What does this mean for share prices?

 What does this mean for share prices?

McKeever says that the stock market will likely reward companies that break strikes in the short term — by waiting out their workers or bringing in nonunion replacements. But the question of whether that’s a sustainable strategy is more complicated.

Concerning media companies, a prolonged strike could turn off viewers — as it historically did during lockouts in major-league sports.

“If you’re relying on replacement labor … does your product suffer? And if so, will you see that downstream in terms of lower revenues, lower demand and eventually lower stock prices?” McKeever says.

He says Southwest could face a similar tradeoff if it tries to break the SWAPA strike. That might make shareholders happy in the short term, but it could degrade Southwest’s product in the long term — with potentially serious consequences. “Until a catastrophe happens as a result of all that [pilot schedule] optimizing, shareholders love it,” he says.

Term of the month: soft landing

When a pilot lands an airplane, they have to drop altitude, quickly and gently enough to ensure a smooth touchdown. The Federal Reserve is facing a similar challenge as it attempts to pilot the economy into a soft landing.

Soft landing definition

In economics, a soft landing refers to a central bank like the Fed raising interest rates fast enough to curtail excessive inflation but slow enough to avoid crashing the economy and potentially causing a recession.

The Fed has raised its federal funds rate target 11 times in the last 18 months to tame rapid price increases; most recently, it raised its target to between 5.25% and 5.5% on July 26.

The effort has largely been a success so far. The consumer price index (CPI) increased just 3% year over year in June 2023 — a big improvement over the 9.1% annual increase recorded in June 2022. During that one-year period, the unemployment rate has stayed below 4%, and gross domestic product (GDP) growth has remained positive.