Ingrams June 2023

Ingrams.com | June 2023

And the winners are …

The 35th Year

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We’re honored to once again be named one of Ingram’s Best of Business.

It’s been our pleasure serving the Kansas City community for the past 40 years.

Congratulations to the other amazing businesses recognized this year!

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JUNE 2023 • VOLUME 49, NO. 6

Talk of the Town 7 In the News/Correspondent Business News and Legislative Updates Perspectives 4 Editor’s Note Has the USPS Gone Postal by Joe Sweeney 9 Between the Lines True visionaries gifted us with an exceptional city. Hold onto that legacy. by Jack Cashill 11 Reflections Somewhere, there must be a balance between sustainability and capitalism. by Dennis Boone

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12 In a Nutshell

Features

The most recent market rally has seen money pour in from the sidelines. by Ken Herman

Special Reports 21 Best of Business

21 Best of Business

Business & Commerce 15 Of Counsel

Kansas City Awards Which companies are the best of the best at what they do in the Kansas City region? Ingram’s readers answer that question with their Best of Business Kansas City recognition in the catego ries of Wining & Dining, Entertainment & Culture, Business Services and Business Products.

Kansas City Awards Ribs or steak? Stage or screen? Imports or domestic? Whether it’s fine dining, entertainment venues or high-end vehicles, you’ll find the best of what this region has to offer in our Best of Business Kansas City awards. The long run-up to a shortage of physicians in the U.S. has grown to include nursing staff, even as enrollments in regional nursing pro grams have plunged in recent years. Program administrators and hospital nursing executives assess the ways they are addressing the problem.

New reporting regulations will touch every business enterprise in the nation. by Bill Quick

16 Small Business Adviser If a recession is indeed coming,

56 Healthcare Trends

here’s a business-readiness checklist. by Jake Hymes

56 A Nursing Crisis

18 Financial Adviser

With enrollments at nursing programs in Missouri and Kansas down sharply from their pre-pandemic peak, hospital nursing executives are tackling the downstream consequences of that

With core inflation cooling, the Fed may have reasons to scale back the rise in interest rates. by Scott Colbert

troubling trend. By Dennis Boone

19 Wealth Management

Artificial intelligence may present some interesting investment opportunities, but some risks, as well. by Phil Kernen and Miles Green

60 Q&A with … Mike Bukaty The chief executive for employee benefits/insurance brokerage Bukaty Companies addresses trends in that important sector, including the enor mous hurdles confronting small busi nesses in particular as costs continue to surge for employee health plans.

Leads & Lists

54 Best of Business Kansas City 58 Top Area Nursing Programs 62 Health Insurance Providers 63 Top Area Hospital and

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Medical Centers Ranked by Revenue

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EDITOR’S NOTE

by Joe Sweeney

Has the USPS Gone Postal?

A simple matter of poor service is one thing. When it devolves into outright criminality, we have a bigger issue as a business community. Even as the nation’s focus of late is on Washington—with the finger-pointing over unethical or unlawful actions by past and current occupants of the Oval Office—there remains critically important work to be done in each branch of the government. One creation of the federal government, and arguably the most relevant to everyday life for most people, is the U.S. Postal Service. Yet it also happens to be the most challenged enterprise. I write this with some concern about repercussions, but honestly: Can today’s mail service get any worse? As we write the check for postage on tens of thousands of issues each month, we’re reminded of the trust we place in the postal system. Let’s just say that if the system is as strong as its weakest link, we should all be mortified. A significant problem on a national level is the internal theft of mail, with stolen checks being forged and cashed. One banking executive has informed us of longstanding concerns over wide spread fraud associated with postal workers’ stealing checks from the mail and selling them on the black market. Kansas City is not immune to that. On June 8, I went to the main post office at Union Station and talked with two executives because 20 payments in envelopes with the correct postage—placed into that facility’s mailbox on May 14—had yet to be cashed. It appeared that they had been lost in transit. But not all: One check from that batch cleared Nebraska Furniture Mart. Another, however, had been crudely modified to the sum of $4,500 and cashed by a Johnson County resident and recent h igh s chool graduate, whose name I now have but won’t publish. I was notified of the forgery by our bank representative on June 9 and I quickly networked with the other bank (where the check was deposited) to obtain a copy of it. That was just the first in a series of inconveniences. In addition to late fees and accrued inter est from mortgage companies and credit-card firms came ill will from vendors and valued contractors waiting on overdue payments. Going on two weeks after the fraud was uncovered, the money had yet to be refunded into our account. A Kansas City police detective walked me through the crime: For more than six months, a present or former postal system employee with a master key to open mail-collection boxes had been stealing checks. This person would then solicit folks through social media networks to help cash these checks, in exchange for about 20 percent of the face amount. Our first inclination was to pursue the kid who foolishly deposited the check into her bank account, and we still may do so through the Leawood Police Department, the jurisdiction where the forgery occurred. Turns out, this bandit and his network of thieves had accrued well in excess of $600,000 of checks cashed over a period of at least six months. I’ve been told that the post office changed the locks on the

collection boxes in the Brookside and Waldo areas. The crimes then continued in the neighborhoods to the north and south. I understand stealing checks from the mail has been occurring for many years. It’s just a damn shame that an arm of our federal gov ernment is unable to prevent such activity in the first place, or to locate and prosecute those involved when it does occur. At a time when homicides for a calendar have already set an all-time record, staffing at the Kansas City Police Department is down more than 300 officers. Understandably, violent crime takes precedence. But that doesn’t make it easier to accept this as just part of every day life in Kansas City—especially after four of our work trucks were stolen by thieves over recent years. The citizens of this city and the very funders of the postal system should be aware of this national trend and par ticularly of this matter in Kansas City. The banks sure as hell don’t deserve to bear the costs imposed by these crimes; neither do the victims. I once met Fred Smith, the former CEO of Fed Ex, and asked him if he thought the postal system should be priva tized. With a smile, he suggested that we couldn’t do much worse. In a time when we encounter postal rate increases mul tiple times each year and service becomes noticeably worse, I believe Americans are entitled to know why this government agency is so dysfunctional and what is being done to improve it. The irony of this column is that, just a few minutes before penning this, I was informed from one of our lenders that an ACH payment we make each month had been debited from our bank account five times. Naturally, the problem will be resolved, but apparently there are flaws with online banking, as well. Still, as the American model of commerce evolves, we’ll see an evolution away from relying on the post office. Maybe that’s a good thing. Until then, it seems that the least we can ask is that our mail be dependably delivered— without fear that any of us is about to become the victim of a crime.

Joe Sweeney Editor-In-Chief and Publisher E | JSweeney @ Ingrams.com

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Editor-in-Chief & Publisher Joe Sweeney | JSweeney @ Ingrams.com Editorial Director Dennis Boone | DBoone @ Ingrams.com Senior Editor Jack Cashill | Editorial @ Ingrams.com Columnists Scott Colbert Miles Green Ken Herman Jake Hymes Phil Kernen Bill Quick Director of Sales Michelle Sweeney | MSweeney @ Ingrams.com Art Director Traci Faulk | Production @ Ingrams.com Copy Editor Nancie Boland | Editorial @ Ingrams.com Digital Editor Will Crow | WCrow @ Ingrams.com Researcher John Ward | JWard @ Ingrams.com

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Ingrams.com MISSOURI’S AND KANSAS’ DIGITAL BUSINESS MEDIA The entire contents of this publication are copyrighted © 2023 by Show-Me Publishing, Inc. with all rights reserved. Reproduction or use in any manner of editorial or graphic content without permission is prohibited. The magazine assumes no responsibility for unsolicited manuscripts. Ingram’s reserves the right of unrestricted editing of articles. Submissions must be in writing to be considered. Ingram’s (ISSN #1046 9958) is published monthly by Show-Me Publishing, Inc. at 2049 Wyandotte, Kansas City, Missouri, 64108. Price: $44.95 for one-year, $69.95 for 2 years and $99.95 for 3 years. Back issues are $5 each. Periodical postage paid at Kansas City, Missouri, and additional mailing offices. POSTMASTER: Please email address changes to JRyan @ Ingrams.com, fax to 816.474.1111 or mail changes to Ingram’s Magazine at 2049 Wyandotte Kansas City, Missouri, 64108.

Coming in July: Ingram’s 38th Annual Corporate Report 100, The Kansas City Region’s Fastest Growing Companies There is no better issue nor target group to market to than the region’s fastest-growing companies. Claim your ad position: Call 816.842.9994 or email MSweeney@Ingrams.com

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IN THE NEWS

Tidbits of Business News from Around the Region

MISSOURI BUCHANAN COUNTY Infrastructure Funding The Missouri Department of Econo mic Development has awarded $2.5 million in federal funding to promote the development of industrial projects in St. Joseph. The money, from the American Rescue Plan Act, will go toward water and sewer infrastructure at Eastowne Business Park, setting the stage for land development east and northeast of that site. That will supplement $2.7 million from the state for improvements on the Pickett Road corridor to bolster develop ment there. Kansas City planners have approved new additions to the ongoing redevelop ment of Metro North Crossing, including pickleball courts outside the T-Shotz there and a reduction of roughly 10 percent in the earlier projection for 401 parking spaces. Already, construction has begun on Hawaiian Bros Island Grill and Whattaburger sites, as well as a multiten ant retail building that will cover 15,000 square feet, and developers are consider ing a second multifamily project, valued at $40 million, that would bring more than 460 the number of units affiliated with the project. Saint Luke’s Health System and St. Louis-based BJC HealthCare have agreed to form a statewide health system capable of serving Missouri’s population of 6.2 million. Once the agreement is complete, the merged enterprise will retain dual headquarters, with the eastern site serving Missouri and southern Illinois, while the Kansas City operation will continue to serve western Missouri and parts of Kansas. The combined operation will have nearly 40,000 employees and more than $15 billion in annual revenues. CLAY COUNTY Metro North Makeover JACKSON COUNTY Saint Luke’s-BJC Merger

PLATTE COUNTY Distribution Center Opens…

spaces from 50,000 to as much as 1.3 million square feet. The first of those, a nearly 750,000-square-foot spec building, is expected to be completed in 2024. New Jail Considered Platte County commissioners are assessing the updated report from a con sultant who says the findings of a jail assessment conducted in 2019 suggest an even more acute need today for a new jail. After a steep drop in numbers at the Platte County Detention Center in early 2020, during the pandemic, the jail popu lation has regained pre-pandemic levels. The original report projected a need for 237 beds by 2024, rising to as many as 376 by 2039. The current facility can hold 180 and has been as high as 230 over the past year, forcing inmate transfers to adjoining counties.

The region’s latest addition to a grow ing network of distribution centers is an $18 million facility of nearly 125,000 square feet that opened at 115th and Con gress early this month. The new center, operated by DHL eCommerce Solutions, is twice the size of the St. Louis site it closed a week earlier. More than 125 em ployees in the new space will be able to process 28,000 parcels an hour, the com pany says. … As Another Breaks Ground VanTrust Real Estate has begun con struction of a 2.36-million-square-foot distribution facility at Platte International Commerce Center. The Platte City site will consist of three buildings, offering

Correspondent News Updates from the Capital cities

Washington | SBA Ups Numbers on Bad PPP Loans The Small Business Administration has announced that 390,103 loans under the Payroll Protection Program have been charged off, roughly 3.4 percent of the 11.46 million loans made in response to the COVID-19 pandemic in 2020 and 2021. The charge-offs represented loans for which borrowers failed to submit a forgiveness application by the required deadline. The emergency legislation that created PPP in early 2020 was meant to designed to help businesses that might have been forced to lay off employees because of health restrictions, but the $790 billion issued as loans had no provision requiring a personal guarantee or credit underwriting. Jefferson City | Assembly Signs Off on Widening of I-70 Flush with cash from strong tax revenue growth and the federal response to the pandemic, the General Assembly has signed off on a $2.8 billion trans portation plan to widen Interstate 70 to six lanes between Blue Springs and Wentzville. That was more than three times what Parson had asked for during his annual budget address when he sought $859 million for a partial widening of the highway. It was part of a $50 billion spending plan for the 2024 fiscal year, which begins July 1. Still, he said, a number of other projects will be cut from a

budget he considers loaded with too many legislative pet projects. Topeka | Kelly Issues Veto to Spare School Cuts

Gov. Laura Kelly has signed off on a K-12 spending plan for next year but vetoed a measure that would have cut funding to many school districts. Most of those districts are in rural areas, but the cuts also would have fallen on the Kansas City, Kansas district ($3.2 million), Olathe’s district ($1.6 million), and Bonner Springs schools (more than $750,000). They were the only districts singled out for cuts within Johnson and Wyandotte counties; the remainder would have seen increases.

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IN THE NEWS

Tidbits of Business News from Around the Region

KANSAS DOUGLAS COUNTY Plastic-Bag Ban Proposed

and infuses roughly 600 employees to support additional financial planning lines and expand new business-service lines.

Homefield athletic-themed development near Village West, a project that includes a $150 million hotel with 229 rooms and a youth baseball complex valued at $40 million. A $60 million indoor multisport building is already under construction, and work is planned for a $53 million indoor arena, a $26.7 million immersive art museum, and a $20 million BigShots Golf facility. Last month, the county asked for more time to review financing mechanisms as part of the $838 million Homefield project. Medicare Provider Moving In A month after being acquired by CVS Health in a $10.6 billion deal, primary care provider Oak Street Health says it will open a clinic in Kansas City, Kan. The company, which primarily serves Medicare patients, already has a site in Independence. The Wyandotte County office will be in the 1200 block of North Seventh Street. That news was part of the announcement that Oak Street, which has 172 locations in nearly two dozen states, was expanding in Kansas, Arkansas, Iowa, and Virginia.

SHAWNEE COUNTY Property Tax Rebate

After four years of on-again, off-again study and deliberations, the Lawrence City Commission is considering a ban on single use plastic bags. Staff documents in support of the ban, aimed at reducing the environ mental impact of waste bags, estimate that city residents dispose of as many as 36 million of them a year—an average of roughly one a day for each of the 95,000 residents there. JOHNSON COUNTY Creative Planning Adds More Already the region’s largest wealth management firm, Creative Planning has followed an acquisition-heavy 2022 with an agreement to buy BerganKDV, a Minneapolis wealth manager and account ing firm. That adds $2.5 billion in assets under management to Creative’s base, which stood at more than $220 billion,

Topeka is moving forward with City Council consideration of a measure that would deliver property tax rebates to owners whose annual household incomes are no more than $37,750. As currently envisioned, it would apply only to the city portion of taxes collected by Shawnee County, currently about $900 on a home valued at $200,000. Details of the proposal are still being framed out, but supporters say rebates would go to all resi dents who pay city property taxes and are eligible for a state homestead refund.

WYANDOTTE COUNTY Homefield Makes Its Pitch

Unified Government officials have resumed consideration of the massive

Coming in January:

th Anniversary Special Edition

A special commemorative issue that will look back on how Kansas City’s business infrastructure has evolved since the first publication of Corporate Report (forerunner of Ingram’s), was published in 1974. We’ll cover the people and companies that built this region over the years, take note of the biggest stories in our publication’s history, and look ahead to what the next half century might bring.

Claim Your Position: 816.842.9994 • JSweeney@Ingrams.com

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BETWEEN THE LINES

Pointed Perspectives & Penetrating Punditry | by Jack Cashill

There Is No Place Like Home

True visionaries gifted us a rare and beautiful city. It’d be nice if those who think they can improve upon it don’t mess it up. Some years back, I accepted a Fulbright to teach urban studies at the Université de Lorraine in Nancy, France. The textbook for one course featured four cities considered to be the world’s best planned. Paris, Nancy, Bath in England—no surprises there. But the fourth, Kansas City, as in Missouri! OMG! Last month found me in three of those cities and reminded me anew of why Kansas City made the cut. The year my wife and I lived in Nancy (NON-SEE) just happened to be our 10th anniversary year. Every 10 years, we make a point of going back. I still have not figured out why

Although few Americans know about Nancy, the city is renowned for its urban design. As a UNESCO World Heritage Site, Nancy attracts tourists from all over the world. At the center of the city is the spectacular Place Stanislas, a vast pedestrian square ringed by outdoor cafes and museums. It is a truly wonderful place to visit. Nancy almost perfectly fits the model “15-minute city” as imagined by American urban planners. They would be happy to know we walked every place we needed to go—breakfast on the square, the museums, church, dinner. In fact, I walked about five miles a day. But there’s a

companies would rent a car to a clueless foreigner who just stepped off an over night flight, but happily, they do. As a caraholic, I could not be without one. With about an hour’s sleep, I set off for Nancy, a four-hour drive due east of Paris. Complicating matters was that, unknown to Joan and me, the GPS was set to “avoid toll roads.” We spent an hour slogging dopily through Parisian suburbs before correcting the setting, but our four-hour drive had turned into five. When the Fulbright people sent us to Nancy those many years ago, I was re lieved. I did not want to be assigned to Paris. In Paris, you are just another Amer ican. In Nancy, a city of about 100,000, we were rock stars. Thanks to our tow

catch: The city was designed in the 18th century. Locals have had nearly 300 years to adapt their life style to the design. This means not only lots of walking, but it also means lots of con-forming to the mandates of the various gov erning bodies. As a case in point, I had origi

Cities in Europe have had hundreds of years to acclimate residents to their designs. Kansas City is a different beast; the locals won’t easily give up personal transportation.

headed two-year-old, we made many good friends. All these years later—French style—they remain in place, and they remain good friends. Of the four sets of people we met with over six days, all of them—happy to say—shared our worldview. What pissed us off, pissed them off. Given my tenuous grasp of French, it is much easier to affirm what someone says in their lan guage than to contradict them. We could not have been there without a car. Our closest friends, for instance, live at the summit of a quaint hilltop village outside Nancy in a home that has been in the family for generations. The view from the garden is so spectacular in so many directions that the Nazis commandeered it for their reconnaissance staff. Indeed, this 800-year-old village of 300 people has seen more history than the state of Arkansas. It is not easy to reach in any case, but impossible without a car.

nally booked a hotel on the Place Stanislas before learning that I would have to ask permission from the local authorities to even drop my luggage off. Instead, I booked a hotel about a half-mile from the square that promised on-street parking and near- by garages. I imagine the person who wrote the line “on-street parking” had a good laugh with his friends. The underground parking garage cost close to $40 a day. Like all such garages in France, the ramps are frighten ingly narrow, and the parking spaces impossibly small. To spare her the drama, I always dropped Joan off

Jack Cashill Ingram’s Senior Editor P | 816.842.9994 E | Editorial @ Ingrams.com

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BETWEEN THE LINES

before parking. I was thrilled to sur vive the week without scraping the car against the many walls begging me to scrape them. Walking back one night from the “nearby” garage—about a quarter mile—I had to ask myself: what hap pens when you can no longer walk five miles a day? For all its virtues, France is no country for old men, let alone old women. I could not envision living there. My wife took the train into Paris a day before me, and I was free to roam the countryside. This you can only do by car. I set my sights on Verdun, turned off the GPS, and headed out on a series of back roads. On the loneli est of these roads, I passed a cemetery, backed up, and pulled in. Unsure whether it was open, I maneuvered past the gate and wandered in awe between the crosses, row on row. I thought I was the only one there until I heard a voice call out behind me.

Given the French penchant for rules, I presumed I was about to be yelled at. I wasn’t. Instead, an angelic young Francaise offered me a personal tour.

about retiring to France. Upon finding my wife’s hotel unscathed, I literally thanked God for my deliver ance and asked forgiveness for wishing death on three separate motorcyclists. If nothing else, the drive into Paris eased my return home. KC, I remem bered upon arriving, is to drivers what Nancy is to walkers, a potential UNES- CO World Heritage Site for caraholics. With its seamless sprawl, splendid boulevards, and ample freeways—more miles of them per capita than any city anywhere—Kansas City minimizes the stress in our lives and encourages niceness. It is no wonder my textbook recognized the city’s essential virtue. Now if only our planners would do the same.

Kansas City is to drivers what the French city of Nancy is to walkers— a potential UNESCO World Heritage Site for caraholics.

In heaven, the 4,000 young Americans buried at St. Mihiel surely envied me. The nightmare drive into the heart of Paris later that day erased any lin gering thought I might have entertained

The views expressed in this column, which is also published online in the Heartlander, are the writer’s own, and do not necessarily reflect those of Ingram’s Magazine. Jack Cashill , Senior Editor, Editorial @ Ingrams.com

Your Vacation Home and Meeting Place at Pebble Bay Club and Old Kinderhook

315 Country Ridge Drive This large home includes 4 bedrooms, 10 beds, 3.5 baths, kitchen, dining . . . and much more! There’s a lot of dough rolled into this beautiful vacation rental lake home at 315 Country Ridge Dr., in more ways than one. The home was built by the Wolferman family from Kansas City, which is famous today for its gourmet English muffins. You may reserve this beautiful home as your vacation rental home at the lake. Your Home at the Lake

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REFLECTIONS

by Dennis Boone

At the Intersection of Business and Life

Want to Save the World? Sustain This

The data suggest that those freaking out about global warming would be well advised to just … chill. Another one of those stop-the-world moments that make so many rational people want to get off: In researching a feature on commercial real estate that ran in last month’s issue, I stepped into a puddle of eco-babble that I simply was not expecting, and still can’t comprehend. Turns out, one of those pricey new luxury apartment com plexes we see everywhere these days was offering website guidance to prospective tenants on how to fully engage in the sustainable lifestyles their site was promoting. In addition to hectoring people about in-apartment composting (the smell will no doubt go over well with dinner/movie dates) and making your own body butter—there’s such a thing?—or shampoo; since we all have so much time on our hands, I came across this little gem: “Living without waste means not producing trash in the first place. And you can do this by avoiding new purchases.” If there’s a greater testament to the civilizational decline that

Their findings? Most of 25 water-pol- lution measures showed improvement. Dissolved oxygen concentrations were up; fecal coliform bacteria counts were down, and the share of rivers deemed safe for fishing increased by 12 percent between 1972 and 2001. Tree cover, you ask? Well, says the U.N.’s Food and Agriculture Org anization, forest growth in the United States has surpassed harvest for nearly a century . By 1998, tree growth exceeded harvest by 43 percent, and the forest cover was 380 percent more than it had been in the 1920s, the FAO declared. Being environmentally conscious is a good thing. Being an obsessive nutcake won’t move the needle. And, to get back where we started, I’m going to suggest that there is nothing “sustainable” about paying $2,600 a month for a two-bedroom apartment in Kansas City, America. That’s pushing $2 a square foot, by the way, almost what you can expect to pay for the average flat in New Jersey. Even with the run-up in home values, even with the spike in interest rates, you can still get into a decent three-bedroom house today—with a yard to do your composting— for a third less than that. So be earth-friendly, yes. But don’t get carried away with it. In the final analysis, a zero-waste environment, which is unattainable on its face, im plies zero need for trash trucks. Or trash truck drivers. Or the guys running along behind them for block after block. Which is OK, I guess, if we’re going to embrace the ethos of those who see nothing but environmental disaster being imposed on the world by “dirty” industries. You know, the same types who glibly suggest that the trash haulers learn how to code. Which ties into other current events of note: Amazon, Netflix, Meta, and Lyft are just a few of the big players who kicked nearly 160,000 tech workers off their payrolls in the first quarter of 2023. Maybe those coders should learn how to sling trash bins …

will bring down a nation built on free enterprise, risk-taking, and capitalism itself, I can’t think of it. Avoiding. New. Purchases. Who knew it was just that easy? Look, there’s plenty to be said in favor of sus tainability. But here’s a little knowledge bomb to drop on those whose environmental fervor is tinged with moral panic: Capitalist countries practice it a whole lot better than the social ist paradises like modern-day China and Cuba or the Third World misery of a Chad or Congo. The fact is, half a century after the first Earth Day, the air and water quality in the U.S. has improved dramatically. We’re not perfect, but we’re getting better all the time. With the excep

Amazon, Netflix, Meta, and Lyft are just a few of the big players who kicked nearly 160,000 tech workers off their payrolls in Q1 of 2023. Maybe those coders should learn how to sling trash bins …

tion of a few choice neighborhoods in the urban core—litter and gun smoke seem to be a popular lifestyle combo there—we’re pretty good about keeping the place clean. It’s been a long time since I’ve seen someone like Iron Eyes Cody on the side of a highway, crying over a sack of garbage tossed at his feet. An outfit called Resources for the Future noted on the 50th anniversary of the Clean Air Act that “despite the quadrupling of the gross domestic product since 1970, air quality across the United States has improved substantially … [atmospheric con centration of] fine particles declined 41 percent since 2000, ozone fell 32 percent since 1980, and lead decreased 99 percent since 1970.” A couple of years before that report, researchers at Califor- nia-Berkeley and Iowa State University analyzed data from 50 million water quality measurements collected at 240,000 monitoring sites throughout the U.S. between 1962 and 2001.

Dennis Boone is the edito rial director at Ingram’s. E | DBoone @ Ingrams.com P | 816.268.6402

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IN A NUTSHELL

by Ken Herman

Sideline Money Fueling the Market

Even if the Fed waits on higher rates in June, look for them in July. In the meantime, be on watch for a rally-triggering spark. A tremendous amount of cash is sitting on the investment world sidelines, which could pour into the stock market and spark a major market rally at any unknown day or hour as soon as there is a significant “spark.” That spark could have been the first unemployment report of June, which to many, was hard to interpret and hard to understand. It is difficult to say which was the bigger surprise: The huge, unexpected rise in payrolls or the equally huge, unexpected rise in the unemployment rate. From the Fed’s perspective, the rise in unemployment—coupled with the drop in average hourly earnings—should outweigh the shock of another huge job gain. Maybe the weaker numbers stand in support of a pause they were leaning toward, anyway. That said, bear in mind the rate of improvement in year-over-year average hourly earnings is slowing. And the Why does that matter? Because wage inflation boosts overall inflation for two reasons: First, because costs rise; second, because income growth allows producers to pass costs on. Wage costs are rising fast, even in low-paying industries, which is one reason restaurant prices are still rapidly rising. And total income growth is strong. More people working, even in lower-paying jobs, generate more income. In other words, if the Fed were really worried about the inflationary implications of this report, it would raise rates. But because it’s also worried about tightening credit conditions, it’s inclined to pause. Because there is not much to lose by waiting to hike rates again in July, the Fed is more likely to emphasize the rise in unemployment and drop in average hourly earnings growth. There has been progress in the inflation fight, but perhaps not enough. In a recent Fed news conference, chairman Jay Powell explained the Fed was seriously considering pausing rate hikes at the June meeting. He teed up the decision as a choice between raising rates because inflation is not falling fast enough or pausing drop, not just this month but in the past year, reflects the shifting composition of labor because the most rapid job gains are in the lowest-paying categories. The Inflation Factor

to give the Federal Open Markets Committee time to process the deg ree of bank credit tightening. At that time, the committee was leaning toward pausing, mostly out of concern for tightening bank credit conditions. Powell also emphasized that inflation was slowing without dwelling on the details. Most other FOMC participants, at least most of those who have weighed in since then, have not been as sanguine. The big picture looks good, but there are still real problems in the details, even beyond the slow pace of core CPI improvement. Wall Street, however, does not think inflation is falling fast enough to convince a majority of the Fed

members that cuts are justified, and in fact, believes the Fed is not even really pausing if rates do not rise. Rather, maybe they are slowing their tightening pace from a quarter point at every me eting to a quarter point at every other meeting. If the Fed opts

In the continuing battle against inflation, the big picture looks good. But problems remain in the details of how the Fed will act in the coming months.

to leave rates unchanged in June, it will very likely hike them in July. When the Fed raised rates over a short stretch from 2017 to 2019, members did so at every other meeting because they were not sure how far rates should rise, and they wanted more time to see the result of rate hikes. This could be the same approach. The distinction between pausing and skipping is not just semantic hair-splitting. It is a meaningful distinction bearing on how policy will be conducted after the June decision.

Ken Herman served as the Managing Director of Bank of America Global Capital Markets and was the Mayor of and served on the City Council in

Glendora, Calif. E | Editorial@

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OF COUNSEL

by Bill Quick

Inside the Corporate Transparency Act

Why you, as a business owner or investor, need to know about this new federal reporting obligation. A new federal law requires businesses and their owners to disclose personal information and their photographs to a federal law enforcement agency, and there are only a few exceptions. Why this matters for you. From Wall Street to Main Street to your street, the vast majority of private and many non-profit entities will be swept into Corporate Transparency Act compliance. If you are an investor or have investors, you need to pay attention. Not only is reporting important, so is ongoing compliance. What is this law about? If you have not heard of the CTA, you are not alone. Many business owners, and their professional advisors, are taken aback upon first learning of its existence and scope. At its core, the CTA requires reporting of personal direct and indirect beneficial ownership and control information per taining to businesses operating in the U.S. The personal identify ing information includes name, date of birth, physical home address, and your photograph. The financial crimes enforcement

What will compliance look like? Businesses will need to compile, main- tain and update their reported informa tion constantly to meet the CTA’s com- pliance requirements. Any change to or correction of previously reported in formation must be done within 30 days of the event, not when the business be comes aware of the event. All newly formed business entities beginning Jan. 1, 2024, will be required to file their initial CTA report within 30 calendar days of formation. Reporting company businesses in existence before Jan. 1, 2024, will have one year to make their original CTA report filing, along with any subsequent amendment filings that would have been required had the re port been filed on Jan. 1, 2024. What happens if you don’t comply? There are steep fines ($500 per day up to $10,000) per incident and possible jail time (up to two years) for those failing to timely and properly comply with the CTA. Those who fail to file their initial report will also be subject to fines for failing to file what should have been subsequent filings–the fines can rack up. Further, the IRS recently an- nounced increased enforcement, util izing new data analytics technology to identify audit targets. FinCEN’s database will be a key component for such data analytics technology. Who may access FinCEN’s Benefi- cial Ownership Secure System (BOSS)? Information in the BOSS will be acces- sible to law enforcement at the federal, state, and local levels and includes the law-enforcement arms of various federal agencies. Financial institutions may also have access upon their customer’s con sent. Importantly, this information is not available to the general public and is not accessible through Freedom of Information Act requests. Conclusion. The compliance re quirements under the CTA go live Jan. 1, 2024, and you have only the remain ing waning months of this year to take any action to influence your future compliance position. Now is the time to discuss this with your legal team for guidance.

arm of the U.S. Department of Treasury (FinCEN) is currently building out a secure system to receive, store, and manage this vast influx of information. FinCEN estimates that more than 32 million now existing businesses will be required to report in Year One. This law aims to prevent money laundering, illicit financial activities, corrupt practices, and terrorist financing at the expense of your business being swept up in its bycatch. Who must report? Beginning Jan. 1, 2024, that personal information must be reported for those owning, directly or indirectly, 25 percent or more of the business or who have “substantial control” over the business. Every business will have

Every business will have at least one person to report, regardless of its ownership or control structure.

at least one person to report, regardless of its ownership or control structure. Once the initial report is filed, this information must be updated within 30 days of any subsequent event that makes the previously reported information inaccurate. Attribution of ownership and what constitutes substantial control will vary from business to business and will require analysis and professional advice. Exempt Entities. Some categories of business entities are exempted from CTA compliance. These generally include reg ulated business entities, such as publicly traded companies, insur ance businesses, banking businesses, 501(c) registered non-profit entities and quasi-governmental organizations. In addition to the other exempt categories, a catch-all exemption is available for any business entity that meets all three of the following thresholds: (1) have a physical street address in the U.S., (2) have 21 or more full-time employees, and (3) generate more than $5 million in annual gross receipts as reported on last year’s federal tax return. Missing any of these thresholds will render a business ineligible for this exemption.

Bill Quick is a partner at the Kansas City law firm Polsinelli PC. P | 816.360.4335 E | wquick@polsinelli.com

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SMALL BUSINESS ADVISER

by Jake Hymes

Batten Down the Hatches

It’s a good idea to fine-tune your small business plan for any economic environment. In recognition of the more than 33 million small businesses in the U.S., we are sharing helpful best practices to fine tune your business plan to weather economic shifts. Responsibly manage your business debt Interest rates changes have significant impacts on business lending. To effectively manage your debt, consider these finan cial tactics before applying for a business loan: • Convert floating debt. Consider converting any floating rate debt to fixed-rate debt, which flips the mindset from short- term financing to a longer-term solution. Although many bor rowers use their investment portfolio as a natural hedge for floating-rate debt, it may still make sense to lock in a low, fixed rate now for any variable-rate debt you may have. • Consolidate debt. If your company has extensive over head costs with bills and outstanding balances, debt consolida- tion could be a smart strategy to move existing debt into one stream-lined payment. Debt consolidation can potentially pro- vide a longer repayment period and/or lower interest rate— both of which can help improve available liquidity. • Clean up your credit and tax liens. A tax lien is the gov ernment’s legal claim against your property when you fail to pay a tax debt. Make sure your credit and tax debt are up to date and tidy to ensure you’re getting the best rates available. • Transition from alternative lending sources to conventional. If your business has alternative financing on the balance sheet, but you’ve been able to stabilize your profits and expenses, now may be the right time to convert your debt to more traditional loans and lending. • Be honest with your banker. This may seem obvious, but you’d be surprised how many business owners inaccurately fill out loan applications, whether intentionally or inadvertently. Filing for bankruptcy or having a tax lien is not an automatic disqualifier in the application process. With that in mind, it’s better for your relationship with your banker to be transparent about details. Strategies to improve income If cash flow is top of mind, take inventory of your equipment and see if there is anything old or outdated that can be sold, refinanced, or salvaged. Also, spend time reviewing your assets to determine how they can help the business work smarter and improve liquidity. If your business is inventory-based, assess your supply reg- ularly and consider buying in bulk or shopping around to get the best purchase price. Another option is to restructure your pricing to align with the current market, inflation, and compet itors. However, be wary of aggressive price increases to avoid upsetting your current customer base. Another way to improve cash flow is to streamline your ac- counts payable and accounts receivable processes. Review timing, steps, and ways to reduce your business bank account churn. Combat supply chain challenges Small and large businesses alike are being impacted by supply

chain disruptions like slow manufactur- ing and delayed shipping. As a result, we continue to see increases in shipping costs, storage expenses, delivery delays, and logistics issues. To combat the supply chain challen- ges, consider ordering material further in advance than typical so you can more confidently predict what you need. This can impact upfront costs but can also help assuage concerns about products, parts, and shipping timing. Implement employee retention strategies With unemployment in the U.S. at 3.5%, it’s important as a business owner to develop employee retention strategies to not only keep your employees but en-sure they are happy in their roles. With nearly historical lows and despite some recent softening, the labor market remains competitive. Here are some financial considerat ions in today’s labor market: • Invest in and strengthen your cur- rent team through talent development, wage reviews, internal promotions, and hires to help retain your current work-force. • Recognize that hiring costs have increased and plan accordingly. If raises and promotions are not in the financial plan, focus on benefits to make up for any difference in salary or hourly pay. • Embrace the hybrid home-office schedule and provide flexible work en- vironments. Consider how the work- from-home shift can help you cut costs if your industry allows for virtual or asynchronous work. • Be shrewd in your resourcing fore- casts, knowing you may not have the upper hand in resignations and new hire negotiations. Running a small business requires an immense amount of discipline and persev- erance, even in the best economic condi tions. In today’s volatile environment, this is more important than ever. As a busi ness owner, you must be willing to adapt to any changes that come your way and pivot to ensure your business is successful. Strategize and plan well by having a strong relationship with your banking partner, managing your debt, improving cash flow, finding alternative financing options, and focusing on employee retention.

Jake Hymes is senior vice president and direc tor of small business at UMB Bank.

P | 303.839.2299 E | jacob.hymes @umb.com

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SMALL BUSINESS ADVISER FINANCIAL ADVISER

by Scott Colbert

Inflationary Cycle Suggests Things Cooling Off

Signs are the Fed may be winding down its push for higher rates—but it’s not certain yet. Through mid-June, stock markets have held up remarkably well for 2023. The S&P 500 is up almost 14 percent now on a year-to date basis. Large-cap international stocks are in second place, up almost 11 percent now on a year-to-date basis. Even smaller stocks have started to participate with this big stock rally. The Russell 2000 is now up over 7 percent. Bonds and cash, of course, are up on a year-to-date basis as well. A typical balanced portfolio is likely up at least 6 percent or perhaps as much as 8 per cent, or even more, if you’ve had a concentration in those large-cap growth stocks. Of course, this is a much better return so far on a year-to-date basis than the average balanced portfolio, which was down closer to something like 11, 12 or 13 percent last year. On a year-over-year basis, remarkably, the trailing 12-month CPI has fallen from 4.9 per cent to just 4 percent. That’s a remarkable drop because we lost last May’s CPI print where in flation was an entire 1 percent just alone that month. That’s the good news. If we look under the hood of the CPI, we’ll note that it’s been fall ing now consistently for the past 11 months, a remarkable drop from its high last June, coming in at 9.1 percent. Not All Good News Where’s the bad news? We know that the CPI has both food and energy in it. The Federal Reserve likes to take food and energy out and look at what they call core inflation. Food and energy are ba sically 20 percent of the CPI. Food is 13 percent and energy is 7 percent. When we look on just a core basis, CPI was up 4/10 of a percent. On a year-over-year basis, the core CPI is still a relatively sticky 5.3 percent, down from its high last September of 6.9 percent, but nonetheless much more sticky than the headline CPI number. There’s even good forward news when it comes to looking at the core CPI. When we look at just the core CPI, shelter makes up a rather remarkable 43 percent of it. What is it that drives the shelter part of the CPI? Well, it’s primarily what it costs to live in a single-family home. In addition, part of it has to do with rents on a year-over-year basis and the last two small components are what it costs to insure your apartment or your house, or what it costs you when you stay away from home, lodging, essentially at a Holiday Inn or a Marriott. Housing as a percent, 43 percent of the core CPI, has been coming in at an 8 percent year-over-year pace. It’s the biggest driver of this sticky core inflation. Here’s the good news on hous ing: Home prices have been falling now on a year-over-year basis for almost a year. Rents have been declining, not negative on a It’s really been a remarkable bounce back so far, particularly when viewed in the context that the Federal Reserve has been raising rates for the past 15 months. The monthly Consum er Price Index for the month of May, the sum total of all goods and services, was only up 0.1 percent.

year-over-year basis, but they’ve been in creasing at a much slower pace. It takes a while for the way the Federal Reserve looks at housing to work its way into the CPI numbers, often with as much as a 12- to 18-month lag. In other words, it lagged on the way up when home prices were soaring, it wasn’t contributing a lot of inflation. Now that home prices are declining, it hasn’t started to pull the core inflationary num bers down. We would expect that core in flation for housing will begin to decline from 8 percent to something closer to 4 percent as the year progresses. If we can get there,

that would be enough to take the core CPI from its sticky 5.3 per cent handle to a 3.5 percent rate on a year over-year basis. Bottom line is this, these infla tionary statistics are probably viewed as very good to the Federal Re serve. Does it take the pos- sibility of future rate

As home prices retreat from a huge spike, we’ll likely see improvement in the nation’s core inflation numbers.

hikes off the table? Yes, to the extent that core inflation continues to make some progress, and that headline inflation makes progress. I think the home prices are going to start to help bring those core in flationary rates down. It might give the Fed enough room to sit tight for the rest of the year, but still I think we’re going to have a rather hawk ish pause from the Fed, because there’s a brief minority that suggest while the in flationary trends have been in the right direction, they want to make sure that they continue and move onward towards that 2 percent rate. That’s still much low er than this relatively sticky 3 percent to 5 percent rate that we have today. Will they be perpetually on pause? I doubt it. I still think there’s probably like ly a rate hike coming in July, but we’re very close to the end of this cycle and it’ll just simply depend upon how quickly the economy’s cooling, how much impact this has had ultimately on employment. Then, eventually, will we or won’t we push our way towards a recession?

Scott Colbert is executive vice president and chief economist for

Commerce Bank. P | 314.746.8557 E | scott.colbert@

commercebank.com

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