MidSouth Week in Review:
June 21, 2019

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The S & P made a new high this week and is on target for its best performing June since 1955.  This week the Fed decided not to lower interest rates, but there is an almost 100% agreement of a rate cut in July because of the yield on the 10-year Treasuries dropping below the 2% yield level yesterday.  The Fed hasn’t had an interest rate cut since late 2008.  Oil surged 10% to $58 from Wednesday’s low on worries about an Iran/U.S. conflict.  U.S. crude oil production hit a record 123.4 million barrels a day last week.  A weakening dollar caused gold to surge to $1,400, a 5-year high.  The 30-year mortgage rates hovered around 3.8% for the third straight week.  Bitcoin surged 10% this week to $9,914 on the announcement that Facebook is launching a cryptocurrency-based payment system called Libra.  Because of flooding and delayed planting, corn is up 35% from its May lows and soybean’s are up 15% .  A recent Merrill Lynch survey found that investors have not been this bearish since the global crisis with pessimism driven by trade war and recession concerns.

BuzzBits

Stock Market Bubbles – Of the eight times when the S & P doubled over a five-year period, five cases were followed by a severe crash, such as the Great Depression, the Dot-com bust, or the Black Monday crash of 1987 – Nate Silver ….. When the P/E ratio is 25, a $10,000 stock market investment returns on average $12,000 ten years later.  At a 30 P/E level, the expected return is negative – Irrational Exuberance, Robert Shiller

Mississippi Road Sign – If you can read this then you aren’t from Mississippi.

Social Security Stats – The average worker retiring in 2020 will have paid $36k in Medicare taxes during their lifetime and can expect to receive $229k in benefits over their lifetime – Urban Institute …..The first person to receive Social Security retirement benefits, retired in 1940 after paying $24.75 in three prior years.  The lady died 35 years later at 100, after receiving $22,889 in retirement benefits – Social Security

Marijuana – Researchers who tracked users over a 25-year period among adolescents who used pot every week, found an I.Q. decline by the users.  States should consider restricting use of pot for the group under 25 years of age.  The average THC content today is 18.7% vs. 3.7% in the 1990’s – New York Times

College Tuition – has soared 1,375% since 1978, more than four times the rate of inflation.  Borrowers owe more than $34,000 per person.  Over 2 million have defaulted over the past six years, and the number grows by 1,400 a day – Wall Street Journal

My 16 Acres – The U.S. owns 2 billion acres of land in the 48 contiguous states, including state and federally owned land.  If divided equally among the 122,000 households in the country, each household would own 16.3 acres of land – BTN Research ….. Almost 30 million acres of U.S. farmland are owned by investors from Canada, Germany, China and other foreign countries, an amount that has doubled over the past two decades.  With a median age of 55, many farmers have no family members willing to take over - NPR.org

The Kiddie Tax – applies to any child under the age of 18.  Previously a child’s income was taxed as if it were his parents.  Now the tax is the same as a trust.  Any income above $12,750 is taxed at 37%.  A child can still claim a standard deduction of $1,100 – Investmentnews.com

Bad Move – In the 1880’s at the urging of recent immigrants, the government brought more than 300 carp from Germany.  By 1910, it was clear a mistake had been made.  Carp are tolerant of poor water quality.  They travel miles to spawn growth, can live up to 50 years where they have invaded lakes that turned brown and muddy.  Plants and ducks disappeared and they displaced other fish – New York Times

Gloria Vanderbilt – died Monday at age 95.  Her sportsman-playboy alcoholic father, who was the great-grandson of “robber baron” Cornelius Vanderbilt, died at age 45 of cirrhosis of the liver after squandering his $25 million inheritance.  In infancy, she inherited a $2.5 million trust fund, equivalent to $37 million today, that she could not touch until she was 21.  At 10, her abusive mother and wealthy aunt sued each other in a child custody case and she moved in with her aunt, where she was dubbed the “poor little rich girl” by the press.  At 17, she dropped out of school and married a 64-year-old associate of mob boss “Lucky” Luciano, who was the first of her four husbands.  She had affairs with Errol Flynn, Frank Sinatra, Gene Kelly, Howard Hughes and Marlon Brando.  One of her sons died after he fell from a penthouse as she pleaded for him not to jump.  Another son is CNN announcer Anderson Cooper.  In the mid-70’s, when jeans were cut mostly for men, Vanderbilt signed a contract to market jeans for women with a profit sharing agreement.  In 1980 she earned $10 million, before the fashion income faded.  In 1993, she was hit for back taxes of $2.7 million and had to sell her Manhattan townhouse and home in South Hampton to satisfy the judgement.  In 1971, the Vanderbilt’s had a family reunion in Nashville at Vanderbilt and reportedly not one of the family members in attendance were millionaires.

buzz@msifund.com

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