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An Alternative To Money Market Funds

March 2024

MARKET OVERVIEW
February is behind us and what a great start to the year we have seen!! After a strong 2023 for the major indices, the market has continued to power higher. As of the close of  trading March 8, the S&P 500 and Nasdaq reached all time highs. The Dow Jones Industrial Average “DJIA” reached its all time high on February 23.  Stock markets around the world are also seeing record highs as the DAX in Germany, the UK’s FTSE 100 and Japan’s NIKKEI 225 have recently seen all time highs.

Some items of note: Germany replaced Japan as the world’s 3rd largest economy last month, the FTC filed suit to block the merger of grocery chains Albertsons and Kroger, Jetblue and Spirit Airlines scrapped their merger after a federal court blocked the deal and Amazon was added to the DJIA replacing Walgreens effective March 4.

ECONOMIC SUMMARY
Last Friday’s Nonfarm Payroll Report (NFP) was stronger than expected as 275,000 jobs were added in February, well above the estimate of 195,000. The unemployment rate inched up to 3.9% marking the 25th straight month that the jobless rate stayed below 4%. The December and January jobs figures were revised down by a combined 167,000 jobs. The U-6 rate rose slightly to 7.3%. The Labor Participation Rate held steady at 62.5% while wages rose 5c to $34.57 after increasing 18c in January. The next jobs report will arrive on April 5.

FEDERAL RESERVE
Fed Chair Powell made clear during Congressional hearings last week that the Fed is determined to see the inflation rate approach its desired 2% level before it begins cutting rates later this year. The Fed Funds rate held steady at 5.25 - 5.50%. Friday’s strong jobs report should end any hopes of a Fed rate cut when the Fed meets again March 19-20.

STOCKS TO WATCH
The collapse of China’s mega real estate developers Evergrande and Country Garden has had a major negative impact on China’s economy. Many market observers believe this is China’s “Lehman Brothers Moment” as many of its banks are severely damaged. China’s banks are facing two enormous problems as many real estate developers are defaulting on their loans while people are not making mortgage payments on their homes because the construction of their homes has not been completed.

Several American and European companies with significant operations in China have reported disappointing results. For example, Apple (AAPL), Tesla (TSLA) and Starbucks (SBUX) closed on Friday,  March 8 at or near 52 week lows. Year to date, AAPL is down 11.32%, SBUX is down 5.16% while TSLA is down 29.43%. Meanwhile, last month UK banking giant HSBC took a $3 billion charge on its Chinese operations. This charge caused its share price to sink 8% on the news. Things continue to look grim for China, the world’s 2nd largest economy.

My weekly radio show is now on holiday and should return soon on WWPR 1490 AM. My prior radio shows are available here and columns here.

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