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• EIA:2/3 New York City Gas Stations Don’t Have Gasoline To Sell
• Sr Tsy Offl: China Needs Appreciate Yuan More, Boost Demand
• ForexLive North American wrap: Upbeat payrolls fail to impress markets
• US dollar shorts at lowest since Sept 4
• It’s gonna be a cliffhanger
• Don’t mention Japan
• White House says no new measures to announce on SPR after Sandy
• The bleeding continues for cable
• Rating Agencies:Little Damage To Local Gov L-T Cred Post Sandy
• Analysis: Some Scheduled US Tax Hikes Not Part of Fiscal Cliff
• AUD/USD falls to 200-day moving average
• Fed’s Williams says unemployment to stay above 7% through at least 2014
• Fed’s Williams: FOMC May Expand QE3 To Include Other Assets
• I can’t blame you, Joe
• Neither Mr. Market nor Macayla is that impressed with payrolls
• 200-day average probed
• China services to be in focus after the weekend
• Japanese politicians begin discussions to raise debt ceiling
• Acquitted Greek journalist fires back
• US DATA: ISM-NY says they hope to have a new………

EIA:2/3 New York City Gas Stations Don’t Have Gasoline To Sell Posted: 02 Nov 2012 03:10 PM PDT WASHINGTON (MNI) – Due to the disruptions to gasoline supply caused by Hurricane Sandy, the U.S. Energy Information Administration Friday announced it has began conducting an emergency survey to monitor vehicle fuel supply conditions in the New York City metropolitan area. “Based on today’s emergency survey of gasoline availability, EIA estimates that two-thirds of gas stations in the New York Metropolitan area do not have gasoline available for sale,” the EIA said. “This number includes stations that reported no gasoline available and those we could not reach after numerous attempts, and consequently assume that the station was closed,” it added. According to the EIA, of the stations sampled, one-third had gasoline available for sale, 3% were not selling gasoline because they had no power, 10% had power but no gasoline supplies, and 53% percent did not respond to attempts to contact them. ** MNI Washington Bureau: 202-371-2121 ** [TOPICS: MAUDS$,M$U$$$]

Sr Tsy Offl: China Needs Appreciate Yuan More, Boost Demand Posted: 02 Nov 2012 01:50 PM PDT By Steven K. Beckner (MNI) – Ahead of this weekend’s Group of 20 meetings in Mexico City, a senior U.S. Treasury official stressed the need for China to make further progress toward exchange rate flexibility and toward increasing domestic demand in its economy to reduce its large trade surplus. The official also said a central focus of the gathering of G20 Finance Ministers and central bank governors will be the ongoing problems in Europe. Encouraging steps have been taken in the 17-nation Euro zone, including the European Central Bank’s sovereign bond buying program and the euro-zone bail-out fund or European Stability Mechanism, but more progress is needed, the official said in a conference with reporters. The senior Treasury official suggested some forbearance is needed as Greece, the Eurozone member that is deepest in crisis, tries to comply with fiscal and other reforms demanded by its official creditors. Fending off potential criticism of the U.S. budget deficit, the official said the Obama administration is pushing ahead with a medium-term plan to reduce the deficit gradually over a period of years while continuing to provide support for the economic recovery. On a day when the Labor Department reported a better than expected 171,000 rise in non-farm payrolls, but also an uptick in the unemployment rate to 7.95, the official said the U.S. is growing faster than other advanced nations and has built a solid foundation for stronger growth in the future. The U.S. is also ahead of other nations in strengthening its banks and in regulating financial derivatives, the official claimed. But the official acknowledged that “economic and job growth is not yet strong enough” in the United States. China, which is growing considerably faster despite a recent slowdown, needs to do more to “rebalance” its economy, the official said, repeating a mantra that has been coming out of Treasury under both political parties for years. The official stopped well short of Republican Presidential nominee Mitt Romney’s assertion that he will brand China “a currency manipulator” on his first day in office, but declared that “China has further to go” in achieving “greater exchange rate flexibility.” The Chinese yuan has risen some 11% in real terms in recent years, but has “more work to do,” said the official, who added that increasing domestic consumption “has some distance to go.” The official said the Mexico City discussions will largely be a continuation of those that took place in Tokyo last month during the annual meetings of the International Monetary Fund and World Bank. The finance ministers and central bankers, including Fed Chairman Ben Bernanke but not Treasury Secretary Timothy Geithner, will “continue discussions … to strengthen demand and job growth.” “The expectation is that Mexico City will largely continue the conversations we saw in Tokyo on this set of issues including the ongoing crisis response in Europe, including managing growth in emerging markets, where stronger domestic demand remains an imperative.” In the U.S. position is that it will “move forward on a balanced, medium term deficit reduction plan while continuing to maintain support for the recovery.” In particular, the G20 will discuss fiscal and financial problems in Europe. Asked about Greece, the official said, “We’ve been following discussions between the IMF and Greece very closely.” “It’s extremely important that, as Greece undertakes these continued, challenging reforms — fiscal measures, reforms on the structural side, privatization, labor market reforms — that Europe come together in support of those reforms” so that Greece can “stay on the path of sustainability.” “The discussion is ongoing, and we’ve seen some progress there,” the officials went on. “Our hope is that in coming days and weeks those reforms will move through the Greek parliament … (all parties must) insure that the (reform) program goes forward to assure sustainability.” ** MNI ** –email: sbeckner@mni-news.com [TOPICS: M$Q$$$,M$U$$$,M$X$$$,MFU$$$,MFX$$$,MGQ$$$,MGU$$$,MGX$$$]

ForexLive North American wrap: Upbeat payrolls fail to impress markets Posted: 02 Nov 2012 01:46 PM PDT Non-farm payrolls +171K vs +125K exp Unemployment rate 7.9%, as expected Canadian employment +1.8K vs +5.0K exp US Sept factory orders +4.8% vs +4.6% exp Williams: Fed "may expand" its asset purchases to "include other assets." SNB's Jordan says 1.20 cap right 'for the time being' Acquitted Greek journalist fires back Japanese politicians begin discussions to raise debt ceiling Gold drops $40 to $1677 S&P 500 -0.9% to 1415, down 0.2% on week CAD leads, EUR lags The US dollar was on a mission Friday. It rallied on the solid payrolls number and then rallied even harder when the rest of the market was disappointed despite the solid payrolls number. The euro will close very close to the 200-day moving average at 1.2828 but fell nearly a full cent since the beginning of European trading. It was a steady bleed lower. Cable blasted below 1.6080 on the jobs report and continued lower until bids ahead of 1.6000 finally stopped the descent. The Canadian dollar was the only currency that stood up to the US dollar, finishing with a small change at 0.9956 but CAD picked up large gains on the crosses. AUD/USD crumbled below 1.0360 but held above 1.0330. It was the worst day for gold in a long time, perhaps the worst day of the year as the break of $1700 triggered relentless stops down to $1675.

US dollar shorts at lowest since Sept 4 Posted: 02 Nov 2012 12:54 PM PDT The weekly CFTC Commitments of Traders data: EUR short 58K vs 55K last week JPY short 37K vs 18K last week The market has been absolutely piling into yen shorts. Two weeks ago the market was a net long 10K.

It’s gonna be a cliffhanger Posted: 02 Nov 2012 12:30 PM PDT The EUR/USD close, that is. We’ve dipped as low as 1.28215 but are presently back above the 200-day average which sits at 1.2829. A close below the average suggests deeper downside in the days/weeks ahead. A close above suggests we continue more range trade.

Don’t mention Japan Posted: 02 Nov 2012 12:28 PM PDT Fed’s Williams: we have to do everything possible to speed up economy and avoid a Japan-like scenario For the past four years, Japan has been dragged out like it’s some sort of nightmare scenario but the 4%  unemployment and healthy consumer balance sheets are also something to be envied. He adds that there aren’t any obvious sources of growth anywhere in the world and that possible Fed loses on its balance sheet are of no concern.

White House says no new measures to announce on SPR after Sandy Posted: 02 Nov 2012 12:25 PM PDT Did someone think they would deploy the strategic petroleum reserves four days before the election? Really?

The bleeding continues for cable Posted: 02 Nov 2012 12:19 PM PDT Another leg down for cable late in the day in one of the latest Friday moves in awhile. Bids at 1.6000/10 should stop the slide and could set-up a bounce when markets rebound. Overall, cable down 110 pips from this time yesterday.

Rating Agencies:Little Damage To Local Gov L-T Cred Post Sandy Posted: 02 Nov 2012 12:10 PM PDT –But Reimbursement Prospects Important to Credit Assessment By Yali N’Diaye WASHINGTON (MNI) – While natural disasters have the potential to pressure liquidity positions and weaken local governments credit strength in the short term, the Big Three rating agencies indicated they expect little implication for those issuers’ credit quality in the long term. That being said, reimbursement prospects will have an important role in assessing municipal issuers’ credit in the aftermath of hurricane Sandy. “Initially we see strains on liquidity and short-term costs,” Standard & Poor’s U.S. Public Finance analyst Karl Jacob told MNI Friday as the agency was preparing to issue a report on the topic. “But over the long term, ratings don’t tend to change because there is usually a lot of federal and state assistance and insurance policies,” he added. Fitch Ratings also noted in a commentary Friday that “in the immediate aftermath of a number of past disasters, a consequent reduction in credit strength of general government debt seemed inevitable.” “However, any economic and financial impact of those events has proven manageable in the short term and not detrimental to long-term credit quality,” Fitch said, adding that “ratings have rarely been adjusted based solely on the impact of disaster-related damage.” Still, should the damages ultimately fundamentally alter economic prospects of an issuer, the long-term credit assessment could change. “The highest level of concern is likely to be in areas in which rebuilding is prolonged, incomplete, or costly to the locality, or in which population out-migration appears long-lasting,” Fitch warned. But for now, Fitch estimates Sandy’s impact on public finance overall is “uncertain but not likely severe.” Moody’s on Thursday also highlighted that “U.S. municipal issuers have an extremely strong track record of recovering from natural disasters without impairments to bondholders.” It added that while higher credit risk could stem from delayed financial assistance from higher levels of government, Moody’s does not expect such lags to “significantly affect long-term ratings” for issuers with enough liquidity. In the short term, however, disasters such as hurricane Sandy do put pressure on municipalities’ liquidity and credit ratings. In that regard, “Over the coming weeks and months, as more information on the level of damage and prospects for reimbursement and rebuilding become available, Fitch will continue to monitor ratings in affected areas and make adjustments if and when appropriate,” Fitch said. Reimbursement prospects are indeed “very important,” Jacob told MNI, “especially the federal reimbursements,” he said, referring to funds that municipalities receive from the Federal Emergency Management Agency (FEMA). “Many communities have levels of insurance and they have the availability to tap credit,” Jacob said. “But historically the FEMA payments have captured a significant portion of the cost.” “But the timing in the reimbursement of the FEMA payments is always slower than the bills that have to get paid,” he said. “So that’s why we are always interested in liquidity and other options to tap lines of credit” or obtain short-term loans.” Moody’s also stressed the importance of payments from the federal government and reimbursements from insurances, as delays would add strain on the issuers’ finances. And excess costs that are not matched by revenues can reduce fund balances. “Fitch will assess the risk that sufficient funds may not be available for non-discretionary costs including debt service,” the commentary said, adding Fitch would re-evaluate ratings where it perceives “heightened risk.” When assessing the credit risk by type of municipal issuers, some are more vulnerable than others. Moody’s noted that “Issuers of revenue bonds will be most immediately affected by increased expenditures.” “Classes of debt, including sales and special tax revenue bonds, and revenue bonds supported by the operations of healthcare, educational, housing and other enterprise entities may be more vulnerable owing to factors such as appropriation risk and the cyclical nature of revenue streams,” Moody’s added. “The vast majority of tax-supported debt in the affected region is backed by property taxes, mainly through the issuer’s general obligation, with a handful of bonds supported by broad-based sales and/or income taxes,” Fitch noted. It added “the risks of these two types of security are similar.” ** MNI Washington Bureau: 202-371-2121 ** –email: yndiaye@mni-news.com [TOPICS: MAUDS$,M$U$$$]

Analysis: Some Scheduled US Tax Hikes Not Part of Fiscal Cliff Posted: 02 Nov 2012 12:10 PM PDT By Denny Gulino WASHINGTON (MNI) – How much could the taxes on the most heavily taxed part of your income go up Jan. 1? How about 189%? That’s the change in 2013 marginal tax payments if all income is from stock dividends. If all your income is from capital gains, the tax bill on the most heavily taxed portion will go up 58.7%. While old news to tax specialists, who are busy advising clients to accelerate income into 2012, the numerous tax changes scheduled for Jan. 1 are just beginning to sink in for many others. On Capitol Hill, most if not all of the many separate scheduled changes are considered bargaining chips, to be traded and modified in the process of avoiding — and to some extent exploiting — the fiscal cliff deadline. In the process some taxpayers will become relative winners, others losers and lawmakers will find themselves becoming holdouts or compromisers. That process may not end Jan. 1. Some suggest the reason George Lucas chose now to sell his Star Wars franchise to Disney for $4 billion was to play it safe and take the at least $200 million in tax savings under the current 2012 tax rates. The so-called fiscal cliff decisions Congress will face beginning Nov. 13 when the Lame Duck session begins include some big tax alternatives. But some new taxes aren’t generally included among the cliffhangers, though they may become so. Best known among those that are included in the fiscal cliff decisions is whether to let Bush-era tax cuts be extended for all income categories, or just for those with incomes under $250,000. There’s an additional ricochet effect for upper middle-income households that would be moved into the territory covered by the alternative minimum tax for which the “patch” exempting up to $74,450 in income for couples is also set to expire. The non-partisan Tax Policy Center last month said nearly 90% of taxpayers would see their tax bill rise if there are no substantial changes, with low-income households seeing 2009 tax-stimulus tax credits expire and high-incomes seeing rates on ordinary income, capital gains and dividends go up. Without any changes, the government would collect more than $530 billion in additional tax revenue, up about 21%, for the 2013 tax year, averaging $3,500 more per household, the Center estimated. Next, the payroll tax that individuals have withheld from pay and that employers pay to support Social Security, temporarily reduced for two years to stimulate the economy, is set to go back up by 2 percentage points to 6.2%. The Obama administration has not formally proposed cancelling or modifying the payroll tax increase but Treasury Assistant Secretary Jan Eberly referred to the murky policy Friday, telling reporters, “The payroll tax would certainly be among those that would be considered” for discussion. White House spokesman Jay Carney has occasionally been asked about the payroll tax rate’s future and, without being specific, has said there may be some administration proposals on it in December. There is also an indirect effect on the government of the scheduled increase in long-term capital gains taxes, which go to 20% from the current 15%. It is assumed that many investors are poised this year to sell their stocks and bonds that have done well before that rate goes up. That would give government a late 2012 calendar year windfall at the expense of calendar 2013 revenues as happened in 1986. Tax increases that are scheduled but are not being included under the fiscal cliff umbrella are the ones most likely to remain in place regardless of those intense negotiations that may keep Congress busy until the early hours of Jan. 1 or beyond. They include the new 3.8% tax on investment income like trust payments, with some exceptions, or the new 0.9% on earned income for Medicare. They are part of the new health care law but may become bargaining chips after all. For the individual income tax, the rate is set to go to 39.6% for adjusted gross incomes greater than $250,000 from 35%. Along with that the new Medicare tax would boost tax payments 15.7% at a tax rate of 40.5%. For income derived from renting property or from royalty income, the tax payments go up 24% at a rate of 43.4%. Passive trade or business taxes, like the individual rate, go up to 39.6% from 35% which, after than new 3.8% net investment tax, becomes 43.4%. It boosts tax payments on the most taxed portion of income 24% next year compared to this year. For active trade and business incomes, the increase in tax payments is only 13.14%. All those numbers come from the American Institute of Certified Public Accountants. One of their experts, Blake Christian, writes, “Taxpayers making more than $250,000, married filing jointly, or $200,000 if single, may experience 2013 marginal tax rate increases ranging from 13% to 189% depending on the character of the income.” That hardly exhausts the list of tax hikes set for next year: –The top estate tax rate goes to 55% from 35%, with the exemption dropping back to $1 million from $5 million. –The maximum additional child tax credit, refunding the credit amount over owed taxes, falls by half. –Tuition credits under the American Opportunity Credit is set to cover less college cost for fewer years and there will be no refund for 40% of the credit above the tax liability, the Tax Center said. Said the Tax Policy Center of the three-dimensional chess moves that will be fiscal cliff negotiations, “Congress may choose to avoid some of the scheduled tax increases and not others. The separate provisions have very different effects in total and across income groups. Furthermore,” the tax analysis group said, “the measured effect of the different tax increases depends on the order in which they are considered because the provisions interact with one another. The size of these interaction effects, however, varies among different groups of provisions.” ** MNI Washington Bureau: 202-371-2121 ** –email: dgulino@mni-news.com [TOPICS: MAUDS$,M$U$$$,MC$$$$,MFU$$$,MGU$$$]

AUD/USD falls to 200-day moving average Posted: 02 Nov 2012 12:03 PM PDT Today’s 70-pip drop in AUD/USD has wiped out three days of gains and leaves the pair in negative territory on the week. Despite that, there are still reasons for optimism. AUD/USD touched a one-month high yesterday and remains above the 200-day moving average (1.0334). In addition, the 100-day MA crossed above the 200-day MA today.

Fed’s Williams says unemployment to stay above 7% through at least 2014 Posted: 02 Nov 2012 11:34 AM PDT With inflation low, unemployment should be Fed’s focus Fed’s measures ‘are having the desired effects’ Sees growth at 2.5% in 2013, 3.5% in 2014 Threats include Europe and fiscal cliff Nice to have some forecasts but there there isn’t anything to take away. Update: MNI’s Beckner picked up on an important comment that Reuters didn’t carry — that the Fed "may expand" its asset purchases to "include other assets."

Fed’s Williams: FOMC May Expand QE3 To Include Other Assets Posted: 02 Nov 2012 11:30 AM PDT By Steven K. Beckner (MNI) – Emphasizing the “flexibility” of the Federal Reserve’s third round of large-scale asset purchases, San Francisco Federal Reserve Bank President John Williams said Friday that the Fed “may expand” its asset purchases to “include other assets.” Williams, a voting member of the Fed’s policymaking Federal Open Market Committee, said that alternatively the Fed could adjust downward or even end its third round of asset purchases if it finds they aren’t working or are causing problems. However, he strongly suggested that the FOMC will more likely need to continue so-called “quantitative easing,” given that the Fed is “falling short” on both its maximum employment and price stability objectives. And he said high unemployment has to be the Fed’s “central focus” for now, although he emphasized that he is not taking low inflation for granted. Williams voted with the majority on Sept. 13 to Buy $40 billion per month of mortgage backed securities until the labor market improves “substantially” — on top of the $45 billion in longer term Treasury securities it plans to buy through year-end. The FOMC also delayed short-term rate hikes until at least mid-2015 and said it “expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.” . Williams said those policies are helping the housing market and other aspects of the economy and said they should help increase the economy’s growth rate to 2.5% next year and 3.5% in 2014. Speaking to community leaders in Salt Lake City, Utah, Williams said QE3 “is intended to be flexible and adjust to changing circumstances.” “Unlike our past asset purchase programs, this one doesn’t have a preset expiration date,” he said in prepared remarks. “Instead, its duration will depend on what happens with the economy.” Echoing the FOMC statement that it will continue buying MBS “until the job market shows substantial improvement,” Williams added that “we may expand our purchases to include other assets.” “But, if we find that our policies aren’t doing what they’re supposed to do or are causing significant economic problems, we’ll adjust or end them,” he said. Referring to the FOMC’s unprecedented pledge to keep the funds rate very low “for a considerable time” even after the recovery strengthens, Williams said that means “we intend to keep short-term rates low even as the economy improves to make sure this recovery takes hold.” While stressing the Fed’s continued commitment to price stability, Williams said, “the unemployment rate has remained far above the maximum employment level for over four years straight. Thus, unemployment is-and should be-a central focus of monetary policy right now.” “This concentration on getting unemployment down in no way represents a lessening of the importance of price stability,” he continued. “Quite the opposite. Consider that, if the recovery loses steam, inflation could fall too low-well below our 2% goal.” Calling inflation fears unwarranted, Williams noted that “inflation has averaged only 1.7% over the past year, below this 2 percent target.” “This means we’re falling short of both of our goals, especially the maximum employment mandate,” he said. “What’s more, the recovery faces threats from Europe and the fiscal cliff,” he went on. “This is a situation that demands Fed action to keep our economy on track towards maximum employment and price stability.” Aside from European and fiscal headwinds, Williams said business contacts are telling him that uncertainty about the policy outlook is having a “tremendous” effect on economic activity. ** MNI ** –email: sbeckner@mni-news.com [TOPICS: MMUFE$,M$U$$$,M$$BR$,MFU$$$,MGU$$$]

I can’t blame you, Joe Posted: 02 Nov 2012 11:24 AM PDT

Neither Mr. Market nor Macayla is that impressed with payrolls Posted: 02 Nov 2012 11:19 AM PDT Stocks on their lows, commodities getting hit, EUR/USD sitting on its 200-day average.

200-day average probed Posted: 02 Nov 2012 11:10 AM PDT EUR/USD dipped as low as 1.2827, a marginal penetration of the 200-day moving average at 1.2829. You really need a close below the moving average to make a move below it technically meaningful. Support is arrayed down to 1.2815 on a technical basis and to 1.2800 on defense of numerous 1.28/1.32 double-no-touch option strategies.

China services to be in focus after the weekend Posted: 02 Nov 2012 10:53 AM PDT Something to keep an eye on shortly after the open on Sunday is the HSBC China services PMI. The prior reading was 54.3. In the meantime, this should keep you entertained.

Japanese politicians begin discussions to raise debt ceiling Posted: 02 Nov 2012 10:47 AM PDT There was some chatter about Japan’s ‘fiscal cliff’ because the opposition was refusing to discuss raising the debt ceiling until an election date was set, but it sounds like cooler heads are beginning to prevail.

Acquitted Greek journalist fires back Posted: 02 Nov 2012 10:44 AM PDT The Greek journalist put on trial yesterday, and acquitted, for publishing a list of Greeks with Swiss bank accounts spoke to Reuters today. The case raises so many questions because despite front page attention from international media, it was almost entirely ignored by the domestic media. Reuters reports, “coverage of his trial was almost completely absent from television news and relegated to the back of most newspapers.” “The main problem in Greece is the people who govern it. It is a closed group, an elite, one part of which is composed of people from all the parties and the second connected directly or indirectly to business people,” he told Reuters in an interview. Greek authorities have had the list since 2010 and none of the big names have been prosecuted. Pension and wage reform are nice but corruption and tax evasion, it seems to me, are the large issue in Greece.

US DATA: ISM-NY says they hope to have a new……… Posted: 02 Nov 2012 10:30 AM PDT US DATA: ISM-NY says they hope to have a new release data announced next wk for the Oct Report On Business.

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