Executives Fret Over Weather’s Economic Impact Amid El Nino Forecast: Bloomberg Analysis

Bloomberg — America’s top executives are spending more and more time talking about something completely out of their control: the weather.

With the second quarter still three weeks to go, it’s already been talked about in earnings calls for S&P 500 companies more than at any time since 2019, according to data compiled by Bloomberg. And it’s not just executive feedback: Time-related analyst questions have more than doubled from the first quarter, the data shows.

That renewed weather attention comes as investors anticipate an economically destructive El Nino weather pattern this summer, following months of intense storms and snowfall that wreaked major disruptions in the US.

The data shows that the increased importance of weather conditions is widespread across all sectors, but most pronounced among companies in the utility and consumer discretionary sectors, illustrating the enormous economic impact of extreme weather conditions.

The asymmetric impact of weather conditions on the calls for results is a factor that contributes to their increase. While Deere & Co. counts on wet and mixed conditions to fuel demand and Pinnacle West Capital Corp recently benefited from a long winter in Phoenix, Arizona, Michigan-based electricity provider CMS Energy and Alaska Air Group they were harmed by similar conditions.

In the case of Alaska Air, the company posted its second loss in eight quarters due to an extreme winter. CEO Benito Minicucci is now bent on bolstering the company’s ability to mitigate bad weather wherever possible.

The last time the weather weighed so heavily on executives and analysts also coincided with an El Niño pattern in 2019. This year’s version may herald one of the hottest North American summers on record, intensifying storms across the globe. and the loss of trillions of dollars in economic activity.

But despite that potential for enormous influence, many executives are loathe to talk about the weather. When asked about the weather-related lawsuit at Sherwin Williams’ first-quarter earnings conference call, CEO John Morikis bluntly replied: “I would characterize it as we don’t like to talk about weather, you’re right.”

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