By Gayl Mileszko
We the People
A very rare copy of the Constitution dated 1787 was found in a dusty filing cabinet on the old 184-acre Hayes Farm in Edenton, North Carolina two years ago. The plantation was initially owned by Governor Samuel Johnston in 1765, and was given to Edward Wood, whose family owned it until 2022, when it was sold to the state for $6.1 million. Ken Farmer, a Virginia antiques appraiser, was hired by the Woods to evaluate all the items on the property. He was astonished to find a 1776 draft of the Articles of Confederation and a document written on four sheets of 11-by-16-inch paper, signed ink by the secretary of the Continental Congress, Charles Thomson. As he came to learn, there were approximately 100 copies of the Constitution printed in New York and sent to the original 13 colonies for ratification, but only nine, including the one just found, have been accounted for. Brunk Auctions in Asheville planned to auction the official, signed ratification copy on September 28 at 2 p.m. The document was not damaged but the sale was delayed by the flooding from Hurricane Helene that has recently devastated so much of the city. It has now been rescheduled for October 17 at 6:00 p.m. and may go for more than $40 million. The Helene recovery effort may exceed $40 billion.
27 Amendments
Delaware was the first state to ratify the Constitution in 1788 which took effect in 1789 and has since been amended 27 times. It is still the oldest written constitution in the world still in force, and its opening three words – “We the people” – are known to billions of people around the world. Unfortunately, we have failed to teach our young students much of this American history. It is not therefore surprising that recent surveys find that 66% of American respondents cannot name the three branches of government, and only 54% know that the Supreme Court has final responsibility for determining what is constitutional. There is always debate over new amendments, and this year’s discussion is no exception. Issues involving voting rights, the right to bear arms, the power to conduct elections, the composition and term of the Supreme Court, abortion, the Electoral College, presidential immunity, standards for impeachment, executive regulatory actions, and so much more, always reflective of our times. In this time of such extreme political polarization and loss of public trust in our governmental institutions and our press, it is hard to envision a convention assembling with 38 states ever again being able to reach consensus on anything. The last amendment was ratified in 1992; this is the one that states that a sitting Congress cannot give itself a pay raise (or cut) during its current session. The grassroots campaign for passage was launched by a sophomore at the University of Texas-Austin who tapped into the widespread public anger over a proposed 51% hike. The Archivist of the United States certified the amendment as ratified under Article V, and published it in the Federal Register. However, courts have since ruled that it has no effect on cost-of-living adjustments, so in the end, it was almost meaningless.
Election Day
At this writing there are less than three weeks to go before Election Day on November 5. Early voting by absentee ballot or in person at the polls has begun in many states. Ten more states now permit it as of this week. Intense attention is being given to turnout in key battleground states: Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin. TargetEarly estimates that 1.5 million Americans have already voted, a majority being registered Democrats, but the total is well below the number who cast ballots during the pandemic election year of 2020. Polls currently indicate a tight race — but few survey methods have proven reliable in the past. Online betting markets PredictIt, Polymarket, Kalshi, and Election Betting Odds all currently favor the Republican by significant margins. But history suggests that there will be an October surprise, some late-breaking event to potentially change the course of the race. However, this year, the public and the financial markets have so far been overlooking every event and development that would, in the past, have dramatically shaken prospective voters. Not a president with diminished faculties, elected official scandals, an impeached Cabinet Secretary, assassination attempts and state and federal prosecutions of a former president, escalating global conflicts, a paralyzed Congress, American hostages, persistent terrorist threats, unprecedented debt and deficit levels, and weak federal emergency disaster responses, among others.
Market Movers
What does it take to shake the markets these days? Well, it clearly takes an awful lot. International aggressors and victims now — amazingly — choose to telegraph wartime moves. Tens of millions of mostly unvetted illegals crossing our border are draining the resources of cities and towns across the country and increasing risks of terrorism. An ongoing stream of new regulations and executive orders confuse and potentially harm businesses of all sizes. But Congress has managed to fund the government through early December, stifling threats of a shutdown for now, as debts and deficits continue to rise above all rational levels. Very heavy issuance of corporate and municipal securities ahead of the elections are being met with strong receptions. There are regular buyers at decent prices for our never-ending series of Treasury auctions for now while some governments announce their increased interest in gold. BRICS+ nations are growing in number and threaten the status of the U.S. dollar. However, as we have recently seen, any slightly surprising economic data involving inflation and jobs can rattle traders. Newly nuanced statements from the Federal Reserve Chair and other monetary policy voters can also increase day-to-day volatility.
Municipal Market Update
Tax-exempt markets have weakened alongside Treasuries as investors adjust to new, lower expectations for downward rate movements. At this writing, futures traders still widely anticipate a 25 basis point cut at the November 7 Fed meeting, and another 25 basis point cut on December 18. Through the close on Friday, AAA rated municipal bond benchmark yields are up 17 basis points on the month. The 2-year benchmark yield stands at 2.47%, the 10-year at 2.78% and the 30-year at 3.69%. Comparable Treasury yields are up 25 basis points: the 2-year stands at 3.95%, the 10-year at 4.10%, and the 30-yaer at 4.41%.
HJ Sims Finances Cornerstone Classical Academy
HJ Sims managed to generate significant investor interest in our $21.9 million BBB-minus-rated financing for Cornerstone Classical Academy in Jacksonville, Florida. Bonds callable 2/1/32 were issued in $5,000 denominations through the conduit Public Finance Authority, and were structured with term bonds in 30 and 40 years. The 2064 term bonds were priced with a coupon of 5.00% to yield 4.75%. The $11.1 billion calendar also included a $10 million charter school financing for BB+ rated Spectrum High School in Elk River, Minnesota which came with a 2059 term bond priced with a coupon of 5.00% to yield 4.95%. Statesboro STEAM Academy in Georgia brought a $9.4 million non-rated transaction through the Bulloch County Development Authority featuring a 40-year term bond priced at 6.75% to yield 6.80%. The Alturas Preparatory Academy in Idaho Falls had a $17.3 million Aa2 rated state guaranteed financing that sold through the state Housing and Finance Authority with a 2059 maturity priced at 4.50% to yield 4.63%. Lake Norman Charter School in Huntersville, North Carolina Minnesota came with a $23.1 million BBB-minus rated deal due in 40 years that priced at 5.00% to yield 4.85%, issued through the PFA. In the senior living sector, the PRS California Obligated Group/University Retirement Community at Davis sold $88.1 million of BBB+ rated bonds featuring a 30-year maturity that priced at 5.00% to yield 4.31%.
HJS Sims in the Market With Cincinnati Classical Academy
This week, HJ Sims is back in the market with a $29.5 million non-rated financing for the Cincinnati Classical Academy, a K-8 public school with 746 students and 425 on the wait list, planning to expand to K-12. We invite you to contact your HJ Sims representative for more information on this and other financings on tap through the end of the year and many more being scheduled into early next year. We plan to remain active and invested throughout this election season. We also encourage all of our readers to help educate your elected representatives and candidates on the value of tax-exemption to nonprofits, and cast your votes on all the ballot initiatives and policies that will support our key senior living, charter school, private school, student housing, critical access hospital and utility sectors. Refresh your reading of our extraordinary Constitution and encourage all on your campus and in your family and neighborhoods to find your polling place and vote!