The monthly jobs report following Harvey has also shown a similar pattern to that of Katrina and Sandy.  In the month that the extreme weather struck, the number of jobs added nationally declined, as shown in the chart above.  However, within a couple of months, job creation had rebounded to levels preceding the disaster.  Accordingly, although we may see further weakness in October, a rebound may come by November, in part driven by rebuilding efforts.

In terms of gas prices, they have behaved similarly where oil producing areas have been impacted, spiking immediately after the storm before retreating in subsequent weeks.  Prices jumped 12.1% in the week after Harvey struck, while the jump from Katrina was 17.7%. There was a muted impact from Superstorm Sandy as few oil producing facilities were impacted in the New Jersey region.  Following the first week’s jump, prices eased -3.8% five weeks after Katrina’s impact.  In the 5 weeks after Harvey, gas prices are down -4.3%.

Inevitably, after these destructive storms, the areas impacted by Hurricanes Harvey, Irma and Maria will begin to rebuild. The potential beneficiaries of reconstruction are ETFs such as XLB (SPDR S&P Homebuilders ETF) and ITB (iShares U.S. Home Construction ETF) which may see positive earnings impacts as early as the fourth quarter.  Although gas prices may see a short term boost, it is less likely to have a lasting impact on stocks that make up ETFs such as the XLE (Energy Select Sector SPDR ETF) and IYE (iShares U.S. Energy ETF).

Hafeez Esmail is the Chief Compliance Officer at Main Management, a participant in the ETF Strategist Channel.

A pioneer in managing all-ETF portfolios, Main Management LLC is committed to delivering liquid, transparent and cost-effective investment solutions. By combining asset allocation insights with smart implementation vehicles, Main Management offers a unique approach that translates into distinct advantages for our clients, including diversification, cost efficiency, tax awareness and transparency. http://www.mainmgt.com

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