More On Hurricane Harvey - Energy Markets, Equities Impacted

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Includes: AROC, GNRC, HD, LL, LOW, NIB, OIL, SN, UNG, VALE
by: James Roemer

Summary

Historic move in gasoline as more refineries shut down.

Which stocks normally react to devastating hurricanes.

How you can help those in need of relief from Hurricane Harvey.

It's almost sacrilegious to talk about investing based on Hurricane Harvey, given the uncanny death and destruction that has hit the area. Our hearts go out to the thousands of families that have been affected by this. For more information how you can make a donation, please refer to the information at the bottom of the page.

If you want to see and hear a detailed analysis how we forecasted Hurricane Harvey very early and its impact on global markets, please click here.

The cooling eastern Pacific Ocean, a warm Atlantic and a lack of African dust for the first time in 5 years are main factors influencing the active hurricane season. The wet west African weather that is spawning more tropical waves, is also one reason why global cocoa (NIB) production has improved, helping to pressure cocoa prices some 25% the last 6 months.

Why have natural gas prices (UNG) not reacted to Harvey? Its pretty simple--demand destruction from the cool August weather and tens of thousands of people without power has offset any short term closing of oil rigs in the western Gulf of Mexico.

Frankly, I hate being right about a weather event that is now called a calamity. But, because of popular request, I am likely going to have a much more detailed paid service on Seeking Alpha for subscribers that want to know more about how to invest specifically in stocks and ETFs on weather.

For example, here are some futures and equities that have responded to Hurricane Harvey. Those who foresaw this storm last week, had the potential to make profits on these particular market positions. For example, Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) always reacts positively after hurricane damage. This is because of the need for hundreds of thousands of people to rebuild their homes and procure home supplies. Another stock, Valero (NYSE: VALE) is a major refinery in the Gulf. It has rallied because the refinery itself has not incurred a lot of damage, but has benefited from the spike in gasoline prices. Some other notable companies whose stock price benefits from hurricane damage are Generac (NYSE: GNRC), Sanchez Energy (NYSE: SN) , Archrock (NYSE: AROC) and Lumber Liquidators (NYSE: LL)


The moves of markets on Harvey were as of two days ago. In particular, gasoline prices have soared another 7-10% as of this writing. The tropics are very active and there will be various other trades through the fall season. Whether gasoline prices continue to rally will be based on if there is irreversible damage to refineries; something that is difficult to say. Usually, a situation like this is short-term in nature, but this is not an usual event, but one in 200 years. For more information about hurricanes and our predictions a few weeks ago, please click here.

More Hurricanes On the Way

Another hurricane should be approaching the tropics within 8-10 days. Orange juice to the energy market and many stocks will be watching. Overall, while September is often a down month in the stock market and many of Trump's intended policies for tax reform, etc. may well NOT come to fruition, many of the stocks listed above could continue to be supported on breaks due to my forecast for an active hurricane season.

For those looking to donate to the Harvey Relief efforts, here are several charities:

The American Red Cross is accepting donations on its website. You can also text HARVEY to 90999 to donate $10.

AmeriCares takes medicine and supplies to survivors.

Catholic Charities provides food, clothing, shelter and support services to those from all religious backgrounds

Houston Mayor Sylvester Turner established a Harvey relief fund at The Greater Houston Community Foundation. The organization connects donors with a network of nonprofits and innovative solutions in the social sector.

GlobalGiving, which calls itself the largest global crowdfunding community, has a goal of raising $2 million for its Harvey relief fund. Funds will be used first for immediate needs of food, water and shelter and then transition to long-term recovery efforts.

United Way of Greater Houston has launched a relief fund for storm-related needs and recovery. The organization says it already maintains a disaster relief fund but anticipates the needs of Harvey will far exceed those existing resources.

The Center for Disaster Philanthropy has also launched a Hurricane Harvey relief fund. The organization says its strategy emphasizes “investing well rather than investing quickly, addressing the greatest needs and gaps in funding that may be yet to emerge.”

GoFundMe, the social fundraising site, has created a landing page that gathers the campaigns on its platform related to Harvey.

The Salvation Army says it is providing food and water to first responders and preparing for massive feeding efforts for residents.

Send Relief and Southern Baptist Disaster Relief says its teams began responding before Harvey made landfall and continues on-the-ground relief work.

Samaritan’s Purse is accepting donations as well as volunteers for Harvey disaster relief for the coming months.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.