MorningWord 10/31/12: Trick or Treat – Q4 Guidance Maybe Suspect as a Result of Sandy

by Dan October 31, 2012 9:08 am • Commentary

MorningWord 10/31/12:  For most in NYC, myself included, the last few days has been nothing more than an inconvenience, while many in some of the outer-boroughs, Long Island, and New Jersey have had their worlds turned upside down as a result of Hurricane Sandy.  Obviously our thoughts are with the families of those who lost their lives in the storm, but it appears most damage in NYC will likely be categorized by inconvenience (loss of some property (see pic below of my garage, I moved my car above ground Sunday afternoon!), loss of power (mine is not expected to be back for 3-7 days) and loss of public transportation (we will endure), while the damage on the Jersey Shore and in places like Breezy Point Queens will take months if not years for the residents to recover.

Jane Street Garage-West Village, NYC


My trip yesterday out of NYC (through New Jersey to Grandmother’s house we went in Upstate New York) demonstrated to me first hand how damaging the storm may be to the economy of the mid-Atlantic region at a time when things were just sputtering along in a fairly weak recovery.

Driving through New Jersey we saw plenty of flooded roads that could not be traversed and will surely hinder efforts to restore power, which will obviously crush businesses large and small, and hinder the ability of individuals to work. (we approached 5 roads like this and had to find alternate routes to get to the highway):


Productivity in the region will obviously drop dramatically over the next few weeks, transportation, trucking, shipping, hospitality, retail, housing, will all see very massive blowbacks from the storm as life will not resume as normal, as already strained local and state governments strain to cope with the recovery.

Which brings us back to the fairly mundane task of picking winners and losers from the aftermath of Sandy.  From where I am sitting, tri-state auto dealers should see a fairly nice uptick in sales in the coming weeks and months.  Retail, aside from the likes of Home Depot and Lowe’s, will have a difficult time for weeks.  Hospitality industry in places like NYC will have a bit of a zero sum situation, but many affected areas will get destroyed as visitors will not be coming back to places like Atlantic City for some time.  It’s a bit early to tell, but these occurrences seem to be happening a bit more frequently of late, so maybe the airlines’ horrible profit performance over the last decade, and the companies’ guidance account for at least 1 or 2 disaster a year, but airlines will likely see a big black whole right in the middle of their Q4.

While that little rundown is not all too scientific,  I think it is safe to say that much of the guidance given from companies in the last couple weeks should be treated with some skepticism.  Sandy could be the cause of many pre-announcements as Q4 comes to a close or in the start of the new year, and could offer many companies a very easy scapegoat for already poor revenue growth (as Enis detailed in his MacroWrap this morning).