Birthdays, anniversaries, holidays, deaths, Valentine's Day, Mother's and Father's Day, graduations, the list goes on and on. The greeting card industry remains a global institution in the gift-giving world despite experiencing slumping sales.

 

Greeting cards have been around for more than 180 years. First inspired by the Japanese art form called "origami," an English artist, Sir Henry Cole, created the first hand-pressed Christmas cards in 1843. These cards were initially used as invitations to his dinner party. The trend caught on, and throughout the nineteenth century, consumers sent greeting cards to friends, family members, and acquaintances for every kind of special occasion. The first American card was produced in 1874. These cards were made with thick paper and printed and colored by hand and were easily affordable for most people. Times have changed.

 

My question is why cards are so expensive. The average cost of a greeting card from the Geeting Card Association is about $4.50. I will believe that when I see it. This weekend, I went shopping for a 25th anniversary card for my wife and paid more than $8. I mean, really. A flashy gold embossed drawing on the front. A mildly sweet but heartfelt message about how much she means to me. A bit of ribbon like a bookmark on the second page, and that's it.

 

As a couple, we must easily spend at least $150 a year if I count the cards we give to friends and relatives. Why do we do it? In this digital era, where most communication lacks depth, taking the time and effort to pick out a card and write something endearing at the bottom, as I often do on a physical card, is a gesture we think is worth it.

 

Somehow, writing with a pen creates a genuine connection, and for us, when displayed over the mantel, it brings a sense of love, happiness, and celebration. And if you are like my wife, a greeting card can be kept forever, becoming a treasured item that holds sentimental value and evokes lasting memories. Evidently, we are not alone in those emotions. 

 

Nine out of ten households buy greeting cards. The average American sends and receives approximately 30 greeting cards or more per year, according to Greeting Card Market Research. U.S. consumers purchase about 6.5 billion cards every year, with retail sales between $6 billion and $8 billion. Worldwide, the industry generates over $16 billion annually, down from $23 billion in 2020. Sales are expected to decline further, with some analysts predicting the industry will shrink to $20.9 billion by 2026.

 

Obtaining data on this industry is challenging since most companies are privately held. There are a handful of large companies, such as Hallmark and American Greetings, which together account for 82% of the market. It is estimated that the profit margin for the entire sector averages about 11%. This lack of competition partially explains the continued high prices for cards. It is a mystery to me why there are not more entrepreneurs entering this market.

 

Anyone with photo editing software can design a greeting card, and there are no barriers to entry for selling cards, such as a license to create and sell them. You can't copyright a quote or saying, so the contents of the card can easily be copied. And it can't be just the convenience at the point of sale because cards sold online are just as expensive.

 

One reason may be that selling items is more expensive than producing them. Getting your product into retail stores, such as grocery, drugstore, or supermarket chain, is extremely difficult. You need to have a variety of designs in multiple categories; simply offering a line of birthday cards won't suffice.

 

 All these outlets have similar overhead costs. Greeting cards occupy a significant amount of display space and often remain on the shelf for an extended period. As such, the rate of turnover is low. "Congratulations on your college degree" card to your grandson comes around infrequently. In the meantime, cards are thumbed through and damaged, and many of the categories may not be high on the shoppers' list of cards.

 

Retailers offer cards to generate incremental revenue. They have found that most customers seldom buy cards because of the lower price, so discounting your card price is not going to siphon customers from elsewhere. Shoppers buy for the convenience, so stores mark the price up to what customers are willing to bear. The retail mark-up is between 50-100 percent.

 

To many, it might seem like Baby Boomers are the last holdouts when it comes to sending Christmas cards or $10 bills in birthday cards, but that is not entirely true. It is true the young do not bother with greeting cards, but neither did I when I was young. Yes, the internet, text messages, and the like are immediate, far cheaper, and less hassle overall — no picking out cards, licking stamps, writing addresses, etc. Facebook walls, for example, are an easy way to keep up with birthdays, but that's about it.

 

However, according to the annual U.S. mail survey, the greeting card category has been increasing for the last three years. Additionally, estimates suggest that 40 percent of greeting cards are not sent through the mail but are instead hand-delivered or tucked into a gift’s wrapping. Social media may actually help the industry since it notifies us of birthdays, deaths, new jobs, and other events that people tend to share on their profiles.

 

 And it is millennials who are the main drivers. They have also contributed to the higher pricing levels of greeting cards, because they are buying the more expensive, embellished, and heavier paper missives with lots of glitter and ribbons. A high-quality greeting card is often crafted by hand, which requires time and effort.

 

Inflation is hitting every industry, and greeting cards are no exception. Prices for paper, especially thicker cardstock, are climbing. The labor to design more intricate cards and add foil, letterpress, and video is also increasing. Yes, cards are much more expensive.   And I will complain, as is my right, but neither my wife nor I will end our love affair with the greeting card anytime soon.

 

 

Stocks should climb a bit higher this month. The next round of tariffs is not due to be levied until July nor will Trump's Big Beautiful Bill (BBB) be passed until then. That gives investors some breathing room to book some gains.

 

The first-quarter earnings season is just about over. Overall results have beat estimates by 6 percent with 79 percent of companies delivering an upside earnings surprise. The incoming economic data has been mostly favorable but much of the data reflects an economy that has been rushing to purchase what it can before the onset of further tariffs.

 

A key economic indicator, The Institute for Supply Management (ISM), data for May showed a slowdown in business new orders and services and an increase in prices and employment. That is in keeping with my own forecast of an ongoing mild case of economic stagflation.

 

The employment numbers for May — a gain of 139,000 jobs — indicated that the labor market remained largely resilient amid the government's new tariff policy. I am forecasting a slowdown in the economy but am still expecting a 1.8 percent gain in GDP for the second quarter, followed by a 1.36 percent gain in the fourth quarter — slow but no recession. Those data points are a bit higher than most economists are expecting. On the inflation front, I see the Consumer Price Index for April announced to show a 2.36 percent increase year-over-year. Regular readers know I am predicting that the data will begin to show an uptick in the inflation rate that will continue into year's end.

 

That is one reason why I doubt the Federal Reserve Bank will bow to the president's wishes to cut interest rates anytime soon. The bond market has penciled in two rate cuts before years' end, but it is hard to see that happening with rising inflation. One caveat would be that if the tariff war drove the economy into recession, while employment fell off a cliff, the Fed might be forced to cut.

 

In the meantime, after months of promising trade agreements were just around the corner, Wall Street is in a "show me" frame of mind. The most progress on trade this week was a brief phone call between the president and his Chinese counterpart and a meeting with the newly elected German leader, Friedrich Merz. Investors are convinced that the TACO (Trump Always Chickens Out) tariff play is alive and well within the White House.

 

The administration has until June 9 to justify its sweeping tariffs under the Emergency Powers Act before the U.S. Court of Appeals. If unsuccessful, the Court of International Trades' decision a week ago to block those tariffs will stand. If so, legal experts predict the case will go to the Supreme Court immediately. In the meantime, our trading partners will most certainly drag their feet in tariff negotiations.

 

And while investors are no longer "tariffed," the spending side of the BBB is before the Senate. It has been crucified by the president's best bro and megabucks campaign backer, Elon Musk of Tesla. Musk has blasted the BBB as a "disgusting abomination" and demanded Congress "Kill the Bill."

 

 The forever friendship of the two amigos seems to have hit the rocks, if their vitriolic exchanges on social media this week are any indication. Will they kiss and make up? Let's hope so. Musk, through his ownership of X, has a large and powerful social media presence that could pose a serious threat to the bill's passage. Given their slim majority in both the House and Senate, the Republicans face the uncomfortable prospect of renegotiating the spending portion of this bill.

 

As for the markets, I wrote that the S&P 500 Index is in a trading range. My upside target is 6,100-6,150 or 100 to 150 points from here. This should happen in fits and starts working its way higher into July. At that point, traders will begin to discount the ramifications of possible tariffs and the passage of the tax and spending bill on inflation, growth, debt and the deficit.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

Home prices have been climbing for years, but the pace of that growth is beginning to cool. That may be good news for some buyers, but relatively few Americans can still find a place they can afford to buy.

 

Redfin, a national real estate brokerage, recently estimated that there are almost half a million more home sellers than buyers in today's housing market. In 2023, buyers outnumbered sellers but last year the trend turned. Sellers outnumbered buyers by 6.5 percent. Today, sellers outnumber buyers by 33.7 percent, which is the most significant gap since 2013.

 

The recent economic uncertainty has sparked a willingness to sell but has also made buyers hesitant. The upcoming threat of tariffs on foreign goods, their potential impact on the economy, and concerns about possible layoffs, such as those affecting federal workers, have combined to reduce demand for housing. 

 

If history is any guide, when the trend reverses, housing prices drop. That appears to be happening in select areas, such as Florida, California, and Texas, but only modestly so far. The combination of high house prices and lofty mortgage rates is taking its toll.

 

Statistics indicate that the housing inventory has increased nationwide. Single-family home construction is expected to grow by 3 percent, while multifamily starts are projected to decline by 4 percent. Theoretically, this means buyers have more options, which can help ease price pressures. However, beneath the surface of the housing market, the supply of houses in the lower and middle price tiers remains subpar and more volatile than at the high end of the market.

 

Buyers are also struggling to find anything they can afford, especially first-time homebuyers. The median price of a home sold in the U.S. during the first quarter of the year was $417,000, 33 percent more than it cost in 2019 before the pandemic. First-time buyers are looking for something cheaper than the average, but even then it's hard to find something they can afford. A typical home will cost a buyer $361,000 in 2025, according to Zillow, compared to $354,000 last year.

 

Thanks to inflation, a tighter Fed policy, and concerns about the country's growing debt and deficit, interest rates have risen significantly in the last several years. Mortgage rates have climbed above 6.92 percent. The average rate on a 30-year fixed mortgage hasn't dipped below 6 percent since 2022, according to Freddie Mac. As such, most consumers who took out new mortgages in recent years have rates above 6 percent.

 

Over the last several years, as interest rates continued to rise, many U.S. homeowners who were lucky or astute enough to lock in a mortgage rate of 3 percent or less in the past, stayed put. Sure, prices were going up for their home, they reasoned, but so were mortgage rates. At current rates, they would be crazy to sell.

 

But the years are passing, and many empty-nester homeowners are getting older. Others are changing jobs or getting divorced. Some are having more children. The pressure to sell is mounting. The sticker shock of paying twice your existing mortgage rate or more is waning, and what's to say that mortgage rates won't go even higher?

 

Home prices declined in 11 of the top 50 most populous metro areas in the last month. The spring buying season has been sluggish, to say the least. To be sure, no one is looking for a market crash or anything remotely like it. However, the higher long-term interest rates climb, the more buyers will disappear.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

Equities remained on hold this week but managed to produce gains for the month. Tariff news dominated the tape, while the quarterly earnings results supported the market overall. Thanks to strong earnings from Nvidia and a federal court decision against reciprocal tariffs.

 

It was a Mr. Myagi kind of week as tariffs off, tariffs on ping-ponged through the federal court system while global markets reacted in kind. On Wednesday, a federal trade court blocked some of President Trump's most sweeping tariffs, set to take effect in July. The three-judge panel of the U.S. Court of International Trade placed a temporary hold on some tariffs imposed by utilizing a 1977 law called the International Emergency Economic Powers Act (IEEPA). That lasted less than 24 hours as White House lawyers managed to lift the order for ten days.

 

The president had argued the act gave him the authority to impose reciprocal tariffs worldwide, but the court disagreed. It wrote that Trump's actions  "exceed any authority granted to the president by IEEPA to regulate importation using tariffs." Duties based on other laws remain in force, such as tariffs on steel, aluminum, and autos.

 

Expectations that the ruling would shoot down the tariffs may have been why so many countries have been "negotiating with good faith" and yet were unwilling to sign on the dotted line until the trade court announced their decision. Why agree to anything when the country's legal system declares your actions illegal? It appears foreigners were right to hold out until this week.

 

The U.S. court system is causing increasing problems in the implementation of many of Trump's most important initiatives. Over 328 lawsuits have challenged Trump's use of executive powers. The courts have ruled against him in more than 200 cases so far in his second term. Immigration, deportations, reduction in the size of government, birthright citizenship, transgender military service, DEI programs, and now tariffs.

 

However, the Wall Street consensus is that the trade war is far from over. There are more conventional means at the president's disposal to impose tariffs, although they do not confer the broad powers Trump claims he needs. The more traditional approach would be to utilize provisions of U.S. trade laws, such as Section 232 (tariffs on national security grounds) or Section 301 (unfair trade practices), to impose tariffs.

 

Overall, this legal setback will likely delay and complicate the imposition of tariffs. Appeals take time, as will adjusting trade strategy. Given that tariff revenues figured prominently in the calculations of deficit spending, the delays may also cause trouble within the Republican Congress and its timetable for passing the tax and spending bill.

 

Aside from busting the budget, the "One Big Beautiful Bill Act" also includes a change in the tax treatment for foreign capital in the U.S. under a provision labeled Section 899. The provision states that "discriminatory foreign countries” that impose levies that impact U.S. companies would be charged a new 5 percent tax on their U.S. income. Why should you care?

 

If passed, it would transform the present trade war into a capital war, where U.S. assets, such as plants and equipment, as well as purchases of bonds and stocks owned by foreigners, including foreign governments, would see their income taxes here grow to 20 percent per year. It would certainly hasten the current trend among non-U.S. investors to reduce their holdings in the U.S. How that squares with Trump’s desire to increase foreign investment is a mystery to me.

 

As for the markets, I warned readers last Friday not to take Trump's threat to apply 50 percent tariffs on Europe seriously. The markets sold off, but I wrote, "His track record for implementing such actions in the recent past has been spotty at best." Sure enough, by Sunday afternoon, he backed off. 

 

Again, in a post this Friday morning (is this becoming a Friday thing?), Trump accused China of violating their two-week-old trade agreement. Markets fell once again on the news. It's impossible to predict how long this tantrum will last but traders have now begun to discount the president's on-again, off-again, shoot-from-the-hip outbursts. His tariff tactics have earned him a new moniker making its way across social media — "TACO," which means "Trump Always Chickens Out."

 

Nvidia, the semiconductor leader in AI, delivered a robust set of numbers in its latest quarterly results, which provided support for technology stocks and the broader market. Earnings overall have been surprisingly good. Economic data has been mixed, with both the economy and inflation slowing. GDP declined by 0.3 percent in the first quarter, driven by a surge in imports. The Fed's inflation forecaster, the PCE Index, came in less than expected for April, as I had expected.

 

In any case, markets are extended but working off those overbought conditions through time. It appears that stocks are poised to continue their upward climb, barring any new developments from the White House. The best-case scenario for the S&P 500 Index would be between 6,000 and 6,200 before taking a breather.  

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

The American tradition of firing up the backyard grill for a BBQ among friends and family is upon us. However, this year's record high prices for beef, brought on by generational lows in cattle inventories, make serving up steaks and hamburgers a budget-busting event.

 

A look at cattle futures on the Chicago Mercantile Exchange (CME) reveals what we can expect in terms of price increases this summer. Over the last month, live cattle futures have hit a record high of $2.18 a pound. That is a record high. Prices are up 22 percent from the same time last year. In comparison, pork prices are forecasted to rise by 1.8 percent, while poultry prices are expected to increase by a mere 1 percent

 

Grilling season officially began on Memorial Day and runs through to Labor Day. For whatever reason, the lion's share of grilling is packed into the days between Memorial Day and the Fourth of July. Your local supermarket or grocery store has already stocked its meat counters by buying steak, ribs, ground beef, and other meat selections from wholesalers to lock in supply.

 

But before you blame food companies for gouging, consider that companies such as Tyson Foods have reported a second-quarter loss of $285 million in its meat division, where a $470 million cost increase hit them in their beef-packing operations. What, therefore, is the core problem in the sky-rocketing price of meat?

 

I have said it before, and I will say it again — climate change. The U.S. Department of Agriculture reported that the total cattle herd in the U.S. is 86.7 million head. That is a generational low dating back to 1951. The changing weather has caused drought conditions in grazing and farming lands throughout the nation. That not only limits ranchers' ability to add more animals to the herd but has also increased the cost of feeding them, as feed prices have also risen.

 

That's tough going for the average hard-working rancher, who is now in his sixties. Drought, rising feed prices, water scarcity, the threat of tariffs, and increasing prices for everything from diesel to tools and tractors leave little room for profit.  Many are retiring, and few are taking their places. The cost of starting a farm or ranch requires enormous capital, and few are willing to risk it in this environment.

 

Producers are taking steps to reduce costs, including raising heavier animals, closing inefficient meat-packing facilities, and encouraging growers to replenish their herds. If, by some miracle, this were to occur, it would still require 18-24 months for the calf to grow into a harvestable animal. In the meantime, the trend is not your friend. Unfortunately, since most of the world has given up on addressing climate change, the only real solution to rising meat prices is to accept higher prices.

 

At some point, that steak or hamburger will cost so much that it could cause a massive shift in consumer preferences. When that occurs, is anyone's guess. As for your next BBQ, you have three choices: take out a loan, switch to chicken, pork, or fish, or pray for rain.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.