U.S. Super Storm’s Record Flooding Lands Blackout Blow (Bloomberg)
Record tides from a wintry super storm combined with hours of pounding wind and rain to deal an unprecedented blow at the U.S Northeast’s power grid, flooding electrical substations and shutting down New York City’s financial district. At nightfall, Consolidated Edison Inc., New York City’s utility, killed power in parts of downtown Manhattan and Brooklyn as seawater encroached on crucial electrical equipment and warned more power cuts may be coming. Crews in Connecticut threw up a dike around a substation serving downtown Stamford and stood ready to shut down four others should floodwaters rise by the forecast 11 feet. “The last time we saw this threat was never,” Connecticut Governor Dan Malloy said at a press conference yesterday, warning the worst seawater flooding in 70 years could have tides lapping at the base of at least one inland dam. As of 8 p.m. in New York, the storm had knocked out power to some 3.6 million homes and businesses, according to the U.S. Energy Department. That figure may increase overnight. Power blackouts that may eventually affect as many as 10 million people in the region for as long as 10 days left homes in the dark, closed the stock market, and disrupted operations at refineries, pipelines and power plants. Damaged power lines, substations and other infrastructure will contribute to the $20 billion in total storm costs estimated by Eqecat Inc., a risk- management company in Oakland, California.
NYU Hospital Evacuated As Generator Goes Down (CBS)
New York University Langone Medical Center was evacuated Monday night, after power went out as a result of Superstorm Sandy, and generators subsequently began to go down. As CBS2’s Dick Brennan reported, power went down across Manhattan from 39th Street south to the southern tip of the island – a region that includes the hospital. Backup generators were in operation, but started to fail in the 11 p.m. hour, and an evacuation began.
Massive Transformer Explosion Rocks ConEd Plant (WP)
The explosion happened shortly before 8:30 p.m. at the building located in Stuyvesant Town..."There was an explosion about 5 minutes ago and I could see Blue sparks coming from the plant! The plant is dark and smoke stacks are not lit up!" Mario Camilla said in an email. Con Ed has since confirmed the spectacular blow out, which was also captured on video, and said it was a substation equipment failure. The utility said at more or less the same time it lost power at its central command station but it has now been restored.
Building Collapses On 14th Street (NBC)
A four-story multiple-unit residence at 92 8th Avenue between 14th and 15th streets collapsed Monday evening, according to the FDNY and witnesses. Susan Milyavsky was standing on the balcony of a friend's apartment just across the street from the building when its front collapsed. "It was like it just melted off," Milyavsky said. "It crumbled down."
Idled Stock And Bond Traders Watch, Wait, And Position (WSJ)
Even with the U.S. stock market closed, investors found ways to trade. "You can work around it to a certain extent," said Nanette Buziak, head of equity trading at ING Investment Management. On Monday morning, "where I would have been trading in stocks, we ended up trading what we needed to in futures. We're also still trading where we need to in international markets." [...] But activity in the municipal-bond market ground to a halt Monday, as issuers postponed deals and trading wrapped up early. Some of the week's biggest deals are being pushed back to later in the week or are on a day-to-day schedule, if they aren't postponed indefinitely...A handful of other markets stayed active, but trading was thin and many people could not get to their desks. As a result, those who were around found themselves buzzing with activity, as traders hunted for scarce counterparties. "Actually, we are very busy today. Can I hang up now?" said Mamoru Arai, senior currency trader at Mizuho in New York, who said his firm was operating with only two traders on the floor today, compared with more than a dozen on a normal day.
NYSE To Test New Contingency Plan Tuesday (WSJ)
The broader plan outlined Monday night by NYSE and rival exchange groups BATS Global Markets Inc. and Direct Edge Holdings LLC would see the Big Board operator's all-electronic NYSE Arca platform handle critical opening and closing auctions. The New York Stock Exchange and the smaller NYSE MKT exchange would remain closed under the plan being discussed, The plan deviates from a proposal floated Sunday by NYSE Euronext, which involved operating the New York Stock Exchange using Arca's systems. This drew concerns from brokerage officials worried that they weren't properly prepared for the unconventional approach. Under the plan outlined late Monday, all trading in NYSE-listed securities would execute on the Arca exchange, according to the notice from NYSE Euronext.
Labor Department Says Hurricane May Affect Jobs Report (Bloomberg)
The U.S. Labor Department will wait to gauge the impact of Hurricane Sandy before determining the status of the October jobs report, the last before next week’s presidential election. The monthly employment data are scheduled to be released Nov. 2 at 8:30 a.m. in Washington. The median forecasts of economists surveyed by Bloomberg call for payrolls to rise by 125,000 workers in October and for the jobless rate to increase to 7.9 percent from 7.8 percent. “We will assess the situation when the weather emergency is over and notify the press and public of any changes at that time,” Labor Department spokesman Gary Steinberg said in an e- mailed statement today.
As Sandy strengthens, Connecticut governor issues 'Katrina-like' warning (MN)
Governor Dannel P. Malloy called a quick press briefing at 9:15 p.m. after consulting with town officials and getting updates from the situation on Long Island. His biggest worries were for region one, which extends from Bridgeport to Greenwich, but he also has substantial concerns for residents along the Shoreline from Old Saybrook to West Haven. The governor said he was issuing "a Katrina-like" warning, telling residents to get to the highest place in their homes if they are already experiencing flooding, or if necessary to their roofs.
Behind Decision To Close Markets (WSJ)
Even if traders no longer flock to the exchange floors to buy and sell stocks and other securities, the software engineers and other technology staff who are responsible for maintaining those electronic systems still must be connected. And like the hundreds of thousands of East Coast residents immobilized by the storm, many traders couldn't find transportation to take them to their firms' trading floors. That issue took on added importance late Monday when parts of lower Manhattan flooded and were without power. Opening the U.S. stock markets without the New York Stock Exchange wasn't an option, according to one person involved in the discussions over the weekend. While other, all-electronic exchanges could have opened for business, the Big Board's role as the official opening and closing price-setter for many benchmark stocks would have posed problems for firms catering to retail investors and mutual funds that calculate their valuations against prices set on the NYSE. Some customers worried they didn't have enough time to address any technical problems that may have surfaced as they rerouted systems to send orders to NYSE's Arca electronic exchange. Others faced the prospect of not being able to handle any trades whatsoever, due to not having adequate backup plans, according to people close to the matter.
UBS To Reveal Investment Bank Exit Plans Tuesday (Reuters)
The move will focus Zurich-based UBS around its private bank and a smaller investment bank, ditching much of the trading business that saw it lose $50 billion in the financial crisis and one rogue trader lose $2.3 billion last year...Investors are keen for details on how the Swiss bank will wind down the fixed income unit without incurring big losses. Employees complain they have been in a state of limbo after months of rumors of cuts. "It's becoming like torture, especially for those that don't think they will be compatible with the new Orcel team," said one employee, referring to Andrea Orcel, a close ally of Ermotti from Bank of America who arrived in July and is expected to run the investment banking unit's remaining businesses. Bankers were already anxiously awaiting news of an initial 400 job cuts set to hit this week, though that will likely be just the beginning of a cycle of layoffs that will hit those in fixed income trading the worst.
Nomura Trails Goldman in Return on Equity Amid Losses Abroad (Bloomberg)
“The current levels of net income are absolutely not adequate,” Nomura’s Co-Deputy Chief Financial Officer Jonathan Lewis said in a phone interview yesterday. “Return on equity of 0.5 percent for the second quarter is not where we want to be.”
Investors Play Lehman Claims Games (WSJ)
In the Lehman case, some big investors have been buying the claims against the London unit for more than 100% of their original value, according to buyers and sellers, as well as the administrator for the subsidiary. This stands out, as IOUs from bankrupt companies typically fetch severely discounted prices of half or less than their original value. Claims against other Lehman units are selling for far less.
Milken's Past Invoked In Gupta Sentencing (Dealbook)
Judge Jed S. Rakoff, the presiding judge in Mr. Gupta’s case, made a surprising reference to Mr. Milken during the hearing. It came after Mr. Gupta’s lawyer, Gary P. Naftalis, made a plea for a lenient sentence. Mr. Naftalis cited the hundreds of letters of support for Mr. Gupta, who in addition to his business accomplishments has played a leading role in fighting global disease. He read a letter from Barry Bloom, the former dean of the Harvard School of Public Health. “Dr. Bloom stated, ‘To my knowledge, as someone who has worked in global health for 40 years, with the sole exception of Bill Gates, no leader of the private sector or corporate world has invested so much of his time, energy, and personal credit to do so much for the poorest people of the poorest countries than Rajat Gupta,” Mr. Naftalis said. “I’m glad he didn’t say except for Michael Milken,” Judge Rakoff responded.
Storm Overwhelms Atlantic City (NYT)
“The city is under siege,” said Thomas Foley, the city’s chief of emergency management. “Sandy is pretty furious at Atlantic City. She must have lost a bet or something. As we say in our slogan, ‘Do A.C.’ She’s doing A.C., all right.”