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Today in the Market (9/12/2022)

Good Evening. U.S. equities increased Monday as Wall Street edged closer to this week’s highly anticipated inflation report.

The Dow Jones increased by 0.71%, while the S&P 500 increased by 1.06%. With a 1.27% increase, the Nasdaq Composite led the way upward.

THE BUYING SPREE CONTINUES

After receiving regulatory approval for his Berkshire Hathaway (BRKB) to purchase up to 50% of Occidental Petroleum (OXY), Warren Buffett purchased further shares of the company. 

OXY is now 26.8% owned by Berkshire Hathaway, according to a regulatory filing made Friday evening. That happened exactly one month after Warren Buffett’s company revealed that its holdings in OXY had increased to 20.2%. When Berkshire Hathaway reaches a 20% ownership threshold, Occidental earnings can be recorded on its books.

Also, Berkshire Hathaway has been granted authorization by the Federal Energy Regulatory Commission to acquire up to 50% of Occidental Petroleum. That’s in accordance with a directive made on August 19 and a request made on July 11. Though it has been rumored that Berkshire may decide to acquire the entirety of Occidental, The Wall Street Journal reported last month, citing sources, that Warren Buffett was unlikely to do so.

RAILROAD STRIKE COULD HURT

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US railroads announced today that they will postpone the shipping of some materials because of the possibility of a strike by more than 90,000 rail workers.

The unions that represent those workers have threatened to strike beginning on Friday in protest at their work schedules. Two-person crew members are frequently required to remain “on call” seven days a week, which makes organizing social events with family or friends outside of work nearly impossible. Along the 140,000-mile rail network in the US, a strike would halt all operations.

What would happen? The US economy would lose $2 billion every single day that trains aren’t moving, according to the Association of American Railroads (AAR). On top of that:

  • Trains transport one-third of US grain exports. Food shortages could get worse if those transfers are hindered.
  • Trains carry around 50% of the fertilizer used in the US. The CEO of a trade association for fertilizers told lawmakers that the consumer price of food would increase if fertilizer flows dried up.
  • How do factories and dealerships transport more than 75% of completed vehicles? With trains

Looking forward… The federal government has closely monitored negotiations for months and is pressing for a settlement because it is estimated that the US economy would almost collapse if trains were to cease running. If a compromise is not struck this week, Congress has the authority to prevent a strike from occurring.

THE WEEK AHEAD

London is the destination for the queen’s funeral: The late monarch’s casket will travel from Scotland to London, where she will lie in state for four days before her funeral the following Monday. One of the largest diplomatic gatherings of the last 10 years is likely to include President Biden and many other international leaders.

Inflation: The publication of the consumer price index on Tuesday may provide additional evidence that inflation has peaked. Price growth last month is predicted to have been 8%, which is still exceedingly high but less than the increase of 8.5% in July. 

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