The UAW's demands are radical, and market volatility intensifies in the second half of the month👀
Stocks reversed course on Friday, falling nearly 1.2% since the New York opening, as the market expressed concern over the massive strike action by the United Auto Workers (UAW), the first time in the union's 88-year history that it has simultaneously targeted all three major U.S. companies. Automakers are on strike, and vehicle shortages may intensify inflationary pressures in the medium term; the UAW's demands are more radical, demanding a 40% wage increase within 4 years and a reduction in working hours to 4 days a week, a total of 32 hours, as well as cost of living and Pension adjustments and other related benefits, which will lead to higher labor costs and lower profitability for automakers; in addition, President Biden's seeming tendency to support union workers is also worrying the market, but considering that the UAW is the only one that has not yet expressed concern about the upcoming The move comes as no surprise given the support of major trade unions in the coming 2024 presidential election.
We expect the second half of September to be more volatile than the first half, with approximately $4 trillion in options expiration on Friday, in addition to concerns about the UAW strike and negative stock seasonality, over the past few weeks. Here, the SPX has remained largely range-bound due to market long gamma, and we prefer to take a negative stance on risk exposure through the end of the month.