Vital Statistics:
Stocks are flattish this morning despite a port strike that began at midnight. Bonds and MBS are up.
The Longshoreman’s strike began overnight, which affects East Coast and Gulf Coast ports. In the near term, it is probably a non-event, however it could impact the economy if it drags on. The Longshoreman’s Union is asking for the moon – it isn’t just about wages – it wants a total ban on automation / robotics at these ports.
If the strike lasts a couple of weeks, it probably doesn’t affect the economy all that much, however it could cause shortages, especially with food items which can perish. Overall, it will be inflationary, but probably not enough to affect monetary policy.
Jerome Powell spoke yesterday at the National Association of Business Economics in Nashville, TN. He said that the labor market was solid, and that inflation is much closer to the Fed’s 2% goal. The Fed sees the downside risk to slower growth and the upside risk of higher inflation as balanced and is not on a preset course.
The impact of Hurricane Helene on servicers could be big, especially for homes that lacked flood insurance. While flood insurance is common in low-lying areas and coastal regions, it isn’t common for people that live in mountainous regions, and many of these homes were totally wiped out. Holders of VA servicing might be stuck with a 25% check from the VA and will be forced to come up with the rest.
The Chicago PMI remained in contraction territory however it did improve slightly. Employment helped the cause, while new orders declined. The Chicago PMI is heavily impacted by Boeing’s fortunes, which is dealing with a strike at the moment.
