Worst Storm in 100 Years Seen for Northeast U.S.

Hurricane Sandy will probably grow into a “Frankenstorm” that may become the worst to hit the U.S. Northeast in 100 years if current forecasts are correct.

Sandy may combine with a second storm coming out of the Midwest to create a system that would rival the New England hurricane of 1938 in intensity, said Paul Kocin, a National Weather Service meteorologist in College Park, Maryland. The hurricane currently passing the Bahamas has killed 21 people across the Caribbean, the Associated Press reported, citing local officials. “What we’re seeing in some of our models is a storm at an intensity that we have not seen in this part of the country in the past century,” Kocin said in a telephone interview yesterday. “We’re not trying to hype it, this is what we’re seeing in some of our models. It may come in weaker.” The hybrid storm may strike anywhere from the Delaware- Maryland-Virginia peninsula to southern New England. The current National Hurricane Center track calls for the system to go up Delaware Bay and almost directly over Wilmington, Delaware, just southwest of Philadelphia, on Oct. 30-31. The hurricane center warns the track is subject to change. Sandy’s Impact “Users are reminded to not focus on the details of the track forecast late in the period, as Sandy is expected to bring impacts to a large part of the U.S. East Coast early next week,” the center said. A tropical-storm watch was issued from Savannah River northward to Oregon Inlet in North Carolina, the NHC said in an advisory. A tropical storm warning is in effect for Florida’s east coast from Ocean Reef to Flagler Beach. A storm watch means tropical storm conditions are possible within the region, a warning means tropical storm conditions are expected. As of 8 a.m. New York time, Sandy was a Category 1 hurricane with winds of 80 miles (129 kilometers) per hour, down from 100 mph earlier, according to the hurricane center in Miami. It was 15 miles east of Great Abaco Island in the Bahamas and 480 miles south-southeast of Charleston, South, Carolina, moving northwest at 10 mph. “If the storm follows the current hurricane center forecast, we are looking at over $5 billion in damage,” Chuck Watson, director of research and development at Kinetic Analysis Corp. in Silver Spring, Maryland, said yesterday. Watson said the track may change quite a bit between now and early next week. An accurate assessment of potential damage from wind and rain probably can’t be made until late this week. Weakening Insignificant Sandy’s apparent weakening doesn’t accurately predict the storm it may become, said Matt Rogers, president of Commodity Weather Group LLC in Bethesda, Maryland. Computer models suggest the hurricane may transform into a hybrid system over the weekend because of another storm moving in from the Midwest. “When the storm phases with the energy from the west, it is forecast to deepen rapidly,” Rogers said. “Indeed, it is expected to continue weakening until phasing really takes place late Sunday into early Monday.” The 1938 hurricane killed more than 500 people after crossing Long Island and battering Connecticut and Rhode Island. “We can say even now our worst fears may be realized,” Kocin said. “If we were seeing what we’re seeing today one day out, we would really be shouting the alarms.” States Prepare Governments along the East Coast are preparing for Sandy’s impact. New York Governor Andrew Cuomo directed state agencies to monitor the storm and Massachusetts’s Emergency Management Agency warned residents to expect the worst. New York City has a 55 percent chance of winds of at least 39 mph by Oct. 30, according to estimates by Tropical Storm Risk, a consortium of experts on insurance, risk management and climate supported by the U.K. government. New York Mayor Michael Bloomberg said the city was taking routine precautions at this stage. “A good message to everybody is you should always have a ‘go’ plan,” he said at a news conference yesterday. “Particularly if you live near the water in a low area, you may have to be evacuated. I wouldn’t plan on it today. Listen to the radio and if necessary follow the instructions.” The mayor is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News. U.S. Utilities Hurricane Sandy will probably grow into a “Frankenstorm” that may become the worst to hit the U.S. Northeast in 100 years if current forecasts are correct. Utilities along the East Coast were monitoring the storm. Nine mid-Atlantic power companies held their first conference call Oct. 24 to discuss how crews will be dispatched to the hardest-hit areas, Myra Oppel, a spokeswoman for Pepco, Washington’s electric utility, said yesterday in an interview. Pepco retained 400 contractors already working on its system so they’d be available if the storm hits that area, Oppel said. New Jersey’s Public Service Electric & Gas Co. prepared sandbags to protect substations. Exelon Corp. (EXC)’s Baltimore Gas & Electric urged its 1.2 million power customers in central Maryland to prepare for power failures and flooding. “We’re taking this extremely seriously,” Robert Gould, a utility spokesman, said in an interview yesterday. The system crossed Jamaica Oct. 24 and Cuba yesterday, tracking north to the central Bahamas, where a hurricane watch was posted for many of the islands. Winds of at least 74 mph extend 35 miles from Sandy’s core, while gusts of 39 mph reach out 275 miles. The distance from Freeport, Bahamas, to Fort Lauderdale, Florida, is 94 miles. On Jamaica, 70 percent of the island lost power, roofs were torn from homes and roads were blocked by downed trees and floods as Sandy roared ashore, according to Air Worldwide. Tom Larsen, senior vice president and product architect at Eqecat Inc., a risk modeler in Oakland, California, said yesterday he doesn’t expect Sandy to be worse than Irene. That storm struck the East Coast in August 2011, killing at least 45 people and causing at least $15.8 billion in damage, according to the hurricane center. To contact the reporters on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net; Matthew Brown in London at mbrown42@bloomberg.net

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Fed Seen Forgoing Next Round of Asset Purchases Until September

Federal Reserve Chairman Ben S. Bernanke will probably forgo announcing a third round of large- scale asset purchases this week, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt, according to median estimates of economists in a Bloomberg News survey.

Eighty-eight percent of economists say the Federal Open Market Committee will refrain from starting new purchases at a two-day meeting beginning today in Washington. Forty-eight percent say the FOMC will announce the buying at its Sept. 12-13 meeting, according to the July 25-27 survey of 58 economists.

The FOMC may take further action should the job market not make “sustained progress” in bringing down an unemployment rate stuck above 8 percent for 41 consecutive months, Bernanke said this month in congressional testimony. The FOMC wants to see more jobs data before beginning asset purchases aimed at holding down borrowing costs, spurring growth and reducing unemployment, said Michael Gapen, senior U.S. economist for Barclays Plc in New York.

Policy makers “don’t need to do something immediately because the economy is basically treading water,” with a second quarter growth rate of 1.5 percent, Gapen said. “What gives the Fed the ability to sit tight for now is financial market conditions haven’t weakened that much.”

Rather than increase asset purchases this week, the Fed is more likely to extend its pledge to hold its main interest rate near zero beyond its current horizon of late 2014. Twenty-six percent of economists expect the central bank to announce a later date, while 74 percent of economists expect the Fed not to change its forward guidance, according to the survey.
Trigger Finger

“There’s nothing that really suggests the Fed has an itchy trigger finger or that they’re champing at the bit to ease policy again,” said Paul Edelstein, director of financial economics for IHS Global Insight in Lexington, Massachusetts.

By waiting to step up stimulus until September, when Bernanke is scheduled to hold a press conference and policy makers will update forecasts for growth and unemployment, the FOMC can “give some guidance to markets and link it directly to their outlook for the economy,” he said.

The Labor Department plans on Aug. 3 to release its payrolls report for July. The report is likely to show that employers added 100,000 jobs this month, according to the median forecast in a separate survey of economists, compared with the 80,000 increase in June.

Asked to estimate the size and composition of new asset purchases, 34 of 48 economists said a new round of quantitative easing will consist of mortgage-backed securities and Treasury securities. Thirteen of the 48 economists said the purchases would consist entirely of mortgage-backed securities.
Second Round

The median estimate was for purchases totaling $600 billion, the same size as the second round of asset purchases announced in November 2010. Economists predict the purchases will be split evenly between Treasuries and mortgage debt.

“In general their preference is to use Treasuries rather than mortgages, but at this point they’re owning more and more of the Treasury market, so there’s reason to spread it out,” said Jim O’Sullivan, chief U.S. economist for High Frequency Economics in Valhalla, New York.

Global stocks rallied last week despite as European Central Bank President Mario Draghi said July 26 he is prepared to do “whatever it takes to preserve the euro.”

Since Draghi’s remarks, the MSCI World Index rose 4.3 percent and the S&P 500 has increased 3.5 percent. The S&P 500 was little changed yesterday, closing at 1,385.30. The index is up 10.2 percent this year.
Fiscal Cliff

Fed officials have identified Europe as one of “two main sources of risk,” Bernanke said in his testimony to Congress this month. The other risk is the so-called fiscal cliff, about $600 billion of spending cuts and tax increases that are scheduled to go into effect at the end of the year unless Congress acts.

Bernanke cited a Congressional Budget Office estimate that the full range of spending cuts and tax increases would knock the U.S. into a “shallow recession” in 2013.

“We are seeing demand being relatively stable,” Jim Compton, chief revenue officer of United Continental Holdings Inc., said in a July 26 earnings call. His company is the world’s largest carrier.

“When we talk about the economy being tepid, we are very much aware of, particularly Europe, and are keeping our eyes on that,” he said. “We’re obviously watching softness in the economy to see where that turns.”

While lawmakers may not resolve U.S. fiscal challenges until after the Nov. 6 election, economists don’t believe the Fed will alter its stimulus based on the political calendar, according to the survey.
Before Election

Sixty-five percent of the economists surveyed believe the Fed won’t be influenced by politics as it weighs whether to start a new round of bond purchases. Eighteen percent say the Fed will be more likely to act before the election, while the same proportion percent say the Fed would be more likely to wait until after Nov. 6.

Bernanke testified on July 17 that the prospect for more stimulus hinges on job creation and the outlook for inflation.

“It’s very important that we see sustained progress in the labor market and avoid deflation risk,” he said. “Those are the things we’ll be looking at as the committee meets later this month and later this summer.”

Inflation, excluding food and energy, was 1.8 percent in the year through May, according to the Commerce Department’s personal consumption expenditures index. Including all items, prices rose 1.5 percent during the period.
Inflation Target

While inflation is below the Fed’s 2 percent target, market expectations for price gains have increased since the Fed began a second round of asset purchases and started so-called Operation Twist, a program to extend the average duration of securities in the Fed’s portfolio.

Traders in inflation protected securities predict inflation of 2.1 percent over the next 10 years. That compares with 1.5 percent in August 2010, when Bernanke signaled the Fed may initiate a second round of quantitative easing, and 1.7 percent in September of 2011, when the Fed started Operation Twist.

The Fed chairman said the central bank’s tools for easing policy include further purchases of Treasuries and mortgage- backed securities, altering the Fed’s language on the outlook for interest rates and reducing the rate the Fed pays banks on excess reserves.

Economists believe the Fed is unlikely to lower the interest rate on excess reserves. Four percent expect such a move this week, while 14 percent see the Fed doing so in September. Seventy-four percent of economists say the Fed won’t use the policy tool.

To contact the reporter on this story: Joshua Zumbrun in Washington at jzumbrun@bloomberg.net

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Pending Sales of U.S. Homes Unexpectedly Fell 1.4% in June

Contracts to purchase previously owned homes unexpectedly dropped in June for the second time in the last three months, a sign of limited momentum in housing.

The index of pending home resales decreased 1.4 percent to 99.3 after a revised 5.4 percent gain in May that was less than initially reported, figures from the National Association of Realtors showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 0.3 percent June increase.

Slower job growth that’s holding down confidence and strict lending standards are restraining housing even with cheaper properties and mortgage rates at all-time lows. While acknowledging the improvement in housing, Federal Reserve Chairman Ben S. Bernanke said last week that policy makers are ready to take further action to boost an economy that faces a headwind from Europe’s debt crisis.

“One of the cruel facts of this current backdrop is that few people have really been able to take advantage of these historically low rates -- whether that’s by choice or force,” Tom Porcelli, chief U.S. economist for RBC Capital Markets LLC in New York, said before the report. “You really haven’t seen purchase applications pick up in any meaningful way at this stage.”

Estimates in the Bloomberg survey of 34 economists ranged from a drop of 4 percent to a gain of 4 percent.

Another report today showed orders for durable goods climbed more than forecast in June, boosted by demand for military hardware and aircraft. Bookings increased 1.6 percent for a second month, the Commerce Department said.

Orders excluding the volatile transportation category slumped 1.1 percent, the most in five months.
Jobless Claims

First-time applications for unemployment benefits fell more than forecast last week, extending the period of volatility typically seen in July. Jobless claims dropped 35,000 in the period ended July 21 to 353,000, the Labor Department said.

Pending home sales provide insight into actual contract closings a month or two later. Purchases of existing homes, which made up about 93 percent of the residential real estate market last year, are tabulated when the contract closes.

Today’s figures suggest sales of existing homes will slow. Purchases decreased 5.4 percent to an eight-month low 4.37 million annual rate, the Realtors group said July 19.

Existing-home sales have climbed since reaching a low of 3.39 million at an annual rate in July 2010. In the buildup to the subprime lending collapse and recession, sales reached a peak of 7.25 million in September 2005.
Distressed Properties

Competition from cheaper distressed properties may have held down existing-home sales. Transactions involving foreclosures and short sales, where a lender agrees to accept less than the balance of the mortgage, accounted for 25 percent of the total last month, matching the May figure.

“We’ve been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors,” Lawrence Yun, the Realtors group’s chief economist, said in a statement. “Any bank-owned properties that have been held back in markets with inventory shortages should be released expeditiously to help meet market demand.”

New dwellings accounted for almost 7 percent of the market last year, down from a high of 15 percent during the boom of the past decade. Sales of new homes dropped 8.4 percent to a 350,000 annual rate in June, a Commerce Department report showed July 25.
Year Ago

Compared with a year earlier, June pending sales of previously owned properties increased 8.4 percent after a 14.7 percent jump in May.

Contract signings decreased in three of the four regions, today’s report showed, including a 7.6 percent slump in the Northeast and a 2 percent decline in the South.

Low borrowing costs are making homes more affordable. The average rate on a 30-year fixed mortgage dropped last week to 3.53 percent, the lowest since Freddie Mac record-keeping began in 1972.

For companies like Sherwin-Williams Co. (SHW), gains in housing translate to more purchases.

“Housing sales are picking back up and housing volumes are improving, those are all really positive market metrics to sustain growth in this business,” Christopher Connor, chairman and chief executive officer of the Cleveland-based paint manufacturer, said on a July 19 earnings call.

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

Marine vs. 30 Cops

Sgt. Shamar Thomas USMC Veteran: "I took an Oath that I live by. I am NOT anti-NYPD. I am anti- Police Brutality. I am no longer under contract with the USMC so I do NOT have to follow military uniform regulations. I DON'T affiliate myself with ANY POLITICAL ORG. I affiliate myself with the AMERICAN PEOPLE that's it. I REFUSE to affiliate with anything that SEPARATES. There is an obvious problem in the country and PEACEFUL PEOPLE should be allowed to PROTEST without Brutality. I was involved in a RIOT in Rutbah, Iraq 2004 and we did NOT treat the Iraqi citizens like they are treating the unarmed civilians in our OWN Country. No one was brutalized because our mission was to "WIN the hearts and minds", why should I expect anything less in my OWN Country. I DO NOT SUPPORT WAR. If you don't like this video or my beard. Then SUPPORT A WOUNDED WARRIOR!...And a desert marpat blouse is not a uniform"
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United States Marine Corps. Sgt. Shamar Thomas from Roosevelt, NY went toe to toe with the New York Police Department. An activist in the Occupy Wall Street movement, Thomas voiced his opinions of the NYPD police brutality that had and has been plaguing the #OWS movement.

Thomas comes from a long line of people who sacrifice for their country: Mother, Army Veteran (Iraq), Step father, Army, active duty (Afghanistan), Grand father, Air Force veteran (Vietnam), Great Grand Father Navy veteran (World War II).

To contact Sgt. Thomas directly: sgtshamarthomasusmc@yahoo.com