Wesley Chapel, FL, October 10, 2005 -- Perhaps you haven’t heard the words “Hurricaneomics” or “Hurricaneomic Effects” mentioned yet on cable television talk shows, but you probably will one day soon. Even if you’ve never taken Econ 101 or even gone to college, you will know immediately what Hurricaneomics is all about. It’s one of those unusual, self-explanatory, concepts that needs no further clarification or definition.
In a nutshell, Hurricaneomics talks to 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.
The term Hurricaneomics was coined recently by leading technical analyst and financial market forecaster, Louis B. Mendelsohn. He 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 Mr. 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.
In 2005 three major hurricanes made landfall in the Gulf region of the U.S. following a very active year in 2004 in which four such hurricanes hit Florida alone. For those living outside of the affected 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 hurricaneomic effects that these storms - and perhaps others like them yet to come - will have throughout the world as their full impact over time ripples through the financial markets.
Consider the hurricaneomic effects on the U.S. deficit. Already following Hurricane’s Katrina’s devastation to New Orleans and surrounding areas, rebuilding efforts are expected to cost the federal government hundreds of billions of dollars, which will contribute to a weakening of the U.S. dollar in foreign currency and Forex markets.
Supply tightness coupled with increasing worldwide demand for oil will continue to put upward pressure on energy costs affecting gasoline, home heating oil and natural gas. Agricultural production costs, building material costs, as well as manufacturing and shipping costs will increase too, further contributing to inflationary pressures which will prompt the Fed to take a more aggressive stance by raising interest rates even further.
Hurricaneomic effects will also impact debt markets should there be a 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. Right now it is too early to tell what the full impact of these storms will be. Plus, more of these killer storms may be just one hurricane season away as this year’s season comes to a close on December 1st.
Then, of course, there’s always the threat of global terrorism particularly since it appears from the recent experience with Hurricane Katrina that the U.S. is not on its A-game in its 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 2001 market crash and the September 11th 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 hurricaneomic “climate”.
About Louis B. Mendelsohn
Louis B. Mendelsohn is the President and CEO of Market Technologies, LLC, an Inc. 500 Company, headquartered in Tampa Bay since it was founded by Mr. Mendelsohn in 1979. The company, with customers in over seventy countries worldwide, is recognized as the world leader in market forecasting. Market Technologies researches and develops proprietary trend forecasting and market timing technologies that utilize artificial intelligence applied to intermarket and hurricaneomic analysis, in order to forecast various commodity and financial markets throughout the world. These presently include energies, interest rates, stock indexes, currencies, metals, grains, meats, softs, Forex and ETFs, covering a total of sixty-nine world markets.