An Alternative To Money Market Funds
March is behind us and what a month it was!! Both the S&P 500 and the Dow Jones Industrial Average reached record levels as the bull market continues to run. As of the close of trading on April 1, the Dow Jones Industrial Average was up 8.32% year to date, while the S&P 500 was up 7.02% and the Nasdaq was up 4.59%. The yield on the 10 Year US Treasury reached a new high for 2021 on March 30 with the yield spiking to 1.78%. Many Wall Street observers believe the yield will soon crack the 2% level which may cool the market’s recent run.
Last Friday’s Nonfarm Payroll Report was surprisingly strong as the Labor Department said 916,000 jobs were added. The forecast was 660,000 jobs to be added. The U-3 unemployment rate dipped to 6.0% while the U-6 rate, a broader measure of the employment picture widely followed by economists, fell to 10.7%. Meanwhile, the closely watched labor participation rate rose a touch to 61.5% last month. Let's see if the strong job growth continues when the next jobs report is released on May 7.
The next Fed meeting of 2021 will be April 27-28 Last month, Fed Chairman Jerome Powell spoke at a press conference at the conclusion of the Fed meeting March 17. He made clear the Fed will remain accommodative for the foreseeable future. At the end of trading on April 1, the yield on the 10 Year US Treasury stood at 1.71%
Last month, a very troubling story emerged when the lightly regulated family office Archegos was forced to unwind more than $20 billion in trades in certain stocks such as Viacom and Discovery.
Bill Hwang, founder of the Manhattan based Archegos pled guilty to insider trading charges in 2012. He paid $44 million to settle the civil charges. In April of last year, Mr Hwang persuaded the SEC to lift its ban which barred him from working with a securities firm. It is unclear why the SEC decided to lift the ban. Hwang paid millions of dollars in commissions to a number of brokerage firms. Both Credit Suisse and nomura have admitted they suffered “highly significant” losses as a result of the margin calls.
Last week, President Biden announced his long awaited infrastructure proposal. Less than one third of the proposed $2.2 billion plan is actually focused on traditional infrastructure such as highways, bridges etc. It is unclear how much of this proposal will become law as Congress will discuss the plan in detail in the coming weeks.
My weekly radio show airs each Friday at 12.30PM EST on WWPR 1490 AM. The show can also be heard live on the station’s website (www.1490wwpr.com). My prior radio shows and columns are available here.
If you are unhappy with the returns now offered by money market funds feel free to contact us.