Beyond food, fuel, and maybe used car prices there are not a lot of areas where I see any relief on the inflation front. This is especially true when looking at leisure and entertainment activities.

 

As younger generations focus their spending habits on experiences rather than objects, tickets for live entertainment, sporting events, and movies are climbing. The Bureau of Economic Analysis is predicting that American consumers will spend a whopping $95 billion on live event tickets this year.

 

If you grew up as a fan of live concerts you are probably in sticker shock. An average ticket price for a live concert this summer stood at $120.11, according to Pollstar. That is a 7 percent increase compared to 2022, and 27 percent higher than in 2019. However, that doesn't account for the steep price increases to see the most popular entertainers.

 

Just last week my brother-in-law, Ron, posted this on Facebook: "Insanity! Stadium concerts for the Stones. Presale tickets in upper level, over $350!" Taylor Swift commanded an average face value ticket price of $254. An Eagles ticket averaged $239, while the "Boss" fetched $226 a ticket on average. Of course, those were prices if you were lucky enough to buy them directly and not in the resale market. Swift resales averaged $1,095, while Beyonce tickets were going for $380.

 

Visits to theme parks have also increased. If you took your family to one of Disney's themes parks this year you know how expensive that five-day vacation has become. On average, it costs a family of four $6,300 or more, and those prices are continually increasing.

 

The company is doing its best to get more money out of visitors by offering extras like features that allow paying guests to skip some lines. Other less obvious increases involve the higher prices of souvenirs, food, and parking.

 

Besides, these costs, there are also peripheral costs like higher prices for airline tickets, hotel rooms, and gas (if you are driving). Scott, a friend and colleague of mine, has taken his wife and daughter to Disney in Florida several times. Here is his take: "It depends how fancy you want to get. For the three of us, including flights, it can be $5,000 to $8,000."

 

I am not picking on Disney. Consumers who visited other theme parks, and even campgrounds, have had to shell out about 3.4 percent more this year than last, and more than 6 percent since 2019.

 

But price gouging seems rampant in other areas as well. As the holidays approach, retailers, big and small, both national and local are using the "experience" to up prices. Take live trees for example. Smelling that pine in your living room while you unwrap presents will cost you more again this year. Canadian wildfires and "labor costs" are the excuses given.

 

In Boston, for example, a 7-foot balsam is going for $170, while a Fraser fir of the same height is fetching $220. Of course, if you would like an 8-foot balsam fir delivered to your doorstep there are a couple of places on the internet that will charge you a mere $325-plus.

 

If you haven't noticed how crazy holiday prices have risen, just take a stroll around your local holiday gift fair. On my excursion, I was offered the chance to buy wooden cutting boards starting at $175 apiece. Locally made cheese could be had for $12 a slice and a one-ounce vial of herb-infused salt for $12. If that did not appeal to you there were always bars of scented soap for $33 each.

 

And while most of us complain about prices, we continue to pay for our experiences and luxuries. Of course, everyone experiences inflation differently. Your rate of inflation depends on where you live and what you buy. Lower-income Americans, for example, suffer the most from rampant price rises. They spend more of their income on necessities. For those who are barely making ends meet, the experience of rock concerts and excursions to Disney or Three Flags is not even contemplated. For them, about the best experience they could have is putting food on the table or having enough gas money to get to work.  

 

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.

Some of the 9 percent plus gains in the benchmark S&P 500 Index since October should be pared back in the week ahead. That doesn't mean Santa will thumb his nose at investors for the rest of the month. I am still expecting a traditional end-of-year rally.

 

Thanksgiving has come and gone, but stocks have hung in there as November ends. And while technology has marked time this week, we have seen basic materials, precious metals, industrial and financials come back to life.

 

The declining U.S. dollar is largely responsible for those gains. I don't think this upward momentum is over either. I am thinking that the greenback is going to continue to fall and as it does assets that are negatively correlated with the dollar will continue to gain. 

 

Some investors may remember that back at the beginning of August when I expected markets to decline into the September-October period, I wrote a column called "The Catch-up Trade." I highlighted basic materials, commodities, mines and metals, agricultural equities precious metals, small caps, and China as potential adds to your portfolio. 

 

I wrote that "All the above areas have been left in the dust this year as everyone's focus was squarely on the Magnificent Seven and lately AI stocks. As a contrarian, I am attracted to unloved areas like this. That is not to say that the technology sectors of the market will not participate. They will, just not at the same rate as those in a catch-up trade, in my opinion."

 

Except for China (and even there I am still waiting for a snap back higher), all the above areas are rising. Gold and silver have had pretty good runs. I am expecting energy to begin to climb as well. Even crypto, another beneficiary of a falling diamond, is doing well. I expect these areas to continue to climb in the weeks ahead.

 

As I have said, the main locomotive for this trade has been and will continue to be the dollar's decline. As investors see inflation coming down, and an end to the Fed's monetary tightening regime of the last two years, the yield on the U.S. ten-year Treasury bond has fallen by more than 70 basis points in the last few weeks. In turn, that has made the dollar less attractive, so traders are looking elsewhere for more attractive currencies, such as the Yen or even the Euro.

 

On a near-term basis (next two weeks), I am expecting the equity markets to consolidate with a risk of whittling down some of the gains we have enjoyed over the last several weeks. The American Association of Individual Investors (AAII) over the past week has seen the spread between bulls and bears widen by almost 30 points. The percentage of bulls has reached a six-month high, while bears fell to below 20 percent. As readers know, I use the AAII data as a contrarian indicator, meaning the more bullish the date, the higher the risk of a pullback.

 

On a technical basis, it looks to me that we are hitting peak levels on the main indexes. Technology and financials are close to July 2023 highs. Over in the bond market, I expect the decline in yields has been overdone, and we should expect to see a push back up to relieve overbought conditions.

 

If we do pull back, I am expecting something like a "W" pattern of ups and downs, but this should be completed by mid-December. And then what? I expect we will make new highs and continue to climb to as much as 3,800 or beyond on the S&P 500 Index. As such, I would use any pullbacks to add to positions both in technology as well as industrials, and the catch-up areas I highlighted. 

 

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.

On Thursday of this week, almost 200 nations are meeting in Dubai at the COP28 Climate Summit to discuss global warming. The COP28 the participants will focus on how to keep temperatures from climbing any higher. Thus far, the track record is less than encouraging.

 

Over the last eight years, despite pledges from both political and business leaders worldwide to reduce industrial emissions, temperatures have continued to rise. This is in the face of massive efforts both here and abroad to develop and expand solar, wind, and nuclear power alternatives to fossil fuels.

 

Despite these efforts, carbon dioxide emissions and temperatures continue to rise. With that background, the climate summit will be focusing on how to keep their stated goal of keeping world temperature gains below their 1.5-degree Celsius (2.7 degrees Fahrenheit) target.

 

That number, established at the 2009 Copenhagen summit, was officially set as a temperature ceiling goal a year later by the United Nations.

 

In 2015, at the Paris Agreement, 195 countries agreed to hold temperatures below 2 degrees Centigrade, specifically to stay within that 1.5 centigrade level. The 1.5C level is akin to a speed limit for rising temperatures worldwide. Going above that level, scientists believe, would make some impacts of climate change irreversible.

 

It was not an arbitrary data point. Climate scientists arrived at the number by comparing the average global surface temperatures today with those that occurred in the late 1800s before industrialization. The difference between now and then is approximately 1.1 degrees Celsius (2 degrees Fahrenheit).

 

The bad news, according to Copernicus, a European climate service, is that we have already surpassed the 1.5-degree speed limit on at least 127 days this year. That may seem a tiny number to you and me, but when it is added to an overheated planet overall, the impact can be huge. As a result, it is almost a certainty that 2023 will be the hottest year on record.

 

Floods, heat waves, droughts, hurricanes, wildfires — take your pick — we all experienced the changes. Some more than others. 

 

More subtle changes are occurring as well like the change in farmers' growing seasons throughout the world. Fortunately, the ocean, which makes up 70 percent of the earth's surface, absorbed more than 90 percent of the excess heat (and 30 percent of excess carbon dioxide). However, even the oceans are succumbing to the extra heat. Coral reefs are bleaching and crumbling, the polar ice and snow caps are rapidly shrinking and so is marine life.

 

Here in the U.S., the heat is causing accelerated climate change. It is also creating more and more extreme weather events, according to the latest Federal National Climate Assessment. The cost of extreme weather events is at least $150 billion per year in direct damage alone. That total is projected to increase over the near term.  In addition, billion-dollar events are occurring at a far more rapid clip than they did in decades past, according to the report.

 

Today a billion-dollar disaster is occurring every three weeks, as compared to one every four months back in 1980.

 

Unless something changes, the 1.5C threshold will be broken permanently by the early 2030s, according to the Intergovernmental Panel on Climate Change. That would create much worse climate effects and make 2023's weather issues look like child's play in comparison.

 

Do I think something radical will change during the COP28 this week? No, I don't. Both President Biden and Vice President Harris are not even attending. That is not to say that America is doing nothing. The president has allocated $6 billion to strengthen the electric grid, help deploy carbon-free energy, protect communities from the impacts of climate change, and improve water reliability. But given the dangers, the U.S. and other industrialized countries need to do more, a lot more.

 

Work on reducing emissions is so slow that additional greenhouse warming is almost a guarantee. The world's efforts to roll back climate change have been incremental when was is needed is a transformative approach. Redesigning the way buildings are built, rather than installing air conditioning, halting, rather than slowing, new development in floodplains, the kind and number of cars we drive, how we cool and heat our homes, and how business conducts business from the ground up.

 

Am I preaching to the choir? I don't think so. We are all sitting on our hands, complaining about the weather, the tick seasons, and the ice storms and doing little to nothing about the cause. Well, unless you plan to vacate this planet in the next seven or so years, our time of reckoning fast approaches. By then it will be too late.

 

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.

This stock market rally lasted nine straight days. That was more than enough to trigger some profit-taking.

 

"Too far, too fast" is my interpretation of the nine-day continuous climb in the equity and bond markets. The rally that started early last week continued this week, although it was clear to me that it is showing some signs of faltering.

 

And as has happened throughout the year, the Magnificent Seven group of stocks was the focus of most of the buying but on less and less volume. Since they represent such a large part of the indexes, it was not hard to see that the indexes were supported by a handful of stocks. However, the remaining 493 stocks in the S&P 500 Index are rolling over, which they have done all year.

 

Bond yields, on the other hand, have stopped going down. Instead, the U.S. 10-year Treasury bond had been consolidating. That is until the bond auctions on Wednesday and Thursday. The 10-year bond auction was fair, but the 30-year sale on Thursday did not go well at all. It was the weakest auction in almost two years. There was little to no appetite for long-dated bonds after the large decline in yields last week. On Friday, yields, and with them the stock market, recovered a bit.

 

To be clear, I am not convinced that we have seen the peak in long-term interest rates. If I look out further than January, I know that next year the U.S. Treasury will need to auction even more bonds simply to finance the government's existing spending plans. Some bond analysts expect more than $2 trillion in fundraising will be on the docket. If so, that should push interest rates back up and yields higher than where they are now.

 

As for the Fed, right now the betting is that there will be no rate hike at the December FOMC meeting. Some now predicting a rate cut as early as June 2024. Those kinds of predictions usually crop up to justify why stocks can continue to climb higher. I don't put much faith in that, especially when not one Fed member has even discussed rate cuts in the coming year.

 

In a speech before members of the International Monetary Fund on Thursday, Federal Reserve Bank Chairman Jerome Powell said the Fed is 'not confident' it has done enough to bring inflation down. He warned that more work could be ahead in the battle against higher prices.

 

 This statement was only a week after the FOMC meeting in which Powell's words were interpreted by the market as indicating the Fed was through raising rates. The moral of that tale is one usually hears what one wants to hear.

 

We are once again getting close to the deadline for a government shutdown. The Nov. 17 deadline is fast approaching and there is still no plan to keep the lights on in Washington. House Republicans are all over the map in what they want. Unfortunately, the new Speaker has yet to table any plan that would satisfy all his members. 

 

What is worse, Senate Republicans are now also demanding stricter border policies as a condition for Ukraine aid. At this point, the best that can be hoped for is yet another continuing resolution that would stretch funding out for another month or two. If not, I would expect the financial markets to hit some turbulence.

 

Chair Powell's words, combined with the poor bond auction, all on the same day (Thursday, Nov. 9), had bulls rethinking the market direction in the days ahead. I am looking for a minor pullback in the averages here short-term. A decline of 30-50 points on the S&P 500 Index should about do it from here. Anything lower than say 4,300 would tell me that there is more trouble in paradise than I am expecting.   

 

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.

Baby Boomers are aging. As their health fails, an increasing number of the elderly are turning away from nursing homes and opting for home health care instead. The problem is finding enough trained caregivers to handle demand.

 

The demographics in the U.S. indicate two trends — an aging population as well as a declining birth rate. By 2034, there will be more adults over the age of 65 than children under the age of 18. Between 2018 and 2060, the population of seniors will double.

 

An overwhelming majority of Americans (88 percent) would rather receive long-term care services in their homes as they age, according to a recent study by the Associated Press and NORC Center for Public Affairs. Being cared for at home instead of in a clinical setting has many benefits according to studies. Daily routines in housekeeping, mealtimes, and things like prescription reminders seem to alleviate feelings of isolation and alleviate stress and depression while helping to improve memory and physical stability and fostering a sense of independence. And it is not just the elderly, individuals recovering from short-term surgery, rehab, or chronic illnesses prefer to recover at home as well.

 

About 12 million Americans are receiving some kind of home-care services at any given time and that number is increasing. There are 45 million seniors, based on Medicare statistics, of which 15 million will end up in the hospital every year. Of those, more than 3 million suffer from five or more chronic conditions and will be hospitalized several times a year. That is why home care is one of the fastest-growing segments of the health-care sector. 

 

The median costs of in-home care are different depending upon the state, but a survey by Genworth Financial believes the national average is approximately $4,000 per month. Private insurance companies, Medicare, and Medicaid foot some or most of that bill depending on the individual's circumstances.

 

The total home-care market was valued at $301.09 billion in 2021. It is expected to top $813.17 billion in the next five years. That is a compound annual growth rate of 15.25 percent. The U.S. Bureau of Labor Statistics indicates that the demand for home health care and personal care aides is expected to rise by 34 percent from 2019 to 2029, which would surpass the average growth rate of all other occupations. Last year, home care spending hit a historical high of $113.5 billion.

 

Unlike trends in other segments of health care that have seen high levels of corporate concentration, the home care industry is made up of more than 33,200 small businesses as of 2022. In total, there are an estimated 3.4 million home care workers providing health care support to older adults with disabilities in the U.S. Overall, roughly 78 percent of providers employ fewer than 50 workers. The facts are that there is a growing gap between the number of home care workers and patients. This is nothing new. Between 2013 and 2019, the number of available home care workers for every 100 patients has fallen by nearly 12 percent. The gap has widened since then. Some recent studies indicate that as many as 25 percent of referred patients have been turned away from home healthcare providers due to a lack of workers.

 

The physical, mental, and emotional stress required to care for these individuals is often overwhelming. It is not an easy job. More than half of these current home care workers have no formal education beyond a high school degree. Many are immigrants from various ethnic, economic, and cultural backgrounds.

 

Nationally, home health-care workers are paid an average of about $13.50 per hour. In some states such as Louisiana, West Virginia, Texas, Mississippi and Oklahoma, workers make less than $12 an hour. Almost 43 percent of workers' income is below the poverty level. In addition to the low pay, poor communication, lack of recognition and challenging work hours conspire to discourage workers from continuing in this field. In 2022, the professional caregiver turnover rate was more than 77 percent.

 

But before we pin the blame on unscrupulous home care agencies, recognize that these companies face enormous challenges in financial, operational, and clinical areas. Providing health-care services is extremely complicated, beset by logistical challenges, system inefficiencies, complex payment systems, and lack of care coordination. Private insurance companies, Medicare, Medicaid, differing reimbursement policies, eligibility, and all sorts of differing care requirements must be included in the mix.

 

It is an industry that is difficult to apply economies of scale because no two agencies address these problems in the same way. Usually, the owners as well as their employees, are overrun with existing duties, and as such expanding is just not worth considering. Paying higher wages might increase the supply of workers, but training them to understand, communicate, and deliver quality services to an expanding patient base is just as important.

 

If ever there was an industry in need of data-driven technology, it is this one. The industry could benefit greatly from communication tools, such as data access and secure data information exchange. If workers were able to access easy-to-use technology that could connect them to experts while on the job, both the stress levels and the probability of making medical mistakes would be lessened considerably. Software that could improve care delivery, while reducing paperwork, as technology has done in countless other areas, is just begging to be developed and introduced to an important area looking for solutions. 

 

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.