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US stock market daily report (October 08, 2012, Monday)

Shares of Edwards Lifesciences Corp. (EW) got the smack down in afterhours trading on Monday - shares were off 17% and will draw massive amounts of trader attention to the short side, come Tuesday morning. The company warned Q3 revenue will miss its own estimate because of weak transcatheter heart valve sales. Edwards reported they now expect revenue of $448 million which is below the forecasted $465 million to $485 million range it issued in July.

The $5-per-gallon gasoline prices that plague California and the West Coast are not likely to spread across the country like some infectious disease because there is plenty of oil in the market and there’s enough refining capacity to meet demand. Gas prices across the nation are far less vulnerable to the recent refinery outages that put the hammer to prices in California due to few pipelines that connect the state to the rest of the country. California gets most of its crude via tankers from Alaska, Asia or South America and refines most of its gasoline in-state. The state has done little to boost its refining capacity, bucking heads with the oil industry for years over a host of environmental regulations and strict gasoline formulas. “Refiners and regulators on the West Coast don’t exactly have a warm relationship,” according to Tom Kloza, chief oil analyst at Oil Price Information Service (OPIS). Although there is little expansion on the East Coast, surplus gasoline cargoes from Europe or eastern Canada can reach New York Harbor within 10-11 days which makes it much easier to deal with shortages than in California where the nearest overseas suppliers are in distant Asia. California is extremely vulnerable to refinery outages so when a fire at the Chevron Corp. (CVX)  Richmond refinery, a power outage at the Torrance refinery for Exxon Mobil (XOM) and maintenance work at additional plants took out about 25% of the state’s gasoline production capacity, wholesalers panicked. The results are skyrocketing prices at the pump. According to the AAA Daily Fuel Gauge Report , a gallon of regular gas averaged $4.67 statewide in California on Monday, up 50 cents in just a week. In comparison, the national average price per gallon of gas stands at $3.82 a gallon, up 4 cents from a week ago. California has other issues that affect price per gallon. California requires motorists to burn summer blend gasoline until the end of October while the summer gas season typically ends elsewhere on September 15. Summer gasoline is formulated to pollute less during the hot summer months but, hits the wallet harder since it is more expensive to produce. California refiners are deliberately drawing down inventories of summer-grade gas as they move to switch over to the winter grade, a switch the rest of the country has already made. Because of California’s geographical isolation, its fuel market is thinly traded since there are not that many traders, for their market. The wholesale market is much more susceptible to wild price swings than regions that are more actively traded. Independent refiners still active in the California market consist of Phillips 66 (PSX), Tesoro Corp. (TSO) and Valero Energy Corp. (VLO). According to Kloza, wholesale prices in California plunged to $3.30 a gallon Monday from a record $4.30 on Thursday, triggered in part by Governor Jerry Brown ending the summer gasoline season, early. Drivers will begin to see the price effect at the pump in a few days.

Marathon Petroleum Corp. (MPC) shares were higher by 6% on Monday after agreeing to buy BP PLC’s Texas City refinery and infrastructure assets. Marathon Petroleum will pay a base purchase price of $598 million, plus nearly $1.2 billion in inventories and an additional $700 million over six years - subject to conditions. The deal is expected to contribute to the buyer’s earnings in the first year of operations.

Alliance Financial Corp. (ALNC) announced Monday they agreed to a takeover from NBT Bancorp Inc. (NBTB) in a deal valued at approximately $233 million that combines the two upstate New York lenders. Alliance holders will receive 2.1779 shares of NBT common stock or roughly $48.24 a share based on Friday's close, per details of the deal. The agreed upon figure represents a 22% premium of Friday's close and is well above its all-time high of $41.85 in September. Alliance shares were higher by 16% into the close of the trading session on Monday. NBT shares ended the trading session down 3%. The deal broadens NBT's placement into the Syracuse area in Central New York plus, adds $1.4 billion in assets. Alliance Chairman and Chief Executive Jack H. Webb will join the board of NBT and will become executive vice president, strategic support for NBT. The deal is expected to close in Q2 of 2013.