MidSouth Week in Review
March 24, 2023

Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund

For the week the S&P was down 0.4%.  The Dollar collapsed from 105 to 100.  The Fed raised interest rates by a quarter-point matching last months increase and was the 9^th consecutive rate increase.  The yield on the 5-year Treasury dropped from a 4.30% high this month to 3.30%.  Bitcoin rose to 28k from 19k earlier in the month.  Gold rose to 20k from 16k in November.  Interest rates on the 15-year mortgage dropped to 6.42% vs. 6.60% last week and 3.63% a year ago.  Sources:  Wall Street Journal and New York Times

Fed Rate Hike – Expect the Fed to raise rates again by a quarter point in May and possibly again in June.  If lending doesn’t slow, another hike could be in the cards in July – The Kiplinger Letter

Stressed – When you are stressed you eat ice cream, cake, chocolate and sweets.  Why?  Because ‘stressed’ spelled backwards is ‘desserts’.

Banks – Treasuries and other assets normally seen as safe have lost value recently as interest rates soared.  If a bank has to sell assets at a loss to raise funds to meet withdrawals, as Silicon Valley Bank did, insolvency can then become a real possibility – The Kiplinger Letter  ….. This year we have had the biggest bank scare since 1980 – Barron’s ….. One of the bank indexes is down 19% from its February high - Buzz

Luxury Home Sales – defined as those in the top 5% in market value, dropped 45% during the three months ended January 31 compared with the same period the year before – Redfin

Suicide Rates – for young Americans ages 10 to 19 jumped by 40% from 2001 to 2019, while emergency room visits for self-harm rose by 88% - New York Times

Lithium – is the common ingredient in most electric-car batteries since January.  The price has dropped nearly 20% helping make electric cars more affordable.  The price drop has made it easier for carmakers to cut prices for electric vehicles – New York Times

Previously Owned Homes – Sales rose 14.5% in February from the prior month but were down 22.6% from a year earlier – National Association of Realtors

Credit Crunch – High on the list:  Australia, Canada and the U.K, where housing markets are vulnerable because most mortgages have adjustable rates.  So, homeowners must pay more after the interest rates reset upward – The Kiplinger Letter

Airline Travel – The average U.S. round-trip ticket price booked in February was $571, up 23% from a year earlier and 8% from January – Airline Reporting Corp.

Commercial Mortgages – A record amount of commercial mortgages are expiring in 2023 and is set to test the financial health of small and regional banks already under pressure – Wall Street Journal ….. My firm has this week moved out of our office building, after the owner has decided to convert it to apartments.  A building across the street, a 30-story office building has an occupancy rate of only 22% - Buzz

Home Prices – fell 0.25% in February vs. last year.  Median prices are down 12.3% from their record highs in June of $413,800 – National Association of Realtors

Volkswagen – said it is committing $193 billion over the next five years to manufacture its own electric vehicle batteries and expand in the world’s biggest markets, including China, where it makes half its profits – Financial Times

Where To Find The Worst Traffic In The South – 1) I-85 in Atlanta, 2) I-10 in Houston, 3) Cracker Barrel parking lot after Church – It’s A Southern Thing

Poverty – The U.S. has a poverty problem.  A third of the country’s people live in households making $50,000 or less.  More than 4% of those over 65 live in deep poverty.  On the eve of Covid in 2019, our poverty rate was roughly double that of several peer nations, including Canada, South Korea and Germany – New York Times

April Performance – of regional bank stocks: First Republic (FRC) -89%, PacWest (PACW) -64%, Western Alliance (WAL) -55%, Zions Bank (ZION) -42%, Comerica (CMA) -38%, First Horizon (FHN) -28% - Wall Street Journal

Race Horses (20 Years Ago) – I was part owner of seven race horses.  None made me any money except for a horse that I named after my daughter Annsley (Annsley Bear).  Annsley Bear broke her leg at a race at Churchill Downs and I got some insurance money and retired from the industry – Buzz - See Attachment

Dancing to Chuck Berry - https://www.instagram.com/reel/CmdLIFCDFoM/?igshid=MDJmNzVkMjY=

Face - https://www.instagram.com/reel/CnL4keUKV5i/?igshid=MDJmNzVkMjY=

Face Paint - https://www.instagram.com/reel/CoboL4Ujr_1/?igshid=MDJmNzVkMjY=

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.