🐂 Fury Road

Markets

On Thursday, the stock market experienced a significant surge driven by the successful IPO of Arm, the British chipmaker. Investors were delighted with Arm's debut as its shares saw an impressive 25% increase, marking the best day for the Dow since early August. Arm's successful debut was also a significant victory for Nasdaq, as it aims to leverage this achievement to attract more listings compared to its competitor, NYSE.

UAW Goes on Strike Against GM, Ford and Stellantis

Shortly after midnight, the United Auto Workers union commenced strike actions simultaneously against all three major Detroit car companies, marking the first instance of such a coordinated strike. These work stoppages were specifically aimed at factories located in Michigan, Ohio, and Missouri.

The decision to initiate the strike was made by UAW officials after they were unable to reach new labor agreements with General Motors, Ford Motor, and Jeep-maker Stellantis for approximately 146,000 U.S. factory workers. Despite negotiations extending late into the night, the differences between the two sides were too substantial to prevent the strike from occurring at the 11:59 p.m. ET deadline.

Employees at various locations, including Ford's Bronco plant in Detroit, a Stellantis Jeep factory in Toledo, Ohio, and a GM pickup plant in Missouri, were directed to cease work, marking the beginning of potential sporadic walkouts that could occur at other auto factories without prior notice.

Labor

Auto Workers start unprecedented strike

Currently, approximately 13,000 employees at the three largest car manufacturers in North America have officially initiated strikes to demand improved pay conditions. Ford, General Motors, and Stellantis failed to reach new labor agreements with the United Auto Workers union before their contracts expired at 11:59 pm last night. This unprecedented simultaneous strike at all three Detroit automakers in the union's history could become the second-largest work stoppage in the past 25 years, apart from the ongoing SAG-AFTRA strike.

The potential consequences of this strike are extensive:

1. Prices for new and used vehicles from Ford, GM, Chrysler, Dodge, Jeep, and Fiat may increase as the strike continues and vehicle inventories diminish.

2. Suppliers of automotive components such as headlights and brakes could experience reduced orders, leading to possible layoffs.

3. Both laid-off and striking workers will have reduced spending power, which could negatively impact businesses in the Midwest that rely on the auto industry.

4. According to the Anderson Economic Group, just 10 days of striking could result in $5.6 billion in lost wages and earnings.

The reasons behind the UAW's decision to strike are as follows:

1. The union, representing approximately 150,000 members at the Big Three, is advocating for pay increases that are proportionate to the raises received by executives.

2. They are seeking the elimination of what the union considers a tier system that requires eight years to reach top wages.

3. The UAW is pushing for a 32-hour workweek with 40-hour pay to compensate for mandatory overtime fatigue.

4. They are demanding the reinstatement of traditional pensions and cost-of-living raises.

The Big Three automakers have largely rejected these demands and have countered with pay raises that are only about half of what the union is requesting.

In a strategic move, the UAW is currently directing members at select assembly plants to go on strike, disrupting car production while stretching their strike fund for as long as possible. More workers will join the strike if their demands remain unmet, creating uncertainty for the companies involved, as stated by UAW President Shawn Fain, who pledged a commitment to "no corruption, no concessions."

Finance

Arm gives huge lift to the IPO market

On Thursday, the chip designer owned by SoftBank made its debut on the stock market and concluded the day with a market valuation of $65 billion. This marked an increase of approximately $10 billion from its initial valuation. Arm's initial public offering was the largest one seen in the past two years, and analysts believe that it might pave the way for more companies to go public following a two-year period of limited IPO activity. In the upcoming week, Instacart and the advertising technology firm Klaviyo are anticipated to start trading as part of this trend.

Aviation

Delta’s sky club is getting a lot more exclusive

Frequent travelers, prepare to bid farewell to complimentary mimosas at the Sky Club and say hello to $7 bottles of water from Hudson News.

Delta has unveiled a series of significant changes to its loyalty program aimed at reducing overcrowding in popular lounges, rewarding premium customers, and promoting spending on its co-branded credit cards:

1. American Express Platinum and Platinum Business cardholders, as well as those with Delta SkyMiles Reserve credit cards, will now have annual limits of six and ten Sky Club visits, respectively. However, there's a workaround – by spending $75,000 on the card in a year, this requirement can be bypassed.

2. The elite Delta Medallion status will now be determined based on how much you spend rather than how frequently you fly.

3. Achieving Diamond status will now necessitate accumulating 35,000 MQDs ("Medallion Qualifying Dollars"), up from the current requirement of 20,000.

These changes are set to take effect in the coming year. Delta's strategy seems to be paying off, as CEO Ed Bastian noted that the amount consumers charge to their Delta credit cards contributes to 1% of the U.S. GDP.

In a broader context, this move is part of a larger industry-wide revamp of rewards programs. American Airlines recently implemented similar changes, discontinuing lenient Covid-era reward programs that aided its financial stability during the pandemic. Meanwhile, United Airlines has opened a 35,000-square-foot club at the Denver airport to accommodate a greater number of customers.

International

What is causing the floods in Libya

Storm Daniel, which had previously brought heavy rainfall to Greece, Turkey, and Bulgaria, made landfall in Libya on Sunday night, resulting in the breaching of two dams and widespread flooding in the port city of Derna. According to a Libyan aid group, the flood has claimed the lives of 11,300 people as of yesterday, but the death toll may rise to 20,000 as search and rescue operations continue. Libya's attorney general has initiated an investigation to determine who bears responsibility for the disaster.

It is already evident that Libya's infrastructure was ill-prepared for such an event. Experts had issued warnings to the Libyan government last year, emphasizing the deteriorating condition of the two dams near Derna, which had likely not received proper maintenance since 2002. However, no action was taken.

When the medicane, a rare Mediterranean hurricane-like storm, struck, both dams failed, resulting in a massive 23-foot wave that swept entire buildings into the sea.

The attorney general's investigation will also scrutinize the inconsistent warnings issued by the city's leadership. While Derna's mayor urged certain citizens to evacuate, the commander of the Libyan National Army advised people to remain in their homes, as reported by the WSJ.

In terms of recovery efforts, humanitarian convoys have recently gained access to the city. According to the International Organization for Migration, there are currently over 30,000 displaced individuals due to the extensive destruction caused by the flood.