So today while it should be a quiet market–both equities and interest rates as employment numbers are waited on instead we have markets tumbling. The S&P500 is off by more than 1%. The 10 year treasury yield is tumbling –down 9 basis points to around 3.70%.
There should be almost no doubt that the main reason for the selloff today is the dock worker strike and the potential negative effects that could have on employment and potentially inflation.
The other macro factor is the Middle East war situation–in my mind Iran will eventually step into the fray. While thus far their words have been bluster, they will step in to prove they are not a paper tiger. I hope I am wrong on this, but it seems inevitable.
So what does this mean to me? Nothing at the time–reacting to these macro factors AT THIS TIME would be a mistake. Certainly eventually they may be meaningful to the long term investor now is not that time. Preferreds and baby bonds today are fairly flat with 50% of issues up and 50% down (more or less)–no action to be taken.
Tim,
I was on a series of conference calls with clients (and contacts) in Asia over our weekend and the war in the middle east was a key topic (as was Russia).
Not to get into politics, Tim, but Iran is already firmly in the fray in the middle east. They are the main source of equipment/training/intelligence/guidance for Hezbollah, Hamas, the Houthis in Yemen, groups in Syria, and numerous other puppet/proxy groups across the middle east.
The Israelis are fighting Iran (primarily through its proxies) on multiple fronts. Iran has fired a few missiles at Israel directly, but it careful not to draw a big response. They don’t want to put their nuclear program at risk. I personally think their longer term goal is to keep the “pot bubbling” until they have a nuclear weapon. Frightening prospect. The new president in Iran is an opportunity for change, but only time will tell.
It’s sad that so many civilians are being affected, but Iran’s playbook is to have terrorists hide among civilians as human shields – then to play to the western press when attacks on those terrorists impact the civilians the terrorists have put in harm’s way.
More than a few missiles now.
Side note-
Mkts of China & Hong Kong up 6-8% now. Wow
Israel isn’t going to attack Iran until after Yom Kippur.
Rosh Hashanah has begun in Israel (New Year high holiday).
Iran certainly won’t attack again until after Yom Kippur as there is a long memory of the Yom Kippur War , so Israel will be ready.
FWIW, You might note that the percentage of religious Jews is much higher in the USA than in Israel. It’s time to go to the beach, not synagogue
I’m certain Israel sees this attack as it’s opportunity. To do what, no idea, but they cannot allow continued dislocation of a large percentage of the population because Iranian proxies are firing missles. Direct action against Iran seems a lot more likely .
What happens to US bonds? No idea
Don’t forget the Hamas attack anniversary of 10/7
Also port workers on east and gulf coast just went on strike. If its not figured out in a few days, there will be nasty repercussions.
To Legend.vs; Iam sure you have seen what the Longshoremen are asking. Iam not taking either side but will just say they are asking for a 77% pay increase over 6 years which I view as truly OBSCENE. Talk about creating more massive inflation. It is reported that the company has offered 50% which they have turned down. Also ridiculous. I will just close by saying when you look around at what some of these large corps have given their employees in pay raises & benefits I feel that INFLATION is far from dead regardless of what the Gov. wants you to believe. Iam a consumer just like everybody else and its ridiculous how some of these things have gone up in price. The “retiree class” really gets killed during these times.
Chuck, It goes beyond that. The dock workers are worried about automation and they should be. But to tell the companies they want no automated equipment is the tail wagging the dog. The government stepped in when the railroads went on strike because it would have affected the national economy. Just seems like the timing is bad when things seem to be slowing down to have a strike like this.
Charles,
at the risk of edging toward politics (and apologies if I get too close to the line). I think there is a potential trading opportunity from the strike.
The Christmas “rush” should be in full swing, so there will be a lot of pressure on the shipping system over the next few months.
The west coast ports are running pretty full already (from what I read) and although there is some effort to expand shipments into Mexico (and truck goods to the US), and even some effort to use Canadian ports similarly, there just isn’t enough capacity to make up for all the lost port capacity from the strike.
I personally think the strike may go on for at least another month (JMHO). The two sides are far apart and I think they may be counting on government intervention, which puts the current administration is in a bit of a bind.
The dock strike will hurt the economy, which won’t look good for the administration, but they took a big popularity hit with the unions when they intervened in the railroad strike. They aisle can’t take another hit like that with the election just weeks away and some of the “battleground” states having high union membership/support. So, I don’t think we will see any presidential action on the strike until after the election.
If that holds true, there may be an opportunity to trade in companies that will take a beating (or will benefit) from the strike – port operators, shippers, maybe some key retailers, maybe even some auto companies that rely on building in Europe and shipping to the US.
Note that I don’t think this will create long term opportunities, but maybe some 1-2 month plays?
Sell, then buy back 5 minutes before the strike is settled. Can you predict the future? Though government intervention and/or high settlement is inflationary. Combined with rate cuts and political upheavel we may soon be living in interesting times.
Private–close, but no foul.
Private, I like how you laid out all the snakes in a row. My thoughts were more about various plays too but not too deeply. I thought more about how it might affect what I already own. My first thought was my REXR preferred but the WC isn’t on strike ( yet) so as you pointed out this might actually help anything related to the WC and there might be a knee jerk reaction in relation to the EC.
Now I also own GLP preferred and I believe they ship a lot of fuels. As a matter of fact, East Coast drivers might see an increase in their fuel costs.
But honestly I have been looking more at the forest ( the market) than the trees ( individual stocks) you bring up an interesting point. Any suggestions out there?
Oh my thoughts are with you Private, but hard to express them without bringing up the P word. but good point on how do you play that.
Private, I found one which is going to be affected by the dock workers and I think you might still own. ADM
There is also DOLE and FDP
Charles
You and I dabbled in ADM when it had its pratfall in January ($52)
You sold at a profit – I kept as Sock drawer.
Now $58 and 3.4% div
Agree it may get bent by dock strike.
I’ll buy more if it does
Major ag commodities broker. We all need food.
Charles
Agree we all need food.
Not optimistic about the near term of our ag co-op prefs.
Not a seller of my large holdings, but expect rough weather ahead due to oversupply further aggravated by strike restricting exports.
A good news possibility is that the stress of the above may reduce the likelihood of an early call of the CHSC’s
Westie, Not saying its a safe buy, but keep an eye on MOS