MidSouth Week in Review:
May 21, 2018

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

During the 5-year 2013-2017 period my returns (19.1%) were in the top 1% vs. all domestic equity mutual funds.  Not so in 2018 as I finally turned positive on Wednesday with help from the small cap rally.  The small cap Russell 2000 was the markets first 10% correction in two years.  From February through today the Russell is the leading stock index with a year-to-date return of 6.0%.  Benefitting from the new tax law, small companies are less susceptible to skirmishes over trade policy.

For the week the S & P 500 declined 0.5% vs. a 1.3% advance and a record high today from the Russell 2000.  The yield on 10-year Treasuries rose to 3.11%, the highest level since 2011, which caused the dollar to rise to its highest level since December.  Oil supply hit a 3-year low, causing crude to rise to $72 a barrel , its highest level since 2014.  Morgan Stanley predicts crude will hit $90 a barrel by 2020.  Strategic Int’l Securities predicts retail gas will hit $4.00 per gallon at the pump if crude hits $94/B.  The current average retail price of gas is $2.90.  Certain retailers such as Walmart and Macy’s are showing store improvements.  Buoyed by low unemployment and rising wages, Americans are stepping up purchases of everything from apparel to groceries to dishwashers.  The FANG stocks all declined for the week, indicating investors may be moving from growth to value stocks.

BuzzBits

Money Surplus – The U.S. government saw a $214 billion surplus in April, the largest monthly surplus in history.  The tax receipt of $510.5 billion was also a record – Treasury Department ….. 64% of Americans say the government should be required to pass a balanced budget each year – James Madison Institute

The Royal Wedding – will be held Saturday morning, May 19, at a total cost of around $36 million.  Approximately $34 million will be for security, which will be paid for by the government and the balance by the Royal Family – New York Times

The Priciest Homes – sell fast or collapse in price.  A look at the top 10 transactions in nine of the hottest markets in the U.S. saw the following results:  average sale price ($20,664 million), average days on market (421), percentage of original list price reflected in the sales price (72.4%), price dropped per day from list to sale date ($20,985).  Atlanta properties sold at only 66% of their initial price.  The most expensive properties in Nashville took an average of 1062 days to sell and at 73% of the original asking price – Wall Street Journal ….. The 3.2 months inventory in December of existing homes was the lowest on record – National Assoc. of Realtors ….The price of lumber has risen 52% over the past six months…..This week the 30-year fixed mortgage rate hit 4.625%, the highest level since May 2011 – Pension Partners

Late Night Show Ratings – have declined 42% since May of 2016.  Fallon dropped from 1.03 to .52, Kimmel from .55 to .36 and Colbert from .65 to .41.  The problem evidently stems from too much slanted political humor vs. the old school comedians, such as Johnny Carson and Bob Hope, who never let known their political preferences – everyone was fair game – Buzz.

American Retirees – are healthier and wealthier than ever.  One in every six in the U.S. is a millionaire (if you include the value of their homes).  Their average wealth has risen more than 100% since 1989 to $752,000, and the share of those who are millionaires has doubled – Wealth

The New York Yankees – have the best record in baseball this year (.700) and will win the World Series in 2018, based on the 20-year cycle.  The Yankees won the series in 1938, 1958, 1978 and 1998, so 2018 looks to be a shoo-in – Buzz … At 6 to 1 odds, Las Vegas has the Yankees favored to win the World Series … The Boston Red Sox won the 1918 World Series with pitcher and leading hitter Babe Ruth who was traded to the Yankees for the 1920 season.  That year he hit 54 home runs, which was more than any team had ever hit.

Follow The Benefits – In 2017, California had the fastest growth in its homeless population (14%) and also had the highest proportion of the unsheltered (68%) ….. If California was an independent country, it would have the fifth-largest economy.  The state recently surpassed the U.K. and is only $700 billion behind Germany – AP

Music – Studies have shown that music can buoy mood, fend off depression and improve sleep.  It can also ease pain and lower levels of stress-related hormones.  A songs rhythm can influence heart rate and brain activity – TIME

Auto Insurance Premium Increase – after a $2000+ claim was $657 in Rhode Island and $614 in Massachusetts vs. only $150 in Kentucky and $212 in Tennessee – NAIC

Expensive Settlement – Michigan State University agreed to a $500 million settlement with 332 women and girls abused by Dr. Lawrence Nassar.  The average settlement per abused was $1.5 million.  The average cost of the settlement per Michigan family is $150 - Buzz

Drug Addiction – Up to 25% of job applicants fail drug tests, staffing agencies say.  Two million working-age men who are unemployed and looking for work take legal opioid painkillers on a daily basis – The Kiplinger Letter ….. Positive tests for opioids dropped 17% in 2017, likely reflecting continuing crackdowns on illegal or excessive opioid prescriptions – Wall Street Journal

buzz@msifund.com

This material was prepared by MidSouth Investment Management LLC, and does not necessarily represent the views of the presenting party, nor their affiliates.  This information has been derived from sources believed to be accurate.  Please note – investing involves risk, and past performance is no guarantee of future results.  The publisher is not engaged in rendering legal, accounting or other professional services.  If assistance is needed, the reader is advised to engage the services of a competent professional.  This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.  This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such.  This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested.  All economic and performance data is historical and not indicative of future results.  Market indices discussed are unmanaged.  Investors cannot invest in unmanaged indices. 

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