Bill’s By The Number$

Posted by: Vanessa Guadiana | Posted on: June 22nd, 2015 | 0 Comments

1. RATES WILL GO UP SOMEDAY – The last time that the Federal Reserve began a rate-tightening cycle was on 6/30/04 (i.e., 11 years ago).  In the 1st month following the 6/30/04 Fed hike to short-term rates, the S&P 500 fell 3.3% (total return).  In the 6 months following the 6/30/04 Fed hike to short-term rates, the S&P 500 gained +7.2% (total return).  The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation.  It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).       
2. AVOIDING A CORRECTION – As of today, the S&P 500 has gone 1,357 calendar days (i.e., from 10/03/11 through and including Sunday 6/21/15) without a 10% or greater drop in the index, the 3rd longest stretch without a double-digit pullback in the last 50 years.  The longest streak in the last half century without a 10% decline was the 2,553 calendar days from 10/11/90 to 10/07/97 (source: BTN Research).    
3. IMPACT ON LONGER PAPER – The last time that the Federal Reserve began a rate-tightening cycle was on 6/30/04 (i.e., 11 years ago).  In the 1st month following the 6/30/04 Fed hike to short-term rates, the yield on the 10-year Treasury note dropped from 4.62% to 4.50%.  In the 6 months following the 6/30/04 Fed hike to short-term rates, the yield on the 10-year note dropped from 4.62% to 4.27% (source: BTN Research).           
4. MORE AND MORE – There are 59 million Social Security beneficiaries today.  That number is projected to grow to 78 million in 2025 and almost 100 million in 2040 (source: Congressional Budget Office). 
5. MONEY ABOVE THE MAXIMUM – Earnings up to $118,500 in 2015 are subject to Social Security payroll taxes.  90% of earnings were subject to payroll taxes in 1983.  Just 81% of earnings are expected to be subject to payroll taxes in 2015 (source: Social Security).  
6. RETIREES ARE MILLIONAIRES? – The maximum retirement benefit paid by Social Security to an individual retiring in 2015 at the full retirement age of 66 is $2,663 per month.  $3.2 million invested in a pre-tax account earning 1% annually on a tax-deferred basis would generate $32,000 per year or $2,667 per month of taxable income, i.e., income taxes are due upon withdrawal from the pre-tax account (source: Social Security).  
7. BAD AND WORSE – The USA’s national debt is $18.2 trillion, larger than our $17.7 trillion economy.  Japan’s national debt is $10.1 trillion, more than twice as large as its $4.2 trillion economy (source: BTN Research).  
8. IN SIX MONTHS – Employers with 51-99 employees that work at least 30 hours a week must provide health insurance coverage per the Affordable Care Act effective 1/01/16 or be subject to a fine (source: ACA).    
9. IT’S HOT OUT THERE – An average of 658 Americans die each year from extreme heat, a total that exceeds the average number of deaths caused every year from tornadoes, hurricanes, floods and lightning combined (source: Center for Disease Control).  
10. BORROWING FOR COLLEGE – 23% of American adults have outstanding student loan debt.  The loans were either taken out for their own college education, for their spouse’s college education or for the schooling of that of a child or grandchild (source: Federal Reserve). 
11. A LITTLE SHORT – The “aggregate national retirement deficit” is $4.13 trillion.  This “present value” amount represents the additional funds that working Americans would need to save by age 65 to eliminate expected deficits in their retirement years (source: Employee Benefit Retirement Institute).  
12. HIS IDEA – Republican presidential candidate Rand Paul proposed a 14.5% flat tax for the USA in a Thursday 6/18/15 op-ed published in the Wall Street Journal.  The $9.1 trillion of adjusted gross income in the USA during tax year 2012 taxed at a flat 14.5% would generate $1.32 trillion of federal income tax, $131 billion more than the $1.19 trillion of federal income tax actually collected in tax year 2012 (source: Internal Revenue Service).  
13. DEFAULT? – Greece consolidated 4 different payments due to the International Monetary Fund (IMF) during the month of June 2015 and instead has negotiated to make a single payment of 1.587 billion Euros on 6/30/15.  Overall, Greece owes 323 billion Euros to all its creditors (source: Greek Public Debt Management Office). 
14. TWO ROYAL FAMILIES? – There was a Bush or a Clinton on the Republican or the Democratic national ticket for 7 consecutive presidential elections from 1980-2004 (source: BTN Research).   
15. NBA CHAMP – Peter Guber has an ownership interest in both the Golden State Warriors and the Los Angeles Dodgers.  Guber is worth an estimated $400 million (source: BTN Research). 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –

Copyright © 2015 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.