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An Alternative To Money Market Funds

July 2018

June is behind us and what a month it was!! The yield on the 10 Year US Treasury ended June @ 2.83%, a mere 30 basis points above the yield of the 2 Year US Treasury. Fed Chair Jerome Powell indicated at the end of Fed meeting June 13 that two more quarter point increases are expected for the rest of 2018. The flat yield curve is a concern for many on Wall Street as they fear the flat yield curve may eventually invert. An inverted curve has preceded the past seven recessions, according to the Federal Reserve Bank of Cleveland.

The AT&T - Time Warner takeover battle finally reached its conclusion on June 12. US District Court Judge Richard Leon completely rejected the Department of Justice case and approved the AT&T acquisition of Time Warner without conditions. AT&T closed the deal on June 14.

This approval has led to a bidding war for the Fox media properties that Fox has agreed to sell to Disney. Comcast made an all cash bid for these assets one day after Judge Leon’s decision and Disney promptly responded with an improved offer that the Fox Board accepted. Disney and Fox shareholders are scheduled to vote on the deal on July 27 but this vote may be delayed if Comcast, as many expect, makes an improved bid for the coveted Fox assets.

Crude oil continued to make headlines in June. Russia and OPEC met in Vienna June 22-23 to set policy for the remainder of 2018. They agreed to raise output by one million barrels per day beginning July 1. Late last month, President Trump and the US State Department announced sanctions would be imposed on countries that purchase oil from Iran. These developments led to a strong rally in crude oil as Brent crude ended June just under $80/barrel while WTI crude ended June just under $75/barrel.

Trade tensions continue to simmer around the world as President Trump seeks better terms for US exports. Any hopes of a revised NAFTA deal appear to be dead. Beginning July 1, Canada has imposed tariffs on a number of American made products in retaliation for the US tariffs on Canadian produced aluminum and steel.

Also on July 1, Mexico elected its first left leaning President in decades. Andres Manuel Lopez Obrador (AMLO) is a close friend of UK politician Jeremy Corbyn, who has previously supported terrorist organizations such as Hamas. AMLO has recommended amnesty for Mexican drug cartels and views immigration to both Canada and the United States as “a human right.”

My weekly radio show on WWPR is now on holiday and will return September 7. 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.

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