From: robert.johnston@enron.com
To: kenneth.lay@enron.com, mark.frevert@enron.com, mike.mcconnell@enron.com, john.sherriff@enron.com, london.brown@enron.com, a..shankman@enron.com, gary.hickerson@enron.com, jeffrey.mcmahon@enron.com, raymond.bowen@enron.com, john.lavorato@enron.com, louise.kitchen@enron.com, bryan.seyfried@enron.com, markus.fiala@enron.com, jeff.kinneman@enron.com, eric.gonzales@enron.com, jonathan.whitehead@enron.com, l..nowlan@enron.com, bill.white@enron.com, don.schroeder@enron.com, randal.maffett@enron.com, per.sekse@enron.com, m..presto@enron.com, tim.belden@enron.com, tim.heizenrader@enron.com, mike.grigsby@enron.com, k..allen@enron.com, j.kaminski@enron.com, michael.bradley@enron.com, j..kean@enron.com, linda.robertson@enron.com, richard.shapiro@enron.com, joseph.hirl@enron.com, jeremy.thirsk@enron.com, nicholas.o'day@enron.com, john.greene@enron.com, robert.fuller@enron.com, michael.gordon@enron.com, scott.tholan@enron.com, jim.roth@enron.com, brendan.fitzsimmons@enron.com, clayton.seigle@enron.com, britt.whitman@enron.com, rommel.aganon@enron.com, kimberly.landry@enron.com, kelly.holman@enron.com, kristin.walsh@enron.com, nancy.turner@enron.com, dave.lawlor@enron.com, john.kemp@enron.com, john.brindle@enron.com, david.cromley@enron.com, laura.ewald@enron.com, eric.scott@enron.com, v..reed@enron.com, bruce.garner@enron.com, larry.lawyer@enron.com, scott.neal@enron.com, rus.woody@enron.com, jennifer.fraser@enron.com
Date: 2001-09-13 12:24:43+00:00
Subject: Competitive Analysis Update #9- US Terrorism Attacks

Report below continues our reporting from yesterday and covers the impact of the terrorist attacks on US market openings/closings, energy infrastructure, and political outlook.  We will be providing a full strategy memo on the broader impact of the crisis on the US economy, world energy markets, and international security later today.

A.	Market Updates

U.S. Markets

?	US equity markets are closed today but may open Friday. NYSE/NASDAQ/AMEX officials will reconvene later today to decide on restart.
?	Regular NYMEX trading is cancelled for Thursday and no restart date has been determined.  NYMEX is trying to start ACCESS trade via internet on Thursday afternoon.
?	CBOT to close a/c/e electronic futures early at 1300 CDT.
?	The Federal Reserve Board injected $38.25 billion into the financial system yesterday by buying government bonds from investment houses. Typically it buys only a few billion dollars in bonds in a day.
?	Marsh & McClennan reports that about 700 employees who worked in one of the two towers are still missing.
?	Morgan Stanley chief executive Philip J. Purcell told MSDW employees that the "vast majority" of its 3,500 employees in the center had been accounted for.
?	Keefe Bruyette & Woods, an investment bank with headquarters near the top of the south tower, is searching for 69 of its 172 employees from its offices on the 89th and 90th floors.
?	The Securities and Exchange Commission's Northeast regional office was destroyed when the 7 World Trade Center building collapsed. Commission officials said they believed that all 300 employees were evacuated unharmed but hundreds of investigations, like a broad inquiry into initial public sales of stock in the late 1990's, would be hampered by the loss of notes and files that were kept only in that building.
?	IATA expects week's costs for airlines industry to reach $10B

Asia Overnight

?	Tokyo equities stabilize: TOPIX closes up, regaining and holding 1000 level; Nikkei tested below 9500 in morning session before closing unchanged; other Asia mostly higher

Europe

?	Mid-session all indices up marginally, FTSE strongest, within striking distance of 5000
?	ECB leaves rate unchanged; no coordinated G7 action on rates or currency
?	Gold: up marginally near $280 in range trading, no moves to support eary Wed. spike into low $290s
?	Brent Crude: down on Saudi, Kuwaiti support, pledges to make up any shortages

Forex

?	Eurodollars pricing inter-meeting Fed cut, but G-7 communique; BoE Eddie George's comments argue for consideration, monitoring over near term rather than any immediate action
?	The German Finance Ministry said on Thursday the upcoming meetings of the International Monetary Fund and G7 finance ministers may not take place as scheduled although final decisions had not been taken.

 B.	Transportation/Infrastructure Updates

Gas/Power/Nuclear Infrastructure
?	Pipelines, under a heightened state of security, are operating at normal levels.	
?	All 103 nuclear facilities remain at a heightened state of alert.
?	Energy Secretary Spencer Abraham (on Wednesday) ordered a halt to all shipments of nuclear materials and the suspension will remain in effect indefinitely.
?	Consolidated Edison, whose operations were most directly affect by Tuesday's events, said the attack on the WTC had damaged 3 substations (2 sustaining permanent damage) as well as major transmission lines into lower Manhattan.
?	As a result of the fire at the Pentagon, Washington Gas shut off gas to the building.  The distributor will turn service back on when Pentagon officials indicate that they are ready to restore service.
?	FERC does not plan to re-schedule the regular bi-monthly meeting that was canceled this week , said a spokeswoman for the agency. Instead, its next meeting will be Sept. 26.   Some of the orders that the Commission was to have considered "are time-sensitive and probably will have to go out prior to the meeting on the 26th," she noted.
	
Crude/Products/Refineries

?	Some analysts believe that additional attacks could be in the works.  One opinion is that future targets could include transportation or petroleum infrastructure.  For this reason, the resumption of normal operation at some petroleum import terminals might be delayed
?	Saudi and other Gulf states have pledged to maintain market stability.  The UAE oil minister said that if the price of oil remains above $30 during the OPEC meeting on September 26, "OPEC will concentrate on taking appropriate measures to stabilize the market at an appropriate level."
?	US government waives summer gasoline specs 3 days before expiry
?	In this situation (Mideast tensions and likely recession), OPEC will find great difficulty with its normal policy cutting production in order to keep prices strong. 
?	If the market comes to believe that OPEC is not capable of enforcing its price floor, it might renew its attack on the bottom of the band and drive prices lower.  If the market comes to believe that OPEC is not capable of enforcing its price floor, it might renew its attack on the bottom of the band and drive prices lower.
?	ExxonMobil Corp. released a statement urging consumers not to horde gasoline. "We have supply available for retail customers and to meet contractual obligations, and encourage customers to maintain their normal buying habits to avoid artificial runouts," the statement said.
?	House Energy and Commerce Committee Chairman Billy Tauzin, (R-La), stated that "The oil supply is hugely adequate?there is no reason for any American to gouge another American. Anyone who is doing that is aiding and abetting the terrorists."

Air Travel

?	Newark, La Guardia, Bush Intercontinental, Chicago O'Hare and Kennedy Airports are expected to be open only to incoming flights that were diverted to Canada on Tuesday.  Diverted flights expected to resume at 11am.
?	Logan Airport in Boston still closed.
?	Continental has suspended all scheduled flights today; diverted flights may operate
?	American Airlines has suspended regularly scheduled flights until noon CDT; most diverted flights will remain grounded until further notice.
?	Southwest has cancelled all flights until further notice and will not resume scheduled service today.
?	United will operate diverted flights today; scheduled service cancelled until noon.
?	US Airways has canceled flights until further notice; diverted flights will operate before scheduled service
?	American West expects to resume a portion of its flights at 3pm EDT, ramping up operations gradually over the weekend.
?	Delta expects to conduct very limited operations after noon EDT today. Inbound flights expected to begin arriving from Canada later today.  Westbound service from Europe expected to begin on Friday. Also, their website indicates that the Atlanta airport (Hartsfield) has been "certified" by the FAA.

Rail Travel

?	Amtrak operating a normal schedule.
	
Maritime Transportation

?	All major port cargo operations other than New York are open and continuing to do business.  Delays continue due to inspections in major ports, especially for tanker vessels.

C.	Political Updates

?	Bush administration building case for massive military reprisal; shoring up public support from NATO and key allies; seeking logistical and intelligence support from Pakistan.  Itar-Tass reportiing Pakistani delegation to Kabul to discuss bin Laden extradition w/ Taliban
?	Pentagon tasked with drawing up plans for military reprisal, but Secretary of State Powell has stated that "we're far from selecting any particular military targets."
?	The options under consideration include more powerful, sustained attacks that accept greater risk to American forces, and may include bombing attacks by manned aircraft and landing special forces troops on the ground.
?	This is a nightmare scenario for Arab leaders.  The situation was already tense due to Arab-Israeli fighting; it will now get worse as the Bush Administration demands absolute cooperation in its anti-terrorism policy, which may include military attacks against states in the region.  Mideast leaders are very worried by reports that some of the terrorists may have been nationals of their countries (Saudi, Egypt, UAE).  They are also uncomfortable with displays of celebration in some Arab lands.  Their immediate priority is to demonstrate that they are on America's side, thus the rapid reassurances on oil supplies.  
?	Israeli officials and intelligence analysts reportedly believe that the attacks were too large an operation for any one group. Iraq is viewed as the most likely sponsor.
?	Iraq says US and British planes raid southern Iraq, hit homes.  US and UK deny the report.
?	Israel steps up attacks on Palestinians; 13 Palestinians killed since Wednesday
?	Senate's comprehensive energy bill, like most legislation in Congress, is on hold following Tuesday's attacks.  No updated legislative calendar has been announced.