MidSouth Week in Review:
May 29, 2020

From Buzz Heidtke (buzz@msifund.com)

The S&P was up 3.1% during the holiday shortened week and up 4.6% for the month.  Over the past two weeks, value has outperformed growth as the S&P rose 10% vs. a 20% gain from the S&P mid-cap value index (IJJ).  The FANG stocks (Facebook, Amazon, Netflix and Google) + Apple only rose 5% during the period.  The Fed said that businesses saw limited evidence of recovery in recent weeks, with economic activity still declining amid the pandemic.  Consumer confidence rose to 86.6 vs. 85.7 in April, suggesting the worst of the coronavirus slump may be in the past.  2.1 million filed for jobless claims last week vs. 2.4 million the previous week.  Last Friday, after the close, Hertz announced bankruptcy, causing the stock to decline on Monday from $2.84 to 40 cents.  Hertz has roughly 700,000 rental cars, of which only about 15% of the fleet is being used.  Sources – New York Times and Wall Street Journal

BuzzBits

Buy Them – when they stink.  “Most people get interested in stocks when everyone else is.  The time to get interested is when no one else is.  You can’t buy what is popular and do well” – Warren Buffett ….. Legendary investor Benjamin Graham observed that the clear-cut under-valuation of companies typically only occurs during bear markets.

Gratitude – Nashvillian Larry Stumb, a 32-year Merrill Lynch veteran, was asked by a client to go to the hospital and play his guitar and sing for a despondent fellow with lung cancer.  Hesitantly, Stumb went to see the fellow and played for a half hour.  As Stumb got up to leave, he told the fellow, “I certainly hope you get better,” to which the guy replied, “and I hope you do too.”

Cheap Money – Last week, UBS introduced promotional fixed rate loans ($25,000+) at 1.25% for 1-year, 1.50% for 3-years and 1.95% for 5-years.  The fixed-rate loans are available by putting up securities as collateral.  Uses of the credit line include: 1) Consolidate higher interest rate, third-party debt. 2) Purchase a vacation home or investment property. 3) Manage cash flow, access liquidity for your business and pay your taxes. – Robert McAleer, UBS

Hotel Occupancy Rates – hit 35.4% last week vs. 21% on April 5-11.  The average daily rate was $80.92, a  39.7% decline from 2019.  Revenue per available room was $28.67, a 69.9% decline – STR

Mortgage Rates – dropped to a record 3.15% on 30-year mortgages and to 2.62% on 15-year mortgages – Jay Kumar ….. In 1982, 30-year mortgage rates hit 18.75%.  Ouch! - Buzz

The Louisiana Purchase – In 1802, an outbreak of yellow fever took place in the  French colony of Haiti that killed an estimated 50,000 French troops trying to control the country.  The loss in the Key Caribbean outpost forced France to withdraw and was so economically damaging that Napoleon sold off 828,000 square miles of French territory in the U.S., extending from New Orleans to Canada (15 states), to Thomas Jefferson for a mere $15 million, representing 2.8 cents per acre.  The purchase doubled the size of the U.S. and made it a major world nation – THE WEEK

Filtered Coffee – A Norwegian study of 508,747 over a 20 year period found that the coffee was associated with a 15% reduction in the risk of dying prematurely from any cause.  Men who drank unfiltered coffee had a 4% death reduction rate and women had a 9% reduction – New York Times

Private Colleges – are hurting.  Last year, at this time, 419 colleges were still accepting applications for freshman.  This year, the number is 754.  The average discount given to freshmen attending a private college has increased every year since 2009, reaching a high of 52.6% in 2018.  80% of the colleges are ranked “Low” financial health – New York Times

Embarrassing! – On May 26, 1993, the Cleveland Indians beat the Texas Rangers 7-6 in baseball after Jose Conseco lost a deep hit flyball in the sun and it hit him on the top of his head and bounced over the wall for a home run – New York Times

Women vs. Men Drivers – A British study of 14,425 area fatalities from 2005 to 2015 found that men drivers of cars and vans had twice the rate of fatal accidents, 4x the death rate of female truck drivers, and 12x the fatality rate of female motorcyclists – New York Times

Fake Ads – What’s the difference between God and a lawyer that advertises on TV?  God does not think he’s an attorney.

Soda and Beer Prices – are soaring because carbon dioxide prices have risen around 25%.  Why?  Carbon dioxide is a byproduct of ethanol, which by federal mandate is mixed with gasoline to make it burn more cleanly.  But fewer are driving and demand for gas has plunged, causing many ethanol plants to shut down and prices to rise – Wall Street Journal

buzz@msifund.com

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