US dockworkers strike, Nike earnings: Morning Brief

Today on Morning Brief, hosts Seana Smith and Brad Smith dissect the ongoing US port strike and trending company news.

The show begins with a spotlight on the major dockworkers' strike that has halted operations at 36 ports along the Gulf and East coasts. This marks the first coast-wide strike for members of the International Longshoremen's Association since 1977.

To provide insight into this significant development, Stifel Transportation & Logistics Analyst Bruce Chan joins the program.

Following the strike coverage, attention turns to a range of trending tickers and company updates. They discuss recent developments for several notable firms, including CVS Health (CVS), Super Micro Computer (SMCI), Stellantis (STLA), NIO (NIO), and Charles Schwab (SCHW). Additionally, Nike's (NKE) upcoming earnings report is previewed.

This post was written by Angel Smith

Video Transcript

It's 9 a.m. here in New York City.

I'm Brad Smith alongside John Smith.

This is Yahoo Finances flagship show The Morning brief brought to you by best Let's get to the three things that you need to know Today around 45,000 for workers across the East and Gulf Coast walked off the job today after failing to reach an agreement on a new labour contract, the International Longshoreman's Association, saying a final proposal by the US fell short.

This is the first East and Gulf Coast port strike in nearly 50 years and the S and P 500 Dow closing at record highs on Monday.

The major averages finishing out the month of September and the third quarter in the green.

Now it was the first positive September for the S and P 500 since 2019.

The gains define what's historically a weak month for stocks, and today marks the start of the fourth quarter.

Wall Street is awaiting the latest read on the economy with job openings and ISM manufacturing data out this morning, and he signs of further weakness well that could trigger market volatility.

Traders are looking for clues around the feds next steps we are going to be hearing from a number of Fed officials today, including Fed Governor Lisa Cook and Fed Presidents Bark and Bostic and Collins.

Ports from Maine to Texas this morning are shut down, with more than 45,000 dock workers on strike.

It's the first Coast wide strike for members of the International Longshoreman's Association since 1977.

Danny Romero is on location, joining us live from Elizabeth in New Jersey, at the Port of New York and New Jersey.

Danny, what do you see of the message out here is no contract, No work.

There are over 200 dock workers out here picking the line.

They've got a DJ going.

They've got snacks.

They've been out here since midnight.

We heard from one of the strike team captains that has been part of the union for over 30 years.

And here's what he had to say in his message.

Well, we've been out here since, uh, 12 o'clock last night.

12 01.

We came out here.

We've been out here all night, and we just We just want them to be fair, and that's it.

We just want fair wages.

That's it.

We just want a piece of the pie.

We don't want the whole pie.

We just want a piece.

We wanna, you know, be fair.

You know, these companies, they're making a lot of money and just we just want a little bit of it.

Some of the signage is out here that the dock workers are holding our phrases against automation, which has been one of their sticking points.

We have reached out to US Marine Time Alliance for comment.

They have not responded to our inquiry, but they did post a statement online.

They say that both sides have moved past off their previous positions.

They also offered a 50% increase in wages.

They've tripled employer contributions to their retirement plans, but they maintain their language around automation.

There also was a press conference yesterday with New York Governor Kathy Hope, the End Port Authority, and they said that over 100,000 containers will be stored safely and they are expecting 35 inbound ships over the next week, which will be under the supervision of the Coast Guard shot.

All right, I'll take it from here.

Thanks so much.

Excellent shot there and we'll check back in throughout the day, keeping with the historic port strike here.

We're seeing global shipping stock slide as around 45,000 dock workers along the east and Gulf coasts walk off the job.

Our next guest says and they say, who stand to benefit and what industries are most at risk during this strike here with more.

We've got Bruce Chan, transportation and logistics analyst at ST O. Bruce, let's start with your base case here.

How long do you believe this strike will last?

Yes.

Good morning, Brandon.

Thank you for having me.

So our base case here is two weeks, and, uh, there's no real hard science to that.

Um, but I think a lot is gonna depend, obviously, on the political situation and the willingness of the Biden administration to intervene here.

Um, but, uh, yeah, our base case is about two weeks.

All right, So, Bruce, let's talk to talk to us a little bit more about the economic impact here because I think a lot of investors are asking themselves ultimately what this could mean.

Many of them trying to figure out whether or not it's gonna have an economic ripple effect.

What that means for their portfolio.

What's your early read?

Right?

So the first thing I think it's important to do is to contextualise the magnitude of what this disruption could look like.

And this is not something that we think would approach anywhere close to the scale of the post pandemic surge in 2021.

You know, that was really a globally co ordinated system wide shortage of supply coupled with the resurgence of demand, you know, really, across the world.

But that doesn't mean that we, you know, couldn't or wouldn't see significant impact from a stoppage here.

And the real key now I think, is how long ultimately is the strike going to last?

If it's something that's 1 to 3 days, you know, probably not as big of an issue.

I think that's relatively digestible, especially given you know, what we see as a pretty slack supply in the in the freight system right now.

But the longer this goes, you know, the more the impact scales and really it starts to scale exponentially.

Um, so, you know, inflation for consumer goods, I think, is going to become an issue if we start to get into that two week time frame, we might start to see shortages of consumables.

And then, you know where we'd probably be most worried is for, um, you know, critical process inventories.

Unavailability there could cause, um, you know, shuttering of production plants.

Uh, potentially, you know, furloughs and layoffs.

Obviously, that's something that the administration wants to avoid.

So, Bruce, with that in mind, where do you believe the administration might need to make its voice known?

Where do they need to?

Similarly, as they've stepped in in the past negotiations in the auto workers case, where might we see the Biden administration throw some weight around or try to show some solidarity here?

Yeah, So they're they're really having to thread the needle politically, because on the one hand, this is a pro union, pro labour administration.

We're obviously in an election year.

We're a little bit more than a month away from an election.

You've got some of the, you know, longshore constituency in key swing states.

So, you know, they've signalled that they would be supportive of an organic negotiating process.

But you know, once you get into that, you know, again, 2 to 3 week frame where you start to see broader economic implications, I think is where you could see them start to invoke Taft Hartley, and, you know, that would really bring about an 80 day cooling off period.

But I think you know, the key thing to think about there is that even during that period, you could see slowdowns in, In, In in Work.

You could see you know, the I a bring down shifts so we still really wouldn't be at full capacity even in that situation.

So, Bruce, let's talk about a little bit more about the the plays here that are at risk.

Or maybe you could position yourself to benefit from this.

One of the plays that you say are actually could be beneficiaries of the strike, I believe, are FedEx and UPSY.

Yeah, so, um, Air Cargo essentially is the only clear beneficiary we can see in this situation.

It's essentially the only way to move products in country and bypass the ports.

If you think about diversion to the West Coast ports, for example, the West Coast ports are operating with pretty good fluidity, but they're essentially at capacity and the same is true in Canada.

Halifax The number four port in Canada is, you know, pretty near capacity.

Montreal is going through its own strike right now.

That's the number two port in Canada and the number one on the East Coast.

So there really are not a whole lot of options in terms of a plan.

B here, other than air cargo, which is, you know, significantly more expensive.

Probably only available to high value goods and, you know, get some of those critical process goods.

Um, so that should be a real headwind for anybody that owns and operates aircraft capacity.

Is there a total economic cost that you're anticipating?

You know, even as you're kind of looking across the companies that will be most impacted total a total blow to the economy.

Uh, for the two weeks that you were talking about that this could potentially go on for Yeah.

I mean, I've seen estimates out there in the in the trade press, Um, you know, citing a couple billion dollars or a few billion dollars per day.

Uh, but again, I, I think this is something that starts to scale exponentially in terms of the overall impact of the US economy, so, you know, couple days of strike, you know, probably a more minimal impact, but, you know, it starts to get, um you know, much more significant.

Um, you know, after that period, Bruce are many of these companies many of the shippers, many of those, uh, a at risk of being I, I guess, challenged, at least in the short term.

Uh, do they pretty much have checks in place right now that they are better positioned than maybe they would have been 56 years ago before we saw more of these strikes begin to happen?

Um, you know, I would say technology and supply chain planning is is probably, um, a little bit better.

Um, so, you know, one of the things that you saw, some of the the you know, big box retailers, uh, do is to, um, you know, preposition inventory that happened earlier this year than than it has in in previous years.

So, you know, as far as consumers should be concerned about holiday peak goods, um, I don I think there's as much of a worry there.

Um, but it's those you know, consumables, especially the perishables.

If you think you know, bananas, Cherries, coffee, Uh, European beer and wine.

You know, those are things that can't be preloaded into inventory.

Uh, those are the things that I think will be a little bit more concerned about what in the negotiations would be perhaps the the biggest delta between the the cost structure that companies that go through and work through these ports would then have to consider post negotiation that investors would also have to kind of price into their models as well.

And it And is there any inkling that that we could get to that point where some of these companies are gonna have to come out and say, All right, we've got to revise what our cost of of doing business through these ports looks like And how it's going to impact impact, how investors have already modelled out for for growth for these companies in the expense basis.

Yeah.

Thanks, Brad.

Um you know, look, I think for the importers themselves, um, there is, you know, uh, an inflationary cost element here.

Uh, ultimately, that probably gets passed through to the consumer.

So, um, you know, uh, ultimately, this will be inflationary for everybody.

But if you think about the total logistics cost inputs for, you know, most goods, they're on average in the low single digit percentage.

So, you know, from this issue alone, we don't see a major impact to the end consumer.

But for, you know, the operators that are in the middle Um, you know, there certainly is an inflationary impact to consider here.

Great insight and perspective.

Bruce, thanks so much for joining us here this morning.

Bruce Chan, Who's the transportation and logistics analyst over at Stifel.

Appreciate it.

Thank you.

Well, today we're getting a fresh read on the state of the economy, investors closely watching job openings and manufacturing data out in less than an hour for hints on the Fed's potential.

Next steps here to discuss how the data might impact the bull market.

We've got Yahoo Finance's very own Josh Schafer here.

All right, so a lot of data to really break down here And, of course, another big employment week once again here.

Yeah, Brad, it's a big, uh, week for eco data, and I think there's kind of a clear read through here For what?

Someone that is looking for stocks to go up might want this data to see.

Essentially, you want to see signs of growth, right?

You want to see signs that the labour market isn't cooling as fast as feared and maybe something like the manufacturing sector isn't continuing to see further and further contraction.

You're gonna get that with a look at that.

With ISM out at 10 a.m. this morning, I thought Stewart Kaiser put this well to you last week.

Sean, I'm just saying it's all about growth.

Like, realistically, that is what you're looking for here.

And it's because of when we think about this fed narrative right?

The Fed cut by 50 basis points.

A larger cut.

They opted for a larger cut.

They normally opt for a larger cut if the economy is slowing down.

Right now, the market has rallied.

The market does not think the economy is slowing down.

They think the Fed is getting soft landing.

That's what investors expect.

Does the data fit that?

Because if the data doesn't fit that, then this that we've had since the Fed meeting might reverse a little bit because people are expecting data to relatively hold up.

I think bank of America's team over there.

Oung Kwang, who uh, runs er as part of the and strategy team, described this well, he said, It's not about the data coming in very well.

We know that the jobs numbers aren't great.

It's not a secret that they're slowing down.

It's about them not being terrible.

And you could say the same thing with ISM manufacturing, which is coming out, Uh, at 10 a.m. that's been in contraction for about two years outside of one month.

So that number isn't gonna come in and be great.

It's about it not being bad.

And so I think that's again remembering that we're talking about cooling here.

It's just how cold you don't want something ice cold, right?

You don't want your poor ice cold, but just let's talk about Ultimately, I think what this means for investors, right and what this could mean for leadership, what that could mean for the next like hire because you're right.

It's all about how this data comes in and whether or not even just lives up to expectations because there is a lot of weakness that's already based in to some of those forecasts.

But when you talk to so many strategists, and we talked to a number last week that we're talking about some of that opportunity in mid caps, given the environment that we're in right now.

And then you had David Costin over the weekend talking about the fact that if we actually get a strong jobs report that could then increase investor appetite there for risk.

So it could also have a real impact on that leadership of what we could see at least here in the short term.

And when you think about risk, you think about low quality.

You think about something you've been writing about with small caps, maybe right and sort of the fact that most people would argue this is a nuanced argument because I heard someone last week we had on air saying that the economy doesn't necessarily matter small caps.

I think a lot of people would argue that for small caps to keep participating notice.

Since that fed meeting, small caps haven't really led.

It hasn't been like the Fed is cutting.

This is the small caps call that we've been hearing all year.

You need pretty strong economic data for that to come through Mike Wilson from Morgan Stanley also wrote this in his note this week.

He said for you to get a cyclical rotation into sectors that would benefit from the economy doing well, you probably need unemployment to fall and you need or you need, uh, monthly payrolls to actually come in better than expected.

So you need a little bit of a turn in that jobs data, At least in Wilson's view, for you to start to see some of those cyclicals really take leadership and part of what we saw in Q three maybe bleed in further into Q four.

Yeah, that's a great point.

All right, Josh Shafer.

Great stuff.

So much for bringing all that down here.

But is gearing up to be a busy couple of days here for econ that again?

We're gonna have some of that breaking news out at 10 a.m. Eastern time here this morning.

Coming up throughout this hour, we're going to be counting down to the closing bell on Wall Street.

You're looking at a bit of a pull back here for the Dow futures and S and P features, but again, stocks coming off another record close plus We are pushing ahead to earnings out after the bell Nike as the company gears up to report quarterly results and will be bringing you continued coverage on the dock workers strike at the East and Gulf Coast ports shut down for the first time since 1977.

All that and more ahead on now, time for some of today's trending tickers.

You can scan the QR code below to track the best and worst performing stocks of the session with Yahoo Finance's trending tickers page.

First and foremost, we gotta talk about the swoosh Nike set to report its fiscal first quarter earnings after the bell today.

Just last month, the apparel company appointed Elliott Hill as the Future CEO, the incoming CEO from John Donahoe that takes effect October 13th.

Nike facing some hurdles for the past couple of years.

Rising competition, macro economic headwinds.

Two of the factors there shares.

Right now you're seeing them extended hours or pre market moving lower by about 3/10 of a percent here and overall, some of the expectations for this quarter, um, are not very optimistic.

Not very high hopes that you're seeing from the analyst community at least coming into this print.

However, I think with the decision to have this executive change over, you've kind of already laid the groundwork.

For even if this past quarter is a dud or is under the expectation, then a lot of the eyes and a lot of the kind of attention is gonna be focused in on the future.

And in mid October And then even as we get more of the kind of, perhaps investor day commentary in mid November, that's where it kind of swings towards.

Yeah, it certainly will.

I think investors are gonna be looking at this as very much something that's in the past here.

As you look ahead to Nike under Hill, what ultimately that is going to look like?

I think that is really the focal point here for analysts, for investors going forward on Nike.

But when it comes to this report, we are expecting to see a report of a 10% decline in sales.

A lot of things that have been challenging here for Nike or some of their headwinds that limited pipeline on sneakers.

We've talked to Adrian you over at Barclays about this time and time again, also mentioning the fact that demand for new models remains low.

Launches are still under performing on Nike's Apps and Nike's website, and that th those were warnings that we got from executives a few months ago, starting in the early summer.

So again, a lot of this has already been baked in, I think, to the stock ratio, looking at year to day performance of off just about 18.5%.

We're looking at losses of about 1% yesterday.

But again, I think the question, though going forward, is if we have any hints, or maybe what the leadership is going to look like under Hill, where Nike's priorities lie.

I don't know if we're gonna get too much whether or not that's gonna be held here for the investor day later on this year.

But again, Investor is very much an analyst, very much focused on what happens now under that new leadership versus some of the trends that we've seen with Nike over the last several quarters.

I think just a huge return to science is what Hill might bring here.

I mean, this guy has a background in kinesiology, and so the study of how your body and how specifically your body functions based on the apparel you are wearing or the, uh, souls that are underneath of you.

I think in making sure that not just performance is able to click on all cylinders.

But then you also have lifestyle that the company is able to compete well in.

But it really is the rise of some of the new competition.

You've got people that are just able to and companies that have been able to grow their businesses just by being in people's faces all day on their social media feeds.

And so could we see some type of strategic acquisitions come forward in the future not just from Nike but from some of the other major manufacturers as well.

That's a question I ask myself every day.

We'll ask those executives when we have them one, too.

Ultimately, just to wrap this up, EPS that's expected adjusted EPS 52 cents a share, revenue expected to come in at about $11.65 billion for the quarter.

Here we'll see what the company ultimately reports, though later we will.

We know investors are very excited about Hill's share surge.

As as we did get that news so again any more, uh, commentary of colour.

I don't know.

What that leadership will look like is something that the street will be focused on.

All right, let's take a look at CBS CBS shares moving to the upside the health care giant, reportedly speaking with advisor for strategic review of its business and laying off nearly 3000 employees.

Now this coming after CBS faces potential activist pressure from one of its major shareholders.

You're looking at gains right now, just about 8/10 of a present on the heels of that Wall Street Journal report of the activity here from Glenview Capital Management, pressuring CV S to improve their operations.

We actually saw the stock rise yesterday, but I It's no secret that CV S has had a number of challenges, a number of headwinds facing the business.

They've been facing falling profit margins at its retail pharmacies.

And that's not all.

Take a look at rising cost of patient care from Aetna, and that generates about a third of its revenue.

That has been an issue here for CV S and going back to what we heard earlier this summer, the company cutting its 2024 earnings forecast for the third straight quarter back in August.

So again, the investor pressure has been there.

And now we're seeing activist impress activist pressure, uh, activist investor pressure.

Add to that.

So now that we have this report here reports that I should say that they are undertaking a strategic review, including a possible break up lots of talk about maybe what that new structure could potentially look like here for CBS Yeah, I think you hit the nail on the head.

I'll add two things here.

And of course, it does come back to the subsidiary and specifically in Aetna as you're thinking about how that weighs on some of the costs here and the cost profile there for patient care and then additionally, it's the the profit margins, declining profit margins among some of the pharmacies and the retail experience, as they're also having to navigate to consumers that that's being far more diligent about where they spend their money.

And, uh, for CV SI.

I think that's one of the concerns that has to continue to be adjusted or at least grappled with at this at this juncture.

Um but we'll see what more the strategic review really yields here.

Uh, and if there's another structuring that we see come forward from CV S here, uh, as they think about the segments that they do operate Lastly, here, let's talk a little Super micro computer shares.

They are in the green today.

As we are inching towards the open, the semiconductor company will begin trading on a post split basis.

This is just the latest name in the sector to implement a stock split.

You'll remember.

Oh, yeah, this little company called NVIDIA I, I joke, and it's all ingest.

NVIDIA Massive company, obviously, and Broadcom.

They both split their stocks this year here and it It's kind of a a psychological play to lure some consumers and as well, uh, but 10 for one stock split that is essentially going into effect here today.

And, uh, I think it is more telling how a lot of the chip companies wanna make sure that they they are affordable, if you will for the retailer average investor out there, Um and we'll see what that does in terms of increasing some of their own positions as well Yeah, when you take a look at that stock price, obviously 41 bucks a share, much more affordable, especially when it appeals to the retail investor out there.

But again, like you were saying that they they follow in the footsteps of some of those other very popular a IA I plays.

You mentioned NVIDIA Broadcom also amongst that list, and not necessarily a massive surprise, given the run up that we've seen in Super Micro and what shares have done not only this year, but really what it's done over the last couple of years.

And Yahoo Finance.

When I got a chance to speak with their CFO earlier this summer, he was talking about that unrelenting demand for their products and basically the the the runway and the opera opportunity that lies ahead for Super Micro, who's extremely bullish on that, saying that it's not so much or it's not at all a demand problem.

It's more a supply issue, whether or not they're able to meet that demand at this point.

So again, Super Micro, this number one stock split Miguel a bit more affordable here for the retail investor to get in stock to track All right, Well, coming up.

We are gonna be counting down to the opening bell on Wall Street as stocks kick off their first day of the fourth quarter trading that's coming up next.

On morning brief another thought that we're keeping our eye on ahead of the bell is PayPal today, marking one year since CEO Alex Chris took the helm of the payments company.

So far this year, PayPal shares are up 27% as the new CEO shakes up the company's internal mindset and leadership team.

As part of the turnaround, he's rolling out new products to go alongside a revamped corporate logo and marketing campaign.

Yahoo Finance executive editor Brian Sazi sat down with Alex Chris to learn more about the changes that are underway.

We have the opportunity with two sides of an ecosystem to innovate in ways that I don't think anybody else can.

And I wanted to surround myself with other leaders that had that same mindset and that same background and you're right.

I've really gone top to bottom through the leadership team.

And there was not a single person, uh, on my CEO staff that, uh was in the same job when I got here or or hasn't been brought in new to the organisation.

And so we're We're getting stronger every day.

All right?

We are staying tuned for the opening bell on Wall Street here.

We're just seconds away and taking a look at some of the futures here this morning.

Actually, you know what?

Let me start off with the backdrop.

Over the past three months here as we rounded out the third quarter, you saw that move higher over the past three months for the Dow Jones industrial average by about 8.2%.

S and P 500 over that same period moved higher by about 5.5%.

And then additionally, the NASDAQ composite moved higher by about 2.5% over the past three months.

Let's take a look at the opening at the NASDAQ.

You've got Hologic ringing the opening bell kicking off breast cancer awareness month.

Plenty of pink there on the screen and at the NYSC.

You've got a bell ringer, ticker symbol AM TM.

I believe that's, uh, Amum.

Uh, yeah, I believe that's who that company is.

All right.

Well, anyway, great logo from them and great look at the NASDAQ there.

All right, we've officially kicked off today's session.

You are watching the morning brief brought by Invesco.

Let's do a check of the markets as the bell just rung here in the US, the Dow Jones industrial average you're seeing that begin the day just barely to the downside here by about 2/10 of a percent.

The S and P 500 begins the day lower by about 1/10 of a percent.

The NASDAQ composite as that was making up its mind going into the opening cross.

You're seeing that down by about 1/10 of a percent.

Let's take a look as we always do at the heat maps.

Here we learn.

We heard you love heat.

So here's some heat.

And, uh, here's some cooling areas as well, but any all things considered, we're kind of mixed out of the gate here for the S and P 511 sectors.

You've got energy pulling up the caboose, though right now that's down by about 9/10 of a percent 1%.

We'll round that off, too, and then on the other side, leading the charge here you've got communication services, that's up by about half a percent.

We'll ride out with a quick look at the NASDAQ composite here worth NASDAQ 100.

I should say, If we were to put 3400 companies up there, it would be a doozy.

So here's a look at the NASDAQ 100 of those mega cap tech stocks.

So let's get on over to Yahoo Finance's Jared B Bookery for more in a look at what's moving.

Hey, Jared!

Hey there.

Let me Let me go back to the S and P 500.

I'm gonna show you a three month chart on the WiFi Interactive.

Uh, we are just by record highs right now, but as we've been talking about, this is the best year to date performance through September since 1997 and I'll give you some more stats for five months straight.

The S and P 500 has closed at record monthly highs.

The internals in the market, the breadth that is the number of stocks that are outperforming in the quarter was 328 and that is just very strong.

And so we've kind of left some of those concentration worries behind haven't been talking a lot about NVIDIA lately, but I have been talking about the US dollar.

Here's a three month chart on that, and what I want to show is those last two days.

We've seen some pretty strong, constructive action here, and I'll put a three year chart with some lines, so you can see we were just by the support line that I'm drawing in here, and now we have reversed off of it.

It's a big enough move.

It's not totally convincing, but it's a big enough move that we could get some momentum.

And the target here is going to be somewhere around 10 7-Up there, and so a stronger dollar.

Well, that could weigh on equities.

However, the US dollar doesn't have to do that.

It could also break down in a false reversal.

So that's something I'm going to be watching about in the days now.

I also want to check out some of our sectors.

I was watching utilities in in particular.

Now you can see it's down about one third of a percent today, but if we look at the year to day chart, just incredible how strong it has been since July and also very low volatility.

Traders love this.

So if you like the A, I play utility is looking like a viable alternative to the very volatile NVIDIA.

Um, and if we go to the year to date, I'm just going to do this quick.

You can see utilities now.

The number one sector XL C has alphabet and meta that is number two, and those are the only ones that are outperforming tech right here.

That's up only 16.5%.

So we'll have to see what the new quarter brings.

And I got to talk about China because it has been on an absolute tear.

You can see adding to gains today.

And let's just check out the trailing month.

Their benchmark index, the C SI 300 is nearing a bull market, and we've seen this many times before.

We've seen these averages with a lot of volatility, go up and then just give those back.

But it looks like the Chinese authorities keep having more tricks in their bag and they keep adding more stimulus.

If that goes, you would expect the rally to continue.

But if they end up disappointing markets as they have so many times in the past.

Well, I'd expect the reversal of that.

Finally, I want to close on the NASDAQ and just check out Apple.

It's giving back some gains today, down about 2.4%.

But, uh, this is a year to date chart and you can see it's just been consolidating.

And it got ever so close to a record yesterday Looks like it wanna breaks through that it wants to break through.

But, uh, we'll have to see if that comes to pass 230 a close of 230 or higher, probably seals that and, uh, kicks off the next move higher if we don't see that.

Well, probably just returning to this support line down here, guys.

All right, Jared, thanks so much for bringing that down for us here.

We wanna get to our strategy session, our next guest saying that the biggest risk for investors is holding too much cash as saving rates become less enticing.

Let's talk about it with Callie Cox.

She's red holds wealth management chief market strategist Callie.

It's great to have you back here in Yahoo finance.

Let's just take a step back.

And we we been lining, uh, or laying out the number of ECOM reports that we have on deck here this morning.

And then as we look ahead to next week, I'm curious.

As you take a look at the current valuation levels, you got socks coming off another record close.

How do you see this set up here into the rest of the week?

And then, of course, looking ahead to the rest of the fourth quarter, so Well, Shana, it's a busy week, and more importantly, we're gonna get a slew of jobs data.

The job market is what you need to be watching right now to gauge where the economy is.

So I'm gonna be waiting for that, especially the jobs report that we're seeing on Friday.

Companies so far are, uh, you know, cutting down their hiring, but they're not necessarily firing people either.

So it seems that the economy is stuck in this great wait mode with you have a lot of questions about where it heads next.

In terms of valuations.

I think valuations are quite attractive in certain parts of the market.

But if you look at valuations as a whole on the S and P 500 in large cap stocks.

You could probably make the argument that they're a little expensive.

Kelly.

With all of that in mind, it seems like much of the focus is really pivoted towards the employment situation as we've seen the most bouts of volatility really emerge when we have weeks like this, where you've got manufacturing, that could continue contraction and then on the back half of the week, get even more employment data.

That kind of signals that the Fed has more work to do in terms of making sure that we can initiate and fully pull off this soft landing.

How might that add more volatility into the mix once again if we do get, uh, a weaker than expected report?

Well, Brad, I would be watching the services activity report over the manufacturing report.

Manufacturing is, of course, important, but it's such a small slice of the economy, and it's been in contraction mode for so long now that we really need to be looking at the services side of the economy for hints on employment.

For H hints on where growth and spending goes from here.

Um, manufacturing, however, is, you know, in a in a trench of sorts.

And if we see some recovery in the housing market, if we see some recovery in capital expenditures, we could see those manufacturing gauges come up.

Most important this week, though, is the jobs report that we're getting on Friday and then within the jobs report.

I'm, of course, watching the unemployment rate, seeing where unemployment comes from.

But more importantly, we want to see a stronger pace of hiring.

Kelly do so still have plenty of catalysts ahead of them besides action from the Fed.

And besides, some of these data points that we'll be getting out to keep this momentum going.

I think so.

It's a busy, busy few months that we have ahead of ourselves.

We're in the fourth quarter.

It's a seasonally strong time of year, and I think that stocks have a lot of positive catalysts behind them.

But there are still a lot of obstacles to hurdle.

I mean, we also have earnings season coming up.

I think the big banks start reporting at the end of next week, so we're going to be getting a lot of this top level and bottom level data that investors are going to have to digest with a pretty emotionally charged presidential election coming up.

Um, you know, I tend to I think that the market can overcome all of this.

But at the same time, we're telling our clients that any scenario is possible and you need to be prepared for a weakening economy slipping into recession.

And Kelly, speaking of a weakening economy.

There's lots of attention today on the port strike unknown just in terms of how long it's going to last.

Do you see this having a ripple effect?

I guess one.

The risk that maybe this poses here to the market.

But two is something like this.

Is that going to prompt investors to take more of a risk off type of approach?

Well, I definitely think the port strike is concerning, uh, from a financial perspective.

Um, it'll be interesting to hear how a port strike affects, you know, different companies, depending on how long the strike goes.

Uh, from a macro perspective, you have to watch the effect of strikes in the October jobs report.

So the one that we're not getting Friday, the one that we get on the first Friday of November because strike if if an employee is striking during the reference week for the report, they're technically counted as unemployed, temporarily unemployed but unemployed nonetheless.

And the market is especially sensitive to the unemployment rate Right now, Callie, Just lastly, while we have you for the final quarter of 2024 do you do you have a favourite sector, a top sector that you believe is well primed and and positioned to outperform.

Oh, that's a good question.

Uh, you know, I think rate sensitive sectors are especially attractive at the moment just because the market hasn't fully digested this this potential of the economy staying strong with the Fed gradually lowering rates.

I'm not saying that's a definite, but I think that that a possibility that the market still hasn't fully factored in.

Callie Cox, Ritz Holtz Wealth management Uh, great.

Thanks.

And thanks for joining us here this morning here, Callie.

A lot to digest and process here.

And of course, we're all excited to kick off the final quarter of 2024.

Thanks so much.

Well, Treasury yields are moving lower this morning to kick off a new month of trading after scoring its fifth straight month of gains in September For more on what to expect from the bond market in the months to come, we've got Jeff Given, who is the senior portfolio manager, co head of US Core and Core plus fixed income at Manulife Investment Management.

Great to have you here on set with us.

Thank you for having me.

Absolutely so I mean as we are kind of like moving away from the what could take place in the equity markets in the fourth quarter of this year.

Now you've got kind of a different scenario than we began the year with on the fixed income side.

What is the biggest pivot that you're tracking there?

Yeah, it's really the pivot of what people expect for the Federal Reserve.

It's It's been a bit crazy this year, to be honest with you.

You started off.

We were pricing in seven cuts and then all of a sudden we're pricing in almost no cuts, and now we're back to like six cuts, you know?

So I think that volatility is going to continue on what the market expects really based on you know the unemployment numbers that we think would be the most important thing.

And, you know, we we're gonna be watching very earnestly what's gonna happen on Friday.

You know, Jeff, when you take a look at some of the movement that we have seen in the bond market in the wake of the decision by the Fed, we did see a positive and the twos and tens here, just in terms of Is that a trend that you think is going to continue or are we going to see the steeping?

And I guess, what does that indicate?

Just in terms of an investment opportunity?

Yeah.

We do think the steeping is gonna continue.

Historically, when you get to the end of the cutting cycle, you're gonna see 100 basis points between twos and tens.

Now, that's when you're probably in a recession.

I'm not so sure that's going to happen, and, you know, so maybe it's 50 base points this time, but we still have a lot of steeping to go.

Not that surprising.

We backed off it.

We moved quite fast, you know, over the summer, as we got ahead of ourselves a little bit, Jeff Do you think the bond market is still ahead of itself just in terms of what it's pricing and what what it's expecting the Fed to do versus maybe the more likely outcome at this point?

I do.

I think, that pricing in another 50 basis point cut in the next meeting and then another 50 basis points is a little bit much.

Um, I thought they would go 25 this last meeting and leave the fifties for when they're in trouble.

Um, but I, I wouldn't be surprised if they dial it back to 25 in the next two meetings.

I mean, it's it's really been the the the depths of the cut that have have caught the markets kind of flat footed at this juncture here.

So I mean, it's really thinking about how the Fed will have to continue to show this kind of combined force and and, you know, maybe it will only have one dissenter on a continuous basis, but be unanimous in their decision making.

How might bond market swing just based on the the tenor that they sense, or at least the kind of unanimous, uh, type of sense that they're getting from the Fed at Dru.

I do think it's really important for the Fed to be close to a unanimous, and it makes sense to have one decent out there, especially a governor saying OK, maybe we don't need to go as fast.

That's gonna be the brakes on the marketplace, so to speak.

I mean, who wants to be that person?

That's just like All right, cool, I. I got the short straw.

I'll be somebody always wants to be difficult, right?

But you were saying how how important that is it is because that's gonna give the market more confidence that the Fed knows what they're doing going into the meeting and coming out of the meeting.

And that signal, we think, is very, very important.

So I guess How should investors then be thinking about this opportunity?

Because there's so much uncertainty about whether or not we are going to see further weakening, beginning within the economy, what that risk of recession looks like?

Ultimately, how that plays out for the bond market.

Where do you see the most attractive opportunities right now in fixed income?

Yeah, I think first of along the curve, it's not not about just taking duration is taking the right amount of type of duration.

So looking at that intermediate part of the curve is very important.

We may not see 30 year yields drop a whole lot or even 10 year yields.

A whole drop a whole lot, but you could see that five and seven year yields come down fairly significantly as that curve deepens out through the cutting cycle.

Um, and so I think you know, from a curve perspective that 4 to 8 year part of the curve makes a tonne of sense.

You can get some added return there, um, and then sector wise agency.

M BS.

You know, that's where we we're focused on adding value away from just the Treasury market.

Is it still US bonds that are most attractive, or are there other areas around the globe internationally, that you're looking at bond buying opportunities?

Yeah, we focus mostly on the US, but I do think as the Fed gets through the cutting cycle that the dollar is going to a bit, and so that's going to make areas like Europe and other developed markets look attractive and potentially some emerging market countries as well.

You know, Jeff, as we've been talking, we've been getting some headlines here just about a possible escalation here from Iran with Israel.

And we've seen a bit of a reaction play out in the bond market, which is what I want to talk to you about.

With bond yields right now tumbling, it almost seems like a knee jerk risk off type of reaction.

I'm curious how you're evaluating that heightened geopolitical risk and the impact that you see that playing in some of that movement that will Yeah, And I think that's the reasons that you know, going into the intermediate space and buying, you know, the fixed income where nobody wanted to buy it the last several years, right is that is going to be that risk off trade.

It's going to create some stability in portfolios.

Um, so I would expect that to continue through here.

Um, you know, obviously, the offset is the fact that the US government doesn't want to stop spending any time soon.

But, you know, from a geopolitical standpoint, the dollar will be the safe haven Treasury market is going to benefit from that.

All right, Jeff, giving great to have you here.

I said thanks so much for joining us, Breaking it all down.

Let's stick with us here at Yahoo Finance coming up the East and Gulf Coast port strikes underway today, we will break down what it means for you as imports and retailers ahead of the holiday season.

That's coming up right after the break.

Thousands of dock workers from Maine to Texas are on strike.

The big question.

How much pain could this cause for the economy and for companies?

For more on this, we bring in catalysts.

Co anchor Madison Mills at the Wi Fi Interactive Hey, Madison!

Hey, Brad.

So let's talk about the economic impact here, as you guys have been covering throughout the programme here estimates for that economic impact.

They're really all over the place, right?

We've got JP.

Morgan in the billions in terms of impact for the day.

But then, on the other flip side of things, you've got Wells Fargo with a note saying Quote, Don't panic.

And they point to this chart behind me as the reason why you shouldn't be panicking.

Because purchasing managers have known about that pending deadline of October 1st and they've been increasing their purchases heading into October.

You can see just at the end of your screen here that uptick in purchases.

And I want to point out that number 6% increase from the beginning of the year through July in terms of purchasing managers importing goods into the states ahead of that deadline.

So they knew this strike was coming, right?

So there is a little bit of kind of preparation baked in here that could be protective.

But having said that, I want to point out the companies that stand to have the biggest impact here.

You're looking at Walmart at the very top here.

Why do they have the biggest impact?

Remember, this is the largest grocer in the United States.

We know that bananas, for example, 75% of our bananas guys coming in through these ports.

That is, of course, going to have a huge impact on a company like Walmart.

If you look a little further down here, Home Depot Amazon, they are likely to have less of the brunt of the impact because those non perishable goods can be warehoused at least for the first couple of months.

Of course, there are costs associated with that as well.

So if the strike does go on, that could lead to inflationary pressures.

I do want to point out here that there is this big question about whether or not we are going to see the costs for these retailers trickle down to consumers and reignite inflation.

We do have one potential example to look back to as an indication of what we could see in the future here that GM strike last year, the Federal Reserve found almost no impact to the cost of vehicles.

So that could be an indication that so long as this strike doesn't go on for months and months and months here, of course, that's a big question.

We could see the brunt of the blunt of this, uh, really kind of stalled at these ports because of the way that these companies and purchasing managers have already hedged against any potential impact of the port closures due to these strikes.

You guys all right, Matty, thanks so much for breaking that down for us.

We want to continue with the fallout here from the strikes of at the ports and the dock workers strike coming just weeks before the holiday shopping season starts.

In a closely watched presidential election earlier this week, President Biden, making it clear that the federal government would not intervene in the strike.

We're joined now by Jonathan Gold, National Retail Federation vice president for supply chain and Customs policy, and Jonathan.

I'm going to guess that this isn't welcome news here for you.

I'm guessing that you do want the Biden administration to intervene.

So what is your message to the administration?

Thank you.

I mean, absolutely.

At this point, with the strike that is ongoing, we need the administration to get the parties back to the table and the strike, get the parties negotiating, and get a deal that provides certainty for these ports moving forwards.

You know, all all that considered John and and we'll see what the administration's response is.

I mean, I've been to NRF shows in the past and see how much technology is talked about within the entire supply chain and logistics and, uh, retail management experience here.

I mean, how much of that needs to be factored in for both sides to really consider how this is going to both automate and and help out some of the productivity within these ports.

Look, I mean, the big issues on the table for these the two parties were wages and automation, and there are a number of other issues as well.

That's for the parties to work through and decide what the best path forward is.

But the only way they can do that is to get back to the table and have those negotiations.

As you noted, you know, automation A. I technology.

It's a huge part of the continued evolution of the supply chain, and it improves productivity and efficiency and helps get goods to market as quickly as possible.

John, then is this going to disrupt the holiday shopping season?

I guess.

What does that fall out look like?

Look, as you noted, a lot of retailers took advanced, uh, mitigation steps to ensure that product will be on store shelves.

They brought product in earlier in the the peak shipping season.

They've shipped the product to the West Coast, and that's all been reflected in the numbers we've seen through our Global Report Tracker as well as other numbers.

However, even taking some of those steps, a prolonged strike is certainly going to have an impact on the supply chain.

And the thing to consider here is the time is gonna take to recover from a strike.

You know, it takes 3 to 5 days to recover from a one day shutdown.

If that goes for a week or two weeks, that compounds you're looking at months for potential recovery.

How how long of a strike are you anticipating?

And then the the full recovery.

Um, especially when you add on that it's gonna be a a peak volume season for many of the retailers that are relying on these sports as well.

I wish I had the answer on how long the strike is gonna go for.

I think that really depends upon the parties.

And to be honest, the administration and when they're gonna decide to step in and get the parties back to the table.

But it, um, it doesn't come back to the administration, right?

I mean, the administration can be a voice here, but it it's still as you mentioned gonna be these two parties coming together and netting out.

So where is kind of the biggest hang up that you believe that it could mean a cost gets passed on the consumer as well.

Look, I think the administration can take several actions.

The Taft Hartley Act certainly is one of those that implements a cooling off period between the parties to continue to negotiate.

You know, we can look back to what happened in 2002 when we had the 11 day lockout at the West Coast ports, and most experts say that took close to six months to recover from.

I think the economy, as we all know, is in a very different spot now.

So a prolonged strike at the East Coast and Gulf Coast ports, you know, could take up to six months, depending on how long that strike goes for.

But it's imperative we get those ports back up and running and operating, because this is going to infect millions of other workers millions of businesses, imports and exports who all rely on the the flow of commerce through these ports.

You know, we spoke earlier with Bruce Chan and the steel, transportation and logistics analysts and and he was mentioning and really commenting on the impact that this could have to the consumer.

What what is the anticipation O on your side on that effect that ultimately consumers might have to be bracing for as a result of these strikes.

I mean, look, we certainly hope there won't be an impact on the consumer.

We hope this strike ends quickly and goods continue to flow.

However, the longer it goes, the more potential there is for, you know, goods.

Maybe not to be there.

Uh, but again, retailers have taken steps to to mitigate that.

Um, but it's gonna be a challenge.

And again it all.

Unfortunately, it all depends on how long this strike goes on for Jonathan Gold, National Retail Federation Vice president and supply chain and Customs policy.

Thank you so much for taking the time here.

Great.

Thank you.

Coming up, everyone.

Some top trending tickers from Yahoo Finance's home page.

That's next you're watching.

Morning brief brought to you by Invesco.

We're taking a closer look at Yahoo finances trending tickers.

We've got three names to watch.

STIs neo and Charles Schwab.

We're doing it in less than 30 seconds each.

So let's go.

First up, we've got Stan extending the production pause for its electric fiat until November 1st.

This is because of weak demand.

Solan is also recalling nearly 200,000 hybrid jeeps over a potential fire risk There, you're taking a look at shares of STL a down by a little more than 2% right now.

Let's take a look at shares of new They They are on the move here this morning, the Chinese electric vehicle maker seeing its second highest number of deliveries ever in September of more than 35% from a year ago.

And now the company also set a new quarterly record for deliveries in the third quarter.

As a result, you're looking at gains, uh, carrying over from some of that optimism baked into the stock from yesterday, you're looking at gains of just about 3.5%.

I think the big question is what ultimately does this demand that look like down the road?

And whether or not some of the stimulus efforts that are playing out right now in China, whether or not that's going to further boost some of the demand for vehicles like new and finally here we've got Charles Schwab announcing its CEO Walt Beninger will retire at the end of the year after 16 years at the helm, he will be replaced by the company's president, Rick Wurster.

Taking a look at shares they are down by about 1.5% right now, uh, the company reminding that Schwab, uh, has been led by beninger by, uh as the CEO.

Rather, since late 2008, some major accomplishments growing.

Of course, the client assets from $1.14 trillion to get this $9.74 trillion as well.

The market cap during that time is also grown from $18 billion at the end of 2008 to 100 and $19 billion 600 60% increase during that time.

Here.

He's approaching his 65th birthday next year as well.

All right, well, before we go to break, we want to do a quick check of the markets on the back of headlines from a US official that Iran is preparing to launch a strike against Israel, you can see the reaction play out in the markets.

We did take a leg lower on those headlines as they cross as it stands right now, you have the Dow off just around 225 you have the S and P off about eight tens of A and the NASDAQ declining the most.

You have three major averages, up just 1.2%.

Of course, the aftermath of or what exactly?

The ripple effects of the ongoing port strike that is also a factory.

And maybe to some of that downward pressure in the moves today.

And you can see Lockheed and North Gov agreement on the back of the headlines that we had been talking about previously there on the escalation possible escalation between Iran and Israel.

Those are moving to the upside there.

We have locked up just about 2% flipping over to the bond market.

You're also looking at the reaction play out there that risk off trade.

You're looking at yields move to the downside.

You're looking at bond prices, Treasury prices moving to the upside.

So again, uh, important trades to keep in mind.

You got all that and more.

We will continue to track the leg lower that we're seeing in the broader markets.

We also have some bringing econ data out at the top of the next hour.

Stay tuned.

We'll be right back