Bank Stocks Feel the Pain From Private Credit, The Big Business of Youth Sports, It’s Not Just Oil; Aluminum Prices Have Been Surging!, Surprise: U.S. Oil Inventories Actually Increased, How to Create a Tax-Free Account for a Child & More

Bank stocks feel the pain from private credit

You may have noticed that the bank stock index is down about 10%, which is more than the S&P 500’s decline of 3% at the beginning of the year. It is estimated that banks made roughly 10% of their total loans to non-depository financial institutions known as NDFIs, which includes private credit companies. It’s also estimated that these types of loans in the past three years have grown from $1.1 trillion to $1.9 trillion. The banking stocks may struggle for a few more months, but the good news is a recent study from the Office of Financial Research found that private funds and BDCs, which are Business Development Corporations, use lines of credit and currently they’ve only used about 50 to 65% of the buying capacity. The tough decision for the banks is do they cut off the line of credit now or do they take on more risk and let those lines of credit increase to 70 or 80%? I feel I hope they stop it now because the risk I think is too great going forward on these private loans. We do hold two banks in our portfolio, which means we may see little to no gain in those stocks in 2026 due to the concerns around private lending. However, we do invest in companies for the long term and understand that difficulties can arise and cause a down year for any company. Long-term I don’t believe this will have a major impact on the financial situation for most of the bigger banks.

The Big Business of Youth Sports

I remember growing up and wishing for a baseball or maybe a football for Christmas so I could go down the street and play with my friends. Fast forward to today and youth sports are a multibillion-dollar business for companies. The average American family spends $1,000 on sports per child. Whenever there’s an opportunity someone or some business will step in and fill the void, Dick’s Sporting Goods has helped fill this void. Dicks opened back in the 1940s by a gentleman name Richard Stack, who had the nickname, Dick. His grandmother had $300 cash in her cookie jar and that is what Dick used to start a fishing supply shop in Binghamton, New York. There are now more than 700 stores across the country and their newest concept known as Dick’s House of Sport is expected to have around 100 stores by the end of next year. These are mega stores that are 150,000 square feet, which is three times the size of a normal store. In these mega stores you will find batting cages, climbing walls, golf simulators, and even fields to run around to test out your new cleats. Dicks have been doing well considering it saw revenue skyrocket to $14.1 billion last year. This was twice what it was 10 years ago, not a bad feat for any company.

It’s not just oil; aluminum prices have been surging!

With the recent war in Iran, the rising price of oil and gasoline has been quite noticeable and has been discussed heavily by various news outlets. One lesser-known impact from the difficulties within the Strait of Hormuz is the price for aluminum has surged. People may not notice it since they don’t necessarily buy aluminum directly, but if the problem persists you could see price increases for your favorite six pack of soda or beer. Outside of packaging, aluminum is also used across electronics, construction, transportation, and solar panels. In 2025, the Middle East accounted for roughly 21% of unwrought aluminum imports, which is the raw, unprocessed metal, and 13% of wrought aluminum imports, which is aluminum that has been mechanically shaped into sheets, rods, or other finished forms. Due to supply concerns, the price of aluminum has now increased to 4-year highs and there are concerns it could push even closer to $4,000 per ton from the current price around $3,400 per ton. Aluminum is the most abundant metal on earth, but production has slowed with locations like Bahrain’s Alba cutting production by 19%, this location is home to the world’s largest smelter. Unlike oil, China could have a huge impact when it comes to producing aluminum. China is already the biggest producer of aluminum, but to try and reduce emissions and prevent overcapacity they keep production constrained. They currently have several idle smelters that could be restarted if they feel aluminum prices are too high. Like we have said with the price of oil, I don’t see this as a long-term problem, but the longer supply is constrained for these input costs, the more problematic it is for inflation.

Surprise, US oil inventories actually increased

I know what you’re thinking with the price of gasoline and oil increasing, oil inventories must be declining. Fortunately, that is not the case. If the inventories were decreasing the price of oil and gasoline at the pump would probably be even higher. For the week ending March 13th, crude oil inventories rose by 6.2 million barrels to 449.3 million barrels. This does not include the Strategic Petroleum Reserve (SPR). Everyone including the analysts thought for sure there would be a decline and the estimate was for a decline of around 40,000 barrels. Gasoline inventories did fall by 5.4 million barrels to 244.1 million barrels as of March 13th, but that inventory level is still 3% above the five-year average for gasoline inventories. If the inventories remain high, we could see the price of oil and gasoline begin to decline in another couple weeks or so. It will not go back to where it was a month or so ago, but we should hopefully start seeing a decline back to more normal levels soon.

Financial Planning: How to Create a Tax-Free Account for a Child

A powerful way to build tax-free wealth for a child is by strategically using the kiddie tax rules with investments that generate qualified dividends and long-term capital gains. Under the kiddie tax, the first $1,350 of investment income is tax-free, and the next $1,350 is taxed at the child’s rate, which for capital gains and qualified dividends is typically also 0%. This means a child can receive up to $2,700 of investment income each year with no federal tax. Income above this level is taxed at the parent’s rate, which may be 15% or 20%. While $2,700 may not seem like much, it can support a surprisingly large portfolio because dividend yields are typically low and capital gains are only recognized when assets are sold. For example, a portfolio with a 2% dividend yield would not generate $2,700 of dividends until it reaches about $135,000. While the account is below that level, capital gain harvesting can be used each year to bring total income up to $2,700, allowing gains to be realized tax-free while increasing the cost basis. Because this involves realizing gains (not losses), there are no wash sale restrictions, and investments can be immediately repurchased. By consistently harvesting gains over time, the child can build a portfolio with minimal tax drag and potentially access those funds later with little to no capital gains tax, especially if they continue the strategy after they are no longer subject to the kiddie tax.

As technology gets better, there are more scams

In 2024 there were 147,000 people in the US that were aged 60 and older that were scammed. Their losses were over $4.9 billion, which was an increase of 40% from 2023 according to the FBI. The number is even higher because many people don’t like to report fraud because of shame and fear. Sometimes the scam is rather simple, but people are caught off guard at a bad time and get nervous. Say you receive an email asking about an authorized purchase on a debit or credit card. It says if this is not your charge to call the institution at the number listed on the email, which looks like it’s coming from the institution. When you call the number and they answer, they’ll say something like this is such and such from the legal department or the fraud department and to avoid more losses you need to open a new account. They tell you to protect yourself you need to transfer your money into this new account before you lose any more money. It all sounds well and good until you realize you should’ve not called the number on the email but instead investigated the actual number for the institution itself that is either on your credit card or your bank account. If you are helping your parents or maybe even just taking care of your own finances, you should set financial limits on transfers with your bank. Also, make a commitment to yourself that no matter how bad the fraud sounds you will stop and think before acting for at least 24 hours. This will give you time to think about it and hopefully your critical thinking will set in and allow you to realize something doesn’t quite feel right. It is also helpful if you can quickly report the fraud to police because sometimes, they can stop a scam before the money is lost.

Is next day shipping important to you when you order online?

The excitement of next day or even same day shipping seems to be losing its appeal for some consumers. It should not be a surprise to anyone that the retailers were paying through the nose to Federal Express and UPS to ship a small package to you on the same day or the next day. Over the last five years, Federal Express and UPS have raised their base rates between 5% and 7%, which does not include fuel charges, address correction fees, or an additional charge for delivering to a residence. Some retailers who don’t want to lose their customers are beginning to offer discounts if people are not in a hurry and are willing to wait five to seven days to get their package. A couple of things you may not realize is that the delivery networks are the busiest on Mondays and Tuesdays because people will order more stuff online over the weekend. You also may be wondering, why is it less expensive to wait five days to deliver to the same place? The reason being you can give the carriers a longer delivery window that can give them more flexibility to wait for a truck that is full as opposed to shipping a half empty truck. That can lower the shipping cost, which can be passed on to the retailer. Last year, Amazon shipped 8 billion items to US prime members on the same day or the next day. If they were to offer you, maybe a 5% discount or so to get the item in 5 to 7 days would you take advantage of that?

New York City has a proposal for $30 an hour minimum wage

It’s no surprise that the new socialist mayor of New York City has proposed a $30 an hour minimum wage, which would be an increase from the current $17 an hour. The proposal would increase the minimum wage to $30 an hour by 2030. If your business has fewer than 500 employees, then you don’t have to pay the $30 minimum wage until 2032. Currently, Seattle has the highest minimum wage at $21.30 an hour. However, the Los Angeles City Council last year approved to raise the minimum wage from $20.32 to $30 an hour in 2028 but only for hotel and airport workers. I love how the new mayor in NYC says this will make the city more affordable for people. Obviously, he doesn’t know much about business. The reality is business owners will have to increase prices on everything and add on fees to remain profitable or cut jobs. Sorry Mr. mayor, people are in business to make a profit. Ultimately, that is why they take the risk to open a business, but a socialist mayor may not understand that. I believe the increase in minimum wage will then make items more expensive and there goes the affordability benefit he is claiming. It is simple economics if costs increase, prices will rise to maintain margins.

McDonald’s is set to reduce prices again

If you like McDonald’s food, you’re in for a treat because starting in April, they’re going to cut prices for their value menu even more. Some items will cost three dollars or less and there will be breakfast meal deals for only four dollars. The CEO said they are absolutely going to make sure that they are protecting their leadership position in value menus. Surveys in 2019 revealed 36% of people believed McDonald’s gave them the best value, but in the most recent survey that it fell to 21%. Consumers will benefit from this shift towards value because other competitors like Panera just announced a $4.99 menu, Domino’s Pizza now has a pizza deal for $9.99 and even the sit-down restaurant Applebee’s says about 1/3 of their diners use their value menu. If I was a shareholder in this company, I would have to believe that cutting prices further would cut into their profit margins and I’d be worried that the stock over the next year could suffer as McDonald’s tries to maintain their value leadership, especially considering the stock still trades at over 20x 2027 earnings.

Maybe it’s time to look at buying a newly built home

January new homes sales, which are based on signed contracts, showed a 17.6% drop month over month and were 11.3% lower than January 2025. Given it is a smaller market than existing home sales, the numbers can be more volatile but given the extreme change I believe there are some signals to look at here. As demand has slowed, the inventory of new homes for sale climbed to a 9.7-month supply, which was up from eight months in December and was 7.8% higher than January 2025. This has led to a decrease in new home prices as the median price of a home sold in January was $400,500, a decline of 6.8% year over year. Prices could decline further as builders may need to offer more incentives to entice buyers. Shoppers may need those incentives considering they are now dealing with higher rates as the average rate on the 30-year fixed loan was between 6% and 6.2% in January but now stands at around 6.4%. Data from the National Association of Home Builders shows an estimated 37% of builders cut prices in March, which was a small increase from February’s 36%. Severe weather could have had an impact on the report, but I believe affordability and uncertainty continue to be the driving forces as sales were down nearly 22% from December in the West, where weather wouldn’t have had an impact. Unlike existing homes, builders want to move their inventory, and deals could become more available to buyers. I think there is still some more room for prices to fall in the new home space, but it may be time to start looking around if you are in the market for a new home.