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With interest rates rising, your cash holdings could now earn you some interest income.

Again, they could—but they may not be doing so. Many financial institutions are not passing along higher interest to customers holding cash. You should check to see how much your money earns, and if it’s a pittance, look at some alternatives.

Here are some ways to earn interest income…

In recent months the Federal Reserve Board has aggressively increased its target rate. The rate currently stands at 3.25%. The fed funds rate provides a base rate for short-term loans. For example, the three-month T-bill yields 3.95% at Charles Schwab.

Yet many financial institutions haven’t increased the rates they pay on savings accounts. They continue to pay near-zero rates that resulted from meager market interest rates in years past.

I have quite a lot of cash in a business savings account at my credit union. That money continues to earn the measly 0.10% that has been the rate since I opened the account five or six years ago.

I looked at Bank of America’s savings rates, but they’re even worse. They pay 0.01% to 0.04% on savings accounts and just 0.05% on a 7-month CD, the shortest term they offer.

I have most of my investment portfolio with Charles Schwab. They currently pay 0.40% on cash balances. It’s better than $0.10%, but still pretty meager.

As an alternative to earning nearly nothing on your cash, look for money market mutual funds and bank money market accounts. It’s important to understand the difference between the two types of investments.

Money market mutual funds invest in short-term liquid securities such as Treasury bills or corporate commercial paper. These funds earn short-term market rates minus a management expense. For example, the Fidelity Government Money Market Fund expenses are 0.10%. Net of fees, the fund has a current yield of 2.49%. A money market mutual fund will have a stable $1.00 share price.

Money market savings accounts are FDIC-insured bank accounts. The banks set the yields, which vary widely from bank to bank. You can find accounts paying almost nothing up to around 3.0%. To take the bank path, you need to shop around and be willing to send money to banks with which you may not be familiar.

Your brokerage account may allow you to sweep all cash into a money market mutual fund. Fidelity does that, and it is a nice feature. Charles Schwab does not, so you must manually buy and sell shares if you invest with Schwab. The Schwab Treasury Obligations Money Fund yields 2.76%, which can be worth the effort.

Now that we have interest rates above one percent, you can pick up extra earnings by ensuring your cash holdings earn interest. The 2.5% to 2.8% current paid by money market funds will increase as the Fed continues to increase interest rates.
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If there is one topic that scientists disagree strongly about in the field of medicine, it is the so-called amyloid hypothesis. This theory, believed by many scientists, holds that the protein amyloid-β accumulates into toxic deposits as Alzheimer’s disease progresses, ultimately causing dementia.

However, others think that amyloid is associated with the problem, but it isn’t the problem. The doubters point to a very detrimental second protein called tau. This protein also deposits in the brains of people who have Alzheimer’s, and it is actually the one that more strongly correlates with cognitive decline.

However, if the amyloid hypothesis does hold up, one company stands to benefit greatly…

Lecanemab and Alzheimer’s

That company is Biogen (BIIB), and it’s all thanks to recent clinical trial results.

Developed by Biogen and Japan’s Eisai (ESALY), lecanemab is a monoclonal antibody designed to clear clumps of amyloid protein from the brain.

The companies conducted a Phase III trial, Clarity AD, which ran for 18 months and covered 1800 patients in more than a dozen countries. According to data released on September 27, the drug candidate slowed the rate of cognitive decline by 27%; however, only a limited amount of data has been made available so far, and scientists are awaiting the full analysis results before proclaiming lecanemab a miracle drug.

Still—for a disease with virtually no effective treatment measures, that 27% is a significant figure.

At the moment, all doctors can offer Alzheimer’s patients are medications that alleviate some of the symptoms. Patients in the early stages of the disease might be given drugs to increase the levels of a brain chemical called acetylcholine, which helps nerve cells communicate. Also, psychiatric medications are sometimes prescribed to manage the behavioral and psychological symptoms that arise as Alzheimer’s advances.

The question remains whether the benefit lecanemab brings is worth the risks. During the trial, about 20% of participants who received lecanemab showed abnormalities on their brain scans that indicated swelling or bleeding, although fewer than 3% of those in the treatment group experienced symptoms of these side effects.

The FDA is reviewing lecanemab for ‘accelerated approval’ on the basis of Phase II results that showed a decrease in amyloid. The new Phase III results could tip the scales in favor of approval, although the trial is not formally part of the review. The agency expects to announce its decision on January 6, 2023.

Biogen Needs an Approval

Biogen needs the FDA approval on lecanemab badly.

Last year, its predecessor, aducanumab, was a flop. It was also designed to target amyloid plaque in the brain, but it wasn’t clear that the drug meaningfully slowed the rate of cognitive decline in clinical trial participants. In addition to the questions over aducanumab’s efficacy, there were concerns about its safety after roughly 40% of clinical trial participants developed brain swelling and bleeding.

Despite this, aducanumab received approval from the FDA, setting off an outcry. The Department of Health and Human Services, which oversees Medicare, decided to restrict the use of aducanumab to only patients enrolled in clinical trials. So, in effect, the drug’s rollout was over before it began.

Biogen’s share price suffered as a result, plunging from around $400 per share to a bit below $200. Shareholders have been hoping good trial results for lecanemab will turn the company’s fortunes around. For the company itself, lecanemab would be a game changer.

There’s no denying that many uncertainties remain around lecanemab. But Wall Street will be able to form a fuller opinion once the trial’s data is presented at the Clinical Trials on Alzheimer’s Disease (CTAD) conference in late November.

Then the drug will need to be approved for reimbursement by the Centers for Medicare and Medicaid Services (CMS), the same body that restricted the use of aducanumab to clinical trials. Both the conference and the CMS verdict have the potential to move Biogen’s share price in a big way.

But if all goes well, the reward could be huge.

Biogen’s Potential

With nearly six million Alzheimer’s patients in the U.S. today—and no effective method of slowing the disease’s progression—demand for lecanemab will likely be significant. Evaluate Pharma, a pharmaceutical industry intelligence provider, has estimated that the market for Alzheimer’s drugs will exceed $12 billion before the end of the decade.

Biogen’s portfolio of drugs is far less diversified across diseases than many rival biotechs and has fewer patented products as well. However, Biogen has the distinct advantage of a clearly defined specialty: neurological illnesses. Many of the diseases it seeks to treat, from multiple sclerosis to motor neuron disease, have few, if any, effective treatments available currently. This specialization serves as a kind of economic moat, or competitive advantage, for the company.

And Biogen remains much cheaper than its peers. FactSet places the company’s price-to-earnings multiple at 15.6 times for the full financial year—significantly below the 37.6 times average of its biotech peers.

Obviously, much will depend on government regulators and the release of full trial data for lecanemab. Nevertheless, there is plenty to be optimistic about with Biogen, making it a speculative buy.

You can buy shares anywhere in the $240 to $275 range.
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With the bond market in focus this year, there’s been plenty of options action in iShares 20+ Year Treasury Bond ETF (TLT). The long-term bond fund is the most active of the treasury bond ETFs, trading around 180,000 options per day on average. A large trader or fund placed a very interesting spread trade last