Market Commentary: Dreams and Aspirations

By Gayl Mileszko

Dreams and Aspirations

In Tabuk, Saudi Arabia, crown prince Mohammed bin Salman has very ambitious and pricey plans for a stunning metropolis on the Red Sea coast, a major effort to diversify the desert nation’s oil-dependent economy, modernize the kingdom and transform its relationships with neighbors and trading partners.  Dubbed “Neom”, a combination of the ancient Greek word for new and the Arabic word for future, it is key to the 2030 Vision for the largest country in the Middle East, a nation of 36 million, and has been underway since 2017. The showpiece, said to be the Saudi version of the Great Pyramids, is a futuristic city of ten thousand square miles without roads or vehicles, run on 100% renewable energy, with more than a million people living in twin mirrored skyscrapers that are 1,640 feet high. It is to consist of luxury resorts, ports for cruise ships, and an economic zone with 15 separate regions, including a floating industrial complex, film studios, giant airport, high-speed train, and sport venues expected to host the Asian Winter Games in 2029.  From the beginning, it was understood to be the world’s largest earthworks operation and construction project, truly an architect’s dream and comptroller’s nightmare. The cost being borne by the nation’s sovereign wealth fund will likely explode from an original budget of $500 billion to exceed $2 trillion by the time it is substantially complete in 2039.


The challenges faced by the monarchy magnify so many of the issues faced by those here in America with their own grand visions for a new transformative project. Whether it is a new senior living community, a charter school expansion, a replacement bridge or stadium, there are inflated construction material costs, delivery delays, conflicts with neighbors, engineering challenges, environmental issues, labor issues, worker housing needs, challenges in recruiting talent, and a constant need for legal and other expertise to help quash one unexpected problem or another.  Some reports indicate that the Saudi project is far behind schedule, that goals for 2030 have been scaled back by as much as 98%, with 300,000 residents now expected instead of 1.5 million and 1.5 miles of glass walls, down from 105 miles. Some 100,000 additional workers will be needed to make Neom a reality. Outside financing is now being pursued as the costs of the requirements for major construction materials increase and, in turn, raise the price tag for many other projects around the world. 


More than 6,700 miles to the west lies Pierre, South Dakota and the residence of the 52-year-old state Governor, Kristi Noem. She is a rancher, two-term state legislator and four-term Member of Congress, who was elected the state’s first-ever female governor in 2018. Noem, a Republican, was re-elected in 2022 to a final term with the largest vote total in state history. She has starred in a number nationally broadcast “Freedom Works” commercials designed to bolster the Coyote State’s nursing, plumber, electrician, and law enforcement workforce. In recent years, many have placed her on the short list of potential vice-presidential candidates. So, as is often required of those seeking a national stage, she wrote a book, a second memoir, titled “No Going Back” just released on May 7. Excerpts detailing her refusal to order Covid lockdowns may have earned her a few fans, but her justification for shooting Cricket, her 14-month-old female dog, along with an unnamed goat, went viral, shocking the non-farm population and dog-lovers everywhere, arguably eliminating any chance for further elective public office. The tale intended to show how capable she is of doing gruesome but necessary jobs completely backfired. Most astonishingly, this episode from twenty years ago, along with her false claims of meeting Kim Jong-un, has come to dominate headlines once reserved for explosive antisemitic campus protests and the wars in Gaza and Ukraine. A non-stop series of media interviews have earned her no sympathy, kept the story alive, and served as a lesson for all in leadership roles on the need for editors and other seasoned advisors to help protect the precious brand.

Preventable Communication Crises

There are always events that trigger the need for crisis communication, a structure, frequently updated, for managing and responding to events that are unexpected, disruptive, and potentially damaging. For politicians, as with all in health care and finance, plumbing and other matters, the number one rule is: first, do no harm. Organizations all need a plan setting forth the channels, systems, protocols, people, procedures, and backups needed when there is a threat to the reputation and continuity of the business, including respect for its leaders. The daily news is replete with stories of failures, almost all preventable with strong governance, adversely impacting nursing homes, assisted living communities, schools whose charters are up for renewal, private schools whose scandals become public.

Low Market Volatility

From time to time, scandals impact stock, bond and commodity prices — and sometimes sectors as a whole as in the cases of Enron, FTX, Theranos, Jefferson County, and Wells Fargo. But, on the whole, markets are stable and liquid at present, with the majority of equity and fixed income indices showing positive returns and few disruptions. Exceptions include U.S. Treasuries, down more than 2.2% in 2024 on heavy issuance; high grade corporates, down 1.19%; and high-grade municipals, down 0.88%. Among the better performers: copper and nickel, up 16%; gold, up 12%; the S&P 500 and Nasdaq, up 7.9%; high yield corporate bonds, up 1.43%; and high yield municipal bonds, up 2.39%.

Municipal Market This Week

We saw very little high yield issuance on last week’s $7.1 billion slate. But this week’s $11 billion primary municipal market calendar includes several higher yielding financings, including a $16.2 million non-rated deal for Independence Classical Academy in Fort Pierce, coming through the Capital Trust Authority of Florida. The California Municipal Finance Authority is in the market with a $22.1 million non-rated transaction for St. Mary’s School, a private K-8 school in Aliso Viejo.  In addition, Northeast Carolina Preparatory School in Tarboro, North Carolina is coming with a $28.9 million Baa3 rated financing through the conduit Public Finance Authority. And the Clifton Higher Educational Finance Corporation of Texas plans a $202.9 million sale for Idea Public Schools; bonds are guaranteed by the state’s permanent school fund and are rated AAA.

Market Backdrop

The market backdrop for this week is the continuous “slower to lower” message coming from Federal Reserve officials which, juxtaposed against the most recent indicators of a slowing economy, have futures traders nevertheless betting on two rate cuts later this year. There are nine Fed speakers on the circuit this week, so we will hear more about the central bank’s dependence on data. Geopolitics is always center stage, and so traders are following developments in the 7-month-old Israel-Hamas war, new Russian airstrikes on Ukraine, the travels of the Chinese premier through France, Hungary and Serbia. There are 9 Treasury auctions and quarterly corporate earnings coming from Uber, Tyson and Disney. Apple has announced the largest stock buyback on record at $110 billion. There may be a vote to oust the Speaker pressed on the House. It is Week 4 of former President Trump’s criminal trial in New York. The primary season continues with Indiana voters going to the polls. And, sadly, some of the proud students and parents who were robbed of high school graduation ceremonies in 2020 due to COVID restrictions will again see commencement celebrations cancelled four years later. From California to Michigan to New York and Boston, pro-Palestinian, pro- Hamas and antisemitic protest violence continues, fueled by outside agitators and, in some cases, the school’s own faculty

Current Yields

At this writing, the peak of the Treasury yield curve is the 3-month at 5,42%, while the 2-year stands at 4.82%, the 10-year at 4.48%, and the 30-year at 4.625%. The AAA municipal general obligation bond benchmark yields on the short end remain inverted as well. The 1-year yield at 3.25% is higher than the 16-year maturity at 3.21%, The 10-year yield stands at 2.69% and the 30-year yield that is so closely followed is at 3.77%. Municipal yields, especially on the long end and in the below investment grade sector are extremely appealing to both retail and institutional investors. Small block trades are running 50% higher than average according to Municipal Market Analytics.  For borrowers reluctant to come to market with these rates, MMA also points out that long-term tax-exempt yields are still well below the historical average since 1917 at 4.78%.

Dream On

As we enter the first full trading week of May, some investors cannot help but recall the Wall Street adage for stocks “Sell in May and go away”. But the record shows that the S&P 500 has had positive returns in over 75% of summer periods for the last 40 years, and it has historically finished the year higher when the first four months post a gain, as they have in 2024. We encourage our investors to stay invested. Contact your HJ Sims representative for recommendations on where to put extra cash to work. We also encourage our nonprofit clients to reach out for guidance in traversing current markets and strategizing for the future. We look forward to working with you to help define dreams and execute on visions, whether humble or on a relative par with Neom.