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Morning Reads

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It took over six weeks, but it looks like a strike that threatened to upend the American auto industry is coming to an end. General Motors (GM) has become the last of the Big Three Detroit automakers to ink a tentative deal with the United Auto Workers union, which had threatened to expand its strike to GM's key engine plant in Tennessee (the automaker's largest facility in North America). In total, the series of walkouts that began on Sept. 15 ended up involving nearly 50,000 workers, with the labor action costing GM, Ford (F) and Stellantis (STLA), as well as their suppliers, billions of dollars.

Quote: "We wholeheartedly believe our strike squeezed every last dime out of General Motors," UAW President Shawn Fain declared. "They underestimated us. They underestimated you. We have shown the companies, the American public and the whole world that the working class is not done fighting. In fact, we're just getting started."

Union members will get hefty double-digit pay raises that are said to cost GM nearly $7B over the next 4.5 years. Higher labor costs will also hit the bottom line of Ford, which last week suspended its guidance and said the new deal with the UAW would add $850 to $900 to the cost of each car. Other terms in the contracts include restricting the use of lower-paid temporary workers, as well as having influence over what plants stay open as the automakers shift to electric vehicles.

"GM has moved firmly into a medium-term downtrend, with buyers giving up the critical $30 support zone decisively," wrote SA Investing Group Leader JR Research. "Investors are right to question whether General Motors's 2030 business plan is still on track, notwithstanding management's optimism."

Outlook: The new UAW contracts will significantly raise costs for the automakers, which will attempt to pass some of those along to consumers, seek out production efficiencies, or change their focus to the most profitable models. EV leader Tesla (TSLA) and non-union foreign brands like Toyota (TM) could also now be in the crosshairs of the UAW, and it may drive other industries to secure better compensation and working conditions. Pharmacy staff from CVS (CVS) and Walgreens (WBA) just went on strike in what has been dubbed as "Pharmageddon." "This is more than an auto industry story," according to the Anderson Economic Group. "It is a signal to the entire country that unionized workers can demand and get big wage increases." (34 comments)

AI risks

President Biden has issued an executive order to manage artificial intelligence risks, establishing new standards for AI security, advancing equity and civil rights, and promoting innovation and competition. The order requires AI system developers to share safety test results and other critical information with the U.S. government, among other mandates. The development follows the G7 nations agreeing to a code of conduct for companies building advanced AI systems, while Biden's move builds on previous actions the U.S. government has taken, including securing voluntary commitments from companies - including Amazon (AMZN) and Alphabet (GOOGGOOGL) - for AI safeguards. (164 comments)

Federal borrowing

The U.S. Treasury has lowered its federal borrowing estimate for the current quarter on higher revenue expectations, although this would still be a record amount compared to prior fourth quarters. It expects to borrow $776B during Q4, $76B lower than its previous forecast, and $816B during Q1 2024 - also a record for that period. “In total, over those two quarters, marketable debt will have increased by $1.59T!” SA analyst Wolf Richter noted, before investors turn to the quarterly refunding statement due tomorrow. Most WSB readers think across-the-board spending cuts would immediately address the budget deficit. Do you agree? Take the poll here. (4 comments)

Buyer's remorse?

X Corp. is now worth about $19B - well below the $44B paid by Elon Musk to buy the social media platform in 2022 - even as the world's richest man ramps up efforts to transform the app into a one-stop shop for a wide range of services. Musk has been working to transform X into an "everything app," even floating the idea of X serving as an online dating interface while planning to turn the app into a financial hub. Other features include voice-and-video chat, which could bring X in line with social media apps like Instagram and Facebook. Will it be able to compete over the long term with rival platforms from Meta (META) and other companies? (14 comments)

Today's Markets

In Asia, Japan +0.5%. Hong Kong -1.7%. China -0.1%. India -0.4%.
In Europe, at midday, London +0.6%. Paris +1%. Frankfurt +0.5%.
Futures at 7:00, Dow +0.3%. S&P +0.2%. Nasdaq +0.1%. Crude +1% to $83.13. Gold +0.1% to $2,007.80. Bitcoin -0.3% to $34,453.
Ten-year Treasury Yield -5 bps to 4.83%.

Today's Economic Calendar

FOMC meeting begins
8:30 Employment Cost Index
9:00 Case-Shiller Home Price Index
9:00 FHFA House Price Index
9:45 Chicago PMI
10:00 Consumer Confidence
3:00 PM Farm Prices

Companies reporting earnings today »

What else is happening...

New U.S. chip curbs put $5B worth of Nvidia's (NVDA) orders at risk.

Bank of Japan tweaks yield curve control policy, holds interest rates.

Apple (AAPL) takes wraps off 'scary fast' Macs with updated M3 chips.

McDonald's (MCD) beats on both lines as price hikes boost sales.

Truist downgrades Krispy Kreme (DNUT) on weight loss drug overhang.

Broadcom (AVGO) CEO believes VMware (VMW) delay is bureaucratic.

Pinterest (PINS) jumps as earnings, monthly active users top estimates.

Tesla (TSLA) stock drops to close at lowest level since May.

SEC charges SolarWinds' (SWI) information security chief with fraud.

White House oil plan for Alaska seen as major threat to future drilling.

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.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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