An Alternative To Money Market Funds
Sarasota Herald Tribune and Naples Daily News
September is behind us and the amazing stock market rally has continued through September. The Dow Jones Industrial Average, S&P 500, Nasdaq Composite and the Russell 2000 reached record highs in September. The extraordinary rally has continued even though not a single item of the Trump legislative agenda been passed by Congress. However, there is growing optimism tax reform will pass by the end of this year.
The Federal Reserve chose to stand pat at last month’s meeting. The Fed will next meet October 31 to November 1. The crushing impact of the hurricanes Harvey, Irma, Jose and Maria, coupled with a weaker than expected reading of the Personal Consumption Expenditures Index (PCE), the Fed’s favorite inflation measure, likely bolsters the belief that the Fed will stand pat the rest of this year. The PCE fell to its lowest level since October 2015. Interestingly, Janet Yellen’s term as Fed Chair ends in February unless she is nominated again by President Trump.
There was a major change made last month in the time needed for settling securities trades. The SEC made the change effective on September 5. It reduced the time needed to settle stock and bond trades from 3 business days down to 2 business days, a move long favored by Wall Street.
Both Brent Crude Oil and West Texas Intermediate Crude Oil ended September well above the $50 per barrel level. Goldman Sachs and Citi raised their outlook for oil during the month helping to give the energy sector a lift. Note that the major integrated oil stocks such as Occidental, Royal Dutch Shell, ExxonMobil, Chevron and BP pay generous dividends. They have lagged the rise in the S&P 500 this year, offering investors the chance for capital appreciation as well.
Cyber security issues once again made the news last month. Equifax suffered a severe breach and a few of its executives sold shares of the company before the breach was made public. The firm’s CEO Richard F. Smith was ousted by the company’s Board of Directors due to the public outcry. Shortly after Equifax made the news, Whole Foods, now owned by Amazon, said it had been hit by a credit card security breach as its point of sale systems had been targeted.
In Merger & Acquisition news, Sprint and T-Mobile are reportedly close to agreeing to a merger with T-Mobile CEO John Legere expected to run the combined firm. The deal is expected to be an all stock transaction. Meanwhile, President Trump blocked the sale of Lattice Semiconductor to a Chinese firm. President Trump followed the recommendation made by CFIUS, the Committee on Foreign Investment in the US overseen by Treasury Department.
My weekly radio show on WWPR 1490 AM airs at 12.30pm each Friday. My prior radio shows and newspaper 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.