Looking Backwards …
LB #1
The strike is over. The port workers have reached an agreement ending their potentially crippling strike after three days. This from Reuter’s, “The tentative agreement is for a wage hike of around 62% over six years, two sources familiar with the matter told Reuters, including a worker on the picket line who heard the announcement. That would raise average wages to about $63 an hour from $39 an hour over the life of the contract.”
It sure doesn’t sound like inflation is running at 2% to me if all these workers are getting 10% annual raises to do the same job they were a year ago. How many other unions, like Boeing who are still striking, will now be emboldened to point to this and say hey hey look at that.
Reuters continues, “Both sides said in a statement that they would extend their master contract until January 15, 2025 to return to the bargaining table to negotiate all outstanding issues.” Outstanding issues.
LB #2
Why are we pushing this strike back until January 15, 2025 instead of 6 years like the wage hike portends? The real obstacle in the agreement wasn’t resolved. The topic of automation was the real contentious issue. The union says we want a great big raise, and we want promises that you won’t automate us out of existence. The very fact that you are getting a big raise only makes it more likely that management would consider automating. This re-opens the wage negotiations after the election now, doesn’t it? Biden, the true champion of the union man, will be leaving and someone new will have to face a far bigger problem or they will just kick the bucket down the road a few months again then too. The real problem wasn’t solved, and management hasn’t agreed to not automate, they have merely agreed to pay higher wages which makes it more beneficial to.
LB #3
The oil markets rallied a lot last week with Brent crude up almost 10% at over $74 a barrel. This has been on the back of the Iranian missile response on Tuesday and Joe Biden flapping his ice cream eating gums about Iran oil targets might be a serious target. For a senile old man, mental mistakes are forgivable, but when he discloses potential key military targets, we might want to bring the Dairy Queen to the Dairy King if you know what I mean. The oil price shot up despite some major hurdles on the production side. OPEC is sitting on around 5 million barrels a day in capacity that it could easily produce which has largely acted as an anchor on the oil price keeping it going lower.
Looking Forwards…
LF#1
There is much recovery to be done in the coming months in the western part of North Carolina as we have discussed. There are some serious supply chain shortages that could affect just how quickly the region can get back on its feet. This from ZeroHedge, “Rep. Chuck Edwards (R-NC), representing a district in the western portion of the state battered by Hurricane Helene, released a press release Sunday detailing the infrastructure devastation. Edwards said power outages remain widespread in western North Carolina as of Sunday. Fast-forward to Wednesday morning, Poweroutage.US data shows more than 400,000 residents are without power in the region.”
That is a lot of people that would be entering the winter season potentially without power. This humanitarian crisis continues to unfold as we learn more and more about how isolated the region is with the roads having to be rebuilt etc. What I did learn was more concerning. ZeroHedge continues, “Given all of this, Jesse D. Jenkins, an assistant professor and macro-energy systems engineering and policy expert at Princeton University, responded to the dire situation of a grid apocalypse playing out in the Southeast US:
“This is devastating. We do NOT have 360 substations worth of transformers and other electrical equipment sitting in stockpiles waiting to be deployed. It could take a very long time to restore power to everyone. Are we facing a Hurricane Maria-type impact on grid infrastructure?” and also this “Nathaniel Horadam, a managing consultant and automated vehicle specialist with the Atlanta-based nonprofit Center for Transportation and the Environment, wrote on X, ” It’s Hard to express how insane this is. With ongoing supply chain challenges facing switchgear and transformers, this could take many months to resolve.”
“There’s no excess capacity to quickly replace substation infrastructure. Lower priority sites could literally take years,” Horadam warned.”
Years, wow! It turns out that FEMA has been giving their money to immigrants and they might be broke before the aid can be delivered to Americans when it is needed and it turns out that our transformer backups have been shipped off to Ukraine so the little con artist Zelensky can get them destroyed while acting as a NATO puppet. If I was in charge of a debt riddled nation and I saw this exorbitant waste of money and resources, I might raise my voice. I raise my voice! This is why we need to vote out these clowns in office, not vote for these clowns running, and simply put 537 above average intelligent citizens in office with no lobbying capacity for one term to set this government straight. They should then be ineligible to run ever again, and the new crop should be the same way. If you can get drafted into the military you should be able to get drafted into Congress or the White House. You simply need to be able to read, write and have the good sense not to wear white after Labor Day. I just fixed this country you are welcome America.
LF#2
The path to profitability is looking rockier or is it more rocky, regardless Bloomberg’s Jeran Wittenstein is reporting, “Daron Acemoglu wants to make clear right away that he has nothing against artificial intelligence. He gets the potential. “I’m not an AI pessimist,” he declares seconds into an interview. What makes Acemoglu, a renowned professor at Massachusetts Institute of Technology, come off as a doomsayer locked in on the mounting economic and financial perils ahead is the unrelenting hype around the technology and the way it’s fueling an investment boom and furious tech stock rally.
As promising as AI may be, there’s little chance it will live up to that hype, Acemoglu says. By his calculation, only a small percent of all jobs — a mere 5% — is ripe to be taken over, or at least heavily aided, by AI over the next decade. Good news for workers, true, but very bad for the companies sinking billions into the technology expecting it to drive a surge in productivity.
“A lot of money is going to get wasted,” says Acemoglu. “You’re not going to get an economic revolution out of that 5%.”
I’m sorry Daron, that makes you the biggest pessimist on this topic other than myself it seems. Everyone seems to be embracing the inevitability of AI to reshape businesses into a sci-fi novel of the future. Consider my coveralls unimpressed.
Let’s just say that I’m right and Daron is right on his 5% estimate. The ROI from the tech community would be a terrible waste of capital. Now, I have heard a recent interview from Mark Zuckerburg on the Acquired Podcast where he is pitching his new goggles and their future capability. You put on the goggles and you are able to see the person that you are talking to on the phone, you see their body language and it is a warm personable experience. It sounds all warm and fuzzy doesn’t it. Give me a party line telephone and I will imagine what someone looks like, smells like, and sounds like digitally. How are we going to do this? $5000 glasses and every call is going to cost $5 a minute so Zuckerburg can buy another Hawaiian island?
Let’s say I’m wrong and AI blows up and replaces accounting. Literally. AI scans the item as it is sold, records the sale, aggregates the sales for the day in the correct account, and aggregates the cost of sales for the day in the appropriate account. It then adds a tally to the future replacement orders for the replenishment of inventory and it also reduces current inventory by the correct amount. It can give you a running total month to date of all your P&L’s. It changes everyone’s lives and all accountants, A/P, A/R, warehouse clerks, revenue clerks, accounting professors, and controllers are fired. Don’t you think they are going to push back just a little bit. Look at what the union did when it came to automation. I think even if they could do all that I think the rank-and-file accounting clerks and bean counter unions would march over and pitchfork Zuckerburg on his current Hawaiian island. There would be nothing left of him but a 10 key paper tape trail. They would be all up in his googles.
LF#3
Lastly, I just wanted to point out something that none of you will care about. Senegal has a credit problem. This from Katarina Hoije for Bloomberg, “Senegal said it will act swiftly to lower its budget deficit after an audit showing a weaker fiscal and debt position prompted Moody’s Ratings to downgrade the West African nation.
The company lowered Senegal’s long-term rating to B1 from Ba3 late on Friday after an audit launched by newly elected President Bassirou Diomaye Faye showed a budget deficit of 10% in 2023, almost double the 5.5% reported by the previous administration… The West African nation’s debt was estimated at 83.7% of gross domestic product at the end of 2023, according to the government audit — about 10 percentage points higher than the previously published 73.6%.”
It turns out there are real consequences for running budget deficits and having a debt to GDP percentage that is too high. Do you remember the movie the Big Short? Do you remember when Steve Carrell went into the regulator’s office, and she was wearing the big dark glasses? Yes, the symbolism meant she was either in the dark or blind. She also came right out and said it, if we don’t approve their credit ratings they will take their business down the street. I wonder sometimes if that isn’t what is happening with the US debt markets. Why, ohh because we are basically Senegal. According to usgovernmentspending.com website we currently have a 6.8% deficit as compared to Senegal’s 10%. However, we are currently running a 131% debt to GDP compared to 83.7% for Senegal. Perhaps that is why Moody’s downgraded our credit rating but for some reason we are still at AA+ equivalents.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 42,352.
The 10-year Treasury bond is at …at 3.98%
The price of Brent Crude is … at $78.05 per barrel.
The price of gold is … at $2,667/oz.
The price of silver is … at $32.40/oz.
I leave you with this from the information superhighway, I’m reading a book on anti-gravity right now, it’s impossible to put down.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.