Helene Disruption - Market Update Sep. 30 - Oct. 4, 2024
Helene told me to keep it short
This newsletter is 1,268 words a 6-min read
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Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Summary of Topics:
Economic News
🙅🏾♂️Dockworker Strike
🥶Frozen Labor Market
Stats of the Week
⬆️38% Increase in Finance Wealth in the US
👷🏾254,000 jobs added
💰$1 Billion waiting to be claimed
Looking Ahead
🤷🏾Inflation but no one cares
💳Consumer Credit Report
💹Q3 Earnings Begins Slowly
Sports I Love
What Else is NEW?
Back to Normal …. Or NOT
Ravens Close Call
Markets
I work in Utilities and part of my responsibilities is Storm Restoration. I've been away for about two weeks working on restoring power in Southern Georgia. During that time, I have been seeing and looking at power grid maps, material lists, and crew work orders. All that is to say, that is why I did not post a Wednesday Money Mentality last week. AND this week's newsletter is going to be pretty light and might be full of errors (SORRY). But seems the stock market was ripping while I was away so that is pretty cool.
But before markets, check out this cool video of the storm's damage from space:
Tale of the Tape
Economy
🙅🏾♂️STRIKE
On Monday, dockworkers at 36 major ports in the US from Maine to Texas went on strike. Essentially cutting off half of all shipping to the US.
🔎Background: The dockworkers have been threatening to strike for a month now after labor contracts broke down over wages. The International Longshoremen's Association (ILA) union represents 45,000 workers has been negotiating with the United States Maritime Alliance (USMX) which is the employer's association, but they could not meet an agreement by Monday's deadline. This is the first major work stoppage since 1977.
🗨️In Their Words: ILA's leader, Harold Daggett said, "We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve."
USMX said in a statement, "Our current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation and recognizing the ILA’s hard work to keep the global economy running."
The Real Issue: AUTOMATION!
ILA believes their livelihoods are threatened by current efforts of USMX to automate process.
USMX says it is trying to automate to remove dangerous, chaotic, and physically taxing jobs and in the process sage a ton of money from labor costs.
How It Affects You: It will not really affect your day to day but there are few items that you won't be able to get easily such as: bananas, some meats, Ikea furniture, some alcohols, mangoes, and some electronics.
🔢By The Numbers: It is estimated by JP Morgan that the shutdown will cost the US economy $5 billion per day.
Takeaway: This is another show of force from unionized labor. It is showing the power of unionized labor over individual negotiation. Yes, there are major short comings when working in a union; however, it makes it easier for more people to get paid a reasonable wage. As we saw with Ford, GM, and the railroads.
Unfortunately for the ILA, the strike is actually beneficially to USMX. Because 90% of all ports are owned by the companies in the USMX, they make more money when capacity is tight. However, unless the ILA works eventually the USMX will cave to the demands of the ILA.
My Takeaway: Pay attention to incentives. ILA wants to protect jobs that will inevitably be eliminated. A similar thing happened in 1977, when ILA blocked using container because it would take jobs away. IT DID! But they held on and cost USMX, $14 Billion until they caved.
USMX wants to make money and if American History teaches us anything, the cheapest cost of production will always win. Automation in the end always wins. While the strike goes on, ILA will charge more and charge as much as they can get away with.
Recommendation: To Really understand this strike, I recommend everyone read this post by Kyla Scanlon called "The Biggest Man-Made Disaster".
🥶Not So Much For Non-Unionized Labor
The JOLTS report was released on Wednesday. I love the way Axios put it, "The no-hire, no-fire labor market."
🔢By The Numbers: The hiring rate fell to 3.3% in August, the slowest hiring pace since October 2013.
Layoffs remained at 1% for August. It is the lowest rate of layoffs we have seen in years.
Workers are quitting jobs at a historically slow pace. We have to go back to 2015 to quits rates this low.
Takeaway: Over the last few years, it paid to switch jobs. As most people who switched jobs could get much higher pay. However, the job switching premium is vanishing. The difference shows one of the reasons why most people are unwilling to switch jobs. The other is that it shows that companies are not in a breakneck hiring pace anymore. Leading to most workers being okay with staying with their current role for a big longer and dancing with the one that brung them.
Stats of the Week
⬆️38%
US household financial wealth has risen 38% since 2019 to $120 trillion. The great part of this news is that only $35 trillion comes from home equity.
👷🏾254,000
The number of jobs added to the US economy in September, far above economist estimates of 150,000. Even with all my doom and gloom above, the labor market seems to have bucked the recent trend of bad job numbers. The unemployment rate also dropped to 4.1%.
⚠️More Important: August's job numbers were revised higher from 142,000 initially reported to 159,000.
Someone won the Billion Dollar MegaMillion lottery but has still not gone in to collect the jackpot. It has been 6 MONTHS! You are given one year to claim your winnings, or it is distributed to all the participating states.
Is it you?
Looking Ahead
Economy
The once most important monthly metric, inflation, will be reported on Thursday. However, no one cares anymore because inflation has been defeated ... for now.
Other things happening next week
Consumer Credit report on Monday that will give us insight into how everyone is spending as holiday shopping has begun
A smattering of earnings reports
Sports I Love
What Else is New
Oh Look! Another week, another Man U SUCK! At least this week's sucking led to a tie rather than a loss. I guess I have to take that as some accomplishment. 😔
Real Madrid Back to Normal Sort Of
Now a team that makes sense, is what I would like to say but HOW THE HECK DOES REAL MADRID LOSE TO LILLE?! This was Lille's First Ever Champions League match in a long time and somehow, this was the week Real Madrid decided to take a day off?!
LIKE THE HECK
At least in La Liga they returned to normal.
Ravens Close Calls
Ravens won on Sunday, but it was not because they wanted to win. They gave the game away in Overtime, but the Bengals didn't want the game either apparently. So begrudgingly, the Ravens took the victory.
Ravens keep playing with this laissez-faire attitude with consistent close calls every game. Typically, after taking control of the game. I don't know what is going on, but they better get back to concentrating cause they can be beat if they are not focused.