Thinking Out Loud — The Tea Leaves Are Probably Wrong — September 27, 2023

Locator: 45598UAW.  

Updates

October 1, 2023: inventories in great shape. Link here: https://www.barrons.com/articles/evs-are-setting-records-but-theres-a-wake-up-call-in-the-data-9b7e63d9?mod=bol-social-tw

September 29, 2023: Fain authorizes increased strike action against Ford, GM

Original Post

UAW: tea leaves — 

• Fain is serious about that 40% / 60% pay raise and willing to go the distance;
• last week’s decision to expand the strike against Stellantis/GM and favor Ford was nothing more than a ploy; nothing to do with “progress” with Ford; ploy foiled miserably; egg on Fain’s face;
• short term: strike will have greater impact than Covid on UAW families;
• long term: if strike goes as long as Fain appears to want the strike to go, impact on auto sector will be worse than impact of Covid; thinking Americans can already see that;
• if strike goes as long as Fain appears to want it to go, Biden will rue the day he walked with the UAW;
• we’re not even two full weeks into strike and already one gets the sense that the average American isn’t going to support a 40% pay raise for established workers; 60% pay raise for recent hires (polls say differently — see below);;
• at three weeks, UAW rank-and-file will start to ask why 20% of work force (those on strike) are being slammed, while 80% continue with full pay (and probably lots of overtime)
• auto manufacturers will start closing plants next week as parts become scarce.
• Americans will side with auto manufacturers (polls suggest otherwise — see below) — 40% / 60% pay raise beyond the pale
• last week, circular firing squad: UAW and management; this week, circular firing squad, UAW and White House; auto manufacturers have left the scene;
• targeting all three manufacturers was an incredibly stupid strategy; the three CEOs are now a band of brothers and will bargain accordingly;
• those are the tea leaves; they may be different by the end of the week; certainly not aligned with polls;
• polling data shows Americans strongly support the unions. Google: UAW strike poll.
• polls don’t put food on the table; if polls accurate, we should see huge Biden bailout for struggling families. Polls suggest Americans would support huge bailouts for families hurt by the strike;
• waiting to see inventory numbers of cars on lots; Asian manufacturers will benefit greatly.

WTI: the surge today was quite remarkable; continued after hours.