By Gayl Mileszko
Market Commentary
Gimme Shelter, Gimme Something
It was another age, now two generations ago, when the Rolling Stones started singing about the world closing in on us, the terrifying proximity of violence and war, and our need to scurry for shelter. As we know, anxiety is still pervasive today. We worry about everything from microplastics to measles, machine learning to market meltdowns. The national electric grid in Cuba collapsed this week, leaving 10 million people without power. North Korea is testing nuclear-capable rocket launchers. Chinese fighter jets and warships harass Taiwan. One million Lebanese, one-fifth of the population, has been displaced by the rockets being fired by Israel and Hezbollah. We are unleashing bunker busters on hardened Iranian missile sites along the strait of Hormuz. More and more tech billionaires are building ultra-luxury underground bunkers and we think: they must know something. So, who among us can be surprised by a recent study that found that 1 in 3 Americans believe the world will end during their lifetime?
Life Goes On
Battle plans are being drawn in the Situation Rooms in Washington and Kyiv, Camp Rabin in Tel Aviv, the Kremlin, and from within the rubble in Tehran. But most of us get up in the morning and go to work, to school, to volunteer, to visit, to appointments made months ago. The poet Robert Frost once quipped that everything he learned about life could be summed up in three words: “it goes on”. And so, it does. About 70,000 babies were born in America last week. We celebrate our Saints Patrick and Joseph, Holi, and Eid al-Fitr. March Madness gives us the chance to root for the underdogs with the most grit and gumption. And even with so much snow still on the ground, Nisan is here and the spring equinox is about to arrive. Thank goodness.
Central Banks Not Central This Week
With all that is going on around the world, not much attention is being paid to central bankers who are usually front and center whenever they meet. This week, for a variety of reasons, the spotlight is off our own Federal Open Market Committee as well as monetary counterparts in Japan, Britain, Switzerland, Sweden, Canada, and the European Central Bank. All are expected to hold rates steady while issuing solemn assurances that they stand ready to act should war and energy prices fuel inflation or rising unemployment threaten the economic outlook. Fed Chair Jay Powell, wearing his bipartisan purple necktie, has just likely headed his penultimate meeting, although Wall Street would not mind having him stay at the helm for a while longer. For years, he has had a calming influence on jittery markets. But as a lame duck he is unlikely to press for unexpected moves in the form of cuts or hikes. There is a block on the confirmation hearing for the President’s pick for the next Fed chief, Kevin Warsh, while the Department of Justice investigation into Powell’s testimony to Congress on the cost of headquarters renovations drag on. This week, a federal judge quashed DOJ subpoenas that had been issued in January, but that decision will likely be appealed. Several cases are being dumped onto the laps of the Supreme Court justices to clarify the unique aspect, if any, of the Fed’s legal independence. Until the Congress starts to legislate, all the action lies in the executive and the judicial realms.
Predictions
President Trump is already frustrated with SCOTUS over its tariff ruling and the pace of its deliberations. He himself has been operating at warp speed now for 15 months now, knowing that he really only has until the mid-term elections to accomplish his “Gimme” policy goals. Beginning in January, he will be the lame duck, and the composition of the next House and/or Senate may present even greater challenges. Polymarket places the odds of the Senate remaining under Republican control at 51%, but bettors see an 85% chance that the Democrats will take the House. Kalshi has more than $1.8 million of wagers on the balance of power; at present 49% see a Democratic sweep. These hugely popular prediction markets are making plenty of headlines on their own, rivaling legal sports betting sites and effectively placing political, financial, military, and other current events squarely in the sporting category. Concerns have been raised over insider trading, and leaks of classified intelligence. Arizona has filed criminal charges against Kalshi over “illegal gambling” and there are more than 20 federal lawsuits filed in an escalating legal battle over regulatory authority. These, too, are likely headed to the Supreme Court.
Gimme Now
Our interest in, and demand for, instant gratification can be readily seen in some of the wagers being made on contract platforms. Will Markwayne Mullin say the word fentanyl during his confirmation hearing? Pay me right away. Will Jay Powell use the phrase “tariff inflation”? Pay me now. How many times a day do we say “gimme” about my money, my order, my need for a quick answer. Amazon is profiting from this with its new 1-hour and 3-hour delivery options. Claude by Anthropic is helping to generate grant proposals for nonprofits in hours, not days. We are moving toward 24/7 trading on our largest stock exchanges. WisdomTree recently announced instant settlement capabilities for tokenized Treasury money market fund shares. Change is breathtaking at the 30,000-foot level and in our own day-to-day lives. All we can do is take a moment, apply our gut sense, our commonsense thinking, to all the news and developments swirling around us.
Not Quite Now
Not everything moves at lightning speed, though. Disruption comes in many forms. Thousands of vessels, cargo ships, and oil tankers are stranded or awaiting safe passage on either side of the Strait of Hormuz. The latest producer price index came in higher than anticipated at 3.4% year over year, causing a delay in all corporate bond issuance on Wednesday after a near record $115 billion came to market last week amid much greater volatility. In the municipal bond market, the City of Chicago postponed about $292 million of its $800 million general obligation bond issue last week due to market conditions. Build America Bond refundings by the Bay Area Toll Authority and the Dormitory Authority of the State of New York were also held back. Most underwriters consider the market upheaval to be short term in nature given expectations for a relatively quick end to the war with Iran. Uncertainty reigns, however, so at this writing, stocks, bonds, gold, and Bitcoin are all selling off.
Extreme Fear But Havens and Opportunities
Algo, robo, momentum and other headline-driven trading systems create major movements in the financial markets throughout the day. It is hard to remain calm and objective, remove emotion from both market entry and investment decisions. Not surprisingly, we see the CNN Fear Index pointing in the range of ‘extreme fear”. Record high levels of U.S. money are being placed under the mattress and in $7.8 trillion of money market funds. It is impossible to see ahead – an hour, a day, a week, or month — never mind one year or thirty. It is not surprising that futures trading is now only building in one small Fed fund rate cut for December 2026 and not again until December 2027. At this writing, only a few asset classes are showing positive returns so far in 2026: coal, crude oil, gold, silver, and aluminum. One major high yield muni benchmark index is up 1.41% this year while all the major equity indices are down 2.75 to 4.77%. We view many municipal bonds as a haven. Last week, Baa3 rated Magnolia Public Charter Schools came with a $17.9 million California School Finance Authority deal structured with a 2065 term bond that priced with a coupon of 5.375% to yield 5.53%.
Odd Signals for Caution and Contact with Your HJ Sims Rep
We can argue in months and years ahead but the 1969 Rolling Stones song “Gimme Shelter” is considered one of the greatest rock songs ever recorded. Worth a listen on YouTube for all unfamiliar — or for those who will blame this author for why we can’t get this song (or a few others like” You Can’t Always Get What You Want”) out of our heads just now. We are not looking back to the oil crisis of the 1970s, but we note that that crude oil and US Treasuries are now the most negatively correlated since 2022. And we are very aware that many major oil shocks have preceded recessions: 1974, 1981, 1990, 2001 and 2008. Our 2-year Treasury is trading above the Fed funds rate by the most since March of 2023 when it topped 5% back when Jay Powell implied that the Fed may need to increase pace of hikes again. The drama accompanying the triple witching options expirations on Friday only adds to the angst. This is why you have an HJ Sims representative, a trusted financial professional who can discuss your concerns, goals, needs, and risk tolerances, as often as you need. We are moving forward with major bond financings for senior living and charter school borrowers. We are actively trading higher yielding, creditworthy municipal and corporate bonds as well as dividend stocks, funds, and other securities. Yes, we are attuned to rising gas prices, how energy, AI, consumer, and defense sectors movements related to Operation Epic Fury impact our portfolios. Worries of course dominate but forward-thinking people are seizing on opportunities that did not exist a month or even one year ago. Talk to us to learn more about how we can help you, your family, your business through this latest, most recent period of uncertainty.