ARTICLES

An Alternative To Money Market Funds

October 2026

MARKET OVERVIEW
September is behind us as the battle in Iran rages on. Oil prices have retreated from their recent highs but remain elevated. Interestingly, the spread between a barrel of Brent Crude and WTI Crude has widened to over $12 per barrel. Many Americans are paying over $4 per gallon for regular gasoline. Washington Insiders believe President Trump will resume heavy bombing on Iran once the midterms are finished early next month.

As of the close of trading last Friday, the Dow Jones Industrial Average is up 6.48% year to date. Meanwhile, the S&P 500 is up 12.81% and the Nasdaq is up 16.99% year to date.

Some items of note: Canada is trying to improve its trade with the European Union as it seeks some relief from the toll taken on its economy thanks to the heavy US tariffs. The US Senate passed the PROTECT COLLEGE SPORTS ACT. It now heads to the US House for passage. President Trump has previously said he will sign the bill into law once the bill arrives on his desk. Paramount has clinched its deal to acquire Warner Brothers Discovery. The deal is expected to close Tuesday, October 6. Enbridge will acquire the Tallgrass Energy crude oil business from Blackstone, Shopify is acquiring Tailwind Labs, the LIV golf tour has filed for Ch. 11 bankruptcy, Campbell’s and Conagra both cut their quarterly dividends, Warren Buffett has stepped down as Berkshire Hathaway Chairman, Volkswagen is struggling as Chinese models are crimping its margins. Volkswagen was also removed  from the Euro Stoxx Index being replaced by Nokia. Finally, Anthropic plans for an IPO next month while smart ring maker Oura has postponed its IPO plans due to market uncertainty.

ECONOMIC SUMMARY
Last Friday’s Nonfarm Payroll Report was much weaker than expected as 29,000 jobs were added, well below the 90,000 jobs increase forecast. The prior two months saw a revised drop of 60,000 jobs. The Labor Participation Rate improved to 61.8% while the U-6 rate dipped to 7.6%. The U-3 rate ticked up slightly to 4.2%. The next Nonfarm Payroll Report will be released on Friday, November 6.

FEDERAL RESERVE
The Federal Reserve met September 15-16 and raised rates by 25 bps. The Fed will continue to monitor inflation and hopes to soon meet its 2% target. The Fed next meets on October 27-28. Many economists feel the Fed will stand pat there due to Friday’s weak unemployment report.

STOCKS TO WATCH
Nike (NKE) reported disappointing quarterly results last Thursday, October 1. NKE is suffering from a weak Chinese market. Also, increased competition  from both old and new competitors is harming sales margins. Most NKE footwear sells for over $100 per pair. Just recently, yours truly visited a local Sam’s Club in Sarasota, FL. Men’s Adidas footwear was on sale for $40 per pair. In addition, Walmart now sells several Reebok footwear models for less than $50 per pair.
Likely, this is the new reality for NKE. It will need to cut prices to compete with Adidas, Reebok and other footwear makers. Keep in mind that NKE’s premium pricing enabled it to carry a PE ratio of 30 and above for years.

Keep an eye on NKE’s dividend. NKE has raised its quarterly dividend 24 straight years. Its current quarterly dividend is 41c/share ($1.64 annually). During Thursday's earnings conference call, management said it forecast earnings of $1.15 to $1.35 for the new fiscal year. At those levels, the dividend is clearly not covered. NKE’s Board, using history as a guide, will meet in mid November to declare the next quarterly dividend. It is during the calendar year’s 4th quarter that the Board has chosen to increase the dividend for the past 24 years.

The Board may elect to slightly increase the dividend next month making NKE a “Dividend Aristocrat”, a company that has increased its dividend for 25 straight years. But if things do not improve dramatically soon, NKE’s dividend will be at risk of being cut.

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).

If you are unhappy with the returns now offered by money market funds, feel free to contact us.

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

If you are unhappy with the returns now offered by money market funds feel free to contact us.

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.