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Bill’s By The Number$

1. BULL MARKET STATS – Since bottoming on 3/09/09 (just short of 9 years ago), the S&P 500 has gained +401% (total return), an annualized +19.9% per year, and produced 198 all-time record closing highs. The most recent record close was on Friday 1/19/18. 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. TRILLIONS – The US stock market was worth $29.6 trillion as of 12/31/17. The S&P 500 makes up 81% of the total US stock market capitalization as of 12/31/17, equal to $23.9 trillion (source: BTN Research).

3. TRUMP STOCK MARKET – The S&P 500 gained +26.2% (total return) during the 1st year of the Trump administration, i.e., the 12 months from President Trump’s 1/20/17 inauguration through 1/20/18. That result is more than double the index’s trailing 50-year average annual return of +10.1% achieved over the 5-decade period from 1968-2017 (source: BTN Research).

4. LESS THAN FIVE PERCENT – The US population was 327 million as of 1/01/18, 4.4% of the world’s population (7.44 billion) as of that date (source: Census Bureau).

5. ABOUT THE SAME – The average price of gasoline nationwide was $2.54 a gallon as of Friday 1/19/18. The average price of gasoline nationwide in 1968 (i.e., 50 years ago) was 34 cents. After adjusting for 50 years of inflation, the 34 cent price in 1968 is equivalent to $2.47 in 2018 dollars (source: AAA, Department of Labor).

6. CROWDING OUT OTHER EXPENSES – California’s pension contribution is $8.5 billion during the current 2017-18 fiscal year for the defined benefit plans covering its 1.5 million state employees, both active and retired (i.e., general state workforce, police, firefighters, highway patrol officers and teachers). The pension contribution was just $1.6 billion in 2002-03 and is projected to be at least $17.3 billion in 2029-30 (source: Stanford Institute for Economic Policy Research).

7. DOLLAR CUT-OFFS – For tax year 2015 (the latest year that tax data has been released), it took $480,930 of adjusted gross income (AGI) to rank in the top 1% of taxpayers, $195,778 of AGI to rank in the top 5%, $138,031 of AGI to rank in the top 10%, and $79,655 of AGI to rank in the top 25% (source: Tax Foundation).

8. TOP ONE – The top 1% of taxpayers in tax year 2015 made at least $480,930 of adjusted gross income (AGI), received 21% of all AGI and paid 39% of all federal income tax (source: Internal Revenue Service).

9. RENT NOT OWN – The United States has added 8 new “renter” households in the last decade for every 1 new “owner” household, a total of 7.8 million new “renters” vs. 965,000 new “owners” (source: Census Bureau).

10. AT LEAST SIXTY – The price of crude oil has closed above $60 a barrel each trading day in 2018, finishing last Friday 1/19/18 at $63.37 a barrel. Before the last trading day of 2017 (Friday 12/29/17) when oil closed at $60.12 a barrel, the last time oil had closed above $60 a barrel was 6/24/15 (source: NYMEX).

11. CHANGING THE RULES – Kentucky is the 1st state to require Medicaid beneficiaries to complete a monthly “work requirement” effective as of July 2018. Kentucky will require 80 hours a month of “work, school, job skills training or community service” in order to retain Medicaid benefits. 9 other states, including North Carolina and Arizona, have applied for a federal waiver to also implement Medicaid work requirements. 23% of Americans (74 million folks) are on Medicaid today (source: Medicaid).

12. GET OUT OF DODGE – For every 2 families that moved into Vermont last year, just 1 family moved out, making Vermont the “top moving destination” state. For every 1 family that moved into Illinois last year, 2 families moved out, placing Illinois last on the same list (source: United Van Lines).

13. WHAT IF? – The average interest rate paid by the government on its interest bearing debt was 2.309% as of 12/31/17, less than half of the 4.838% paid as of 12/31/07, i.e., 10 years ago (source: Treasury Department).

14. HEAD FED – Janet Yellen’s 4-years as Federal Reserve Chair ends on Wednesday 1/31/18 with her 32nd and final meeting. During Yellen’s term as Fed Chair, the nation’s central bank implemented 5 rate hikes and began reversing the $4 trillion of bond purchases made over the 6 years of 2008-14 during “Quantitative Easing,” a innovative program started under Fed Chair Ben Bernanke (source: Federal Reserve).

15. SUPER GAME – If Minnesota beat Philadelphia in the NFC Championship game to advance to Super Bowl # 52, they will be the first team in NFL history to play in the Super Bowl on their home field (source: NFL).

 

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Copyright © 2018 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. WHAT THEY THOUGHT – At the end of 2016 (12/17/16), 10 Wall Street equity strategists forecasted the closing value of the S&P 500 as of 12/31/17. Their predictions ranged from a low of 2300 to a high of 2575, up from an actual 12/31/16 close of 2239. The actual 12/31/17 closing value for the S&P 500 was 2674, equal to a +21.8% total return result. The actual index close exceeded all 10 predictions. 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: Barron’s).

2. NOT CRAZY AT ALL – With the Dow at 12,500 in June 2012, Seth Masters, the chief investment officer at Bernstein Global Wealth Management, predicted the 30-stock index would cross 20,000 by 2020. The Dow first closed above 20,000 on 1/27/17 and closed at 25,296 on Friday 1/05/18. The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 US stocks representative of the overall economy (source: Wall Street Journal).

3. FEAR – The 2000-02 bear market for stocks hit bottom on 10/09/02. The S&P 500 hit a bear market low on that date. The headline in USA Today the following morning (10/10/02) was “Where’s the bottom? No end in sight.” From that bear low, the S&P 500 gained +102% before peaking 5 years later on 10/09/07 (source: USA Today).

4. NOT EXACTLY – USA Today writer Kelly Kennedy predicted in a 5/22/13 article that “market forces and an impetus to attract younger, healthier people into the insurance market will help keep health insurance premiums lower as the Affordable Care Act takes effect on 1/01/14” (source: USA Today).

5. COMPARED TO WHAT? – The 11/26/12 issue of Time magazine ran an article titled “Why Stocks are Dead” which documented the gloomy equity forecast of money manager Bill Gross. The S&P 500 closed at 1406 on 11/26/12. The S&P 500 closed at 2743 on 1/05/18 (source: Time).

6. BEAR – Marc Faber, editor of the “Gloom, Boom & Doom Report” predicted on 8/09/16 that the S&P 500 was “set to crash 50%.” From an 8/09/16 close of 2182, the index rose +26% to 2743 by 1/05/18 (source: CNBC).

7. OFF JUST A BIT – In January 2007, the Congressional Budget Office forecasted a $249 billion surplus in fiscal year 2017 (i.e., $4.284 trillion of tax receipts less $4.034 trillion of outlays). Fiscal year 2017 actually produced $3.315 trillion of tax receipts less $3.981 trillion of outlays, a $666 billion deficit (source: CBO).

8. SO WRONG – In January 2007, the Congressional Budget Office forecasted that our nation’s “debt held by the public” would fall from $4.843 trillion as of 9/30/06 to $4.274 trillion as of 9/30/17. Instead, our “debt held by the public” has risen to $14.673 trillion, more than $10 trillion greater than the CBO estimate (source: CBO).

9. CLOSE – David Rees of Capital Economics predicted in the Financial Times on 8/08/16 that the yield on the 10-year Treasury note, at 1.59% on that date, would rise to 3% in 2017. Actual 2017 high: 2.50% (source: FT).

10. WHEN? – Social Security trustees announced on 7/13/17 that the trust fund backing the payment of Social Security benefits (OASI benefits) would be zero in 2035. When the trustees released their report in 2007, the Social Security Trust Fund was projected to be depleted in 2042 (source: Social Security Trustees Reports).

11. GOING AWAY – In July 2017, Dr. James Canton, CEO of the Institute of Global Futures in San Francisco, predicted the following 6 things will no longer exist within a decade: keys, parking meters, cash, brick-and-mortar banks, TVs, and telephones (source: NBC News MACH).

12. OIL – With oil at $44 a barrel on 9/05/16, RBC’s global head of commodity strategy Helima Croft predicted the price of oil will rise to $60 in 2017. Oil closed at $60.12 a barrel on 12/29/17, its high for the year (source: CNBC).

13. CAMPAIGN RHETORIC? – Our economy begins its 103rd month of growth this week, an expansion exceeded in length only 2 times since 1900. Then candidate Donald Trump predicted on 4/02/16 that the US is on course for a “very massive recession” because the country is “sitting on an economic bubble” (source: Reuters).

14. DIDN’T HAPPEN – Savita Subramanian, head of US equity strategy at Bank of America-Merrill Lynch, predicted on 10/09/16 that the US will “hit a recession sometime in the 2nd half of 2017” (source: CNBC).

15. WHO KNEW? – The 8/14/17 issue of Sports Illustrated predicted the final 4 teams in college football this season would be Alabama, Florida State, Ohio State and Oklahoma State. 1 of the 4 teams (just Alabama) made it to the final 4. University of Central Florida, the only undefeated FBS team at year end, was unranked in SI’s preseason top 25 (source: Sports Illustrated).

 

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2018 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. THE FOUR LARGEST – 1 out of every 3 Americans (33%) lives in just 4 US states – California, Texas, Florida and New York. These 4 states were home to 107.5 million citizens at the end of 2016 out of our nation’s population of 323.1 million (source: Census Bureau). 1/30/17 #10

2. TAKES TIME – From President Ronald Reagan’s State of the Union challenge on 1/25/84 “to simplify the entire tax code so all taxpayers are treated more fairly,” it took 2 ¾ years until the Tax Reform Act of 1986 was signed into law by Reagan on 10/22/86 (source: New York Times). 2/13/17 #5

3. DO I REALLY NEED IT? – Only 36% of all jobs in the United States require education beyond high school, i.e., 64% of American jobs require a high school diploma or less. 27% of jobs do not require any formal educational credential (source: Department of Labor). 2/27/17 #8

4. DEFERRED PAYMENTS – Instead of paying professional baseball player Bobby Bonilla $5.9 million (as owed) in 1999, the New York Mets negotiated to pay Bonilla $1,193,248.20 every July from 2011 through 2035, a total of $29.8 million over 25 years (source: New York Mets). 4/03/17 #15

5. PERSONALIZED MEDICINE – 10 years ago, it cost $10 million and took several weeks to “sequence a genome,” i.e., mapping out a person’s entire genetic code. Today, the work can be completed for $1,000 in just a few hours (source: Financial Times). 4/10/17 #14

6. JOBS, JOBS, JOBS – Each one-tenth of one percentage point increase in our GDP (e.g., 2% growth to 2.1%) due to a rise in manufactured goods translates into +80,000 new American jobs (source: Commerce Department). 4/17/17 #7

7. BUILDING NEW HOMES – Permits for the construction of 6.14 million single family homes were issued during the 4 years of 2003-2006. Permits for the construction of 6.08 million single family homes were issued during the 10 years of 2007-2016 (source: Joint Center for Housing Studies of Harvard University). 7/10/17 #14

8. WHO PAYS? – A 1986 federal law (“Emergency Medical Treatment & Labor Act”) requires hospitals to provide emergency services regardless of a patient’s ability to pay. Every uninsured person costs a hospital an average of $900 per year in uncompensated care (source: Craig Garthwaite, Northwestern University). 7/17/17 #11

9. A LOT IN A FEW – Of the 524 bank failures that have occurred in the USA during the 10 years ending 6/30/17, more than half (51%) have occurred in the 4 states of Georgia, Florida, Illinois and California. 9 US states had zero bank failures in the last 10 years (source: Federal Deposit Insurance Corporation). 8/07/17 #7

10. IN AND OUT – The USA imports 22% less oil than it did just a decade ago. Oil imports averaged 7.9 million barrels a day in 2016, down from 10.1 million barrels a day in 2006. Total petroleum exports from the United States have quadrupled over the last decade, rising from 1.3 million barrels a day in 2006 to 5.2 million barrels a day in 2016 (source: Department of Energy). 9/11/17 #8 and #9

11. DEDUCTION GOING AWAY? – Among the numerous recommendations in the 9/27/17 Trump plan for tax reform was the elimination of the individual deduction for state and local taxes, including property taxes. Taxpayers in just 2 states (California and New York) utilize 33% of the deduction (by dollar) and just 6 states get 51% of the deduction’s use (source: Internal Revenue Service). 10/09/17 #11

12. GROWING – The US economy has been growing for the last 99 months (i.e., no recession), an expansion exceeded in length only 2 times since 1900 (source: National Bureau of Economic Research). 10/16/17 #5

13. SHIFT IN TYPE – In 1975, defined contribution plans outnumbered defined benefit plans 2-to-1, i.e., 207,700 to 103,300. 40 years later in 2015, defined contribution plans outnumbered defined benefit plans 14-to-1, i.e., 648,300 to 45,600 (source: Government Accountability Office). 10/30/17 #13

14. MORE AND MORE RENTERS – The 111.4 million households that existed in the United States on 9/30/09 were split between 75.3 million owners and 36.1 million renters. The 119.1 million households in the United States on 9/30/17 were split between 76.2 million owners and 42.9 million renters (source: Census Bureau). 11/06/17 #4

15. JOBS LOST – An analysis of 97,500 mergers and acquisitions that occurred across 68 countries around the world between 2004-2016 estimates that with a maximum 20% top corporate tax rate in place (instead of the current 35% top rate) that the United States would have retained 4,700 domestic companies that instead became foreign-owned over the 13-year period (source: Ernst & Young). 11/20/17 #12

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. THROUGH NOVEMBER – The S&P 500 gained +3.1% (total return) in November, making it 20 of the last 21 months (including 13 months in-a-row) in which the index has posted a positive result. 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. LOSERS LAST YEAR – An equal investment at the end of 2016 into the 6 stocks in the S&P 500 that lost at least 40% last year is up a collective +25.8% YTD as of Thursday 11/30/17 (source: BTN Research).

3. WINNERS LAST YEAR – An equal investment at the end of 2016 into the 7 stocks in the S&P 500 that gained at least +70% last year is up a collective +22.0% YTD as of Thursday 11/30/17 (source: BTN Research).

4. RISK/REWARD – 144 individual stocks in the S&P 500 (i.e., 29% of the stocks in the index) gained at least +30% during the first 11 months of 2017 (change of the stock price without including the impact of reinvested dividends) including 49 stocks that are up at least +50% YTD through 11/30/17. 131 stocks (26% of the stocks in the index) have dropped in value since the end of 2016 (source: BTN Research).

5. EMPLOYMENT SITUATION – Our country’s 147.0 million employees are split 85/15 between the private sector (i.e., non-government workers) and the public sector (i.e., government workers) (source: Department of Labor).

6. BACK TO BOOM LEVELS – The median sales price of existing homes sold nationally in October 2017 is 108% of the median sales price of existing homes sold nationally in June 2007, the latter date being the peak of the real estate boom. Sale prices in the Northeast have not completely bounced back. The October 2017 median sales price in the Northeast is just 93% of its June 2007 median sales price (source: National Association of Realtors).

7. DONE THIS BEFORE – The House’s “Tax Cuts and Jobs Act” proposes a 1-time tax of 14% on the estimated $2.6 trillion of profits held in overseas subsidiaries of US multinational firms. The 14% proposed tax rate would replace the existing 35% top marginal rate that may be deterring movement of the funds back to America today. The Senate’s version of tax reform proposes a 1-time tax of 14.5%. A similar tax holiday was utilized in 2005 when a 5.25% one-time tax incentive (also down from a top marginal corporate tax-rate of 35%) motivated American businesses to repatriate $360 billion back to the USA (source: Internal Revenue Service).

8. COLLEGES – The “Tax Cuts and Jobs Act” has proposed a 1.4% levy on the investment income from the endowments of private colleges, earnings that are currently untaxed. E.g., Harvard’s $37.1 billion endowment would have owed $39 million on the $2.8 billion it earned in fiscal year 2017 (source: Harvard University).

9. LONG-TERM GUESS – When President Franklin D. Roosevelt proposed the Social Security retirement program in 1935, FDR’s financial people projected that total Social Security expenditures would reach $1.3 billion in 1980 or 45 years into the future. Actual outlays in 1980 were $149 billion. Thus, the analysts’ 1935 estimate represented less than 1% of actual 1980 Social Security expenditures (source: Social Security).

10. SEE A TREND? – The US economy grew by +4.2% per year over the 24 years from 1950 through 1973, a period of worldwide economic expansion. The US economy grew by +3.2% per year over the 27 years from 1974 through 2000. The US economy has grown by +1.8% per year over the last 16 years from 2001 through 2016 (source: Commerce Department).

11. OPEN ENROLLMENT – 12.2 million Americans signed up a year ago for their 2017 health insurance via the federal exchange or through a state-run exchange (source: Affordable Care Act).

12. FRIDAY DEADLINE – Congress must pass a fiscal year 2018 budget by midnight on Friday 12/08/17. If Congress does not agree on a 2018 budget by that date and if they do not extend the “continuing funding resolution” that expires on 12/08/17, our 13th government shutdown since 1980 will occur (source: BTN Research).

13. SHRINKING – Detroit was the 5th largest city in the United States in 1950 with 1.9 million people. Detroit is currently the 23rd largest city in the United States with 673,000 people (source: Census Bureau).

14. GROWING – Phoenix was the 99th largest city in the United States in 1950 with 107,000 people. Phoenix is currently the 5th largest city in the United States with 1.6 million people (source: Census Bureau).

15. COSTLY – Auburn fans who rushed the field following its upset of # 1 ranked Alabama on 11/25/17 cost the school $250,000. The SEC implemented a policy in 2004 that levies fines when spectators leave the stands and enter the playing field after a game. Auburn has been fined 3 times since 2013 (source: SEC).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. STREAKING – The S&P 500 is up +1.2% (total return) for the “month to date” with just 4 trading days remaining in November. If the index does finish “up” for the month, it would be its 13th consecutive “up” month, the best run for the S&P 500 since it ran off 15 straight months of gains from March 1958 through May 1959. 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. HOW OFTEN? – In the 70 years from 1947-2016, the S&P 500 had 27 declines of at least 10% but less than 20% or once every 2.6 years. A correction is defined as a stock market decline of at least 10% but less than 20%. In the 70 years from 1947-2016, the S&P 500 had 11 declines of at least 20% or once every 6.4 years. A bear is defined as a stock market decline of at least 20% (source: BTN Research).

3. THE LAST TIME – The last “10% correction” for the S&P 500 was a 13.3% drop over the 3 months that ended 2/11/16. The last “20% or more bear” for the S&P 500 was a 56.8% drop over the 17 months that ended 3/09/09 (source: BTN Research).

4. SMALL RANGE – For the 7 years from 2010 to 2016, the S&P 500 experienced 417 trading days in which the index gained or lost at least +1% (total return) for the day, an average of 60 per year. YTD through Friday 11/24/17, the S&P 500 has produced just 9 trading days of “1% up-or-down” movement (source: BTN Research).

5. LOW-TAX STATES – The House’s “Tax Cuts and Jobs Act” retains the deductibility of property taxes up to a maximum of $10,000 per year. Of the 10 states with the smallest average property taxes, President Trump carried 8 of the 10 states in the 2016 presidential election (source: Internal Revenue Service).

6. HEALTH CARE – 23% of health care spending in the USA is incurred by just 1% of Americans. The healthiest 50% of Americans account for just 3% of total health care spending nationally. Prior to the passage of the Affordable Care Act in 2010, 35 states had “high-risk” pools to insure their high-cost sicker citizens (source: KFF).

7. WHAT EACH PAYS – The total cost of Medicaid ($566 billion in calendar year 2016) is shared between the federal government and the 50 state governments. Nationally the split of Medicaid expenses is 57% paid by the federal government and 43% paid by state governments. On average, Medicaid represents 24% of state expenditures (source: National Association of State Budget Officers).

8. STILL THE AMERICAN DREAM? – The national homeownership rate in the USA as of 9/30/17 was 63.9%, down from a peak of 69.2% as of 12/31/04. Every 1 percentage point reduction in the homeownership rate represents 1.2 million households that have changed from homeowner to renter status (source: Census Bureau).

9. SILICON VALLEY REAL ESTATE – Just 3% of 75 million homes in the United States have a fair market value of at least $1 million. 57% of homes in San Francisco and 46% of homes in San Jose are worth at least $1 million (source: Trulia).

10. LESS THAN HALF THE AVERAGE – The average 30-year fixed rate mortgage over the last 45 years is 8.26%. The average 30-year fixed rate mortgage as of 11/22/17 was 3.92% (source: Freddie Mac).

11. BACKSTOP – The Pension Benefit Guaranty Corporation (PBGC) was forced to take over an average of 10 failed pension plans per month over the last 15 fiscal years (2003-2017) or 1,767 pension plans over the 15 years. The PBGC protects defined benefit pension plans in the private (non-government) sector (source: PBGC).

12. EVERY DAY – An estimated 10,100 Americans will turn 65 years old each day next year (2018). This group represents the 8th 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. LONG LINE – There are 116,169 Americans on a national waiting list hoping to receive an organ donation, of which 96,335 people need a new kidney. 20 Americans die each day waiting for an organ transplant that never comes (source: Organ Procurement and Transplantation Network).

14. BAILOUT NEEDED? – The US Postal System last earned a profit in fiscal year 2006. Since then, the USPS has lost money for 11 consecutive years, including a $2.7 billion loss for the fiscal year that ended on 9/30/17, equal to a daily loss of $7.4 million (source: USPS).

15. WOW – Alabama has been ranked # 1 or # 2 in the nation going into its annual “Iron Bowl” showdown with Auburn in 9 of the last 10 years, including last Saturday’s 11/25/17 game (source: BTN Research).

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. LATE IN THE YEAR – The S&P 500 index has closed at its calendar year high during the month of December in 18 of the last 32 years, i.e., 1985-2016. The index’s high close (so far) during 2017 (a value of 2594) was achieved on Wednesday 11/08/17. 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. FIRST YEAR OF FOUR YEARS – 2017 is the 1st year of Donald Trump’s first 4-year presidential term. The S&P 500 has been positive on a total return basis during just 11 of the last 20 “presidential 1st years.” The S&P 500 is up +17.3% YTD (total return) through the close of trading on Friday 11/17/17 (source: BTN Research).

3. GOOD RESULT – The trailing 1-year performance of the S&P 500 has been a gain of at least +16% (total return) at the end of every month this year through 10/31/17 (source: BTN Research).

4. WE TEACH THE WORLD – 60% of the 1,078,822 foreign students studying at American colleges during last year’s school year (2016-17) are natives of China, India, South Korea or Saudi Arabia. New York University (NYU) and the University of Southern California (USC) have the most foreign students in the United States (source: Institute of International Education).

5. WE SELL, THEY BUY – US exports of goods and services to China have increased tenfold since 1999, rising from $17 billion in 1999 to $170 billion in 2016 (source: Commerce Department).

6. SOME PAID, SOME DID NOT – Americans filed 150.5 million tax returns in tax year 2015. 66% of the returns (99.0 million) paid federal income tax while 34% of the returns (51.5 million) did not pay any federal income tax (source: Internal Revenue Service).

7. NO FEDERAL INCOME TAXES – 54% of the American taxpayers (49.8 million out of 92.4 million returns) that reported adjusted gross income less than $50,000 during tax year 2015 legally did not pay any federal income tax (source: Internal Revenue Service).

8. MADE A LOT AND PAID A LOT – The 6.75 million tax returns from tax year 2015 that reported at least $200,000 of adjusted gross income (AGI) represent 4% of all the tax returns filed, received 43% of all AGI nationwide and paid 59% of all the federal income tax that was paid nationally in 2015 (source: Internal Revenue Service).

9. STRONGER BANKING SYSTEM – Only 7 banks have failed in the United States YTD through 11/15/17, on pace to be the 3rd consecutive year of fewer than 10 failures. Over the 7 years from 2008-14, 507 banks failed, an average of 72 per year. 157 banks failed in 2010 alone (source: Federal Deposit Insurance Corporation).

10. IMPACTS JUST A FEW – The House version of the “Tax Cuts and Jobs Act” would limit the deduction of mortgage interest expense to that created by debt of $500,000 or less. Just 7% of the 7.7 million home mortgages originated in 2016 were for loans that exceeded $500,000 (source: Inside Mortgage Finance).

11. NO CHANGE FOR MOST – The House version of the “Tax Cuts and Jobs Act” eliminates the state and local tax deduction on Form 1040, Schedule A, except for a maximum $10,000 deduction for property taxes. Just 5% of homeowners nationwide (3.7 million out of 75.6 million homeowners) paid more than $10,000 of property taxes in 2016 (source: National Association of Home Builders).

12. JOBS LOST – An analysis of 97,500 mergers and acquisitions that occurred across 68 countries around the world between 2004-2016 estimates that with a maximum 20% top corporate tax rate in place (instead of the current 35% top rate) that the United States would have retained 4,700 domestic companies that instead became foreign-owned over the 13-year period (source: Ernst & Young).

13. GROWING ECONOMY – Commerce Secretary Wilbur Ross estimates that a +1% increase in our nation’s GDP would equate to $3 trillion of additional tax revenue to our government over the next 10 years. The United States collected $27 trillion of tax revenue over the last 10 fiscal years (source: Office of Management and Budget).

14. LOTS OF BORROWING – Student loan debt nationwide has increased +7.3% annually over the last 5 years, i.e., from 9/30/12 to 9/30/17, rising from $956 billion to $1.36 trillion. Outstanding auto loans ($1.213 trillion) are less than outstanding student loans (source: Federal Reserve Bank of New York).

15. PERFECT – Of the 130 Division 1 FBS football schools (using 85 scholarships per team), just 4 teams are undefeated as of 11/15/17 – Alabama, Miami, Wisconsin and the University of Central Florida (source: ESPN).

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. WASHINGTON AND WALL STREET – 2017 has had a Republican in the White House and Republicans controlling both the House and the Senate. Over the last 80 years, the S&P 500 has gained +10.7% per year (total return) when the White House and Congress were controlled by the same political party. With only 7 trading weeks remaining in 2017, the S&P 500 is up +17.3% YTD (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. SINCE THE 2016 ELECTION – Donald Trump was elected as the 45th President of the United States on 11/08/16. In the 12 months since the 2016 election, i.e., 11/08/16 to 11/08/17, the S&P 500 gained +23.7% (total return), more than twice the average annual +10.2% gain that the index has achieved over the last half century, i.e., 1967-2016 (source: BTN Research).

3. DID I SAY THAT? – University of Pennsylvania finance professor Jeremy Siegel said he “wouldn’t be surprised to see a 1,000 point drop on the Dow” following Donald Trump’s victory on 11/08/16. The Dow gained +5,231 points in the 1 year since the election through the close of trading on 11/08/17 (source: BTN Research).

4. NEW PAPER – The US issued $15 billion of new 30-year debt last week. The bond carries a 2.75% coupon with an 11/15/2047 maturity date. 30-year Treasury debt has been traded since 1977 (source: Treasury Department).

5. INCREASE EVERYONE – Individual income taxes paid by American taxpayers would have to increase by +42% in order to eliminate our $666 billion deficit from fiscal year 2017 (source: Treasury Department).

6. COMPLETE CYCLE – The jobless rate in the United States was 5.0% in October 2005, then doubled to 10.0% by October 2009, and now has come full circle to 4.1% in October 2017. The last time we had an unemployment rate that was lower than 4.1% was in December 2000 or almost 17 years ago (source: Department of Labor).

7. ONE YEAR – As of the end of October 2016, the USA was domestically producing 8.5 million barrels of crude oil per day while we were importing 9.0 million barrels. As of the end of October 2017, the USA was domestically producing 9.6 million barrels of crude oil per day while we were importing 7.6 million barrels. Thus, in the last year, our nation’s production of crude oil has increased +1.1 million barrels a day while our importing of crude oil has declined by 1.4 million barrels a day (source: Department of Energy).

8. SUPPLY AND DEMAND – The price of oil closed at $57.35 a barrel on Monday 11/06/17, its highest close since oil finished at $59.01 a barrel on 6/30/15 or more than 28 months ago (source: NYMEX).

9. A LOT TO MEXICO – American exports of natural gas will exceed its imports of natural gas in 2017, the first year in which that has happened since 1958 or 59 years ago (source: Energy Information Administration).

10. HIGH-TAX STATES – The House’s “Tax Cuts and Jobs Act” retains the deductibility of property taxes up to a maximum of $10,000 per year. Of the 10 states with the highest average property taxes, President Trump carried none of the 10 states in the 2016 presidential election (source: Internal Revenue Service).

11. LOOMING DEADLINE – Congress must pass a fiscal year 2018 budget by midnight on Friday 12/08/17, a deadline that is now less than 4 weeks away. If Congress does not agree on a 2018 budget by that date and if they do not extend the “continuing funding resolution” that expires on 12/08/17, a shutdown of our government will occur. Our nation’s last shutdown took place in early October 2013 when the government stopped business for 16 days (source: BTN Research).

12. STANDARD OF LIVING – China’s economy is the 2nd largest in the world behind the United States, but China’s “GDP per person” is only $9,377 while the USA’s “GDP per person” is $61,687 (source: IMF).

13. ON THE SAME PAGE – Janet Yellen took over as Fed Chair on 2/03/14, running the central bank for 30 meetings since then. 8 different Board of Governor members have cast 20 dissenting votes to Yellen’s interest rate recommendation made at the 30 meetings. None of 20 dissenting votes were cast by Jerome Powell, a Board of Governors member since 5/25/12, and Yellen’s successor as of 2/03/18 (source: Federal Reserve).

14. VOTING – The 2018 midterm elections will be held on 11/06/18. Republicans control the House 241-194 and the Senate 52-48, the latter number counting 2 independents that caucus with the Democrats (source: BTN Research).

15. LOST THEM ALL – Through week # 9 of the NFL season, the Cleveland Browns and the San Francisco 49ers remain winless. In the last 50 seasons, only 3 NFL teams finished their football season winless (source: NFL).

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Bill’s By The Number$

1. FROM HERE TO THE END – The S&P 500 was up +16.9% YTD through 10/31/17 (total return). The index has been up 19 of the last 25 Novembers and 20 of the last 25 Decembers. The S&P 500 has averaged a gain of +1.7% in November and +1.4% in December over the last 25 years (1992-2016). 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. WORTH TWICE AS MUCH – 2 stocks within the S&P 500 doubled in value in 2014, then 2 different stocks doubled in 2015 and then 2 more stocks doubled in 2016, i.e., change of the stock price of at least +100% not counting the impact of dividends. 3 more stocks within the index, all different from the previous 6 stocks that doubled in 2014-2016, have doubled YTD through 10/31/17 (source: BTN Research).

3. LONG TIME WITHOUT WORK – 24.8% of unemployed Americans have been out-of-work for at least 27 weeks as of 10/31/17, i.e., jobless for more than 6 months. 45.5% of unemployed Americans had been out-of-work for at least 27 weeks as of 4/30/10 or 7 ½ years ago (source: Department of Labor).

4. MORE AND MORE RENTERS – The 111.4 million households that existed in the United States on 9/30/09 were split between 75.3 million owners and 36.1 million renters. The 119.1 million households in the United States on 9/30/17 were split between 76.2 million owners and 42.9 million renters (source: Census Bureau).

5. DEDUCTIONS – The House Ways and Means Committee released its initial design of tax reform last Thursday 11/02/17. The bill, officially HR # 1 and called the “Tax Cuts and Jobs Act” (TCJA), eliminates the deductibility of state and local taxes and sales taxes, but retains the deductibility of property taxes up to a maximum of $10,000. TCJA would maintain the mortgage interest deduction for homeowners, but limit the deduction for new mortgages on debt up to $500,000 for homes purchased after 11/02/17 (source: TCJA).

6. PROPOSED BRACKETS – Under TCJA, a couple filing jointly would pay no tax up to the new $24,000 standard deduction, then pay a 12% rate up to $90,000 of earnings, then pay a 25% rate up to $260,000 of earnings, then a 35% rate up to $1 million of earnings and finally a 39.6% rate for earnings above $1 million (source: TCJA).

7. FAMILY CREDIT – The proposed family tax credit increases the existing child tax credit to $1,600 (from $1,000), plus adds a $300 tax credit for each parent along with a $300 tax credit for a “non-child dependent,” e.g., a college student or an aging parent living within the household. The family tax credit phases out from $110,000 to $230,000 of “modified adjusted gross income” on a joint return (source: TCJA).

8. IMMEDIATE HELP – Businesses would be allowed to “fully expense,” i.e., deduct, the cost of qualifying property retroactive to purchases made as of Wednesday 9/27/17. However this benefit expires in 2023 (source: TCJA).

9. RESTRAINING EUROPE’S RECOVERY – The value of the Euro, the common currency of the 19-nation Eurozone, has risen from $1.0531 as of 12/31/16 to $1.1651 as of 10/31/17. The Euro’s rise means that Americans paying one Euro for an export from the Eurozone have experienced a +10.6% price increase (source: BTN Research).

10. LESS RUSH TO DRILL – Since peaking at 958 operating oil rigs nationwide as of Friday 7/28/17, the number of oil rigs in use in the United States has declined in 11 of the last 14 weeks (including the last 5 weeks in a row) to 898 operating rigs as of Friday 11/03/17 (source: Baker Hughes).

11. FED JOBS – Janet Yellen’s 4-year term as Fed Chair expires on 2/03/18. President Trump announced on 11/02/17 that Jerome Powell will replace Yellen as Fed Chair. Yellen could, if she chooses, stay on as a member of the Fed’s Board of Governors for 6 more years through 1/31/2024 (source: Federal Reserve).

12. MAKE IT EASY – 68% of plan sponsors of defined contribution retirement plans offer automatic enrollment for their new employees today (source: Alight Solutions).

13. TIGHT BUDGET – 34% of American households headed by seniors at least age 65 receive 90% or more of their annual income from their Social Security retirement benefits (source: Government Accountability Office).

14. NOT MUCH – The Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamps program, provides support to 40 million low-income and disabled Americans. An individual with no other income source can receive a maximum SNAP benefit today of $192 per month or $6.31 per day (source: SNAP).

15. GREAT OFFENSE – The 2017 World Series champs Houston Astros led all 30 teams in Major League Baseball in batting average, on-base percentage, runs, hits and doubles (source: Major League Baseball).

 

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Bill’s By The Number$

1. BETTER THAN AVERAGE – The S&P 500 is up +16.9% YTD (total return) through Friday 10/20/17, more than half again larger than the index’s trailing 50-year (1967-2016) average annual return of +10.2%. 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. STREAKING – The S&P 500 has been up on a total return basis in each of the first 9 months of 2017, matching the 9-month start to a year last achieved in 1995. With 7 trading days remaining in October 2017, the index is up +2.3% (total return) for the month-to-date (source: BTN Research).

3. IF IT HAPPENED TODAY – When the S&P 500 fell 58 points on “Black Monday” (10/19/87), the tumble represented a fall of 20.5%. A 20.5% decline on last Friday’s (10/20/17) closing index value of 2575 would equate to a fall of 528 points (source: BTN Research).

4. LOOKING INTO THE FUTURE – Just 1 of 10 Wall Street equity strategists polled by Barron’s on 12/17/16 forecasted a year-end 2017 closing value for the S&P 500 above 2500. The S&P 500 index closed last Friday (10/20/17) at 2575 (source: Barron’s).

5. WE’VE TIGHTENED OUR BELTS – For the 5 years of 2003-07, total household liabilities in America increased by at least $1 trillion each year. Total household liabilities declined by $157 billion in 2008 (from 2007) when the global real estate crisis began. Since the end of 2008 to the middle of 2017, total household liabilities have increased by $985 billion (not per year but in total) over the 8 ½ year period (source: Federal Reserve).

6. EQUITY – The average loan-to-value ratio in the US housing market as of 6/30/08 was 55%, i.e., the average home mortgage had 45% of equity behind it. The average loan-to-value ratio in the US housing market as of 6/30/17 was 42%, i.e., the average home mortgage had 58% of equity behind it (source: Federal Reserve).

7. JUST FIVE SURPLUS YEARS – The budget deficit for the United States in fiscal year 2017 (i.e., the 12 months that ended 9/30/17) was $666 billion. The USA has run a budget deficit in 52 of the last 57 fiscal years, i.e., 1961-2017. The only surplus years were 1969, 1998, 1999, 2000 and 2001 (source: Treasury Department).

8. NATIONAL EXPENDITURES – 60% of the $3.981 trillion of total outlays for the US government during the recently completed fiscal year 2017 were in just 4 categories – Social Security ($945 billion), National Defense ($600 billion), Medicare ($597 billion) and Net Interest Expense ($263 billion). Total outlays increased by +3.3% on a year-over-year basis, up $128 billion (source: Treasury Department).

9. DEFENSE DOLLARS – America’s spending on “National Defense” (stated as a percentage of total government outlays) has fallen from 43.2% in fiscal year 1966 to 15.1% in fiscal year 2017 (source: Treasury Department).

10. NOT ENOUGH PEOPLE – Japan, a country that has strict immigration policies and a low birth rate, had a population of 128 million in 2010. Japan’s population is projected to fall 34% to 85 million by the year 2100 (source: The Brookings Institute).

11. GROWING EACH YEAR – The population of the USA reached 300 million on 10/17/06. The population of the USA reached 326 million on 10/17/17. Thus, over the last 11 years, the population of the USA has grown an average of 2.36 million citizens per year as a result of births, deaths and immigration (source: Census Bureau).

12. LESS OIL DEPENDENT – Imports of crude oil into the USA for the week ending Friday 9/08/17 were 6.48 million barrels a day. In the last 20 years, there has been only 1 week in which the USA imported less than 6.48 million barrels a day of crude oil (source: Department of Energy).

13. SOME INFLATION – Over the 4 years from 2013-2016, the measurement of American inflation (using the Consumer Price Index) on a year-over-year basis reached the Federal Reserve’s target of +2% at the end of 3 months, i.e., 3 out of 48 months. But after year-over-year inflation was reported to be +2.2% through 9/30/17, the +2% target threshold has now been achieved at the end of 5 of 9 months YTD in 2017 (source: Federal Reserve).

14. MOTHER NATURE – The United States has suffered 218 weather and climate disasters since 1980 in which the cost of damages exceeded $1 billion (inflation adjusted value in 2017 dollars), an average of nearly 6 separate “billion-dollar or more” disasters per year (source: National Centers for Environmental Information).

15. WORLD SERIES BOUND – The Los Angeles Dodgers are the first team in the 148-year history of Major League Baseball to win 15 of 16 games and lose 15 of 16 games in the same season (source: Elias Sports Bureau).

 

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Copyright © 2017 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. UP FOR THE YEAR – In spite of tumbling 20.5% on the single trading day of 10/19/87 (30 years ago this week), the S&P 500 gained +5.3% (total return) for the entire 1987 calendar year. 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 value (source: BTN Research).

2. LUMP-SUM NEEDED – A present value (PV) amount of $1.96 million in a pre-tax retirement account is required today to fund a future payment stream for 30 years of $100,000 annually (with a 2.5% increase for maintenance of purchasing power) assuming that a 6% rate of return (ROR) can be maintained into the future. If the ROR falls to 5% from 6%, the PV amount rises by 13% to $2.21 million. If the ROR rises to 7% from 6%, the PV amount falls by 11% to $1.75 million. These calculations do not account for the payment of federal income taxes which would be due as a result of withdrawals from any pre-tax retirement account (source: BTN Research).

3. NATIONAL DEBT, ANNUAL DEFICIT – For fiscal year 2017 (the 12 months that ended 9/30/17) the United States increased its national debt by $671 billion to $20.245 trillion. For fiscal year 2017, the United States is expecting a $668 billion budget deficit with a final deficit number to be released this week (source: Treasury Department).

4. BE REAL CAREFUL – 54% of 1,006 adults surveyed in early August 2017 believe that the American stock market will suffer a correction of at least 10% before the end of 2017 (source: Gallup).

5. GROWING – The US economy has been growing for the last 99 months (i.e., no recession), an expansion exceeded in length only 2 times since 1900 (source: National Bureau of Economic Research).

6. CRUDE INTO FUEL – The United States has 141 operable oil refineries in 2017, 78 fewer than the 219 refineries that America had in operation in 1987 or 30 years ago (source: Energy Information Administration).

7. MAKE IT EASY TO START – Oregon’s state-run IRA retirement program where employees are automatically enrolled began yesterday (10/15/17) for employees at 2,100 of the state’s largest employers. Only 23% of the employees in the state’s pilot program conducted before yesterday’s official launch opted out of the pre-tax plan, i.e., 77% of the employees continued to make pre-tax contributions once they started (source: OregonSaves).

8. UP AND DOWN – Congress has raised the top individual marginal tax rate 4 times since 1950, most recently in 2013 when they raised the top rate from 35% to 39.6%. Congress has lowered the top individual marginal tax rate 9 times since 1950, most recently in 2003 when they dropped the top rate from 38.6% to 35% (source: IRS).

9. CANCELED – President Trump signed an executive order on 10/12/17 that cancels “cost-sharing reduction” (CSR) payments. Created out of the Affordable Care Act (ACA), CSR payments had been expected to provide an estimated $7 billion to health insurance companies in 2017 to reimburse them for lower deductibles and lower co-pays provided to low-income individuals. The CSR payments are separate from the estimated $37 billion in “income-based” subsidies that remain in place for 2017 to help low-income individuals afford their monthly ACA health insurance premiums (source: Congressional Budget Office).

10. TOO EXPENSIVE FOR ME – 5 out of every 6 Americans (84%) who purchased their 2017 health insurance through an ACA-mandated marketplace receive a premium subsidy that averages $375 per month. Nationwide, the premium subsidies will total $37 billion for 8.26 million individuals in 2017 (source: Milliman, Inc.).

11. MORE SKIN IN THE GAME – 81% of employees who purchase their health insurance through their employer are responsible for a deductible, the other 19% of employees pay no deductible. The average deductible of the employees that have to pay a deductible is $1,505 per year in 2017 (source: Kaiser Family Foundation).

12. LIVING LONGER – Life expectancy at birth for an American has increased 6.9 years over the last 40 years, i.e., life expectancy at birth is increasing by 1 year every 6 years (source: National Vital Statistics Report).

13. SENIORS – 15% of the US population is at least age 65, ranging from 19% of Florida’s citizens to just 11% of Utah’s residents (source: Census Bureau).

14. NOT A LOT OF WIGGLE ROOM – 74% of the projected spending of the US government over the next decade is “mandatory” spending (Medicare, Medicaid or Social Security) and interest on our debt (source: CBO).

15. NICE RAISE – Stephen Curry, 2-time NBA MVP, signed a 5-year contract in July 2017 that will pay him a guaranteed $201 million through 2022. Curry, who made $12.1 million last season, will make $34.7 million for his 2017 season that begins tomorrow 10/17/17 (source: Golden State Warriors).

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