A Fine Whine
York is enjoying another moment in the sun as the nation’s 250th birthday approaches. For the non-history types, York was a big deal back in the colonial days. Next year marks the 250th anniversary of the adoption of the Articles of Confederation, our first governing constitution, by the Continental Congress while it was hiding out in York during the Revolutionary War.
Because of this, many consider York the first capital of the United States. Others disagree, but there is no debate that York was once the nation’s first wine capital. Yes, wine.
One of England’s bedrock objectives for its colonial empire was wine production. In fact, Jamestown settlers were required to plant grapevines on each parcel of granted land earmarked for wine production.
The difficulty, however, was that cultivating hardy grapes capable of producing quality wine proved really challenging. Much to his frustration, Thomas Jefferson experimented with vines for decades without success.
It was the Germans in York who finally achieved commercial quantities of drinkable wine. In 1818, Thomas Eichelberger established the first recorded vineyard in the borough of York on land that is now a city park. Others soon followed and in 1829, York hosted what is considered the first wine convention in the country featuring several local vintners. York Madeira, York Claret, and York Lisbon wines were shipped widely to other states.
Another York native, John Adlum - often called the father of American viticulture - founded a winery in Washington, D.C., and helped popularize the Catawba grape.
For reasons not fully understood, York did not hold the wine mantle for long. By the mid-19th century, Ohio (Catawba), Missouri (Norton) and eventually California had pushed York into the history books.
You can still find excellent wine in York County today. Allegro and Cadenza produce wine to suit a wide range of tastes, including a solid array of dry wines, all curated by a German, Carl Helrich.
When it comes to investment in landscape in 2025, I did fair amount of whining. Jake must have wanted to ask whether I’d like some cheese with all of it.
Populist politics. Tariffs. Concentrated equity markets. AI bubble. Geopolitical shocks. Then layer on widening federal deficits, a softer dollar and persistent uncertainty around inflation and interest rates, even disciplined investors could feel uneasy heading into 2026.
Any outlook begins with the economy. US GDP accelerated late in 2025, and activity appears strong to start 2026. Tax refunds this spring could support consumer spending later in the year, and business incentives in the 2025 tax legislation are already stimulating capital investment.
The US consumer represents 70% of the US economy and their current posture is complicated. Economists describe a “K” shaped consumer, with the highest income brackets spending freely and the lower ones struggling with affordability issues. Tax refunds may or may or may not provide an economic tonic given rising consumer debt delinquencies.
An encouraging start to the new year, but rapid economic growth can be inflationary if productivity does not keep pace. Current data suggest productivity is improving as well, which could give the Federal Reserve room to hold short-term rates steady and perhaps even consider another small rate cut later in the year.
Regarding the Fed, the current political pressure campaign is troubling. Political attempts to influence rate decisions risk undermining central bank independence. If bond investor confidence erodes, long-term yields could rise quickly as bond investors demand compensation for policy uncertainty. It has certainly been a boon for gold prices of late.
Disturbing federal deficits remain another grim concern. US debt is nearing $40 trillion and the fiscal deficit is running at a staggering percentage of GDP. The 2025 tax package is projected to widen even further - which will apply upward pressure on longer-term interest rates.
Tariffs have been a major source of volatility - and frustration - since April 2025. Their effects have been uneven: Large companies have generally managed higher import costs better than small businesses, which have struggled with both import cost increases and shifting rules. A pending Supreme Court decision could prove pivotal, possibly lessening the tariff impact on the economy.
The dollar has been trending weaker since 2025, and that pattern may persist as foreign investors diversify currency reserves and increase gold exposure. International markets - particularly emerging-market equities and debt - performed strongly last year and the momentum is continuing in 2026.
Market leadership is finally broadening in 2026. For the first time in years, stock returns are not solely dependent on mega-cap technology. The law of large numbers appears to be catching up with the mega techs, which is a healthy sign. And investors are starting to ask when tangible returns on investment will emerge from the ginormous amount of AI spending.
US stock market valuations are at record highs, though heavily influenced by the largest names. Multiple expansion is unlikely to be the driver of any gains this year; earnings growth will matter more. Small- and mid-cap cyclicals may benefit from firmer domestic growth and reduced tariff noise.
As for interest rates - ask us in December and we will explain what happened; just too many cross-current factors to handicap. One wild card: Roughly one-third of US debt matures in 2026. That refinancing tsunami wave could pressure yields higher and weigh on the housing market with higher mortgage rates.
Our base case is a somewhat steeper curve by year-end, with the 10-year Treasury yield near five-percent and short rates stuck in the low three-percent range.
Finally, commodities. Gold and silver have delivered extraordinary returns of late, supported by geopolitics, dollar weakness, and concerns about monetary independence. Another constructive year would not surprise us.
Oil remains dominated by headlines - falling on developments in Venezuela, rising on tensions involving Iran. Natural gas is much more compelling investment as demand expands alongside AI-driven electricity consumption and LNG exports.
As always, we see opportunities amongst the foggy landscape, which means less whining and more action.
Signing off to enjoy a glass of Cadenza red and watch the Super Bowl commercials.
Until next time, be well.