How Much Will Hurricane Matthew Cost
Weekly Update - October 17, 2016
Though stocks rose Friday after statements from Federal Reserve officials, the major indexes ended the week lower amid choppy trading. For the week, the S&P 500 lost 0.96%, the Dow fell 0.56%, the NASDAQ dropped 1.48% and the MSCI EAFE declined 1.40%.
Counting the Cost of Hurricanes
Whenever disaster strikes, people often wonder: What's all this going to cost? Though the human toll of injury and death may be incalculable, experts have gotten pretty good at estimating the economic costs of lost production and physical damage due to major storms.
According to one economist, about two-thirds of the economic losses of a hurricane are related to property damage while one third come from economic losses.[ii] The insurance costs of property damage due to Matthew's wind and storm surge are currently estimated to be between $4 billion and $6 billion, though those figures may rise as claims start rolling in. The chart below shows storm damage estimates for four major hurricanes since 1979.  We can see that Hurricane Sandy and Hurricane Katrina dwarf Matthew in terms of overall damage.

However, Matthew is estimated to have a higher percentage of losses due to wind damage, which could have implications for insurance companies. Damage from storm-caused wind and surge is generally covered under standard homeowner's and business policies, though they are often subject to high deductibles.
One estimate of Matthew's overall cost, including evacuations, lost revenue, and other important factors, puts the total cost at over $10 billion. Though that figure is a drop in the bucket of the overall U.S. economy, the localized effect of closed businesses, damaged roads, and flooding in affected areas could be devastating. Flood damage is not usually covered, and many hurricane victims don't have specialized flood insurance.
How much do disasters like Hurricane Matthew affect larger economic questions like Federal Reserve policy? We don't know how the Fed considers natural disasters, but it's likely that regional Feds like the Federal Reserve Bank of Atlanta include disaster-related figures in their reports.
Recent comments by Fed officials have left us with a cloudy picture about future interest rates. While it's clear that many Fed officials believe economic conditions are strong enough to warrant a December rate hike, Fed Chair Janet Yellen isn't so certain. In a Friday speech, she gave us some insight into the Fed's reluctance to move on interest rates, saying that anomalies in economic trends leave her inclined to run a "high-pressure economy" to reverse more of the economic damage before it becomes permanent.

Economic Calendar
Monday: Empire State Manufacturing Survey, Industrial Production
Tuesday: Consumer Price Index, Housing Market Index, Treasury International Capital
Wednesday: Housing Starts, EIA Petroleum Status Report, Beige Book
Thursday: Jobless Claims, Philadelphia Fed Business Outlook Survey, Existing Home Sales

Data as of 10/14/2016
1-Week
Since 1/1/16
1-Year
5-Year
10-Year
Standard & Poor's 500
-0.96%
4.36%
6.96%
14.84%
5.62%
DOW
-0.56%
4.09%
7.17%
11.15%
5.17%
NASDAQ
-1.48%
4.13%
9.02%
19.09%
12.12%
U.S. Corporate Bond Index
 
-0.23%
7.83%
6.36%
5.55%
7.46%
International
-1.40%
-3.00%
-3.87%
2.61%
-1.38%
Data as 10/14/2016
1 mo.
6 mo.
1 yr.
5 yr.
10 yr.
Treasury Yields (CMT)
0.26%
0.46%
0.66%
1.28%
1.80%

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and  Treasury.gov. International performance is represented by the MSCI EAFE Index. Corporate bond performance is represented by the DJCBP. Past performance is no guarantee of future results. Indices are unmanaged and canno be invested into directly.
Headlines
September retail sales rise. Retail sales rebounded 0.6% last month, boosted by auto sales, which could be good news for the holiday shopping season.

Business inventories increase in August. Stocks of goods rose, especially among U.S. retailers, suggesting businesses might be expecting healthy demand for goods this quarter.

Consumer sentiment drops to one-year low. A measure of how optimistic Americans are about their financial prospects plummeted this month, suggesting Americans are concerned about the economy ahead of elections.

Small business confidence falls in September. A measure of confidence among American small-business owners dipped last month as declines in job openings and inventory investment declined.

 "Things may come to those who wait, but only the things left by those who hustle. "

- Abraham Lincoln
Dulce de Leche Mousse
Make your own dulce de leche in this easy dessert!
 
Serves 4
 
Ingredients:
 
1/4 cup sweetened shredded coconut
1 cup heavy cream
pinch Kosher salt
1/4 cup dulce de leche
 
Dulce de Leche
1 14-oz can of sweetened condensed milk
 
Directions:
 
  1. To make the dulce de Leche, heat the oven to 425o F. Heat a kettle of water to boiling.
  2. Pour the condensed milk into a pie plate or small oven safe dish. Cover tightly with foil and place it inside a roasting pan. Put it in the oven and carefully fill the roasting pan with the hot water until it comes halfway up the sides of the pie plate. Bake the mixture for approximately 1 1/2 hours, checking and replenishing the water as needed until the milk is thick and golden brown. Cool uncovered.
  3. To make the mousse, lower the oven temperature to 325o F. Spread the coconut flakes on a rimmed baking sheet. Toast the flakes, shaking them to toss, for 5-7 minutes until golden.
  4. While they are cooling, beat the salt and cream just until soft peaks form. Don't overbeat. Gently fold 1/4 cup of the cooled dulce de leche into the mixture, being careful not to deflate the mixture.
  5. Scoop the mousse into individual bowls and chill for at least an hour and up to 8 hours. Serve topped with the coconut flakes and a small drizzle of dulce de leche.
Note: the remaining dulce de leche can be kept sealed in the refrigerator for up to a week and used as an ice cream or yogurt topping or on oatmeal or pancakes.
 
Recipe adapted from Charlyne Mattox | RealSimple.com

Understanding the Small Business Healthcare Tax Credit
The Small Business Healthcare Tax Credit helps small businesses and tax-exempt organizations afford the healthcare they provide their employees. Your business may be eligible for the credit if: 
  • Your business has fewer than 25 employees working full time or who work a mix of full and part time.
  • The average annual wage paid to employees must be less than $50,000 (in 2015) and the employer must pay at least 50% of all employees' health insurance premium costs.
Beginning in tax year 2014, the tax credit became worth a maximum of 50% of premiums paid by small business employers and 35% of premiums paid by small tax-exempt employers. If you didn't owe any taxes during the tax year, the credit can be carried back or forward to other tax years.
 
To learn more about small business tax issues, please contact a qualified tax professional.
 
Tip courtesy of IRS.gov

3-Point Putting Drill
Dialing in your directional control and distance awareness is challenging and takes practice. Use this putting drill to practice control and drop your stroke count. Choose a breaking putt that's between 15 and 40 feet or so. Walk to about the halfway mark and place two tees six inches apart. You get one point for sending the ball between the tees, you get a second point if you can also end within three feet of the hole, and a third point for also sinking the putt.
This drill rewards accuracy, speed control, and perceptual awareness by forcing you to visualize the line the ball needs to take. Adjust the game as you improve by moving the tees, shifting your starting point or moving the tees closer together. The more you play, the better you'll get at identifying and executing the best line to the hole.
Tip courtesy of Dan Martin, PGA | Golf Tips Mag

5 Minuets to Better Health
Research shows that short bursts of activity can yield great benefits to health. They get the blood pumping and can help your arteries stay elastic. One study found that just two sessions a week of a high-intensity regimen was able to lower blood pressure by 9%. Here are some ideas for quick exercises that can boost your daily activity level:
  • On your daily walks, walk quickly up the hills to increase the intensity and recover on the downhill side.
  • On the treadmill, increase the intensity for 60-second bursts, and then recover for several minutes.
  • On a stationary bike, do all-out sprints of six seconds, and then recover for several minutes.
Always consult your physician before starting a new fitness regime.
 
Tip courtesy of AARP

Get Green Power from Your Utility
Does your local utility company offer green power? Green power is energy created from renewable, more environmentally friendly resources like solar, wind, geothermal, hydropower, or biomass. Many utility companies will allow you to purchase green power for a small fee each month. The system works by selling green energy into the existing power grid and then allowing consumers to purchase the energy. Supporting green energy allows consumers to reduce their reliance on fossil fuels while encouraging the development of renewable energy sources.
To find out if green power is available in your area, check the Green Power Network at energy.gov.
 
Tip courtesy of the U.S. Department of Energy

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