Well, 4Q is off to a great start as Iran's missile attack against Israel weighed on equity markets and caused oil to spike, and bond yields to fall in a classic flight to quality move. In case you forgot Iran attacked Israel back in mid-April with drones and missiles. Will we forget this attack just as quickly? I posted some thoughts on geopolitcs back then in this post. The 2Y yield fell back to 3.62% and the 10Y back to 3.74%.
The east coast and gulf port strike is in effect, with a sticking issue being the unions fight against increased automation (in addition to wanting a large pay increase). I don't know about you but I can't help but associate dockworkers with the HBO classic "The Wire". In fact the risk of automation was a topic on this episode from circa 2003.
Admittedly I haven't read enough to know anything to have a strong opinion about the port strikes, but it does make me wonder why the issue of automation at the ports has taken this long to become a major sticking point.
In economic news JOLTS was solid on the surface with openings increasing more than estimated, but under the surface the continued low hiring rate and quit rates is a troublesome sign to some labor economist. Whether or not low hiring and quits portends a problem or is simply a consequence of above average period of time when both measures were evelated over the past couple of years is something we'll find out over time. On the ISM front the data was in line with weakening employment but increased production and new orders.
In the fallout from Hurricane Helene there are continued reports that one of the primary quartz plants in NC, a plant that supplies the quartz that is used in the manufacture of silicon wafers used in semiconductors, will likely continued to be shutdown due to flooding, leading some to question the second and third order effects.
A little under the radar is the new PM in Japan, Shigeru Ishiba, calling for elections on October 27th. Ishiba is viewed as "hawkish" and largely opposed to low rates and low taxes.
On the day ahead ADP, Fedspeak, whatever happens in the Middle East.
XTOD: Martin Wolf: Have we seen the end of cheap money? https://t.co/fmuagR0989
XTOD: Cerebras is an unprofitable AI company utterly dependent on selling chips to one of its biggest investors, which might not actually be able to take them out of the country. Naturally it is seeking an IPO with an $8bn valuation.
XTOD: The amount of time young men spent gaming was not exactly low in 2019. Usually when you see dramatic growth it's from a low starting point, but this is dramatic growth from a high starting point. https://pbs.twimg.com/media/GYy6QOgXUAMxJtl?format=jpg&name=small
XTOD: Another month of weak JOLTS data. 1/ Hiring rate at 3.3%, comparable to where we were with an unemployment rate of over 8% (!!!) last cycle. It's a really tough time to find a job. The ongoing labor market weakening is intensifying the "Great Stay". Quits rate at 1.9% in August, aside from COVID the lowest since 2015. Last cycle, we saw this level of quits when the unemployment rate was 5.5%-6.0%. People know it's a not-great labor market.
XTOD: Stanley Druckenmiller at Grant’s conference: “Bipartisan fiscal recklessness is on the horizon.”
He’s short bonds; equivalent of 15-20% of his portfolio. “George would be embarrassed of me” for not making it a bigger bet.
XTOD: $APO just dropped the Private Equity meme of the decade in their investor presentation Savage
https://pbs.twimg.com/media/GYz79C2WIAI2me1?format=jpg&name=900x900
XTOD: “Your days are numbered. Use them to throw open the windows of your soul to the sun. If you do not, the sun will soon set, and you with it.” — Marcus Aurelius, Meditations
https://x.com/martinwolf_/status/1841156542403359204
https://x.com/paulg/status/1841051183466647574
https://x.com/RobinWigg/status/1841085876824093032
https://x.com/EconBerger/status/1841117356610691489
https://x.com/GZuckerman/status/1841140328763412673
https://x.com/Mythos_Man/status/1839443989667393854
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