Thursday, November 30, 2023

Morning Note: Pricing Power and the Price of Labor

FYI, for the next few weeks (to year end), I'll be a bit less active, and less voluminous, here on the blog, as I'll be devoting the time normally spent organizing, then articulating, my thoughts for the daily message to what, as usual, will be a several part year-end message (delivered over the final two weeks of the year)..

So, for this morning, just the following graph (H/T BCA Research), followed by my brief assessment, and some critical investment wisdom from the late great Charlie Munger:


The green line represents corporate pricing power, the black line, as the name implies, represents the cost of labor... Think about go-forward profitability, and the prospects for the labor market, amid a scenario where companies no longer have the power to price goods in a manner that keeps up with the price for labor.

"Ask yourself what are the arguments on the other side. It’s bad to have an opinion you’re proud of if you can’t state the arguments for the other side better than your opponents. This is a great mental discipline.” 

-- Charlie Munger

Asian stocks rose overnight, with 12 of the 16 markets we track closing higher.

Europe's also mostly in the green so far this morning, with 12 of the 19 bourses we follow trading up as I type.

US equity averages (save for the Nasdaq) are higher to start the session: Dow by 277 points (0.78%), SP500 up 0.11%, SP500 Equal Weight up 0.28%, Nasdaq 100 down 0.18%, Nasdaq Comp down 0.10%, Russell 2000 up 0.60%.

As for yesterday’s session, US equities were mixed: Dow up 0.1%, SP500 down 0.1%, SP500 Equal Weight up 0.4%, Nasdaq 100 down 0.1%, Nasdaq Comp down 0.2%, Russell 2000 up 0.6%.

This morning the VIX sits at 13.15.

Oil futures are up 1.54%, nat gas futures are up 0.25%, gold's down 0.41%, silver's up 0.32%, copper futures are up 0.30% and the ag complex (DBA) is up 0.32%.

The 10-year treasury is down (yield up) and the dollar is up 0.61%.

Among our 32 core positions (excluding options hedges, cash and money market funds), 17 -- led by URNM (uranium miners), Range Resources, XLE (energy stocks), XME (base metals miners) and AT&T -- are in the green so far this morning... The losers are being led lower by VNM (Vietnam equities), SPTL (long-term treasuries), EMB (emerging mkt bonds), REMX (rare earth miners) and GLD (gold).

Have a great day!

No comments:

Post a Comment