|
|
Enron Mail |
Market Update: ? NYSE/NASDAQ/AMEX set to open Monday; SEC tests on Sunday indicate that few logistical and technical problems are expected to disrupt trading. ? NYMEX also set to open Monday from 1000CDT to 1300CDT. The exchange will be physically accessible by ferry. Asian/European Markets Overnight ? Sony Corp., which relies on the U.S. for more than a quarter of its sales, plunged 7.7 percent to 4220 yen. The Nikkei 225 slid 386.80 to 9622.09, its lowest since December 1983, while the broader Topix index lost 3.2 percent to 1001.19, on track for its lowest close since October 1998. Of shares trading in Japan, 294 stocks reached 52-week lows. Sony Corp., which relies on the U.S. for more than a quarter of its sales, plunged 7.7 percent to 4220 yen. ? European equities have recovered after a weak opening. FOREX ? The dollar is marginally down against the Yen at 117.13, in spite of the BoJ's intervention. The dollar is down against the Euro at 0.9295, amid concerns US' stock market may fall sharply when markets re-open today. Markets remain on high alert for coordinated intervention in support of the dollar. Fed/G7 Activity ? White House "Working Group on Financial Markets" set to coordinate support for possible market intervention. Fed will purchase equities from institutional investors in the event of a market panic. ? Federal Reserve, ECB and Bank of Japan officials are trying to accomplish two main tasks: (1) provide a zone of stability through direct liquidity injections, quiet intervention on the currency front and intense discussions with senior banking and trading participants; and (2) conduct monetary policy as appropriate to the economic and market conditions of each country and not in response to the terrorist attacks. Because of the severe impact of Tuesday's events on US economic growth there is pressure from senior officials for an inter-meeting rate cut. ? VP Cheney warned in a Sunday television interview that the country could "quite possibly" be in both war and recession. Equity Outlook ? Analysts expect small "patriotic rally" on Monday opening, driven by liberalized rules for company stock buy-backs, intervention by institutional investors and wealthy private investors, and SEC limits on short-selling. ? First Data Corp., Cisco Systems Inc., and FleetBoston Financial Corp. among the firms expected to participate in share buy-back schemes. ? Airline, insurance, and financial stocks expected to face heavy selling, following losses in those sectors in European trading on Friday. Some form of government relief for the airline industry is probable. ? Analysts expect Compaq/HP to be among several mergers that are likely to be delayed or cancelled. Insurance ? Swiss Re, Northwestern Mutual, Chubb, and Hartford Financial among leading insurers who have stated that the attacks were not "acts of war" and that payments will have to made. Payments from the insurance industry are expected to reach $30 billion. olitical/Security Update: ? As expected, no overt military action was taken by the US this weekend against Afghanistan or any other target. ? Expectations continue to center on Afghanistan as the most likely target for military strikes, sometime this week. Partial mobilization of reserves is bigger now than in early stage of 1990 crisis. ? A Pakistani delegation will reportedly visit with Taleban leaders to establish a deadline for the handover of bin Laden. ? Multinationals were evacuating staff and dependents from Pakistan and other countries in the region. Japan's Toyota Motor and Honda Motor Co., had begun pulling staff out of South Asia. Japanese trading firms Marubeni Corp., Itochu Corp. and Tomen Corp. are evacuating dependents from Pakistan, while Nichimen Corp. has told its employees' families to leave Pakistan, Iran, the United Arab Emirates and Saudi Arabia. Meanwhile, BP has evacuated all expatriate staff from Pakistan. ? The US has secured logistical and political support from both traditional allies in NATO and elsewhere, as well as from less friendly nations such as Iran and Russia. The coalition could be difficult to hold together as the campaign widens beyond Afghanistan. ? Strikes against Iraq do not appear to be imminent, but are by no means out of the questions. Sources report that Iraq has been sheltering elements of the bin Laden network in northern Kurdistan. US demands that Syria shut down terrorist groups operating on its soil ? The challenge for the US will be to keep the focus on a "war against terrorism" and not a "war against Muslims", a very difficult line to avoid crossing. Pope John Paul II, former South African President Mandela, and French Prime Minister Jospin are among those urging the US to show restraint. A calmer atmosphere now prevails in the Senate. Senators expected the Administration to make those responsible 'pay a price' but were not pressuring the White House to act before it was ready and before it had made a determination of who was responsible. There was no sense, therefore, that Bush was under political pressure to take immediate or premature action. The only caveat was that Senators disliked the idea, being put forward by Attorney General Ashcroft, of bringing the 'guilty parties to justice.' C. Infrastructure Updates Telecommunications ? Local telephone company Verizon Communications said on Sunday its communications network, damaged in the World Trade Center attacks, passed service tests with the New York Stock Exchange and appeared ready for stocks to resume trading on Monday. Crude/Products/Shipping ? Re-insurers are expecting war risk insurance premia would go up by 500%, and these charges were in many cases already in effect. The combination of the Air Lanka airbuses destroyed in the recent Tamil Tiger attack at Colombo airport, and the four aircraft destroyed in the USA this week, implied total losses of around 23 years of premium, according to sources. This was simply the liability for assets and did not include compensation for personal injury or death. Aviation and shipping are closely linked in the application of war risk. ? Additional complications are being encountered due to strict rules on inspection, tug requirements and anchorages. To make matters worse, many of the tugs and barges associated with petroleum traffic have been diverted to support disaster recovery operations. Sources report that the harbor was completely shut again on Friday during President's visit to New York City. ? The stricter regulations mean that blending shipments from NY to New England are delayed, and conventional shipments into the NY area are also delayed. The majors are working to divide product up between themselves in obvious fear of being seen as manufacturing a shortage during a crisis or profiteering at time of a national tragedy. ? Helicopter flights to offshore rigs and platforms in the Gulf of Mexico (GoM) have resumed, albeit under stringent new rules that are reportedly overloading the Federal Aviation Authority (FAA), which instituted a no-fly ban after the attacks. ? Sources report fewer tankers being chartered to US destinations due to higher risk premiums associated with the political situation. In one case, two shipments of Iraqi Kirkuk from the Mediterranean bound for the US were cancelled after the letters of credit were rejected. This represents 4 million barrels, whereas the US imports about 63 million barrels per week. So on the fourth day of the crisis, this factor was expected to have caused a 10-20% drop in crude sailings to the US. The crucial unknown is the length of the crisis. If security concerns continue in the weeks ahead, this figure will likely rise. ? New York Harbor is open, but operating under strict restrictions. Ships are being allowed in on a case-by-case basis. Normal vessel flow of 140 ships a day was only back up to 20 on Saturday. ? Valdez, Alaska; Seattle, Washington; LA/Long Beach, California all open, but operating under heightened security. ? Several major refining units in Japan have reopened this week, reassuring local markets amid concerns of an energy supply crisis from the Middle East. The Tonen General refinery at Sekiyu reopened on the 15 September, followed this morning by Idemitsu's Hyogo refinery. The 80,000 bpd Hyogo refinery has been closed since 13 August for routine checks and maintenance. The 335,000 bpd Tonen Sekiyu plant, which is a subsidiary of ExxonMobil, closed a 77,000 bpd crude distillation unit (CDU) on 1 September, also for routine checks and maintenance. ? Nippon Mitsubishi Oil has suspended oil exports due to concerns over the possibility of disruption to oil supplies from the Middle East. In August Nippon Mitsubishi exported 818,000 barrels of oil products including kerosene and jet fuel, mostly to other parts of Asia, but also to the US. However it has said that it may be prepared to dip into the country's 20m tonne LPG stockpile if the crisis escalates. The government has made no official announcement to oil companies to increase stockpiles in the light of last week's terrorist attacks in the US. Other refiners, including Cosmo Oil and Idemitsu Kosan, have announced that they will continue to export their oil products as usual. LNG ? River pilots in Lake Charles report that the LNG vessel FINIMA is presently scheduled to arrive at the entrance to the Calcasieu River channel at Lake Charles at 0500 on 9/18, whereupon it will be boarded by a pilot and escorted by at least two tugs run by Seabulk International to the LNG terminal for cargo discharge. Air Transport ? Washington officials are discussing the conversion of Reagan National Airport from a civilian facility to a military base. The airport remains closed. ? All major US airlines expecting or have already initiated schedule reductions and lay-offs in expectation of falling demand for air travel. In Washington's Dulles airport, meanwhile, passengers are being asked to check in four hours before departure. Yesterday saw around 65% of usual flights by American Airlines take off. British Airways was running 70% of its flights out of Heathrow and 80% from Gatwick.
|