Dow finished finished down 306 at session lows, advancers over decliners 4-3 & NAZ fell 12. The MLP index advanced 3+ to the 348s (4 year high) & the REIT index lost another 2+ to the 344s following yesterday's tumble. Junk bond funds were mixed & Treasuries saw more buying which lowered yields (but still elevated). Oil continued higher, going over 90, & gold added 6 to 1944 (more on both below).
AMJ (Alerian MLP Index tracking fund)
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The United Auto Workers (UAW) union broadened its strike against General Motors (GM) & Stellantis (STLA) citing a lack of progress in negotiations, although the union spared Ford (F) from new strike activity after the 2 sides agreed on some provisions in their talks. UAW Pres Fain said that union members will go on strike at all the parts distribution facilities for GM & STLA, the parent company of brands like Chrysler, Dodge, Jeep & Ram. The new strike activity covers 38 locations across 20 states in all nine of the UAW's regions & will affect approximately 5600 union members, which brings the number of UAW workers on strike to roughly 19K. "Both GM and Stellantis have rejected our profit-sharing proposals and both com " The UAW is running what it calls a "stand up strike" in which some of the union's locals are asked to go on strike incrementally as the union sees fit to ratchet up the leverage on the auto companies. The union leaders believe that gives them flexibility in escalating the strike as needed up to a potential nationwide strike. "Stellantis & GM in particular are going to need some serious pushing," Fain said. GM countered calling the UAW's escalation of the strike "unnecessary" & adding, "The decision to strike an additional 18 of our facilities, affecting more than 3,000 team members plus their families and communities, adds validity to the blueprint identified in last night’s leaked texts — that the UAW leadership is manipulating the bargaining process for their own personal agendas." "We have contingency plans for various scenarios and are prepared to do what is best for our business, our customers, and our dealers," GM continued. "We have now presented five separate economic proposals that are historic, addressing areas that our team members have said matters most: wage increases and job security while allowing GM to succeed and thrive into the future. We will continue to bargain in good faith with the union to reach an agreement as quickly as possible."
Workers ratchet up battle against major automakers — but one is spared amid talks
Credit card companies are racking up losses at the fastest pace in almost 30 years, outside of the Great Financial Crisis, according to Goldman Sachs. Credit card losses bottomed in Sep 2021 & while initial increases were likely reversals from stimulus, they have been rapidly rising since the first qtr of 2022. Since that time, it's an increasing rate of losses only seen in recent history during the recession of 2008. It is far from over, the firm predicts. Losses currently stand at 3.63%, up 1.5 percentage points from the bottom & Goldman sees them rising another 1.3 percentage points to 4.93%. This comes at a time when Americans owe more than $1T on credit cards, a record high, according to the Federal Reserve Bank of New York. “We think delinquencies could continue to underperform seasonality through the middle of next year and don’t see losses peaking until late 2024 / early 2025 for most issuers,” analyst Ryan Nash said. What is unusual is that the losses are accelerating outside of an economic downturn, he pointed out. Of the past 5 credit card loss cycles, 3 were characterized by recessions. The 2 that occurred when the economy was not in a recession were in the mid ’90s & 2015 to 2019. He used history as a guide to determine further losses. “In our view, this cycle resembles the characteristics of what was experienced in the late 1990s and somewhat similar to the ’15 to ’19 cycle where losses increase following a period of strong loan growth and has seen similar pace of normalization thus far this cycle,” Nash added.
Credit card losses rising at fastest pace since the Great Financial Crisis
Russia imposed an indefinite ban on the export of diesel & gasoline to most countries, a move that risks disrupting fuel supplies ahead of winter & threatens to exacerbate global shortages. In a gov decree signed by Prime Minister Mikhail Mishustin, the Kremlin said that it would introduce “temporary” restrictions on diesel exports to stabilize fuel prices on the domestic market. The ban, which came into immediate effect and applies to all countries apart from 4 former Soviet states, does not have an end date. The countries exempt from the ban include Belarus, Kazakhstan, Armenia & Kyrgyzstan, all of which are members of the Moscow-led Eurasian Economic Union. Russia is one of the world's largest suppliers of diesel & a major exporter of crude oil. Market participants are concerned about the potential impact of Russia's ban, particularly at a time when global diesel inventories are already at low levels. Energy analysts said the vague language used in Russia's announcement made it difficult to assess exactly how long the ban would remain in place & warned that Moscow could once again be seeking to weaponize fuel supplies ahead of another winter heating season. A spokesperson for the Kremlin said that the fuel export ban would last for as long as necessary to ensure market stability.
Russia’s indefinite ban on diesel exports threatens to aggravate a global shortage
Gold prices rose early today despite a higher $ as bond yields weakened & investors looked for safety amid weak equity markets. Gold for Dec closed up $6 to settle at $1945 per ounce. The rise comes as the metal catches a bid from safe haven buy as US stocks weaken following the Federal Reserve's hawkish outlook on Wed, as the central bank indicated it would raise interest rates again at one of the 2 remaining meetings of its policy committee this year & will keep rates high for longer than previously expected. The fallout from Wed's 'higher for longer' message from the US Federal Reserve continues with the stock market suffering its worst...worst slump in 6 months. The $ rose early, making gold more expensive for intl buyers. The ICE dollar index was last seen up 0.17 points to 105.53. However bond yields weakened, lowering the carrying cost of owning gold. The 2-year note was last seen paying 5.114%, down 3.4 basis points & the yield on the 10-year note, which touched a 16-year high yesterday, was last seen down 5.9 basis points to 4.435%..
Gold Closes With a Gain as Treasury Yields Ease and Weak Equities Prompt Safe Haven Buying
Oil eased off yearly highs, capping a tumultuous week that saw the Federal Reserve flagging a further rate hike & Russia banning diesel exports. While Russia's announcement of a temporary embargo on gasoline & diesel exports has tightened an already stressed global fuel market, signals that the Federal Reserve will keep borrowing costs higher for longer have cooled oil’s rally. West Texas Intermediate (WTI posted its first weekly loss in a month, after reaching the highest level this year. Still, crude has surged this qtr as Saudi Arabia & Russia extended their production curbs through the end of the year. The outlook for demand has also improved, with refiners in China, the world's largest oil importer, ramping up processing to a record. That backdrop has prompted oil firms to make the case for a return of $100 oil. Despite fluctuations in futures prices, there are plenty of signs of tightness in the physical market. WTI for Nov fell 74¢ to close at $90.03 a barrel in New York & Brent for Nov settlement dropped 3¢ to settle at $93.27 a barrel.Oil’s Rally Cools as Tight Crude Market Vies With Hawkish Fed
Another difficult week for stocks. Everybody is still thinking about what the Fed statement really means. In the short term, interest rates are high & look to be going north from here. Dow dropped 655 this week, going below 34K again.
Dow Jones Industrials
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