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An Alternative To Money Market Funds

December 2019

November is behind us, December has now arrived and the amazing bull market continues to set records!! Just prior to Thanksgiving, the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 indices all reached new record highs. Last Friday’s rally was fueled largely by the unexpectedly strong November Nonfarm Payroll Report.

Payrolls jumped by 266,000 last month, well ahead of the 183,000 estimate. Adding to the good news, the September and October payroll figures were revised upward by a combined 41,000. The unemployment rate dropped to 3.5%, its lowest rate since 1969. The widely followed U-6 rate dropped to 6.9%, down slightly for the 7.0% figure last month. Wages grew by 3.1% last month, also exceeding expectations. The University of Michigan consumer sentiment survey last Friday posted a reading of 99.2, well ahead of the 96.9 estimate, also fueling the big rally.

Crude oil surged last Friday at the conclusion of the OPEC meeting after Saudi Arabia’s Energy Minister said the country would continue its voluntary cut of 400,000 barrels per day. This brings the total cuts implemented by OPEC and its allies to 2.1 million barrels per day. Meanwhile, the oil giant Saudi Aramco went public with a $1.7 trillion valuation. The IPO raised a record $25.6 billion, surpassing China’s Alibaba IPO, which raised $25 billion in 2014. The shares are listed on the Saudi stock exchange in Riyadh.

There were some significant developments in the Mergers & Acquisitions area. BB&T and SunTrust completed their merger last Friday, creating the 6th largest bank in the US. Truist is the name of the combined entity and its stock ticker is TFC. CBS and Viacom completed their merger with the combined entity now named ViacomCBS. Tiffany agreed to be acquired by LVMH, the French luxury goods firm for $16.2 billion or $135 per share in cash. Xerox has announced it will make a hostile bid for HP after being rejected by HP’s Board last month. Carl Icahn has urged the two firms to combine citing the potential for significant cost synergies.

Just weeks after cutting its commission rates for online trades to zero, sparking an industry wide frenzy, The Charles Schwab Corporation announced it was acquiring rival TD Ameritrade in an all stock transaction valuing TD Ameritrade at $26 billion. Upon the deal’s completion, Schwab will have over $5 trillion in assets under management. Without much fanfare, Schwab also said it will move its headquarters from the Bay Area in California to a Dallas, TX suburb. This move will save Schwab and its employees a great deal of money. Texas has no state income tax and a low cost of living, unlike California's high state and local taxes and relatively high cost of living.

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 newspaper columns are available here.

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