MidSouth Week in Review
July 29, 2022

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

For the week the S&P rose 4.3% and was up 9.2% for the month.  This week, the Fed raised its interest rate by 75 basis points.  The GDP declined 0.9% in the 2Q, followed by a 1.6% contraction in the 1Q.  30-year mortgage rates declined to 5.60% from 5.96% last week.  Its not official but it is expected that Social Security could boost benefits by 10%+ next year, the largest annual increase in 41 years.  Natural gas surged from a July low of $5.32 to a $9.43 high.  Existing home sales declined for the fifth straight month.  The 5, 10 and 30-year government bond yields all dropped below 3% this week.  Walmart had a 10% decline on Tuesday after saying its full-year profit would decline 11% to 13%.  Google parent Alphabet reported its slowest quarterly sales growth in two years.  Sources:  Wall Street Journal and New York Times

Inflation – indicators are that the recent 9.1% gain may have been the top.  Why?  Gas prices have fallen 10%, wheat futures have fallen 37% and corn futures are down 27%.  The cost of shipping from Asia to the U.S. is 11.4% lower – Ed Hyman, CEO of Evercore- ISJ

Investment Tip – for men.  Never buy a stock for your wife because if it goes up its hers but if it goes down it’s yours.

Big Banks – The interest rates they charge borrowers are rising rapidly but the rates they pay savers have barely budged, 0.1% on average.  Most big banks have plenty of deposits and don’t need to raise rate to attract more – Greg McBride, CFA

The Big Drop – The current pump average for gas in Nashville is $3.57 vs. $4.70 four weeks ago.  Wholesale gas closed at $3.09 today vs. a $4.32 June high – Buzz ….. People in rural settings are paying $2.470 more for gas vs. two years ago and those in urban settings are paying $2.057 more – Iowa University

Deal Making – Buyouts are down 21% this year because of concerns about inflation, interest rate hikes and the threat of a recession – Refinitiv

Pickleball – Three dads living on Bainbridge Island, WA, in 1965 were sick of hearing their kids complain of boredom, so they created a make-up of ping-pong, tennis and badminton to squelch the belly aching.  It worked.  Today, there are 9,524 pickleball enabled parks, community centers and sport complexes across the U.S. – Parade

Retirement – In a recent survey by the investment firm TIAA, just 19% of women said they felt they would be able to retire without running out of money vs. 35% for men.

Colleges – Around 200 colleges have closed in the past 10 years and around 95 in the past four years.  In 2019, only 51% of adults considered a college degree to be “very important”, down from 70% in 2013.  Enrollment declined from 19.6 million in 2011 to 17.5 million in 2019 and the number dropped to 16.2 million last fall – Wall Street Journal

Ouch! – More than 37 million adults age 50+ (1 in 3) are at a risk of not having enough to meet their basic needs.  That means millions of seniors are already in poverty or close to it – AARP Foundation

High Interest Rates – Interest rates soared during the 1978 to 1982 period as the U.S. suffered 45 consecutive months of 7%+ inflation.  I tried to  buy a house at a give-away price in 1983, but had to decline because the mortgage rates were 18% - Buzz

Amusing – that there is rarely a fire at a profitable company or at one with no fire insurance.

U.S. Consumer Confidence – slid again in July as higher prices for food, gas and just about everything else continues to weigh on Americans.  The consumer confidence index fell to 95.7 in July vs. 98.4 in June.

Cheap Flights – The average cost of domestic flight  is expected to drop 20% this fall to $298 vs. the average cost in May.  However the fall cost will still be 19%  higher than at the same time in 2019.  European flights are expected to drop 25% vs. the summer months – Hopper

Traffic Deaths – have risen 11% to a 16-year-high, the largest year-over-year percentage rise in history.  The rise came as drivers increased their travel after a significant drop in vehicle traffic after the pandemic began – NHTSD

Ouch! – In mid-2018 there were more active home real estate listings than there were agents vs. 2022 when there is 3x more agents than listings – National Association of Realtors

Today’s Living Arrangements – of 25 to 34 year-olds.  Living with a spouse – 80% in 1970 vs. 38% today, living with parents/other relatives 13% vs. 29% today, living with unmarried partner 2% vs. 17%, living alone 4% vs. 10% - U.S. Census Bureau

The material was prepared by MidSouth Investment Management LLC, and does not necessarily represent the views of the presenting party, nor their affiliates.  This information has been derived from sources believed to be accurate.  Please note – investing involves risk, and past performance is no guarantee of future results.  The publisher is not engaged in rendering legal, accounting or other professional services.  If assistance is needed, the reader is advised to engage the services of a competent professional.  This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.  This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such.  This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested.  All economic and performance data is historical and not indicative of future results.  Market indices discussed are unmanaged.  Investors cannot invest in unmanaged indices.