plunged to $16.7 billion as the early effects of the coronavirus pandemic were beginning to dramatically drive down global demand for oil. Brent crude plummeted to around $20 a barrel at its lowest point last year.

The Saudi Arabian Oil Co. said the increase in profits primarily reflects the impact of higher crude oil prices, which have averaged around $60 a barrel in recent months. Prices have steadily climbed amid increased global demand for crude and disciplined cuts to production by producers to balance the market.

Aramco produced some 9.2 million barrels a day in 2020, compared to a current average of 8.6 million barrels a day for the first-quarter of 2021.

The company confirmed it would deliver on a promised dividend payout of $18.75 billion for its shareholders this quarter, or what amounts to $75 billion a year. Nearly all of that payout goes to the Saudi government, which owns more than 98% of the company, with the remaining 1.7% trading on the Saudi stock market.

The payout, however, exceeds Aramco's current cash flow of $18.3 billion. Aramco saw its full-year profits nearly halved in 2020 to $49 billion, down from $88 billion in 2019 and $111 billion in 2018.

Still, the Saudi company remains one of the world's most valuable companies.

Aramco's higher earnings will come as welcome relief to the Saudi government, which continues to rely heavily on the company's barrels of oil for revenue.

Aramco, which produces all of the kingdom's oil and gas, is central to Crown Prince Mohammed bin Salman's efforts to diversify the economy. The prince intends to transfer ownership of Aramco to the country's sovereign wealth fund and use the earnings for investments abroad and locally with the aim of spurring new sectors and generating millions of new jobs for Saudi youth.

Aramco's Chief Executive Officer Amin Nasser said the first-quarter earnings are a sign that "better days are coming."

"While some headwinds still remain, we are well-positioned to meet the world's growing energy needs as economies start to recover," he said.

The company noted in its earnings report that while vaccination programs around the world to combat COVID-19 are an encouraging development, the pandemic is far from over.

The company recently announced a $12.4 billion deal to sell leasing rights over its oil pipelines to a consortium of investors led by EIG Global Energy Partners. The sale is aimed at raising money to maintain Aramco's dividend commitment to shareholders.

Prince Mohammed revealed in an interview last week there are talks to sell a 1% stake of Aramco to a leading global energy company. While he did not reveal further details, speculation has swirled around potential buyers from China, which is the world's largest importer of oil.

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