Morning Reads

Morning reads

Todays Open Interest Change



Unions are in focus across the country as more workers threaten industrial action and strikes continue to impact entire industries. Joining the train in 2023 have been pilot associations at major airlines like American (AAL) and Southwest (LUV), the Teamsters Union at UPS (UPS), Workers United at Starbucks (SBUX) and the International Association of Machinists and Aerospace Workers at Spirit AeroSystems (SPR). Don't forget the damaging walkout that continues to plague Hollywood - with both writers and actors conducting a historic double strike.

Bigger picture: Many workers feel compensation and conditions have worsened over the past three years despite bumper corporate profits since the pandemic. Besides pay not keeping up with the rising cost of living, employees might see a moment of leverage in a tight labor market, while big changes are threatening control of entire industries (think EVs/autos, or AI and the screenwriting process). A contagion effect is also rippling across sectors as employees see better working terms and pay hikes occur after companies come to the bargaining table, while new union leadership and younger members continue to push for stronger deals.

The latest case in the spotlight is the United Auto Workers union, which has landed approval from workers at Ford (NYSE:F), General Motors (NYSE:GM) and Stellantis (NYSE:STLA) to strike if a new contract is not worked out before Sept. 14. A work stoppage by its 150,000 workers could result in an economic loss of more than $5B in just 10 days, according to the Anderson Economic Group, given current inventories and the manufacturing environment. Auto stocks have typically traded higher following resolution and contract ratification in the past - in what has typically been a recovery from aggressive selloffs during the contract talks - but some carmakers may be at more risk than others.

Outlook: On the corporate side, businesses have to decide whether to dig in for the long haul (Hollywood) or agree to new terms for their workers (UPS). At issue are terms that may impact a company's bottom line and decrease competitiveness, or limit powers to balance merit-based progress and employee motivation. On the other hand, better worker terms can give corporations access to a steady and well-trained labor force, as well as a sense of operational cost predictability and the ability to attract talent in a tight labor market. Take the WSB survey.

Bilateral relations

U.S. Commerce Secretary Gina Raimondo has become the third cabinet secretary to visit China this year after landing in the country for a trip that hopes to get the two sides talking again (prior trips were made by Janet Yellen and Antony Blinken). "Of course, in matters of national security, there is no room to compromise or negotiate," Raimondo told Chinese Commerce Minister Wang Wentao. "And as you say, the vast majority of our trade and investment relationship does not involve national security concerns." Tightening restrictions on technology and advanced semiconductors have weighed on U.S.-Sino tensions, but Beijing has also been struggling with an economic slowdown and worries about its property sector, with shares of China Evergrande (OTC:EGRNF) tumbling around 80% in Hong Kong on Monday. (2 comments)

Combat-grade plugs

3M (MMM) has reportedly agreed to a more than $5.5B settlement to resolve over 300K lawsuits claiming the company sold the U.S. military defective combat earplugs. 3M had argued the earplugs worked properly when soldiers were trained on how to use them, but veterans had sued subsidiary Aearo Technologies, claiming that its foam earplugs were flawed and didn’t protect them from damage to their hearing. The case is one of two big disputes that 3M has found itself in. The other is related to "forever chemicals," with the potential for liabilities that analysts have estimated may cost the company billions of dollars. (133 comments)

Medicare negotiations

Amid reports that the Biden administration is gearing up to announce the first ten drugs that will be subject to Medicare price negotiations early this week, Wall Street analysts have come up with their own lists of potential inclusions. The pricing negotiations introduced as part of last year’s Inflation Reduction Act allow the Department of Health and Human Services to bargain for Medicare Part D drugs for the first time in history. While revised prices for the first ten drugs are unlikely to take effect until 2026, the impact will only grow afterward as the list of targeted drugs expands, with the program expected to save an estimated $98.5B for the U.S. healthcare system over ten years. (40 comments)

Today's Markets

In Asia, Japan +1.8%. Hong Kong +0.9%. China +1.1%. India +0.2%.
In Europe, at midday, London closed. Paris +0.8%. Frankfurt +0.5%.
Futures at 6:30, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude -0.2% to $79.71. Gold +0.1% to $1942.30. Bitcoin -0.4% to $25,950.
Ten-year Treasury Yield unchanged at 4.24%

Today's Economic Calendar

10:30 Dallas Fed Manufacturing Survey
1:00 PM Results of $46B, 5-Year Note Auction

Companies reporting earnings today »

What else is happening...

Horizon Therapeutics (HZNP)-Amgen (AMGN) trial withdrawn by the FTC.

CDC advisors to meet Sept. 12 to discuss new COVID shots.

Gran Turismo revs up, while Barbie becomes year's top film.

California judge rules Diablo Canyon nuclear plant can stay open.

Angry oil industry sues U.S. over new Gulf auction rules.

Databricks in discussions to raise funds at $43B valuation.

It’s been a tough month for crypto - will it get even worse?

Love and shun: Hedge and mutual funds are rotating positions.

Jabil (JBL) to sell China mobility business in $2.2B deal.

XPeng (XPEV) scoops up DiDi's (OTCPK:DIDIYself-driving division.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

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