Monday, 11 September 2017

Irma: If You Can’t Stop It, Trade It

Posted by Valentine at 11:47 Labels:

Hurricane Irma arrived to Florida on Sunday and (as expected) it did so with no mercy. The Category 4 storm made landfall on Cudjoe Key with winds up to 130 mph, according to the National Hurricane Center. The storm caused massive destruction in some areas, snapping trees and cutting off power supplies to more than a million people.

The authorities urged people to evacuate as soon as possible. Latest reports show that about 5.6 million residents in Florida were ordered to leave their homes.

“If you have been ordered to evacuate, you need to leave now, [...] Not tonight, not in an hour, now,” warned Governor Rick Scott in a press conference after explaining that the strength of Hurricane Irma is life-threatening. In the Caribbean, more than 20 people were killed.

The situation is critical down there in Florida. But there is more to come. And I am not talking only about physical loses, Irma is also likely to hit you financially unless you protect yourself.

Keys to trade Irma:

  • Search for shelter: if you’re interested in surviving Irma, then you should start looking for shelter right now. And I am not talking about a bridge, I am referring to safe-haven assets. Remember our little friends gold, the Japanese yen and the Swiss franc? Well, they are likely to move higher on Monday as Wall Street digests Irma.

  • Airlines: more than 10,000 flights have been called off over the weekend as Irma landed in Florida. American Airlines, United, Spirit, JetBlue and Delta Airlines have all suspended flights to the city’s airport and other regional airports as well.

  • Hotel & Leisure: a weaker flow of people is also likely to hit the hotel and leisure business. From resorts to entertainment parks, these sectors are expected to edge down as soon as Wall Street opens its doors on Monday.

  • Insurance: heavy destruction, means heavy losses for the insurance companies. In fact, insurance experts believe Irma would be a major event for the industry. But there is also an interesting way to see it if to trade insurance stocks medium-term. People who suffered losses and were not properly insured are likely to turn into insurance companies for covering their assets in the future, which could cause a rebound in a few weeks.

  • Construction: following the previous logic > heavy destruction, means heavy reconstruction. Government spending to rebuild affected areas is of course a key focus for construction stocks. Not only construction companies are expected to rise, check on construction supplies and machinery, such as Caterpillar for instance.

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