Stock Market Quickly Gets Over Irma

Stock Market Quickly
Gets Over Irma
By www.Options-Trading-Education.com

http://www.options-trading-education.com/24658/stock-market-quickly-gets-over-irma/
As hurricane Irma tore through
the Caribbean with Florida in its
sights the stock markets of the
world paused in their upward
climb.

Now that the hurricane has
passed with less than expected
damage the markets are back
to their continued rally.

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Reuters notes that world
stocks build as Irma weakens.

World stocks climbed to record
highs on Tuesday as an easing
in tensions over North Korea
and signs that Hurricane Irma
was causing less damage than
feared in the United States
boosted risk appetite.

The MSCI All Country World
Index .MIWD00000PUS edged
up 0.2 percent, building on
Monday’s 0.9 percent gain — its
fourth-biggest so far this year.

The pan-European STOXX 600
index jumped to a one-month
peak as insurers .SXIP made
further headway and basic
resources .SXPP and financials
.SX7P joined in the rally.

Wall Street stocks futures rose,
with the S&P 500 .SPX eyeing a
fresh all-time high after hitting
a record closing level in the
previous session.

It all has to do with strong
corporate earnings.

Successful long term investors
gauge a stocks true value using
an intrinsic stock value
calculation as explained
by Profitable Investing Tips.

The dictionary definition of
intrinsic stock value is its
fundamental value.

It is obtained by adding up
predicted future income of a
stock and subtracting current
price.

It can also be seen as actual
value of an equity versus its
book value or market value.

The concept of fundamental
analysis of equities evolved
from this concept.

Using fundamental analysis the
intrinsic value of a stock is the
expected company cash flow
discounted to current dollars.

It is a discounted cash flow
valuation.

So as long as earnings are
strong investors expect to see
more and are willing to bid up
stock prices.

It does not hurt stocks that
interest rates are so low.

The question might be that
while the stock market shrugs
off damage from hurricanes

what happens when interest
rates go up or when the costs
of reconstruction in Florida and
Texas come to bear on the
market?

Investopedia says that with
time stocks and the economy
will suffer from the
hurricanes.

Hurricanes Harvey and Irma
are likely to deliver a combined
hit of at least $290 billion to the
U.S. economy, equal to about
1.5% of annual GDP, according
to estimates by AccuWeather
Inc.

This comes while stocks, as
measured by the S&P 500
Index (SPX), are in a fragile
position, essentially having
traded sideways for about three
months.

The economic blow from Harvey
and Irma will flow through to
reduced corporate profits,
putting further downward
pressure on stocks.

The underlying problem is that
the uninsured losses from these
two hurricanes will exceed $200
billion.

That is more than hurricanes
Sandy and Katrina combined.

The concern in this case is that
the overpriced market is due
for a correction.

Usually corrections are fixed as
the economy grows.

But if the double whammy of
two hurricanes causes even a
mild recession then watch out.

The stock market may have
gotten over Irma for now
expecting strong future
earnings but if earnings fall due
to hurricane related losses
watch out!

Stock Market Quickly Gets Over Irma

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Stock Market Quickly Gets Over Irma