Morning Reads
- Modi Wants to Make India a Chip-Making Superpower. Can He?
- European Countries Differ Over Windfall Taxes on Banks
- Bankers’ 40% Pay Cuts Show the China Dream Fading in Its Richest Cities
- EU Escalates China Tensions With Probe to Ward Off Cheap EVs
- As OPEC’s Energy Influence Wanes, China’s Minerals Clout Rises
- Oil Trader Gunvor Re-Enters Metals in Bet on Energy Transition
- Big Oil’s Climate Fix Is Running Out of Time to Prove Itself
- BP CEO’s Sudden Fall Puts Oil Major’s Strategy Back in Play
- Biden’s Climate Law Is Reshaping Private Investment in the United States
- Soft Core Inflation to Bolster Case Against More Fed Tightening
- Corporate Defaults Jump, Highest August Monthly Tally Since 2009
- A Who’s Who of Silicon Valley Will Convene With Lawmakers on A.I.
- Arm Is Set for US IPO Pricing in Test to AI Hype, China Risk
- iPhone 15 and 15 Pro First Look: Why a Tiny USB-C Port Is a Huge Deal
- Apple’s iPhone Price Bump Is Part of Subtle Revenue-Boosting Strategy
- Goodbye, California. Driverless Trucks Are Headed to Texas
- Watch Boutiques Blossom in the Digital Age
- Birkenstock Files for IPO in Further Boost to US Market
- From $1 Billion to Almost Worthless: FaZe Clan Runs Out of Hype
- McDonald’s to Eliminate Self-Serve Soda Machines at U.S. Locations
- America’s Largest Newspaper Chain Is Hiring a Taylor Swift Reporter
Todays Open Interest Change
PREMIUM
Prepper
The auto sector is on watch as negotiations between the UAW union and Detroit carmakers - Ford (F), General Motors (GM) and Stellantis (STLA) - head down to the wire. Things have gone back and forth over the last several weeks, but they aren't looking good ahead of today's strike deadline at 11:59 p.m. ET. Contributing to the tensions has been the industry's shift toward EVs, which has created new manufacturing dynamics - such as less of a need for engine and transmission plants, as well as new battery factories that are largely not unionized.
Defining moment: "To win, we're likely going to have to take action," UAW President Shawn Fain declared. "Just as we have approached our negotiations differently than we have in the past, we're preparing to strike these companies in a way they've never seen before." While the rhetoric remains charged, a targeted walkout is likely to first hit specific U.S. factories before an all-out strike envelops one or more companies, especially if it helps the UAW avoid distributing strike pay to its 146,000 members.
At issue are the terms surrounding new four-year labor contracts for Big Three auto workers. Demands range from higher wages, more paid time off, reduced workweeks, a return to traditional pensions, the elimination of wage classification tiers and a shift back towards cost-of-living adjustments. However, the two sides have grown increasingly skeptical of each other, trading accusations of "no genuine offers," "negotiations in bad faith" and "not showing up to the bargaining table."
Ripple effects: A 10-day strike could cost the U.S. economy $5.6B in gross domestic product, according to the Anderson Economic Group, and push the Michigan economy into a recession. The firm added that lost worker pay could be equal to $859M and lost automaker earnings could be $989M, while continuing to deplete dealership stock levels and impacting prices. A disruption could also deal a sizable economic blow to the broader auto network, like parts suppliers including Lear Corp. (LEA) and Magna International (MGA).
CPI recap
Retail inflation heated up again in August, with the Consumer Price Index rising 0.6% M/M and 3.7% Y/Y, fueled by higher gasoline and housing prices. Stock markets still largely cheered the data, though concerns over inflationary pressures remained. "The Fed's rate-hike cycle most assuredly ended in July," noted Investing Group Leader Lawrence Fuller as core figures signal that inflation is continuing to moderate. ING economists, however, expect the Fed to keep one further hike in their dot plot forecast until the end of 2023. (328 comments)
The right arm?
British chip designer Arm Holdings (ARM) has priced its initial public offering of 95.5M shares at $51 apiece, at the upper end of the expected range of $47-$51. This gives Arm, majority-owned by Softbank (OTCPK:SFTBY), a valuation of more than $54B. The IPO was oversubscribed by 10 times, with major companies such as Intel (INTC), Nvidia (NVDA) and Apple (AAPL) eyeing $735M of the float. SA analyst David Krejca believes the IPO price is very generous, saying long-run investors are better off waiting for lower prices, while Cavenagh Research said Arm's leadership in the CPU industry and its AI involvement make it an attractive investment opportunity. Also see what WSB subscribers think about investing in IPOs before Arm begins trading today. (60 comments)
Casino hackers
Caesars Entertainment (CZR) is expected to disclose in a regulatory filing that it paid tens of millions of dollars to hackers who infiltrated the company’s systems in recent weeks and demanded a ransom. The group, known as Scatter Spider or UNC 3944, is experienced at social engineering tricks to gain access to corporate networks. A different hacking group is also believed to be responsible for the hacking incident that disrupted systems at MGM Resorts (MGM) this week, impacting everything from the casino floor to online bookings. Reports indicate the hackers impersonated an employee and gained access to MGM's systems after a short phone call to its IT help desk. (17 comments)
Today's Markets
In Asia, Japan +1.4%. Hong Kong +0.2%. China +0.1%. India +0.1%.
In Europe, at midday, London +1.2%. Paris +0.4%. Frankfurt +0.3%.
Futures at 7:00, Dow +0.3%. S&P +0.4%. Nasdaq +0.4%. Crude +1.3% to $89.69. Gold -0.1% to $1,929.70. Bitcoin +0.8% to $26,338.
Ten-year Treasury Yield +1 bp to 4.26%.
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Producer Price Index
8:30 Retail Sales
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
Companies reporting earnings today »
What else is happening...
France orders Apple (AAPL) to stop iPhone 12 sales over high radiation.
Citigroup (C) realigns corporate structure to reduce management layers.
Netflix (NFLX) drops as ad tier not seen driving revenue in short term.
Senate AI summit gathers tech leaders for closed-door policy talks.
Curaleaf chairman sees DEA agreeing to reschedule marijuana.
Google (GOOG, GOOGL) lays off hundreds from recruiting team.
Visa (V) starts shareholder talks on exchange offer for class B shares.
Goldman (GS) fires transaction banking execs over compliance lapses.
Starbucks (SBUX) visionary Howard Schultz steps down from board.
FTX gets green light to sell its cryptocurrency holdings worth $3.4B.