An Alternative To Money Market Funds
July is behind us and what a month it was!! The incredible stock market rally continued as all three major indices reached new record highs. The rally was bolstered by a series of strong earnings reports by many S&P 500 members such as Kimberly Clark, Apple. Microsoft et al.
On July 31, the Federal Reserve cut interest rates by a quarter point for the first rate cut since 2008. Fed Chair Jerome Powell’s uncertainty about additional rate cuts later sent stocks skidding. The Fed’s remaining 2019 meetings are set for Sept 17-18, Oct 29-30 and Dec 10-11. Many economists feel the Fed has no choice but to make additional rate cuts due to the rising US Dollar and dramatically lower interest rates offered by the world’s other major central banks.
France, Germany, Japan and Switzerland now offer 10 Year sovereign debt with negative yields while the UK’s 10 Year British Gilt yields less than 60 basis points.
The July Nonfarm Payroll Report released on August 2 showed continued strength in the US economy as 164,000 jobs were added while wages rose 3.2% year over year. Interestingly, the labor participation rate rose to 63%, its highest level since March. The total number of people in the labor force reached an all time high in July as well.
President Trump announced Aug 1 he will impose another 10% tariff on $300 billion of Chinese imports beginning Sept 1. The trade dispute between the two nations shows no signs of being resolved any time soon. Chinese officials are expected to come to Washington next month in hopes of making progress even though previous meetings have proven to be fruitless.
The tariff news hit the retail sector particularly hard so it will be interesting to hear what the major retailers say when they release their quarterly earnings later this month. Nordstrom made headlines last month when news broke that Nordstrom family members may seek to increase their stake in the company. The family owns over 30% of the shares and unsuccessfully tried a takeover in 2017. Nordstrom is scheduled to report its quarterly results August 21.
The best performing IPO of 2019 has been Beyond Meat, affectionately called Beyond Belief on many Wall Street trading desks. The company reported another loss on July 29 but it was news of a secondary offering that sent the shares tumbling. The 3.25 million shares were priced @ $160/share with 3 million shares being sold by company insiders and another 250,000 shares sold by the company. The lockup period was set for October 29 but in an unusual move, the lead underwriters agreed to waive the lockup restrictions for this offering.
My weekly radio show is on holiday and will return in September on WWPR 1490 AM. My prior radio shows and newspaper columns are available on our website (www.amescapmgmt.com).
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.