Monday, November 28, 2022

Think Strategically: Puerto Rico’s Earth Cries Out

By on January 10, 2020

North of 1,500 earthquakes impact island

Everywhere we look around the planet, nature seems to be moving in ways never witnessed by most scientists.

We have begun to see how climate change is altering the natural cycle of life, from hotter and longer days to increased temperatures on most continents, especially in the arctic zones, where the artic caps are melting at a rapid pace. Other ecosystem failures are occurring in the world, for example, forest fires in California and, more recently, Australia that have destroyed both flora and fauna and thousands of homes.

In Puerto Rico, we have been enjoying an extended holiday season that began on Thanksgiving Day and ends Jan. 20 after Las Fiestas de la Calle San Sebastián. All celebrations came to an end for most families on Dec. 28 when two earthquakes, at 4.7- and 5.0-magnitude on the Richter scale, occurred in the area known as the Montalva Fault, some 6 km out in the sea from Guánica. The quakes have continued, and more than 1,500 aftershocks have been recorded within the same geographic area that includes Guánica, Yauco, Peñuelas, Guayanilla and Ponce as Puerto Rico’s Earth cries out.

Finally, as most Puerto Rican families were set to celebrate the Epiphany, or Three Kings Day, on Jan. 6, at 6:32 a.m., a 5.8-magnitude earthquake hit in the area known as Indios in Guánica. The impact created severe damages to homes, businesses as well as landslides. Then, on Jan. 7, a 6.4 earthquake struck the region at 4:24 a.m. local time. This time, the earthquake was felt across the entire island and left Puerto Rico without electric power for the second time in two years. Extensive damage to hundreds of homes was reported, causing more than 50 to collapse in Guánica, and downtown Guánica was basically destroyed with hundreds of businesses damaged. In addition, some schools have collapsed in Yauco, Guayanilla, Peñuelas and Ponce as well as severe damage to hundreds of other buildings. A second 6.0 earthquake followed at 7:15 a.m. local time, also causing extensive damage.

All told, more than 1,500 earthquakes have had an impact on and continue to hit the area.

Thousands of citizens are living in makeshift refugee camps, with tents, tarps, cars or other makeshift temporary shelters. Most fields have thousands of people sleeping in them, including sports venues, parking lots, shopping centers, farms and other locations in their communities outside their homes. These refugees are fleeing nature’s destructive power; they are afraid of losing their lives in their own homes, and there seems no end in sight for nature’s destructive power.

During Hurricane Maria, the government’s inactions allowed 4,645 Puerto Ricans to die, and this time, the island’s residents took matters into their own hands. The outpouring of support for our fellow neighbors includes thousands of private-sector companies sending help. Caravans of aid could be witnessed going south; however, why hasn’t the government evacuated the zone and set up a proper refugee camp at the National Guard’s Camp Santiago? This facility housed the Central American Games not that long ago, and it can be converted into a tent city quite quickly—and outside of the earthquakes’ current epicenter. If the government uses Camp Santiago, all support can be channeled to a single center where it can help all affected in the region. With its location near PR-52, and 45 minutes from the San Juan metropolitan area, this should be the place the government uses to support those in need.

Week in markets

Major indices near all-time highs as Iran takes 2nd stage

The stock market picked up in 2020, exactly where it left off in 2019, even rising with a strange mix of geopolitical issues and rosy economic reports. The way the market is behaving is signaling its likely chronicle for 2020. As the year takes shape, four vectors are likely to have an impact on investor behavior:

  • Vector 1: As an election year, 2020 will be affected by political risks and policy shifts.
  • Vector 2: The global, U.S. and Puerto Rico economic performance will be affected.
  • Vector 3: The U.S. presidential impeachment and election processes will take their toll.
  • Vector 4: How to sustain current market growth?

All major indices we follow closed at near-record highs as the geopolitical issues between the U.S and Iran took second stage. For now, it seems no further escalation is occurring. Even as Iran retaliated against the recent killing of its general by striking U.S. military bases in Iraq, but there were no reported casualties, and President Trump seemed to stand back from his initial position.

In the second week of trading of the year, the Dow Jones Industrial Average closed at 28,823.77, for a gain of 188.89 points, or 0.66 percent, and a year-to-date (YTD) return of 1.0 percent. In addition, the S&P 500 closed 3,265.35, for a gain of 30.50 points or 0.94 percent, and a YTD return of 1.1 percent. The Nasdaq closed at 9,178.86, for a gain of 158.09 or a 1.75 percent increase, and a YTD return of 2.1 percent. The Birling Capital Puerto Rico Stock Index closed at 1,733.66, a loss of 11.03 points, or -0.63 percent, and a YTD return of -0.9 percent. Meanwhile, the U.S. Treasury’s 10-year note closed with a 1.83 percent gain, or an increase of 1.67 percent. The U.S. Treasury’s 2-year note closed at 1.56 percent, or a gain of 1.96 percent, or YTD return of -0.1 percent.

Jobs growth and unemployment

The Bureau of Labor Statistics reported that total nonfarm payroll employment rose by 145,000 in December, and the unemployment rate remained unchanged at 3.5 percent, with significant job growth happening in retail trade and healthcare.

In December, the number of unemployed people was unchanged at 5.8 million. When compared year over year, it is noted that in December 2018, the unemployment rate was 3.9 percent, or 10 percent higher than December 2019, when it was 3.5 percent.

Final word: San Sebastián Street Party must be postponed

Amid all the suffering, anxiety, destruction, loss of life and crisis, a movement to postpone the San Sebastián Street Party has erupted in Puerto Rico. This effort has begun to attract several figures, including Gov. Vázquez, Archbishop González, several artists and a growing majority of other local people. San Juan Mayor Carmen Yulín Cruz has stated Las Fiestas de la Calle San Sebastián should go on as planned.

We at Birling Capital strongly feel the San Sebastián Party should be postponed; this is not the time for a party when we have thousands of fellow Puerto Ricans without homes, who are sleeping in tents or cars. This is the time to unite all our efforts to support our fellow neighbors in their time of need.

Francisco Rodríguez-Castro, president & CEO of Birling Capital, has more than 25 years of experience working with government, and multinational and public companies.

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