Kane Davis Cooper - Earnings starting to reflect cost of hurricanes

Earnings starting to reflect cost of hurricanes

Kane Davis Cooper – Several companies have not unexpectedly said that earning this year will be lower than previously anticipated because of the recent hurricanes on the South-East coast of America.

Moody’s have initially estimated that the overall damage caused by hurricane Harvey alone could amount to over $100 billion.

Southwest Airlines and Sherwin-Williams have both added their names to an ever-growing list of companies that have downgraded expectation for this year because of the weather.

Other companies such as Sysco, Marriott, Newell Brands, and Gap have also said their operations were somewhat affected by the storms. The effects seen from previous such events have had a knock on for many months.

The big question is whether these financial effects will have an effect on the wider economy and the answer to that is yet unknown but expected to be only slight. Information from insurance companies, which is not yet forthcoming will provide more clarity.

The initial indications should be a relief to investors and the markets remain in buoyant territory and the hope of further tax cuts and a continuing strong overall economy are largely seen as the drivers for continued good times in the markets.

The prospect of large-scale rebuilding efforts should also pump welcome new money into infrastructure spending and home improvements, helping companies such as Home Depot and the like.

Motor sales are also predicted to rise according to some strategists with demand increasing for new car purchases in the middle of this month and following a strong summer sales period.

It is expected that the recovery from the latest hurricanes will give automobile sales an extra lift in September, and will likely continue to moderately boost the market in the upcoming weeks and months. When hundreds of thousands of people are touched by an incident of this scale, not everyone will buy at the same time.