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August 28, 2005
Katrina now a 175 mph monster, Sun., August 28, 2005, 12:40 PM
Katrina is shaping up to be possibly the greatest storm of the century, and it appears that the city of New Orleans, vulnerable at the best of times, is about to face potentially the worst of times, sometime between 7:00am and 8:00am ET Monday.
There are estimates that the death toll could possibly be in the thousands. An emergency worker estimates a direct hit to the City could result in 44,000 deaths. That would be a catastrophe for America.
I, and occasionally my family, have visited New Orleans over a dozen times. It is one of my favorite cities in North America. I know the place well, and maybe because of that knowledge I am so fearful.
The damage this catastrophic storm could wreak on the city and the South generally is likely to be in the tens of billions. I think all traders and locals ought to be focussed on the NOAA Hurricane Center advisories. Regrettably, TV news tends to sensationalize these storms; but the video on this one is likely to tell a horror story of its own.
Should New Orleans experience the worst-case scenario, I believe that the emergency funds to be provided will impact traders in two ways: (1) the U.S. equity market will pop, giving rise to what I call a very high risk buy" that would then carry prices higher, probably well into October, and (2) inflationary pressures will escalate.
So this could be a time where the USD requires enormous support by the Fed, which would give an immediate boost to the gold market.
The damage to oil rigs and refiners in the region will likely be substantial, so I could see crude oil contracts going over $70 a barrel on Monday.
The U.S. economy will be disrupted. (All forms of) shipping will be stopped, or at least slowed considerably through the South. Workers will not be able to get to work. Many factories and workplaces will be shut down for lengthy periods. Retail shopping will be stopped or curtailed for major areas. Much higher gasoline prices " and the need to buy emergency food and equipment at raised prices -- will add to the woes of shoppers. Travel throughout the region will be affected.
New Orleans evacuated as Hurricane Katrina approaches
By John Shinal, SAN FRANCISCO (MarketWatch) --
The mayor of New Orleans ordered the city's 485,000 residents to evacuate immediately Sunday as Hurricane Katrina approached with 175-mile-per-hour winds and an expected storm surge of up to 20 feet, according to news reports. "The city of New Orleans has never seen a hurricane of this magnitude hit it directly," Mayor Ray Nagin said of the Category 5 storm, according to the Associated Press.
This is not a good picture, given that the Big Easy is seven feet below sea level, so I think you get the message: capital markets are going to be severely upset by Katrina.
Three days ago, when I first noted Katrina-Petrina was being far over-played by media, and where I started receiving private meteorologist reports in response from some readers " nobody could tell this storm would turn south, gain strength over the Florida Everglades, then power further west into the Gulf, where it hit even warmer water and lower air pressure that was required to build this once minimal storm into a Category 5 hurricane.
Three days ago, NOAA experts were giving probabilities of this storm developing like it has, at less than one pct. But that's the unpredictability of weather.
I once took my family sailing on an overnight voyage from Ft Lauderdale, Florida, to Freeport, Bahamas, starting on a very calm night with a weather front not expected until 48 hours later.
Six hours later, that front hit us in the middle of the Gulf Stream. The waves became unbelievably high, probably 15 feet or more at the worst. The Bermuda Triangle Effect made my instruments unusable and we could not find the low-lying Grand Bahama Island in the morning weather, so I then headed the boat due west 60 to 70 miles to Florida -- at the minimum a ten hour trip.
Onboard was a friend who had single-handed his own 46 ft sailboat seven times on open Atlantic crossings. He never saw weather like that.
Also on board were my wife, and children, aged 6 and 10. I feared the worst, especially when out of the storm came an enormous tornado headed for a direct intersect with my boat. The sailor's condition of fright called ‘in extremis' struck me " mostly because my family was without any protection whatsoever. I was powerless to move.
Needless to say, my family have never again voyaged offshore more than three miles, other than on a cruise ship.
Being off West Palm Beach about 18 miles, I called into the Coast Guard to give my position, which was now accurate as I got close to land. I told my contact that the tornado had missed us by about 100 feet, and was told that it had touched down a few miles south of WPB, an hour or so earlier.
Getting into the safety of the inlet was quite a personal story too, but the message I'd prefer to give is that, having been through major storms in Florida and Bahamas, nobody should underestimate the power of nature.
p.s. It's 7:00pm ET, Sunday, and my wife has just returned from a trip up north, including the Intrawest Blue Mountain resort ("it's beautiful; you won't believe the new construction"), and was aghast at the latest Katrina news from CNN: "I love that city! This is a tragedy. I can't watch this anymore." I agreed. What is now widely believed to happen tomorrow morning to New Orleans will, in fact, be tragic.
Posted by Posted by Bill Cara on August 28, 2005 12:41:04 PM | Category: Cara Today in the Market