I have not failed. I just found 10,000 ways not to do it.
-Thomas Edison
Most of us think of Thomas Edison as a mad genius who had a eureka moment when trying to invent the lightbulb. The reality is quite different. It is estimated that Thomas Edison tried over 50,000 combinations of different materials to determine the right composition for the filament in a lightbulb.
The quote above was the response of Edison when a reporter asked him if he had failed in creating the lightbulb. Failure is a necessary part of any learning process. When we are pushing towards new goals or trying new things. We are not going to get it immediately. We need to have grit to hold on and keep iterating despite the pressures of failures.
Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Markets
Even the joy of football returning could not help the markets get back on track this week.
This newsletter is 1,944words a 9-min read
Tale of the Tape
Economy
If a deal is not signed by September 14 (which it is looking like it won't be signed). The United Auto Workers Union will go on strike.
🔍Details: Here are a few of the sticking points in the negotiations.
Pay raise of 46%
Change to a 32-hour work week but stay with a 40-hour pay
Pensions reinstated for all employees
Takeaway: Labor has had a very busy summer striking across a bunch of industries. After the UPS driver labor agreement, the United Auto Workers are taking the baton and running with it. However, I do not think they will be able to get most of the items on their list. Some of the demands feel far too stretched to be accepted. But that's the beauty of negotiating.
My Takeaway: Unions have proved they still matter. Across all industries, they have been able to force the hand of employers to come to the table and negotiate. However, unions are still not nearly as accepted in the American workforce as they once were. If I am being honest, I am not sure that I want to have a union as part of my labor deals even knowing fully well some of the benefits. Guess it is just the false narrative I have in my head that I can do better as an individual rather than a collective group.
Women's Labor force Participation rate has risen to its highest level in history. The difference between male vs female participation is at its narrowest point of any time in history.
🔍Details: Women ages 25-54 (prime working years) have returned to the workforce in record numbers post-pandemic with hybrid work becoming normalized.
The largest increases came from mothers of children under five according to Hamilton Project.
The gender pay gap also declined to 16cents: For every $1 a man makes, a woman makes 84cents
✳Asterisk: Like with all pharmaceutical ads, there are notices to take note of in the fine print of things that could affect this historic change.
Many companies are re-instating in-person work policies. Removing the work flexibility that gave many mothers the ability to work while taking care of their children
Federal aid that helped keep 70,000 daycare programs open will end this month. If those daycare programs end, about 3.2 million children will need a solution for childcare. This could fall on the shoulders of mothers, who are typically seen as the primary care providers
Takeaway: Women entering the labor force has created a major tailwind for the economy. According to the Century Foundation, if fewer women participate in the labor market, the US would lose over $10 billion in tax and business revenue per year. Families would earn $9 billion less per year.
My Takeaway: Government-sponsored family policies have proven again and again that they are extremely beneficial to everyone not just those who directly gain from them. A larger laborforce provides economic growth by increasing the output of the economy and providing more finances for families to spend within the economy. Which provides money for companies to take risks and higher even more people. When the labor market shrinks, the opposite effect takes place.
Governments always say they love children and care for the future. If that were the case, they would focus heavily on looking at ways to help mothers in the workforce. How to make childcare affordable and available.
If you were unable to watch Aaron Rodgers’ first game as a New York Jets or any SEC football match this weekend. It was probably not your fault. Disney is currently in a bit of a feud with Charter.
🔍Details: Traditional TV is dying and both companies are fighting over the leftover scraps like hyenas after a lion has eaten its fill (the lion being large tech companies).
Charter wants to include Disney's streaming services (Disney+, ESPN+, and HULU) for free with its cable packages. Of course, Disney said HELL NO!
Charter also wants the option to remove sports channels in order to create more packages to sell to customers. Disney also declined this option
Disney asked for a higher licensing fee. Charter said see points 1 and 2 above
💬In Their Words: Charter CEO Christopher Winfrey said, “We’re on the edge of a precipice. We’re either moving forward with a new collaborative video model, or we’re moving on.”
In regular speak, Disney or any other production company no longer has sway over us. Tradition TV is no longer a large part of our business so we will walk away unless concessions are made
Takeaway: This fight will determine what happens with the future of entertainment. This will either be the death of cable and traditional TV as we know it or create a new way for these services to survive in the new age. The old model cannot go further. Disney and other production companies are being burdened by these traditional services and are looking for ways to move forward. Cable providers like Charter and Comcast have diversified their revenue generation away from cable.
My Takeaway: Both companies are fighting over a melting ice cube. Traditional TV has been dying for the last decade. Every year we get more numbers that show more people “cutting the cord”. I barely know anyone who still has cable TV. Live sports have been the only thing that keeps people on cable packages but Amazon, Apple, and Google are all slowly buying up sports leagues to add to their various streaming packages. There is no room for cable companies to survive. Traditional production/TV companies cannot compete with the money tech companies can throw at these sports leagues.
Stats of the Week
This is the number of sign-ups for MLS Season Pass on Apple TV+, the day after his debut for Inter Miami. The day before Messi's first game, there were only 6,000 new sign-ups.
Remember Messi, gets a share of revenue from every new subscriber who registers for MLS Season Pass. Do the math on those numbers and Messi made an easy million from these new sign-ups and the season ain't over yet. If Messi finds a way into the MLS Playoffs, you already know things are about to be explosive for Apple's pocketbooks.
You can get a roundtrip flight to London for $300 from a bunch of European airlines as the summer demand disappears.
The number of new apartment units constructed so far in 2023. This is the highest number in over 50 years. According to Axios, we have not seen this much construction since the 1970s.
✳Asterisk: 90% of apartments constructed so far have been "luxury" apartments. This means affordability is not exactly the aim of these buildings.
Looking Ahead
Inflation
On Wednesday, the Bureau of Labor Statistics will release Consumer Price Index (CPI aka Inflation) numbers for the month of August. It is expected for prices to have risen 0.4% from last month. This would be the highest monthly increase since January mainly driven by increased gas prices.
🔢By the numbers: Annual inflation is expected to increase from 3.2% in July to 3.4%
Core inflation (which removes food and gas prices) is estimated to increase by 0.2% from last month and decrease from 4.7% to 4.3%
😕Why We Care: These inflation numbers are important because of the upcoming Fed Meeting next week. It could drive Jerome and his Fed buddies to increase interest rates one last time, in an effort to drive inflation down. I hope he does not. There is nothing the Fed can do with its limited tool set. Interest Rates will not help with inflation anymore. With student loans kicking back in, spending is basically destroyed for a large portion of the population. All this will do is put even more pressure on the labor market and make life more painful for the average person who will not benefit from higher rates.
🍎The Big Apple*
Nope not talking about New York City. Your favorite tech company will be hosting an event on Tuesday. It is expected that Apple will announce basically the same thing they announce every year: a new iPhone, a new Apple Watch, and a bunch of overpriced accessories that you will still buy because Apple.
I expect to see the iPhone FINALLY have USB-C. After being sued by the EU last year.
Although we know exactly what to expect, we still watch the event because it is APPLE. We just cannot help ourselves. They are intertwined in our lives. Plus absolutely no company puts on a show like Apple does. I have never seen product launches be this entertaining.
What to Watch: Apple's market cap recently fell over $200 Billion due to investor's overreacting to news China has told its government officials to stop using iPhones. China makes up about 20% of Apple's revenue base. However, the announcement was focused on 1% of the total iPhone users in China.
Sports I Love
The amount that will be generated by states in tax revenue from sports betting. According to Axios, it is estimated that about 74 million Americans will be betting on NFL games this season. That is a 60% increase from last season.
Surprise Weekend of Football
There were no soccer games but plenty of sports to be watched this weekend. Unfortunately, the games I really wanted to watch I couldn't because of the feud between Disney and Charter. But we live in the age of technology, there is always a way to watch the game 😉😏. A few headlines from the weekend.
Bama LOST
Their defense still ain't there at all.
Colorado Dominated
Prime is doing something special with this team. Hope it lasts the entire season
Kansas City Lost to Detroit
The amount of dropped passes in this game was just ridiculous.
UAB got beat
Extras
IRS Using AI Against Uber Wealthy
The IRS announced on Friday that it will begin using AI to detect tax violations by high-income earners and large business partnerships. It will use machine learning to help them identify ways in which the uber-wealthy have hidden tax revenue from the government.
💬In His Words: Danny Werfel, the IRS Commissioner said, "... underfunding led to the lowest audit rate of wealthy filers in our history. I am committed to reversing this trend, making sure that new funding will mean more effective compliance efforts on the wealthy."
🔢By The Numbers: The IRS will be targeting those with a tax income over $1 million and have tax debts of over $250,000
The IRS estimates that there are about 1,600 taxpayers who fall into this category
The IRS expects to claw back hundreds of millions of dollars in taxes if not over a billion dollars in tax payment owed to the government.
Takeaway: It's about DAMN TIME.
*I am a tiny shareholder in this company.