⚡ New Inflation Fears

October 02, 2024 Today's insights are courtesy of SURF Air Mobility, they are Los Angeles-based electric aviation and air travel company expanding the category of regional air travel and reinventing flying through the power of electrification. Learn More Here ➔ Daily Indices Provided By Magnifi MarketDayMonthYearDow▼0.41%▲2.03%▲26.53%S&P▼0.93%▲2.46%▲34.50%Nasdaq▼1.53%▲3.43%▲37.61%Bitcoin▼3.51%▲10.46%▲130.29%10-Year▲0.61%▲0.53%▲7.64% AI for your financial future | Learn More ➔ GOOD MORNING Here's everything you need to know today: Nike needs a makeover… and fast. The Swoosh postponed its investor day—because nothing screams “we’ve got this” like delaying your big strategy reveal—and posted some meh Q1 results. For the fiscal first quarter, Nike delivered mixed results, beating earnings expectations (70 cents per share vs. 52 cents expected) but missing on revenue ($11.59 billion vs. $11.65 billion anticipated). Not exactly the "Just Do It" performance Wall Street wanted. Nike’s been playing it safe, leaning on old standbys like Air Force 1s while ceding ground to edgier, hungrier competitors. Now, with CEO John Donahoe stepping down and Elliott Hill ready to step in, Nike has a chance to hit refresh. But Hill’s no stranger—he’s a 32-year veteran of the brand and needs to prove that he’s ready to Make Nike Cool Again, and isn’t just another “mid” CEO wearing new Jordan colorways.  To make things more interesting, the Chinese market—Nike’s third-largest—is a mixed bag of mystery. The economy there’s been as steady as a seesaw lately, and Nike’s already bracing for a rough ride. But hey, China’s central bank just dropped its biggest stimulus since the pandemic, so maybe Nike’s fortunes will change. Hill’s going to need that bounce, because if Nike wants to break out of its 19% stock slump, it needs fresh innovation—stat—or they’re just going to be running in circles. Let’s Dive Into More Details Below… Middle East Conflict and East Coast Port Strike: Inflation’s Perfect Storm As tensions between Israel and Iran push oil prices higher and a port strike snarls supply chains, Jay Powell may be forced to rethink those rate cuts amid growing inflation risks BREAKING NEWS After Iran launched a flurry of missiles at Israel in response to targeted ground raids into Lebanon, investors scrambled for safety like it's 2020 all over again. Gold shot up, oil prices breached $71 per barrel, and haven assets like bonds and the US dollar rallied. Meanwhile, stocks took the brunt of the blow, with the Dow, Nasdaq, and S&P all selling off in midday trading. Now, add to this mix a longshoremen strike stretching from Maine to Texas, and you have the perfect recipe for an inflationary environment that could make Jay Powell's head spin… again. WHAT HAPPENED In one corner, we’ve got what looks like an increasingly unavoidable regional war brewing in the Middle East, with Israel already vowing to retaliate despite Iran already vowing to retaliate to any retaliation, while the rest of the region (and the globe) watches nervously from the sidelines. Oil traders have been quick to react to the kind of pure, uncut uncertainty that comes from missiles flying over one of the world’s busiest energy corridors. So here we are with crude oil surging past $71 a barrel, and there’s a real chance that prices could go much higher if this escalates into the regional conflict that no one wanted but everyone feared. On the other hand, domestic labor unrest is ramping up as dockworkers from 36 ports across the East and Gulf coasts picket for higher wages and job protections. The International Longshoremen’s Association (ILA) is striking over automation and wage disparities. If this goes on for more than a few weeks, we could see major disruptions to supply chains just in time for peak holiday season. CONTINUE READING ➔ Tesla Of The Skies? One company that most have never heard of is making waves in aviation… According to investing legend Cathie Wood, there will be an "inevitable shift" transforming urban mobility. One company is looking to lead the movement in regional travel by working to develop one of the world's first electric-powered aircrafts. Opening a potential $75 billion 'regional air mobility' market! Right now, there is a window of time that retail investors can learn more before the industry experiences this major structural change to electrification. This company is called Surf Air Mobility (NYSE:SRFM)... Which has been called "the 'Tesla' of aviation." Already the largest US commuter airline by scheduled departures, Surf Air generated over $60M flying passengers in 2023… And now their future could be even brighter as they develop the technology to electrify powertrains for existing aircraft. As we enter the era of the 'air taxi…' Early investors in transformative companies like Surf Air could benefit by learning more. Do your research today! Learn More About SRFM Now ➔ 36 US Ports Shut Down as ILA Strike for Wages and Ban on Automation The ILA strikes over automation fears and stagnant wages, stalling crucial cargo flow and raising concerns about US competitiveness BREAKING NEWS Late Tuesday night, the strike between the ILA and USMX was officialy underway, centering on two major issues: money and automation. After news broke and the sun rose, union members took to the streets. Amidst the chanting and cheers, a lone Fox News reporter asked if ILA union leader Harold J. Daggett was worried that this strike would hurt the everyday American. A fired-up reply followed, "Now you start to realize who the longshoremen are, right? People never cared about us until they finally realized that the chain is being broken now. Now, cars will not come in, food will not come in, and clothing will not come in. Do you know how many people depend on our jobs? Half the world." According to multiple reports, approximately 45,000 members of the ILA are participating in the strike, which is affecting operations at 36 ports along the East and Gulf Coasts of the United States, stretching from Maine to Texas. WHAT HAPPENED The most recent attempt to strike a deal between the ILA and the USMX in terms of wage increase was really the finally straw, the ILA uninterested in a nearly 50% wage increase over six years, a tripling of employer contributions to employee retirement plans, and strengthened healthcare options. Notably, USMX maintained the current contract terms regarding automation and semi-automation, a contentious existential issue for the union, and requested an extension of the current Master Contract. USMX stated they plan to "retain its existing technology language that created a framework for how to modernize and improve efficiency while protecting jobs and hours" of ILA members. Despite these terms from the USMX, the ILA rejected the offer, asserting that it fell short of their members' demands for wages and protections against automation. Daggett criticized the proposal, arguing that ocean carriers represented by USMX were prioritizing their billion-dollar profits over fair compensation for American dockers, as seen in the quote above. Giants like A.P. Moller-Maersk generated $82 billion in revenue for the 12 months ending in September 2022, while MSC and COSCO posted revenues of $28.2 billion and $63.22 billion, respectively, for the same period. Despite these profits, ILA workers have seen minimal wage growth, receiving just a $1 per hour raise over four years (2018-2022), bringing their current wage to $38 per hour—roughly $81,000 annually for a 40-hour week. PBS has reported that many ILA workers can make over $200,000 annually, but the union says they must work significant overtime to reach that figure. Then there is the issue of automation, with the current 2018 ILA-USMX master contract explicitly banning fully automated terminals and equipment—defined as machinery that operates without human interaction. In USMX's latest proposal, they maintain this provision and extend it to include a ban on semi-automated equipment, a notable concession to labor concerns. However, the ILA's stance is even broader, demanding a complete ban on the automation of cranes, gates, and container movements across all 36 ports under their control. The ILA's opposition to these technologies reflects deeper concerns about workforce reduction and job security in the US, which seem far less prominent in countries like China. CONTINUE READING ➔ Ford Tries to Spark EV Demand With Free Home Charging and Added Perks By Ford offering complimentary home-charging installations, the legendary automaker addresses key concerns, making electric vehicle ownership more convenient and attractive BREAKING NEWS In 1981, American Airlines launched the first frequent-flyer program, changing how companies engaged with customers by offering rewards for repeat business. This model was quickly adopted across industries like Ford's most recent announcement, including retail, hospitality, and automakers. Starting October 1, Ford will provide a complimentary home charger and standard installation to anyone who purchases or leases a Ford EV, such as the F-150 Lightning pickup truck or Mustang Mach-E crossover. Ford's strategy is nothing new. The late 20th and early 21st centuries saw the rise of sophisticated employee recognition programs and personalized customer reward systems, which Ford hopes will lead to continued sales over the years as EV cars integrate with the world and their customer base. WHAT HAPPENED Ford's "Ford Power Promise" program, launching Tuesday, is a multi-faceted strategy as they continue to try to appease their old and new customers, stay on top of new electric technology in the automotive sector, and ride Biden's administrative EV push, as just in March 2024 the EPA announced a final rule setting new emissions standards that would require up to two-thirds of new cars sold to be electric vehicles by 2032. Ford's approach with the "Ford Power Promise" program is a sophisticated, possibly first-time offer not yet seen in the United States and a straightforward application of operant conditioning in the automotive industry. This initiative aims to alleviate EV ownership's financial and psychological barriers, as it is one of the biggest hurdles for buyers. A February 2024 YouGov survey found that 40% of consumers cite prohibitive upfront costs as their primary concern, while infrastructure and technology limitations further dampen enthusiasm. Even more on the nose with Ford's move is that extended charging times (36%) and a sparse charging network (31%) underscore the urgent need for technological advancements and improved infrastructure. Battery-related issues, including charging inconvenience, longevity concerns (30%), and limited home charging options (28%), form another cluster of deterrents. The market's failure to offer diverse EV models (26%) alienates consumers with specific needs while confusing financial incentives (15%) potentially negate some economic motivations for adoption. By Ford offering incentives such as home charger installation, educational resources, and upfront costs, Ford is hoping that by effectively creating favorable consequences for consumers buying their EV vehicles, adoption, however slowly, will follow. This strategy aligns with the world of psychology under "operant conditioning," which posits that behaviors followed by positive outcomes are more likely to be repeated. Ford desperately needs this in their EV sales as they lag behind competitors such as Hyundai/Kia and neck and neck with GM. CONTINUE READING ➔ Last Week Here’s what you missed 1. Dockworkers Strike Disrupts Major East and Gulf Coast Ports Nearly 50,000 members of the International Longshoremen’s Association are striking across ports along the East and Gulf Coasts, shutting down major container terminals from Maine to Texas. This action threatens significant economic disruptions, impacting supply chains for consumer goods and essential imports. Estimated economic losses are between $3.8 billion and $5 billion per day. 2. PepsiCo to Acquire Siete Foods for $1.2 Billion PepsiCo has announced a definitive agreement to acquire Garza Food Ventures, the parent company of Siete Foods, for $1.2 billion. Siete Foods, known for its health-conscious tortilla chips and snacks, will help PepsiCo expand its offerings to meet dietary restrictions, potentially boosting PepsiCo's product portfolio in the growing health food sector. 3. CVS Health to Lay Off Nearly 3,000 Workers Amid Cost-Cutting Drive CVS Health plans to cut approximately 2,900 jobs to reduce costs by $2 billion as part of its ongoing strategic review. The move comes as CVS looks to streamline operations, invest in AI, and potentially separate its retail and insurance divisions. This restructuring is a response to rising healthcare costs impacting its Aetna insurance unit. 4. Nike Faces Quarterly Sales Drop; CEO Transition Looms Nike reported a larger-than-expected drop in quarterly sales, as weak demand in China and stiff competition from newer brands continue to hurt its performance. This earnings report comes amid a leadership transition, with Elliott Hill set to take over as CEO later this month, highlighting challenges for the incoming leadership. 5. Jeep Recalls 194,000 Plug-In Hybrids Over Fire Risks Jeep is recalling over 194,000 plug-in hybrid SUVs, including Wranglers and Grand Cherokees, due to risks of catching fire even with the ignition off. Owners are advised to park their vehicles outside until recall repairs are complete. This recall involves more than 154,000 vehicles in the U.S., affecting Stellantis, Jeep’s parent company. 6. Charles Schwab CEO Walt Bettinger to Retire at End of 2024 Charles Schwab has announced that CEO Walt Bettinger will retire by the end of 2024, with Rick Wurster, the current president, set to take over. Bettinger, who led the brokerage through a significant crisis in 2023, will continue as executive co-chairman. This transition could signal strategic shifts at the brokerage firm. 7. Iran Missile Strike on Israel Sends Oil Prices Surging Oil prices soared nearly 5% following Iran’s missile strike on Israel, heightening fears of further supply disruptions in the Middle East. The geopolitical instability comes as the market is already grappling with OPEC production cuts, leading to concerns about the impact on global oil supplies and related stocks. 8. Super Micro Computer Implements 10-for-1 Stock Split Super Micro Computer, known for its high-performance computing solutions, implemented a 10-for-1 stock split, which took effect after Monday’s closing bell. The split aims to improve liquidity and make the stock more accessible to a broader range of investors, enhancing its appeal to retail shareholders. 9. Teamsters Support International Longshoremen’s Strike The Teamsters union, representing over 1.4 million members, has pledged its support for the International Longshoremen's Association in their strike. This cross-union solidarity amplifies the leverage of striking dockworkers, highlighting a broader trend of rising labor activism across the U.S. 10. Verizon Faces Backlash Over Massive Outage Verizon faced significant customer backlash after a massive network outage disrupted services across large parts of the U.S. for several hours. The company’s lack of communication regarding the cause and measures to prevent future outages has attracted criticism, potentially impacting customer trust and retention. CONTINUE READING ➔ Today's insights are courtesy of SURF Air Mobility, they are Los Angeles-based electric aviation and air travel company expanding the category of regional air travel and reinventing flying through the power of electrification. 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