UPS: It’s Montague VS Capulet With No Romeo Or Juliet

In fair Taxifornia, where we lay our scene, the Montagues and Capulets of the shipping realm engaged in a dramatic contract feud. ⚔️

The Teamsters Union, waving their proverbial swords, accused United Parcel Service (UPS) of walking away from negotiations. UPS swiftly retaliated, claiming the union had halted the talks. Verily, ’twas a battle of words!

As the sun rose upon the warring factions, they unleashed their salvos in early morning statements. Their aim? To reach an agreement and avert a strike before the month’s end, when the current contract expires.

Alas, the shares of the parcel delivery company suffered a 2.3% blow in the skirmish.

Already, the workers of UPS have given their blessing for a strike if the talks crumble. ‘Tis a dire threat, for it would be the first strike since 1997, a mighty clash that lasted fifteen days. With millions of daily deliveries hanging in the balance, both sides yearn for a finalized deal. 😱

But alas! The dance of negotiation has faltered. The Teamsters claim UPS made an offer unanimously rejected and withdrew from the bargaining table. In response, UPS brandishes its historic offer and beckons the union to return. Verily, a wrong road has been chosen, cries the Teamsters’ General President, Sean O’Brien.

Memories of the past doth haunt them, for the national strike of 1997 brought chaos, cost the company a hefty sum of $850 million, and sent customers fleeing to rivals. UPS attempted to sweeten the deal, but the Teamsters deemed it insufficient, demanding greater rewards for the brave workers who risked their lives during the pandemic.

Yet, refusing to negotiate, especially when the finish line is within reach, spreads unease among employees and customers alike, threatening to disrupt the realm of the U.S. economy, UPS warned.

Alas, the feud continues, and only time shall reveal the fate of these star-crossed negotiators. 🌟

Highest yields since 2007? 🤯

In a significant development that reflects the shifting tides of the financial market, the United Kingdom Debt Management Office recently conducted a government bond auction, resulting in the sale of £4 billion ($5.08 billion) worth of bonds. Notably, this auction offered an annual return of 5.668%, marking the highest yield seen in the gilt market since 2007.

The robust demand, at 2.77 times the volume of offer, compared favorably to the previous auction held on June 7, when it stood at 2.34 times.

To find a comparable yield level, we’d have to go back to June 2007 when a similar five-year gilt auction took place, with an average yield of 5.790% on the sale of £2.5 billion.

A prior instance of a significant yield was recorded in September 1999 when the sale of £2.7 billion in 10-year gilts garnered an average yield of 5.694%. 

The Bank of England’s latest projections indicate a gradual decline to just over 5% by year-end and a subsequent drop below 2% by early 2025. Consequently, the real inflation-adjusted return for bond investors is anticipated to be considerably lower than what was observed during the late 1990s, when similar nominal yields were prevalent.

As market expectations regarding further rate hikes from the Bank of England persist, investors are demanding greater returns, as evidenced by the strong performance of this government bond auction. These developments highlight the dynamic nature of the financial landscape and the continued impact of evolving market conditions on bond yields and investor sentiment. ⏫

$NFLX‘s recent crackdown on password-sharing has sparked family disputes over streaming bills, but it has also generated positive effects for the company’s stock. 😆

Goldman Sachs ($GS), joining a growing list of Wall Street firms, now considers the streaming giant a more attractive buy due to its advancements in password enforcement.

In a note issued by Goldman Sachs analyst Eric Sheridan, he praised Netflix’s execution of the password-sharing initiative, the resurgence of content creation, and the reduced competition from traditional media companies. This prompted Sheridan to upgrade the stock from Sell to Neutral and raise the price target from $230 to $400.

Over the past year, Netflix has attracted 5 million monthly active users to its ad-supported tier and experiences new subscriptions in the US after implementing password-sharing restrictions. As a result, Netflix’s stock has surged, witnessing a remarkable 135% increase since Goldman Sachs issued its sell rating.

Goldman Sachs envisions a scenario where 40 million sharers become add-on members, generating $7.99 per month, while 30 million sharers transition to the ad-supported tier, yielding an average monthly revenue of $15 per user.

These estimations lead Goldman Sachs to project a revenue increase from $31.62 billion in 2022 to approximately $49 billion in 2025. 😱

Here’s a quick run-down of what today’s FOMC notes revealed. If you want to read the behemoth of the text yourself, you can find it here.

• Most Federal Reserve policymakers at the June meeting believed it was appropriate to maintain the benchmark interest rate unchanged due to the need to assess the impact of previous tightening measures.
• Inflation above the 2% target rate led committee members to consider maintaining a restrictive monetary policy stance going forward.
• The latest projections indicate that FOMC members expect the federal-funds rate to reach 5.6% by year-end, suggesting the possibility of two more quarter-point rate hikes this year.
• The minutes highlight uncertainty around the economic outlook and inflation levels, and there is an acknowledgment of the potential for a mild and short recession.
• Concerns exist regarding the banking sector and the potential for credit tightening due to weakness in this area.
• Future policy decisions will be made based on available information, and the possibility of consecutive rate increases has not been ruled out.
• The Federal Reserve aims to remain restrictive until inflation shows signs of easing and is on a path to 2%, emphasizing the current distance from that scenario.