MidSouth Week in Review
March 26, 2021

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Apr. 1, 2021 | RedChip Companies

The S&P rose 1.6% for the week.  Bank stocks registered a decline since last Thursday due to a recent drop in interest rates.  Stocks have had their best 12-month run since the 1930’s.  Mortgage rates rose to 3.17% from 3.09% the week before.  The Dollar hit its highest level since November.  Crude declined from 67 to 57 before recovering to 61 today.  The number of people seeking unemployment benefits fell sharply last week to 684,000, dropping to its lowest level since the pandemic began.  Sources:  Wall Street Journal and New York Times


The markets will be closed next Friday in observance of Good Friday.




Higher Interest Rates – are usually bullish for stocks.  Going back to 1962 there have been 11 times when the yield on the 10-year Treasuries rose 1.0%+, averaging a 25.8-month duration.  The S&P was positive 78.6% of the time and averaged a 17.0% return – LPL Research, FactSet


Wild – Two women showed up at a Florida covid vaccine site “dressed as nannies” with bonnets and specs.  When the suspicious staff asked for their ID, it turned out they were only 34 and 44 – THE WEEK


Retail Stock Trading – has doubled to around 20% of total trades vs. 10% a couple of years ago.  Declining trading commissions have resulted in more small-timers using online brokerages.  The change has been most prominent among those under 34.  Daily average trades have risen sharply at Ameritrade, Schwab, E-Trade and Robinhood


U-Haul Costs – for a cross country journey from California to Nashville are around $2,700 vs. only $1,300 to go from Nashville to California.  Why?  It’s a one-way street.  Fed up residents are fleeing California in droves, heading to states like Florida, Texas and Tennessee.  California is driving out its productive citizens due to massive taxes and heavy-handed regs – Beacon


Real Estate Agents – are now more plentiful than homes for sale.  This phenomena reflects both the extremely tight labor markets and how surging prices are persuading tens of thousands to try their hands at selling real estate.  At the end of January, there were 1.04 million homes for sale.  That is down 26% from a year earlier and the longest on record going back to 1987.  Realtors with two years of experience or less earned a median gross income of $8,900 in 2019 – Wall Street Journal ….. Sales of existing homes fell 6.6% in February, following two months of gains – National Association of Realtors


Babies – The global fertility rate has been cut in half (down 51%) in the last 50 years, falling from 4.92 births per woman to 2.41 in 2018 – The World Bank ….. The average number of children per family in the U.S. is 1.93 – etastica ….. The Brooking Institution estimated in December that as a result of the  pandemic, 300,000 fewer babies will be born in the U.S. this year vs. last year.  Birth rate declines:  Italy 21.6%, France 13.5%, Japan 9.3% - ZeroHedge


Privatize the Postal Service – Why?  Because they just unveiled a 10-year strategic plan on Tuesday that would raise prices and lengthen delivery time in an effort to record $60 billion in projected losses over the period – New York Times


Commodities – From 2011 until it bottomed in April, the index was down by two-thirds.  Since then commodities have been the best performing asset class by a “long shot.”  Goldman Sachs predicts a further 15.5% overall for the sector over the coming months with a $72 per barrel for oil vs. its current price of $61 – chief INVESTMENT officer


Social Security – cost-of-living adjustment (COLA) came in at 1.3% this year but is expected to bump to 3% next January.  Why?  Prices of gasoline and many other goods and services are rebounding.  Those who delayed getting their Social Security payments will get larger checks – The Kiplinger Letter


Migrants – Over 100,000 people attempted to enter the U.S. illegally from Mexico in February, a 28% increase from the prior month.  This month, the total could reach as high as 130,000 – The Kiplinger Letter ….. Single adults account for 82% of the illegal apprehensions so far this year – Wall Street Journal ….. 40% of all workers in LA County are working for cash; and not paying taxes.  This is because they are predominantly illegal immigrants, working without a green card.  95% of warrants for murder in Los Angeles are for illegal aliens – LA Times


Used Car Prices – are expected to rise 10% - 15% vs. last year.  Why?  The combination of tax refunds and $1,400 stimulus check, will arm buyers with plenty of cash to bid up the limited supply of quality used vehicles – The Kiplinger Letter ….. The February number of cars in stock at U.S. dealerships has declined 26% vs. last year – Wall Street Journal ….. The typical U.S. driver spent 26 hours stuck in traffic in 2020 vs. 99 hours in 2019 – ApsTechnical.com


Country Inflation Rates – The four lowest are: Japan (-0.6%), Switzerland (-0.5%), Ireland and China (-0.2%).  The three highest:  Venezuela (2665%), Argentina (38.5%) and Turkey (15.6%).  The U.S. inflation rate is 1.7% ….. The stock market valuation in Argentina has declined from $350 billion in 2018 to $20 billion last year, a 91% decline – Wall Street Journal


You Are Late - https://youtu.be/yQQIOMubFAI


Welcome to Tomorrow


Basic auto repair shops will disappear ….. A gas/diesel engine has 20,000 individual parts.  An electrical motor has only 20 parts.  Electric cars are sold with lifetime guarantees and are repaired only by dealers.  It takes only 10 minutes to remove and replace an electric motor …..Faulty electric motors are not repaired in the dealership but are sent to a regional repair shop that repairs them with robots …..Gas pumps will go away ….. Street corners will have meters that dispense electricity.  Companies will install electrical recharging stations; in fact, they’ve already started in the developed world ….. Coal industries will go away.  Gasoline/oil companies will go away.  Drilling for oil will stop.  Say goodbye to OPEC!  The middle east is in trouble ….. Homes will produce and store more electrical energy during the day than they use, and will sell it back to the grid.  The grid stores it and dispenses it to industries that are high electricity users.  Has anybody seen the Tesla roof? ….. A baby of today will see personal cars only in museums.  The future is approaching faster than most of us can handle ….. In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide.  Within just a few years, their business model disappeared and they went bankrupt.  Who would have thought of that ever happening ….. What happened to Kodak and Polaroid will happen in a lot of industries in the next 5-10 years, and most of us don’t see it coming ….. Software has disrupted and will continue to disrupt most traditional industries in the next 5-10 years ….. UBER is just a software tool; it doesn’t own any cars, and is now the biggest taxi company in the world.  Ask any taxi drivers if they saw that coming …..Airbnb is now the biggest hotel company in the world, although they don’t own any properties.  Ask Hilton Hotels if they saw that coming ….. In the USA, young lawyers already don’t get jobs because of computers, you can get legal advice (so far for right now, the basic stuff) within seconds, with 90% accuracy – compared with 70% accuracy when done by humans.  So, if you study law, stop immediately.  There will be 90% fewer lawyers in the future, (what a thought!).  Only omniscient specialists will remain ….. Computer programs already help nurses diagnosing cancer, and the programs are 4 times more accurate than human nurses ….. Facebook now has pattern recognition software that can recognize faces better than humans.  In 2030, computers will become more intelligent than humans...COMPUTERS CAN BE UNPLUGGED...OR SHOT!!!!! ….. Autonomous cars: In 2018 the first self-driving cars are already here. In the next 2 years, the entire industry will start to be disrupted.  You won’t WANT to own a car anymore as you will call a car with your phone; it will show up at your location and drive you to your destination ….. You will not need to park it.  You will pay only for the driven distance and you can be productive while driving  The very young children of today will never get a driver's license and will never own a car …..This will change our cities because we will need 90-95% fewer cars. We can transform former parking lots into green parks ….. About 1.2 million people die each year in car accidents worldwide including distracted or drunk driving. We now have one accident every 60,000 miles.  With autonomous driving that will drop to 1 accident in 6 million miles. That will save more than a million lives worldwide each year …..Some traditional car companies will doubtless go bankrupt.  They will try the evolutionary approach and just build a better car, while tech companies (Tesla, Apple, Google) will do the revolutionary approach and build a computer on wheels ….. Look at what Volvo is doing right now; no more internal combustion engines in their vehicles starting this year – with the 2019 models using all-electric or hybrid only, with the intent of phasing out the hybrid models …..Many engineers from Volkswagen and Audi are completely terrified of Tesla – and they should be.  Look at all the companies offering all-electric vehicles. That was unheard of only a few years ago …..Insurance companies will have massive trouble because, without accidents, the costs will become cheaper.  Their auto insurance business model will disappear …..Real estate will change.  If you can work from home (or from literally anywhere), people will abandon their towers to move far away to more beautiful affordable locations ….. Electric cars will become mainstream about 2030.  Cities will be less noisy because all new cars will run on electricity ….. Cities will have much cleaner air as well …..Electricity will become incredibly cheap and clean ….. Health: "Tricorder X" will be announced this year.  There are companies which will build a medical device (called the Tricorder from Star Trek) that works with your phone – taking your retina scan, your blood sample, and you breathe into it.  It then analyses 54 bio-markers that will identify nearly any disease. There are dozens of phone apps out right now for health. – Ray O’


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