Dow slid back 6, decliners over advancers about 5-4 & NAZ inched up 2. The MLP index rose fractionally to the 242s & the REIT index was off 1 to the 363s. Junk bond funds were flattish & Treasuries had limited selling, raising yields slightly (more below). Oil went up to the mid 91s (another almost yearly high) & gold inched up 1 to 1947.
AMJ (Alerian MLP Index tracking fund)
Treasury yields climbed as the focus shifted to the Federal Reserve meeting this week, which could provide clues about what could happen to interest rates in the coming months. The yield on the 10-year Treasury was up by almost 4 basis points to 4.357%. The 2-year Treasury yield was last trading more than 4 basis points higher at 5.075%. Yields & prices move in opposite directions & 1 point equals 0.01%. As well as the latest interest rate decision, investors will be looking for guidance on the outlook for monetary policy from the central bank. Markets are pricing in a 99% chance that the Fed will keep rates unchanged this week, according to CME’s FedWatch tool, which gauges pricing in fed funds futures. However, rates going higher later in the year is still a possibility that Fed officials have not taken off the table in recent weeks. Many cited economic data, especially regarding inflation, as a key factor in their decision-making. Both the consumer price index & producer price index for Aug, indicated that inflationary pressures may be easing, especially when excluding volatile food & energy prices for core CPI & core PPI figures. Core consumer inflation came in at 0.3% on a monthly basis & 4.3% from a year ago, with the monthly rise being 0.1% ahead of expectations & annual increase being in line with estimates. Meanwhile, the core-PPI was in line with estimates at 0.2%. The figures were followed by the University of Michigan's consumer sentiment report which reflected a significant decline of inflation expectations.
Treasury yields rise as investor attention turns to upcoming Fed meeting
The largest manufacturing association in the US is calling on the United Auto Workers (UAW) & Detroit's Big Three automakers to quickly reach a resolution to end the UAW's strike against Ford (F), General Motors (GM) & Stellantis (STLA), warning the impact of the work stoppage will be felt throughout the country. "The impact of this strike will echo far beyond the city of Detroit as multiple economic analyses have demonstrated," National Association of Manufacturers (NAM) Pres Jay Timmons said. "The small and medium-sized manufacturers across the country that make up the automotive sector’s integrated supply chain will feel the brunt of this work stoppage, whether they are a union shop or not." "American families are already feeling economic pressures from near-record high inflation and this will only inflict more pain," he continued. "We urge a swift resolution to end this strike and avoid further undermining the strength of our industry and harming our broader economy." The strike was the first time the union has gone on strike against all 3 automakers at once after rejecting each of the manufacturers' offers for new labor deals. The workers are striking at a GM plant in Wentzville, Missouri; a STLA plant in Toledo, Ohio; & a Ford plant in Wayne, Michigan. Plants that were not called upon to strike will work without a contract, UAW Pres Shawn Fain said. The UAW plans to strike at additional facilities incrementally if negotiations drag on & it has not ruled out an across-the-board strike at all plants. An extended work stoppage would be costly not only for the auto industry but for the economy at large. If the manufacturing operations of all 3 automakers are entirely shut down in an extended strike, it would cost the US economy roughly $5.6B in just 10 days, according to the Anderson Economic Group.
Manufacturing group warns UAW strike will be felt beyond Detroit
Clorox (CLX), a Dividend Aristocrat, warned of a material financial hit from ongoing production disruptions caused by a cyberattack last month. The
company, which produces its namesake bleach products & Pine-Sol,
among other household items, also said it doesn't have an estimate for
when it will be able to resume full operations. The cybersecurity breach will impact fiscal Q1 results due to product outages & delays. Nonetheless,
the company said it believes the threat is contained. It expects to
start bringing systems back up to speed next week & will ramp up to
full production “over time.” CLX had disclosed the attack in Aug, saying that its systems had been breached. After learning of
the attacks, the company took systems offline & involved law
enforcement. A month later, the attack is still causing “widescale disruption” to the companies operations. While systems are being repaired, the company has had to go manual on
many of its procedures. As a result, the company has scaled back its
order processing, meaning fewer products are making their way onto store
shelves. The stock fell 1.43.
If you would like to learn more about CLX, click on this link:
club.ino.com/trend/analysis/stock/CLX_aid=CD3289&a_bid=6aeoso5b6f7
Clorox says last month’s cyberattack is still disrupting production
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