California Facing $5 Gasoline Stirs Brown to Relax Rules

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Gasoline closing in on a record $5 a gallon prompted Governor Jerry Brown to direct Californiaregulators to relax smog controls so oil refineries could increase supplies of cheaper fuel.

1:25Oct. 8 (Bloomberg) -- Jane King summarizes the top stories this morning on the Bloomberg Business Report. (Source: Bloomberg)Enlarge imageRetail prices began to skyrocket after Exxon Mobil Corp.’s 150,000-barrel-a-day refinery in Torrance, near Los Angeles, reduced production Oct. 1 after a power failure. Photographer: Jamie Rector/BloombergEnlarge imageCalifornia’s average price for regular unleaded has jumped almost 50 cents a gallon in the past week. Photographer: David Paul Morris/BloombergRegular gasoline in California surged to an average $4.668 a gallon, an all-time high and 22 percent more than the U.S. average, according to data today from AAA, the nation’s largest motoring organization. Some stations were charging as much as $5.89 in the Big Sur area, according to GasBuddy.com.The California Air Resources Board yesterday granted refineries permission to make an early shift to winter-blend gasoline, typically not sold until after Oct. 31. Due to the composition of the gasoline, refiners can produce more of the winter blend than the summer blend.“It’s absolutely outrageous,” said Tonnie Katz, 67, a retired newspaper editor who stopped at a Los Angeles gas station for a $69 fill-up. “I don’t think anyone understands it. For seniors, this is an awful big chunk out of our budgets.”California’s average price for regular has jumped 50 cents a gallon in the past week. That made it at least $1 a gallon higher than in a dozen other states: Alabama, Arkansas, Georgia, Louisiana, Missouri, Mississippi, New Mexico, Oklahoma, South Carolina, Tennessee, Texas and Virginia, according to data provided by AAA.

FTC Investigation

U.S. Senator Dianne Feinstein, a Democrat from California, sent a letter to Jon Leibowitz, chairman of the Federal Trade Commission, yesterday asking for an immediate investigation into whether supply was being manipulated for profit.“California commuters are facing the highest gas prices and the longest commutes in the country,” Feinstein said in a statement. “Paying hundreds of dollars to fill your tank every time you go to the pump is untenable, particularly because it does not appear the price spike and supply disruption are in any way related to supply and demand.”California is dependent on its own refineries for gasoline because the state is mostly cut off from oil-products pipelines spanning the rest of the country. Refiners outside California are generally not equipped to supply the cleaner-burning gasoline required in the state.

Soaring Prices

http://www.bloomberg.com/news/2012-10-08/california-facing-5-gasoline-stirs-brown-to-relax-rules.html
Point

IMF warns of 'alarmingly high' risk of deep global slowdown

By Jim Puzzanghera
October 9, 2012, 7:16 a.m.
WASHINGTON -- The International Monetary Fund on Tuesday downgraded its economic projections and warned of an "alarmingly high" risk of a serious global slowdown because of fiscal problems in the U.S. and Europe.The organization said world economic growth would be 3.3% this year, down from a projected 3.5% in July, and would improve to just 3.6% in 2013, down from a forecast of 3.9% made three months ago.Similarly, projections for growth in advanced economies slipped to 1.3% this year, compared to 1.4% in the July forecast, and 1.5% next year, down from 1.8%.The IMF actually boosted its forecast for U.S. economic growth this year to 2.2%, from 2.1% in its July World Economic Outlook. But the European debt crisis dragged down its global projections.Economies in the euro zone are projected to contract 0.4% this year, down 0.1 percentage points from July. And while the recession in Europe will end in 2013, growth is forecast to be a minuscule 0.2%, compared with a July projection of 0.7%.The struggles of the world's most developed economies, and looming threats such as the fiscal cliff in the U.S., are dragging down the rest of the world, the IMF said.“Low growth and uncertainty in advanced economies are affecting emerging market and developing economies through both trade and financial channels, adding to homegrown weaknesses,” said IMF Chief Economist Olivier Blanchard in releasing the group's World Economic Outlook.The IMF said there is a rising risk -- about a 17% chance -- that global economic growth will fall below 2% in 2013, which would be consistent with a recession in advanced economies and a serious slowdown in emerging and developing markets.The risk of a 2013 recession is about 15% in the U.S., but more than 80% in the euro zone, the IMF said.The risk for a deep global economic slowdown next year is "alarmingly high" because of several short term factors, the IMF said. The most serious are a further deepening of the European debt crisis, failure in Washington to avert large tax hikes and government spending cuts looming in January, and another spike in oil prices caused by Middle East tensions."A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component," the IMF said."The answer depends on whether European and U.S. policymakers deal proactively with their major short-term economic challenges."http://www.latimes.com/business/money/la-fi-mo-imf-global-economy-international-monetary-fund-20121009,0,4887017.story
Counterpoint

Pay No Attention to IMF, Look at Companies: Gartman

Published: Tuesday, 9 Oct 2012 | 4:49 AM ETText SizeBy: Shai Ahmed
CNBC Associate Editor

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Noted investor and the publisher of The Gartman Letter, Dennis Gartman dismissed the latest warning on global economic weakness to come from the International Monetary Fund (IMF), saying he “paid no attention [to it] whatsoever.”

CNBCDennis Gartman

“I give very little credence to what the IMFsays. I give far more credence to what FedEx says, what the railroad companies say, and the earnings outlook and expectations of the auto companies rather than the IMF,” Gartman told CNBC Tuesday.FedEx [FDX  85.87    -0.50  (-0.58%)   ] and other multinationals including Hewlett-Packard[HPQ  14.2885    -0.1715  (-1.19%)   ] have warned in recent weeks that the worsening global economic outlook has hampered their bottom lines.The IMF said on Monday that it expected global growth to remain sluggish and lowered its growth forecasts blaming the looming U.S. fiscal cliff and the on-going euro zone debt crisis. (Read More: IMF Slashes Forecasts for Global Economic Growth.)It added that the fate of the global economy lay in the hands of U.S. and European policymakers.

As earnings season gets under way, Gartman also downplayed the importance being given to earnings, claiming most downward risk had already been factored in to the markets.“I am amused at how often and how much we pay attention to earnings. Wall Street has ramped down its expectations, I don’t think anyone is going to be very surprised,” he said.Gartman rejected the impact of earnings from bellwether Alcoa [AA  9.125   0.005  (+0.05%)   ] — the world’s largest aluminium producer — which reports later on Tuesday.http://www.cnbc.com/id/49338944



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PBOC injects $42.14 billion into money market

By MarketWatch
--Central bank pumped funds into banking system for second time in two weeks--May signal greater resolve by government to boost economy--More certainty on country's leadership change may have emboldened authoritiesSHANGHAI--China's central bank pumped a massive load of cash into the country's banking system for a second time in two weeks, spurring stock-market rallies in markets from Shanghai to Sydney and signaling to some investors a stronger resolve by the government to stimulate the country's ailing economy.The liquidity injection--the second biggest of its kind ever--is aimed at lowering domestic borrowing costs for companies grappling with the country's slowest rate of growth since the financial crisis.Chinese authorities have refrained from using more-powerful fiscal and monetary weapons in recent months as analysts have said uncertainties over the country's milestone leadership handover has likely contributed to indecision. However, with the transition apparently back on track for later this year, policy makers could become significantly more proactive in ramping up growth through the rest of 2012.The People's Bank of China used financial instruments known as reverse-repurchase agreements, a type of short-term loan, to inject 265 billion yuan ($42.14 billion) into the money market Tuesday, adding to the CNY2.418 trillion offered since late June.The move came two weeks after a record 290 billion yuan was offered on September 25, just before a week-long vacation when extra cash is typically taken out of the system for holiday purchases. Those amounts compare to an average 89.4 billion yuan of cash injected at the twice-weekly regular open-market operations since late June, when the central bank shifted to a more-accommodative bias to support the economy."The central bank seems to be scrambling to bring money-market rates down in order to support growth," said Dariusz Kowalczyk, a senior economist at Credit Agricole CIB. "The large open-market operation shows a pro-growth policy bias and should thus be positive for market sentiment."The Shanghai Composite Index rose 2% to 2115.23, Asia's biggest gainer Tuesday, while Australia's S&P/ASX 200 index closed up 0.5% at 4505.3, a fresh 14-month high.Thanks to the abundance of cash in the system, the weighted average yield of the seven-day repo, a benchmark for interbank borrowing costs, declined to 3.76% late Tuesday from 3.83% Monday.The extra cash and lower interbank-lending costs make banks more willing to offer better interest rates to customers. In addition, since some bonds are priced off the repo rate, companies will likely to be able to sell debt at lower costs.The move also came a day after the International Monetary Fund lowered its forecast for China's economic growth for both 2012 and 2013, likely indicating that the country's economy had kept weakening in the third quarter, said Wang Yingfeng, a bond analyst at Yaozhi Asset Management.Central-bank Governor Zhou Xiaochuan said that China's economy faces "relatively big" pressure and that the bank will take more "preemptive, targeted and effective measures," according to the latest edition of bimonthly China Finance Magazine.On Monday, the IMF said it now expects China's economy to grow by 7.8% this year and 8.2% next year, down from its previous growth estimates of 8.0% and 8.4%, respectively.Plagued by an unfolding euro-zone crisis and a depressed local-property market, China, with the world's second-largest economy, saw its growth fall to a three-year low of 7.6% in the second quarter. China is scheduled to release third-quarter economic data next week.
http://www.marketwatch.com/story/pboc-injects-4214-billion-into-money-market-2012-10-09-24852027