Markets pause with Fed speakers and inflation in focus

Dow edged up 61, advancers over decliners 4-3 & NAZ added 25.  The MLP index advanced 3 to the 288s & the REIT index was 3+ higher to the 441s.  Junk bond funds hardly budged & Treasuries had limited selling which took yields slightly higher.  Oil slid under 71 & gold gained 5 to 2652, but below early highs (more on both below).

Dow Jones Industrials

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Boeing (BA), a Dow stock, sweetened a contract offer & said it was its “best and final” proposal for its more than 30K machinists as their strike, which has halted most of the aerospace giant's aircraft production, entered its 2nd week.  The new offer raised pay, reinstated annual bonuses & increased a bonus that would be given upon the contract’s ratification, among other changes, BA said.  The new offer would raise general wages by 30% over 4 years, up from a previously proposed 25%, doubled the ratification bonus to $6K & reinstated an annual bonus.  The labor union, the Intl Association of Machinists & Aerospace Workers, didn't immediately comment on the offer.  BS said the offer is contingent upon ratification by Fri at 11:59PM PT.  The new offer is BA's latest attempt to reach a deal with its machinists & end a costly strike, the unionized work group’s first since 2008.  Machinists on picket lines in Renton, Washington, said last week that they rejected the first contract with higher pay because they wanted their wages to keep up with the sharp increase in the cost of living in the Seattle area.  The stock went up 2.93.

Boeing sweetens labor proposal in ‘best and final’ offer as strike enters second week

Foot Locker (FL) turned 50 while on a bit of an upswing 2 years into Dillon's tenure as CEO.  Last month, it released fiscal 2nd-qtr results & full-year guidance that beat expectations, as comparable sales grew for the first time in 6 qtrs.  As FL revamps its sprawling store footprint, & perhaps benefits from some good timing, it's making strides in winning back its critical brand partners.  “Our last qtr was a really good indication that the hard work that we've been putting into the Lace Up plan is working, and that makes me feel really, really great, because I really see the next 50 years of growth for Foot Locker and our future,” Dillon said, referencing the company's turnaround plan.  “I really think that there’s layers of category growth that we can drive by just making sneakers that much more inclusive, that much more fun, that much more easy to access.”  But as FL stares down the next 50 years, the company is still at a crossroads & must answer some fundamental questions: can it once again be the market leader in sneakers, & can it not just survive, but thrive, as brands rely less and less on wholesalers?  While its fiscal 2023 turned out worse than it originally anticipated, the company is seeing some of its turnaround efforts start to take hold.  Online sales are growing.  FL plans to relaunch its mobile app at the end of the year & recently unveiled its revamped loyalty program FLX, which allows customers to earn discounts, access to product launches & perks like free returns.  “We know that we only capture a fraction of this annual sneaker spend that our existing customers spend on sneakers,” said Kim Waldmann, FL's chief customer officer.  ”[FLX] isn’t necessarily about getting you to buy 10 more sneakers per year, it’s an opportunity for us to drive share of wallet consolidation by the fact that you’re getting value back in shopping with us.”  The stock fell 93¢.

How Foot Locker is waging a comeback after its breakup with Nike

The threat of port strikes on the East Coast & Gulf of Mexico is sending shockwaves thru the supply chain & raising concerns that there will be an uptick in inflation.  "Goods trans-shipped across the country are not only going to be late but they will cost more, e.g., apparel meant for early winter and the holidays," George Kochanowski, CEO of logistics company Staxxon said.   Kochanowski continued, "If the goods were containerized, where will all those empties go and who will pay to have them stored, accounted for, and repositioned? All these costs will be factored in the price of the goods sold."  The Intl Longshoremen's Association (ILA) is negotiating on behalf of 45K dockworkers at 3 dozen US ports from Maine to Texas that collectively handle about ½ of the country's seaborne imports.  It warned its members are prepared to stop work if they don't have a new contract by the Oct 1 deadline.  The issue is that this comes during the most critical time of year for retailers, which said that if a new labor deal isn't negotiated by the end of the month, it could have a "devastating impact" on the overall US economy.  Jim Gillis, Pacific region pres of IMC, a nationwide trucking company that operates at ports, said he's seeing a "litany of issues related to cargo surges – mainly port congestion & pool chassis shortages."  It was something they hadn't seen in the previous months.

Holiday goods at risk as port strikes pose ‘devastating impact’ on economy

Increasing turmoil around the world, including the escalating fighting between Israel & Hezbollah, has gold prices pushing up to a fresh record, with front-month gold futures settling up 0.3% to $2626 an ounce and SPDR Gold shares up 0.3% looking for a new record close as well.  The global volatility along with the Federal Reserve's shift in its inflation-fighting campaign has bolstered gold & there may be more room to travel up.  With geopolitical tensions worsening & the official monetary authorities getting towards full swing over the rate cycle the tailwinds for gold continue to exceed the headwinds & there is plenty of upside scope.

Gold Finds New Record Amid Geopolitical Turmoil

WTI crude oil futures fell 0.9%, closing at $70.40 per barrel, as concerns over sluggish demand from China & a surprise slowdown in European manufacturing dampened market sentiment.  The eurozone reported an unexpected contraction in business activity, with services stagnating & manufacturing output deteriorating further.  At the same time, market participants awaited potential stimulus measures from the Chinese gov, which could reignite fuel demand in the world's top oil importer, especially after a significant decline in refined oil imports this year due to its struggling manufacturing sector.  On the supply side, geopolitical tensions added to market uncertainty as Hezbollah fired over 100 rockets into northern Israel, including areas near Haifa, raising fears of a broader conflict in the key oil-producing region.  Additionally, a tropical disturbance in the Gulf of Mexico prompted Shell to shut down production at several of its facilities as a precautionary measure.

Oil Settles Lower on Demand Concerns

Markets are taking a breather after the latest rally.  The bulls are optimistic about the future while nervous investors keep buying gold.  As shown today, there is still a fair amount of turmoil in the US economy.