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An Alternative To Money Market Funds

February 2025

MARKET OVERVIEW
January is behind us and what a choppy month it was. President Trump has made clear he will use tariffs as a negotiating tactic to make American products far more accessible in markets around the globe. The President is expected to announce a round of tariffs for the European Union this week. As of February 7, the DJIA was up 4.13%, the S&P 500 was up 2.45% and the Nasdaq was up 1.1%.

Some items of note: Bill Ackman’s Pershing Square has offered to acquire Howard Hughes Holdings, Johnson & Johnson has offered to acquire Intra-Cellular Therapies for $14.6 billion in cash, IAC will spin off its ANGI subsidiary, Targa Resources has announced a 33% increase in its quarterly dividend, Southwest Airlines announced new measures to cut costs and improve profitability, CNN is set to lay off hundreds of its staff as it battles declining ratings, workers at a Whole Foods store in Philadelphia voted to unionize, becoming the first store in the nation to do so. China’s DeepSeek AI firm rocked the US chip sector claiming its chips could perform better and cheaper than NVIDIA and other chipmakers’ products can. NVIDIA shares fell 17% on this news.

ECONOMIC SUMMARY
Friday’s Nonfarm Payroll Report was weaker than forecast as 143,000 jobs were added vs. the estimate of 169,000. Economists at major firms said the weaker number was unlikely to push the Federal Reserve to cut rates when it meets again in March. The jobs figures for November and December were revised up by a combined 100,000 jobs. The unemployment rate dipped to 4.0% marking the 9th straight month that the unemployment rate was at 4% or higher. The U-6 rate held steady at 7.5%. Average hourly earnings rose 0.5% in January demonstrating solid wage growth. The next nonfarm payroll Report will be released on March 7.

FEDERAL RESERVE
The Fed kept rates steady at its meeting back on January 28-29 and many economists doubt the Fed will cut rates when it meets again on March 18-19. The economy remains strong so there does not appear to be a reason to provide added stimulus to the economy. Meanwhile, the central banks of the United Kingdom, Canada and the European Union all cut rates by a quarter point at their most recent meeting.

STOCKS TO WATCH
Last Wednesday, Ford Motor Co. (F) reported both its 4th quarter and full year results for 2024. F now sees weaker earnings this year along with additional large losses from its electric vehicle division (EV).This unit posed a loss of $5.08 billion for 2024. Revenue for this unit fell 35% to $3.9 billion in 2024, Sadly, F projects a loss for its EV division to be in a range of $5 billion to $5.5 billion for 2025. As you may recall, F took a $1 billion charge last year on its cancelled 3 row electric SUV. F shares hiit a new 52 week low after its earnings release. Undoubtedly, F shares will soar on the day F’s management announces it is ending production of EVs!!

My weekly radio show is now on holiday and should return soon on WWPR 1490 AM. My prior radio shows and columns are available on our website (www.amescapmgmt.com).

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