Last week, the Senate intervened to avert a freight rail strike that could have had catastrophic consequences for the economy. The White House projected that 765,000 people would have lost their jobs within the first two weeks. Fortunately, the government intervened just days before crucial drinking water, food, and energy shipments were set to be sidelined. The deal was debated in Congress due to a nearly century-old law that regulates labor relations only when it comes to railroads and airlines. The CEO of the Association of American Railroads noted that the Railway Labor Act has been effective in reducing work stoppages, but unions dislike the law that limits their leverage when negotiating a deal that their members can support.
The four major railroads in the US, Union Pacific, CSX, Norfolk Southern and Berkshire Hathaway’s BNSF reported record profits in 2021, and Wall Street analysts expect even bigger profits in 2022. However, the new railroad deal could still go south and cause mayhem in the streets, so the situation will continue to be closely monitored.
Wall St. Analysts Unhappy With Strong Jobs Report
The November jobs report was released last week, with 263,000 jobs created, much better than the expected 200,000. However, the Dow initially tumbled, and some have attributed this to the ongoing efforts by the Federal Reserve to lower consumer prices. While some sectors such as tech and media have seen layoffs, others like hospitality and healthcare are hiring aggressively. The consensus among Wall Street traders and investors is that the Fed will now need to do more to cool things down and lower inflation rates. The Fed is expected to have a half-point rate increase during this month’s Federal Open Market Committee (FOMC) meeting, although economists are now anticipating quarter-point rate hikes in the first and second quarters of 2023. The latest jobs report could signal the need for the Fed to apply more medicine to the economy to get its desired effect.
OPEC Meeting Decisions Could Impact Oil Prices
WTI crude oil rose almost 7% last week to close on Friday at $81.51 per barrel. The market awaits the results of the OPEC+ meeting, which will be held virtually today, Sunday, 12/4/22. Over the past few days, oil prices have been trending higher, in part due to protests in China that have led to a relaxation of strict CV-19 lockdowns. The European Union is also moving closer to imposing a $60 per barrel price cap on Russian oil in an attempt to mitigate extreme volatility in energy prices globally. Natural gas finished the session down 2.6% on Friday at $6.56. ExxonMobil, Royal Dutch Shell, Cheniere Energy, ConocoPhillips, Chevron, and Occidental Petroleum are some of the biggest oil and gas producers in the world, all of which have Wall Street analysts offering 12-month price targets in the last three months. However, investors should carefully research investment options and seek professional advice before making decisions.
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