MidSouth Week in Review
May 27, 2022

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

May. 31, 2022 | RedChip Companies


The S&P was up 6.5% for the week, one of its best weeks ever.  The Dollar dropped from 105 to 102 this month.  Mortgage rates declined for the second straight week.  The Fed plans to raise interest rates 3 times to bring down the most rapid pace of inflation in 40 years.  The U.S. personal savings rate declined to 4.4%, the lowest since 2008.  Bitcoin declined below 129 and has been down for seven consecutive weeks.  The number of single digit PE stocks in the S&P has nearly doubled, going from 32 to 59.  The yield on the 10-year Treasury bonds dropped to 2.78% from 3%+.  Unemployment decreased 8,000 to 210,000.  The U.S. economy shrank 1.5% in the 1Q.  Lumber declined from its March high of 1361 to 640.  Sources:  Wall Street Journal and New York Times

 

The markets will be closed Monday in observance of Memorial Day. 

 

BuzzBits

 

7 Week Losing Streaks – Through last Friday, the S&P had been down seven consecutive weeks.  Since 1970, this has happened three times (1970, 1980, 2001) and the market averaged being up 22.3% over the next 12 months – LPL Research ….. Through Tuesday the S&P was down 17.3%, its fourth worst 99 day decline in history.  During the other three, day 100 to yearend averaged a 25.2% return - @CharlesBilello

 

Beware – of people who say they’re going to invest your money as if it were their own – pretty soon it is! – Robert Orben

 

Home Sales – decreased 20% in April vs. a year ago and down 17% from the March numbers, because half the population is living paycheck-to-paycheck and inflation and interest rates are soaring.  Contracts to buy previously owned homes dropped to a 2-year low in April  - New York Times …..Mortgage rates have risen almost 2.3 percentage points since November.  It appears as if homes valued under $400,000 have the potential to see a decrease in demand and lower prices for the remainder of the year – Buzz …..The average down payment percentage for first-time home buyers was 9.2% in 2021 – CoreLogic

 

Gas – hit a high of $4.60 on Tuesday, about 51% higher than a year ago.  Average demand has hit its lowest level since 2013, excluding 2020 (Covid).  Surging costs and a slowdown in demand could hinder expectations for a driving season resembling pre-Covid times – Business Insider

 

The Rich – The top 0.1% (140,000) earn $1.58 million+ annually.  About 3x as many make the majority of their income from owning a  business vs. being paid a wage ….. Most of them own unsexy businesses such as auto repair shops, gas stations.  Rich people tend to own unsexy businesses – New York Times … The magic number to be wealthy is $2.2 million of net worth.  The average net worth of the financially comfortable is $774,000 – Schwab’s Modern Wealth Survey

 

Bank Profits – dropped 6.5% in the 1Q to $59.7 billion, as larger firms grew their loan loss provisions in response to heightened economic and geopolitical uncertainty.  Inflationary pressures, rising interest rates, and geopolitical uncertainty could hamper bank profitability, weaken credit quality, and reduce loan growth – FDIC

 

Fly Away – Airfares increased 18.6% in April vs. March, and were up 33.3% vs. a year ago.  The one month increase is the highest increase in history – Department of Labor

 

Nearly 320,000 – of the more than 1 million covid cases could have been prevented if all eligible adults had gotten vaccinated.  The states with the most preventable deaths were West Virginia, Wyoming and Tennessee.  Massachusetts had the fewest – NPR.org

 

Vehicles – The average age hit a record 12.2 years in 2021.  This was the fifth straight year the average age has increased.  With car supplies constrained, prices have soared for both new and used vehicles, resulting in more shoppers choosing to delay purchases – Wall Street Journal

 

Big Cities – The nine cities with 1 million+ people lost 1.7% of their population last year.  NYC lost 3.5% and SF lost 6.3%.  Millennials are entering their childbearing years and seeking out family-friendly homes in better school districts – Wall Street Journal ….. Nashville lost 1% of its population last year to adjoining counties.  Why?  The average SAT score in Nashville was 18 vs. 25.5 in a populated adjoining county.

 

The Poor – 45% of men and 54% of women living alone in the U.S. lacked the resources to pay for their basic living needs – U. of Massachusetts

 

Stolen Guns – More than 70% of all guns stolen this year in Nashville (822) were taken from vehicles.  67% of the vehicles that had guns stolen were easy targets because the keys were left inside or made available to thieves – The News

 

Love You Mom/Dad – As rates and home prices soar, 40% of parents now have an adult child living with them – CNBC

 

5-year-old Italian piano prodigy plays astonishing Mozart for competition audience - https://www.classicfm.com/music-news/videos/italian-piano-prodigy-child/

 

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