MidSouth Week in Review:
June 06, 2018

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The S & P 500 rose 0.5% for the week and 1% today on the news that the unemployment rate declined to 3.8%, its lowest level in 18 years.  Consumer spending increased more than expected in April, a further sign that economic growth was gaining momentum early in the 2Q while inflation continued to rise steadily.  A Fed rate hike in June is now a given with many now expecting three to four hikes in 2018.  The 30-year mortgage rate declined from 4.66% to 4.56%.  Crude declined from around $73 a barrel 10 days ago to $66.  Disney stock declined 3% ($4.5 billion in valuation) for the week, possibly because their ABC network cancelled “Roseanne”, after its star Roseanne Barr made some insensitive racial remarks.  Disney’s ESPN has lost 13 million subscribers from its 2011 peak of 100.1 million to 87.2 million, a 13% decline.

BuzzBits

Stock Market Weakness – Over the past 25 years, three of the next four months have averaged negative returns: June (-0.13%), August (-0.56%), September (-0.15%) – BTN Research

Simple Solution -  As presidential candidate and future billionaire Ross Perot spoke to some Texas ranchers in 1992 about the financial plight of our prison system and saying that it costs more to keep a man in the penitentiary than it does to send him to Harvard, an old guy stood up, pushed his hat back and said, “Hell, Ross, the answer’s simple.  Send those jailbirds to Harvard.” ….. California, New Jersey and Connecticut each spend $60,000+ annually on housing per inmate, with New York leading the way at $69,358.  South Carolina is the lowest at $20,053 – USA TODAY ….. A federal study reports that 75% of women in jail are mentally ill – America’s Criminal Treatment of Mental Illness, Alisa Roth

Capitalism – 82% of the wealth generated worldwide went to the richest 1%.  Almost all rich countries now have progressive income taxes and universal public education.  Thanks to capitalism, the number of people in “extreme poverty” has declined from 1.85 billion in 1990 to 767 million in 2013 – THE WEEK ….. The top 0.1% (1 in 1000) paid 19.5% of all federal income tax collected in 2015 - IRS

Time on the Internet – Since 2000, the average time per week spent on the internet has risen from 9.4 hours to 23.6 hours, essentially 1.3 waking days per week – Digital Future

Truck Driver Shortage – Amazon has created a culture of near instant gratification, but the cost of that level of convenience is starting to catch up with consumers.  According to the American Trucking Associations, there’s a shortage of roughly 50,000 truck drivers across the country, and it’s hitting both businesses and consumers in the wallet.

The NBA Finals – will feature the San Francisco Warriors and the LeBron James led Cleveland Cavaliers.  The last time James wasn’t playing in the finals (2010), Amazon was selling at $123 a share vs. its current price of $1646 – New York Times

Alimony – A survey by the American Academy of Matrimonial Lawyers found that half of lawyers saw an increase in women paying alimony and child support over the past three years.  The increase comes as 4 in 10 women are the breadwinners for their families – Pew Research …. Because alimony is no longer a tax deductible item under the Trump tax bill, the after-tax cost of alimony for those in the highest tax bracket (37%) will rise by 58.7% - Buzz

Senior Home Ownership – Prior to the 2007 real estate crisis, 24% of the housing wealth in the U.S. was held by seniors age 60 and older.  Today 41% of household wealth is owned by the 60+ age group, indicating the younger generation favors renting vs. owning – Federal Reserve Bank of New York

The Fat Tax – New Look, one of Britain’s most popular and affordable clothing giants was found to charge more for plus-size clothing.  A National Obesity Forum spokesman said, “People should pay for the materials/time required to manufacture larger sizes.” – New York Times

Student Loan Rates – are rising this year for undergrads to 5.05% from 4.45% and from 6% to 6.6% for graduate students – New York Times …..Many employers are offering assistance to their employees to  repay their student loan debt, an incentive that helps lure new talent and workers build their nest egg – Thomson ONE

buzz@msifund.com

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