We hope all clients and readers in the Milton-affected areas of Florida and other states are safe today. This monster storm dealt damage across the state — Florida’s east coast saw Milton’s fury in the form of tornadoes while the west coast saw the brunt of what had been a Category 5 Hurricane until it was downgraded shortly before landfall. While most of Sarasota and the surrounding areas remain without power, hopefully service will return in the next few days. Initial reports are that Sarasota was lucky, as the rainfall amounts from Milton were less than expected. No doubt the evacuation response to Milton ahead of the storm saved lives and injuries, and full credit goes to all the officials in Florida from Governor DeSantis on down for stressing the need to leave the evacuation zones.
Milton hit many counties in both Florida as well as some in adjoining states. We are reviewing credits in these areas. As we have learned from most hurricanes (though we are still working on Helene’s implications), storms of this magnitude affect the market values of municipal bonds from a perception viewpoint. High-grade municipal bond issuers have the financial wherewithal and credit strength to rebuild – even when municipalities weather high-intensity storms. And if there is a credit impairment, it is usually temporary. But these storms also remind us of the underlying credit quality of most general-obligation bonds as well as essential-services bonds.
As for Sarasota, the area is still assessing damage. Landfall for Milton was in Siesta Key, which had already been pummeled by Hurricane Helene’s storm surge. The rainfall levels seem to have been much less than predicted across a number of areas, and that is indeed good news. At first glance, the damage Milton caused does not seem to be as extensive as Helene’s was to the barrier islands of Longboat Key and Siesta Key. Power outages are extensive, but service should begin to be restored in the next day or so. We expect the Sarasota airport to be up and running perhaps by tomorrow.
Cumberland Advisors has come through the storm and not missed a beat, as we had a remote team of trading and operational personnel working to keep business continuity. Of course, many employees sheltered in place and are dealing with power outages, downed trees, etc.
There is no question, in our view, that Hurricanes Helene and Milton represent a much higher level of storms in both intensity as well as speed. The damage they have caused will have impacts for property and casualty companies from an insurance perspective and for utility companies from a rates perspective as they rebuild; and, down the road, there will be a stimulus effect from the rebuilding efforts.
We pray all affected are back to normal soon.
John R. Mousseau, CFA
Chief Executive Officer & Director of Fixed Income
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