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An Alternative To Money Market Funds

May 2025

MARKET OVERVIEW
The month of April proved to be a quite volatile period for the markets. In April, the Dow Jones Industrial Average was down 3.2% for the month while the S&P 500 declined by 0.8%. The Nasdaq actually rose 0.9% in April.

Some items of note: Republic Airways and Mesa Air announced they will merge with Republic the controlling entity, Spirit Airlines CEO Ted Christie stepped down, the Medicare insurers rose dramatically after the Trump administration increased by 5.06% the payments the Centers for Medicaid and Medicare Services will pay these insurers, well above the 2.23% rate proposed by the Biden administration. John Malone will not seek another term on the Board of Directors for Warner Brothers Discovery and instead will transition to the role of Chair Emeritus.The White House has begun interviewing candidates to replace Fed Chair Jerome Powell as his term expires in May, 2026. Nvidia vowed to spend up to $500 billion to build AI servers in the US, Joseph Creed will become the next CEO of Caterpillar, succeeding James Umpleby III.  Finally, Capital One received the last regulatory approvals needed to acquire Discover. The deal is set to close on May 18.

ECONOMIC SUMMARY
Friday’s Nonfarm Payroll Report was stronger than forecast as 177,000 jobs were added versus the estimate of 130,000. The unemployment rate remained at 4.2% marking the 12th straight month the rate has been at 4% or higher. The jobs figures for February and March were revised lower by a combined 58,000 jobs. Meanwhile, the U-6 rate dipped to 7.8%. Average Hourly Earnings rose by 3.8% year over year, in line with the forecast. In addition, the closely watched Labor Participation Rate rose slightly to 62.6% in April. The next Nonfarm Payrolls Report is scheduled to be released on Friday, June 6

FEDERAL RESERVE
The Fed kept rates steady at its meeting back on March 18-19. 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 this week on May 6-7. 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
Last week, Spain’s government had to declare a national emergency after the country’s electric grid blacked out for over 18 hours. It is not clear what caused the blackout at this time. But, it should be noted that Spain earlier this year announced its electricity is now 100% generated by renewable energy (wind and solar). Spain’s approach for supplying electricity to its country is in stark contrast to neighboring France.

About 70 % of the electricity in France is produced by nuclear power. France is the world’s largest net exporter of electricity since the cost of producing energy is quite low thanks to its nuclear power production. President Trump has noted the low cost of nuclear produced energy and is pushing for more development of nuclear power given its low cost and reliability. If Spain taught the world one lesson after its severe 18 hour blackout last month, it is that green energy is a  supplement, not a replacement, for our supply of electricity.

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

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