MidSouth Week in Review:
June 07, 2019

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The S & P had its best week of the year in gaining 4.4% in anticipation of a Fed rate cut by July.  The Dow rose 4.8%, breaking its record of six consecutive down weeks.  Ten-year Treasury bond yields declined to 2.07% today, its lowest level since Sept. 2017.  Freddie Mac said that the rate on 30-year mortgages declined to 3.82%.  Crude oil reached bear market territory on Wednesday, after registering a 20% decline from April’s high.  Natural gas declined to $2.34 from its almost $5 high.  Household net worth rose 4.5% in the 1Q vs. a 3.7% decline in the 4Q due to a rising stock market.  Beyond Meat (BYND), a company that produces meatless-burgers, went public at $25 a share in early May before surging to a $137 a share high today.  Nice!

BuzzBits

Value Stocks – Value is currently trading at the biggest discount ever.  For Value to make a comeback the following developments are likely needed:  1) regulations that foster competition  2) less policy uncertainty  3) either a reaccelerating of global growth, or a full-blown recession that forces repricing of growth stocks – J. P. Morgan

Student Debt – “If my young self knew what I was doing when I signed my life away on the dotted line just to go to school then I probably would never have gone.” – Danielle Cooper ….. The average millennial student-loan debt in 2017 was $10,600 – Federal Reserve

Ride-hailing – tends to make cities more congested and polluted, not less.  A Denver research study found that Uber and Lyft was responsible for an 83% increase in miles that would have otherwise been traveled by car.  Much of that increase came from “dead heading” or driving in search of the next fare – National Renewable Energy Lab

Female Phobia – 60% of male managers say they are uncomfortable mentoring and socializing with junior-level women vs. 32% the previous year – Axios.com

Cheap Marijuana – There used to be around 180 pot growers in Monterey County, CA.  Now there are almost none.  Why?  Imports!  Columbia can produce cannabis for around $0.50 a gram vs. around $6 for publically traded growers, Canopy Growth (CGC) and Tilray (TLRY) – Barron’s

Religious People Live Longer – A Jama Internal Medicine study found that regular service attendance was linked to reductions in the body’s stress responses and even in mortality, so much so that worshippers were 55% less likely to die during the up to 18-year follow-up period than people who didn’t frequent the temple, church or mosque – TIME

Singles – Today, 35.7 million Americans live alone, 28% of households vs. 13% in 1960 and 23% in 1980.  Consumer product companies are taking note, catering to what they see as a lucrative market for single-person households, by upending generations of family-focused product development and marketing.  This has caused manufacturers to reduce the size of fridges and ovens, food companies to produce more single-serving options and household-product makers to revamp packaging – Dow Jones News

College Enrollment – has declined 1.7% this year, and has been down for seven consecutive years.  The decline has caused many for-profit and small schools to close their doors.  The only category to see enrollment growing was 4-year private non-profit colleges, where enrollment grew 3.2%.  The number of full-time MBA students declined 12% last year vs. 2017 - Wall Street Journal

Talcum Powder – Just about everyone’s “heine” was patted with the powder when they were a child.  Last week a jury ordered Johnson & Johnson to pay $325 million to a couple because the powder was alleged to have caused an asbestos-linked cancer.  In 2018, J & J was ordered to pay $4.7 billion to 22 women and their families for the same reason.  J & J also faces about 14,200 related claims and if they lose those cases for the same amount per claimant, it would be the equivalent to paying $9,300 to every U.S. citizen ….. Last month a jury awarded an elderly CA couple $2 billion who said Bayer’s Roundup weed killer caused their non-Hodgkin’s lymphoma.  Both are now in remission – Wall Street Journal

Illinois – has proposed raising their top income tax rate from 4.95% to 7.99% and to double their gas tax to 38 cents a gallon and their auto registration fee from $50 to $148 annually.  One group they almost forgot about were the electric vehicle drivers (Tesla, etc.) who are only charged a $17.50 annual tax.  The first proposal was to raise the tax for this group to $1,000 annually, but has since been lowered to $248 annually – Chicago Tribune ….. IL has a $7 billion backlog of unpaid bills – Wall Street Journal

buzz@msifund.com

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