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Bill’s By The Number$

1. NOT THE LONGEST BULL YET – The bull market for the S&P 500 will reach 103 months in length as of the close of trading today (10/09/17). That’s the 2nd longest bull market for the stock index since 1950, trailing only the 113 ½ month-long bull that ended in March 2000. 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. HIGH AFTER HIGH – During its 103 month-long bull market, the S&P 500 has set 169 all-time record closing highs including its most recent on Thursday 10/05/17, its 6th in the last 7 trading days (source: BTN Research).

3. ROLLIN’ ON – The S&P 500 gained +4.5% (total return) during the 3Q 2017, its 8th consecutive “up” quarter. It also marked the 18th of the last 19 quarters that have produced a total return gain (source: BTN Research).

4. A DECADE AGO – It was 10 years ago today (Tuesday 10/09/07) that the S&P 500 peaked at a then all-time record closing high of 1565. The very next day, the index began a painful 17 month tumble that resulted in a 57% drop of the raw index, its worst bear market loss in the last 80 years. In the last 80 years (i.e., back to 1937), the S&P 500 has suffered through 4 bears, each with losses of at least 40% (source: BTN Research).

5. SAGE ADVICE – It was 9 years ago (10/16/08) that Warren Buffet wrote his “Buy America, I Am” op-ed article in the New York Times. Buffett encouraged investors to “be fearful when others are greedy, and be greedy when others are fearful.” Buffett’s letter was released less than 5 months before the stock market bottomed on 3/09/09, ending a 57% decline of the S&P 500 (source: New York Times).

6. THE WORLD’S BIGGEST – The US economy is $19.25 trillion in size as of 6/30/17. 10 years ago (2007), the economy was worth $14.48 trillion. 20 years ago (1997), it was worth $8.61 trillion. 30 years ago (1987), it was worth $4.87 trillion (source: Commerce Department).

7. ALL IN THE FAMILY – A single political party has controlled the White House, the Senate and the House of Representatives in 21 of the last 60 years, i.e., 1958-2017. Republicans control all 3 this year (2017). Democrats last controlled all 3 in 2010 (source: BTN Research).

8. BANKING BUSINESS – The last bank to fail in the United States and require a financial bailout occurred on 5/26/17 or 136 days ago. That’s the 2nd longest stretch between American bank failures in the last 10 years, a decade that has seen 526 bank failures or 1 failure per week (source: Federal Deposit Insurance Corporation).

9. MOST EVER – US oil producers exported 1.984 million barrels a day during the week ending Friday 9/29/17, the largest weekly total ever exported by American oil firms. The total broke the old record, which had been set just a week earlier, by +33% (source: Energy Department).

10. RUNNING A LITTLE SHORT – 43% of 6,389 Americans surveyed admit that they “have difficulty making ends meet” (source: National Financial Well-Being Survey, Consumer Financial Protection Bureau).

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. Nationwide, just under 92% of the economic benefit of the state and local tax deduction flows to taxpayers with gross incomes in excess of $100,000 (source: Internal Revenue Service).

12. NEIGHBORLY – Canada cut its top corporate tax rate to 15% as of 1/01/12. The Trump White House proposed on 9/27/17 to cut the top US corporate tax rate from 35% to 20% (source: White House).

13. ESTATE TAXES – The federal estate tax exemption is $5.49 million for 2017 deaths, i.e., a married couple would be able to shelter $10.98 million from federal estate and gift taxes. Only an estimated 80 small farms and closely held businesses will leave estates that will be subject to the payment of federal estate taxes as a result of a 2017 death. An estimated 2.6 million Americans will die in 2017 (source: Tax Policy Center).

14. PROVIDES JOBS – The football stadium to be built in Inglewood, CA that will house the Los Angeles Rams and the Los Angeles Chargers beginning with the 2020 season will provide jobs for 22,000 construction workers plus 12,000 full-time and part-time jobs once the stadium is completed (source: NFL).

15. BIG FLY AND NO FLY – Major League Baseball set records for strikeouts in a season (40,104) and home runs in a season (6,105) during the 2017 regular season that ended on Sunday 10/01/17 (source: MLB).

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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. STILL MADE MONEY – The S&P 500 peaked on 10/09/07 before beginning a 17-month bear market that saw the raw index fall 57% before bottoming on 3/09/09. An investment in the S&P 500 on 10/09/07 (i.e., at the market’s top and before the fall) is up +100% (total return) as of the close of trading on Friday 9/22/17 (i.e., nearly 10 years later), an annualized return of +7.2% per year. 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. BEFORE AND AFTER – Before beginning a bull market run in March 2009 that has produced annual gains of +19.0% (total return) over each of the last 8 ½ years, the S&P 500 closed at a bear market low of 677 on 3/09/09. The average return for the stock index for the 2 years ending 2/28/09 (just 9 days before the bear market bottom) was a loss of 26.1% per year on a total return basis (source: BTN Research).

3. IN OR OUT? – Health insurance companies have until 9/27/17 (this upcoming Wednesday) to decide whether they will participate in the federal health insurance exchange in 2018. Open enrollment for 2018 insurance coverage begins in 5 ½ weeks on 11/01/17 (source: BTN Research).

4. MORE THAN KATRINA – Damage caused by Harvey and Irma is estimated to be $290 billion. Harvey’s damage estimate of $190 billion would make it the costliest weather disaster in US history. Harvey and Irma were the first Category 4 or higher hurricanes to strike the US mainland in the same year (source: AccuWeather).

5. TOUGH CROWD – In a statistic tracked since 1971, only 28% of Americans today are “satisfied” with the way our country is being governed. Remarkably, the high point for this statistic was 59% in September 2002, i.e., even the best polling outcome resulted in 2 out of 5 Americans “dissatisfied” with the government (source: Gallup).

6. JUST ONE MONTH TO GO – With just the month of September remaining in fiscal year 2017, the budget deficit to date is $674 billion. The last 5 Septembers have reported a budget surplus that has averaged $76 billion. The deficit from fiscal year 2016 was $587 billion (source: Treasury Department).

7. DIFFERENCE OF OPINION – The Trump White House submitted a 10-year budget plan to Congress on 5/23/17 that forecasted a $16 billion surplus in fiscal year 2027. The Congressional Budget Office released its analysis of the White House numbers and projected a $720 billion deficit in fiscal year 2027 (source: White House, CBO).

8. IMPORTS – The USA imported an average of 51,500 shipping containers per day in 2016, an all-time record. Each box is a 20-foot long cargo container. The 2 busiest container ports in the USA are Los Angeles and Long Beach (source: National Retail Federation).

9. MORE THAN JUST WAGES – For every $1 spent for wages and salaries in the private sector, employers spend an additional 44 cents on benefits. Average compensation is $23.15 per hour while the cost of benefits averages an additional $10.11 per hour (source: Bureau of Labor Statistics).

10. GONNA PARTY LIKE IT’S 1999 – After adjusting numerical data from the past for the impact of inflation, the median household income in 2016 ($59,039) is the highest ever recorded in the United States, surpassing the previous median income record high ($58,665) set in 1999 (source: Federal Reserve Bank of St. Louis).

11. THEY EXTRAPOLATE – The government surveyed 95,000 American households to compile the “household income” statistic, or less than 0.1% of the nation’s 118.9 million households (source: Census Bureau).

12. TOP ECHELON – It took $170,500 of household income to rank in the top 10% of earners in calendar year 2016 (source: Census Bureau).

13. BEST CITY – The # 1 city in the United States for jobs is Pittsburgh. The study was based upon job openings, median base salary, job satisfaction and the median cost of a home (source: Glassdoor).

14. MORE THAN DOUBLE – The artificial constraints used by the Treasury Department for the last 6 months to hold our national debt at $19.8 trillion have been suspended through Friday 12/08/17. This allowed our country’s debt to climb to $20.2 trillion as of last week. 10 years ago today (9/25/07), our national debt was only $9.0 trillion (source: Treasury Department).

15. UNBEATABLE – The Cleveland Indians won 22 consecutive baseball games through 9/14/17, the 2nd longest winning streak in the 148-year history of major league baseball. If the Indians had a 55% chance of winning each of the individual games, then the odds they would win 22 games in a row were 1 in 515,253 (source: MLB).

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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. ALMOST TWO-THIRDS – The total return of the S&P 500 stock index over the last 7 calendar years (2010-2016) is +132.8% (total return). The best 18 trading days during the 7 years (i.e., 18 days out of 1,762 trading days) produced an +83.1% gain. Thus, 1% of the trading days over the last 7 years were responsible for 63% of the index’s 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. DEPENDS – An individual 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. A second individual with $1 million invested in the S&P 500 as of 1/01/82 withdrawing an inflation-adjusted $100,000 per year would have $4.46 million remaining after 35 years, i.e., as of 12/31/16. 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. BETTING ON LAST YEAR’S WORST – An equal dollar investment made at the end of the day on 12/31/16 in the 10 worst performing individual stocks within the S&P 500 from calendar year 2016 is up +16.0% YTD through 8/31/17 (source: BTN Research).

4. CHASING AFTER LAST YEAR’S WINNERS – An equal dollar investment made at the end of the day on 12/31/16 in the 10 best performing individual stocks within the S&P 500 from calendar year 2016 is up +8.4% YTD through 8/31/17 (source: BTN Research).

5. OCTOBER, BEST AND WORST – The 3 best gain days (by percentage) for the S&P 500 in the last 67+ years (i.e., dating back to January 1950) all occurred during October. 5 of the 7 largest loss days (by percentage) for the S&P 500 over the same time period occurred during the month of October (source: BTN Research).

6. POST-KATRINA – Hurricane Katrina, the costliest natural disaster in US history, struck landfall on 8/29/05. In the 1-year following 8/29/05, the S&P 500 gained +9.7% on a total return basis (source: BTN Research).

7. FROM THE GULF – The Gulf of Mexico was the source of 18% of US oil production in calendar year 2016, approximately 1.6 million barrels a day (source: Department of Energy).

8. YTD – The cost of crude oil has fallen 12.1% YTD through 8/31/17. The price of gold has increased +14.5% YTD through 8/31/17. The S&P 500 has gained +11.9% YTD (total return) through 8/31/17 (source: BTN Research).

9. IMPACT ON PUBLIC SCHOOLS – Proposition 13 was passed by California voters in June 1978, resetting property taxes to 1% of market value and allowing for increases of no more than +2% annually, i.e., as home values have skyrocketed in the Golden State, property taxes have not. Since the “assessed” value used for the property tax calculation is only reset upon sale of a home, a new California homeowner today could pay property taxes 4 times as large as the seller of that same property (source: Santa Clara County Assessor).

10. SIXTEEN YEAR LOW – The nation’s 4.3% unemployment rate from July 2017 is the lowest that the United States has reported since February 2001. The country’s jobless rate was 4.1% or lower during all 12 months of calendar year 2000. The jobless rate increased to 4.4% in August 2017 (source: Department of Labor).

11. INCOME SHOCK – 61% of American male workers age 25-70 have experienced at least 1 stretch of time that lasted as long as 12 months when they received no earnings (source: Nat’l Endowment for Financial Education).

12. LONE STAR STATE – Texas is the # 2 state in the United States in terms of gross domestic product (GDP), trailing only the state of California (source: WorldAtlas.com).

13. DRENCHED – Rainfall in Houston from Hurricane Harvey on Sunday 8/27/17 totaled 16.07 inches, nearly double the city’s previous record for a single day of 8.32 inches that was set in 1945 or 72 years ago (source: National Weather Service Houston).

14. THREE TO TWO – An individual stock trade “settles” in 3 business days, i.e., the stock buyer must deliver cash and the stock seller must deliver the securities within 3 business days. Beginning Tuesday 9/05/17, an individual stock trade will “settle” in just 2 business days (source: Securities and Exchange Commission).

15. CRUSHED IT – Professional golfers have hit 29 drives of at least 400 yards during the wraparound PGA season through Sunday 8/27/17. Dustin Johnson has the season’s longest drive at 439 yards (source: PGA).

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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. DAILY STOCK MOVEMENT – The S&P 500 has had as much daily volatility in its last 12 trading days as it did in its first 152 trading days of 2017 (note there have been 164 trading days YTD). Both the last 12 trading days and first 152 trading days each produced 4 trading days that closed with at least a 1% total return gain or loss. 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 proportionate to its market value (source: BTN Research).

2. LAST QUARTER – The 3 months of October-November-December rank 2-3-5 in terms of average monthly performance for the S&P 500 index (i.e., October is 2nd best, November is 3rd best and December is 5th best). The 3 months have jointly gained + 4.9% per year (total return) over the last 25 years (1992-2016) or 54% of the index’s total return over the entire 25-year period (source: BTN Research).

3. FALLS – In the last 50 years (i.e., September 1967 through August 2017), the S&P 500 has suffered 25 tumbles of at least 10% (i.e., the total of 19 separate 10% corrections and 6 separate 20% bears), or 1 every 24 months. The last of the 25 drops ended on 2/11/16 or 18 ½ months ago (source: BTN Research).

4. IN THE YEAR 2047 – Our national debt, $19.8 trillion today, is projected to reach $25.2 trillion as of the end of fiscal year 2027 and $92.0 trillion by the end of fiscal year 2047, i.e., 30 years from now. The $92.0 trillion is estimated to be 150% of our economy in the year 2047 (source: Congressional Budget Office).

5. HARD WORK – Productivity of the average American worker (output per worker per hour) over 10-year stretches of time increased the greatest (+34%) from 1957-1966. Productivity had its weakest 10-year growth (+11%) from 1973-1982. Productivity grew just +13% from 2007-2016 (source: Department of Labor).

6. PACIFIC NORTHWEST – Between 6/30/16 and 6/30/17, average home prices increased in 48 of 50 US states. Washington’s +12.4% average home price gain led the nation (source: Federal Housing Finance Agency).

7. GREAT FOR BUYERS – The national average interest rate on a 30-year fixed rate mortgage fell to 3.86% last week, the lowest average recorded so far during calendar year 2017 (source: Freddie Mac).

8. CUT IN HALF – The percentage of home mortgage loans that are delinquent (defined as being at least 1 monthly payment late but not including those loans in the foreclosure process) was 8.44% at the end of the 2nd quarter 2011. That number has fallen to 4.24% as of the end of the 2nd quarter 2017 (source: MBA).

9. FANNIE AND FREDDIE – Treasury Secretary Hank Paulson announced on 9/07/08 (i.e., 9 years ago) the government’s plan to take control of mortgage giants Fannie Mae and Freddie Mac. The Treasury Department initially pledged up to $200 billion of financial support in anticipation of future mortgage defaults. Fannie and Freddie actually received $187 billion of taxpayer aid, but have paid back $271 billion for an $84 billion profit for taxpayers, equal to a +4.2% annualized gain (source: Treasury Department).

10. SENIORS STAYING PUT – 53% of the owner-occupied homes in the United States, i.e., 53% of 75.7 million or 40.1 million homes, are owned by Americans who are at least age 55. A decade ago, age 55+ homeowners owned just 43% of all homes (source: Census Bureau).

11. SAVE FOR A RAINY DAY – The personal savings rate in the United States fell to 3.8% in June 2017, its lowest level since August 2008. The all-time low for this statistic is 1.9% in July 2005. The rate is defined as “savings” (i.e., after-tax income less consumption spending) divided by after-tax income (source: Department of Commerce).

12. LARGE LOANS – 42 million Americans owe $1.34 trillion in student loan debt. Just 1 in 20 borrowers (5%) had outstanding loans of at least $50,000 in 2002, i.e., 15 years ago. 1 in 6 borrowers (16%) have outstanding loans of at least $50,000 in 2017 (source: Consumer Financial Protection Bureau).

13. STILL LOOKING – 16 years after the terrorist attacks on the World Trade Center, 40% of the 2,753 people killed in New York City (i.e., 1,112 victims) have not had their remains positively identified. Just 3 weeks ago (8/07/17), new DNA testing identified the remains of a man killed in the 9/11/01 attack (source: CNN).

14. A LOT OF FOLKS – The population of the United States is projected to increase by +2 million people per year over each of the next 30 years, reaching 390 million as of the year 2047 (source: Congressional Budget Office).

15. SAME OL’ SAME OL’ – The same 11 college football teams finished the 2016 season (post bowl games) in the top 11 spots in both the writers’ poll and the coaches’ poll. Those same 11 football teams have been voted into the top 11 spots in the 2017 preseason rankings in both polls (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. AT THE BACK END – The highest closing value during the year for the S&P 500 has occurred in the final 4 months of the year (i.e., September-December) in 11 of the last 14 calendar 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. ONE DAY – 10 weeks after Alan Greenspan became Fed chairman on 8/11/87 (i.e., 30 years ago), the S&P 500 suffered its worst 1-day percentage loss in history (down 20.5%) on Monday 10/19/87 (source: BTN Research).

3. VERY SENSITIVE – The “duration” of the current 2.75% coupon, 30-year Treasury bond was 20.296 “years” as of 8/18/17, i.e., if interest rates go up 14 basis points on the 30-year bond, the resulting 2.75% price decline would completely offset the bond’s 2.75% coupon over a 1-year time horizon. Duration is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates (source: Ryan ALM).

4. SIXFOLD – Foreigners have increased their holdings of US Treasury Securities from $1 trillion in 2000 to more than $6 trillion in 2017 (source: St. Louis Federal Reserve Bank).

5. THE RISK – The average interest rate paid by the government on its interest bearing debt was 2.279% as of 7/31/17. The average interest rate paid on interest bearing debt was 5.041% as of 7/31/07 (10 years earlier) or 2.8 percentage points higher. Every 1 percentage point increase in the cost of debt on our nation’s $14.4 trillion of publicly held debt is equal to $144 billion of annual interest expense (source: Treasury Department).

6. ANOTHER RATE HIKE? – The next Federal Reserve meeting that has at least a 50% chance of resulting in a hike to short-term rates is the Fed meeting that is scheduled 7 months from today on 3/21/18. The Fed has raised rates 4 times since 12/16/15 (source: CME Group).

7. THEY CUT, WE INCREASED – The 14-members of OPEC agreed on 11/30/16 to slash production by 1.2 million barrels a day, along with additional cuts of 600,000 barrels a day from non-OPEC member countries, a combined reduction of 1.8 million barrels a day. US oil producers have responded to OPEC’s action by increasing their field production of crude oil from 8.699 million barrels a day as of 11/25/16 to 9.502 million barrels a day as of Friday 8/11/17, an increase of +803,000 barrels a day (source: Department of Energy).

8. PROPOSED CHANGE – The 2010 Affordable Care Act (ACA) requires employers with at least 50 full-time employees (working at least 30 hours a week) to offer “affordable” health insurance coverage that provides “minimum essential coverage.” A bipartisan group of 43 House members (known as the “Problem Solvers”) has proposed raising the 50 employee threshold to 500 employees and increasing the minimum hours requirement from 30 hours to 40 hours (source: Congress).

9. WHAT IF? – The CBO projects that if “cost sharing reduction” payments to health insurers ended (estimated to total $8 billion this year), insurance premiums would increase +20% in 2018. Higher premiums over time would increase the ACA tax credits that are paid out by $194 billion over the 10 years ending 2026 (source: CBO).

10. CONSIDER THIS – A new state law in Colorado (House bill # 1041) requires high school guidance counselors to discuss alternatives to college as part of a student’s academic and career planning, e.g., military service and trade schools. The law is effective for the school year that begins this month. 70% of all 2016 high school graduates enrolled in college (source: Department of Labor).

11. DONE WITH IT – 42 million Americans owe $1.34 trillion in student loan debt. Historically, 60% of borrowers fully repay their student debt within 8 years of beginning repayment (source: CFPB).

12. MILITARY FORCE – There are 18.8 million military veterans in the United States. The size of our active duty military is 1.3 million, including 472,000 in the US Army (source: USA Facts).

13. GREEN ACRES – The average “farm real estate value” is $3,080 an acre in 2017, including land and buildings, an increase of +4.4% per year over the last 10 years (source: Department of Agriculture).

14. CRIMINAL RECORD – 324 individuals were convicted of crimes relating to the global real estate crisis that exploded worldwide in 2008 (source: Sigtarp).

15. CLIFFHANGER – Golf rule 16-2 says “when any part of the ball overhangs the lip of the hole, the player is allowed enough time to reach the hole without unreasonable delay and an additional 10 seconds to determine whether the ball is at rest” (source: USGA).

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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. NOT THE LONGEST . . . YET – The longest bull market for the S&P 500 since 1950 lasted 3,452 calendar days, i.e., the 9 ½ years from 10/11/90 to 3/24/00. The current bull market for the S&P 500 is 3,077 calendar days long as of Friday 8/11/17, i.e., the approximate 8 ½ years from 3/09/09 to last Friday 8/11/17. The current bull would have to last until 8/22/18 (i.e., 1 year from now) to reach 3,453 calendar days. 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. THE ART OF THE DEAL – The S&P 500 has gained +15.9% (total return) in the 190 trading days since the 11/08/16 election of President Donald Trump (source: BTN Research).

3. CAN I LEAVE WORK EARLY? – An average American worker has increased his/her productivity by +99% in the last 40 years, i.e., an average worker can complete in 1 hour as of 6/30/17 the same amount of work that it took him/her 2 hours to finish as of 6/30/77 (source: Department of Labor).

4. HOW PEOPLE FEEL – 63% of 1,019 Americans surveyed in April 2017 believe that “upper-income” taxpayers pay “too little” in federal income tax. For tax year 2014, the top 1% of taxpayers (1.4 million returns) paid $543 billion in federal income tax. The bottom 95% of taxpayers (132.6 million returns) paid $550 billion in federal income tax (source: Gallup, Internal Revenue Service).

5. HERE AND THERE – The unemployment rate in the 19 nation Eurozone as of June 2017 was 9.1%, its lowest level since February 2009. The unemployment rate in the United States as of July 2017 was 4.3%, its lowest level since February 2001 (source: Eurostat, Department of Labor).

6. HE SAID – 91-year old Alan Greenspan warned on Friday 8/04/17 that the bond market, boosted by low interest rates for the last 3+ decades, will eventually suffer from rising rates. Greenspan gave no time frame with his forecast but did predict that “when they (rate increases) start they will be rather rapid.” Greenspan ran the Fed for 18 ½ years through 1/31/06, the 2nd longest stretch by any Fed chair in its 104-year history (source: CNBC).

7. IMPACT OF LOWER RATES – The discount rate used to calculate the present value of pension liabilities has historically been benchmarked to high-quality corporate bond yields. Every 1 percentage point drop in the discount rate produces an approximate +12% increase in the present value of pension liabilities (source: Center for Retirement Research at Boston College).

8. BEHIND THE CURVE – 95% of the companies in the S&P 500 (476 firms) have underfunded pension plans (source: Bloomberg Businessweek).

9. EVERY SINGLE DAY – 48 million Americans are at least age 65 today, representing 15% of our 326 million citizens. The number of age 65+ seniors is projected to increase by a net +4,700 per day over the next 18 years, i.e., the net 4,700 number is seniors turning age 65 less deaths in the 65+ age group (source: Social Security).

10. SEEKING QUALIFIED WORKERS – In June 2017, there were 5.224 million Americans that had their employment end either by quitting, being laid off or getting discharged from work. In June 2017, there were also 5.356 million Americans that were hired into new jobs. Separate from the 5.356 million Americans that were hired, there are still 6.163 million job openings that have yet to be filled, an all-time record for a statistic tracked since December 2000 (source: Department of Labor).

11. DIVERSE – There are as many ordained ministers (8) in the 535 members of Congress as there are engineers (8). There are 3 veterinarians and 3 psychologists in Congress today (source: Congressional Research Service).

12. ALL ONE PARTY – Republicans control the governor’s office and the state legislatures in 26 US states, while Democrats have complete control of the state government in just 6 states (source: Washington Examiner).

13. BRICK AND MORTAR – Halfway through calendar year 2017 (i.e., as of 6/30/17), 5,300 retail stores have closed, equal to more than 200 per week (source: Credit Suisse).

14. NOT THE USA – There are 10 countries in the world that currently maintain the top credit rating from each of the 3 major credit rating agencies, including Canada and Germany (source: Trading Economics).

15. HISTORIC – Through 114 games of the current MLB season (which is 162 games in length), the Los Angeles Dodgers are 81-33, i.e., the Dodgers have 48 games remaining. Only 6 teams in the 141-year history of MLB have won at least 110 games, including just 2 teams in the last 60 years (source: Major League Baseball).

– 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. SO MANY RECORDS – The S&P 500 closed at a calendar year 2017 high of 2439 on Friday 6/02/17, its 22nd record closing high this year. During a bull market that is now in its 100th month, the stock index has set 148 record closing highs. 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 DO THEY KNOW? – The S&P 500 may be up +9.6% YTD (total return) through Friday 6/09/17, but only 35% of stock investors are currently bullish on US equities for the upcoming 6 months. Ironically only 19% of individual investors were “bullish” on US stocks just 5 days before a bull market began in March 2009 that has now lasted 99 months up to the current day (source: AAII).

3. FUNDING A RETIREMENT – The S&P 500 has averaged +9.1% per year (total return) over the 25 years ending 12/31/16. A lump-sum of $903,388 (in a pre-tax account) will sustain a 20-year payout of $100,000 per year (i.e., $2 million of gross distributions before taxes) assuming the funds continue to earn +9.1% annually. This mathematical 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).

4. GOOD RESULTS LATELY – The S&P 500 was down on a total return basis in 9 of the 13 years from 1929-1941. The S&P 500 has been down on a total return basis in just 1 of the last 14 years from 2003-2016, i.e., down in calendar year 2008 (source: BTN Research).

5. PRETTY LIKELY – The Fed Funds futures market was priced last Friday 6/09/17 to reflect a 99.6% chance of a ¼ of 1% rate hike by the Fed at this week’s 2-day meeting that ends Wednesday 6/14/17 (source: CME Group).

6. BACK WORKING AGAIN – During the global real estate recession that began in 2008, our national jobless rate peaked at 10.0% in October 2009, representing 15.4 million out-of-work Americans. The May 2017 jobless rate of 4.3% equates to 6.9 million individuals lacking employment (source: Department of Labor).

7. MISMATCH – There are 6.0 million job openings nationwide as of 4/30/17, the largest number ever reported for a statistic that has been tracked since December 2000. That number has climbed 2.3 million (from 3.7 million) in the last 4 years. For our nation’s 6.9 million out-of-work citizens, the record total of job openings may point to a “shortage of skills” that has prevented them from gaining employment (source: Department of Labor).

8. FALLING OIL PRICES – The 13-nations that make up OPEC earned $433 billion in net oil export revenues in 2016, its lowest earnings total since 2004 (source: Department of Energy).

9. IMPACTS THEM MOST – The 1-page tax reform outline released by the White House on 4/26/17 included a proposal to eliminate the deductibility of state and local taxes and property taxes on the 1040 return. The plan would increase individual income taxes by an estimated $1.3 trillion over the next 10 years. Taxpayers reporting at least $100,000 of adjusted gross income would pay 75% of the higher taxes (source: Tax Policy Center).

10. TOP HAT – The top 1% of US taxpayers paid 39.5% of total federal income taxes collected for the 2014 tax year (source: Internal Revenue Service).

11. NEEDS ACTION – Treasury Secretary Steven Mnuchin urged lawmakers on 5/24/17 to increase the nation’s debt ceiling limit, currently at $19.846 trillion, before they recess for 5 weeks on 7/29/17. The White House had forecasted just a day earlier that our national debt will reach $24.658 trillion by 9/30/27 (source: White House).

12. REQUIRED HELP – 6 banks have failed YTD in 2017 through last Friday 6/09/17, more than the 5 banks that failed in all of 2016. 157 banks failed in 2010 (source: Federal Deposit Insurance Corporation).

13. IT’S VERY IMPORTANT – 58% of American retirees consider their monthly Social Security benefit to be a “major source of retirement income” (source: Gallup).

14. THANK YOU FOR YOUR SERVICE – Retired military personnel are responsible for just a $150 per person annual deductible for TRICARE health insurance coverage (source: TRICARE).

15. REALLY NICE CALL – The 6/25/14 (i.e., 3 years ago) cover of Sports Illustrated featured the Houston Astros as “Your 2017 World Series Champs,” documenting how the organization was building the “game’s next big thing.” Through 6/08/17, the Astros had the best record in MLB at 43-18. The Astros were 70-92 in 2014 (source: MLB).

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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. JUST ONCE BEFORE – The ongoing bull market for the S&P 500 stock index will reach 99 months in length (i.e., 8 years and 3 months) as of the close of trading this Friday 6/09/17. The stock market advance is just the 2nd bull out of 11 total bulls since 1950 to reach 99 months in length. 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. YEAR-TO-DATE – The S&P 500 was up +8.7% YTD (total return) as of the close of trading on Wednesday 5/31/17 (the index was up +3.6% at the same point in 2016). The split between “up” days and “down” days YTD through 5/31/17 is 55/45, i.e., more “up” days than “down” days so far this year (source: BTN Research).

3. HOT AND COLD – The best performing individual stock in the S&P 500 index during the first 5 months of 2017 (i.e., January-May) gained +68%. The worst performing individual stock in the S&P 500 during the first 5 months of 2017 lost 61% (source: BTN Research).

4. THE REALLY RICH – The top 0.1% of US taxpayers (i.e., top 1 out of every 1,000 taxpayers) paid 19.9% of all federal income tax for the 2014 tax year (source: Internal Revenue Service).

5. JUST NOT WORTH IT – 23% of Millennials who have student debt believe the college education they received “will never be worth” the debt they incurred. “Millennials” are defined as the 75 million Americans ages 20-36 in 2017, i.e., individuals born from 1981-1997 (source: TD Ameritrade).

6. NEW MATH – The 10-year budget forecast released by the Trump White House on 5/23/17 boasted that it would reduce our deficit by $5.6 trillion “compared to the current fiscal path.” The math behind the statement is that the Trump plan would reduce the current $8.8 trillion of deficits projected over the 10 fiscal years of 2018-2027 by $3.6 trillion through reduced spending and by another $2.0 trillion due to the “anticipated economic gains that will result” from the plan. The net result: $8.8 trillion of deficits are reduced to $3.2 trillion of deficits (source: OMB).

7. NO RECESSION HERE – The current economic expansion in the United States will reach 8 years in length as of 6/30/17. No expansion in history has lasted longer than 10 years based upon data that has been tracked since 1854 (source: National Bureau of Economic Research).

8. BIG NUMBER – Medicaid expenditures make up 17% of state spending on average today, up from just 12% of state spending in 2010 (source: Medicaid).

9. WHAT TO CHARGE NEXT YEAR? – Health insurance companies have a 6/21/17 deadline for the submission of a “qualified health plan” (QHP) application for participation in 2018 ACA exchanges. The application must include 2018 health insurance premium rates (source: Centers for Medicare and Medicaid Services).

10. AFFORDABLE – The ACA is expected to provide payments of $7.35 billion to health insurance companies in 2017 in “cost-sharing reduction” (CSR) payments. These payments are separate from the estimated $35 billion in “income-based” subsidies (technically a “premium tax credit”) provided in 2017 to help individuals afford their ACA monthly premiums (source: Commonwealth Fund).

11. KEEPS ME UP – 60% of 2,652 full-time employees surveyed in November 2016 “worry about money.” 30% of those surveyed “lay awake at night” worrying about money (source: MetLife Employee Benefit Trends Study).

12. ALMOST HALF – 47% of 2,749 adults surveyed in February 2017 have at least $25,000 of debt, not counting any mortgage debt they have on their home (source: Northwestern Mutual Planning & Progress Study 2017).

13. THEY CUT BACK, WE INCREASED – US oil producers stepped up their “field production” of crude oil by +645,000 barrels a day (to 9.34 million barrels a day) over the 6 months from 11/30/16 to 5/31/17. The increased output was in response to a 1.8 million barrel a day cutback announced by 24 oil producing countries on 11/30/16 (source: Department of Energy).

14. REDUCE SUPPLY, INCREASE THE PRICE – 24 oil producing countries, including all 13 OPEC members, agreed on Thursday 5/25/17 to maintain what amounts to a 2% cut (i.e., 1.8 million barrels) in the global daily production of oil through March 2018 in an attempt to drive up the price of crude oil. The oil production cuts were first announced on 11/30/16 (source: OPEC).

15. RUBBER MATCH – It’s Cleveland vs. Golden State for the NBA title for the 3rd consecutive year, the first time that has happened in NBA history. From 1984-87, the Celtics and the Lakers met in 3 of 4 years (source: NBA).

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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. CLOSE TO THE BOTTOM – June is ranked 11th out of the 12 months for average total return performance of the S&P 500 stock index since 1992, i.e., the last 25 years. Only the month of August has historically produced a poorer average stock performance than June. 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. BREAKEVEN – The 3 summer months (June-July-August) have produced an average loss of 0.1% (total return) for the S&P 500 stock index over the last 25 years, i.e., 1992-2016 (source: BTN Research).

3. THEY ARE NOT DONE YET – Between now and the end of 2018, the Federal Reserve has 13 scheduled meetings. The median estimate of Federal Open Market Committee (FOMC) policymakers suggests 5 separate rate hikes of ¼ of 1% each will occur by 12/31/18. The next Fed meeting is June 13-14 (source: Federal Reserve).

4. TOO PESSIMISTIC – An annual survey of Americans at least age 65 gave the US stock market at least a 50% chance of rising in the upcoming year only 1 time over 12 annual surveys that were conducted from 2002-2013. The US stock market (as measured by the S&P 500) was actually up 10 of the 12 years (down in 2002 and 2008), gaining +105% (total return), an average of +6.2% per year (source: University of Michigan).

5. VERY SENSITIVE – The “duration” of the current 3% coupon, 30-year Treasury bond was 19.764 “years” as of last Friday 5/26/17, i.e., if interest rates go up just 15 basis points on the 30-year bond, the resulting 3% bond price decline would completely offset the bond’s 3% coupon over a 1-year time horizon (source: Ryan ALM).

6. MAKING REGULAR PAYMENTS – 11.0% of college student loans are at least 90 days delinquent as of 3/31/17. Just 3.8% of auto loans are at least 90 days delinquent as of 3/31/17. Both rates represent the percentage of loans delinquent calculated on a “dollar” basis and not on a “per loan” basis (source: Federal Reserve Bank of New York).

7. STUDENT LOANS – Within 4 years of their 2008 graduation from college, 69% of individuals with student loans were making regular payments on the debt, 17% had fully repaid the debt, 9% were making no payments and 5% had already defaulted on the loans (source: National Association of College and University Business Officers).

8. AFTER FIVE MONTHS – The number of operating oil rigs and operating natural gas rigs in the United States is up +38% YTD, reaching 908 operating rigs as of last Friday 5/26/17 (source: Baker Hughes).

9. UP, NOT DOWN – President George W. Bush, just a month into office, delivered his first address before Congress on 2/27/01. Bush encouraged members of Congress to “join me to pay down $2 trillion in our national debt during the next 10 years.” From 2/27/01 to 1/20/09 (the day Bush left office approximately 8 years later), the national debt of the United States had increased $4.9 trillion to $10.6 trillion (source: Treasury Department).

10. SO HE THINKS – President Donald Trump released last Tuesday (5/23/17) a 10-year budget forecast that projects the USA achieving a balanced budget (i.e., annual tax revenues equal to or greater than annual outlays) during fiscal year 2027. When the current fiscal year 2017 ends on 9/30/17, the USA will have failed to record a balanced budget in 52 of the last 57 fiscal years, i.e., 1961-2017 (source: Congressional Budget Office).

11. LIVING ON THE EDGE – 44% of 6,600 adults surveyed in October 2016 could not pay for an unexpected $400 emergency expense out of cash reserves, forcing them to borrow the funds or liquidate an asset to pay the expense (source: Federal Reserve’s Survey of Household Economics and Decisionmaking).

12. BORDERING STATES – Colorado had the lowest unemployment rate (2.3%) of any state in April 2017. New Mexico had the highest unemployment rate (6.7%) of any state in April 2017 (source: Department of Labor).

13. NOT A CITIZEN AT BIRTH – There were 27.0 million “foreign-born” persons in the US labor force in 2016, comprising 16.9% of the American workforce. The percentage of “foreign-born” workers was 13.3% in 2000 (source: Department of Labor).

14. EXPENDABLE – 26% of 1,100 adults surveyed in April 2017 fear that it is “very likely or somewhat likely” that their current job will be eliminated within 20 years, replaced by technology, automation or a robot (source: Gallup).

15. FINALS FOES – LeBron James, 4-time NBA MVP, and Stephen Curry, 2-time NBA MVP, were both born in the same hospital. James was born on 12/30/84 at Summa Akron City Hospital in Akron, OH, the same hospital where Curry was born just over 3 years later on 3/14/88 (source: ESPN).

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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. SINCE NOVEMBER – In the 132 trading days since the 11/08/16 November election, the S&P 500 has gained +12.6% (total return). A typical calendar year has 252 trading days. 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. MORE MONEY OR MORE TIME – A 30-year old individual investing $523 at the beginning of every month in a pre-tax account earning +8% annually would accumulate $1 million by age 60 assuming the monthly investment is increased +3% per year. A 30-year old will need a monthly investment of $730 (assuming a +3% increase per year in the monthly investment) if the pre-tax account earns just +6% annually in order to accumulate $1 million by age 60. A 30-year old individual investing $523 at the beginning of every month in a pre-tax account earning +6% annually would accumulate $1 million by age 64 and 4 months assuming the monthly investment is increased +3% per year (source: BTN Research).

3. MANY YEARS, NO CHANGE – The Social Security payroll tax rate paid by employees has been 6.2% since 1990 except for a 2% reduction in the rate during the 2 years of 2011-12 (source: Social Security).

4. MORE TAXES – Proposed House legislation (“Social Security 2100 Act”) by John Larsen (D-CT) would increase the Social Security payroll tax rate paid by employees from 6.2% to 7.4%, to be phased in over 24 years from 2019-2042. Larsen’s plan would also phase out the current $127,000 ceiling on earnings subject to payroll taxes so that by the year 2047 all earnings would be taxed (source: Social Security Office of the Chief Actuary).

5. ON YOUR OWN – 44% of American private sector workers (i.e., 55 million of 124 million private sector workers) lack access to any employer sponsored pre-tax retirement plan (source: AARP).

6. BIG PROMISES – The unfunded pension liability of the city of Chicago is estimated to be $27 billion, an amount equal to 11 years worth of the city’s current annual tax revenue (source: City of Chicago).

7. REDUCE GLOBAL SUPPLY – OPEC leader Saudi Arabia and non-OPEC member Russia announced plans on Monday 5/15/17 to extend the oil production cuts of 1.8 million barrels a day that were originally agreed to on 11/30/16. The supply cuts will now continue to March 2018. Increased oil production from the United States since late November 2016 has muted the production cuts’ intended impact to raise oil prices. Crude oil closed at $49.44 a barrel on 11/30/16. Crude oil closed at $50.53 a barrel on Friday 5/19/17 (source: BTN Research).

8. STILL BROKE – The finance ministers of the 19 Eurozone nations meet today (Monday 5/22/17) in Brussels, Belgium. On the agenda is the topic of debt forgiveness for Greece. Athens has received 3 bailouts in the last decade – May 2010, February 2012 and April 2016 (source: BTN Research).

9. PART TWO – When the CBO originally “scored” the AHCA on 3/13/17, they estimated that 14 million more Americans will be uninsured in 2018 under the AHCA than under the ACA, a combination of people forgoing coverage due to no forced mandate and others dropping their coverage due to higher premiums. The CBO is expected to release its revised “scoring” of the updated AHCA legislation on Wednesday 5/24/17 (source: CBO).

10. NO DEDUCTION – The deductibility of mortgage interest expense reduces individual income taxes by $77 billion per year. Canada and Australia do not allow its taxpayers to deduct mortgage interest expense (source: IRS).

11. GRASS IS GREENER – 34% of American workers anticipate that they will have a different job with a new employer within 12 months (source: Met Life US Employee Benefit Trends Study).

12. HERE TODAY, GONE TOMORROW – 23% of American workers surveyed in April 2017 are concerned about losing their jobs (source: Fannie Mae).

13. I DON’T SEE IT – A painting sold for $110.5 million at Sotheby’s in New York City on Thursday 5/18/17. The art was sold for just $19,000 in 1984. The staggering sale price for the art equates to a +30% annual rate of return over the 33 years from 1984 to 2017 (source: Sotheby’s).

14. MIDTERMS – Democrats lost 63 House seats and 6 Senate seats in the November 2010 elections, i.e., 2 years into the Obama administration’s first term in the White House (source: Congress).

15. NUMBERS – The New York Yankees retired Derek Jeter’s # 2 on 5/14/17. The Yankees are tied with the Boston Celtics with 21 retired numbers each, the most in professional sports. The Yankees’ 21 retired numbers were worn by 22 different players. Both Bill Dickey and Yogi Berra had their # 8 jersey retired (source: MLB).

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