The Meyers Report 9-27-2024 Fast 15
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00:00Good morning, everyone.
00:05Welcome to the Friday Meyers Report Fast 15.
00:08It is September 27th, 2024, and there's a lot happening.
00:15First off, on October 1st, all of the ports on the east and gulf coasts of the United
00:21States will be paralyzed because 45,000 members of the International Lawnshoremen's Association
00:29will be striking.
00:31These ports handle about half of all the container goods coming into or going out of the country.
00:37This is the first time since 1977 that these people will stop work.
00:44This will cost the economy an estimated $5 billion a day.
00:50Overseas shippers already have routed their ships away from these ports.
00:55This means that we must now add two weeks to the disruption to allow for shipping to
01:02resume once the strike is settled.
01:04So a two-week strike means four weeks of disruption.
01:10A four-week strike means six weeks of disruption and so forth.
01:17The strike will wreak havoc on our supply chain, raising shipping and other product
01:22costs elsewhere.
01:24This area that's under strike is vast, and it includes 36 major ports in Texas, Louisiana,
01:31Alabama, Florida, Georgia, South Carolina, North Carolina, Virginia, Maryland, Pennsylvania,
01:39New York, New Jersey, Massachusetts, and anything else either further north.
01:46The issue appears to be, on the surface, a demand for an immediate 80 percent wage hike
01:53with a six-year contract.
01:55This would be on top of the salaries that already average more than $72,000 a year,
02:02plus overtime and serious benefits and job security.
02:07However, the longshoremen on the east and Gulf coasts are getting paid approximately
02:1430 percent lower than their West Coast counterparts.
02:19Automation, however, is the real key, because working on these docks has been a family business.
02:27And traditionally, one of our own members who's been involved with this for 40 years,
02:32as he put it, you don't get a job on the docks unless you know someone.
02:37The jobs are a family tradition going back generations, and we're talking about a way
02:43of life for families that I guess goes back a long time.
02:49Under the 1947 Taft-Hartley Act, the government has the authority to call for an 80-day cooling
02:57off period to prevent wildcat strikes that could conceivably or critically hurt the nation.
03:03To do this, however, the government has to convene a panel to assess the situation and
03:09determine if there is a serious threat to the nation.
03:13The justification for government intervention.
03:16The strike, however, is not a surprise.
03:19The ILA, that's the longshoremen's union, and the maritime, the United States Maritime
03:26Alliance representing the shippers and management, have known about this go-to-hell date, September
03:3230th, for years, and they've been preparing.
03:36Both the unions and management have significant cash war chests and have made different arrangements
03:43They are prepared for a longer battle, which basically is a negotiating point unto itself.
03:49As for a speedy using of the Taft-Hartley authority, there are several questions, at
03:55least.
03:56First, Joe Biden said he would not intervene.
04:00Second, did the Biden-Harris administration think ahead and have a panel already prepared?
04:07Considering how they do other things, one might suspect they did not.
04:10Third, with Joe Biden's chief economic advisor, Jared Bernstein, having a degree in music
04:18and a master's degree in social work and having no background in business or economics, and
04:26Harris's chief economic advisor being no better, what could possibly go wrong?
04:32I think a lot.
04:35The other elephant in the room is the Florida hurricane, which has now hit land.
04:42It seems to be, it might be worse than expected.
04:45Donde, what's going on down there?
04:47How bad is it or isn't it?
04:49Well, I think before it's all said and done, we'll be calling it the Florida hurricane,
04:53but also the Georgia hurricane, from what's happening inland right now.
04:57It looks like Tampa, the Tampa Bay area, had its biggest, highest storm surge in 100 years.
05:05When you have a hurricane like this, especially when they hit at night, you need a day or
05:10two to really assess the damage and see how much damage has occurred with this.
05:14But the storm surge, I think, is going to be a bigger story than the wind.
05:20We certainly had wind gusts of 115 miles an hour with this hurricane.
05:24That's going to lead to the usual damage of power outages that you would expect.
05:29But inland, this storm is having huge impacts in Georgia, with tremendous flooding.
05:35And this is going to be a story that's going to go through the weekend, because the remains
05:38of Haleen will produce huge amounts of rain in Georgia, parts of the Western Carolinas,
05:45then into the parts of the Ohio Valley, Mississippi Valley areas.
05:50Through the weekend, flooding, you'll be hearing a lot about flooding with this hurricane.
05:54So when it's all said and done, it's not going to be just Florida, but a lot more of
05:58the interior than you usually get.
06:01Don, there's been some reference to an unsurvivable storm surge.
06:04What is that?
06:06Well, yeah, that's been played up a lot.
06:08And it was a huge storm surge, 20 feet plus.
06:13What it means by unsurvivable is if you're going to put yourself on a beach right on
06:18the coast, 20 foot of water, you're not going to survive it.
06:22So so it's it's been a little overplayed in the sense that if you have half a brain,
06:30you're not going to put yourself in the unsurvivable zone of that that surge, so to
06:34speak. So that's what that was referencing, is that if you're going to be there, but
06:40you know, people stick around through these hurricanes and that's why they were very
06:44strong with the wording.
06:46So but a 20 foot storm surge is not a 20 foot wall of water coming at you.
06:51No, it's not like a wave, but but the the rising waters going up 20 feet is going to
06:56inundate a lot of areas like roads and houses and places that aren't usually below
07:02water. OK, Isaac, we've we've we both know what's happening with roughly what's
07:08happening with the strike that's supposed to occur on the 30th.
07:15How will this how will the port strike impact the trucking industry?
07:19It really depends on what side of the industry you're on, Gary.
07:22As you said, those ports make up about 40 to 50 percent of all import traffic here in
07:27the States. That's about a million containers a month are going to be affected by
07:31this. So a lot of shippers have already rerouted to the West Coast.
07:35A lot of the East Coast trucking companies have been feeling the effects of this last
07:39three, four weeks and have lost significant volume to West Coast ports.
07:46Now, if you're a West Coast trucking company, you're seeing a surge in imports at the
07:50West. So you're benefiting from this.
07:53A lot of the other people who are benefiting are the over the road community, because
07:57once the once those containers hit the West Coast, it's not only container companies
08:02are clearing up that volume.
08:04A lot of that freight gets transloaded into warehouses that gets shipped onto domestic
08:09truckloads. So our over the road side of the industry has already felt the benefits of
08:15this looming strike for the last three, four weeks.
08:18So, again, it really depends on who you ask.
08:20If you're an East Coast guy, you're hating what's going on right now.
08:23If you're a West Coast guy, you're loving it.
08:25And if you're an over the road guy, you're also enjoying what's happening.
08:29This is the strike actually does take place.
08:33That's the that's the smoking gun question.
08:36So you're not sure it's going to take place?
08:38I don't know. I don't know.
08:39If you would have asked me three, four weeks ago and we had this conversation, I would
08:42have told you absolutely not.
08:43The government will intervene.
08:45The closer we're getting.
08:47I'm not as optimistic about that.
08:49I'm I.
08:51Do I want the strike to happen?
08:53Many people in the trucking industry would like the strike to happen, and here's why.
08:57The last time we had a significant lockout was in 2002, Gary, and that was on the West
09:03Coast. It was an 11 day lockout that took the industry six months to clear up the
09:08backlog. Now, when we have disruption in our industry, rates go up.
09:13If we have just a couple of days of strike here, the biggest losers will be the East
09:18Coast truckers again, because all that freight's already gone west.
09:21They've already lost all of that volume.
09:24Couple, we get two weeks of backlog here.
09:28We're going to see volume take us into quarter two of 2025.
09:33So a lot of trucking companies are looking forward to a strike.
09:37Interesting, so you don't see it hurting.
09:40Well, first off, with all the trans shipping across the country, won't that increase cost
09:45to the consumer? Will that hurt inflation?
09:49Yes. No, absolutely.
09:50Or hurt inflation.
09:51So for the general public, not so good, unfortunately, for the trucking community who
09:56struggled for the last two and a half years and really wants to see rates on the rise,
10:01the trucking companies will benefit here.
10:04So you don't. So for the trucking industry, you see increased business, but not not an
10:10accompanying increase in costs.
10:13Exactly. Increased business, no increase in costs, increase in rates as well.
10:19OK, so do you see it impacting the country in terms of an economic slowdown at all?
10:24I don't. Especially, you know, we have the holiday season upon us.
10:28We've been reporting for the last three months import volumes are up double digits year
10:34over year. And a lot of that is because people have been planning for the strike.
10:38You have a lot of retailers that have been trying to get containers, products into the
10:42states before a looming strike, before this upcoming election and what may or may not
10:48happen with tariffs. So we've seen a huge surge already to get ahead of this.
10:52So I do not see this impacting the holiday season.
10:55Moreover, I see this helping the trucking community get through quarter one of 2025.
11:00Is any of this going to affect the availability of food in the supermarkets?
11:05That's going to be the biggest.
11:07Yeah, that's going to be the biggest industry impacted by this, because like I said, a lot
11:11of the containers have been surging in the states that are able to come in.
11:15Right. Retail product that can sit in warehouses for an extended period of time.
11:19You can't do that with perishable goods.
11:21So we'll see a lot of bananas is going to be one of the biggest, biggest products
11:26affected here. High density, low value type of product that can't go to the West
11:32Coast because you can't truck it to where it needs to be.
11:36There's just way too much cost associated into that.
11:39But do you think people are going to start to hit the supermarkets this weekend and
11:42stock up? I think people should hit the supermarkets this weekend and stock up.
11:47OK, Bob Janetzky, with all this going on, the S&P 500 and other stock indicators seem
11:57to be saying that they're moving up.
12:00And are they voting for, are they indicating a likelihood that Trump is going to get
12:06back into the White House?
12:08Oh, they're going up, especially this morning in the futures market, because we just
12:14got some what is very positive economic news.
12:19It's delayed because it refers to what happened in August.
12:23And here we are at the end of September going into October.
12:26But a lot of the economic news lately has shown the economy was really strong this
12:32summer. Now, that goes against what I've been telling people, that we've expected a
12:36slowdown. But you go with the information you have and most of the business surveys
12:42were saying that the economy is pretty strong and the inflation is still with us.
12:48The figures that came out this morning for August tell us a totally different story.
12:53It shows that in just about every case of the economy, personal income, consumer
12:59spending, all of these indicators show very slow, if any, growth in August.
13:06And that comes after a couple of months where we've already seen indications from
13:10these indicators that things are getting slow.
13:12Now, these indicators are more comprehensive than a lot of these business surveys.
13:17And so I believe that they're more important.
13:19In addition, the indicators show inflation basically was non-existent.
13:25Both measures of inflation with and without food and energy went up a tenth of a
13:31percent. And what that did is it brought all the year over year inflation numbers down to
13:37below 3 percent.
13:39So we're in the 2 percent vicinity, according to these numbers.
13:42And these are the Fed's favorite numbers because they tend to be lower than the other
13:46inflation. Bottom line, though, we're seeing kind of a justification for the Fed taking a
13:5450 basis point cut in interest rates.
13:57And we're also seeing economic numbers that will likely justify additional rate cuts in
14:03the short term area as we go out toward the end of the year.
14:07And the Fed is not going to be bothered by this strike.
14:12Strikes occur, things like that, shocks occur.
14:15You have a spike in inflation if it does occur.
14:20And consumers, as Isaac said, are really going to feel the pinch.
14:26My view was that, gosh, you would think the government, namely Biden, a month before the
14:33election, as we go through the final weeks pre-election, would want to avoid this sort of
14:39disruption. But as you pointed out in the beginning, they have not been very good at
14:44planning for anything.
14:45They don't seem to understand what's happening in the economy and the importance of the
14:50policies. And so Biden has said he's not going to intervene.
14:54If he does intervene, as you point out, he's got to appoint a commission ahead of time to
14:59evaluate it. And I don't think they've had time to do that.
15:02And given their history, they probably haven't.
15:05So we have to see what happens.
15:07But my guess is we could have a strike.
15:09It could be very painful and consumers could see another spike upward in grocery prices
15:16right before the election.
15:18I don't think that's going to play well for the Democrats.
15:22Well, our other people, as we discussed in our group, are convinced that the strike is, in
15:30fact, going to occur.
15:32So, Isaac, do you think it's going to occur still?
15:37At this point, I'll say, yeah, I wouldn't have said that three weeks ago, Gary.
15:41OK, I think it will as well.
15:43All right. So is there anything optimistic on the horizon, Bob?
15:51Well, it's very short term, but we have a short term stock market model that basically
15:57sees the strength or tries to evaluate the strength of an upward movement in stocks.
16:03And that model has for the past week or two been in like the 90 to 100 percent vicinity.
16:09Basically, it says there's a lot of upward momentum in the economy.
16:14That upward momentum is more likely to continue.
16:18We don't know that for sure.
16:20We can have tomorrow a big collapse in the market because of something like the strike
16:25occurring and all of a sudden great concern for investors.
16:29But at least for the moment, things are moving in a very positive direction.
16:35And if that strike really sends prices soaring at the grocery market, I believe it's going
16:42to have an effect on the election.
16:44And if the strike goes for a week or two and we have the effects for the full month, even
16:49if it's solved halfway through the month, that's going to be a very negative thing for
16:54this administration just prior to the election.
16:58Don Day, could the aftermath of the hurricane become an election issue?
17:06You know, I don't think so.
17:08One thing, though, that that we have to get through is we're not done with the hurricane
17:12season. We may have another Gulf region hurricane before the season's over.
17:17But, you know, the preparation, especially with Florida, with Governor DeSantis having
17:23Lyman ready and everything else, I think you'll I think, as I mentioned earlier, if
17:28there's going to be problems with this hurricane, it's going to be in the interior
17:31states. Got it.
17:34OK, on that, I want to thank you to everyone, as usual.
17:38Have a good, safe weekend.
17:40Stay safe, have fun and God bless America.
17:44Have a good.