Sandy Wreaks Havoc, Economic Impact Not Yet Clear
A number of companies postponed earnings announcements Monday, and others were expected to take similar steps Tuesday.
J.P. Morgan chief U.S. equity strategist Thomas Lee said ironically housing may be one sector ultimately stimulated by the after effects of the storm, as homeowners seek to make repairs or rebuild. He said another more immediate impact should be the positive impact on retailers from consumers rushing into stores this past weekend for storm supplies but also shopping for other items, like apparel. "Imagine millions of homeowners taking this action, in these major cities," he said. "That's definitely got to be helpful despite that we end up with two days where nobody can go to stores."
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Lee does not expect a huge impact on stocks when the market reopens but he said it might sell off initially. "It is kind of skittish," he said. "It's coming at a time when we were already worried about the fiscal cliff. It's not a great time for this to be coming."
Another impact from the storm could ultimately be a drop in fuel prices, as the storm-forced shutdowns kept drivers off the road. Initially gasoline futures were higher, but they were flattish in evening and afternoon trading Monday, as it seems the demand destruction may outweigh temporary supply disruptions from east coast refiners cutting back. Of the five major refineries, just Philips 66 refinery in Linden, N.J. was shutting down completely.
Andrew Lipow, president of Lipow Oil Associates estimates a possible loss of 1.5 to 1.7 million barrels of gasoline production from the storms, but demand should be down sharply. He estimates 2 to 2.5 million barrels in total gasoline demand will be lost from Washington to Boston and west to Ohio and northward into Maine.
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