MidSouth Week in Review
November 20, 2020

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Nov. 23, 2020 | RedChip Companies

The S&P declined 0.8% for the week.  The Dow made a new high.  The mid-cap value stock index (IJJ) is up 77% from its April low.  Tesla rose 25% on the announcement that they will be added to the S&P 500.  CVS, Walgreens and Rite Aid averaged a one-day decline of 11% on the announcement that Amazon would be entering the online drug prescription business.  Copper touched a 2 ½ year high of $3.29 from its March low of slightly below $2.  Unemployment rose to 742,00 from 711,000 the previous week.  30-year fixed rate mortgages declined to 2.72% vs. 2.84% last week.  15-year mortgages declined to 2.28% vs. 3.15% a year ago.  Sources:  Wall Street Journal and New York Times




Ouch! – The NASDAQ gained 85% in 1999 before declining 57% over the next 12 months – Robert McAleer


Three Truths In Life – 1) Jews do not recognize Jesus as the Messiah.  2) Protestants do not recognize the Pope as their leader in the Christian faith.  3) Baptists do not recognize each other in the liquor store.


Cheap Money – For those who have accounts at Charles Schwab, funds are available to borrow at rates as low as 1.75%.  The current loan charges for accounts between $100,000 to $250,000 are 4.5%, 3.25% for balances between $250,000 to $500,000, 2.75% for accounts between $500,000 to $1 million, 2.25% for $1 million to $2.5 million balances and 1.75% for those larger than $2.5 million – Schwab Bank


California Tax Revenues – are running $9.9 billion (18.6%) above projection for the FY.  Personal income tax revenue in October was 15.6% above the previous October.  The top 1% of earners in CA generate half of its personal income tax revenue – Wall Street Journal ….. The USPS has received 124,131 change of address requests originating in San Francisco between March and November with the majority relocating outside of the city.  Las Vegas and Florida (no state taxes) were the most popular destinations.


Sad Situation – 50-year-old singer-songwriter Mariah Carey was the youngest child of a black father and a white mother.  Mariah was 3 years old when her parents split.  She grew up in an environment of neglect and violence.  When she was 6, she says, her older brother knocked her mother unconscious; at 12, she was drugged by her older sister, who “tried to sell me out to a pimp.” – The Guardian (U.K.)


Home Price Vulnerability – In the 3Q, the median down payment was $20,7775, a 69% increase from a year earlier.  The rise stretches the limits of affordability for many who are already struggling to give up money to buy a home.  Home values are rising twice as fast as typical incomes – Zillow ….. The median home price rose 16% in November vs. last year, the highest on record - Redfin


Bond Bull Market – The catalyst to kill it may have been last Monday’s vaccine announcement, which caused bond yields to spike to nearly 1%.  On the other hand, the catalyst might have been the election, and the related deteriorating global confidence in the U.S. government – Forbes Billionaires


Working At Home – Offices in 10 major metropolitan areas, including New York City, Philadelphia and San Francisco, have an average occupancy rate of 25% vs. 97% before the pandemic – Wall Street Journal


Small Physician Practices – are struggling to stay open with an average revenue decline of 32%.  One-third of surveyed physicians say their in-person visits have declined by 50%+.  The use of telemedicine has also hurt practices.  Family practices had been struggling before the pandemic – AMA


Highway Headaches – The average U.S. motorist loses $523 annually in additional vehicle maintenance costs due to driving on roads that need repairs.  Most highway funding is provided by the federal government gas taxes.  However, fuel-efficient cars and inflation have decreased the purchasing power of this tax by nearly half in the past 25 years, causing a gap in necessary funding and revenue – AARP


Community Banks – plan to continue adding to their reserves into 2021 to cover loan losses as they brace for a wave of defaults.  About two-thirds of bankers expect they will need to adjust loan terms to help borrowers meet their obligations after deferral periods end – IntraFi ….. Warren Buffett sold off four banks stocks in the 3Q to buy four drug stocks (Pfizer, Merck, Bristol-Myers, AbbVie) – Jay Kumar


International Students – at U.S. campuses has plummeted by 43% this fall, with 20% studying online.  Most international students pay full-pop for tuition – Wall Street Journal ….. 30% of American universities, both public and private, are running deficits – Moody’s Investor Service


Nashville Hotels – Nearly one-third are delinquent on their mortgage loans, totaling more than $325 million of overdue debt – Trepp


Legalized Marijuana Support – according to Gallup polls, was 12% in 1969, 31% in 2000, and grew to 66% in 2019 – New York Times ….. On election day, Oregon became the first state to decriminalize small amounts of cocaine, heroin and meth – New York Times


Song About Clint Eastwood – attached video


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