ARTICLES

An Alternative To Money Market Funds

June 2025

MARKET OVERVIEW
May proved to be a month where the markets rebounded strongly after a very difficult month of April. That strength has carried over into early June. At the close of trading on Friday, the Dow Jones Industrial Average was up 0.51% year to date, while the S&P 500 was up 2.02% and the Nasdaq was up 1.13%, year to date.

Some items of note: General Motors slashed its guidance for 2025 citing Pres. Trump’s tariffs, Ford Motor had a very strong month of sales in April thanks to its employee pricing offer, Warren Buffett’s Berkshire Hathaway reported first quarter earnings below forecast due again to Pres. Trump's tariffs, footwear maker Skechers is being taken private by 3G Capital, Doordash to acquire restaurant booking platform SevenRooms, Sunoco will acquire Parkland Corporation, Japanese conglomerate Panasonic Holdings announced it will cut 10,000 jobs in a restructuring, Burger King is facing a lawsuit over misleading customers over the size of its sandwiches. On May 19, Coinbase replaced Discover in the S&P 500 after Capital One completed its acquisition of Discover, US Steel will soon be acquired by Nippon Steel and CEO Andrew Witty of United Health  stepped down from his position, replaced by Stephen Hemsley, its current Chairman.

ECONOMIC SUMMARY
Friday’s Nonfarm Payroll Report was stronger than forecast as 139,000 jobs were added versus the estimate of 130,000. The unemployment rate remained at 4.2% marking the 13th straight month the rate has been at 4% or higher. The jobs figures for March and April were revised lower by a combined 95,000 jobs. Meanwhile, the U-6 rate stayed flat at 7.8%. Average Hourly Earnings rose by 3.9% year over year, in line with the forecast. In addition, the closely watched Labor Participation Rate fell slightly to 62.4% in April. The next Nonfarm Payrolls Report is scheduled to be released on Thursday, July 3.

FEDERAL RESERVE
The Fed kept rates steady at its meeting back on May 6-7. The economy remains strong, as evidenced by last Friday's employment report. So, there does not appear to be a reason to provide added stimulus to the economy by cutting interest rates when the Fed meets on June 17-18. Meanwhile, the central banks of the United Kingdom, Canada and the European Union all cut rates by a quarter point at their most recent meetings.

STOCKS TO WATCH
It is no secret  that college sports is big business. Friday’s long awaited settlement of the House vs. NCAA litigation ensures that will remain the case as universities will now be able to pay their athletes directly beginning on July 1. The big winners here are male athletes in football and basketball. This compensation will be in addition to the NIL fees (Name, image and likeness) that college athletes are currently permitted to collect. These NIL fees can be enormous. Duke basketball star Cooper Flagg reportedly made $28 million in NIL fees last season, according to the New York Post.

Beginning on July 1, each school will be allowed (but not required) to spend about $20.5 million in new payments to their athletes. This figure comes from a negotiated formula which caps athlete payments at 22% of the average annual revenue that FBS level schools get from ticket sales, media rights and a few other items. This $20.5 million figure will grow on a regular basis over the life of the 10 year agreement. The settlement also creates a new agency, named the COLLEGE SPORTS COMMISSION (CSC). Major League Baseball executive Bryan Seeley has been named the new CEO of this agency. The CSC will serve as the enforcement arm and will have final say in handing out punishments and deciding when rules have been broken.

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

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