To all my Partners,
By now all of you have received your individual monthly statements. If for any reason you have not, please contact me and I will be glad to resend it to you.
Bena Capital had a great month increasing our portfolio of stocks by +10.22% for May This makes our YTD performance at +1.55% since the beginning of 2024. We had some stumbles coming out of ‘the beginning of the year’ gate but hopefully, the 2nd half of this year we’ll have more up months than we’ll have down ones. For 2024, our ups & downs include
|
Bena Capital up months |
Bena Capital down months |
| February | January |
| March | April |
| May |
Some areas for the last 4 weeks that have helped to contribute our increase include a higher unemployment rate that actually signaled to the Federal Reserve a slowdown of the economy. With an interest rate by the Federal Reserve of 5 to 5-1/4%, we see higher rates from our interest on credit cards to a 7% mortgage rate or higher interest rates on automobiles.
Then vs Now
Consumer Rates Affected by CPI and Fed. Reserve Interest Rates
| March 11, 2022 | June 10, 2024 | ||
| 30-year fixed mortgages | 4.29% | 7.15% | +66.6% |
| Credit card interest | 16.34% | 20.68% | +25.56% |
| Used vehicles APR | 9.1% | 11.5% | +26.7% |
As for the May unemployment rate rising to 4%, this is the highest it’s been since January, 2022! The good news with a higher unemployment rate will signal a possible reason for lowering of interest rates by the Federal Reserve for the remainder of the year.
In that same Jobs Report for May, U.S. job growth burst past expectations even as the unemployment rate edged up presenting a mixed picture Of the 272K added new jobs for May according to Labor Dept., close to 40K of those new jobs are government positions which help ‘pad’ the new job numbers and many of the new jobs according to the Labor Department are part-time positions and not full time.
According to the Bureau of Labor Statistics, many of those finding work are part-time jobs and are being filled by illegals coming through the southern borders of Texas, Arizona, New Mexico, and California.
Last week, the Consumer Price Index (CPI) is an inflation gauge used by the Federal Reserve which has stated they prefer a 2% annual inflation rate. The higher CPI numbers the last 3 years has caused inflation to soar as we see below:
Over the last 3 plus years from January 2021 to May 2024:
+19.3% +21.4% +21.2% +35.6%
Overall inflation All food groups All shelter costs All energy
Source: Bureau of Labor Statistics
With the sustained higher interest rates by the Federal Reserve, the hope is to slow down the economy but the main culprit is not a great economy but as economist Milton Friedman said was too much money added into the economy by the federal government!
CPI (Consumer Price Index) Inflation Guage Y/Y
+2.0% +3.7% +3.2% +3.1% +3.4% +3.1% +3.2% +3.5% +3.3%
Fed’s Target Sept. Oct. Nov Dec Jan Feb March April May
2023 2023 2023 2023 2024 2024 2024
Core CPI (excluding food & energy) Inflation Guage Y/Y
2.0% 4.1% 4.0% 4.0% 3.9% 3.9% 3.8% 3.8% 3.6% 3.4%
Fed’s Target Sept. Oct. Nov Dec Jan Feb March April May
2023 2023 2023 2023 2024 2024 2024
So what do we do?
History reminds us that it has typically been better to ‘buy’ than ‘bail’. We at Bena Capital Fund are playing the long game! By that I mean in two to three years from now, we really won’t remember did the Federal Reserve cut 2 or 3 times back in 2024? If markets drop for a month, or more it may create a market correction which have occurred naturally throughout the years. For all 24 corrections in the S&P 500 since W.W. II (1945), it took only 4 months to recover losses.
Never let your emotions become your portfolio’s worst enemy.
Bena Capital Fund:
| 12-MONTH RETURNS | MAY 2024 | JUNE 1-15th |
| +29.28% | +10.22% | +8.12% |
According to Ryan Detrick of Carson Group, when stocks have been up for the 1st quarter (Jan, Feb. & Mar.) which it has, stocks have ended higher by the end of the year 19 out of 20 times. Adding to this, this year is a Presidential year and when an incumbent is running as Biden is (if he’s not replaced at the Democratic Convention in Chicago), stocks have always ended higher for the year.
So, how did we do?
| For March | 1-year (12-month) Returns: | ||
| Dow Jones: | +2.3% | Dow Jones: | +18.2% |
| S&P 500: | +4.8% | S&P 500: | +24.76% |
| Nasdaq: | +6.78% | Nasdaq: | +26.93% |
| Berkshire Hathaway: | +2.74% | Berkshire Hathaway: | +21.4% |
| Bena Capital Fund: | +10.22% | Bena Capital Fund: | +29.28% |
Some highlights of last month:
- May’s unemployment rate rose to 4.0% up from April’s at 3.9% and March at 3.8%
- May’s Non-farm payrolls were higher at 272K higher than the 191K anticipated
- May’s Average hourly earnings up +4.1% Y/Y (up from April’s +3.9%)
- Labor Force Participation for May is down to 62.5 lower than April’s 62.7%
- CPI (Consumer Price Index) for May, Y/Y is +3.3%
- CNBC: The U.S. National debt is rising by $1T about every 100 days’
- FTX Says Defrauded Customers of Sam Bankman-Fried to be Fully Paid Back
- GM to Shut Down the Chevy Malibu in November
- Report from Allianz Life Insurance Co that 42% of Americans are needing to use retirement funds due to inflation
Tax Revenues Before and After 2017 Trump Tax Cuts
$3.31 Trillion $4.89 Trillion
FY2017 Receipts FY2022 Receipts
+47.73%
Percentage increase in Revenue
Source: Congressional Budget Office
Is renting cheaper than buying?
Homeownership vs. Renting
Monthly payments as of February 2024
$2,703 $1,979 37%
Mortgage Rent Gap
Source: Bankrate
Beware: Older People Lose Billions in Scams
Scammers stole more than $3.4 billion from older Americans last year in 2023, according to FBI reports. Losses from scams reported by Americans over the age of 60 (personally, I don’t think that’s old!) were up last year 11% over 2022! The most common reported fraud among older adults last year was tech-support scams, in which criminals pose over the phone as technical or customer service representatives. Source: WSJ; May 1, 2024
CNBC: The U.S. national debt is rising by $1 trillion about every 100 days!
The nation’s debt permanently crossed over $34 trillion on January 4. The U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at $34.5 trillion, as of last Wednesday. At this rate, the U.S. debt will reach $35 trillion in less than 100 days. Moody’s Investors Service has lowered its rating on U.S. government to negative from stable last November.
Interest costs have surpassed both Defense & Medicare budgets!
$514 Billion $498 Billion
Net interest National Defense
$465 Billion $355 Billion
Medicare Medicaid
Source: Department of the Treasury
Nonfarm Payrolls for April added +175 Jobs last month
This was slower than anticipated which was actually good news because it shows the economy is slowing down and so may be inflation! Below is a list of the last few months of job gains and you can see the start of a slowing economy.
| 182K | 290K | 256K | 236L | 315K | 175K |
| November | December | January | February | March | April |
U.S. Plans to Relax Restrictions on Marijuana
The Biden Administration is seeking to reclassify marijuana as a less dangerous drug that could make it much easier to buy and sell pot.
Marijuana has been designed as a Schedule 1 drug since 1970, The Biden Administration wants to reclassify the drug to a Schedule III making it obtainable with a prescription.
The Biden Administration is hoping the move will help his standing with younger voters with their support for the November Presidential elections
and speaking of the upcoming election…..
Biden is Considering Admitting Palestinians from Gaza as Refugees
The Biden Admin. is considering admitting Palestinians to the U.S. as refugees. Biden is hoping to soothe his support with Pro-Palestinians in Michigan as well as others who are protesting against Israel around colleges in the country.
An End of An Era
General Motors is saying goodbye to the Chevrolet Malibu. After selling more than 10 million for decades, GM said it would stop making the Malibu in November. This leaves only the Chevrolet Corvette as the last gasoline-powered car. GM announced in 2023, it would shut down production of the Camaro in 2024.
Americans Have More Investment Income Than Ever
In the last quarter of 2023wealth held in stocks, real estate and other assets such as pensions reached the highest level ever according to the Federal Reserve! Americans in the 1st quarter of 2024 earned about $3.8 trillion from interest and dividends up from $770 billion from 2020 according to the Commerce Department.
How Much Should You Have Saved to Retire?
According to a Fidelity Investments report
* by age 30: 1 times income
* by age 40: 3 times income
* by age 50: 6 times income
* by age 60: 8 times income
* by 67 (retirement age): 10 times income
Source: Fidelity Investments
Youth & Money in the USA
How do you feel about the job market?
6% 38% 44% 11%
Extremely good Pretty good Pretty bad Extremely bad
Source: Milken Institute; CNBC; May 7, 2024
If the election was today, who would you vote for?
36% 35% 29%
Joe Biden Donald Trump Robert Kennedy, Jr.
Source: Milken Institute; CNBC; May 7, 2024
I-Bonds rate falls again to 4.28%
The Treasury Department just released the new interest rate for I-Bonds now at 4.28% for the next 6 months. That’s down almost a full 1% point from when it was adjusted 6 months prior to that. The variable yield is adjusted to inflation rate and not the bond market. There are no state/local taxes paid on I-Bonds but there are other stipulations as to redemption rules.
IRS increasing of audits for those making under $200K
Passage last year of the ‘Inflation Reduction Act’, an increase to the IRS was included for $80 billion to hire 87,000 more agents and the promise that this would go towards audits for those making $400K or more. Now, according to the Treasury Inspector General for Tax Administration (page 16) in his August 31, 2023 report says:
“63% of SB/SE Division’s FY2023 total new examinations will be on taxpayers with less than $200,000 TBI.”
Well, so much for believing a politician!!
Biden tries again to forgive Student Loan debt
Last year the Supreme Court blocked Biden’s $430 billion student loan debt write-off before the November election. Now the President is trying once again to get the student debt vote. Attorney Generals in a number of states say they will again go to the courts for redress.
You wouldn’t run your home or business this way
According to the Congressional Budget Office, the federal budget deficit for the 1st six months of FY2024 ending in March, is now at $1.064 Trillion! This is over and above tax revenues. Tax revenues rose 7% from FY2023 an additional $2.19 Trillion, payroll tax revenues rose +$6%, and corporate income taxes rose +35%.
The more $$$ coming in….the more they continue to spend.
We don’t have an income problem – we have a spending problem!
Source: WSJ; April 10, 2024
Look before you fly:
A veteran Boeing engineer has filed a complaint with federal regulators alleging the company dismissed quality & safety concerns during production of its troubled 787 Dreamliner jets.
…and speaking of Boeing:
United Airlines will be pausing their hiring of pilots due to fewer 2023 aircraft deliveries from….Boeing! The plan was to have 56 Max 8 & Max 9 jets delivered where now there will be 31 less than promised. There will be no Max 10 jets delivered from Boeing for 2024.
Where are the country’s hottest jobs markets?
The country’s hottest jobs markets for 2023 are in Utah & Florida
1. Salt Lake City
2. Jacksonville, Florida
3. Orlando, Florida
4. Tampa, Florida
5. Miami, Florida
A whole lot more expensive to drill
The Biden Administration just raised the price for oil drilling on federal lands. The new cost paid to the federal government will rise to $150K from the present $10K per lease. It will also now require a royalty on oil & gas found. This is the first price increase since 1960.
U.S. Household Wealth
$156 Trillion
Source: Federal Reserve
…and wait, there’s more:
58%
U.S. Households in Q4 2023 holding stocks either directly or through mutual funds
Source: Federal Reserve
$4.7 Trillion
U.S. Household Wealth Gains from Stocks in Q4 2023
Source: Federal Reserve
Stock Ownership by Wealth Group in Q4 2023
86.9% 49.4%
Top 10% Top 1%
Source: Federal Reserve
U.S. Top 1% Wealth Gains in Q4 2023
+49% $8 Trillion
from equities/stocks
Source: Federal Reserve
Walmart is America’s largest grocery store:
(Share of U.S. grocery sales in 2034)
28.3% 10.1% 9.2% 6.4% 4.8% 3.0% 2.7% 2.0%
Walmart Kroger Costco Albertsons Publix Amazon Target HEB
& Sam’s Club & Whole Foods
Top Shopping Websites for Teens
Company/Share
1. Amazon 55%
2. Shein 12%
3. Nike 6%
4. GOAT 2%
Source: Piper Sandler
Tesla, what are you doing to us!
Bena Capital Fund owns a percentage of Tesla shares that are down approx. 30% from YTD. I feel this is a momentary movement (on the down) that will eventually correct. Take a look at the EV market share in the U.S. today:
2024 Q1 U.S. EV Market Share:
52.3% 9.3% 7.5% 6.1% 5.1%
Tesla Hyundai/Kia Ford GM Rivian
Source: Motor Intelligence
BlackRock CEO Sees Budding Global Retirement Crisis
BlackRock’s CEO, Larry Fink sees a global retirement crisis brewing as an aging population is stressing retirement safety nets such as Social Security. Medical breakthroughs are helping people live longer and relying only on a straining Social Security program which is already seeing an insolvency within 10 years.
Jamie Dimon’s Letter to Shareholders
Jamie Dimon last week just released his annual letter to shareholders. Yes, I’m realistic enough to know Jamie Dimon, the CEO & Chairman of JPMorgan Chase, has a wider reach than the Bena Capital Fund’s Letter to Shareholders. In it Jamie said that AI (Artificial Intelligence) will have as profound an impact on society as….computers, the printing press,… and electricity!
Car insurance up YOY +22.2% top reasons:
* Vehicle repairs up 3.1% month over month
* Car & truck rentals up 5.7% month over month
National average gas prices
$3.619 $3.608 $3.549 $3.394 $3.604
Current Yesterday 1-wk ago 1-mon. ago 1-yr ago
Source: AAA
President Joe Biden’s Fiscal Year 2025 Budget Proposal
$7.3 Trillion $5.5 Trillion $1.78 Trillion
Budget spending Tax revenue Adds to Federal deficit
Source: White House
Inflation under Biden
(January 2021 – Feb. 2024)
+21.2% +21% +29.6% +22.7% +20% +28.4% +30% +20.3% +31.4%
Groceries Eating out Baby food Pet food Rent Electricity Nat. gas Used cars Airfare
Source: BLS
…more inflation under Biden
(January 2021 to February 2024)
+12% +31.4% +41.96% +46.62% -2.11% +4.11%
Apparel Airfare Gas prices Credit card Real hourly 30-yr. mortgages
debt wages
Source: BLS; St. Louis Fed; AAA; Freddie Mac
Not all things have gone up:
(January 2021 to January 2024)
-26% -2%
Home sales Real wages
Source: BLS; Fed. Reserve Bank
Percentage of those taking early 401(k) withdrawals due to economic hardships going up?
(2020 through 2024)
2.0% 2.2% 2.8% 3.7%
2020 2021 2022 2023
Source: CNBC; March 11, 2024
We don’t have an income problem; we have a spending problem.
The new $1.2 Trillion spending bill:
- $2.5 million for two hospitals that will perform late-term abortions.
- $1.8 million for LGBQT+ senior citizen living homes
- Sen. Chuck Schumer (D-NY) added $1.5 million to encourage kids to play video games
- Sen. John Fetterman (D-PA) added $368,000 for a ‘Built By Us’ radio podcast.
- Sen. Tammy Baldwin (D-IN) added $2 million for illegal aliens to see psychiatrists
- Sen. Elizabeth Warren (D-MA) added $1 million to boost ‘LatinX’ small businesses
- $880 million for ‘enhanced border security’ in the Middle East (none for our own southern border)
- $1.1 million for ‘climate resilience and equity’ in Boston, MA
- $1.6 million for EV busses on Cape Cod
- $4 million for an ‘economic justice’ lab in Connecticut * $15 million for Egyptians’ college tuition
- Sen Jeanne Shaheen (D-NH), $2.5 million for a kayaking facility in New Hampshire
- Sen Lisa Murkowski (R-AK), $4 million for ‘Alaska King Crab Enhancement Project’
I’ve been asked to repeat this from our March’s Partner’s Letter, so:
History has shown that some months are kinder than others to investors.
According to records spanning over 95 years, since 1929:
Months with the biggest gains: Months with the biggest losses:
January, April, July & December February, May, August, September
The S&P Rises 3 out of 4 years since 1926!
The S&P is up approx. 75% of the time going all the way back for almost 100 years (since 1926)!
| S&P | % advance each year |
| 20%+ | 36% |
| +10% to +20% | 21% |
| 0 to +10% | 15% |
| 0 to -10% decline | 15% |
| 10%+ decline | 13% |
Source: Dimensional Funds
Have you moved?
If you have moved or changed addresses to where your 1099’s should be sent, please contact me with the new information.