MidSouth Week in Review:
May 31, 2019

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The S & P suffered its worst weekly drop of the year in declining 2.6% and its first May drop since 2012.  The Dow registered its sixth consecutive weekly decline.  Growing economic worries caused bond yields to decline to their lowest levels in 18 months.  The 10-year Treasury yields declined below the three-month bonds, creating an inverted yield curve for the first time since 2007.  30-year mortgage rates declined below 4% from nearly the 5% area six months ago.  The declining bond yields caused the Regional Bank Index (KRE) to decline 5% for the week and is down 11% from its May high.  Crude declined 6% today to $53, down from its April high of $66 over worries about the climbing U.S. crude stockpile.  Americans continue to be more cautious about their money with the personal savings rate averaging 6.7% over the past three years vs. 3.7% in 2007.  The Consumer Confidence Index rose to 134.1 in May vs. 129.2 in April and is now close to the 18-year high recorded last fall. 

BuzzBits

Retail Penny Stocks – Sears ($0.37), J.C. Penny ($0.82), Fred’s ($0.41), Pier 1 ($0.57), Jacks Pacific ($0.82), Stein Mart ($0.81), Blue Apron ($0.69), Christopher & Banks ($0.14).  $4,630 will get you a package of 1000 shares of each of these retailers vs. a $240,000 cost at their 10-year highs – Buzz ….. Approximately 6,400 retail stores have gone out of business and closed across the USA, more than the 5,864 stores that closed nation-wide during all of 2018.  This year’s closures are on pace to exceed the all-time record of 8,139 store closures in 2017 – Coresight Research ….. The S & P Retail ETF (XRT) declined 13%, in the month of May.

Love My Phone – Nearly 7 in 10 children, or a slightly lesser percentage than their parents, kept their mobile devices in bed or within easy reach and 29% of the younger group sleeps with the device, compared to 12% of adults – Common Sense Media study

Long Term Returns (1927-2018) – on the cheapest 20% stock valuations vs. the 20% highest valuations.  Price-to-Book (18.5%) vs. (7.2%), price earnings ratio (17.9%) vs. (10.2%), price-to-cash-flow (10.0%) vs. (7.7%).  Stocks selling at low PEs and price-to-book ratios offer the best long term returns – Kenneth French, Data Library

Case-Shiller House Price Index – rose 3.7% in March vs. a 3.9% gain in February - Corelogic ….. Nashville’s April housing inventory was up 39% vs. last year and the average sales price has declined 0.3% since the first of the year – Greater Nashville Realtors ….. Atlanta homes for sale jumped 18.9% in the 1Q…..The average rate for a 30-year mortgage declined to 3.99%, the lowest since January 2018 – Mortgage Bankers Association

Living to 100 – is on the rise.  In 1995, there was one centenarian for every 10,000 people, now it’s one in 5,000.  Centenarians now number around 82,000 vs. 50,000 in 2002.  In the next decade the number is expected to rise to 140,000 – Census Bureau

Tesla Bears – have made more than $4 billion shorting Tesla stock this year vs. losing $1.4 billion in 2018.  The bears are up $1 billion+ in May, thanks to a 23% decline in the stock this month - Bloomberg 

Bank Consumer Satisfaction Rating – was 860 for online banks vs. 807 for brick-and-mortar ones.  Online banks have improved their satisfaction rating because they normally pay higher rates on their deposits – JD Power ….. The national average on savings accounts is 0.09%, according to the FDIC, but finding a savings account that averages 2%+ interest isn’t difficult.  It’s often as simple as opening an online savings account – MarketWatch

150 Years Ago – in Nashville there were 403 arrests in April, representing 1.6% of the population and at an annualized rate of 19% of the town’s 25,000 citizens.  The arrests included: 293 white, 110 colored, 128 married, 295 single, 259 literates, 144 illiterates, 29 operating a house of ill repute, 60 prostitutes, 21 servants, 19 soldiers, and 352 born in U.S. – Daily Press and Times, May 1, 1869

Birth Rates – among teens ages 15-19 fell 7% last year to a record low of 17.4 per 1,000 women vs. 61.8 in 1991.  The share of Americans over 25 who have never married has doubled since 1960.  Those who do marry are having fewer kids.  Both spouses normally have to work to afford health insurance or childcare.  Student debt is another financial obstacle – Wall Street Journal

Property Taxes – The highest is New Jersey with a rate at 2.35%, meaning the tax due on a home valued at $1 million would be $23,500.  The next three most expensive property tax states are:  IL (2.3%), NH (2.15%) and CT (1.97%).  The four lowest tax states are:  HI (0.27%), AL (0.43%), LA (0.49%) and DE (0.54%).

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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