|
It
has been several
years since
Hurricanes Katrina
and Rita rammed into
New Orleans and the
Gulf Coast area in
August-September
2005, but the
country is still
reeling from their
effects, not only in
the rebuilding of
New Orleans and
surrounding Gulf
Coast areas but also
throughout the
United States.
Few events have had
such a widespread
impact on the U.S.
economy as these
devastating storms –
the stock market
crash of October
1987, the terrorist
attacks of
9-11-2001, the start
of Mideast wars in
1991 and 2003 might
be other candidates.
While it took a
little time, the
markets have
adjusted to those
events. But the
remnants of the 2005
hurricanes continue
to linger. Just ask
anyone who has
filled up their gas
tank or paid a
heating bill or
bought any building
materials or
groceries recently.
China has been a
significant factor
in rising prices for
many commodities as
its demands have
increased
dramatically, but
much of the credit
for higher prices in
many markets can be
attributed to
“hurricaneomics®” or
“hurricaneomic
effects,” words you
may not have heard
too often lately.
After four major
hurricanes rumbled
into Florida and the
Southeast in both
2004 (Charley,
Frances, Ivan and
Jeanne) and 2005
(Dennis, Katrina,
Rita, Wilma), 2006
was noteworthy for
its lack of
hurricanes. Not one
hurricane reached
U.S. shores despite
forecasts it would
be an active
hurricane year.
However, with the
threat of hurricanes
always on the
horizon during the
official
June-November
hurricane season –
and several
forecasts that 2007
will be an active
hurricane year –
insurance companies,
the energy industry,
utilities,
government bodies
and other entities
have become well
aware of what the
disruption of a
major hurricane can
do to their bottom
lines – so much so
that the Chicago
Mercantile Exchange
has even added
hurricane futures
based on wind
velocity and a
hurricane’s radius
to its list of
risk-management
weather products.
Hurricaneomics®, a term coined by leading technical analyst and
financial market
forecaster,
Louis B. Mendelsohn,
is the
registered trade
mark for financial
analysis and
consulting services
by Market
Technologies, LLC
that address the
economic and
financial effects
that monster natural
disasters (which
seem to be occurring
with increasing
frequency) have on
the domestic U.S.
and global economy,
world financial
markets and, in
turn, on each and
everyone.
Mendelsohn is the president and CEO of
Market Technologies,
LLC., and
the creator of
VantagePoint
Intermarket Analysis
Trading Software,
which specializes in
analyzing global
markets and the
influences that
events and various
world markets have
on one another. This
area of technical
analysis, first
pioneered by
Mendelsohn in the
mid-1980s, is
referred to as
intermarket
analysis.
Hurricaneomic
analysis and
intermarket analysis
go hand-in-hand
because they both
deal with the
dynamics and effects
within today’s
global financial
markets.
"Hurricaneomics® adds a new wrinkle to economic
thinking, and
traders will have to
become more educated
about the dynamics
of intermarket
relationships if
they want to keep up
with the markets
they are trading," says Darrell Jobman, editor-in-chief of
TradingEducation.com.
"The effect of
the reconstruction
effort has been felt
throughout the whole
U.S. economy, and
traders need to keep
the impact of this
new fundamental in
their minds in their
trading."
For those living outside of the directly affected
Gulf region, the
immediate impact of
these storms has
been limited to
inconvenience and
increased cost of
gasoline at the
pump. Unfortunately,
this does not even
begin to describe
the effects that
these storms – and
perhaps others like
them yet to come
–have throughout the
world as their full
impact over time
continues to ripple
through the
financial markets.
The effects extend even to the U.S. budget
deficit. Rebuilding
efforts have already
cost the federal
government hundreds
of billions of
dollars with more to
come, contributing
to a weakening of
the U.S. dollar in
foreign currency and
Forex markets.
Supply tightness, exacerbated by refinery
shutdowns and
Mideast political
issues, coupled with
increasing worldwide
demand for oil,
notably from China,
will continue to put
upward pressure on
energy costs
affecting gasoline,
home heating oil and
natural gas. The
repercussions of
various events, not
just the 2005
hurricanes, are not
limited to one
market but tend to
extend to a wide
range of
interrelated markets
in today’s global
economy.
For example, the whole ethanol industry got a big
boost when the
hurricanes and
Mideast war
disrupted crude oil
shipments and the
government mandated
the use of ethanol
to reduce U.S.
dependency on
foreign oil. As a
direct result of the
demand for ethanol
made primarily from
corn, corn prices
shot to the highest
levels in more than
10 years, bringing
up price levels for
wheat and soybeans,
and the higher feed
costs helped to
drive up prices at
the meat counter,
too. The U.S.
consumer knows all
about the effects of
hurricaneomics®
although they may
not know it by that
name.
Agricultural production costs, building material
costs and
manufacturing and
shipping costs have
all increased,
further contributing
to inflationary
pressures that could
prompt the Fed to
take a more
aggressive stance by
raising interest
rates even further.
Higher rates impact
debt markets because
of a rising large
number of individual
personal mortgage
defaults, not to
mention defaults on
industrial revenue
bonds and other
municipal bonds as
debt service burdens
their issuers in the
region.
Then, of course, there's always the threat of
global terrorism or
other natural
disasters such as a
major West Coast
earthquake,
particularly since
it appears from the
experience with
Hurricane Katrina
that the U.S. and
local governing
bodies are not on
their A-game in
their ability to
manage multiple
domestic crises
simultaneously.
Just imagine the impact on global financial
markets and investor
psychology if a
Category 3 or 4
hurricane were to
make a direct hit on
Miami or Houston,
followed within a
week or two by even
a small domestic
terrorist attack in
Chicago, New York
City or Los Angeles.
For everyone who is still smarting from the
negative
psychological and
wealth effects and
losses following the
September 11, 2001,
attacks, the goal
today should be on
preserving capital
and growing it in a
disciplined,
business-like manner
without taking
unreasonable risk.
This is the
challenge facing
investors in today's
"climate," which is
addressed by
hurricaneomic
analysis services.
Related Investment /
Trading Links:
Hurricaneomic Press
Release -
Discussion about
potential economic
impacts on the
financial markets
caused by
hurricanes.
TraderEducation.com
-
Free educational
material for traders
covering stocks,
futures, Forex,
ETFs. Daily
market commentary by
trading and
investment
professionals.
Louis Mendelsohn's
website -
Leading technical
analyst and
financial market
forecaster offering
trading software
solutions to traders
in most major world
markets.
TraderChat.com
-
TraderChat.com is
dedicated to
providing traders an
honest and open
forum for
discussion.
Discussions are
positive in nature
and help other
traders learn by
sharing trading
successes as well as
mistakes.
Chat, review
products, news, etc.
Market Technologies,
LLC -
Founded in
1979, Market
Technologies, LLC
offers the
VantagePoint
Intermarket Analysis
Trading Software to
traders in nearly 80
countries around the
world.
Blog Directory for
Traders -
TraderBlogs.com
gives you the latest
daily Trading news
and information –
for Free! The
site was created to
help fellow traders
be more successful
by providing access
to timely and
relevant information
in one central
location.
Directory of brokers -
LocateBrokers.com
is a free site that
allows traders to
search for a broker
in either stocks,
futures, or forex.
There are also
several educational
articles on this
site for traders.
Copyright 
2007 Market
Technologies, LLC.
All Rights Reserved.
VantagePoint
Intermarket Analysis
Software, TraderTech,
ProfitTaker,
World Leader in
Market Forecasting,
and Market
Technologies, LLC
are trademarks of
Market Technologies,
LLC. Synergistic
Market Analysis,
Synergistic
Analysis, and Market
Synergy
are
service marks of
Market Technologies,
LLC.
Hurricaneomics® is a registered trademark of Market
Technologies, LLC.
Hurricaneomic
effects
and hurricaneomic
analysis are service
marks of Market
Technologies, LLC. |
