MidSouth Week in Review
April 9, 2021

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

Apr. 13, 2021 | RedChip Companies


Both the Dow and S&P made new highs today.  For the week, the S&P rose 2.6%.  Today’s investment volume was the lowest of the year.  The unemployment rate dropped to 6% in March from 6.2%.  Commercial real estate firm CBRE projects that office employees will spend 36% of their time working remotely this year vs. 16% before the pandemic.  Yesterday, the Federal Reserve underlined their commitment to record-low interest rates.  Today, Reuters said that U.S. producer prices increased more than expected in March, resulting in the largest annual gain in 9 ½ years and likely marking the start of higher inflation as the economy reopens amid an improved public health environment and massive government aid.  Because everyone is eating at home, corn hit an 8-year high.  Sources: Wall Street Journal and New York Times

 

BuzzBits

 

Fantastic Returns – If you had invested $1,000 in the S&P 500 in 1965, your account would be worth $234,454 today, for a 23,454% return.  If instead you had placed the $1,000 in newly issued Berkshire Hathaway stock, your account would be worth $28,105,261, for a 2,810,526% return – Berkshire Hathaway annual report ….. Through today, the Berkshire stock would be worth $32 million – Buzz

 

Money – isn’t everything but it sure keeps you in touch with your kids – Larry Stumb

 

Jamie Dimon – CEO of JPMorgan Chase says the economy is approaching a “Goldilocks moment” in which rapid growth is synchronized with inflation and a gradual interest-rate increase.  Factors such as government spending and emergence from COVID will prompt an economic boom through 2023 – JPMorgan Chase annual report

 

Office Sublets – At the end of 2020, there were 137 million square feet available, a 40% increase from a year earlier and the highest since 2003.  Office rents for expensive space are down by 17% to 25% in New York City and 13% in San Francisco – Wall Street Journal

 

Retail Investors – are pulling back their trading activity and were down 60% in March.  Why?  Many have been recently suffering big losses.  Since February 12 stocks such as Tesla and Apple have fallen more than 9%.  Popular Gamestop stock has declined from a January high of 483 to 164 today.  Retail trader visits to Robin Hood’s are down 63% - Wall Street Journal

 

Home Mortgages Availability – is down to its lowest level since 2014.  The availability of mortgage loans plummeted 35% year over year in 2020 and were 31% lower in February vs. last year.  The meteoric growth of home prices has made some lenders reluctant to take on first-time home buyers or others they consider slightly risky – Wall Street Journal ….. Mortgage rates have risen 7 consecutive weeks.

 

Household Income By Race – Asians have the highest of any racial or ethnic-category at $98,000.  However the top 10% earn 6.1x more than the bottom 10%.  Other household incomes by race include: Whites $76,057, Hispanic $56,113 and Blacks $45,438 - Statista

 

Soaring Lumber Prices – Because COVID has closed sawmills and other production facilities for construction, lumber has risen to $1131 vs. $254 last April.  The unprecedented spikes have added more than $24,000 to the price of the average single family home, and nearly $9,000 to the price of a multi-family home since April 17, 2020 – National Association of Home Builders

 

Federal Taxes – At  least 55 of America’s largest companies paid no taxes last year on billions of dollars in profits thanks to a range of legal deducts and exemptions that have become staples of the tax code.  Twenty-six of the companies listed, including FedEx, Duke Energy and Nike, were able to avoid paying any tax for the last three years even though they reported a combined income of $77 billion – New York Times

 

Bonds – are not the place to be these days.  Can you believe that the income recently available from a 10-year U.S. Treasury bond – the yield was 0.93% at yearend – had fallen 94% from the 15.8% yield available in September 1981?  In certain large and important countries, such as Germany and Japan, investors earn a negative return on trillions of dollars of sovereign debt.  Fixed-income investors worldwide, whether pension funds, insurance companies or retirees, face a bleak future – Warren Buffett

 

Women of Color – have a 3.8x higher death rate from COVID in Georgia and 1.6x in Michigan than White men.  Why?  Women of color are disproportionately represented in essential work, from home aides to nurses, who were particularly at risk on the front lines of the virus – HuffPost ….. The average life expectancy for a Black person has dropped by 2.7 years to 72.  Along with COVID, researchers cite an increase in drug overdoses as having a negative impact on life spans – AARP

 

Hot, Hot, Hot! – Ellen Culeman listed her fixer-upper home in D.C. for $275,000 on a Thursday and by Sunday she had 88 offers, of which 76 were all-cash.  The 4-bedroom, 1,800 square-foot home sold for $460,000, a 67% increase from the asking price - CNN

 

Topps – long known for baseball cards and Bazooka gum, is going public by merging with a blank-check firm that values the company at $1.3 billion – Deal-Book newsletter

 

New York Taxes – Gov. Cuomo has pressed lifting the top marginal rate for the state’s income tax to 10.9% from 8.82%.  That would make for a top tax rate of 14.78% for a New York City resident, which could represent a tax of $147,000 on income of $1 million.  One could carry a 3.13%, $2.86 million 30-year mortgage in no income tax states Texas or Florida for the same cost – Buzz

 

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