When God Moves Markets – Hurricanes Pt. 1


Hurricane season begins this week and so does the speculation about just how bad this year’s storms are going to be. These so-called “acts of God” have grown noticeably more powerful of late. In fact, ten of the costliest hurricanes hit American shores in just the last eight years.

Where does the fury hit hardest? On Wall Street it’s the energy stocks that get clobbered. Hurricanes Katrina and Rita took down 167 offshore rigs and 183 pipelines - sapping 6% of the nation's oil production.

As the energy complex braces for what's expected to be an active season here are your divine trades.

“It’s not nice to go against Mother Nature,” explains Addison Armstrong, Tradition Energy Director of Market Research on Fast Money. “We’ve had two benign years and that’s not ordinary. And when these hurricanes come in the energy markets run up fast, furious and in people’s faces.”

How would you trade it?

“If we get a strong storm look at the oil fields services sector,” adds Armstong. “Those that have contracts with drillers in the Gulf. Their revenue should go up because their rigs and repair equipment will be highly in demand for many months.”

But do the stocks already reflect some kind of hurricane premium, asks Karen Finerman.

“If you’re bullish energy and believe we’re going to have active hurricanes this summer, why not layer into some of these names now,” replies Armstrong. “You can always take it off... if it doesn’t pan out.”

I would take the other side of anything having to do with hurricanes at all, says Karen Finerman.

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Trader disclosure: On June 2, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (DIS), (MSFT), (WMT); Adami Owns (C), (AGU), (BTU), (NUE), (GS), (INTC), (MSFT); Finerman Owns (GS), (AAPL); Finerman's Firm Owns (GE), (MSFT), (NYX), (SBUX), (SUN), (TSO), (VLO); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Finerman's Firm Owns SPX Index Puts; Finerman's Firm And Finerman Own (C) And (C) Leaps; Jon Najarian Owns A Call Spread In (HOC), (MEE), (SBUX), (TSO), (VLO), (AAPL), (COP), (FTO); Jon Najarian Owns (ACI) Call Spreads And Calls; Jon Najarian Owns (ANR) Calls Spreads And Calls; Jon Najarian Owns (C) Preferred Shares; Jon Najarian Owns (KEY) Puts, (LEH) Puts; Jon Najarian Owns (SNM); GE Is The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC

Armstrong Owns (FTK), (NE)