The dermatology sector in health care is expected to grow by almost 7 percent per year between now and 2034. That is good news, but the increasing incidences and prevalence of skin disorders are behind the industry's torrid growth rate.

 

The global market was estimated to top $1.4 billion last year, with North America being the fastest-growing market, followed by the Asia-Pacific. Skin cancer, warts, infections, dermatitis, psoriasis, and acne are among the primary disorders treated using a variety of therapeutic strategies, including cryosurgery, laser therapy, photodynamic therapy, radiation, and vitiligo therapies.

 

Over the past decade, like many other health-care areas, acquisition and investment activity in dermatology has skyrocketed, fueled by private equity, family offices, and institutional investors.

 

I am practically an expert in the area, given the number of times I have been scraped, cut, fried, and zapped over the last several years. As I wait for yet another biopsy on two spots, one on the crown of my head and the other on my forehead, I wonder how come I have all these unrelenting skin treatments when my parents had none, so I did a little research on the subject.

 

Each year in the U.S., an estimated 6.1 million people are treated for skin cancer, and that number is growing. With names such as basal cell carcinoma and squamous cell carcinoma, the most common forms are usually treatable. Most of these maladies are caused by overexposure to ultraviolet radiation from the sun and indoor tanning devices.

 

We know that the thinning of the ozone layer, where 90 percent of the earth's ozone sits between six and 31 miles above the surface, is partially responsible. This allows harmful ultraviolet rays (UVA) to penetrate the earth's surface and damage the middle layer of our skin. Unfortunately, it was only in the late 1970s that people realized that man-made chemicals, specifically chlorofluorocarbons, were destroying the ozone.

 

As a Baby Boomer, I recall the 1950s at Barnegat Bay on the Jersey Shore with my family. That's when suntan lotion became "a thing." We kids had to slop Coppertone on, although my parents rarely used it. It did little good anyway since I still managed to get a glowing red sunburn that ended in my peeling away large sections of white dead skin weeks later.

 

Reflecting on the past, I realized that basting in the sun only gained popularity in the late 1950s, at least in this country. It was then that the modern bikini became the rage for American women, shortly after Brigitte Bardot modeled a floral version on the beach at the Cannes Film Festival in 1953.

 

Before that, having a summer tan was the mark of a lower-class individual or an outside day laborer, while pale skin signified anything but. Having a tan became high on everyone's agenda. A tan was healthy, sexy and signified someone on the move.

 

I also recall that every male in America wore a hat of some kind while I was in grammar school. It was only after John F. Kennedy first appeared bareheaded at his 1961 inauguration that wardrobes began to change. He is credited with the death of the men's hat as males of all ages gladly exposed their scalps to the rays of the sun in perpetuity.  

 

The point is that, in general, people wore far more clothes back then than we do both summer and winter. Next week, I will expand on this combination of culture, science and events that conspired to create today's epidemic of skin cancer.

 

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 [email protected].

Stablecoins have become a hot topic lately. The supply of this digital currency has grown from $2 billion to $200 billion, and it is beginning to transition from the digital to the conventional world of finance. The Senate's passage of the GENIUS Act this month sets the stage for stablecoins to further integrate into the global economy.

 

A stablecoin, for those who have yet to dip their toes into the digital world is a cryptocurrency without the notorious volatility typically associated with that asset class. Their value is generally pegged or tied to that of another currency, such as the U.S. dollar, a commodity like gold, or another financial asset, such as a U.S. Treasury bond or bill.

 

Stablecoins can act as a medium of exchange. To do so, a stablecoin, like any other currency, must remain relatively stable, assuring those who accept it that it will retain purchasing power in the short term. That is where the need for collateral comes in. 

 

There are four types of stablecoins, depending on the types of collateral they have chosen. Fiat-collateralized stablecoins maintain a reserve of a fiat currency such as the U.S. dollar or, in some cases, U.S. Treasury debt instruments. As such, stablecoins have become one of the largest holders of U.S. Treasuries in the world. 

 

Other collateral choices include commodity-backed stablecoins, pegged to the market value of individual commodities such as gold, silver, or oil. Crypto-collateralized stablecoins, backed by cryptocurrencies and algorithmic stablecoins, are computer-driven and strive to keep the stablecoin's value stable by controlling its supply.

 

Until now, the stablecoin universe has been considered the exclusive domain of crypto enthusiasts who require a digital cash equivalent to finance their trades. The GENIUS Act, short for Guiding and Establishing National Innovation for U.S. Stablecoins, just passed by the Senate, is intended to open this market to the conventional financial world.

 

The act aims to establish a clear federal framework for stablecoins, introducing strict reserve, licensing, and consumer protection standards. Rather than speculative instruments, the act would treat stablecoins as a payment infrastructure with full reserve backing and monthly audits for issuers to ensure stability and reliability. The legislation now goes to the House, where the act could pass by the end of August.

 

If the act passes, the benefits will likely first accrue to the crypto investor, who can use these stablecoins as a cash management tool. For example, it could be a place to store their profits from Bitcoin or Ethereum, Solano, etc., without converting those gains back into a fiat currency.  The investor could even receive an interest rate return, as many of these stablecoins now offer annual yields similar to those of money-market mutual funds. If a new opportunity in the crypto universe comes along, he could then use these stablecoins to acquire it with his stablecoins.

 

If the GENIUS Act becomes law, it would be logical to transition this digital asset into conventional finance. These coins, for example, could be used similarly to debit-card-based payments. In the brave new world of digitalization, stablecoins offer some real advantages.

 

It all comes down to time and money. In today's conventional transfer of funds between two or more parties, intermediaries charge a fee based on the amount transferred and typically require a waiting period before the transaction is complete. Some sums of money can take days to settle or more or are limited to being transacted only during specific windows of opportunity, such as bank working days.

 

Blockchain technology eliminates most of that. Stablecoins enable near-instant transfers, improved settlement speeds, and reconciliation of business payments almost instantly. Internal branch-to-branch or book transfers for banks, as well as intercompany settlements, would also be much faster and cheaper than straight money transfers. Many transactions could be significantly less expensive because they bypass intermediaries.

 

Additionally, stablecoins can utilize contract technology to facilitate automated payments under predefined conditions and events. Real-time transaction tracking would become commonplace, and stablecoins could be used across various platforms, wallets, and networks. A well-regulated digital entity could trigger significant changes in the way money is transferred among governments, banks, merchants, technology platforms, and digital wallets, as well as between traditional and decentralized financial systems.

 

For consumers, three obvious benefits include online shopping and sending and receiving money internationally, as well as paying utilities, subscription services, rent, and, at some point, even mortgage payments.

 

There has been a complete turnaround in the government's attitude toward all things crypto, largely thanks to President Trump and his administration. In the case of stablecoins, the U.S. Treasury has been particularly enthusiastic over the prospect of institutionalizing the acceptance of these coins. Since most stablecoins are pegged to the dollar (over 90 percent), they help to cement and maintain the dollar's dominant role in the global economy. A growth industry, such as stablecoins, could also increase the use of U.S. Treasuries as collateral. That would open up a vast new market for our sovereign debt, something that would likely keep long-term bond yields in check for the foreseeable future. In any case, stablecoins are part of the new digital frontier, and I expect to see their use sprout throughout society in the years ahead.

 

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 [email protected].

Death and destruction are not something that anyone wishes for, but all too often, conflict has occurred frequently over the past years. Historical evidence suggests that in regional disputes markets typically recover within a few days or weeks.

 

Does that mean the financial market participants are uncaring or callous? Not at all. In most cases, markets rebounded because the underlying economic cycle, either in the U.S. or worldwide, was expanding. This growth not only supported markets but also helped move them higher despite geopolitical uncertainty. Conversely, during periods when the market struggled to find its footing, it was mainly due to broader market conditions.

 

Morgan Stanley Wealth Management recently conducted a study on key geopolitical events dating back to 1940, starting with Germany's invasion of France and ending with Russia's invasion of Ukraine in 2022. They examined the stock market's performance three, six, and twelve months after each event and compared it to periods without notable geopolitical events.

 

They found that, on average, the markets underperformed over three months, but over six- and twelve-month periods, the returns were identical. It was as if the conflict or crisis had never happened. There were some geopolitical events that had a significant and lasting impact on equity markets, but market conditions also played a part.

 

The 9/11 bombing of the World Trade Center, for example, occurred about the same time as the dot-com boom and bust unfolded, causing the NASDAQ to fall substantially and take the rest of the market with it. In 2022, during Russia's invasion of Ukraine, the Federal Reserve Bank raised interest rates roughly at the same time, sending stocks lower.

 

If we look back through the 20th century, strong bull markets occurred despite World War II, the Vietnam War, and conflicts in the Middle East. Most of the exceptions to this rule centered on energy. The 1973 oil shock disrupted markets for over a year, resulting in a period of stagflation in the United States. The sudden spike in oil prices, occurring at a time when oil was in short supply, disrupted the economy and led to significant inefficiencies. And yet, Russia's invasion of Ukraine, which temporarily caused oil prices to gyrate, came down again rapidly as additional oil supply came onto the market quickly.

 

A critical difference today is that the U.S. is largely energy independent. It is the world's largest producer of oil and gas. U.S. oil production now exceeds 13.3 million barrels per day. That is more than Saudi Arabia, Russia, or any other member of OPEC.

 

That is not to say that geopolitical risks have no impact. On a country-by-country basis, the story may differ significantly. While the U.S. market has barely skipped a beat throughout the Russia/Ukraine war, the European Community had a different experience. After breaking its dependence on Russian energy, the EU economy suffered from a lack of supply and sky-high energy prices.

 

That difference explains the reason why the continuing turmoil and conflicts in the Middle East have not caused more than brief and shallow declines in the stock markets. The present war between Israel and Iran has seen oil prices spike from the mid-sixties to the mid-seventies dollars per barrel and are presently fluctuating by 1-2% per day based on the most recent developments.

 

Fears that Iran, in retaliation for Israel's continued attacks, decides to block the flow of 20% of the world's oil through the Straits of Hormuz has investors on edge. However, there has been little follow-through in the equity markets thus far. This situation could change if the U.S. decides to take a more proactive role in the conflict.

 

No one knows how long this present daily exchange of bombardments will last. Israel has stated that it will take at least two weeks, if not more, to accomplish their objective. They intend to remove the threat of an Iranian development of nuclear weapons. If  U.S. forces become involved, I would expect a deeper market decline. However, if history is any guide, markets will regain their upward momentum in reasonably short order.

 

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 [email protected].

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.

 

 

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 [email protected].