Morning Reads

Morning Reads




Many are still trying to make sense of the disaster that struck Baltimore early on Tuesday, when the 1.6-mile-long Francis Scott Key Bridge collapsed in the middle of the night. The 95,000-ton container ship Dali, chartered by Maersk (OTCPK:AMKBY), collided with one of the support columns following a last-minute distress call, sending eight workers atop the bridge into the water (two were rescued and six are presumed dead). Responding to the catastrophe, President Biden has called for the federal government to pick up the tab for the reconstruction of the Key Bridge, though that could take years and will require Congressional approval.

What happened? An investigation is ongoing, but videos show the cargo ship's lights turning off - and then on again - shortly before it struck the bridge. Power to the Dali was said to have gone out shortly after it left the Port of Baltimore, including to the ship's engines, possibly due to a failure of machinery aboard the vessel (black smoke?). While emergency generators eventually kicked the lights on, the renewed power likely didn't impact the ship's propulsion or steering gear. An inspection in Chile last June even identified a problem with the Dali's "propulsion and auxiliary machinery," but the most recent examination conducted by the U.S. Coast Guard in September didn't find any deficiencies.

The supply chain is the most talked-about consequence for the economy, with shipping traffic suspended until further notice. Baltimore is one of the busiest ports on the U.S. East Coast, and the rerouting of cargo will create delays and raise costs at a time when consumers and policymakers alike are sensitive to inflation. It will also add to the recent disruptions on the high seas, including increased congestion in the Panama Canal and attacks in the Red Sea that have forced traffic around the tip of Africa.

Immediate impacts: Coal exporter Consol Energy (CEIX) slid 7% yesterday in response to the indefinite shuttering of the Port of Baltimore. The company's operations are said to be highly connected to its Marine Terminal at the port, which represents over a quarter of all U.S. seaborne coal exports. Recent data also indicates that 850K cars and light trucks pass through Baltimore each year, more than at any other U.S. port, prompting Ford (F) and General Motors (GM) to comment on the possible impacts facing the American auto industry. (31 comments)

Paper into cash?

Following a stellar market debut, Trump Media & Technology (DJT) is still rallying on Wednesday, although the firm's near $8B valuation seems excessive as it has never turned a profit. There are also risks of its biggest shareholder, Donald Trump, cashing in on the paper gains despite a six-month lock-up period. While his 60% stake is valued at around $5B, the former president is facing some big legal bills and his son and former officials of his administration sit on the company board. Trump could also seek to use his DJT stake as collateral to get a loan, although chances of securing funds this way are likely low. (17 comments)

Retirement crisis

As people live longer lives, BlackRock (BLK) Chairman Larry Fink is warning that the world is at risk of facing a retirement crisis. "What if the government and the private sector treated 60+ year-olds as late-career workers with much to offer rather than people who should retire?" he asked in his annual letter to investors. Fink also called on policymakers and investment firms to make retirement investing "more automatic" for workers, noting that building savings has never been more urgent. "When people are regularly living past 90, what should the average retirement age be?" (5 comments)

The ban that wasn't

Raising questions about the fate of similar efforts, the city of Berkeley, California, has agreed to drop the first-ever U.S. natural gas ban following a settlement deal with the California Restaurant Association. "Climate change must be addressed, but piecemeal policies at the local level, which are preempted by federal energy laws, are not the answer," said CRA President Jot Condie. Environmental advocates say the court decision and Berkeley's repeal only mark the end of a chapter, and may open the door for more durable strategies to phase out fossil fuels. (47 comments)

Today's Markets

In Asia, Japan +0.9%. Hong Kong -1.4%. China -1.3%. India +0.7%.
In Europe, at midday, London -0.3%. Paris +0.1%. Frankfurt +0.3%.
Futures at 7:00, Dow +0.4%. S&P +0.4%. Nasdaq +0.5%. Crude -0.7% to $81.07. Gold +0.7% to $2,213.80. Bitcoin -1.1% to $70,117.
Ten-year Treasury Yield unchanged at 4.24%.

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $28B, 2-Year FRN Auction
1:00 PM Results of $43B, 7-Year Note Auction
6:00 PM Fed's Waller Speech

Companies reporting earnings today »

What else is happening...

Baltimore bridge collapse should be 'manageable loss' for insurers.

Alibaba (BABA) scraps Cainiao IPO, plans stock buyback for unit.

Boeing’s (BA) debt ratings under review for downgrade at Moody’s.

Visa (V), Mastercard (MA) settle with merchants over swipe fees.

Shockwave Medical (SWAV) surges with J&J (JNJ) in M&A talks.

Operating costs: GoPro (GPRO) set to reduce global workforce.

NBC (CMCSA) ousts ex-RNC head Ronna McDaniel after backlash.

McDonald's (MCD), Krispy Kreme (DNUT) to expand U.S. partnership.

Merck (MRK) wins FDA approval of sotatercept for rare lung disease.

Robinhood (HOOD) unveils first-ever credit card with 3% cashback.

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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