MidSouth Week in Review:
March 01, 2019

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The Dow was up 0.5% today.  For the week the S & P was up slightly and finished the Jan-Feb period with a 11.1% advance.  The Dow registered its 10^th consecutive up week.  Hedge fund manager Ray Dalio lowered his odds of the chances of a recession before the 2020 election from 50% to 35%.  Oprah Winfrey took a $58 million hit on her Weight Watchers stock on Wednesday as the stock plunged from $30 a share to $19 on the announcement of a $50 million paper loss.  Consumer confidence rose from 121.7 in January to 131.4 in February.  The report showed future inflation expectations continue to fall, hitting the lowest level in 15 years.  Farm loan delinquencies hit 19.4% in January vs. 16.5% a year ago.  Oil prices are off to their best-ever year start as fears of a supply glut cool.  Crude oil futures were up 25% in the first two months of the year. 

BuzzBits

Value Stocks – Those stocks with the lowest ratios of price to book value have significantly outperformed growth stocks.  The 20% of stocks at the value end of the spectrum have beaten growth stocks by 3.65 annualized percentage points from 1921 to 2018.  Value stocks got that way from years of getting beaten down and are deeply unpopular with investors – THE WEEK

Politicians – and diapers must be changed often, and for the same reason – Mark Twain

China Stocks – surged Monday following Trump’s announcement that he will be delaying U.S. tariffs on China.  Prospects for a trade agreement between China and the U.S. are now looking very good.  It is evident that both sides need a positive resolution and are willing to compromise.  Last year, China’s stock markets experienced their worst year since 2008, with the Shanghai Composite dropping 24.6% - Bill Witherell, Cumberland Advisors ….. The Shanghai index is up 20% year-to-date.

Chicago – had 14 running for Mayor this week with no one polling above 15% (the two top voter getters for the runoff were both African-American women).  The new mayor will need to find solutions to problems ranging from high crime, population loss and troubled finances stemming from decades of over spending.  Their pension shortfall is $30 billion which represents a debt of $11,111 per citizen – Wall Street Journal ….. Recent Chicago area home listing prices vs. original listing price: $4.65 million down from $9.67 million, $5.2M vs. $6.7M, $4.9M vs. $7.25M, $6.99M vs. $18M, $10M vs. $13M, $7M vs. $15M ….. Kentucky’s governor Mat Bevin, in desperation, has proposed a vote on legalized sport gambling as to help reduce the worst state pension liability in the U.S., at $84 billion, representing $18,791 per citizen - Chief Investment Officer

Charitable Giving – rose 2.6% in 2018 for those giving $1,000+.  The number of donors declined 4.5% last year and donations under $250 declined 4.4%.  Because the 2017 tax cut doubled the standard deduction for marrieds to $24,000, the tax benefit for charitable giving was reduced or eliminated for many.

Digital Advertising – is expected to exceed traditional spending on TV, billboards and print this year.  A big drop in Yellow Pages spending will tip the ad market below 50% of the ad market – Oz.com

Retail Bankruptcies – Eight of ten of the biggest retail bankruptcies, where a company remained intact, was followed by a second bankruptcy filing – AXIOS.com

Wealth – The top 400 richest Americans have more wealth than the bottom 150 million adults, which represents 60% of the country’s wealth distribution.  41 individuals control as much wealth as 3.7 billion of the world’s poorest.

California Solar – Beginning in 2020, solar panels for all newly constructed homes will be mandatory.  The mandate will add between $8,000 to $10,000 to the cost of a new home.  The state estimates the cost will be offset by savings on utility bills yet Realtor.com says the added costs could hit “the affordable side of the market”. – CNBC

Venezuela – has a current inflation rate of around 3.5% per day, which means that a Pumpkin Spice Latte that you bought today for $5.74 at Starbucks would be selling for around $6.68 next week and for $15.04 a month later.  With the country’s annual inflation rate of around 1.7 million percent, what is the smart money doing now?  Buying Bitcoin!  Even if you had paid the top price of $19,500 a year ago, you would still be better off at the current $3,800 price vs. keeping your money in Venezuela’s currency – New York Times

Job Openings – U.S. employers posted 7.3 million available jobs in December, the most on record, which now eclipses the 6.3 million that are currently unemployed – CNBC.com

Problem Gamblers – make up only 10% to 15% of lottery participants but are responsible for 80% of the $73 billion spent on state lotteries – Topic.com

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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