Dow finished down 190 in a choppy session & not far from session lows, decliners over advancers 2-1 & NAZ rose 34. The MLP index was off 1 to the 249s & the REIT index dropped 2+ to the 322s. Junk bond funds were sold & Treasuries had heavy buying, lowering Treasury yields (more below). Oil fell 2+ profit taking & gold slid back 6 to 1987 (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) simultaneous, but limited, strike against Ford (F), General Motors (GM) & Stellantis (STLA) has now cost the US economy over $9B, which is more than twice the previous record for an auto industry strike this century. The latest data released today from Michigan consulting firm Anderson Economic Group (AEG) show the union's strike against Detroit's Big Three cost the auto industry alone $9.3B as of Oct 19, which marked the strike's 5th full week. A breakdown of the numbers shows the UAW's strike has so far cost workers $488M in lost wages, while the automakers have collectively lost $4.2B. Dealers & customers are out a combined $1.9B & suppliers have now taken more than a $2.8B hit. "The cost of this strike is now double that of the 2019 UAW strike against General Motors, with significant layoffs among supplier firms," AEG principal & CEO Patrick Anderson said. "Lost wages of striking workers and those laid off because of the strike are nearing a half billion dollars." Anderson pointed to AEG's warning 2 weeks ago that if the strike was prolonged, it would force manufacturers to delay or cancel investments. "We've now seen GM, Ford, and Stellantis announce such actions," he said. "Many more are likely if the strike continues." The UAW launched its strike against the Big Three on Sep 15, starting with one major assembly plant at each manufacturer. The union has gradually added more strike targets as contract negotiations continue without any agreements in place. The union targeted another STLA plant today, bringing the total number of UAW members striking across the Big Three to 40K. In total, the automakers employ nearly 150K workers who are represented by the union.
United Auto Workers strike: Cost to US economy tops $9 billion
Treasury yields ticked lower today, hovering around multiyear highs as investors continue to assess the prospect of higher-for-longer interest rates from the Federal Reserve. The yield on the benchmark 10-year Treasury note fell by 6 basis points to 4.86%, while the yield on the 30-year Treasury bond slipped around 6.8 basis points to 5.02%. Yields move inversely to prices. The 10-year yield is pulling back from the 5% level, which it hit for the first time since 2007 on Thurs. Yields fell after Pershing Square's Bill Ackman today disclosed he covered his bond short position. Ackman asserted that “there is too much risk in the world to remain short bonds at current long-term rates” in a post. Ackman tied the move to a view that bonds could soon see safe haven interest as equities remain volatile & troubled by geopolitical risk. Markets are also contending with comments by Federal Reserve Chair Jerome Powell from last week. Powell said the central bank would remain “resolute” in its commitment to bring inflation down sustainably to 2% & that lower economic growth was likely needed to achieve this goal. Fed fund futures pricing reflects a 98% probability that the central bank keeps its main interest rate unchanged at the current target range of 5.25-5.50% at its next monetary policy meeting.
Bill Ackman covers bet against Treasurys, says ‘too much risk in the world’ to bet against bonds
Memory chips are at the center of all devices, helping store &
access data in smartphones, computers & the servers training
generative artificial intelligence models. Just 3 companies make more than 90% of the world’s dynamic random-access memory, or DRAM, chips. With Samsung & SK Hynix both headquartered in South Korea, Idaho-based Micron (MU) is the only manufacturer in the US, that has made it the latest target of China's bans on US technologies. About
a qtr of MU's revenue comes from China & “about half that
revenue is at risk,” CEO Sanjay Mehrotra said. Meanwhile, MU is doubling down on US
manufacturing. Its current leading-edge chips are made in Japan &
Taiwan, but MU is aiming to bring advanced memory production to the
US starting in 2026 with a new $15B chip fabrication plant in
Boise, Idaho. MU celebrated its 45th anniversary in Oct by
pouring the first cement at the new fab. The facility is located next to MU's huge research & development facility. “Memory is very cost-sensitive and we have to get economies of scale to
mass produce our chips on a level that meets the market demands,” said
Scott Gatzemeier, corp VP of front end US
expansion. Mehrotra said that MU's goal is to vastly increase the US
share of DRAM production, which he said currently sits at just 2%. That
production comes from its fab in Manassas, Virginia. The company is
getting assistance from the federal CHIPS & Science Act, which offers Bs of $ to incentivize domestic production. “With
Micron’s investments through CHIPS support in Boise, Idaho, as well as
in Syracuse, New York, that 2% over the course of nearly 20 years will
be changing to about 15% of the worldwide production coming from the
U.S.,” Mehrotra added. The stock fell 34¢.
If you would like to learn more about MU, click on this link:
club.ino.com/trend/analysis/stock/MU_aid=CD3289&a_bid=6aeoso5b6f7
How Micron is building the biggest chip fab in U.S. history despite a China ban and smartphone slump
Gold closed lower on profit taking as its price last week rose to an 11-week high as investors turned to the metal's safe haven amid worries over a widening war in the Middle East. Gold for Dec closed down $6 to settle at $1987 per ounce. The drop comes as intl efforts to protect & succor Gaza citizens & free hostages continue amid a rising Israeli bombardment of the territory. Water, power & food for Gaza's 2M citizens was cut off following terror attacks on Israel from Hamas militias earlier this month that killed hundreds of civilians. Israel is also fighting with the Iran-backed Hezbollah militia across its border with Lebanon but the war has yet to spread into other areas of the Middle East or disrupt oil production in the region. The $ also moved down, with the ICE dollar index last seen down 0.61 points to 105.56. Treasury yields were also lower. The US 2-year note was last seen paying 5.08%, down 3.0 basis points, while the yield on the 10-year note was down 7.9 points to 4.848%.
Gold Edges Down as Investors Take Profits After Last Week's Safe-Haven Gains
West Texas Intermediate (WTI) crude oil closed down 2.9% with worries over a widening war in the Middle East easing as Israel holds back on an invasion of Gaza even as it continues its war on Hamas. WTI crude oil for Dec closed down $2.59 to settle at $85.49 per barrel, while Dec Brent crude, the global benchmark, was last seen down $2.22 to $89.94. The drop comes as intl efforts to protect & succor Gaza citizens & free hostages continue amid a rising Israeli bombardment of the territory, after water, power & food for Gaza's 2M citizens was cut off following terror attacks on Israel from Hamas militias earlier this month that killed hundreds of civilians. Israel is also fighting with the Iran-backed Hezbollah militia across its border with Lebanon but the war has yet to spread into other areas of the Middle East or disrupt oil production in the region. Crude oil prices ended lower on Fri but recorded a 2nd consecutive weekly gain as the risk of supply disruptions hangs over the market. But risk sentiment seems to be taking a breather for now, as Israel has delayed its ground invasion in Gaza amid hostage talks.
WTI Oil Closes Down as Israel Holds Back on a Ground Invasion of Gaza as Diplomatic Efforts Continue
With 2 wars, high interest rates which have the potential to last & an auto strike (among other things), investors have a lot of negative news to deal with. Dow closed below 33K, a key support level. The chart below looks ugly over the last 3 months.Dow Jones Industrials
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