MidSouth Week in Review
October 02, 2020

The S&P had a sharp 1.8% initial drop today, on news that President Trump has coronavirus, but quickly recovered.  The FANG stocks + Apple declined 2%+ today.  For the week, the S&P was up 1.5% after registering four consecutive down weeks.  The S&P declined 3.9% in September after having been up five consecutive months.  The Russell Growth Index declined 3.9% in September vs. a 2.6% decline in the Value Index.  J.P. Morgan expects a 10% stock rally by year-end.  Major banks are expected to register a 30% to 60% decline for the year due to low interest rates and COVID-19.  Crude dropped 10% from its mid-week high and natural gas registered a 1 ½ year high.  Sources:  Wall Street Journal and New York Times

BuzzBits

Bonds vs. Stocks – Despite a 47% rise since March 23, stocks were only up 2% for the year vs. 8% for shares of U.S. Treasury Bond ETF.  Over the past two decades, the average annual total return for the S&P is 6.3% vs. around 6.1% for bonds – Dow Jones

Financial Education – I’ve learned that when a man with money meets a man with experience, the man with experience ends up with the money, and the man with the money ends up with the experience – Anon

New Business Applications – began to pick up in June and have reached 3.2 million vs. 2.7 million in 2019.  Spending is picking up and personal savings rates are 3x as high as in the last recession – U.S. Census Bureau ….. Because of the changes we have seen this year, there will be several outstanding opportunities for new businesses – Buzz

Charitable Deductions – Non-itemizers can deduct up to $300 of charitable contributions in 2020 – The Kiplinger Tax Letter

Community College – enrollment was supposed to be strong this fall as many were expected to delay enrollment in 4-year colleges.  But not in Tennessee as enrollment declined by 11.5% or by about 10,000 students – Knoxville News Sentinel ….. MBA applications have soared after several years of falling app numbers because of loosened standardized testing requirement amid the coronavirus pandemic.  MBA apps also soared during the last recession – Wall Street Journal

My Most Secret Fantasy – is having two men – one cooking, the other cleaning – Darlene Cline

Kentucky Retirement System – The top two officers are leaving the lowest ranked retirement system among 148 state and local pensions.  The system is only 2.6% funded and without any further contributions or investment income will be out of funds in 2.6 years, unless it is bailed out - Chief Investment Officer

New York City – The unemployment rate is 16%, twice as high as the rest of the country.  Personal tax revs are expected to drop by $2 billion this year.  Only a third of hotel rooms are occupied.  Their two-year revenue shortfall is $9 billion – New York Times ….. Apartment sales plunged 46% in the 3Q and there are now a record 10,000 apartments for sale in Manhattan - Compass

Obesity – Those with it are twice as likely to end up in the hospital with coronavirus and 50% more likely to die.  Of nearly 17,000 hospitalized coronavirus cases in the U.S., more than 77% had excess weight or obesity – New York Times

Involuntary Retirement – 2 million workers aged 55 to 70 left the labor force in the first three-months of the Great Recession of 2007.  Since March, 2.9 million older workers have left the labor force – PLANSPONSOR 

Gotcha! – California is considering raising taxes on the richest who make $5 million+ to 16.8% from 13.3%.  To make sure some of the sharpies don’t take advantage of the situation by quickly moving out of state, the change will be retroactive to January 1 – Financial Advisor ….. Last week, New Jersey approved raising their tax rate to 10.75% from 8.97% on income above $1 million.  Florida, which has no income tax, has been seeing increased interest from the wealthy to relocate there - Jeffrey Gundlach

The Wealth Gap – The typical white family has a net worth of $171,000 vs. $17,600 for a black family.  Households headed by a college grad African-American have less net worth than white households headed by white high school dropouts – THE WEEK …..  Why? Lack of inheritance is one problem.  Another is insecurity which causes blacks to spend more on clothes, jewelry and autos, items which depreciate rapidly.  When I became a CFP, I initially would go after those who dressed well, had nice suits, nice jobs, nice houses in nice neighborhoods, belonged to country clubs and sent their kids to private schools.  I quickly realized that many of them carried large amounts of debt and were spending everything they made and if they lost their income for a couple of months would be broke.  I soon realized I was going after the wrong group.  The low profile business owners and professionals who didn’t have big ego problems were the ones that had the financial resources and the ones I should have been going after – Buzz

buzz@msifund.com

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