White House Announces Plan to Ease Port Congestion
White House Seeks Help From Nation’s Big Retailers, Shippers
With the US holiday shopping season at risk due to severe supply-chain bottlenecks, the White House announced a new plan to ease some of the congestion at ports on the West Coast. As it stands, the ports of Long Beach and Los Angeles in California are clogged with ships waiting to enter. Once cargo is unloaded from ships, ground transportation is also taking longer than usual due to truck driver shortages.
The Biden administration is turning to the nation’s biggest retailers and shipping companies including Walmart (WMT), Home Depot (HD), FedEx (FDX), and UPS (UPS) for help. Under the plan the companies will expand their overnight delivery and off-hours operations in Long Beach and Los Angeles.
Los Angeles, Long Beach Ports to Stay Open Around-the-Clock
The Port of Los Angeles will now stay open 24/7 following a similar shift by the Port of Long Beach last month. Combined, the two ports represent around 40% of shipping containers coming into the US. The White House also has the International Longshore and Warehouse Union in its corner. Members of the powerful union said they are willing to pick up extra shifts.
The White House is betting that ramping up operations during the night will move goods off container ships and ease some of the pressure in the supply chain. But this solution does not address the lack of truck drivers necessary to deliver the goods once they are unloaded at ports.
Earnings at Risk
The move to ease congestion at ports may be too late to impact some consumer goods manufacturers’ third quarters. With earnings season kicking off, concerns are growing that supply-chain issues will hit some companies’ bottom lines. Take sneaker and apparel maker, Nike (NKE), which reported results at the end of September. Plant closings in Vietnam due to COVID-19 outbreaks and shipping delays caused it to miss revenue forecasts. Even a record back-to-school in the US for the company was not enough to offset the challenges.
Supply-chain issues amid record demand has caused the White House to intervene, relying on some of the nation’s biggest retailers and shippers for assistance. It will be interesting to see if the plan is effective in moving cargo across the supply chain in time for the holidays.
Your Home Is an Asset. Do You Know What It’s Worth?
Your house is much more than a home—it’s likely one of the biggest purchases you’ll ever make, with a value that makes up a significant proportion of most people’s net worth. As such, you’ve probably wondered from time to time what your home is worth.
Determining the answer is not as simple as referring back to your sales agreement or mortgage papers. What you paid for your house when you purchased it merely reflects what your house was worth to you—and the real estate market—at a specific point in time.
In reality, housing values are dynamic and they fluctuate based on a number of factors. Some things, such as keeping your house in good repair, are within your control. Other external influences, such as the market, mortgage rates, and other considerations, can also affect the value of your home.
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The Final Quarter of 2021
A Weekly Column With Liz Young
Every week, SoFi’s Head of Investment Strategy shares her economic and market insights in order to help empower readers to take a more active role in their financial futures. This week, see what Liz has to say about the final quarter of 2021.
No Ace Left in the Hole
One of the many great lyrics Garth Brooks has given us is, “All my cards are on the table, with no ace left in the hole,” and it’s a perfect representation of my feelings about the fourth quarter. That may sound like a negative take, but I want to be clear—even in my worst-case scenario we’d still end the year up almost 11% on the S&P 500. I’m simply finding it more and more difficult to expect any kind of meaningful rally before the end of the year. Here’s why...
Weight of the Evidence Is Heavy
Coming into fall, many expected volatility to ensue. And it has—we finally saw a 5% correction on the S&P at the end of September. While we’ve recovered slightly, the index is still down roughly 4% since the end of August.
If history is a guide, particularly if last fall is a guide, we could expect a more positive November and December. But as I made a list of the negatives, they handily outweighed the positives into year-end.
For starters, GDP growth has been revised downward or pushed out further into the future by multiple sources. Projections are still well above pre-pandemic levels, but they’re lower than originally expected for 2021 due to factors like supply chain issues and labor shortages. Taken together, those three forces—lower GDP growth, supply squeezes, and labor weakness—pave a difficult path for a year-end rally.
Trained for a Marathon or a Sprint?
The next factor I worry about is the stamina of consumers and businesses to pay for or pass-through some of these issues. Yesterday’s CPI reading (5.4% year-over-year) marked the sixth month in a row of inflation above 4%. Studies have shown that when inflation is persistently above 4%, it starts to pressure stock performance. The question becomes: how much longer can companies absorb inflationary costs and labor shortages (which in turn drive higher labor costs) before they become a real drag on earnings per share?
Likewise, at what point will consumers hold up their hands and say “no more” to price increases? We’ve predicated economic strength on pent-up demand and the money still sitting in savings waiting to be spent. What if they don’t spend it because the stuff just plain costs too much?
Politics and Policy
Moreover, one of the catalysts for the strong rally into year-end last year was the fact that the Presidential election was over (okay, over-ish) and removed a big uncertainty from our plate. Shortly thereafter, positive vaccine news came out and removed another big uncertainty. No similar kind of uncertainty-removing event is on the docket this year.
Conversely, the government debt ceiling and reconciliation debate now looks like it could carry into December. Add to that the possibility of Fed tapering before the end of the year and we’ve still got some mud to trudge through.
The Elusive Ace
These headwinds and the idea that there’s “no ace left in the hole” lead me to believe that the volatility is not over yet. They also lead me to believe that it would require various positive developments to take us back above the most recent highs from Sept. 2 (S&P 500 level 4,537). Meaning, we may not see new highs until 2022 when some of these headwinds subside. But to my very first point—even if we fell down to the 200-day moving average on the S&P and stayed there for the rest of the year...we’d still end with a calendar year return of almost 11%. Not too shabby. It just might have all been produced in the first three quarters.
Apple Leverages AirPods For Next Push into Healthcare
Apple Sees New Health-Related Opportunities For AirPods
Apple (AAPL) is pushing further into the healthcare market, exploring ways to use its AirPods to improve individuals’ hearing and posture, and track their body temperatures. Most of Apple’s existing healthcare features and functionality only work for the Apple Watch, but the tech giant has an ongoing effort to develop more digital healthcare products beyond the Watch.
Apple has already seen significant success with its AirPods. The Bluetooth headset is the undisputed leader in the wireless headphone market, making Apple $12.8 billion in sales last year. That is five times as much as second-place headset maker Bose. However, Apple wants to continue to grow its AirPod business by finding new use cases for the technology.
Apple Explores Hearing Aid Market
Apple is looking to enter the hearing aid market, but the company has kept its plans close to its chest. It is not clear if Apple is developing a standalone hearing aid product or if it will market the AirPods’ existing hearing improvement features as hearing aids. The new AirPods Pro include new tech that improves the volume and clarity of conversations with people standing in front of the AirPod wearer.
The hearing aid market is a big opportunity for Apple. Of the roughly 28 million people in America who have mild hearing loss, only 5% rely on a hearing aid. Of the 12 million who suffer from moderate hearing loss, only 37% use a hearing aid.
Other Plans for the Future of AirPods
Apple is at work on AirPod prototypes which can take a person’s temperature from inside their ear. Apple is also developing a wrist-temperature sensor which could be part of the 2022 iteration of the Apple Watch. Meanwhile, Apple is testing motion sensors in earbuds to track users’ posture. With this technology, a person could receive an alert to sit up when they are slouching.
Digital technology is playing a bigger role in our healthcare and Apple wants to make sure it is at the center of these developments. It will be interesting to see how Apple leverages AirPods to meet this goal.