MidSouth Week in Review
July 22, 2022

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The stock market had its best day Tuesday in more than three weeks (+2.8%) and was up 2.5% for the week.  Infectious-disease expert Fauci said he plans on retiring by the end of Biden’s term.  The Fed is planning on a 0.75% interest rate hike next week.  Through Wednesday, gas prices had declined for 33 consecutive days.  Bitcoin rose to $24,000 from $19,500 last week.  Three-fourths of middle class households report their income is not keeping up with their cost of living.  Citigroup sees a 50% chance for a global recession.  Crude dropped to $91 from last month’s high of $124.  Natural gas rose from its July low of $5.37 to $8.40.  Sources:  Wall Street Journal and New York Times

Cheap, Cheap, Cheap – On July 6, U.S. Steel was selling at .95x after-tax earnings.  That was the equivalent of paying $950,000 for a company with $1 million of after-tax earnings and a book value of $2.26 million and yielding $16,000 - Buzz

Monkeypox – Only one person per 220,000 has gotten it  in the U.S.  But if you get it, you had better keep it between us girls.  Why?  Of the 1,500 cases identified in the U.S., they have primarily involved men who had sex with other men – New York Times

Series I Bonds – currently yield 9.7%.  I believe the yield will rise to 10%+ in October.  Good video on how to buy the bonds.  https://www.youtube.com/watch?v=j6mKVVtdCCQ - Buzz

Electric Cars - A 48-month loan on a Tesla would cost $1,470 a month which is equal to the monthly cost of a 30-year $300,000 mortgage at 5.7%, after putting down 15% - USA  TODAY ….. A Florida family bought their teen son a 2014 electric auto for $11,000.   Shortly thereafter, the auto stopped running and they had to pay $14,000 for new batteries.  Ouch! – Fox Business ….. Copper prices skyrocketed 79% from February 2020 to February 2022.  An electric vehicle uses 183 pounds of copper, which is 4 to 10 times more than is needed for a gas car – James Hyerezyk ….. Batteries represent 35 to 50% of the production cost of an electric vehicle – Wall Street Journal

Ouch! – The temperature rose to a record 104.5 this week in London vs. the average July high of 74.  According to Britain’s Department of Business Energy, the best estimates place the number of homes there having air-conditioning at less than 5% ….. At least 1,100 people have died in Spain and Portugal from recent heat-related causes, with some areas in Spain seeing highs of 114 degrees – THE WEEK ….. Oklahoma had a record high temperature of 110 this week.

End of Life – More Americans died in 2021 (3,459 million) than in any year in U.S. history – National Center for Health Stats

Inflation – gains over past 12 months: Chicken +19%, Air fares +34%, Butter +21%, Eggs +33%, Regular gas +61%, Men’s suits +25% - Wall Street Journal ….. Inflation in Britain climbed to 9.4%, a 40 year high – New York Times ….. Inflation will decelerate notably in the 4Q - Feroli

Wholesale Gas – declined from last month’s high of $4.32 to $3.02 yesterday.  Yesterday, a buddy told me he bought gas at $3.56 a gallon – Buzz

Biden – His approval rating is at 33% in a recent New York Times poll.  But the same poll gave him 44% vs. 41% for Trump in a head-to-head matchup – National Review ….. 77% of 500 registered voters in a recent poll believed that most members of Congress do not deserve to be reelected - Gallup

Office Use – hit a pandemic high of 44% in June.  Major cities such as New York City, San Francisco and Chicago continue to lag behind.  Office use in New York City was 41.2% in late June – Wall Street Journal

Tipping – is down for everything from restaurant meals to taxi rides and grocery delivery services.  Why?  The cost of goods and services has risen so fewer are able to give out the usual gratuity – Kiplinger Letter

Closed Home Sales – June 2022 vs. June 2021:  San Diego -34.6%, Santa Clara -33.1%, Sacramento -24.0%, Maryland -25.2%, Los Vegas -24.1%, Denver -23.6%, Rhode Island -20.5%, Phoenix -20.1% - Jay Kumar ….. Builder confidence for new homes posted its 7^th consecutive decline in July, falling 12 points for its second-biggest single-month drop in history – AP ….. 30-year mortgage rates rise to 5.96% - Wall Street Journal

Mexican Border Arrests – dropped 14% in June to 191,898, a 14% drop from the record high of 222,000 record high arrests in May.  About 26% of arrests involved repeat border crossers – U.S. Border Patrol

The Best Tax States – The best is Delaware, followed by Alabama, Arizona, Colorado, D.C., Hawaii, Nevada, South Carolina, Tennessee and Wyoming.  The worst is New Jersey, followed by California, Connecticut, Illinois, Iowa, Kansas, Nebraska, New York, Texas, Vermont and Wisconsin – Kiplinger’s Retirement Report

School Supplies – Just 36% of parents think they can easily afford supplies vs. 52% last year.  In 2021, many parents received enhanced tax credits and federal help, but not in 2022 – Morning Consult

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