The effects of Hurricane Sandy already have been felt on Wall St. as the major exchanges have elected to close today, and perhaps tomorrow. Much less certain is the damage the storm may do to the overall economy. The effects likely will be mixed. Traffic to stores, restaurants and other some other retail outlets will be down. A notable exception will be stores that carry items people buy for hurricane emergencies. Food stores and hardware retailers will see a very large improvement in foot traffic. Among other big industries that could be hurt are the travel and leisure sectors. In the case of airlines, will people cancel trips or merely defer them? The overall price of gas and oil will rise because of refinery shut downs and slow transportation of gas, but those effects probably will last only a few days. The industry that will be most badly battered is insurance. Claims certainly could rise into the billions of dollars. As for the balance of the economy in the region; it probably will recover quickly.
Europe’s economic problems will be pushed off of the front pages, at least while the East Coast braces for Hurricane Sandy and its aftermath. But the bailout of Greece is in real trouble. The coalition that runs Greece has begun to fall apart. Not all members agree to the nature of cuts in jobs and worker pay. And the International Monetary Fund and European Union have insisted on austerity measures that will make deep cuts necessary. The standoff could cost Greece its next aid payment and raises, for the umpteenth time, the possibility of default. The bailout of Spain also has been rocked by disagreements about its size and the extent to which the nation will agree to enforcement of its budget by its neighbors. Efforts to get Spain to accept a massive aid package have gone nowhere in the past few days. According to Reuters:
Italian Prime Minister Mario Monti meets Spanish Prime Minister Mariano Rajoy on Monday and while little is expected from the meeting, some expect Italy to keep pushing Spain to seek a bailout as it would lower borrowing costs for other peripheral euro zone countries.
Word on Windows 8
Now that Microsoft Corp. (NASDAQ: MSFT) has released Windows 8, the guessing games have begun. First is whether mixed reviews of the product will slow its adoption. The pricing of Windows may offset negative press. Upgrades to Windows 8 cost as little as $39. Some PC owners will make the upgrade just to see what the new product is like. Microsoft’s larger hurdle may be businesses that worry about training employees and setting up IT support for more than one operating system. Analysts also will watch whether sales of Windows 8-enabled portable devices will do well. This begins with Microsoft’s own Surface tablet but will soon spread to Microsoft partner product sales. The first of those will be Nokia Corp. (NYSE: NOK). Sales data about Windows 8 will not be uniform around the world. Data about activity in places like Africa and India already have begun to reach the media. Since sales data for the United States are not yet available, any straw of information will increase the speculation about the eventual fate of the new Microsoft product.
Douglas A. McIntyre