MidSouth Week in Review
September 11, 2020

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Sep. 14, 2020 | RedChip Companies


For the holiday-shortened week, the S&P fell 2.5%.  Tesla fell 21% on Tuesday, after the S&P 500 decided they didn’t want them in their index, which caused tech stocks to decline 4% that day.  The tech heavy NASDAQ had a 3-day, 10% decline, its worst since March.  Crude dropped from around $44 to the $36 a barrel level as demand softens.  30-year mortgages hit a record low rate of 2.86% vs. 3.56% a year ago.  The 15-year rate dropped to 2.37%.  Fed chair Powell said the pace of job growth is rising faster than expected, but it may be years before the economy fully recovers. – Sources: Wall Street Journal and New York Times

BuzzBits

 

September – Septem, which is Latin for seven,  was the seventh month of the Roman calendar before Julius Caesar reformed the calendar making September the ninth month and keeping the name.

 

Kids – If your parents didn’t have children, chances are you won’t either – Dick Cavett

 

New Stock Traders – 19.5% of stocks were traded by individuals in the first six months vs. 14.9% last year and nearly double from 2010 – Barron’s ….. A recent study found that 43% of retail investors are trading with leverage.  Ouch! - Buzz

 

Unbelievable – New York City had only three coronavirus deaths over the 7-day period ending September 8 vs. 598 deaths on April 7, which was at a rate of one every seven minutes – NYC.gov, New York Times ….. Prohibition on indoor dining in New York City will be lifted on September 30 ….. For the week ending September 9, only 370 deaths were reported nationally vs. 3,169 for the week ending August 8.

 

Municipal Bonds – Practically every municipality has seen their financial condition deteriorate over the past six months, yet muni prices remain at near pre-pandemic highs.  This has caused Moody’s Investors Service to lower its outlook on all municipal bond sectors except for housing-finance agencies and water, sewer and public power – Wall Street Journal ….. CA, CO, WY and NM are all expected to have 20%+ FY revenue declines.  Municipalities are expected to see average 2020 revenue shortfalls of -13% – NCSL ….. Kiplinger expects 1.1% inflation for 2020, below the 2.3% rate in 2019, but the Fed’s easy-money policies mean high inflation is more likely in the future – KFMA

 

Love You Dad Permanent job losses and the collapse of small businesses has caused the number of young adults living at home to surpass levels not seen since the 1930 “Great Depression”.  As of July, 52% of millennials were living at home – Pew Research

 

Life Insurance Companies – Premiums have been dropping and are now at a 20-year low.  Insurers don’t make money on insurance but on their investment returns, which have been low for years.  Restrictions on face-to-face meetings have forced companies to discontinue in-person medical exams.  Companies will almost surely soon have to increase premiums because of decreasing investment returns.  At least six major life insurance companies have already raised rates this year – Chris Huntley ….. The best type of life insurance to buy is term, where you make a one-time bet you will die, and if you don’t, you lose - Buzz

 

Private Schools – Because of insurmountable financial stress, exacerbated by the coronavirus, many may close.  About 150 Catholic schools have closed this year, including nine in Boston.  As parents and families lost their jobs, many could no longer pay tuition.  Enrollment at Catholic schools peaked in the 1960s at 5.2 million vs. 1.7 million during the 2019-2020 school year – New York Times ….. Consumer borrowing picked up 4.8% in July mostly for big ticket items like tuition and cars - MarketWatch

 

Yale – 26% of Yale’s class of 2023 identified as Asian-American, 49.3% as white, 11.8% as black, 15% as Hispanic, 3% as native American and 7.5% as international – New York Times ….. After complaints, the Department of Justice found the school had a racially weighted admission policy.  The report said that Asian Americans and Whites had only 1/10 to 1/4 of the likelihood of admission of Black applicants – National Review ….. Yale and the rest of the Ivy schools are no longer requiring outside test scores, such as the SAT, for entrance - Buzz

 

Used Cars – Consumers are snapping them up as second or third vehicles so they can avoid trains, buses or Ubers during the pandemic.  Demand has also been fueled by a two-month halt in production this spring.  Used car sales rose 22% in June, to the highest monthly total since 2007 – Wall Street Journal ….. The average trade-in value jumped 16% in July to $14,000 – Edmunds.com

 

Household Debt – Because of concerns about the economy, many households have been paying down debt, particularly credit card debt, which is down 7.4% from a year ago – The Kiplinger Letter

 

buzz@msifund.com

 

This material 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. 


Prospera Financial will not accept orders and/or instructions transmitted by e-mail, and will not be responsible for carrying out such orders and/or instructions. Please do not transmit such information by email. Please be advised that communications regarding trades and/or account values in your account are for informational purposes only and should not be relied upon for accuracy. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error please notify the system manager. Securities and advisory services offered through Prospera Financial Services, Member FINRA/SIPC



"I work with many of the companies that would be RedChip companies. And we certainly ascribe to the same view that the RedChip Companies do, which is Discovering Tomorrow's Blue Chips Today."

  • Bob McCooey, Senior Vice President, NASDAQ Stock Market