MidSouth Week in Review
July 16, 2021

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The Dow, NASDAQ and S&P all made record high closes early in the week but turned down the last few days.  The S&P was down 1% for the week.  The NASDAQ suffered its first 3-day losing streak since October.  The Dollar made a 3 ½ month high this week.  Jobless claims dropped to the lowest level since the pandemic began.  Lumber prices have declined 68% from their May high and are now at the levels they were trading at last July.  Bitcoin declined to $31,250, its lowest level since January.  The 30-year mortgage rates fell for the third straight week to 2.88% from 2.90% last week.  The new listings of $1 million+ homes jumped 17.5% in the week ending June 19, according to Realtor.com and price growth has slowed.  Sources:  Wall Street Journal and New York Times

BuzzBits

The S&P – was up 13% during the first half of the year.  There have been 23 times since 1945 when the S&P was up 10%+ during the first half of the year.  The median second half gain was 10%, with gains 80% of the time.  Of the four times it was down, three were -2% to -5% - MarketWatch

A Daughter – is a daughter for the rest of her life.  A son is a son until he takes a wife – Bob Mamlin

Index Funds – 86% of U.S. equity funds have underperformed their benchmark over a 20-year period.  While index funds don’t tend to return as much as the index, they significantly limit underperformance.  Index funds have grown by $1.9 trillion over the past five years compared to a $1 trillion outflow from mutual funds – Wall Street Journal ….. ETF’s are also more tax efficient and carry less fees than mutual funds - Buzz

Covid Cases – in Tennessee jumped from 51 a day for the 7-day period ending July 1 to 518 a day for the 7-day period ending July 14.  Also, new Covid cases have more than doubled in the U.S. over the past couple of weeks.  Why?  It could have possibly been because of partying over the July 4^th weekend. We also had a big surge in cases in early to mid-December after the Thanksgiving holiday and as the Christmas partying began – Buzz ….. Daily Covid cases in LA have surged from 173 in mid-June to 1,537 yesterday – LA Times

Social Security – could see a 6.1% jump in payments next year based on June’s 0.9% Consumer Price Index increase – Senior’s Citizens League ….. The 0.9% June price jump resulted in a 5.4% annualized rate, the sharpest gain since 2008 – The Hill ….. Prices for used cars and trucks rose 10.5% from the previous month, driving one-third of the rise in the overall index – Wall Street Journal

Autos – Used car prices are up 45% over the past year and new car and truck prices are up 5% over the past year – New York Times

Ouch! – The congressional budget office has forecasted that during the fiscal year ending 9-30-21, the U.S. government will have spent $6.8 trillion, resulting in a $3 trillion deficit – CBO ….. $3 trillion represents a $9,100 per person cost for each U.S. citizen.

The Olympics – The two youngest participants: Hend Zaza (12), Table Tennis from Syria and Sky Brown (13), Skateboarding from Great Britain.  The two oldest: Ni Xialian (52), Table Tennis from Luxembourg and Nino Salukvaoze (58), Shooting from Georgia – Sports Illustrated

Long-Term Capital Gains – The Biden administration has proposed raising the top rate to 43.4% vs. the current top rate of 23.8%.  Ron Wyden (D-OR), the top Senate tax writer, wants certain taxpayers to recognize unrealized gains and losses each year on their publicly traded investments – The Kiplinger Tax Letter

Love You Dad – The old people aged 70+ have a net worth of 26% of the $137 trillion net worth held by Americans as 3-31-21 – Federal Reserve

The Rich – At the start of 2021, the richest 1% held 32% of the nation’s wealth, the highest level since records began in 1989.  The bottom 50% held just 2% of the nation’s wealth.  The richest 1% own 54% of all stocks -New York Times

Long-Term Interest Rates – have trended down recently, but don’t be fooled, they will be headed up again before the end of the year.  Figure on the 10-year Treasuries moving from 1.36% to 1.8% by year-end.  The 30-year mortgage rate should rise from 2.9% to 3.4% by year-end and 4.0% in 2022 – The Kiplinger Letter

Hot Weather – Last Friday, Death Valley recorded a staggering 130 degrees, the hottest since 1913, when it hit 134 degrees.  On June 30, the temperature in Lytton, British Columbia hit 121 degrees.  The average July temperature range in Mexico City is 54 to 76 degrees – New York Times …..

Charitable Giving – was up 3.8% in 2020.  Fidelity Charitable donors increased their giving by 24% over 2019.  Vanguard Charitable reported that donors granted more than $69 million to homeless shelters and food pantries, a 147% increase from 2019 - InvestmentNews

Home Equity Loans

About 30 years ago a friend and his family were driving out west and had an auto accident.  Thankfully he had access to a home equity loan and was able to buy a new car from a local dealer to get home.  A home equity line of credit is a lump sum that you borrow against the equity you’ve built in your home.  Most lenders will let you borrow up to 80 percent to 85 percent of your home’s equity, that is, the value of your home minus the amount you still owe on the mortgage.  These loans have fixed interest rates and typical repayment periods between five and thirty years.  Because your home serves as a collateral for a home equity loan, a lender can foreclose on it if you fail to make the payments.  There is no cost to set up the loan.

Home equity loans are available at many banks, credit unions and online lenders.  You may use these funds for a range of purposes, including debt consolidation, home improvement projects, higher education costs, or emergency purposes.  The amount you can borrow depends on how much equity you have, your financial situation and other factors.

After reviewing your application and checking your credit, the lender will tell you how much you can borrow, your interest rate, your monthly payment, your loan term and any fees involved.  Once you agree to the loan terms, the financial institution will disburse funds as one lump sum.  You then repay the loan over time in fixed monthly payments – Bank Rate

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