Millions are Without Power from Hurricane Sandy

story first appeared on usatoday.com

After leaving a deadly trail of devastation in New Jersey and New York, Superstorm Sandy's brute power is fading as it courses north. But the threat of heavy rains, snow and continued flooding could linger over a huge swath of the Northeast and Midwest for several days.

Now classified as an "extratropical" storm by the National Weather Service,

Sandy has caused at least 50 U.S. deaths so far — 25 in New York, including 18 in flood- and wind-ravaged New York City.

An estimated 8.2 million people were without power Tuesday across 17 states and the District of Columbia. About 2.3 million are in New Jersey alone, where Gov. Chris Christie said Sandy left "absolute devastation" and "unthinkable damage" along coastal towns ravaged by flooding and gale-force winds. More than 20,000 residents of Hoboken were reported stranded late Tuesday night as flooding conditions worsened along the Hudson River.

Some restaurant owners feared losing supply when electricity was lost to their Walk-in Coolers.

President Obama is expected to survey damage in hard-hit areas of New Jersey Wednesday. "We're going to do everything to help you get back on your feet," he said.

Although Sandy's wrath had prompted the cancelation of some 16,000 airline flights through Tuesday, some limited air travel is expected to return to the New York City metro area Wednesday .The Port Authority of New York and New Jersey says John F. Kennedy International Airport in New York and Newark International Airport in New Jersey will open at 7 a.m. with limited service.

Emergency responders continue to scramble to flooded communities still awaiting evacuation. Toms River, N.J., Police Chief Michael Mastronardy said at least 150 people were rescued on flooded Seaside Heights, a barrier
island.

The massive, pinwheel-shaped storm, nearly 900 miles wide, is expected to drub the upper Northeast and Midwest as it moves into Canada this afternoon.

Flooding remains a concern in several states, while bone-chilling temperatures and the prospect of heavy snow remains problematic in the Appalachians, where up to 3 feet has already fallen in parts of Maryland and West Virginia. Wind gusts of up to 60 mph were pummeling Lake Michigan on Chicago's lakefront. In a measure of its massive size, waves on southern Lake  Michigan rose to a record-tying 20.3 feet. High winds spinning off Sandy's edges clobbered the Cleveland area Tuesday, uprooting trees, closing schools and flooding major roads along Lake Erie.

Restoring power to New York City's boroughs remains a challenge and could take a week or longer. "Recovery is a mammoth job" in the days ahead, said New York Mayor Michael Bloomberg, who called Sandy among the worst to ever hit the nation's most populous city.

Few weather events inflict more damage on electrical substation equipment than floods, says Nicholas Abi Samra, an expert on the effect of extreme weather on power grids. "Restoring flooded substations takes much longer than restoring a downed power line," says Abi-Samra, a manager with North Carolina-based energy consultant Quanta Technology.

More than 6,000 New York City residents are still in the city's 76 evacuation centers. Some 110 homes were destroyed or heavily damaged by wind-swept flames in the tiny Queens borough beachfront community of Breezy Point. "We're all devastated. But we're so thankful that this time no one was killed," said Marilyn Coady, a resident for 46 years who lives near the six-block area that was destroyed in the storm.

In New Jersey, Gov. Christie described devastation including seaside rail lines washed away and parts of the coast still underwater.

"It is beyond anything I thought I'd ever see," he said. "It is a devastating sight right now."


Bloomberg said New York City schools would remain closed Wednesday but city workers would return to their jobs. Evacuation orders remain in place for low-lying areas of the city.

The storm sent a surge of water over seawalls in Lower Manhattan and into streets, subway stations and electrical equipment. A large tanker ran aground on Staten Island and winds collapsed a construction crane 74 stories high atop an expensive new condo building. Bloomberg said people evacuated from around the crane cannot return until it is stabilized.

Sandy will end up causing about $20 billion in property damage and $10 billion to $30 billion more in lost business, making it one of the costliest natural disasters on record in the U.S., according to IHS Global Insight, a forecasting firm.

Bloomberg, who said he expects the city's death toll to rise as emergency workers move through neighborhoods that were among the hardest hit, gave a somber account of some of those who died.

They included two who drowned in a home and one who was in bed when a tree fell through an apartment. A 23-year-old woman died by stepping into a puddle near a live electrical wire. A man and a woman were crushed by a falling tree.

An off-duty officer on Staten Island who ushered his relatives to the attic of his home apparently became trapped in the basement.

Sandy also killed 69 people in the Caribbean before making its way up the Eastern Seaboard.

Obama declared New York and New Jersey federal disaster areas.

The disaster declaration makes federal funding available to residents and businesses in the affected areas, which bore the brunt of the sea surge from the superstorm. Speaking during a stop Tuesday at Red Cross headquarters, Obama warned that the massive storm "is not yet over."
He said there were still risks of flooding and downed power lines and called the storm "heartbreaking for the nation."

The president said he told governors in affected areas that if they get no for an answer, "they can call me personally at the White House."

Jeff Masters, meteorology director for Weather Underground, a private forecasting service, called the storm surges some of the highest ever recorded.

In New Jersey, where the storm came ashore, hundreds of people were evacuated in rising water Tuesday. Officials used boats to try to rescue about 800 people living in a trailer park in Moonachie.

A hoarse-voiced Christie gave bleak news at a morning news conference: Seaside rail lines washed away. No safe place on the state's barrier islands for him to land. Parts of the coast still under water.

"It was an extremely devastating and destructive storm, hopefully one that people will only see once in their lifetime," said Joe

Pollina, a National Weather Service meteorologist.

Con Edison spokeswoman Sara Banda said power was out for 804,000 of their customers in New York -- four times the number affected by Hurricane Irene. "This is the largest storm-related outage in history," Banda said.

New York Gov. Andrew Cuomo in an interview with WCBS News radio said Tuesday that power restoration is going to be a real challenge.

A massive explosion at a power substation in Lower Manhattan on Monday evening contributed to the power outages. No one was injured, and the power company did not know whether the explosion was caused by flooding or by flying debris.

New York University's Tisch Hospital was forced to evacuate 200 patients after its backup generator failed. NYU Medical Dean Robert Grossman said patients — among them 20 babies from neonatal intensive care that were on battery-powered respirators — had to be carried down staircases and to dozens of waiting ambulances.

Stock trading was closed in the U.S. for a second day Tuesday — the first time the New York Stock Exchange will be closed for two consecutive days due to weather since 1888, when a blizzard struck the city. Trading was scheduled to resume on Wednesday.

Tonight's Halloween Parade in Greenwich Village has been postponed until some time next week, Bloomberg said. The city's famed New York City Marathon is still scheduled for Nov. 4.

Sandy is still expected to produce strong winds across the Mid-Atlantic and New England, as well as rainfall amounts of 4-8 inches over portions of the Mid-Atlantic. Additionally, snowfall totals of 2-3 feet were possible in the mountains of West Virginia, where blizzard warnings remain in effect.

SEC Approves 'Circuit Breaker'

The Wall Street Journal

Trading exchanges as early as Friday will implement rules designed to tame the volatility of individual stocks by temporarily halting trading during dramatic price changes, even as market participants are bracing for stiffer rules.

Members of the Securities and Exchange Commission signed off on the stock market "circuit breaker" Thursday, the agency said.

The New York Stock Exchange said it will begin a phased rollout on Friday. BATS Global Markets and Direct Edge also have said they expect to begin implementation Friday.

The rule will be in effect on a pilot basis for six months.

The cross-market trading pause was proposed last month in response to the May 6 "flash crash" that saw the Dow Jones Industrial Average plummet almost 1,000 points before partially recovering.

All exchanges will halt trading for five minutes in an individual stock when its price moves 10% or more, up or down, in the previous five minutes. The pause is designed to give traders time to catch their breath and assess whether a stock's price change stems from a real shift in value or an unrelated market hiccup.

"These new rules will ensure that all markets pause simultaneously and provide time for buyers and sellers to trade at rational prices," said SEC Chairman Mary Schapiro.

The SEC considers the stock-by-stock circuit-breaker rule to be the first step of several to curb damage caused by unusual market fluctuations like those seen May 6. Regulators haven't pinpointed a single cause for the incident and are saying it was caused by a confluence of events.

The financial industry generally supports the circuit breaker, but most observers and regulators agree that it alone won't stop another flash crash from occurring.

Right now, the circuit breaker applies only to stocks contained in Standard & Poor's 500-stock index. It doesn't cover smaller cap stocks or index-based products such as exchange-traded funds, which were some of the stocks most dramatically affected on May 6.

"It is my hope to rapidly expand the program to thousands of additional publicly traded companies," Ms. Schapiro said.

In a letter to the SEC, Rep. Melissa Bean (D., Ill.) said, "I am concerned that by limiting the rules to the issuers in the S&P 500, other issuers will be vulnerable to continued market volatility."

The Issuer Advisory Group suggested that regulators include an "opt-in" provision that would permit non-S&P 500 companies to elect to participate.

Other people commenting about the rule are concerned about the market disruptions outside of the 9:45 a.m. to 3:45 p.m. EDT window when the circuit breaker would be in effect. TD Ameritrade Inc. said 10% to 15% of its trades on any given day are placed overnight to be executed at market open, leaving those stocks vulnerable for 15 minutes.

As a next step, the SEC is looking to ban "stub quotes," which are placeholder prices that tend to be far from an actual market price. Normally, those trades won't get executed. But investigators believe that on May 6 some trades were executed unintentionally at stub-quote prices.

The SEC also is working with exchanges to create a unified and predictable policy for breaking erroneous trades.

Regulators and exchanges have said they are dissatisfied with the decision to cancel hundreds of trades that occurred during the height of market volatility on May 6. After the flash crash, the exchanges decided to cancel all trades executed at prices that were more than 60% above or below those printed before 2:40 p.m.

The SEC is eyeing certain types of buy and sell orders for further regulation. Ms. Schapiro has identified two of these types: market orders (orders to buy or sell at market price without regard to fluctuations) and stop-loss orders (orders to sell when a stock falls to a certain price). Investigators of the flash crash believe those types of orders could have accelerated the market drop.

Regulators also will be keeping an eye on different exchanges' rules to curb market volatility. NYSE Euronext has a protocol that halts trading in stocks under certain circumstances. Nasdaq OMX Group Inc. last week announced a similar system that it says is designed to complement the stock-by-stock circuit-breaker rule.

Knight Capital Group Inc. said in a letter to the SEC that the NYSE and Nasdaq protocols, combined with SEC rules on market pauses, "could all be triggered during volatile market periods, creating a great deal of confusion and uncertainty."

The NYSE will undergo a phased rollout of the circuit-breaker pilot program, with the circuit breakers for some stocks starting Friday and the remainder being added early next week, according to Raymond Pellecchia Jr., vice president of corporate communications at NYSE Euronext.

By Wednesday, the circuit breakers will be functioning for all affected stocks, he said.

This weekend, the NYSE will provide scripted halt messages during a testing period that will allow member firms to ensure they receive them properly. The exchange hosted a similar testing session last weekend as well. Mr. Pellecchia said firms can participate in the testing remotely, and so it won't necessarily require traders to be on the floor on a weekend.

World Stocks Sag on Renewed Europe Fears

Yahoo News

Asian markets were also hit hard by reports that North Korean leader Kim Jong Il ordered his military to be on combat alert amid rising tensions on the peninsula.

 

 

World stock markets and the euro tumbled Tuesday on fears Europe's debt crisis will cause a prolonged slump in the region and weaken the outlook for global growth.

In Europe, Britain's FTSE 100 closed down 128.93 points, or 2.5 percent, at 4,940.68 while Germany's DAX index dropped 135.64 points, or 2.3 percent, to 5,670.04. France's CAC-40 sank 99.64 points, or 2.9 percent, to 3,331.29. Markets in Spain and Italy, both carrying high debt levels, both fell around 4 percent.

Wall Street tumbled too — the Dow Jones industrials average slid 153.72 points, or 1.5 percent, to 9,912.85 by early afternoon New York time, while the broader Standard & Poor's 500 fell 16.46 points, or 1.5 percent to 1,057.19.

The euro slid a further 0.5 percent to $1.2277 — heading back toward last week's four-year low of $1.2146.

News of a bank failure in Spain and the prospect of more painful austerity measures across the region renewed investors' worries about growth in Europe and its impact on major trading partners like the U.S., Japan and China.

"Traders are still struggling to find any real conviction to buy into the market and it could take some time for this sentiment to recover," said Anthony Grech, head of research at IG Index.

Once again, Europe's debt crisis was the focus of attention.

The Italian government was due to announce public sector spending cuts to reduce the deficit by euro25 billion ($31 billion) by 2012 in a bid to convince markets that the country can handle its high debt load. On Monday, the International Monetary Fund said Spain, which has already passed tough austerity measures, needed to urgently and radically reform its labor market while consolidating the banking sector.

European officials also remained downbeat.

EU Economy Commissioner Olli Rehn predicted Tuesday that growth in the 27-nation bloc won't top 1.5 percent and the jobless rate will stay close to current highs without reforms over the next five years. He called for greater flexibility for the services sector and the labor market.

Analysts said the coming days will be important for market sentiment — whether investors believe the European Union's $1 trillion rescue package for eurozone countries can avoid a rapid fall in the euro and protect countries from bankruptcy.

"The test for markets over the rest of this week is whether the panic can pass, and a more measured appraisal return," said Daragh Maher, currency analyst at Credit Agricole CIB.

He noted that while the euro is likely to continue to weaken, the EU rescue measures have addressed the main market pitfalls — by giving Greece time to cut its debt and guaranteeing eurozone countries against the risk of default — which should help stymie any sharp sell-off in the short-term.

In Asia, stock indexes were hit hard by the escalating tensions in the Korean peninsula.

A group in South Korea that monitors events in North Korea said Tuesday that Kim Jong Il last week ordered the military to get ready for combat, shortly after South Korea officially blamed his regime for the March 26 sinking of one of its warships that killed 46 sailors.

South Korean officials and other North Korea monitoring groups could not immediately confirm the report by Seoul-based North Korea Intellectuals Solidarity, which cited unidentified sources in North Korea. The Defense Ministry and the Joint Chiefs of Staff said they have not obtained any signs suggesting unusual activity by North Korea's military.

South Korea's benchmark stock index dropped as much as 4.5 percent before recovering some to finish 2.8 percent down at 1,560.83 — its lowest close in more than three months. The South Korean won slid to its weakest level against the dollar in more than 10 months before paring some losses.

Japan's Nikkei 225 stock average shed 3.1 percent to 9,459.89 as the yen's strength against the common European currency hammered exporters.

Hong Kong's Hang Seng index fell 3.3 percent to 19,019.21 while benchmarks in Australia and Indonesia also lost more than 3 percent. Stock markets in India, Singapore and Thailand were down more than 2 percent and China dropped 1.9 percent.

Crude oil for July delivery slumped $2.03 to $68.18 a barrel on the New York Mercantile Exchange, dragging Middle Eastern shares down sharply. Saudi Arabia's Tadawul exchange closed down 6.75 percent while Dubai lost 4.6 percent.

Market Free Fall may Prompt New Rules

NY Times

WASHINGTON — The kind of bungee jump that stocks took Thursday, plunging abruptly before snapping partway back in a brief frenzy of electronic trading, has worried market operators and experts on trading for some time. Despite a surprising consensus about what needs to be done, federal regulators have not shown much urgency in rewriting the rules governing an increasingly fragmented, and computerized, trading system.

That appears likely to change after the wild, record-setting ride that briefly sent the market spinning out of control. President Obama and lawmakers called for action, and regulators at agencies including the Securities and Exchange Commission promised to deliver, even as they struggled to understand the origins and particulars of Thursday’s chaos.

The gist of the solution, according to regulators, traders and academics is that markets need uniform rules for intervening when a stock goes into free fall.

“We need to work out a common consensus as to how markets react when stock prices start to plunge in very short time periods,” said Richard G. Ketchum, the chief executive of the Financial Industry Regulatory Authority, the industry group that polices brokers and exchanges.

Asked why exchanges had not already agreed on such rules, Mr. Ketchum responded: “I can’t say that I have a good answer for that. We should have. And now we must.”

The much-discussed “stock market” — with its connotation of a single entity — is a misnomer. Investors can buy and sell stocks through about 50 markets in the United States. Most of the trades are placed through computer networks, at the direction of computer programs, and orders are routed automatically to the market offering the best price.

It is a system that sometimes spins out of control if the computerized sellers cannot find enough buyers. Last year, on April 28, 2009, the stock price of Dendreon, a Seattle biotechnology company, plunged 69 percent in 70 seconds before trading was halted. When trading resumed the next day, most of the loss was instantly erased.

The same pattern unfolded Thursday, as shares in companies including Procter & Gamble fell precipitously.

Because such declines can reflect a temporary shortage of buyers rather than a permanent loss of value, some of the markets impose “circuit breakers” that pause trading to protect sellers from taking unnecessary losses. The New York Stock Exchange, for example, briefly suspended trading in some shares on Thursday, then slowed the pace of trading to give sellers a better chance to find buyers.

But experts say such safeguards make sense only if they are applied uniformly. When the New York exchange suspended trading Thursday, sellers simply moved to other exchanges with fewer restrictions. In some cases, the supply of buyers on those exchanges already had been exhausted, causing the computerized trading programs to offer shares at lower and lower prices. Some of the resulting downward spirals ended at one penny.

“When the New York Stock Exchange went into slow motion, a system designed to stabilize trading actually backfired in practice,” said James J. Angel, a professor at Georgetown University who studies financial markets. “No exchange should have an independent circuit breaker.”

The S.E.C., which oversees the nation’s equity markets, requires a suspension in trading only in the event of a broad market collapse, defined as a drop of at least 10 percent in the Dow Jones industrial average, which is based on the share prices of 30 large American companies.

Other countries, like Germany, impose similar circuit breakers on trading in shares of any individual company that has a similar drop, but the S.E.C. has never done so. A former S.E.C. official said the possibility had been discussed in recent years, but “I don’t think there was quite the urgency to deal with it.”

The S.E.C. and the Commodity Futures Trading Commission said in a joint statement on Friday that the issue now had their attention.

“We are scrutinizing the extent to which disparate trading conventions and rules across various markets may have contributed to the spike in volatility,” the statement said. “This is inconsistent with the effective functioning of our capital markets and we will make whatever structural or other changes are needed.”

Early this year, the S.E.C. also began a broad review of equity markets, including whether computerized trading is properly regulated.

The heads of several of the largest electronic exchanges said Friday that they would support industrywide rules for breaking free falls.

But there are other ideas to keeping computerized markets in check. Lawrence E. Harris, a finance professor at the University of Southern California, said regulators should simply require all sellers to specify a minimum price below which they do not want to complete the sale of their shares. Market orders, placed at the best available price, can be too risky in the fast-moving age of electronic trading.

On Thursday, some sellers placed orders that were not fulfilled until prices had plunged as low as a penny a share. If sellers had placed “limit orders” instead, those transactions would not have happened, Professor Harris said.

“Electronic exchanges in most other countries only accept limit orders,” said Professor Harris, a former S.E.C. chief economist. “Without any mechanisms to stop the market, we just had stocks falling through the ice.”

But Rafi Reguer, a spokesman for the electronic exchange Direct Edge, said retail investors liked market orders because limit orders could be rejected, forcing the seller to try again, in some cases at a lower price.

“Sometimes what people value is the certainty of execution,” Mr. Reguer said.

Experts also note that the value of limit orders can be subverted if investors routinely set unrealistically low limits, to avoid the inconvenience of having their orders rejected.

The BATS Exchange, a large electronic exchange based near Kansas City, rejects orders if the price would be more than 5 percent or 50 cents away from the last completed transaction.

During the market panic on Thursday, between 2:40 and 3 p.m., BATS prevented more than 47.6 million orders from executing — more than 95 percent of all orders during that period, according to Randy Williams, a spokesman for the company.