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US executives concerned about the weather ahead of El Nino

Tan KW
Publish date: Wed, 07 Jun 2023, 10:52 AM
Tan KW
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NEW YORK: America’s top executives are spending an increasing amount of time talking about something completely out of their control - the weather.

With three weeks still remaining in the second quarter, the weather has already been discussed on earnings calls for S&P 500 Index companies more than any time since 2019, according to data compiled by Bloomberg.

And it’s not just executives’ remarks. Analyst questions involving weather have more than doubled versus the first quarter, the data showed.

That renewed meteorological focus comes as investors anticipate an economically destructive El Nino weather pattern this (northern hemisphere) summer and follows months of intense storms and snow that caused extensive disruptions in the United States.

The increased weight on weather is widespread across sectors, as the data showed, but most pronounced among companies in the disparate utility and consumer discretionary sectors, illustrating the vast economic impact of extreme weather.

Further driving the increase in weather discussion on earnings calls is its asymmetrical impact.

While Deere and Co counts on wet and varied conditions to drive demand, and Pinnacle West Capital Corp recently benefitted from a lengthy Phoenix, Arizona winter, Michigan-based electricity provider CMS Energy and Alaska Air Group were hurt by similar conditions.

In Alaska Air’s case, the carrier recorded just its second loss in eight quarters due to an extreme winter. The company is now bent on bolstering the company’s ability to mitigate bad weather as much as possible.

This year’s version of El Nino may herald one of North America’s hottest summers on record, intensified storms across the globe and trillions of dollars in lost economic activity.

 - Bloomberg

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