El-Erian: Sandy's Market Impact — From the Known to the Uncertain
As our thoughts remain with all those who have been horribly affected by the devastation that hit the U.S. Eastern seaboard and its aftermath, we are being asked about the implications of Hurricane Sandy for markets.

Four observations seem warranted based on available information - and they range from the certain to the highly uncertain.

First, the greatest impact is in individual sectors where we may see distinct winners and losers.

Specific segments have suffered demand destruction which will be difficult to reverse in the short term. Think here of airlines, other transportation companies, and parts of the retail sector in some of the major population centers on the East Coast. Some have also incurred higher costs. Business interruption insurance will only partially offset the hit on these companies' operating earnings; and uninsured small businesses and personal sectors will be particularly badly hit.