MidSouth Week in Review
August 19, 2022

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The S&P declined 1.2% this week on expectations that the Fed will have more rate hikes to curb inflation.  Bitcoin hit 25k before declining to 21k today.  The yield on the 30-year Treasury bonds rose to 3.23% from below 3% last week, its highest level since July.  The inflation rate hit 10.1% in the UK.  Existing home sales declined for the sixth consecutive month.  Brent crude declined from a March high of 139 to 92.  Sources:  Wall Street Journal and New York Times

The S&P 500 – is currently up 11.7% in July and August.  This would go down as one of the best summer rallies ever.  The last three times it gained 10%+ in July and August (1989, 2009, 2020), the final four months added 13.5%, 16.9% and 20.2% - Ryan Betrick ….. The best summer rally ever was an 89% gain in 1932.

Humorist Jim Boren – proposed a constitutional amendment requiring any retroactive tax increases to be followed by retroactive elections for President, Vice President and all members of Congress – Wall Street Journal 

Wealth – The top 0.1% and the bottom 90% of American households hold close to the same amount of wealth.  Nearly two-thirds of Americans are living paycheck to paycheck and 41% are considered poor or low income.  18% of households earn less than $25,000 a year – New York Times

The World’s Tallest Tree – is in Redwood National and State Park in Northern California.  The Hyperion is 379 feet tall, which is equal to 1.26x the length of a  football field – New York Times

Inflation Reduction Act – which was just passed includes a $7,500 tax credit for the purchase of a new electric vehicle and a $4,000 credit for the purchase of a used EV.  The credits are limited to purchases of $55,000 or less – Senate

Homebuyers – About 63,000 home-purchase agreements were called off in July, equal to 16% of homes that went under contract that month.  That’s the highest rate in more than two years.  Jacksonville (-29.3%) and Las Vegas (-27.4%) had the highest rate of home-purchase cancellations – Redfin ….. The number of active home listings jumped 31% from a year earlier, a record-high increase for a third straight month.  Single family homes under construction were more than any time since 2006 – Bloomberg ….. Sales of previously owned homes dropped 5.9% in July vs. June and were down 20.2% vs. last year – Wall Street Journal

Tesla – If you had invested $10,000 in Tesla stock 10 years ago, your stock would be worth a tidy $2.1 million now.  That’s an increase of 24,389.7% over that decade – MarketBeat

The New York Times – now has 9.17 million paid online subscribers with a goal of 15 million by 2027.  The number of print subscribers shrunk 7% in the 2Q to 761,000 – New York Times

Credit Card Debt – has jumped by $100 billion, or 13%, the biggest percentage increase in more than 20 years – New York Fed

Rainstorms – Nearly 6,000 temperature records were broken in the U.S. last month.  Floods battered St. Louis, which recently got two months of rain in the space of six hours and 1,000-year rainstorms also hit KY and IL, where 37 people died in massive floods – New York Times

Fast Flight – American Air announced they have just agreed to purchase 20 supersonic jets that are twice the speed of today’s fastest commercial aircraft (1300 miles per hour).  That means one could fly from LA to NYC in around two hours – USA TODAY ….. In 1946 it took 20+ hours with four layovers to fly from LA to NYC – Buzz

High Cholesterol – Over 200 million around the world suffer from high cholesterol.  A biotech company is working on a single injection that would permanently reduce bad cholesterol.  The injection reduced bad cholesterol in monkeys by over 60% - New York Times

Retirement Age – About 30 years ago the average retirement age was 57.  For those still working, that age target has inched up from 60 in 1995, to 66 today – Gallup poll

Hearing Aids – The F.D.A. has decided to allow over-the-counter sales of hearing aids.  Costs for hearing aids which tend to include visits with an audiologist, range from $1,400 at Costco to around $4,700.  Under the proposal, Federal officials estimate $2,800 savings on the cost of a pair of hearing aids – New York Times

GEORGE PEABODY

Our First Great Philanthropist

Was so poor that his father apprenticed him at age 11 to a Denton, Massachusetts storekeeper, who agreed to teach young George how to become a merchant.  At nineteen, he went to work for a wholesale dry goods store in D.C. and at 21 became partner of the firm, which later became known as Peabody, Riggs & Co.  Because merchants didn’t feel comfortable keeping their money at their country stores and there were no banks nearby, many storekeepers left their money with Peabody.  A banking operation had begun and with a reputation so good that the State of Maryland soon made Peabody’s bank the financial agent for the state.  In 1836, a branch was opened in London and in 1837 Peabody moved permanently to that city, possibly to avoid thee severe financial panic that was gripping the U.S.  In 1843, he started a new firm, George Peabody & Co., which engaged in banking and securities brokerage, and dealt almost exclusively with Americans and U.S. securities.  The firm became immediately successful as Peabody added to his already enormous wealth. 

His first large gift was in 1835, when he gave the state of Maryland $200,000.  Later he gave large amounts for schools and a library in his home town of Denton, $1 million for a library and school in Baltimore and $25,000 to Phillips Academy in Massachusetts.  Around 1857 he gave $3 million to build great rows of comfortable housing for the poor in London.  Queen Victoria was so thankful that she commissioned a $40,000 portrait of herself to be donated to Peabody.

After the Civil War, Peabody returned to the states to look at the condition of our colleges.  He gave $150,000 each to Yale and Harvard and $200,000 to hospitals and soldiers homes.  For his generosity, Congress had a medal of pure gold presented to him from the U.S. Government.

Visiting the south, he saw how destitute the people were.  The rich farms had almost all their fences torn down and many of their houses had been burned.  Churches and schoolhouses were in ill repair.  Mr. Peabody gave the great sum of $3.5 million to help improve education in the south.  Every southern state received a portion of the money.  Peabody College of Nashville was established out of these funds in connection with the University of Nashville.

Every southern state was entitled to send any of its young people who wanted to become teachers to Peabody to be educated free.  Upon graduation, they went back to their home states where they would obligate themselves to teach.  Thousands of the best teachers in the south, the heads of colleges and universities and public schools, were educated at this great school, which is now a part of Vanderbilt University – Great Stories for Young Americans, Circa 1890.

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.