MidSouth Week in Review
March 3, 2023

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

For the week the S&P rose 1.8%.  Lingering inflation and fears of higher interest rates caused the yield on the 5-year Treasury bonds to rise to 4.3% and the 30-year bond yields to hit 4%.  Bitcoin dropped to 22k.  Wholesale gas rose to $2.71 vs. $2.04 in December.  The Dollar rose to 105.0 from its 100.7 February low.  Consumers pulled back on purchases of apparel and electronics in recent months while continuing to spend on groceries and other necessities.  Sources:  Wall Street Journal and New York Times

Small Cap Stocks – have seen a $4.2 billion net inflow this year vs. a $17.4 billion outflow for large-cap funds – Refinitiv Lipper

School Shootings – Last year was the worst in history as 46 shootings took place during school hours, killing 34 students and adults and exposing 43,000+ children to gunfire – The Washington Post

Stock Buybacks - are projected to top $1 trillion in 2023 for the first time.  As of February 17, they totaled $220 billion, a record for that point in the year.  Stock buybacks are viewed as a vote of confidence by management – Wall Street Journal ….. I have seen times when I couldn’t find a stock under 10x earnings, now there are several of them - Buzz

Weight Loss – Last week I mentioned the drug Wegovy as being beneficial for excessive weight loss.  A problem is the cost is as much as $1,349 a month out of pocket for the injection pens, as well as unpleasant side effects, which have prompted some patients to halt their use – Wall Street Journal

Apartment Rents – fell in every major metro area in the U.S. over the six month period through January.  The trend is poised to continue with nearly half a million new apartments set to come this year – the biggest delivery in nearly four decades – CoStar Group ….. Renters with new leases out in January paid a median rent that was 3.5% lower than they would have paid last August – Wall Street Journal

Highest CD Rates – Merchants Bank of Indiana 4.86%, Insbank Online (TN) 4.85%, CFG Bank (MD) 4.75%, First Internet Bank (IND) 4.75% - Bankrate

First-Time Home Buyers – accounted for a quarter of home sales last year vs. the historical average of 35% of sales.  Now with prices still sky-high and rates no longer at rock bottom, few young people can swing a purchase – The Kiplinger Letter ….. Existing home sales dropped 17.8% in 2022 to the lowest level since 2014.  Many economists are projecting home price declines later in the year.

Altria – The maker of Marlboro cigarettes is in talks to buy e-cigarettes brand NJOY for $2.8 billion.  Altria has to do something.  Its cigarettes sales fell 9.5% last year as high gas prices and inflation pinched smokers disposable income.  The trend makes it harder to raise prices without losing market share to cheaper brands – Wall Street Journal

Housing Affordability – Home prices have fallen 11% from their peak last spring.  Housing affordability remains at historic lows for those with the median household income of $90,000 a year.  In the 4Q of 2022, just 38% of homes sold were affordable for families earning $90,000 – Fortune

Tesla’s Model 3 – was pricey five years ago and more than $10,000 above the cost of a typical new car, now sells for $4,930 below the typical new car price – Bloomberg

Monthly Mortgage Payments – increased $1,969 per month, up 58% vs. the 4Q of 2021.  The news was worse for first-time buyers, with monthly payments increasing from $1,233 in January 2021 to $1,806 for January 2023 and home values at $321,900 – National Association of Realtors

Moving – Nearly 700,000 more people moved out of California than moved in between April 2020 and July 2022.  New York had a net exodus of 556,000 people during that period – LA Times

The U.S. Birthrate – has dropped below “the replacement rate,” and without young immigrants the average age of our population will grow older and older – Noahpinion.substack.com

Credit Card Customers – 29% pay only the minimum payment or close to it, even when they can afford to pay more.  The average credit card interest rate is nearly 24% - National Bureau of Economic Research

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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.