MidSouth Week in Review:
May 15, 2020

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

May. 19, 2020 | RedChip Companies

From Buzz Heidtke (buzz@msifund.com)


The S&P declined 2.3% for the week.  The consumer price index tumbled 0.8% last month, the largest decline since 2008.  Crude surged to $29.58, its highest level since mid-March.  Initial unemployment claims hit 3 million last week, bringing the eight-week total to 36.5 million.  Unemployment is expected to hit 17% in June.  Retail sales, less auto sales, declined 22%.  Online sales rose 22%.  From last Thursday through yesterday, the S&P Regional Banking Index (KRE) declined 19% over worries about the economy.  The U.S. deficit for the year is expected to be $4 trillion, which represents about $12,000 per citizen.  Pelosi introduced a coronavirus relief bill on Tuesday with a $3 trillion cost.  Sources – Wall Street Journal and New York Times





One Percent Please - It’s been a lot harder to be up 1% this year compared to 15% last year.  The definition of a good year has now changed to now mean “if you are up at all.” – Kent Simmons, Newberger & Berman Guardian Fund


Gym Members – 87% of gym members don’t even know their gym is closed – Charles Batt


Charitable Deductions – With today’s heightened need for donations, the CARES Act encourages taxpayers who do not itemize their deductions to make cash gifts in 2020.  These donors, who represent the vast majority of taxpayers, can deduct up to $300 of their charitable gifts this year, in addition to taking the standard deduction – National Philanthropic Trust


GE Stock – made a 29-year low this week in hitting the $5 level.  15 years ago, GE had the highest valuation in the S&P 500 Index.  GE’s stock has declined 59% from its February high – Wall Street Journal


Office Tower Downfall – “Most staff will work from home the rest of the year” – Google ….. “If employees want to work from home permanently, we will let it happen” – Twitter ….. “We’ve seen firsthand that people can be just as productive at homes as in the office” – Omnicom ….. “It’s maybe sort of counter intuitive but we have the highest level of productivity among our work force that we’ve ever seen in our history” - PayPal


Trustworthiness – A recent study asked 3,525 investors to rate professionals, based on high, median and low.  The percentage getting a high ranking included: Doctors (77%), Accountants (42%), Lawyers (29%), Financial Advisers (23%), Mechanics (22%), Politicians (6%).  Only 7% gave the docs a low rating vs. 83% for the politicians – CFA Institute


San Francisco Rent – is the highest in the country, with the median monthly rent for a one bedroom apartment at $3,690, which is 30% higher than New York City.  A person would have to earn approximately $60,000 to net enough to pay for their rent in San Francisco – C/Net


Slick Kid – A couple of weeks ago a Utah cop pulled over a kid a couple of blocks from his home who appeared to be driving impaired.  It turned out to be a 5 year-old boy, who was driving to California to get a $200,000 Lamborghini, because his mom wouldn’t buy him one – THE WEEK


Charities – are in trouble.  Fundraising has been cancelled, ticket and event revenue is non-existent.  Most operate on razor-thin margins and half only have 3 months of cash or less on hand.  92% of the nation’s 901,206 non-profits that filed IRS returns had annual budgets of less than $1 million – Wall Street Journal


Used Car Sales – fell 34.4% in April.  Wholesale prices fell 11.4%.  Auctioneer’s inventory was up 40% by mid-April – Manheim


Colleges – Even before the pandemic, 30% of colleges were running in the red.  Now, international students, who pay full tuition, are rethinking traveling abroad, while many American students’ parents have been suffering financial hardships that has put tuition out of reach – Wall Street Journal


Job Losses – Among households with income of less than $40,000, nearly 40% had lost at least one job in March vs. 19% of households making between $40,000 and $100,000 and 13% of households making more than $100,000 – Fed Survey


Restaurants – Open Table predicts 25% of restaurants won’t re-open because of the coronavirus – Bloomberg


Nursing Home Deaths – now represent one-third of those who have perished in the U.S. from the coronavirus.  States with the highest share of death rates from nursing homes include:  MN 80%, WV 80%, RI 73%, PA 66% - New York Times ….. Earlier in the week, Nashville had had 31 coronavirus deaths, representing about 1% of total cases.  Based upon available stats, 29 of the 31 deaths would have been from those with pre-existing health conditions.  Non-overweight white women with no pre-existing conditions would have represented only one of the deaths - Buzz


Hearing Loss – Estimates suggest that it affects two out of three adults above age 70.  It is also rarely treated.  In the U.S., only 14% of adults who have hearing loss, wear hearing aids.  Diminished hearing may be a significant risk factor for Alzheimer’s and other forms of dementia – New York Times


The U.S. Postal Service – is petitioning Congress for up to $75 billion to offset loses, modernize operations and for additional borrowing capacity.  Postal officials project mail volume will fall more than 50% over the next few months – Wall Street Journal








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