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An Alternative To Money Market Funds
July 2026

MARKET OVERVIEW
The US stock market continues to drive higher even as the battle in Iran rages on. As of the close of trading on July 2, the Dow Jones Industrial Average is up 10.06% for 2026. Meanwhile, the S&P 500 is up 9.32% and the Nasdaq is up 11.15%, year to date. The impact has also been swiftly seen in the energy markets. Both Brent crude oil and WTI ended the week trading lower with Brent crude @ $71.80 per barrel while WTI finished @ $68.69 per barrel.

Some items of note: The Attorneys General of a number of states are planning to file a lawsuit to block the acquisition of Warner Brothers Discovery by Paramount Skydance. SpaceX went public in the largest IPO in history, Pharma giant GSK will acquire Nuvalent in a $10.6 billion all cash deal, FOX will acquire Roku in a deal valued at $22 billion, Nvidia plans to raise $20 billion in debt, YUM Brands has agreed to sell its Pizza Hut unit to LongRange Capital for $1.5 billion, while its KFC unit has launched new menu items and a new logo. Former Fed Chairman Alan Greenspan passed away at 100 years of age, Oracle plans to cut over 20,000 jobs, Alphabet has replaced Verizon in the Dow Jones Industrial Average and Honeywell Aerospace became a member of the S&P 500. Finally, all 32 banks participating in the Fed’s stress tests passed the exams which led to several banks increasing their dividends by a healthy margin.

ECONOMIC SUMMARY
Thursday’s Nonfarm Payroll Report was softer than expected as 57,000 jobs were added, well below the 115,000 forecast. The prior two months saw a downward revision of 74,000 jobs. The Labor Participation Rate declined to 61.5% while the U-6 Unemployment rate dipped to 7.9% The U-3 rate fell to 4.2%. The next unemployment report will be released on Friday, August 7.

FEDERAL RESERVE
The Federal Reserve met June 16-17 as Kevin Warsh hosted his first meeting as Chairman of the Federal Reserve. The Fed stood pat on rates and will continue to monitor inflation.The Fed next meets July 28-29

STOCKS TO WATCH
As many of you know, yours truly is a certified player agent for the MLBPA (the Major League Baseball Players Association). Thanks to my status, I have participated in a number of calls held by MLBPA’s leadership.The team owners of Major League Baseball (MLB) have made it clear they will lockout the MLBPA on December 1. This is  the date the current Collective Bargaining Agreement (CBA) expires. There is a wide amount of disagreement between the two sides. So, there is a real chance the 2027 season will be scrapped. In fact, the MLBPA has instructed its members to plan for the 2027 season to be lost.

Here are some of the issues creating this rift. The MLB has proposed a maximum contract length of 5 years along with a maximum level of compensation, similar to the NBA’s “Max Contract” arrangement. MLB seeks to prevent players from deferring portions of their pay to later years while also creating both a salary floor and salary cap ceiling. There are other issues to be resolved but the big one is the Max Contract MLB is seeking. MLB wants a hard salary cap at its ceiling and limit the number of years (5) and compensation a player can receive in a Max Contract. This issue is a NONSTARTER for the MLBPA. For example, the New York Mets and Juan Soto agreed to a 15 year $765 million contract after the 2024 season. Bryce Harper and the Philadelphia Phillies agreed to a 13 year $330 million contract in  2019. Clearly, a 5 year limit on contract length will not fly with the MLBPA.

MLB’s proposed prohibition on pay deferral will be a huge issue in the negotiations. Here is why. States such as New York, California, Massachusetts and Illinois along with Canada’s Toronto Blue Jays have very high marginal tax rates. When combined with the Federal, state and local taxes imposed, a player is facing a combined rate exceeding 50%. Imagine the tax impact on a player who plays in a state such as Texas or Florida. Both have no state income tax. He later gets traded to a team in these high tax locales. The tax impact will be enormous if the player cannot choose to defer all, or a portion of the income to be paid over the time remaining in the player’s contract. Trust me, this will be a very big issue in the upcoming negotiations.

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.

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