Market Commentary: Where Everyone Knows Your Name

by Gayl Mileszko

Ancient Egyptians believed that you die twice: once when you take your final breath and then again, the last time someone says your name. Some of us are simply content to be with friends at a place like Cheers where everyone knows your name today. Many of us who plod along will be lucky if our name, our life, our accomplishments, loves, beliefs, lessons learned and regrets will even be remembered two generations from now. But others are hard at work, inventing, teaching, curing, building, giving and doing things to leave a lasting mark, something foundational for those that follow. Nations as well as smaller communities commonly erect pyramids and monuments, rename streets, and legislate the creation of towns to ensure that some of these great leaders and humble heroes are remembered for centuries if not longer.

Washington D.C., itself created in tribute to our first president, has more than 160 statues and memorials to commemorate lives rich in achievements and sacrifice. Small towns across the country have post offices named after a popular elected official with a long record of service and parks designated for fallen sailors and soldiers. Our transcontinental highway is named after Dwight Eisenhower. Isaac Newton will always be known for his laws of motion. Most buildings on any given college campus are named after wealthy alumni, quite often while they are still quite alive. The generosity of major patrons is often recognized with big letters on a hospital or museum wing that may well last for more than fifty years. There is a Hendrix chord, a Julia Child rose, a Fibonnaci sequence, a Kareem Abdul-Jabbar skyhook, a Cleopatra bath and several forenames spoken daily in prayers by billions around the world.

Senior Living Communities Honor Leaders and Benefactors

Many senior living communities have incorporated with names honoring founders, donors, community or religious leaders with extraordinary vision, heart, commitment and persistence. John Knox Village and Otterbein Homes were named after church founders. Other thriving communities, including Landis Homes and Searstone, were named after those who initially provided seed money and land for homes to support local retirees or to care specifically for widows, the infirm or retired clergy. Mary Wade was named in honor of a donor’s sister, the Whitney Center after the innovator Eli Whitney, Crane’s Mill after the family business that operated in a county for more than two centuries. Miriam Osborn left a portion of her estate to ensure that care would be provided for seniors 131 years ago, while Toby and Leon Cooperman presented a major endowment gift six years ago to support Sinai Residences of Boca Raton.

Financings in the Senior Living Sector off to a Slow Start in 2023

Senior living financings are off to a slow start this year with only three so far coming to market for a total of $84 million, down from a total of $756 million at this point in 2022, $441 million in 2021, and $406 million in 2020. A $202.7 million start-up financing for Seafields at Kiawah Island is scheduled for sale this week through the South Carolina Jobs-Economic Development Authority and there is only one other assisted living deal on the forward calendar at this writing. Operating fundamentals in the sector have gained a lot of ground after the first two years of the pandemic. Senior housing occupancy for independent living and assisted living has seen six straight quarters of increases and the change in occupied inventory, or net absorption, a key measure of demand, in 2022 was the strongest ever recorded by NIC, the National Investment Center for Seniors Housing and Care. Skilled nursing occupancy at the end of 2022 was up 182 basis points from the prior year and the average price per bed paid by buyers reached a record high of $114,200, the first time ever that the average exceeded $100,000. Demographics here still point to a future wave of demand. But for now, many borrowers await some stability in rates, a return to a normal yield curve, a clear trend in declining inflation, and some rational projection about where this economy is headed after three years of pandemic, unprecedented fiscal stimulus, a series of record high Fed rate increases and more than a year of threatening recession talk.

Market Benchmark Performance So Far in March

At this writing, only four trading days into March trading, major stock indices are all positive, oil is up nearly 5% to $80.46 a barrel, gold has risen to $1,850 per ounce and Bitcoin has lost 4.5%. The measure of volatility in equities has dropped 10 percent while it has risen nearly 4 percent for bonds. The peak of the Treasury yield curve is the 6-month maturity at 5.13% and the 12-month maturity at 5.04%. The 2-year yield is at post-2007 highs while the 10-year yields 3.95% and the 30-year 3.89%. The BAA corporate bond yield stands at 6.38%. Top rated municipal bond benchmarks are all up by 2 basis points, with the 2-year general obligation bond at 2.97%, the 10-year at 2.61% and the 30-year at 3.58%. It is extraordinary for the muni yield curve still to be inverted for nearly 3 months; at this writing the 1-year yield at 2.98% exceeds that of the next 11 maturities.

Market Movers

We can expect more volatility here in March, the last month of the first quarter. As we head into peak tax season, there are multiple headline events. The Russia-Ukraine War has entered its second year. The Director of National Intelligence just released her 2023 annual threat assessment, detailing complex strategic challenges from Russia, China, and North Korea. The Federal Reserve Chair is giving his semi-annual monetary policy update to the Congress and the President circulates his FY24 budget request. Major economic data releases include February payrolls and the Fed’s Beige Book overview of economic conditions in each of its 12 districts. There are eight Treasury auctions scheduled, very heavy corporate bond issuance expected, and the largest municipal calendar of the year, half of which is coming in the form of federally taxable securities. Traders are closely watching to see if fund outflows continue.

Everyone at HJ Sims Knows Your Name

At HJ Sims, we are honored to manage brokerage, advisory and banking accounts in the names of our valued clients, during every economic cycle since 1935, when Herbert J. Sims founded the company that still bears his name. We are proud of the generations of families we have served during both volatile and stable economic cycles and look forward to working with you in the days, years and decades to come. Reach out to your HJ Sims representative this week to update us on your latest achievements and review your portfolio in the context of your long-term goals. Unlike at the big wirehouse firms and anonymous electronic trading sites, you will find that everyone who answers your calls here knows your name and values your business.

For more information on offerings or questions about current market conditions, please contact your HJ Sims representative.

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