Apocalypse Now

Everywhere you turn natural disasters and threats of more to come make it feel like the end of the world. Not only do we have to deal with three major hurricanes Irma, Jose and Katia in the Atlantic, now a massive earthquake in Mexico overnight has caused death and destruction. There is also rising nuclear tension with North Korea that is causing the market to seek safety and wait for that proverbial shoe to drop next. 

There are reports of at least five dead after an 8.1 magnitude earthquake and a tsunami that struck the southern coast of Mexico early Friday, prompting tsunami waves in the country that measured up to 2.3 feet and warning to the Pacific coasts of several Central American countries, including Guatemala, El Salvador, Costa Rica, Nicaragua, Panama and Honduras.

The National Hurricane Center is warning that Hurricane Irma remains, “an extremely dangerous” category 4 hurricane with 155 mph winds. The NHC storm track map shows Irma is set to hit Florida on Saturday night before tracking up towards Georgia, Tennessee and South Carolina. That is unwelcome news.

The dollar has gone into deep retreat as the market worries about North Korea tensions and after ECB Chief Mario Draghi made comments that the ECB may move to cut back on quantitative easing in October while US Fed officials suggest that they may slow their trajectory of interest rate increases. The dollar weakness is also reflecting the potential hit on the US economy as it prepares to take a hit from Hurricane Irma just after the hit from Hurricane Harvey and perhaps another shot from Hurricane Jose. The Mexican Peso is also taking a hit as Hurricane Katia will hit land and the fallout from this massive earthquake that may impact there economy as well.   

That, along with the risk on, end of the world as we know it feeling, is leading to a breakout move higher for gold, silver and platinum. Orange Juice prices rose almost 4% as this may be the final blow for many Florida orange juice growers. Florida orange juice growers have fought falling demand for their product as well as crop disease.