ARTICLES

An Alternative To Money Market Funds

November 2022

 

MARKET OVERVIEW
October is behind us and what a strong month it was!! The Dow Jones Industrial Average (DJIA) had its best October ever. Only 2 of its components (Verizon and Microsoft) closed lower last month while the DJIA recorded a monthly gain of 13.95%. This was the best performance by the DJIA since January 1976. At the close of trading on Friday, November 4, the DJIA was the best performer of the major indices posting a year to date decline of 10.83%. The S&P 500 has fallen 20.89% and the Nasdaq is off 33.04% year to date.

ECONOMIC SUMMARY
Last Friday’s Nonfarm Payroll Report (NFP) was strong as 261,000 jobs were added, well above the estimate of 200,000 jobs. The U-3 unemployment rate rose to 3.7%. Meanwhile, the U-6 rate rose to 6.8% last month. The Labor Participation Rate fell slightly from 62.3% last month to 62.2%. This is the third straight month the rate declined. Average Hourly Earnings rose slightly to 4.7% in this month’s report, year over year. The next NFP report arrives on December 2.

FEDERAL RESERVE
The Federal Reserve met November 1-2. The Fed raised rates another 75 basis points and made clear it will remain vigilant in fighting inflation. Friday’s strong jobs report left little doubt in traders' minds that the Fed will likely raise rates another 75 basis points when it meets again on Dec 13-14.

STOCKS TO WATCH
Energy remains the best performing sector in the market for 2022, rising over 66% according to the Fidelity.com website. In fact, it is the only sector with positive performance this year, as per Fidelity. Several experts have recently stated that Brent crude oil is likely headed back above $100/barrel this Winter. The Biden administration has tapped the Strategic Petroleum Reserve (SPR) to help drive gasoline prices lower after surging earlier this year. But Team Biden has kept a lid on domestic production, helping to push oil prices higher around the world.

Thus, the GOP is likely to have a huge day on Election Day, regaining control of both the House and Senate in the midterm elections. Inflation has really eroded most Americans’ purchasing power. Once China finally reopens, expect oil prices to surge, according to the experts. There is little doubt the world will continue to need fossil fuels for decades to come. The push for green energy had led to power shortages in California and in Europe, clear proof of the limitations of wind and solar power. It is highly unlikely green energy will replace fossil fuels as the primary source of energy in our lifetimes. 

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.