U.S. Gas Exports Surge as Iran Sanctions Crimp Supplies

“At a time when sanctions are causing a slump in Iranian cargoes of liquefied petroleum gas, the U.S. is exporting more fuel than ever, driving up tanker rates for BW Group Ltd. and other ship owners.

U.S. sales (EPD) jumped 27 percent last year as those from Iran fell 18 percent, according to the Energy Department and Joachim Grieg & Co., an Oslo-based shipbroker. Tanker rates will rise 6.7 percent to a record $32,000 a day in 2013, RS Platou Markets AS estimates. The U.S. surge is boosting demand for export terminals and shares of Enterprise Products Partners LP, which operates one in Houston, will gain 10 percent in a year, analyst forecasts compiled by Bloomberg show.

Iranian sales are being curbed by European Union sanctions that prohibit any vessel insured in the 27-nation bloc from carrying the country’s energy products. That applies to about 90 percent of the world’s merchant fleet. LPG, which is used for cooking and in petrochemicals, is a byproduct of natural-gas output and the U.S. is producing more than ever as it taps deposits from previously inaccessible shale rocks.

“In Iran you clearly see the declining trend, but don’t forget the U.S. is expanding, so there’s some substitution,” said Steve Engelen, the Oslo-based head of research at Joachim Grieg. “More buying and selling and shifting trade tends to be positive for shipping.”

Minute Steaks..”

“SAP AG (SAP), the biggest maker of business-management software, reported earnings trailing analysts’ estimates as the company increased spending and growth in the Americas slowed. The shares fell.

Fourth-quarter operating profit excluding some items rose about 10 percent to 1.96 billion euros ($2.61 billion), the Walldorf, Germany-based company said today in a statement. Analysts projected 2 billion euros, the average of estimates compiled by Bloomberg. Sales of new software licenses, an indicator of future revenue, climbed 9 percent to 1.94 billion euros, compared with analysts’ 1.95 billion-euro projection….”

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“Oil traded near the highest level in almost four months in New York before reports that may show the economy recovering in the U.S. and as lower temperatures buoy demand for heating fuels.

West Texas Intermediate was little changed after climbing 0.6 percent yesterday. The U.S. East Coast and Midwest will be 5 degrees Fahrenheit (2.8 Celsius) below normal from Jan. 19 to Jan. 23, according to Commodity Weather Group LLC in Bethesda, Maryland. Retail sales probably rose for a second month in December, a Bloomberg News survey of economists predicted before Commerce Department data today.

“Colder weather is helping the energy complex,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who predicts WTI may remain capped at about $95.60 a barrel. “The global oil market looks evenly balanced.”

Crude for February delivery was at $93.70 a barrel, down 44 cents, in electronic trading on theNew York Mercantile Exchange at 12:55 p.m. London time. The contract increased to $94.14 yesterday, the highest settlement since Sept. 18. Prices dropped 7.1 percent last year.

Brent for February settlement was at $111.58 a barrel, down 30 cents, on the London-based ICE Futures Europe exchange. The more-active March contract slipped 20 cents to $110.75. The front-month European benchmark contract was at a premium of $17.89 to WTI futures. It settled at $17.08 on Jan. 11, the narrowest since Sept. 19…”

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Empire Manufacturing: Prior  , Market Expects  , Actual -7.58

Retail Sales: Prior 0.3%, Maket Expects 0.2%, Actual  0.5% …..ex auto +0.3%

PPI: Prior -0.8, Market Expects 0.0, Actual 0.2%

“…..There is a little bit of disappointment because of the GDP figures,” Robert Halver, head of capital markets research at Baader Bank AG in Frankfurt, said in a telephone interview. “The fourth quarter of 2012 should be the only one showing negative growth, with the following quarters showing better figures of economic activity. This is just a negative blink, not a sustainable trend.”

German gross domestic product may have dropped as much as 0.5 percent in the fourth quarter from the previous period, the Federal Statistics Office in Wiesbaden said today in a preliminary estimate. Growth slowed to 0.7 percent in 2012 from 3 percent in 2011, it said. Economists had forecast an expansion of 0.8 percent, according to the median of 28 estimates in a Bloomberg News survey.”

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“U.K. inflation held at the highest rate since May last month as increases in gas and electricity bills helped to keep consumer-price growth above the Bank of England’s target.

Consumer prices rose 2.7 percent from a year earlier, the same as in November and October, the Office for National Statistics said today in London. That matched the median estimate of 36 economists in a Bloomberg News survey. Housing and utility costs added 0.26 percentage points to inflation. From the previous month, prices rose 0.5 percent….”

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“European stocks declined as concern that debt-ceiling talks will harm the U.S. economy, and a report showing German growth slowed more than expected in 2012 offset Spain’s better-than-targeted sale of debt.

IG Group Holdings Plc (IGG) slipped 2.4 percent after saying first-half net trading revenue fell. Air Liquide SA (AI), a maker of industrial gases, retreated 1.5 percent after Bank of America Corp. cut its recommendation on the stock. Hennes & Mauritz AB (HMB) advanced 3.4 percent after posting sales that beat estimates.

The Stoxx Europe 600 Index (SXXP) lost 0.4 percent to 285.0 at 1:16 p.m. in London….”

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“China’s customs administration said every dollar of trade is documented, defending the quality of export data that analysts at UBS AG and Australia & New Zealand Banking Group Ltd. said may fail to capture the true picture.

“Customs import and export statistics are based upon actual customs declarations,” the General Administration of Customs said today in an e-mailed statement, responding to questions submitted by Bloomberg News on Jan. 11. “In our published export and import data, every dollar has a corresponding customs declaration document to back it.”

Last week’s customs report showing export growth of 14.1 percent in December from a year earlier, after a 2.9 percent gain in November, spurred skepticism from economists at banks including UBS, which cited discrepancies with other nations’ imports from China. Smaller trade gains could signal a less robust recovery from a seven-quarter slowdown.

“It is possible that local governments may have tried to boost exports data by either making round trips in special trade zones” or by exporting “earlier than otherwise in an attempt to improve the annual exports data,” Goldman Sachs Group Inc.’s Beijing-based economists Yu Song and Yin Zhang wrote in a Jan. 10 note. “Having said that, there is no concrete evidence to suggest this is what actually happened.”

Goldman Sachs and ANZ also cited a divergence from overseas orders in a manufacturing index, while Mizuho Securities Asia Ltd. said the increase could indicate exporters’ rush to finish year-end orders and government pressure to report exports before the end of the year to reach the official 2012 target of 10 percent growth….”

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“The Australian dollar slid versus most of its 16 major peers before a report this week that may show an increase in unemployment, adding to signs of weakness in the domestic economy.

Australia’s currency fell against the dollar on prospects employers in the South Pacific nation last month added the fewest jobs since a decline in August. Both the so-called Aussie and itsNew Zealand counterpart, known as the kiwi, tumbled from the highest levels in more than four years versus the yen after comments by Japan’s economy minister stoked speculation the country won’t try to spur further losses in its currency.

“There is underlying weakness in the labor market,” said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “If we do a get a weaker unemployment read, the market will look to take the Aussie lower.”

The Australian dollar fell 0.2 percent to $1.0549 as of 4:45 p.m. in Sydney after rising 0.3 percent yesterday. It touched 94.66 yen, the highest since August 2008, before trading at 93.83, 0.8 percent below the close in New York. New Zealand’s currency, known as the kiwi, lost 0.3 percent to 84.05 U.S. cents. It slid 0.9 percent to 74.75 yen after earlier reaching 75.53, the strongest since September 2008..”

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“Prime Minister Shinzo Abe’s fiscal and monetary stimulus measures may trigger a collapse of Japan’s economy as early as this year, according to Takeshi Fujimaki, a former adviser to billionaire investor George Soros.

The yen has slumped 6 percent since elections last month returned power to the Liberal Democratic Party run by Abe, who’s demanded that the Bank of Japan (8301) undertake unlimited cash infusions to end deflation. The premier also unveiled 10.3 trillion yen ($116 billion) in extra spending last week, a step that will add to public debt that’s already more than double the size of the nation’s economy.

“Large-scale spending is ridiculous given the amount of debt Japan has accumulated, while I think highly of Abe in regards to his intention to weaken the yen to support growth,” the president of Fujimaki Japan, an investment advising company in Tokyo, said in an interview on Jan. 11. “Abe’s policies would have worked some 10 years ago, but now they will only accelerate an economic collapse.”

Fujimaki said in an interview last June that Japan may default on its debt within five years and the yen could weaken to as much as 400-500 per dollar. He advised Japanese investors then to hold assets in foreign currencies such as the greenback, Swiss franc, U.K. pound and the Australian and Canadian dollars.

Borrowing in yen and investing in those currencies would have returned an annualized 32 percent as of yesterday, Bloomberg data show….”

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“The yen gained the most in eight months against the dollar after Japan’s economy minister said the nation faces risks from excessive declines. U.S. stock-index futures fell, while platinum reached a three-month high and Spanish notes rose after a debt sale.

The yen strengthened 1.1 percent 88.54 per dollar at 8 a.m. in New York after climbing 1.3 percent. South Africa’s rand slipped against its 16 major peers, while platinum jumped 1.9 percent. Standard & Poor’s 500 Index futures slid 0.4 percent and the Stoxx Europe 600 Index lost less than 0.1 percent. Lonmin Plc, the world’s third-largest platinum producer, rallied to a three-month high. Spanish securities rebounded after the country sold more debt than targeted and 10-year Treasuries rose for a third day.

Economy Minister Akira Amari warned of harmful effects “if the yen excessively weakens” in Tokyo today. Treasury SecretaryTimothy F. Geithner warned yesterday of severe economic hardship should Congress fail to raise the debt ceiling that lawmakers have increased or revised 79 times since 1960, including 49 times under Republican presidents. Anglo American Platinum Ltd. said it will idle four shafts in South Africa, cutting output by 400,000 ounces a year after a review of its operations.

“The world has gone massively short yen on the idea that Japan is going to be more aggressive with its stimulus under the new prime minister,” said Imre Speizer, an Auckland-based strategist at Westpac Banking Corp. “Comments like Amari’s are likely to spook those holding yen shorts.” A short position is a bet a security will decline in value….”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

The Honorable John A. Boehner

Speaker

U.S. House of Representatives

Washington, DC  20515

Dear Mr. Speaker:

I am writing to provide additional information regarding the extraordinary measures Treasury has undertaken in order to avoid default on the nation’s obligations.

Treasury currently expects to exhaust these extraordinary measures between mid-February and early March of this year.  We will provide a more narrow range with a more targeted estimate at a later date.  Any estimate, however, will be subject to a significant amount of uncertainty because we are entering the tax filing season, when the amounts and timing of tax payments and refunds are unpredictable.  For this reason, Congress should act as early as possible to extend normal borrowing authority in order to avoid the risk of default and any interruption in payments.

If the extraordinary measures were allowed to expire without an increase in borrowing authority, Treasury would be left to fund the government solely with the cash we have on hand on any given day.  As you know, cash would not be adequate to meet existing obligations for any meaningful length of time because the government is currently operating at a deficit.

The U.S. government makes approximately 80 million separate payments per month.  These include payments for Social Security; Supplemental Security Income; Medicare; Medicaid; national security needs, including military salaries, military retirement, veterans’ benefits, and defense contractors; income tax refunds; federal employee salaries and retirement; law enforcement and operation of the justice system; unemployment insurance; disaster relief; goods and services sold to the government under contracts with small and large businesses; and many others.  If Congress does not act to extend borrowing authority, all of these payments would be at risk.  This would impose severe economic hardship on millions of individuals and businesses across the country.

It is important to point out that extending borrowing authority does not increase government spending; it simply allows the Treasury to pay for expenditures Congress has previously approved.  Failure to meet those obligations would cause irreparable harm to the American economy and to the livelihoods of all Americans.  Even a temporary default with a brief interruption in payments that Congress subsequently restores would be terribly damaging, calling into question the willingness of Congress to uphold America’s longstanding commitment to meet the obligations of the nation in full and on time.  It should also be noted that default would increase our borrowing costs and damage economic growth and therefore add to future budget deficits, not decrease them.  This is why no President or Secretary of the Treasury of either party has ever countenanced even the suggestion of default on any legal obligation of the United States.

Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation’s borrowing authority.  No Congress has ever failed to meet that responsibility.  It must be understood that the nation’s creditworthiness is not a bargaining chip or a hostage that can be taken to advance any political agenda; it is an essential underpinning of our strength as a nation.  Threatening to undermine our creditworthiness is no less irresponsible than threatening to undermine the rule of law, and no more legitimate than any other common demand for ransom.

In an address to the nation in 1987, President Reagan said, “Unfortunately, Congress consistently brings us to the edge of default before facing its responsibility.  This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits.  Interest rates would skyrocket.  Instability would occur in financial markets and the federal deficit would soar.  The United States has a special responsibility to itself and the world to meet its obligations.  It means we have a well-earned reputation for reliability and credibility – two things that set us apart in much of the world.”

President Obama has put forth detailed proposals to restore fiscal responsibility to the federal budget, and he strongly believes Democrats and Republicans should join together to reduce our deficits.  In the meantime we must protect America’s creditworthiness by ensuring that our government can pay the bills it has already incurred.  Therefore, I respectfully urge Congress to meet its responsibility to the country by extending normal borrowing authority well before the risk of default becomes imminent.

Sincerely,

Timothy F. Geithner

Identical letter sent to:

The Honorable Nancy Pelosi, House Democratic Leader

The Honorable Harry Reid, Senate Majority Leader

The Honorable Mitch McConnell, Senate Republican Leader

cc:        The Honorable Dave Camp, Chairman, House Committee on Ways and Means

The Honorable Sander M. Levin, Ranking Member, House Committee on Ways and Means

The Honorable Max Baucus, Chairman, Senate Committee on Finance

The Honorable Orrin G. Hatch, Ranking Member, Senate Committee on Finance

“A key New York Senate leader and the Assembly speaker said they expect the state Legislature to vote Monday to enact what would be the nation’s first gun control measure following last month’s Connecticut school shooting.

“I think when all is said and done, we are going to pass a comprehensive gun bill today,” Sen. Jeffrey Klein told reporters Monday morning. “I’m very excited about it. I am very confident we are going to vote on a comprehensive bill that will be agreed on by the governor, the Senate and Assembly.”

“My understanding is the vice president’s going to provide a range of steps that we can take to reduce gun violence,” said Obama. “Some of them will require legislation, some of them I can accomplish through executive action. And so I will be reviewing those today, and as I said, I will speak in more detail to what we’re going to go ahead and propose later in the week. But I’m confident that there are some steps that we can take that don’t require legislation and that are within my authority as president, and where you get a step that, has the opportunity to reduce the possibility of gun violence, then i want to go ahead and take it.”

Full article and video

“Dell is in talks with several private equity firms to go private, according to Bloomberg News.

The stock is up 14% on the news.

Bloomberg tweets: “several large banks have already been contacted about financing an offer.”

Dell had an awful Q3, when it missed analysts’ expectations of $13.9 billion in revenues and $0.40 in earnings per share. The actual numbers: $13.7 billion in revenue and $0.39 in EPS.

Dell is suffering from a decline in consumer interest in PCs.

PC sales were down almost 5% during the holidays, according to Gartner….”

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“New pipelines may provide new revenue for US refiners, which have seen big gains in 2012 and are now seeking to ride the wave of success.

HollyFrontier Corp (NYSE:HFC), Phillips 66, Tesoro Corp. (NYSE:TSO), Marathon Petroleum Corp. (NYSE:MPC), Valero Energy Corp. (NYSE:VLO) are among those refiners to keep an eye on as margins for turning oil into gasoline narrow.

Why have refiners seen gains of over 85% for 2012? Look at the margins. Because of a glut in US production, these refiners have been able to purchase oil at an average of $17.46/barrel BELOW the global benchmark. This year should see an even better margin.

This margin could narrow by close to 70% with new pipelines. If this happens, refiners are set to have an even better year.

Now it’s all about pipeline expansion. More than 20 new pipelines are scheduled to become operational in 2013—meaning more oil routed to more buyers. Refiners are seeking to cut in on this link and remove the middle man.

It’s a good enough plan to have Standard & Poors 2012 index list refiners fourth out of 154 industry groups.

Phillips 66 and Marathon are leading the run on pipelines, and investors are taking note—investors like Warren Buffet, on whose word the market seems to hang.

Buffet—the owner of Berkshire Hathaway Inc.—is betting on refiners for 2013. He likes the diversification….”

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“It is time to review some ancient stock market jargon, in order to understand the principle of the disappearing market volume.

A “lot” is 100 shares of stock.  In the era of specialists controlling trading on the floor of the NYSE, trading was done much more easily in “round lots”, meaning multiples of 100 shares which the specialist could apportion out to other traders, much like how an air traffic controller directs multiple inbound and outbound aircraft in the same airspace.  In the days before computers and calculators, putting transactions in round lots made things easier; figuring out how much money had to change hands for a stock at $93/share is much easier if the quantity is 100 shares.  That’s easy math: $9300.  It gets harder if the multiple is different than 100.

“Odd lots” means anything other than a round lot, and in the old days, odd lot orders would go to the “odd lot desk” in order to get aggregated with others into round lots, or otherwise married up with a corresponding opposing order or acceptance.

In the days of paper order slips, order ledgers, and share certificate clerks running paper back and forth across lower Manhattan, these were important functions….”

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“Total earnings for these 22 companies are up +1.4% from the same period last year, with total revenues up +3.5%. This is better performance than what this same cohort of 22 companies did in the third quarter when total earnings were down -2.4% from the year-earlier period….”

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