By Gayl Mileszko
If I Ran the Zoo
“Read Across America” is a nationwide effort launched in 1988 to promote early childhood literacy. Teachers, parents, and high school students, as well as volunteers from the financial, higher ed, charter school, medical, law enforcement, government, pro sports, engineering and arts communities, partner with those in pre-schools and elementary schools as guest readers, helping to foster a love for books and storytelling. The annual reading motivation and awareness program started in commemoration of the March 2, 1904 birthday of children’s author Theodor Seuss Geisel. A native of Springfield, Massachusetts, Geisel started writing under the pen name “Dr. Seuss” while as an undergraduate at Dartmouth College. Dartmouth later awarded him with an honorary doctorate in humane letters. He died in 1991 after having sold more than 700 million copies of books like “If I Ran the Zoo”, a title that brings to mind all the hurdles and opportunities facing elected and appointed leaders across the land, and candidates for their offices. His clever use of simple words and made-up words, rhymes and rhythms, and the humor in his marriage of text to pictures, is still introducing new generations of young children to reading in one of 45 languages while encouraging them to embrace their uniqueness, see good in the world, care for others, and stand up for what is right. Who cannot help but smile as we recall reading The Cat in the Hat for the first time to a child or the last time, we watched How the Grinch Stole Christmas with our family?
One Fish Two Fish Red Fish Blue Fish
It was the National Education Association that initially linked the joy of reading program to Geisel’s birthdate but, in a sign of our cancel culture times, disconnected from the Seuss enterprises in 2018 over what its leaders perceived as his antiquated stereotypes and racist imagery. The focus of the NEA again shifted dramatically during last week’s Read Across America festivities, shining yet another light on the nation’s red and blue political divide. The nation’s largest labor union filed a lawsuit against the U.S. Department of Education for threatening federal funding cuts for education institutions engaging in diversity, equity and inclusion efforts. This week, they are consumed with the announcement of a 50% reduction in the Department’s workforce, a major step toward the Trump Administration’s goal of abolishing the cabinet-level agency altogether.
All Aboard the Circus McGurkus
The White House changed hands 51 days ago. Its agenda was well known, but the pace, details, and order of execution have nevertheless unnerved many parts of Main Street, Wall Street and much of the world. Tax cuts appear to have dropped down the topmost priority list. But the tariffs intended to bring a measure of fairness to trade have upset financial markets and foreign relations and impacted elections. Efforts at peacemaking have made no side or neighbor happy yet. DOGE swat teams from beyond the Beltway charged with eliminating $1 trillion or more from the federal budget have uncovered shocking examples of waste and mismanagement while looking under the government hood. The Capitol Hill press corps along with the White House press pool — now expanding to include streaming services, podcasters, and social media influencers — have been dizzied by the kinds of whimsical imagery, tongue tangling, and fanciful phrasing coming from both ends of Pennsylvania Avenue. Some of it would make Dr. Seuss grin.
Green Eggs and Ham
It is a tradition at Dartmouth that certain first year students eat a big breakfast of green eggs and ham. The price of those eggs appears to have peaked earlier at about $8.17 a dozen, most recently dropping to $5.51, but inflation is still with us. Since emerging from the pandemic, consumers have tried to remain optimistic but are clearly suffering from several years of battle fatigue. Retail sales in January declined 1%. Consumer spending fell in January for the first time in two years. Consumer confidence declined by 7 points in February. Home sales and residential construction have slumped. Manufacturing data reflects rising input costs. Car owners are falling behind on car payments at the fastest rate in more than 30 years. U.S. bankruptcies are at their highest levels in 14 years. Pending home sales are down 6.4% year over year as the median sale price has increased 3.2%. The Beige Book reports a notable rise in uncertainty. Key CPI and PPI data from February are being released this week and are likely to reflect inflation in that sticky range of 3%. We all hope to be pleasantly surprised by lower prices but we are now being hit with retaliatory tariffs from allies as well as adversaries. The President says “There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America.” His administration is working to rapidly restructure the U.S. government and our economy. Much will require legislative action and some outcomes will be determined by the judicial branch. For now, it seems, we will just have to get comfortable with being uncomfortable.
Oh Say Can You Say?
Dartmouth College recognized the generosity of Geisel and his wife by naming its medical school, the fourth oldest in nation, after them in 2012. During his amazing career, Dr. Seuss was also won a Pulitzer Prize, three Academy Awards, two Emmys, and two Peabody Awards. No prizes are yet being given out to peace negotiators over in Saudi Arabia and Qatar, but we hold out hope. Some kudos go to House Republicans and one Democrat from Maine for unifying in order to approve a 6-month funding measure to avoid a government shutdown, but little progress is being reported yet on the debt ceiling, major debt and deficit reduction, and immigration. Among the many key issues on our radar screen is tax reform and municipal bond tax-exemption. Talk is swirling that serious work began this week in the House Ways and Means Committee on a tax bill with Treasury Secretary Bessent. Closed door meetings are expected to continue as state treasurers meet in D.C. and begin their lobbying effort to preserve the best tool, we have for funding essential public purpose infrastructure.
Oh the Thinks You Can Think
We urge readers not to wait until tax bill language is circulated, but to help educate elected officials including state governors and treasurers as well as Members of Congress on the types of projects financed with private activity bonds. We do not want a repeat of 2017 when we failed to organize in time to prevent the loss of our advance refunding tool. We do not want to ask, as Dr. Seuss did in his poem, “How did it get so late so soon?” Borrowers and investors should also engage with legislators to halt efforts to place any type of cap on tax-exempt interest income. The level of 28% was proposed by the Obama Administration and may be re-circulating. Think about it: mere talk of a cap threatens current as well as prospective bondholders. And any type of cap would reduce investor demand and increase the cost of all muni borrowing.
Did I Ever Tell You How Lucky You Are?
“It’s a troublesome world. All the people who’re in it are troubled with troubles almost every minute. You ought to be thankful, a whole heaping lot, for the places and people you’re lucky you’re not!” – Dr. Seuss
The Federal Reserve Chair, who will preside over next week’s monetary policy committee meeting, assured markets on Friday that our economy continues to be “in a good place.”
But we tend to look at day-to-day fluctuations in portfolio prices with some alarm. The stock market, as measured by the S&P 500 Index, has fallen by nearly 10% since mid-February, losing all the gains made since the November post-election rally and skirting correction territory. VIX volatility measures are up by nearly 75%. Concerns over the potential inflationary impact of new federal trade and spending policies, uncertainty over the direction of the markets and worries about a stalling economy – or possible recession — have driven many retail and institutional investors into safer havens. Money market funds stand at an all-time high of $7.02 trillion. Gold prices are near an all-time high at $2,917 an ounce. We note that Berkshire Hathaway has a cash position exceeding $318 billion, the largest of any U.S. company, while Alphabet is holding $95 billion and Apple more than $141 billion. But we are quite sure that they are combing through some extraordinary offerings and opportunities right now. So, too are our traders, banker and financial advisers.
You’ll Miss the Best Things if You Keep Your Eyes Shut
The municipal market is on a tear. Through the first 11 weeks of this year, we are on a record pace for new annual issuance. HJ Sims helped to bring last week’s volume to a 13-week high with our $239.6 million non-rated senior living revenue bond issues for the ISF- Ativo portfolio. The offering included a $136.7 million sale through the Arizona Industrial Development Authority for the construction of a new community in Buckeye and an acquisition in Yuma, and a $102.9 million California Public Finance Authority offering for a new construction project in Santa Clarita. The multi-state transaction was structured with senior, subordinate and taxable series. The senior tax-exempt Arizona series had a final maturity in 2065 that priced with a coupon of 6.75% to yield 7.05% and the senior tax-exempt California bonds due in 40 years priced at 6.625% to yield 6.90%. This week, we are also excited to be in the market with a $347.6 million non-rated financing for Mozaic Concierge Living, a new life plan community to include 168 independent living units as well as 14 assisted living and 14 memory care suites, and 14 skilled nursing beds in Stamford, Connecticut. The non-rated bonds are being offered through the Housing Authority of Stamford. We welcome the opportunity to introduce this credit and invite your questions.
There is no one else who is “youer” than you
Our ability to digest rapid fire news and process major change is extremely challenged right now, causing us to, as Seuss advised, to “Think left and think right and think low and think high” and imagine “Oh, the places you’ll go.” During Read Across America Month, we come to understand that we can all use more time improve our listening skills, whether or not the words are delivered in Seuss’s anapestic tetrameter. Please reach out to your HJ Sims representative this week to hear some of our thoughts on the market, and learn about some of the many options that may be well suited at this extraordinary time in our history to help meet your financing and investing goals.