UK Housebuilding Sector: 1Q 2018; and the weather forecast

09 Apr 2018 / Corporate research

The Bombogenesis Issue

This ominous-sounding term originated from the work of famed Swedish meteorologist, Tor Bergeron (1897-1977), but it only entered popular vernacular this year – and there have been ample opportunities in 2018 to use it.

The word actually comes from combining ‘bomb’ and ‘cyclogenesis’, i.e. meteorology speak for storm formation.

Technically, a storm undergoes bombogenesis when its central low pressure drops at least 24 millibars in 24 hours; for example, a strong, cold jet stream high in the atmosphere interacting with an existing system near a warm ocean current (like the
Gulf Stream).

In turn, this causes already low pressure at the surface to deepen and, as the air converges, the storm spins faster and faster, like a twirling ice skater who pulls in his or her arms; and this leads to higher and higher wind speeds in incredibly short order.

If a storm is strong enough or deepens rapidly (aka there is a sudden drop in pressure), its winds can reach hurricane force, i.e. 119 kilometres per hour – or higher – together with astringent snow and rain.

And, the closer you are to the centre of the storm, the stronger the winds.

In 1Q 2018, the UK Housebuilding Sector has had to contend with a stiff breeze of uncertainty in a Brexit Winter-now-Spring – but no tempest – i.e. it has lost 11% in value but not more.

A rational meteorologist, however, would advise to prepare for worse; and the zephyr change can be faster than a speeding bullet.