ARTICLES

An Alternative To Money Market Funds

December 2024

MARKET OVERVIEW
November is behind us and what a  strong month it was!! The Dow Jones Industrial Average (DJIA), the S&P 500 and Nasdaq all rallied strongly after Donald Trump was elected as our 47th President on November 5. As of November 30, the DJIA was up 19.16%, the S&P 500 was up 26.47% and the Nasdaq was up 28.02%.

Some items of note: Boeing and its union leaders have made peace as its striking workers voted to approve their new contract. Restaurant chains Red Lobster, TGI Fridays and Wendy’s announced plans to close numerous locations around the US. The auto sector continues to face problems as Stellantis, GM and Nissan announced plans to lay off thousands of workers. Intel and Stellantis both fired their CEO and are seeking replacements. Directv terminated its deal to acquire DISH, UnitedHealth Group’s CEO Brian Thompson was murdered in New York City, US Steel shares fell after President-elect Trump reiterated his opposition to a planned takeover by Nippon Steel, Conoco completed its acquisition of Marathon Oil while Tapestry and Capri abandoned their planned merger. Disney raised its dividend by 33% while Ciso reported its 4th straight quarter of declining revenue.

ECONOMIC SUMMARY
Friday’s Nonfarm Payroll Report was surprisingly strong as 227,000 jobs were added in November, well above the estimate of 200,000. Payrolls for the prior 2 months were increased by 56,000 jobs reinforcing the belief that the weak October report was an outlier. Meanwhile, the unemployment rate edged higher to 4.2% marking the 7th straight month the unemployment rate has been at 4% or above. The Labor Participation Rate declined by 0.1% to 62.5% while wage growth held steady at 4%. Also, the closely watched U-6 unemployment rate rose to 7.8% last month. The initial employment report for 2025 will be released on January 3.

FEDERAL RESERVE
The Fed announced a 25 basis point cut in its base lending rate on November 7. This cut takes the range down to the level of 4.5% - 4.75%. The Fed will hold its final meeting of the year on December 17-18 and another 25 basis point cut is expected..

STOCKS TO WATCH
It is no secret that activity in Mergers & Acquisition has been tame during the Biden Presidency. Under the leadership of FTC Chair Lina Khan and the U.S. Department of Justice Antitrust Head Jonathan Kanter, numerous announced transactions were blocked. In fact, in what many viewed as unprecedented, the FTC sued to block the acquisition of the Subway sandwich chain by the Private Equity firm Roark Capital. Ultimately, this deal was completed.

The incoming Trump administration is expected to be more business friendly than the outgoing Biden administration. Some deals that were blocked during the Biden years such as Jetblue’s bid for Spirit Airlines and Kroger’s bid for Albertsons may be revived after the Trump team is fully in place. Due to the ongoing problems at Boeing, a number of airlines have complained about a shortage of aircraft. Spirit, which is now in bankruptcy due to an enormous debt load,   is a prime target for acquisition due to its fleet of aircraft..

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

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