Looming East Coast Port Strike Threatens Supply Chain Disruption

Wall Street Breakfast: Port Strike Looms

Listen on the go! A daily podcast of Wall Street Breakfast will be available by 8:00 a.m. on Seeking Alpha, iTunes, Spotify. Survey Monday A strike at U.S. East and Gulf coast ports can impact supply chains, overwhelm alternate ports and raise shipping rates. Will the work stoppage spur inflation? · Yes (just in time for the holidays) · No (companies are well-prepared) · N/A (will be resolved before any impacts) Take the survey here and don't forget to share your thoughts in the WSB comments section. Port strike looms Thousands of dockworkers at ports on the East and Gulf coasts from Maine to Texas are preparing to go on strike at midnight as negotiations with port employers for a new labor contract have reached an impasse. The work stoppage, which is all but certain, would be the first East Coast port strike since 1977. What went wrong: "The United States Maritime Alliance (USMX) refuses to address a half-century of wage subjugation where ocean carriers' profits skyrocketed from millions to mega-billion dollars, while ILA longshore wages remained flat," said the International Longshoremen's Association. USMX represents port employers including ZIM (ZIM) and Maersk (OTCPK:AMKBY). Union workers have been demanding better wages, automation protections and benefits, with their current contract set to expire today. Bigger picture: The work stoppage is expected to impact more than 50% of U.S. imports, while diverted shipments will likely strain West Coast ports ahead of the busy holiday season. The strike is estimated to reduce U.S. economic activity by between $4.5B and $7.5B for every week it continues, according to Oxford Economics. Every week that cargo is stalled and backlogs created could take as long as a month to clear because West Coast ports are already operating at near capacity. What next: Retailers, automakers, and other businesses face higher freight rates as they make contingency plans for inventory amid mounting West Coast port traffic. J.P. Morgan doesn't see the port strike lasting longer than a week, but warned that the consumers could face higher prices or empty shelves for certain products. Take a look at the stocks and sectors that are at risk from the port strike, and don't forget to take the WSB survey. (47 comments) Escalating conflict The Middle East continues to be on edge, as Israel launched airstrikes on Yemen's port of Hodeidah on Sunday in response to recent Houthi attacks. Israel also stepped up attacks on Lebanon after killing Hezbollah leader Sayyed Hassan Nasrallah last week. U.S. Secretary of Defense Lloyd Austin said Washington "retains the capability to deploy forces on short notice." The oil market's reaction has been muted, as the odds of a wider war appear low for now. Meanwhile, Moody's downgraded Israel again as economic costs mount from its war in Gaza and the intensifying conflict in Lebanon. (5 comments) Not enough California Gov. Gavin Newsom has vetoed an artificial intelligence safety bill, saying it only applied to the biggest and most expensive AI models, leaving others unregulated. The bill "does not take into account whether an Al system is deployed in high-risk environments, involves critical decision-making or the use of sensitive data," he said. "Ultimately, any framework for effectively regulating Al needs to keep pace with the technology itself." Google (GOOG, GOOGL), Meta (META), Microsoft (MSFT) and OpenAI have criticized the bill for imposing vague standards in the name of safety. (17 comments) Coal power exit The U.K. will be the first G7 country to end coal power generation as its last coal-fired plant officially closes on Monday. The Ratcliffe-on-Soar plant, owned by German energy giant Uniper (OTCPK:UNPRF), has been generating electricity since 1967. The closure will end more than 140 years of coal power in Britain, an important milestone for a country that was the first to open a public coal-fired power station in 1882. "This is the final chapter of a remarkably swift transition from the country that started the Industrial Revolution," said Dave Jones, director of global insights at think tank Ember. (3 comments) Today's Markets In Asia, Japan -4.8%. Hong Kong +2.4%. China +8.1%. India -1.5%. In Europe, at midday, London -0.7%. Paris -1.7%. Frankfurt -0.6%. Futures at 7:00, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -0.5% to $67.85. Gold -0.3% to $2,659. Bitcoin -3% to $63,587. Ten-year Treasury Yield +1 bp to 3.77%. Today's Economic Calendar 8:50 AM Fed's Bowman: Economic Outlook and Monetary Policy 9:45 AM Chicago PMI 10:30 AM Dallas Fed Manufacturing Survey 1:00 PM Jerome Powell: "Finding Harmony in the Noise: Transitioning to a New Normal" Companies reporting earnings today " What else is happening... David Tepper: Projections for nuclear powering AI are 'crazy.' Microsoft-backed OpenAI sees $5B annual loss on $3.7B sales. AT&T (T) to sell remaining 70% stake in DirecTV to TPG (TPG). Stellantis (STLA) slashes forecast amid global industry downturn. Nio (NIO) unit to receive RMB13.3B from parent, investors. SA Asks: When will the Federal Reserve cut rates again? U.S. nixes offshore wind auction for the second time this year. Iron ore surges in Asia after China homebuying rules eased. Amazon (AMZN) plots first live news special for election night. Hershey (HSY), Mondelez (MDLZ) navigate market shifts. Wall Street Breakfast, Seeking Alpha's flagship daily business news summary, is a one-page summary that gives you a rapid overview of the day's key financial news. It is designed for easy readability on the site or by email (including mobile devices), and is published before 7:30 AM ET every market day. Wall Street Breakfast's readership of over 3.4 million includes many from the investment banking and fund management industries. Sign up here to receive the Wall Street Breakfast in your inbox every business day.Check out our Podcast RSS feed

Wall Street Breakfast Podcast: Port Strike Starts Tuesday

East Coast port strike to begin early Tuesday, union says. (00:23) California Gov. Newsom is said to veto controversial AI safety bill. (01:33) Amazon plots 1st live news special for election night. (02:41) The union representing 85,000 dockworkers at ports on the East and Gulf coasts of the US said Sunday it will go on strike early Tuesday. "The United States Maritime Alliance (USMX) refuses to address a half-century of wage subjugation where Ocean Carriers profits skyrocketed from millions to mega-billion dollars, while ILA longshore wages remained flat," the International Longshoremen's Association (ILA) said in a statement. The USMX, which represents the ports and shippers, did not immediately respond to a request for comment by Seeking Alpha. The strike would begin at 12:01 a.m. on Tuesday and affect ports from Maine to Texas, ILA said. A strike would be the first coast-wide strike by the ILA since 1977. President Joe Biden told reporters earlier Sunday that he would not intervene to prevent the strike. "It's collective bargaining. I don't believe in Taft-Hartley," he said, referring to the federal law that gives presidents the power to impose an 80-day cooling-off period in labor disputes that could impact national security or safety. California Gov. Gavin Newsom vetoed an artificial-intelligence safety bill that stirred controversy between some major tech companies and esteemed scientists who developed the technology. The Wall Street Journal reported Sunday, citing a person with knowledge of his thinking, that the Democrat decided to bury the measure because it applies only to the biggest and most expensive AI models and leaves others unregulated. The Journal reported, Smaller AI models could create problems, too, leading the governor to prefer a legal framework that's all-encompassing. The vetoed bill, SB 1047, would have required creators of large AI models to take "reasonable care" to ensure that the technology didn't pose "unreasonable risk of causing or materially enabling a critical harm." Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT) and OpenAI objected to the bill, claiming it imposed vague standards in the name of safety. Computer scientists Geoffrey Hinton and Yoshua Bengio, who developed much of the technology on which current generative AI is based, were outspoken supporters of the bill, the Journal reported. Amazon is planning to stream its first live news program on Prime Video. The Los Angeles Times reported, citing people familiar with the arrangement, that the company is hiring former NBC News anchor Brian Williams to host special coverage of election night. Amazon Prime Video in recent years has made a significant push into live sports programming, streaming "NFL Thursday Night Football." It also will be the NBA's streaming platform for the 2025-26 season. Live news programming could become another way for Amazon (NASDAQ:AMZN) to boost advertising sales by expanding its inventory of available commercial slots. More articles on Seeking Alpha: Stocks to watch amid the threat of a major East Coast port strike this week Israel downgraded by Moody's as war weighs on economy Economic growth, interest rates to dictate quality factor in stocks, Goldman says Catalyst watch: Now let's take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. Crude oil is down 0.2% at $68/barrel. Bitcoin is down 2.6% at $63,000. In the world markets, the FTSE 100 is down 0.4% and the DAX is down 0.4%. The biggest movers for the day premarket: Stellantis (STLA) is down 12% after the automaker slashed its 2024 guidance, citing worsening "global industry dynamics" and increased competition from China.