ARTICLES

An Alternative To Money Market Funds

August 2024

MARKET OVERVIEW
July is behind us and what a fantastic month it was!! The Dow Jones Industrial Average, S&P 500 and Nasdaq all hit record highs. As of July 31, the Dow Jones Industrial Average was up 9.52%, the S&P 500 was up 16.70% and the Nasdaq was up 17.70%.

Some items of note: Former President Trump survived an assassination attempt and named J.D. Vance as his running mate on the GOP Presidential ticket, President Joe Biden ended his reelection campaign and Vice President Kamala Harris will now run for President on the Democratic ticket, Southwest Airlines announced it will end its open seating policy and will soon offer assigned seating, Intel reported a terrible quarter and suspended its dividend while also announcing it would cut 15% of its workforce, Chevron is relocating its headquarters to Houston, TX while the national US debt outstanding is now over $35 trillion!!

ECONOMIC SUMMARY
Last Friday’s Nonfarm Payroll Report (NFP) was weaker than expected as 114,000 jobs were added in June, well below the estimate of 175,000. The job figures for the previous two months were revised lower by 29,000. The unemployment rate inched higher to 4.3%, marking the 3rd straight month the unemployment rate was 4% or higher. The Labor Participation Rate ticked higher to 62.7%. Finally, the U-6 unemployment  rate rose to 7.8%. The next jobs report will arrive on September 6.

FEDERAL RESERVE
The Fed met July 30-31 and as expected, kept rates at the 5.25% - 5.50% level. Friday’s weak jobs report likely increases the chances of a rate cut at the September 17-18 meeting. The Bank of Canada, The Bank of England and the European Central Bank all recently announced cuts to their overnight lending rate.

STOCKS TO WATCH
The consumer need for speed in package delivery, which has reached its peak with same day delivery, has placed many retailers in a difficult situation. The cost of shipping for same day delivery is expensive. Alix Partners recently did a survey of retail executives. They found that 75% said same day delivery does not add to profitability.

As a result, shippers such as Federal Express and UPS are facing increased costs due to increased wages, higher fuel prices, higher insurance costs etc.. So, as retailers see increased costs for same day delivery, many are increasing the minimum value for free shipping and same day delivery. In addition, many retailers are tightening their return policies such as shortening the required amount of time for a return, requiring a stated reason for the return and no longer offer free shipping for returns. As a result of these changes, many consumers are willing to travel 15-30 minutes for free in store returns, according to the study.

My weekly radio show is now on holiday and should return soon on WWPR 1490 AM. My prior radio shows and columns are available here.

If you are unhappy with the returns now offered by money market funds feel free to contact us.

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