MidSouth Week in Review:
February 08, 2019

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

After registering five consecutive up days the S & P closed the week down slightly, with three consecutive down days.  Technology shares pulled the market lower today over worries about the U.S. and China reaching a trade deal before the March 1 deadline.  At least five Democratic presidential candidates want to restrict company share buybacks saying it enriches execs and shareholders at the expense of workers.  One of the biggest long term proponents of company buybacks has been Democrat Warren Buffett.  Last week, Bernie Sanders proposed a 45% tax on estates between $3.5 and $10 million, increasing gradually to 77% for amounts above $1 billion.  Last Monday, 30 Republican senators sponsored a bill to permanently end the death tax.  30-year mortgage rates slipped to 4.41%, a 10-month low, and 15-year fixed rate loans declined to 3.84%.

BuzzBits

ETF Returns 2008 – 2018 – The best annualized returns were U.S. Large Caps (8.0%) and U.S. Small Caps (7.9%).  The worst were Gold (3.7%) and Commodities (-5.9%)

Exercise – “I get my exercise acting as the pallbearer to my friends who exercised” – Chauncey Depew, CEO of the New York Central Railroad, who died in 1928 at the ripe old age of 94.

Shrinking Public Equity Market – About half as many companies are now listed vs. 25 years ago.  A Harvard study notes that 74% of the decline list occurred during the 1996-2003 period.  Microcap companies accounted for most of the decline.  The number of IPO’s has declined significantly.

Nitpicky Virginia Politicians – Lt. Gov. Justin Fairfax (D) and Attorney General Mark D. Herring (D) both said Gov. Ralph Northan (D) should resign after being accused of wearing blackface 35 years ago in his medical school yearbook.  Fairfax has now been accused of sexual abuse and Herring of also wearing blackface.  The next guy in line for the job would be the Republican Speaker of the House, Kirk Cox – Richmond Free Press

Tax Returns – One third of the 150.3 million tax returns filed in 2016 legally did not pay any federal income tax.  The remaining paid $1.45 trillion or $1,450 per return.  The zero payers had an average gross income of $12,900.  5% of the 150 million filers reported adjusted gross income of at least $200k and paid 58% of all federal income tax – IRS

Unsold Autos – There were 3.95 million unsold cars in January, a 4% increase from December.  A possible cause could have been the 9% decline in the S & P in December.  When the stock market declines, even if you are not invested, you feel poorer and defer big dollar purchases - Buzz

Taller and Fatter – The average man is 5-foot-9, gaining an inch since the ‘60s, and are more than 30 pounds heavier, reaching an average of 198 pounds.  Women are 5-foot-4 and about 30 pounds heavier, averaging 171 pounds.  The average height for white and black men is 5-foot-10 vs. 5-foot-7 for Mexican and Asian men – AARP

Computer Science – Lured by the prospect of high-salary, high-status jobs, college kids are rushing in record numbers to the major.  The surge in demand for the courses is outstripping the supply of professors, as the tech industry snaps up talent.  Majors in the subject more than doubled from 2013 to 2017, to over 106,000 – New York Times

Moving to Florida - NY Gov. Cuomo blamed a $2.3 billion state deficit on the new Fed law that carries a maximum deduction on state and local taxes at $10,000 as the reason for the shortfall.  The new law has  caused home owners to flee high tax states to low tax states such as FL, NV, and TN.  States with the highest state and local taxes (SALT) as a percentage of income include; NY (9.4%), NJ (8.8%), CT (8.5%), and CA (8.1%).  The lowest include: WY (1.8%), SD & ND (1.8%), TN (1.9%), NV (2.2%), FL (2.6%) – Wall Street Journal….. On Wednesday Trump said he was open to talking about revisions to the SALT cap – THINK ADVISOR ….. A recent poll reports that 43% of CA voters say they can’t afford to live there, headed by 62% of younger voters age 18 to 34 – USA TODAY

Boston Haters – Last week the LA Rams lost to the New England Patriots in the Super Bowl and 93 days earlier the LA Dodgers lost to the Boston Red Sox in the World Series.  The killer would now be for the Celtics to beat the Lakers for the NBA title.  The Super Bowl had the lowest viewership in a decade

California Pot Taxes – have been proposed to be reduced from 15% to 11% for three years on sales and to suspend the cultivation tax of $148 per pound during the period.  Why the cut?  The black market is killing them.  The estimated pot tax revenue for the June FY was $630 million but has now been revised downward to $355 million – LA Times

Correction – Jackie Robinson was not the first black to play major league baseball.  Moses Fleetwood Walker played for the Toledo Bluestockings in 1884.  After 1884, pro-baseball remained all white until 1946 – New York Times

buzz@msifund.com

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