Monday, October 29, 2012

The Might of Nature ~ In Technicolor (Seeking Alpha)


Have you ever thought about the real challenges with dramatic weather and freak storms?  The broad distribution, and concentrated population along the east coast is about to get a reminder that all the engineering, technical expertise, and money is not a match for the power of Mother Nature.  A sampling of the effects come from a morning digest of market related news, and a favorite source of mine, Seeking Alpha.  Ports and Harbours.  Airline travel.  Stock markets.  Company earnings announcements.  Petroleum operations.  The reach is far and deep.  The economic engine > the delivery of goods and services, including the essentials (food, energy, emergency services) can grind to a halt.

Hurricane Sandy
Hurricane forces closure of U.S. stock markets. All U.S. equity and options markets - including the NYSE, Nasdaq and Nymex - will be shut today because of Hurricane Sandy, which is due to make landfall by early tomorrow morning. The Securities Industry & Financial Markets Association has called for bond trading to close at noon; a decision over whether to open trading tomorrow will be made later.

Earnings announcements delayed. Several companies are delaying the release of their latest quarterly reports because of Hurricane Sandy. Pfizer (PFE) will report on Thursday instead of tomorrow, Entergy (ETR) on Monday next week instead of tomorrow, and NRG Energy (NRG) on Friday instead of Wednesday. However, some companies are still reporting today and tomorrow, with Loews (L) and CNA Financial (CNA) having already done so.

Thousands of flights delayed. Hurricane Sandy has caused the grounding of over 6,800 commercial flights. The cancellations are likely to hurt Q4 earnings, says consultant R.W. Mann & Co, although the airlines could make up some of the revenue as passengers reschedule flights. Affected operators include AMR (AAMRQ.PK), United Continental (UAL), Delta (DAL), JetBlue (JBLU) and US Airways (LCC).

Refiners scale back operations. Phillips 66 (PSXyesterday began shutting its 238,000 bpd Bayway refinery in New Jersey in preparation for Hurricane Sandy, while Philadelphia Energy Solutions (CGSUN), PBF Energy and Hess Corp (HES) have started to cut output at refineries in the storm's expected path. Phillips 66 has also temporarily shut oil terminals, while pipelines such as Colonial and Buckeye (BPL) have been preparing their contingency plans. Gasoline futures were +1.1% at $2.73 a gallon.

Insurers prep response teams. Insurers such as Allstate (ALL) are preparing to send their rapid-response teams of claims specialists to assess the damage once the storm passes. The cost to insurers is likely to be less than it would have been in the past, as they've been raising home-insurance rates, tightening underwriting standards, and scaling back sales of policies in hurricane-prone areas.

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