Markets struggle on recession fears

Dow dropped 70 with selling in the last hour, decliners over advancers 3-2 & NAZ was up 39.  The MLP index remained in the 241s & the REIT index fell 3+ to the 359s.  Junk bond funds crawled higher & Treasuries continued with limited strength, taking yields lower.  Oil finished fractionally lower after selling in the last hour & gold slid back 3 to 1931 (more on both below).

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The United Auto Workers (UAW) union will strike against the Detroit automakers if the sides don't reach labor deals by an 11:59PM Thurs deadline, UAW Pres Shawn Fain said.  His comments came the morning after he outlined plans to local union leaders about implementing targeted strikes at certain General Motors (GM), Ford Motor (F) & Stellantis (STLA) plants, if agreements aren’t reached by tomorrow.  “As it stands right now, all three are most likely to be struck unless we get a deal by Sept. 14 at midnight,” Fain said.  “All three are expected to deliver for their workers and if they don’t, there will be action.”  Targeted strikes refer to work stoppages only at certain plants, related to local contract issues that many, if not most, facilities have.  That differs from national strikes where all union members exit plants, which occurred 4 years ago during the last round of negotiations with GM (GM).  Fain said the UAW & automakers “have a lot of work” to do, but he believes the sides can reach contracts before the deadline.  “We can get there, but the companies need to get serious and buckle down,” he said.  Fain said the union continues to seek double-digit wage increases.  The UAW most recently sought 36% hikes, down from initial demands of 40%.  The union's raise proposals to the automakers have not fallen below 30%, he added.  Key demands from the union have included 40% hourly pay increases, a reduced 32-hour work week, a shift back to traditional pensions, the elimination of compensation tiers & a restoration of cost-of-living adjustments, among other items on the table.  Ford CEO Jim Farley said the company remains “optimistic that we can reach an agreement with the UAW in the next two days.” However, he said there are limits to what Ford is willing to offer.  Farley said the company’s latest offer includes “pay increases, elimination of tiers, inflation protection, five weeks of vacation, 17 paid holidays [and] bigger contributions for retirement.”  “We put an offer in today that’s our most generous offer in 80 years of the UAW and Ford,” Farley said today.  “It’s a significant enhancement, still optimistic that we’ll get a deal. But there is a limit because we have to protect for the future, future investments and the profitability of the company funds those.” Farley said Ford is “not going to support” a 4-day workweek.

UAW to strike against Detroit automakers if deals aren’t reached, union boss says

CEO Jane Fraser announced a corp reorganization, saying the move would cut down management layers & accelerate decisions.  Fraser said  that Citigroup (C) would be divided into 5 main business lines that report directly to her.  Previously, the firm had 2 main divisions catering to consumers & large institutional clients.  The changes will include job cuts, though the New York-based company hasn't decided on a number yet.  Fraser, closing in on her 3rd full year atop Citi, is seeking to revitalize a firm mired in a persistent stock slump.  While Citi is the 3rd-biggest US bank by assets, it has a far smaller domestic retail banking presence than its competitors.  That helps explain why Citi has struggled in the post-2008 financial crisis era.  “These changes eliminate unnecessary complexity across the bank, increase accountability for delivering excellent client service and strengthen our ability to benefit from the natural linkages that exist amongst our businesses, all with an eye toward delivering on our medium-term targets,” Fraser said.  Citi stock rose 3.31.
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Citigroup CEO reorganizes businesses, cuts jobs as bank is mired in stock slump

Moderna (MRNA) said its experimental mRNA-based flu vaccine produced a stronger immune response against 4 strains of the virus than a currently available flu vaccine in a late-stage trial, clearing the way for a path to approval in the US.  The results come as MRNA tries to beef up its pipeline & become a company known for more than its blockbuster mRNA Covid vaccine, which won more approvals from US regulators this week.  MRNA expects its Covid shot, its only commercially available product, along with its flu jab, & other experimental respiratory vaccines to make up to $15B in sales by 2027.  These results are also a sigh of relief after the company pushed back its experimental flu shot program in Apr.  An initial vaccine formula didn't accumulate enough data to determine its efficacy, so the company reformulated the shot.  That appeared to pay off in the latest phase 3 trial.  MRNA compared the flu vaccine, dubbed mRNA-1010, to a currently approved seasonal flu vaccine from GlaxoSmithKline (GSK) called Fluarix.  An interim analysis of the trial found that mRNA-1010 produced higher antibody levels for all 4 influenza strains recommended by the World Health Organization – 2 each for influenza A & B – compared to Fluarix.  MRNA's flu shot also generated higher seroconversion rates, which refers to the development of specific antibodies against a virus.  MRNA said the safety findings were similar in the trial to previous ones, which found muscle pain, headache, fatigue, pain & swelling as the most common side effects of mRNA-1010.  The stock rose 3.31.
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Moderna says flu vaccine showed promising results, paving path to approval

Gold futures fell for a 2nd session to settle at a fresh 3-week low.  The latest US consumer price index data offered little clarity to the Federal Reserve's policy outlook.  The uptick in core CPI may keep bets of one more Fed rate hike alive, with such prospects capping gold's potential upside in the interim.  As long as hopes for Fed rate cuts are kept at bay, bullion bulls should struggle to carve out meaningful gains for the precious metal.  Dec gold declined by $2 to settle at $1932 an ounce.  Prices based on the most-active contract settled at their lowest since Aug. 22.

Gold Futures Settle at Fresh 3-Week Low

Oil prices settled lower, shaking off earlier gains fueled by a forecast from the International Energy Agency for potential global supply deficit in Q4.  The latest US inflation reading ran on the “hot side,” especially on the core figure, which will bolster the case for a higher for longer Fed policy rate outlook.  That raises the threat that the central bank chokes off growth & sends the economy into recession which is never a good scenario for oil demand.  Oct West Texas Intermediate crude fell 32¢ (0.4%) to settle at $88.52 a barrel after ending yesterday at their highest front-month contract price this year.

Oil Futures End Lower as Demand Worries Outweigh Forecasts

Inflation data keeps coming muddled.  It has improved sharply from high numbers last year.  However the Fed can not completely control it & consumers are finding it difficult to undertsand prices that are sharply higher from just a couple of years ago.  The producer price index will be released tomorrrow & will likely give a mixed picture about inflation.

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