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““Habit is the intersection of knowledge (what to do), skill (how to do), and desire (want to do.)””
*As of 9/15/2023. For the week of 9/5112023.
The Story
After starting the week off strong, markets moved with little conviction through the middle of the week. We got August's CPI report, which is a good gauge of inflation, on Wednesday. As expected, energy prices drove the overall cost higher. If you strip out energy and food, the data was fairly positive. Stocks moved higher on Thursday before pulling back Friday. Overall, there was very little movement in markets last week.
My View
The big news last week was the United Auto Workers' (UAW) strike against the Big 3 Detroit automakers (Ford/GM/Stellantis). The UAW union represents over 145,000 workers at the three companies and is pushing for better pay, benefits, and work-life balance.
The strike was initiated at midnight last Thursday after the UAW failed to reach an agreement with the automakers, with union members at three plants walking off the job.
Depending on how long the strike lasts, the repercussions could be serious on a number of levels.
First, the local economies around auto plants will suffer as workers have less cash to spend. UAW workers who are on strike will receive $500/week, well under their normal pay. This will have a negative effect on local restaurants, stores, and other retailers.
Second, a lack of supply will push new and used car prices up again. Think back to the pandemic when supply shortages caused a lack of inventory. This could be the result again if the strike lasts long enough.
Third, Ford alone has over 1,400 third-party suppliers. And each one of those suppliers has their own suppliers. A shutdown of production will certainly impact all of these businesses and employees in a negative way.
Finally, there will be ripple effects across the broad economy. The Federal Reserve is already tightening. Will this strike push us into the long-awaited recession? Only time will tell.
Coming Up This Week
August's Housing Starts (Tuesday)
Federal Reserve Decision (Wednesday)
With the UAW strike in full effect, I thought it would be a great time to look at the process of buying a new car.
Here's a couple of big things to remember during your search:
1. Cars are simply a way to get from point A to point B safely
2. (Most) cars are depreciating assets
3. Doing your homework and negotiating properly could save you big $$$
Those in the market for a new vehicle fall into one of three buckets:
1. You could care less about the make/model of your car. You seek efficiency.
2. You need a specific vehicle (large family / hauling / off-roading)
3. You really enjoy nice cars and have identified it as an area of life where you want to splurge.
All three buckets are acceptable. Do some work beforehand to identify what's really important to you.
Next, identify your budget. If you're paying for the vehicle in cash (my preferred method if possible), set that cash aside in a safe place. If you're taking out a loan, make sure it's a monthly payment you can easily stomach. The last thing you want is to be car-poor.
Finally, go into negotiations with a plan and stick to it. Be okay walking away if you don't feel like you're getting a fair deal. Leverage is everything.
Let’s have a week!
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