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An Alternative To Money Market Funds

September 2024

MARKET OVERVIEW
August is behind us and what a strong month it was!! The Dow Jones Industrial Average reached an all time high on August 30. Meanwhile, the S&P 500 and Nasdaq both made a large jump. As of August 31, the Dow Jones Industrial Average was up 10.28%, the S&P 500 was up 18.42% and the Nasdaq was up 18.00%.

Some items of note: Palantir Technologies (PLTR), Dell (DELL) and Erie Indemnity (ERIE) will join the S&P 500 before the start of trading on Monday, September 23. Departing the S&P 500 that morning will be Etsy (ETSY). American Airlines (AAL) and Bio-Rad Labs (BIO). 7-11 says it has rejected an offer from a Canadian convenience store chain, US Steel’s shares recently plunged on news the White House plans to block its sale to Nippon Steel, Nordstrom family members are seeking to take the retailer private, the FTC filed a lawsuit to block Albertsons sale to Kroger, Arch Resources and Consol Energy will merge to create a giant coal company, Mars will acquire Kellanova in a $36 billion deal and Keycorp received a strategic minority investment of nearly 15% by Scotiabank.

ECONOMIC SUMMARY
Last Friday’s Nonfarm Payroll Report (NFP) was weaker than expected as 140,000 jobs were added in August, well below the estimate of 165,000. The job figures for the previous two months were revised lower by 86,000. The unemployment rate inched lower to 4.2%, marking the 4th straight month the unemployment rate was 4% or higher. The Labor Participation Rate was unchanged at 62.7%. Finally, the U-6 unemployment  rate rose to 7.9%. The next jobs report will arrive on October 4.

FEDERAL RESERVE
Fed Chairman Jerome Powell spoke at the annual Jackson Hole Conference and stated the Fed  would soon begin cutting rates. Friday’s weak jobs report likely increases the chances of a 25 bps rate cut at the September 17-18 meeting.

STOCKS TO WATCH
Last month, Bloomberg reported on a surprisingly weak sale of an office building located in Midtown Manhattan. This building, located at 135 West 50th Street, once served as the headquarters for Sports Illustrated magazine. It was acquired by its former owner for $279 million in August of 2012. This office building was sold in an online auction for just $8.5 million!! Yes, you read that right, an office building that was acquired for $279 million in August of 2012 was sold for just $8.5 million just 12 years later. The sale price was a mere 3% of the price paid 12 years earlier.

Needless to say, this sale has sent shockwaves throughout the Manhattan real estate professional community. It is located in a highly desirable area and is a short walk from Broadway theaters, Carnegie Hall, the Museum of Modern Art, many top restaurants and the University Club of New York. Clearly, the commercial real estate market in cities such as New York, Philadelphia, Chicago and San Francisco will likely see sizable losses when office properties there are sold over the next few years.

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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