US markets close as Frankenstein's Monstorm heads to NYC

Hurricane Sandy marks first full trading-day lost to weather in over 25 years.

Hurricane Sandy, which is expected to hit in New York City in just under 15 hours, is likely to throw everything we expected about the upcoming week off-course.

For readers of this blog, the biggest immediate effect is that all equity trading is cancelled for today, and likely for tomorrow as well. The shutdown, announced by the Securities and Exchange Commission (SEC), follows the NYSE's decision, announced yesterday, to close floor trading for the storm.

The NYSE had hoped to leave digital markets open, but the SEC's decision trumps that and also brings down a further dozen exchanges, including the other major NYC exchange, NASDAQ, but also ones based further afield, all the way to BATS in Kansas.

While the NYSE decision was based largely on the physical safety of traders on the floor, the SEC's mandate seems more built around a desire for fairness and stability. Given the storm will likely shut down most of the east coast for at least part of today, large numbers of traders would be unable to log-on wherever they are. The COO of NYSE confirmed to Bloomberg that:

Operating the market that way didn’t seem to serve the public interest. Why do this? To prove we can? That didn’t seem to make a lot of sense.”

The last time the NYSE closed for a full day due to weather was because of Hurricane Gloria in 1985, which says a lot about how bad Sandy is expected to be.

The Atlantic's Alexis Madrigal has written about Why Sandy Has Meteorologists Scared in 4 Images (including one animated GIF, obviously); this is Frankenstein's Monstorm, with a massive confluence of adverse factors. Firstly, and most importantly, it's really, really big. The winds are faster, the affected area is larger, and it will likely stick around for a lot longer once it makes landfall.

Beyond that, though, there's the fact that the eye of the storm will be on central New Jersey, meaning that New York City – the most densely populated area in the US – will be getting full-strength hurricane winds; the fact that the same cold winds that will cause it to "pinwheel" on to land will also strengthen it just before it does, hitting coastal areas even harder; and the problem that the "sheltered" New York City coastline will instead funnel the storm surge directly towards populated areas, meaning that for the coast between Queens and the Bronx especially, there is more chance than not that the surge will be greater than six feet.

The effect of the storm is expected to be worse than last summer's Hurricane Irene, which, despite being thought of as a damp squib (pun not intended), still caused nearly $16bn of damage, mostly from flooding. But the comparatively underwhelming nature of Irene has meant that a number of people aren't taking Sandy as seriously as they perhaps ought to, with evacuations (Mayor Bloomberg ordered the evacuation of around 375,000 people in the worst-hit parts of the city) reportedly being largely ignored.

As well as the physical and economic damage of the storm, there is one other big effect that Sandy could have: it may mess up the US presidential election. No matter how well-run the response is, there are likely to be some areas still lacking power by the 6th. Contingency plans will be in effect, but if there is any uniformity to the areas affect – if, say, rural counties are more likely to be cut-off than urban – then there is the chance that some swings could be down to the storm.

The chance of it affecting the outcome is slim but the possibility is there. Who knows how the parties, and the public, would take it?

Hurricane Sandy making landfall. Image: WeatherBELL

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Getty Images.
Show Hide image

Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.