ARTICLES

An Alternative To Money Market Funds

July 2024

MARKET OVERVIEW
June is behind us and what a terrific month it was!! Both the Nasdaq and S&P 500 hit record highs. As of June 30, the Dow Jones Industrial Average was up 3.79%, the S&P 500 was up 14.48% and the Nasdaq was up 18.13%.

Some items of note: The FTC has blocked the Sealy-Mattress Firm merger, Saks and Amazon joined forces in their plan to acquire Neiman Marcus, Six Flags and Cedar Fair completed their merger, Boeing will buy Spirit AeroSystems, Nike CEO John Donahoe is on thin ice after reducing Nike’s sales growth forecast by about 10%, Bosch may bid for Whirlpool, Volkswagen has committed $5 billion to EV maker Rivian, Gilead rallied on news its HIV prevention shot was 100% effective in a clinical trial and Nvidia briefly became the largest S&P 500 company by market cap.

ECONOMIC SUMMARY
Last Friday’s Nonfarm Payroll Report (NFP) was stronger than expected as 206,000 jobs were added in June, well above the estimate of 190,000. The job figures for May and June were dramatically revised lower by 111,000. The unemployment rate inched higher to 4.1%, marking the 2nd straight month the unemployment rate was 4% or higher. The Labor Participation Rate ticked higher to 62.6%. Finally, the U-6 unemployment  rate remained flat at 7.4%. The next jobs report will arrive August 2.

FEDERAL RESERVE
The Fed meets July 30-31 and is expected to keep rates at the 5.25% - 5.50% level. Friday’s strong jobs report likely ends any chance of a rate cut at the July meeting. Fed Chair Powell made clear at the last meeting that the Fed is focused on its 2% inflation target. He did not see rates being cut in the near term at the June meeting nor any rate increases this year.

STOCKS TO WATCH
Even with the major stock market indices trading at or near all time highs, the closely  watched Transportation Index is flashing a warning signal. For background purposes, this index is made up of railroad firms, airlines, shipping firms and trucking firms. For those who believe in the classic Dow Theory, both the Dow Jones Industrial Average and the Transportation Index must both be moving in an upward direction to confirm a solid bull market. The Transports are said to be a barometer for future economic activity. Among the worst performing stocks in this index year to date are Avis Budget, down 40.1%, JB Hunt, down 20.75% and American Airlines, down 19.65%.

The strength in the stock market this year has been led by mega cap tech stocks. Several sectors have shown signs of a cooling economy. Examples include the recent weakness in Nike, McDonald’s and Starbucks. In addition, several of the fast food chains such as Wendy’s, Taco Bell, McDonald’s, Burger King et al have announced big promotions to help increase customer foot traffic at locations around America.

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

If you are unhappy with the returns now offered by money market funds, feel free to contact us. As of July 5, our fund is up over 17% for 2019.

Disclaimer

The material contained in this website is for your private information. We are not soliciting any action upon it. The opinions expressed here are our present opinions only. The material is based upon information which we consider to be reliable. No representations are being made that it is accurate and complete and thus should not be relied upon as such. Past performance is neither an indication nor guarantee of future performance.