ARTICLES

An Alternative To Money Market Funds


January 2022

MARKET OVERVIEW
December is behind us and what a year it was!! The Dow Jones Industrial Average ended the year up 18.73% while the S&P 500 was up 26.89% and the Nasdaq was up 21.39% for 2021.
The 10 Year US Treasury ended the year with a yield of 1.51% while ending the first week of 2022 with a yield of 1.76%, a sizable jump indeed.

ECONOMIC SUMMARY
Last Friday’s Nonfarm Payroll Report (NFP) was surprisingly weak for the second month in a row. Only 199,000  jobs were added last month, well below the forecast of 440,000 jobs. On a positive note, the US unemployment rate fell to 3.9% from 4.2% in November while the closely watched Labor Participation Rate held steady @ 61.9%. Finally, the widely followed U-6 rate fell to 7.8% from 8.3% in October. Let’s see if the employment picture improves when the next jobs report is released on February 4.

FEDERAL RESERVE
The Fed will hold its first meeting of 2022 January 25-26. All meetings this year will be two day affairs. The Omicron variant of the Coronavirus has been cited by many economists as a major reason why the past two Nonfarm Payroll reports have been well below forecasts. So, it will be interesting to see what the Fed’s commentary will be on its tapering program and interest rate increases.

CORPORATE FINANCE
In early 2021, a number of stocks made amazing rallies after the scandalous Archegos fund blew up. Among the stocks which enjoyed a sizable jump was Viacom (VIAC). VIAC opened 2021 trading @ $36.09 before exploding up to $101.97 on March 15 thanks to an enormous short squeeze. It is hard to say if it was luck, brilliance or a combination of the two by Viacom’s management. But they announced on March 24 a spot secondary offering of 20 million of its common shares @ $85 along with a 10 million preferred share offering @ $100/share. VIAC’s common shares ended trading @ $30.18 on December 31. Many market observers rank the common and preferred secondary offerings by Viacom as the corporate finance move of the year for 2021.

STOCKS TO WATCH
As mentioned in a previous column, the Biden administration will take an aggressive stance regarding large corporate acquisitions. So, it will be interesting to see how active corporate America will be this year in terms of M&A activity. Keep in mind that firms such as Goldman Sachs (GS), Evercore (EVR) and Lazard (LAZ) all generate substantial fee income from their M&A advisory service business. If M&A activity is subdued this year because of the new regulatory climate, these firm’s revenues could be negatively impacted.

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.

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.

CONTACT US

Ames Capital Management Inc.
4419 Samoset Drive
Sarasota, FL 34241

One Scenic Drive
Highlands, NJ 07732

Tel: (941) 378 5000

Email:
info@amescapmgmt.com
donames@amescapmgmt.com