MidSouth Week in Review
September 2, 2022

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

The S&P declined 4.2% in August and -3.4% this week over concerns about the Fed hiking interest rates.  The 4.2% August decline was the worst in seven years.  This month, the yield on the 5-year Treasury bonds rose to 3.32% and the 30-year to 3.37%.  Consumer prices rose 6.3% in July vs. 6.8% in June.  The Euro sank below $1 vs. $1.60 in 2008.  Used car prices plunged to a 12-month low.  Lumber dropped to $470 vs. $1360 in March.  According to Mortgage News Daily, mortgage rates rose 0.24% this week to 6.23%.  Life expectancy declined 0.9 years this year vs. a 1.8 year decline in 2020.  Weekly jobless claims fell to a two-month low.  A CNBC poll showed 59% of Americans are worried that forgiving student loan debt could make inflation worse.  Sources:  Wall Street Journal and New York Times

The markets will be closed on Monday in observance of Labor Day.

The Safest Investment – has always been U.S. government bonds, but not this year.  The long-Treasury bonds are down 22.36% over the past 12 months – Wall Street Journal ….. A two-point rise in interest rates would cause a 30-year bond to drop 13.0% and a 30-year zero coupon bond to drop 38.3% - M.D. Sass

Funny Math – 111,111,111 x 111,111,111 = 12,345,678,987,654,321

Share Buybacks – by S&P corporations are on track for an annual record.  Buybacks increased 70% in 2021 and are in line to increase 13% in 2022 and 10% in 2023 – The Kiplinger Letter

Successful People – love the work they do …understand that the “luck” in their lives is largely determined by their own behavior … take complete responsibility for their actions … and do their best to serve others and make the world a better place – Barry A. Franklin, PhD

European Trip – With the dollar and euro almost at parity, this may be the best time in 20 years for Americans to go.  You won’t save on airfare, but will save on meals, hotels, activities and souvenirs – The Travel Troubleshooter ….. In the past year, the euro has given up 15% of its value, reaching a 20-year low last week – Financial Times ….. The dollar has risen from 92 last September to 109 - Buzz

Home Prices – are headed into a downturn that’s likely to continue through at least 2023.  High home prices have shot up 38% in the past two years, and increasing mortgage rates mean that homes are too expensive for many would-be buyers – Andrew Lieb, Lieb Real Estate Law Firm ….. Home price growth slowed in June as higher mortgage rates made home ownership less affordable – Wall Street Journal

Fatherless Households – has increased from 11% in 1968 to 21% in 2020.  According to PEW Research, in 2014, the two-parent families were down 46% - U.S. Census Bureau

Teacher Vacancies – Houston has about a 900 teacher vacancy and many other school systems are also seeing a shortage of teachers nationally.  The percentage of teacher vacancies soared to a record level in 2020.  Nearly half of teachers polled in March say they intend to quit.  Districts in Texas and Missouri are switching to 4-day weeks – THE WEEK

Crude Oil – has declined to $87 vs. $139 in March due to concerns that fuel demand could weaken as central banks aggressively raise interest rates to fight inflation.  Wholesale gas declined to $2.36 from $4.32 in June – Reuters ….. The retail U.S. average price for regular gas has fallen for 11 consecutive weeks to $3.81 a gallon – Wall Street Journal

Life Expectancy – has declined by four years for Hispanics since 2019, by three years for Blacks and 1.4 years for Whites to 77.4.  Asians declined from 83.6 years to 83.5 years – New York Times

Cigarette Smoking – I started smoking at age 18 when I was a summer bellhop at Nashville’s oldest Hotel.  Cartons were retailing for around $4 but I heard the night manager was stealing cigarettes and selling cartons to employees for $1, so I figured at that price I could not afford to not smoke.  Later in the military I was buying carton’s at $2.50.  After smoking two packs of cigarettes daily, I finally quit at age 40.  Recently I asked Walgreens what they were selling cigarettes for and they said $7 to $9 a pack.  Ouch!  - Buzz

High Food Prices – will linger.  They’re driven by many factors including oil prices, consumer demand, labor shortages, the war in Ukraine, climate/heating and overall inflation, none of which are poised to improve – Jayson Lusk, PhD, Purdue U.

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.