Summing Up The Week

What a wild week! From a Gulf Coast and East Coast port strike that was off as quickly as it was on to Iran’s counterattack on Israel to a nonfarm payrolls report that blew away expectations, there was no shortage of market-moving news this week.

However, despite all of this, stock price action remained relatively muted across the board through the majority of the week until Friday’s payroll report.

Let’s take a look at the news that moved markets this week…

Market News

East and Gulf coast ports strike, strand billions in trade

Early Tuesday morning (at 12:01 a.m.), the ILA union longshoremen at East and Gulf Coast ports in New England and Texas walked off their jobs after failing to reach an agreement, the union’s first strike since 1977, reported CNBC. While the strikes were anticipated, many were hoping a resolution would be reached without having to strike as the ports are responsible for billions of dollars worth of international imports and exports.

In a last-ditch effort on Monday to avert a strike that will cause significant harm to the U.S. economy if it is lengthy — at least hundreds of millions of dollars a day at the largest ports like New York/New Jersey — the USMX offered a nearly 50% wage hike over six years, but that was rejected by the ILA, according to a source close to the negotiations, who was granted anonymity to speak about the private negotiations. The port ownership group said it hoped the offer would lead to a resumption of collective bargaining.

Some pundits point out that the union’s concern is less to do with the actual pay raise as much as it has to do with automation – the looming future of artificial intelligence will likely dramatically reduce the need for physical labor at the ports as robots become smarter and take over more union jobs.

Naturally, the longer the strike lasts, the bigger an impact it will have on the U.S. economy as a whole. “The clock is ticking away,” said Steve Lamar, CEO of Nuco Logistics, a company specializing in pharmaceutical imports and exports.. “Each strike day yields five more days of disruption as our consumer-driven economy gets snarled in port backlogs right as we hit the heavy holiday shopping season. Both sides need to get back to the table and the administration must be ready to use all of its tools to make sure this happens. Reaching a fair, long-term, and sustainable deal is job No. 1 for all parties.”

Iran launches attack on Israel for killing of Hezbollah leader

On Tuesday, Iran launched a ballistic missile strike on Israel in retaliation for the killing of Hezbollah leader and general Hassan Nasrallah, reported CNBC.

The Iranian Revolution Guard issued a statement declaring their reasons for the attack, “In response to the martyrdom of Martyr Haniyeh, Seyyed Hassan Nasrallah, and Martyr Nilforoushan, we have targeted the heart of the occupied territories.” The statement also warned against retaliation, “Should the Zionist regime respond to Iran’s operation, it will face crushing attack.”

Heightened tensions and escalation in the Middle East is not good for anyone, and the attacks resulted in a spike in oil prices as well as a selloff in equities and Bitcoin.

Manufacturing PMI contracts for 6th straight month

On Tuesday, the ISM Manufacturing PMI stayed unchanged at 47.2 in September lower than the expectations for 47.6, reported Seeking Alpha. The PMI, or Purchasing Managers’ Index, measures the activity in the manufacturing sector where a figure less than 50.0 represents a contraction. As a result, September proved to be the sixth month in a row where U.S. manufacturing remained contracted.

“Demand continues to be weak, output declined, and inputs stayed accommodative,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy — which the U.S. Federal Reserve addressed by the time of this report — and election uncertainty.”

Just like that… no more strike!

On Thursday evening, after just two days of striking, the International Longshoremen’s Association (ILA) and the United States Marine Alliance (USMX) reached a tentative agreement to extend their existing contract through January 15, 2025 to allow for more negotiations, reported CNBC.

The move ends the first ILA strike in nearly 50 years which threatened to snarl East Coast and Gulf Coast ports and freeze the movement of billions of dollars in trade including the U.S.’s supply of fruits, automobiles and other goods.

“The International Longshoremen’s Association and the United States Maritime Alliance, Ltd. have reached a tentative agreement on wages and have agreed to extend the Master Contract until January 15, 2025 to return to the bargaining table to negotiate all other outstanding issues,” The ILA and the the USMX said in a joint statement.

The market didn’t react much to the initiation of the strike, so when news broke the strike had ended, the market still didn’t react. What really moved the markets Friday was the nonfarm payrolls report.

Job creation exploded to 254K in September, much better than expected

On Friday, the nonfarm payrolls report showed jobs roared up 254,000 in September versus 159,000 in August and economist expectations for 150,000, reported CNBC. Crucially, the unemployment rate also fell by 0.1% to 4.1%. Many Bears had been warning that once unemployment starts to rise, it can reach a point of “critical mass” where it continues to rise and sends the U.S. economy into recession. This “critical mass” has obviously not happened, yet.

Some pundits were substantively surprised by the report. “It was ‘wow’ across the board, much stronger than expected,”  said Kathy Jones, Chief Fixed Income Strategist at Charles Schwab. “The bottom line is it was a very good report. You get upward revisions and it tells you the job market continues to be healthy, and that means the economy is healthy.”

As a result, the stock market, which had been trending sideways-to-down for much of the week in anticipation of the employment report, rallied substantially. 

Next Week’s Gameplan

After an uneventful week, it’s time to look forward to even more exciting catalysts. First, in the way of economic data, we get consumer credit on Monday, wholesale inventories on Wednesday, the Consumer Price Index (CPI) on Thursday, and the Producer Price Index (PPI) on Friday.

As if all that wasn’t enough, we’re now headed into earnings season where individual companies and sectors can cause upsets – both bullish and bearish – across the board. The big ones to look at come on Friday (of course they come on Friday) in the way of the big money-center banks like JP Morgan (JPM) and Wells Fargo (WFC). While not always market-movers, in the past these two have set the trend for the earnings season, so they’re always worth watching.

So, there’s lots to look forward again next week as we head further into the October, the second most volatile month in the year. I’ll see you here next Friday, friends! 

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Crytpo Corner

Bitcoin Price Action

Bitcoin still isn’t “Digital Gold”

When Iran launched its counterattack on Israel on Tuesday, Bitcoin once again proved that it’s not ready to assume the mantle of “digital gold,” instead selling off with risk assets like growth and tech stocks while the precious yellow metal rallied nearly 1% on geopolitical concerns.

Tuesday wasn’t the start of the worries, however, as Bitcoin melted down into the close at the end of September, prompting me to warn on Twitter that it’s not bullish whenever Bitcoin loses its support into the end of a green month.

Bitcoin careened through last week’s low at $62,380.55, not finding support until $59,824.87 on Thursday after breaking through the key psychological $60,000 level. There’s no question that this week’s price action has done a tremendous amount of technical damage to Bitcoin and recovering may be a bit of a struggle from here.

The Bullish Case

Bulls came away from the week a bit gob-smacked, while, bafflingly, there are many Bulls trying to argue this week’s price action is simply the “calm before the ‘uptober’ storm.” Sorry, ladies and gentlemen, no value comes from yelling at the markets; Bitcoin has clearly broken down and since it owns no calendar, whatever plans you may have had for October were certainly upset for the moment.

The Bearish Case

Bears certainly received plenty of ammunition to shoot down the “Bitcoin is ‘digital gold’” thesis this week. While Bitcoin and gold have been inversely-correlated in the past, never had the distinction been so crystal clear with the two assets moving in dramatically different directions. The Bear calls are similar to the ones they’ve made in the past with many arguing the cycle low at $49,050.01 isn’t the bottom and that Bitcoin will make lower-lows from here.

Bitcoin Trade Update

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Not Your Keys, Not Your Crypto…

In light of brokerage failures in 2022, I no longer keep any of my crypto on an exchange and I only keep enough USD on the exchanges I use to execute my next few buys. I use multiple cold wallets from the brands Ledger and Trezor to hold my crypto (click the links to access the direct sites, and I receive no affiliate benefits from these links).

Additionally, I have now divided my allocated USD between two different exchanges – Gemini and Coinbase – in case one (or both) becomes insolvent. Disclaimer: We both receive a bonus if you use my Gemini referral link to open an account.

I do not trust anyone in the space, even with Coinbase (COIN) being publicly traded (and one of my own Investments in Play positions).

No price target is unrealistic in the cryptocurrency space – Bullish or Bearish.

While traditional stock market investors and traders may think the price targets in the cryptocurrency space are outlandish due to the incredible spread (possible moves include drops of -90% or more and gains of +1000% or more), Bitcoin has demonstrated that, more than any speculative asset, its price is capable of doing anything.

Here are some of Bitcoin’s price movements over the past couple of years:

• In 2017, Bitcoin rose +2,707% from its January low of $734.64 to make an all-time high of $19,891.99 in December.
• Then, Bitcoin crashed nearly -85% from its high to a December 2018 low of $3128.89.
• In the first half of 2019, Bitcoin rallied +343% to $13,868.44.
• In December, Bitcoin crashed -54% to a low of $6430.00 in December 2019.
• In February 2020, Bitcoin rallied +64% to $10,522.51.
• In March , Bitcoin crashed nearly -63% to a low of $3858.00, mostly in 24 hours.
• Then, Bitcoin rallied +988% to a new all-time high of $41,986.37 in January 2021.
• Later in January 2021, Bitcoin dropped -32% to a low of $28,732.00.
• In February, Bitcoin rallied +103% to a new all-time high of $58,367.00.
• Later in February, Bitcoin dropped -26% to a low of $43,016.00.
• In April , Bitcoin rallied +51% to a new all-time high of $64,896.75.
• In June , Bitcoin crashed -56% to a low of $28,800.00.
• In November, Bitcoin rallied +140% to a new all-time high of $69,000.00.
• In November 2022, Bitcoin crashed -78% to a low of $15,460.00.
• In April 2023, Bitcoin rallied +101% to a high of $31,050.00.
• In June, Bitcoin dropped -20% to a low of $24,750.00
• In July, Bitcoin rallied +29% to a high of $31,862.21.
• In September, Bitcoin dropped -22% to a low of $24,900.00.
• In January 2024, Bitcoin rallied +97% to a high of $49,102.29.
• Later in January, Bitcoin dropped -22% to a low of $38,501.00.
• In March, Bitcoin rallied +92% to a new all-time high of $73,835.57.
• In August, Bitcoin dropped -33% to a low of $49,050.01.

Where will Bitcoin go from here? Truly, anything is possible…

What if Bitcoin’s headed to zero?

DISCLAIMER: Anyone considering speculating in the crypto sector should only do so with funds they are prepared to lose completely. All interested individuals should consult a professional financial adviser to see if speculation is right for them. No Get Irked contributor is a financial professional of any kind.