Broken Chains

Hey Influence Traders,

We’ve got runaway inflation indicators and broken supply chains.

But first, Jeff Bezos sent Captain James T. Kirk safely to space and back – for real this time!

All around impressive for the 90-year-old spaceman.

Inflation Concerns

We are seeing employees demanding higher wages, consumer price index (CPI) going up, and the largest Cost-of-Living Adjustment (COLA) bump in almost 40 years.

Employment Data

Recent employment data shows that people are quitting jobs in record numbers, with many people choosing to stay out of the workforce.

There are currently 1.2 roles available for every unemployed person, with certain industries in dire need of employees:

      • Leisure and hospitality – 1.71 million job openings
      • Education and health services – 1.72 million openings
      • Trade, transportation and utilities – roughly 2 million openings

On top of that, thousands of workers are striking across the country – they are NOT happy.

More than 100,000 unionized employees from Hollywood production crews to John Deere factory workers have authorized strikes to try and get stronger collective bargaining agreements.

Thousands are already on strike, including 2,000 New York hospital workers, 700 Massachusetts nurses and 1,400 Kellogg plant workers in Michigan, Nebraska, Pennsylvania and Tennessee.

Like the Dem party, which is making a mad legislative dash to the midterm elections, unions know that they have a closing window to flex their muscles.

Unions have an opportunity to leverage shutdowns and vaccine mandates to be the white horses that save the American worker.

Consumer Prices

The consumer price index (CPI), which measures the prices of goods and services, rose 5.4% annually in September.

While that is the same pace as in June and July and just a little higher than August, it is the sustained high level that is worrying economists.

Many are saying that we no longer have a speed bump of price increases but have crossed the line to sustained increases.

Social Security Bump

One inflation indicator that caught my eye was the bump in COLA payments, which is the amount Social Security recipients receive in benefits.

COLA payments for 2022 were bumped up 5.9% to adjust for the higher cost of living, which is the biggest increase to Social Security checks in 39 years.

To put the size of the bump in perspective, over the past 12 years, the average Social Security COLA increase was 1.4%, including a 1.3% boost in 2021.

The 5.9% bump is the largest since a 7.4% COLA in 1982.

Supply Chains

“I can still hear you saying … You would never break the chain.”

Fleetwood Mac must have been thinking of supply chains, because they are broken across the globe, with ships stuck waiting to enter ports as the poster children for the mess.

Inbound traffic to ports is up 18% year-over-year, but a lack of workers and freight haulers is snarling traffic.

The Biden administration has been meeting with industry to try and find solutions.

But let’s be honest, there is little that the federal government can do at this point.

The White House did announce that the Port of LA is moving to a 24/7 work schedule to try and alleviate some of the supply chain backlog.

Walmart (Ticker: WMT), FedEx (Ticker: FDX), and UPS (Ticker: UPS) have also agreed to move to 24/7 schedules.

This will, of course, drive up overtime and other costs that will be passed on to the consumer, further exacerbating inflation worries.

Supply chains, coupled with skyrocketing energy prices, are driving up prices and inflation and threatening economic recovery.

Those issues caused Goldman Sachs to cut its economic growth forecasts for 2021 and 2022.

The supply chain bottlenecks — such as chip shortages and a resulting lack of new cars on the market — are largely due to the enduring stress on the global economy sparked by the COVID-19 pandemic more than 18 months ago. 

Capitol Gains

We’ve been watching Taiwan Semiconductor Manufacturing Co. (Ticker: TSM) all summer and it is again starting to show some life.

TSM also announced that it will build a factory for specialty chips in Japan and plans to begin production there in late 2024, an important step to address the chip shortages.

Trading Guru Andrew Giovinazzi and I have been working on a uranium angle, as we believe that nuclear will be pivotal in both addressing energy shortages and leading this administration’s green energy revolution.

Andrew has put on a couple of killer trades on one of the best uranium producers.

The live Power Moves Portfolio trade log is here.

Cutting Through the Noise for You,

Frank

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