Bill’s By The Number$
1. NOT ALL ARE COUNTED THE SAME – As of the close of stock trading on Friday 10/16/20, just 10 stocks in the S&P 500 index, i.e., just 2% of the index’s stocks, are responsible for 28% of the index’s 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. WHAT’S LEFT THIS YEAR – With 11 weeks remaining in calendar year 2020, the S&P 500 is up +9.4% YTD (total return) through Friday 10/16/20. The S&P 500 has gained an average of +10.6% per year (total return) over the last 50 years (i.e., 1970-2019). Over the last half-century, the S&P 500 has been up during 40 of the last 50 years, i.e., 80% of the time (source: BTN Research).
3. BELOW ONE – The last time the yield on the 10-year Treasury note was above 1% was on 3/19/20 or 7 months ago today. The 10-year note yield closed at 0.74% last Friday 10/16/20 (source: Treasury Department).
4. FUTURE TAXPAYERS – The nation’s “general fertility rate,” defined as the number of births per 1,000 women between the ages of 15-44, was just 58.3 births in 2019, a record low rate for birth data that has been tracked nationally since 1909 or for the last 111 years (source: National Center for Health Statistics).
5. PRINT AND PURCHASE – The Fed’s balance sheet reached $6.5 trillion as of 10/14/20, up from $3.9 trillion as of 3/11/20, largely the result of purchases of Treasuries and corporate bonds (source: Federal Reserve).
6. MORE THAN TWICE AS LARGE – The US government had a record $3.13 trillion deficit during fiscal year 2020, i.e., the 12 months ending 9/30/20, smashing the previous record deficit of $1.41 trillion set 11 years ago during fiscal year 2009. The deficit was the difference between $3.42 trillion of tax receipts and $6.55 trillion of outlays (source: Treasury Department).
7. HALF-AND-HALF – The United States government has maintained financial records since 1789, i.e., for the last 231 years. As of 9/30/10, the US had reached a national debt of $13.56 trillion. As of 10/15/20, the US had amassed a national debt of $27.14 trillion. Thus, the US government has accumulated more debt in the last 10 years ($13.58 trillion) than it had in its first 221 years ($13.56 trillion) (source: Treasury Department).
8. AT THE MARGIN – The top marginal tax rate used in the payment of federal income taxes in 2020 is 37%. The top marginal tax rate was 70% in 1979, 77% in 1969 and 91% in 1963 (source: Internal Revenue Service).
9. SOCIALLY DISTANCING – Americans sold 745,000 existing homes in April and May this year as the country reacted to a pandemic-driven shutdown. That’s off 25% from the 998,000 existing homes sold in April and May 2019 (source: National Association of Realtors).
10. LITTLE SHORT OF CASH – 17.1 million US households were behind on their monthly rental payment or their monthly mortgage payment as of 9/28/20. That’s 13.5% of the 126.8 million households in the country (source: Census Bureau).
11. IT’S ABOUT TIME – Americans have reduced their outstanding balances on their revolving debt, e.g., credit card debt and home equity loans, for 6 months in a row, i.e., March 2020 through and including August 2020 (source: Federal Reserve).
12. WE NEED ONE OF EACH – There are 213 vaccines and 319 treatments for the COVID-19 pandemic in the development stage as of Friday 10/16/20. None of the test vaccines or treatments has yet to receive FDA approval (source: Milken Institute).
13. WHO’S RIGHT? – As of Friday 10/16/20, 39.2 million people worldwide have been infected with the COVID-19 virus, or ½ of 1% of the globe’s 7.7 billion population. However, the World Health Organization reported on 10/05/20 that its “best estimates” show that 1 in 10 people globally have been infected or 20 times the reported number (source: Johns Hopkins Coronavirus Resource Center, Dr. Michael Ryan, WHO).
14. BAYOU MISERY – 4 of the 10 tropical storms or hurricanes that made landfall in the United States in 2020 – Cristobal, Laura, Marco and Delta – made landfall in Louisiana. The 10 tropical storms or hurricanes to make US landfall broke the record of 9 set in 1916 or 104 years earlier (source: Insurance Information Institute).
15. HOOPS – The NBA’s 74th regular season began on 10/22/19. As a result of the pandemic, the NBA finals were not concluded until Sunday 10/11/20 or 355 days later. The Lakers beat the Heat in 6 games, the 4th NBA title for LeBron James. Bill Russell won 11 titles in a 13-year career with the Boston Celtics (source: NBA).
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Bill’s By The Number$
1. GOOD AND THE BAD – Since 1950, the average bull market (64 months) has lasted more than 4 times as long as the average bear market (15 months). Since 1950, the average bull market has generated a gain of +172%. The average bear market has incurred a loss of 34%. The S&P 500 consists of 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. THE YEAR AFTER – The S&P 500 has achieved an average annual total return of +14.8% in the calendar year after the 16 down years that have taken place in the stock market over the last 75 calendar years (1945-2019). That result is +3.5 percentage points greater than the entire 75-year average annual return of +11.3% for the index (source: BTN Research).
3. “TIME IN” vs. “TIMING” – The split between “up” and “down” time periods for the S&P 500 from 1950 to the end of 2019, i.e., the last 70 years, as measured by: Days: 54% “up” and 46% “down”; Months: 60% up, 40% down; Quarters: 66% up, 34% down; Years: 73% up, 27% down; 5-Year Rolling Time Periods: 79% up, 21% down; and finally 10-Year Rolling Time Periods: 89% up, 11% down (source: BTN Research).
4. BIG GAIN, BIG LOSS – The US stock market has lost $12.1 trillion of value during the 2020 bear market, i.e., from the close of trading on 2/19/20 to the close of trading on Friday 3/20/20. The US stock market peaked at $36.1 trillion, having gained $28.5 trillion during the 2009-20 bull market through 2/19/20 (source: Wilshire).
5. MULTIPLIER – Senate Republicans announced on 3/19/20 a stimulus plan that includes $1,200 cash payments to taxpayers. If each taxpayer that received $1,200 had a “marginal propensity to consume” of 60%, the initial taxpayer would save $480 and spend $720, and then in turn the party that received the $720 would save $288 and spend $432, and the next party would save $173 and spend $259, and so on. Ultimately the original $1,200 cash payment would result in $1,800 of economic activity, i.e., $720 + $432 + $259 + . . . (source: BTN Research).
6. ALMOST INTEREST-FREE CASH – The Federal Reserve implemented its 2nd emergency rate cut this month last Sunday 3/15/20, effectively pushing short-term interest rates to zero. At the latest emergency meeting, the Fed also cut the reserve requirement for thousands of US depository institutions to zero effective Thursday 3/26/20, i.e., permitting easier lending by banks (source: Federal Reserve).
7. JOBS – There was a turnover of 5.615 million employees nationwide during the month of January 2020, comprised of 3.532 million employees who quit their jobs (63%), 1.684 million employees who were fired (30%) and 399,000 employees who retired, died or became disabled (7%) (source: Department of Labor).
8. SEVEN MONTHS – The worldwide flu outbreak that occurred in the fall of 1918 killed 50 million people globally, including 675,000 Americans. The health crisis was a primary cause of a 7-month recession in the USA that lasted from August 1918 through March 1919 (source: National Bureau of Economic Research).
9. WILL THIS BE ENOUGH? – There are 924,100 hospital beds in the United States (source: 2018 American Hospital Association survey).
10. NEED LOTS OF THESE FOLKS – The median annual income of physicians in the United States in 2019 was $199,500 (source: Current Population Survey).
11. GONE – 22 million workers worldwide lost their jobs as a result of the 2008 global financial crisis. Global job losses driven by the coronavirus pandemic are projected to be as few as 5.3 million (assuming swift and coordinated actions to contain the virus) to as many as 25 million (source: International Labor Organization).
12. HIGHER PRICE NEEDED – Saudi Arabia needs to sell oil at $78 a barrel to balance its sovereign budget, while Russia requires a price of $45 a barrel. Brent crude oil, the benchmark for the oil industry outside of the United States, closed last Friday 3/20/20 at $26.98 a barrel (source: International Monetary Fund).
13. AT THE PUMP – The national average price of gasoline has decreased for 23 consecutive days between Wednesday 2/26/20 and Friday 3/20/20, falling 30 cents a gallon to $2.17 a gallon (source: AAA).
14. BACKING MORTGAGES – Government agencies Fannie Mae and Freddie Mac serve as the financial backstop for $5 trillion of the $10.6 trillion of outstanding mortgage loans nationwide (source: Federal Reserve).
15. MORE GAMES – The NFL went from 12 regular season games to 14 games in 1961, then from 14 to 16 in 1978 and will increase from 16 to 17 games as early as the 2021 season (source: NFL Players Association).
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Bill’s By The Number$
1. BULL OVER – The bull market for the S&P 500 that began on 3/10/09 is now officially over. The bull lasted 131 months (2,756 trading days and 1 month short of 11-years in duration), peaked on 2/19/20 at 3386, gained +529% (total return) or an annualized gain of +18.3% per year (total return), and set 255 all-time closing highs. It was the 11th (and longest) bull since the end of WWII, producing the 2nd largest overall gain. 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. BEAR – After closing at an all-time high of 3386 on 2/19/20, the S&P 500 fell 26.7% to close at 2481 on 3/12/20. The fall was the 4th drop of at least 15% but was the 1st decline of at least 20% (the level required to be defined as a “bear” market) that has occurred during the bull market that began on 3/10/09. The 3 other “near-bears” ended on 7/02/10 (off 16.0%), 10/03/11 (off 19.4%) and 12/24/18 (off 19.8%) (source: BTN Research).
3. HIGH AND LOW – The best trading day for the S&P 500 YTD during 2020 was its +9.3% gain (total return) on 3/13/20. The worst trading day for the S&P 500 YTD was its 9.5% loss (total return) the day before on 3/12/20. During 2011, the best and the worst trading days also occurred on consecutive days (source: BTN Research).
4. BEAR FREQUENCY – In the 75 years from 1945-2020, the stock market (using the S&P 500 as its benchmark) has had 12 declines of at least 20% or approximately one every 6.25 years. A “bear” is defined as a stock market decline of at least 20%. The stock market suffered its 12th bear since 1945 last week when the index fell 26.7% from its Wednesday 2/19/20 peak to its closing value on Thursday 3/12/20 (source: BTN Research).
5. GETTING IT ALL BACK – In all 11 bear markets that suffered at least a 20% decline in the S&P 500 index in the last 75 years (1945-2020) before last week’s 12th bear market, the stock market eventually recovered 100% of the loss sustained, i.e., going above the previous bull market high. The average time the stock market took to recover back to a new high closing price from the low point in the downturn was 24 months (source: BTN Research).
6. MAYBE – The White House introduced the possibility of a payroll tax cut for US employees last week in response to the economic impact of the coronavirus. The Social Security payroll tax rate paid by employees has been 6.2% since 1990 except for a 2% reduction to the rate during the 2 years of 2011-12 (source: Social Security).
7. WHEN INTEREST RATES COLLAPSE – Long-dated Treasury bonds produced a gain of +46.4% (total return) on a trailing 1-year basis as of the close of trading last Monday 3/09/20 (source: Barclays).
8. BIG PIECE – 17.7% of the US economy was health care spending in 2018. Americans spent $9.9 billion a day on health care in 2018, a total of $3.6 trillion (source: Centers for Medicare & Medicaid Services).
9. THE SICKEST AMONG US – Just 1% of the US population is responsible for 22% of total health care spending in the country, i.e., 1% of our 329 million population (3.3 million people) create $800 billion of health care expenses or an average of $242,000 per person per year (source: Brookings).
10. THEY CAN VOTE – 9.8% of eligible voters for the 2020 presidential election were born outside of the United States but have since legally become US citizens, a total of 23 million immigrants (source: Census Bureau).
11. ASSUMING MORE RISK – Investors in a “non-investment grade” corporate bond (“junk” or “high yield” bond) that defaults receive on average only 61 cents on the dollar out of a bankruptcy filing. “Junk” or “high yield” bonds are rated below “Baa” by Moody’s (source: Moody’s Investors Service).
12. A 100-YEAR RECORD – U.S. field production of crude oil was 13.1 million barrels a day for the week ending 2/28/20, the highest total recorded in our nation’s history based upon data maintained since January 1920 (source: Department of Energy).
13. I GOT THE FLU – During the 2018-2019 flu season in the United States (approximately November 2018 through mid-April 2019), 35.5 million Americans got sick with the flu, 16.5 million saw a health care provider, 490,600 were hospitalized and 34,200 died from the flu (source: Center for Disease Control).
14. IMPACT OF INFLATION – To rank in the top 1% of US taxpayers took $80,580 of adjusted gross income (AGI) in 1980. To rank in the top 25% of US taxpayers took $83,682 of AGI in 2017 (source: Internal Revenue Service).
15. WHY NOT? – College athletes in Florida will be able to earn money based upon their “name, image and likeness” as of 7/01/20 and still retain their amateur status. FL governor Ron DeSantis is expected to sign the legislation next month, making it the 1st state in the country to implement such a law (source: Sports Business Daily).
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Bill’s By The Number$
1. ELEVEN-YEARS – In the first 4-years following its 3/09/09 bear market closing low, the S&P 500 gained +150% through 3/09/13 (i.e., total return result including the impact of reinvested dividends). In years 5-11 (i.e., the next 7 years) from 3/09/13 to last Friday 3/06/20), the S&P 500 has gained an additional +121%. 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. HALF AS MUCH – The total return for the S&P 500 over its 11-year bull market (i.e., 3/10/09 through 3/06/20) is a gain of +16.8% per year (total return). If you missed the 20 best percentage gain days over the 11-year bull run (i.e., 20 days in total, not 20 days per year), the +16.8% annual gain is cut in half to an +8.5% annual gain. There were 2,768 trading days over the entire 11 years (source: BTN Research).
3. OUCH! – The worst performing stock in the S&P 500 in 2019 lost 62.3%. The same stock is the worst performing stock in the index YTD in 2020 through Friday 3/06/20, losing an additional 73.7%. Since 12/31/18, a $1,000 investment in this stock has fallen to just $99.13 as of 3/06/20 (source: BTN Research).
4. RIGHT ON – The morning after the S&P 500 closed at a bear market low of 677 on Monday 3/09/09, journalist John Authers wrote that “perhaps the greatest reason for hope (for the US stock market) at present is that almost all hope seems to have been lost.” At the time of Authers’ writing, the S&P 500 had fallen 55.2% (total return) over the previous 17 months (source: Financial Times).
5. LOWEST EVER – The yield on the 10-year Treasury note dropped a record low of 0.709% as of the close of trading on 3/06/20, making it 9 record yield closes in just the last 2 weeks (source: Treasury Department).
6. A MODEL FOR OTHER STATES – The state of Colorado opened in January 2019 a department dedicated to reducing the cost of healthcare for its state residents. The “Office of Saving People Money on Heath Care” pushed state lawmakers to pass a bill that protects private health insurers from the excessive cost of their sickest patients, resulting in a 20% drop in 2020 premiums for residents who buy their health insurance on the individual market within Colorado (source: Office of Saving People Money on Health Care).
7. SCARY STUFF – Marc Lipsitch, Harvard University epidemiology professor, predicts that 40-70% of the world’s population “could be” infected with the coronavirus within 12 months. Epidemiology is the branch of medicine that deals with the incidence and control of diseases (source: Bloomberg BusinessWeek).
8. YIKES – The US government’s national debt total is forecasted to reach $30.609 trillion as of 9/30/30. The national debt was $20.0 trillion as of 12/31/16 and is $23.5 trillion today (source: Treasury Department).
9. JUST IN CASE – The personal savings rate in the United States was 7.9% in calendar year 2019, the highest rate nationally since 2012. The monthly statistic, tracked since 1959, reached an all-time high of 17.3% in May 1975 and fell to a record low of just 2.2% in July 2005 (source: Commerce Department).
10. THEY MAKE MORE MONEY – An average non-union worker in the United States in calendar year 2019 had weekly before-tax earnings equal to 81.5% of an average union worker (source: Bureau of Labor Statistics).
11. ALL WERE UP – The average single-family home in the USA appreciated in value by +5.1% during calendar year 2019. Idaho (+12.0%) and Utah (+8.1%) experienced the greatest home appreciation, while Connecticut (+1.9%) and Illinois (+2.0%) reported the smallest gains nationwide (source: Federal Housing Finance Agency).
12. NEW HOMES – The median sales price of a new home was $348,200 in January 2020, the highest nominal value recorded in history. The median sales price of a new home from May 2017 ($345,800) is equal to $364,505 in current-day dollars, the highest value recorded on an inflation-adjusted basis (source: Census Bureau).
13. FREE – The University of Southern California (USC) announced on 2/20/20 that they will waive tuition for students from families with household income of $80,000 or less. Tuition at USC is $57,256 per year (source: USC).
14. LITTLE CHANGE – 91% of House of Representative members who ran for reelection in 2018 won. All 435 House seats are up for reelection on Tuesday 11/03/20 (source: Center for Responsive Politics).
15. STRONG MAN – Netane Muti, an offensive lineman from Fresno State, had 44 bench-press reps of 225 lbs., the most recorded at the NFL 2020 Combine in Indianapolis that ended on 3/01/20. The all-time strength record at the NFL Combine is 51 reps by Justin Ernest of Eastern Kentucky in 1999. Ironically, Ernest was never drafted and never played a down in the NFL (source: NFL Combine).
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Bill’s By The Number$
1. LONGEST BULL – The current bull market for the S&P 500 will reach 11 years in length in just 2 weeks on Monday 3/09/20, the longest bull market for the stock index since the end of WWII. The next longest bull market lasted just under 9 ½ years from 10/11/90 to 3/24/00. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market (source: BTN Research).
2. LUCKY – A person with $1 million invested 100% in the S&P 500 as of 1/01/73 withdrawing an inflation-adjusted $100,000 per year would be out of money in 9 years, i.e., as of 12/31/81. A 2nd person with $1 million invested in the S&P 500 as of 1/01/82 withdrawing an inflation-adjusted $100,000 per year would have $5.64 million remaining after 38 years, i.e., as of 12/31/19. This calculation ignores the ultimate impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance. Actual results will fluctuate with market conditions and will vary (source: BTN Research).
3. BAD DAY, BAD YEAR – The worst year for the taxable bond market in the last 40 years (1980-2019) was a loss of 2.92% (total return). The stock market, using the S&P 500 as a measurement, has had 22 individual trading days in just the last 10 years that resulted in a loss of at least 2.92% (total return). The Bloomberg Barclays US Aggregate Bond Index (created in 1986), calculated using publicly traded investment grade government bonds, corporate bonds and mortgage-related bonds with at least 1 year until final maturity, was used as the bond measurement (source: Bloomberg Barclays).
4. RED FEBRUARY – The last time that February did not produce the largest monthly deficit during a fiscal year was in fiscal year 2002 or 18 years ago (source: Treasury Department).
5. START RIGHT AWAY – A child born in February 1998 (22 years ago) who started college in the fall of 2016 is scheduled to graduate from an average 4-year public in-state college in May 2020. If the child’s parents had invested $143 per month beginning at the child’s 1998 birth and had earned an annualized +8% on all invested dollars, the parents would have been able to pay for their child’s 4-year college expenses of tuition, fees, room and board (the 4-year cost was $84,290). This calculation ignores the ultimate impact of taxes on the investment account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance. Actual results will fluctuate with market conditions and will vary (source: College Board).
6. TOP SHELF – To rank in the top 0.1% of US taxpayers in tax year 2017, i.e., the top 1 out of 1,000 taxpayers, required an adjusted gross income of $2,374,937 (source: Internal Revenue Service).
7. WHO LOVES A BULL MARKET? – The wealthiest 1% of American households owned 56% of the entire value of all US equities as of September 2019 (source: Goldman Sachs).
8. PEOPLE – The US population reached 200 million in 1967, 300 million in 2006 (39 years later) and is projected to reach 400 million in 2058 (52 years later). Today’s population is 329 million (source: Census Bureau).
9. FOR LOTS OF REASONS – American workers today are retiring 3 years later on average than they did in the 1980s (source: Boston College’s Center for Retirement Research).
10. ONE IS A LOT BIGGER – Student loan debt in the USA was +62% larger than credit card debt as of 12/31/19, i.e., $1.51 trillion to $930 billion. Both totals are all-time record highs (source: Federal Reserve Bank of NY).
11. SMALLER HOUSEHOLD SIZE – There were 2.52 people on average living in every American household in 2019, the lowest average household size in US history. There were 3.33 people on average per household in 1960 (source: Census Bureau).
12. FEWER FACTORIES – Manufacturing output makes up just 11% of the USA’s $22 trillion economy, the lowest percentage for our nation’s manufacturing sector since 1947 (source: Commerce Department).
13. IMPORTANT SOURCE OF SPENDING – Chinese travelers accounted for 20% of total tourism dollars spent globally in calendar year 2018 (source: United Nations World Tourism Organization).
14. MILLIONS DIED – The most lethal health epidemic in the last 500 years was the worldwide flu outbreak that occurred in the fall of 1918 that killed 50 million people globally, including 675,000 Americans. 195,000 Americans died in October 1918, the deadliest month in our nation’s history (source: Center for Disease Control).
15. 7-MINUTE MILE PACE – Ultramarathoner Zach Bitter of the United States ran 100 miles on 9/11/19 in 11 hours, 19 minutes, and 13 seconds, an average mile time of 6:48 (source: Guinness World Records).
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Bill’s By The Number$
1. STOCK MARKET – The median annual return of the stock market over the last 35 years (1985-2019) was a gain of +15.1% (total return). The stock market has produced a positive total return gain in 29 of the last 35 years, i.e., 83% of the time. The S&P 500, consisting of 500 stocks chosen for market size, liquidity and industry group representation, was used as the stock measurement. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).
2. BOND MARKET – The median annual return of the taxable bond market over the last 35 years (1985-2019) was a gain of +6.5% (total return). The taxable bond market has produced a positive total return gain in 32 of the last 35 years, i.e., 91% of the time. The Bloomberg Barclays US Aggregate Bond Index (created in 1986), calculated using publicly traded investment grade government bonds, corporate bonds and mortgage-related bonds with at least 1 year until final maturity, was used as the bond measurement (source: Bloomberg Barclays).
3. E.U. AND USA – The 27-nations that comprise the European Union (post-Brexit) have a population of 446 million and a combined economy of $18 trillion. The United States has a population of 329 million and an economy of $22 trillion (source: Census Bureau).
4. CORONAVIRUS IMPACT – China is forecasted to used 25% less oil per day in February 2020 when compared to its actual usage in February 2019, a drop of 3.2 million barrels a day, i.e., from a consumption of 12.9 million barrels a day to 9.7 million barrels a day (source: International Energy Agency).
5. OIL DEMAND – The price of West Texas Intermediate crude oil closed at $63.27 a barrel on Monday 1/06/20 but has since fallen 18% to $52.05 a barrel as of the close of trading last Friday 2/14/20 (source: NYMEX).
6. NEW HOMES – The construction of 888,100 new single-family homes began in 2019, the 8th consecutive year of increasing home building. In the decade of the 2010s, 6.8 million new homes began construction, down 44% from the 12.3 million new homes that were started in the decade of the 2000s (source: Census Bureau).
7. HARD TO ENJOY RETIREMENT – More than half of American workers (54%) have not started a defined contribution retirement plan at work (e.g., a 401(k) plan) or have access to a defined benefit pension plan funded exclusively by their employer (source: Center for Retirement Research at Boston College).
8. FINANCIALLY READY? – The life expectancy of a 65-year old American is 19 ½ years or 234 months (source: Center for Disease Control).
9. FISCAL YEAR 2021 – The White House released on Monday 2/10/20 their blueprint for the government’s budget for fiscal year 2021, i.e., the 12 months from 10/01/20 to 9/30/21. The plan calls for $3.863 trillion of tax receipts and $4.829 trillion of outlays, resulting in a $966 billion deficit. Congress, the ultimate decisionmakers with regard to our country’s finances, is not required to follow any of the suggested numbers from the White House plan (source: Office of Management and Budget).
10. PRETTY OPTIMISTIC – The Office of Management and Budget released a forecast on 2/10/20 that projects US tax receipts increasing from $3.464 trillion in fiscal year 2019 to $6.378 trillion in fiscal year 2030, an increase of +84% over 11 years. Over the last 11 years, i.e., fiscal year 2008 to fiscal year 2019, actual tax receipts increased +37% from $2.524 trillion to $3.464 trillion (source: Office of Management and Budget).
11. EXPENSIVE EDUCATION – Outstanding student loan debt in the USA was $1.51 trillion as of 12/31/19, up +110% from $720 billion as of 12/31/09 (source: Federal Reserve Bank of New York).
12. EVERY DAY – An estimated 10,800 Americans will turn 65 years old each day this year (2020). This group represents the 10th year of 19 years of “Baby Boomers” turning age 65. An estimated 11,500 Americans will turn 65 years old each day in the year 2029 (source: Government Accountability Office).
13. WOMEN IN POLITICS – 24% of the 535 members of Congress are women (127 females), including 26 senators and 101 House members (source: Center for American Women and Politics).
14. MARTHA STEWART – The House passed HR # 2534 on 12/05/19 and has moved the legislation onto the Senate. The bill explicitly defines and prohibits “insider trading,” i.e., the profiting from non-public information. There is no federal statute in existence today that prohibits “insider trading” (source: Insider Trading Prohibition Act).
15. LET THEM ALL IN – 5 of 15 MLB teams in each league currently qualify for post-season play. MLB is considering expanding the number to 7 of 15 in each league beginning with the 2022 season (source: MLB).
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Bill’s By The Number$
1. HISTORICAL PERSPECTIVE – Since 1950, there have been 61 different 10-year periods (i.e., the 10-years from 1950-59, 1951-60, 1952-61, . . . 2010-2019). The S&P 500 stock index produced an average annual total return of less than +7% during 15 of the 61 decade-long periods (25% of the time). 19 of the 61 periods (31% of the time) resulted in an average annual total return of at least +14%. 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. DOWN AT FIRST – The S&P 500 lost 0.04% in January 2020 (total return), its first negative performance month since August 2019 and its first “down” January since 2016. Over the last 3 decades, i.e., 1990-2019, 12 of the 30 Januarys (40%) were “down” months, yet only 4 of the 12 years when January was “down” ultimately resulted in a negative performance for the S&P 500 over the entire calendar year. The 4 years when both January and the full year were negative over the last 3 decades were 1990, 2000, 2002 and 2008 (source: BTN Research).
3. THAT JOB WAS FILLED – The USA has tracked job openings nationwide since December 2000. The number of job openings as of November 2019 was 6.800 million, down 561,000 from the prior month, the 3rd largest month-over-month decline in the statistic’s history (source: Bureau of Labor Statistics).
4. HALF OF ALL TAXPAYERS – 50% of American taxpayers reported less than $41,740 of adjusted gross income for tax year 2017. There were 143.3 million tax returns filed for tax year 2017 (source: Internal Revenue Service).
5. LOOKING AHEAD – 41% of 1,903 young adults surveyed in January 2020 (adults between the ages 24-41) have less than $15,000 saved for their future retirement, while 24% of those surveyed have more than $100,000 saved for retirement (source: Bank of America Better Money Habits Millennial Report).
6. U.S. vs. EUROPE – The US economy grew by +2.3% in calendar year 2019, almost double the +1.2% growth rate achieved by the 19-nation Eurozone. Germany, the largest Eurozone economy, experienced just +0.6% growth in its economy in 2019 (source: Eurostat).
7. MAKING MONEY IN OIL – The price of oil (West Texas Intermediate) closed at $49.61 a barrel on 2/04/20, the first-time oil has closed below $50 a barrel since 1/08/19. The breakeven price for oil produced in the Permian Basin is estimated to be $50 a barrel. 2 million barrels a day are produced in the Permian Basin out of 13 million barrels a day produced by all US oil producers (source: Federal Reserve Bank of Dallas).
8. HOUSING – Of the 5.31 million new US households created in the last 3 years through 12/31/19, 96% (5.07 million) were “owner” households while only 4% (0.24 million) were “renter” households (source: Census Bureau).
9. BEST THEY CAN DO – 55% of renters have a household income of less than $45,000 before tax (source: Joint Center for Housing Studies of Harvard University).
10. TRADE DEAL – The first US trade agreement (the Reciprocal Trade Agreement Act) was signed by President Franklin D. Roosevelt in 1934 or 86 years ago (source: United States International Trade Commission).
11. VOTE – 136.8 million ballots were cast in the November 2016 presidential election, representing 59.2% of the “voting eligible population.” That means there were 94.2 million American adults who were eligible to vote but did not cast a ballot. “Voting eligible population” is equal to our nation’s “voting age population” less non-citizens, some people with felony convictions and US citizens residing overseas in US territories (source: USA.gov).
12. GOT A NEW CAR – Americans purchased 17.0 million new vehicles (cars and light trucks) in 2019, down from a record 17.5 million in 2016, but well ahead of the 10.4 million vehicle sales in 2009. American car buyers also purchased 40.4 million used cars in 2019, an all-time record for the United States (source: Statista).
13. IN JUST THREE STATES – 42% of the 2.06 million new jobs created nationally in calendar year 2019 occurred in Texas (342,800), California (310,300) and Florida (212,000) (source: Department of Labor).
14. HIGHEST AND LOWEST – 23.5% of Hawaii’s 574,000 workers belonged to a union in 2019, the highest percentage of union participation in the United States. Just 2.2% of South Carolina’s 2.14 million workers belonged to a union in 2019, the lowest percentage in the United States (source: Department of Labor).
15. SPRING IS IN THE AIR – Training camps for major league baseball teams open this week. The minimum salary for a major league baseball player for 2020 is $563,500. To rank in the top 1% of all US taxpayers (based upon 2017 tax data) required an adjusted gross income level of at least $515,371 (source: MLB).
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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.
Bill’s By The Number$
1. THE BOTTOM THIRD – The S&P 500 lost 0.04% (total return) in January 2020, a performance that ranks in the bottom 34% of monthly returns in the last 30 years, i.e., 2/1990 through 1/2020. 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. MOST IN A FEW – 10% of American households own 84% of all stocks in the country, including direct ownership of general securities and indirect ownership through mutual funds and other pooled accounts that are held both in pre-tax and post-tax accounts (source: Survey of Consumer Finances).
3. A DOWNTURN IS INEVITABLE, I THINK? – As of 2/01/20, the United States is beginning its 128th consecutive month of an economic expansion, the longest in our nation’s history based upon records maintained since 1854 (source: National Bureau of Economic Research).
4. WANTED: MORE BABIES – China had 14.6 million births in 2019, its smallest number since 1961. The USA had 3.8 million births in 2018, its smallest number since 1986 (source: National Bureau of Statistics).
5. THE IMPACT? – 9.3% of the world’s population is at least age 65 in 2020. 12.0% of China’s population is at least age 65 in 2020. 16.6% of the USA’s population is at least age 65 in 2020 (source: U.N. Population Division).
6. THE NEXT CENTURY – If you are having a daughter or granddaughter born in 2020, and that newborn girl lives an average female life expectancy of 81.2 years, she will live to the year 2101. Updated life expectancy numbers for American babies were released on 1/30/20 (source: Center for Disease Control).
7. REQUIRES BIGGER CONTRIBUTIONS – CalPERS is the largest state pension fund in the country with assets of $401 billion. CalPERS lowered its assumed rate of return (i.e., its discount rate) from 7.5% in fiscal year 2017 to 7.375% for fiscal year 2018 and announced on 1/21/20 an additional reduction to 7.0% (source: CalPERS).
8. FEWER TOOLS AVAILABLE – The Fed cut short-term interest rates by 5 percentage points during the nation’s last recession (a downturn that ran from 12/2007 to 6/2009), an action that could not be replicated today since the Fed’s key short-term rate is 1.75% (source: Federal Reserve).
9. BELOW TWO – The yield on the 10-year Treasury note has closed below 2% for 125 consecutive trading days through Friday 1/31/20, the longest stretch below 2% since November 2016 (source: Treasury Department).
10. FALLING BEHIND – Over the last 25 years, i.e., 1/01/95 to 12/31/19, inflation in the United States (using the “Consumer Price Index”) has increased +71.7% or +2.2% annually. An individual living on a fixed-income who has not benefited from “cost-of-living” increases would have only 58% of the purchasing power as of 12/31/19 that he/she had 25 years earlier. The consumer price index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).
11. LESS THAN FIFTY BUCKS A DAY – There were 64 million Americans receiving monthly benefits from Social Security in December 2019, including retired workers, spouses and children of retired workers, survivors of deceased workers, and disabled people. 70% of the 64 million (45 million people) were retired workers receiving an average monthly benefit of $1,503 or $49.41 per day before-tax (source: Social Security).
12. FINALLY – The United Kingdom exited from the European Union (EU) last Friday 1/31/20, more than 3 ½ years after the Brexit vote that took place on 6/23/16 set in motion the sovereign divorce that was initially approved by 52% of UK voters. 72.2% of eligible UK voters cast a ballot in the 2016 Brexit referendum. The highest percentage of eligible voters to cast a ballot in a US presidential election in the last 100 years is 62.8% in 1960. The UK joined the EU in 1973 (source: NBC News).
13. EXPENSIVE DEGREE – A Harvard law degree costs $65,875 in annual tuition, not counting room, board and books. Law school typically last 3 years (source: Harvard University).
14. LOAD UP THE TRUCK – People who move to Topeka, KS beginning in calendar year 2020 and live and work in the city for 1 year are eligible for a $10,000 award if they rent or $15,000 if they buy a home. The funds are designed to attract workers to Topeka (source: Greater Topeka Partnership).
15. SUPER BET – Prior to the 2/02/20 Super Bowl # 54, the underdog in the big game had won just 17 of 53 games but had won 7 of the last 12 games. The San Francisco 49ers were 1 ½ point underdogs in yesterday’s football game vs. the Kansas City Chiefs (source: BTN Research).
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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.
Bill’s By The Number$
1. FIRST QUARTER – Over the last 30 years (1990-2019), the S&P 500 has gained an average of +2.28% (total return) during the 1st quarter (January-February-March), a total that represents 23% of the index’s 30-year average annual return of +9.96%. 47% of the index’s overall gain has occurred during the 4th quarter (October-November-December) over the last 30 years. 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. RED AND BLUE PROBLEM – The national debt increased +86% during George W. Bush’s 8 years as president, reaching $10.63 trillion as of 1/20/09. The national debt increased +88% during Barack Obama’s 8 years as president, reaching $19.95 trillion as of 1/20/17. The national debt has increased +16% during Donald Trump’s first 3 years in the White House, reaching $23.2 trillion as of 1/20/20 (source: Treasury Department).
3. ARE YOU HONEST? – Only 1 out of every 222 individual tax returns, i.e., 0.45%, was subject to an audit during the US government’s fiscal year that ended 9/30/19 (source: Internal Revenue Service).
4. AT A MINIMUM – 21 US states increased their state-mandated minimum wage as of 1/01/20. The highest minimum wage in the nation is $13 an hour in California (source: National Conference of State Legislatures).
5. LONG-TERM TREND – 29.3% of American workers belonged to a union in 1964. Just 10.3% of American workers belonged to a union in 2019 (source: Department of Labor).
6. 10/20/30 – The Treasury Department announced on 1/16/20 that it will begin selling 20-year bonds before 6/30/20, a reintroduction of a debt instrument last used in March 1986. The 20-year Treasury bonds will be an addition to the existing quarterly auctions of 10-year notes and 30-year bonds (source: Treasury Department).
7. ADVANTAGE: SELLERS – The number of existing single-family homes for sale has been tracked nationally since July 1982, i.e., for nearly 4 decades. The total peaked in July 2007 at 3.4 million but has now fallen to its all-time low of 1.22 million in December 2019 (source: National Association of Realtors).
8. UNLIKELY – The Fed Funds futures market is forecasting an 87% chance of no change in rates by the Federal Reserve at this week’s meeting as of the close of trading last Friday 1/24/20 (source: CME Group).
9. LOWEST IN A LONG TIME – China’s economy grew by +6.1% in 2019, its lowest year-over-year growth rate nationally since 1990 or 29 years earlier (source: National Bureau of Statistics).
10. THREE – If the USA’s GDP growth for 2019 that will be reported on 1/30/20 shows an increase of at least +3% for last year, it will end a record streak of 13 consecutive years of “sub +3%” growth (2006-2018). The next longest streak in our history of “sub +3%” growth are the 4 years from 1930-1933 (source: Commerce Department).
11. A HUNDRED YEARS – U.S. field production of crude oil was 13.0 million barrels a day for the week ending 1/17/20, the highest total recorded in our nation’s history based upon data maintained since January 1920 (source: Department of Energy).
12. STILL A TRADE WAR – Even after the signing of a “Phase 1” trade truce on 1/15/20, the average tariff imposed by China on US exports is 21%, and the average tariff imposed by the US on Chinese exports is 19%. When the current China/US trade war began in February 2018, the average tariff imposed by China was 8% and the average tariff imposed by the US was 3% (source: Peterson Institute for International Economics).
13. LONG ROAD BACK – The Omaha School Employees Retirement System pension plan identified a $771 million shortfall in its funding efforts in January 2019. A proposal that is now being considered would impact all retirees and current employees by lowering annual cost-of-living adjustments in 2024, reducing pensions for new hires made after 7/01/21 and requiring larger employer contributions in 2021. The proposal projects 80% funding for the pension plan within 17 years and 100% funding within 30 years (source: Omaha World Herald).
14. FAMOUS MUSCLE CAR – The 1968 Ford Mustang Bullitt GT driven by actor Steve McQueen in the 1968 movie “Bullitt” was purchased by private investor Robert Kiernan for $3,500 in 1974. Kiernan’s son Sean sold the car at auction in Florida on Friday 1/10/20 for $3.4 million, resulting in an annual pre-tax gain of +16.1% over the entire 46-year holding period (source: Mecum Auctions).
15. GOLFING LONGEVITY – 49-year old Phil Mickelson was ranked as one of the top 50 golfers in the world for 1,353 consecutive weeks (26 years) until early November 2019 (source: PGA).
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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.
Bill’s By The Number$
1. STOCKS OVER TIME – As of 12/31/19, the S&P 500 was “up” 74 of the last 100 months (74%), 140 of the last 200 months (70%) and 202 of the last 300 months (67%). 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. TRUMP STOCK MARKET – Donald Trump was sworn in as the nation’s # 45 president 3 years ago today (1/20/17). The S&P 500 has gained +16.0% per year (total return) over the 3 years. That result is above the index’s trailing 50-year average annual return of +10.6% achieved over the 5-decade period from 1970-2019 (source: BTN Research).
3. NOT EXPANDING BUT SHRINKING – The economies of 9 of the 50 US states are forecasted to “contract” over the next 6 months, the greatest number of states projected to suffer economically since July 2009. The 9 states are West Virginia, Pennsylvania, Delaware, Montana, Oklahoma, Vermont, New Jersey, Kentucky and Connecticut (source: Federal Reserve Bank of Philadelphia).
4. CONCENTRATED – There are 3,142 counties in the United States. Just 31 counties, or 1% of 3,142, produce 32% of the nation’s GDP. Gross Domestic Product (GDP) is the annual market value of all goods and services produced domestically by the US (source: Bureau of Economic Analysis).
5. REALLY LOW – Inflation, as measured by the “Consumer Price Index” (CPI), was up +2.3% for 2019. For the decade of the 2010s, inflation was up just +1.8% per year, the lowest decade of inflation in the USA since the 1930s. By comparison, the decade of the 1970s suffered +7.4% annual inflation (source: Department of Labor).
6. A KILLER – Heart disease is responsible for almost 1 of every 4 deaths (23%) in the United States annually, i.e., 647,000 deaths out of 2.835 million total deaths in 2019 (source: Center for Disease Control).
7. THEY OWN IT NOW – Banks foreclosed on 143,955 homes nationwide in 2019, down 37% from 230,305 foreclosures in 2018 and down 51% from 291,579 foreclosures in 2017. The worst single month of foreclosures in US history – 102,134 foreclosures in September 2010 (source: ATTOM Data Solutions).
8. PAYING FOR STUFF – 64% of 4,441 Americans surveyed in the 4th quarter 2019 indicated they “strongly or somewhat agree” that a “wealth tax” on the “very rich” is an appropriate method to “support public programs” in the United States (source: Reuters/Ipsos Poll).
9. DOWN FROM SEVENTY PERCENT – The top marginal income tax rate for individual taxpayers has been reduced 8 times since 1980, i.e., 8 times in the last 40 years (source: Tax Policy Center).
10. I HAVE TO TELL YOU EVERYTHING? – The IRS estimates that US taxpayers voluntarily pay 83.6% of the federal income taxes that would be paid if all taxpayers were completely honest, the result of tax returns not being filed, income being underreported, and taxes being underpaid. IRS enforcement, i.e., audits, has increased the “net compliance rate” to 85.8% (source: Internal Revenue Service).
11. CHANGE IN THE LAW – The newly passed SECURE Act allows Americans to withdraw money from a pre-tax 401(k) or IRA without paying a 10% penalty for an “early withdrawal” if the funds are used to cover costs related to childbirth or adoption. The withdrawal would be subject to ordinary income tax. Please consult a tax expert for details (source: SECURE Act).
12. MORE WOMEN THAN MEN – For the 1st time since April 2010, women make up the majority of the US workforce. As of the end of December 2019, there were 76.246 million American women working full-time, vs. 76.137 million American men. In the last 12 months, 1.52 million working women have secured jobs, more than double the 586,000 men that have joined the workforce (source: Department of Labor).
13. WHAT IF? – The average interest rate paid by the US government on its interest-bearing debt was 2.429% as of 12/31/19, more than two percentage points less than the 4.508% paid as of 12/31/04, i.e., 15 years ago (source: Treasury Department).
14. SOLDIERS – The US military has at least 10,000 troops today in each of 3 different countries – Afghanistan (14,000), Kuwait (13,000) and Qatar (13,000) (source: Washington Post).
15. SUPER GAME – Super Bowl # 54 will be held in Miami on 2/02/20. No team in NFL history has ever played in the Super Bowl on their home field. Next year’s game (2021) will be played in Tampa, FL (source: NFL).
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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.