Dow sank 288, decliners over advancers 2-1 & NAZ dropped 217. The MLP index slid back 1 to the 242s & the REIT index was off 1+ to the 364s. Junk bond funds fluctuated & Treasuries saw selling which raised yields. Oil gained 1 to 91 & gold added 12 to 1945 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The United Auto Workers (UAW) officially went on strike against the "Big Three" Detroit automakers today, potentially imperiling an already-fragile US economy. About 13K autoworkers began picketing at 3 assembly plants in Michigan, Ohio & Missouri after their contract expired at 1midnight. It marked the first time in the UAW's 88-year history that it walked out on Ford (F), General Motors (GM) & Stellantis (STLA) — the maker of Chrysler & Jeep — simultaneously. An extended work stoppage risks causing Bs in damage to the economy. A recent analysis from the Anderson Economic Group, a think tank that specializes in the economic impact of labor strikes, estimated that economic losses from a 10-day work stoppage could cost about $5.6B. "Even a short strike would impact economies throughout Michigan and across the nation," said Patrick Anderson, CEO of the Anderson Economic Group. That figure includes manufacturer losses of $989M & lost direct wages of $859M. It does not take into consideration strike pay, unemployment benefits, unemployment taxes, income taxes, gov spending or settlement bonuses. Still, the strikes are limited in scope so far as the UAW seeks to preserve its $825M strike fund, which would support a walkout for about 11 weeks by the 146K union members. The National Association of Manufacturers (NAM) called for a "swift resolution" to the strike, warning of potential economic fallout nationwide if the stoppage persists. The walkout threatens to cut vehicle production & drive prices higher at a time when consumers are still grappling with elevated inflation. "The impact of this strike will echo far beyond the city of Detroit," said NAM Pres & CEO Jay Timmons. "American families are already feeling economic pressures from near-record-high inflation, and this will only inflict more pain." The main point of contention between the 2 sides is higher pay, with the union seeking a more than 36% general pay raise for rank-&-file members over 4 years. That is down from the original demand for a 46% wage increase. Full-time assembly plant workers at Ford & GM earn $32.32 an hour, while part-timers currently make about $17 an hour. Full-time employees at STLA earn $31.77 an hour, & part-time workers earn close to $16 an hour. The union is also pushing for cost-of-living pay adjustments, an end to forced overtime & increases in pension benefits for current retirees & the restoration of pensions for new hires, among other benefits.
Unprecedented strike threatens to shred already-fragile US economy
Oil prices climbed to their highest level of the year this week, extending a rally that has put a return to $100 a barrel sharply into focus. Indeed, some analysts believe crude prices could hit this milestone before year-end. Intl benchmark Brent crude futures traded 0.3% lower at $93.46 a barrel today while US West Texas Intermediate futures stood little changed at $90.09. Both Brent & WTI settled at their highest respective levels of the year yesterday. The oil contracts are sharply higher month to date & remain firmly on track to notch their 3rd consecutive positive week. The price rally comes amid growing expectations of tighter supply after Saudi Arabia & Russia moved to draw down global inventories & extend their oil output cuts through to the end of the year. OPEC kingpin Saudi Arabia said Sep 5 that it would extend its 1M barrel per day production cut thru to year-end, with non-OPEC leader Russia pledging to reduce oil exports by 300K barrels per day until the end of the year. Both countries have said they will review their voluntary cuts on a monthly basis. Analysts have indicated they now believe oil prices could soon rally above $100. The Intl Energy Agency (IEA) warned that Saudi Arabia & Russia's production constraints would likely result in a “substantial market deficit” thru Q4. The world's leading energy authority said in its monthly oil report that output curbs by OPEC & non-OPEC members of more than 2.5M barrels per day since the start of the year had so far been offset by members outside the OPEC+ alliance, such as the US & Brazil. “From September onwards, the loss of OPEC+ production, led by Saudi Arabia, will drive a significant supply shortfall through the fourth quarter,” the IEA said.
Oil just hit its highest level of the year — and some analysts expect a return to $100 before 2024
Consumer confidence in the US experienced a setback in Sep, as the recent surge in inflation data for Aug, which exceeded expectations, dampened the previously positive household morale. Preliminary estimates from the University of Michigan reveal that consumer sentiment fell from 69.5 in Aug to 67.7 in Sep, missing expectations that were set at 69.1. Despite the decline in consumer sentiment, the gauge remains above the 6-month moving average, which stands at 64.62, showcasing a resilient optimistic outlook among US households. In terms of consumer expectations, the gauge came in at 66.3 for Sep, slightly up from the previous month’s reading of 65.5 & topped expectations of 66. Additionally, the subindex measuring current conditions saw a notable drop from 75.7 in Aug to 69.8 in Sep, missing expectations set at 75.3. Expectations for inflation over the next year fell sharply from 3.5% to 3.1%. Looking further ahead, the 5-year inflation outlook is at 2.7%, indicating a belief among consumers that inflationary pressures might be more transitory in nature. “Sentiment this month was characterized by divergent movements across index components and across demographic groups with little net change from last month. Notably, though, both short-run and long-run expectations for economic conditions improved modestly this month, though on net consumers remain relatively tentative about the trajectory of the economy,” Surveys of Consumers Director Joanne Hsu said.
US Consumer Sentiment Drops In September, Inflation Expectations fall sharply
Gold futures finished higher to eke out a gain for the week, finding support from a pullback in the $ after a recent drop in the metal's price to a 3-week low. This week's batch of US inflation reports were seen by some as not alarming enough to force more immediate action from the Federal Reserve. Gold futures for Dec gained $13 (0.7%) to settle at $1946 per ounce, with prices for the most-active contract up 0.2% for the week. Gold is still able to trade above $1900 despite the continuation of central bank hikes & the expectation of those rates staying higher for longer. That illustrates how strong the support was for the safe haven asset earlier in the year, with market confidence only creeping back into investors' approach.
Gold Prices End Higher to Eke out a Gain for the Week
Oil prices finished higher, with US benchmark crude marking another finish at their highest since Nov & posting a 3rd straight weekly gain. Warnings by the Intl Energy Agency & the Organization of the Petroleum Exporting Countries of a potential market deficit, have contributed to the rise in oil prices. Although crude prices may be ripe for a technical pullback over the short term, oil benchmarks may yet take further strides towards the psychologically-important $100 level, provided that global supply-demand dynamics truly warrant prices moving even higher. Oct West Texas Intermediate crude rose (61¢) 0.7% to settle at $90.77 a barrel. That's the highest front-month contract finish since Nov 7, with prices ending the week 3.7% higher.
U.S. Oil Futures End at the Highest Since November, Up a third straight week
There was a lot of inflation news this week along with other stories. But they decided nothing. Traders will have to wait until next week to find out what the Fed has to say. For the week Dow finished up a measly 28 & can not break above 35K.Dow Jones Industrials
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