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Bill’s By The Number$

1. TIME IN THE STOCK MARKET – If you selected any single month at random to invest in the S&P 500 during the 25-years ending 6/30/19, you achieved a positive total return 67% of the time. If you extend your investment time horizon to just 1 year, you achieved a positive total return 80% of the time. If your time horizon was 2 years, you also achieved a positive total return 80% of the time. 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. FIVE-ONE-EIGHT – The NASDAQ Composite peaked at 5049 on 3/10/00, fell to 1114 on 10/09/02 and has risen to 8330 as of the close of trading last Friday 7/26/19. The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system (source: NASDAQ).

3. DEBT CEILING – Our national debt was $22.02 trillion as of Thursday 7/25/19. Legislation expected to be signed into law by President Donald Trump this week would suspend our country’s debt ceiling limit until 7/31/21, i.e., there will be no statutory limit on our nation’s borrowing for the next 2 years. If signed into law, the debt ceiling will have been raised, temporarily extended or suspended 87 times since 1960 (source: Treasury Department).

4. CAN’T STOP SPENDING – Last week’s congressional compromise is the 5th time since 2011 that Congress ignored the annual spending caps as stipulated in the Budget Control Act of 2011 (source: Congress).

5. BUYING FROM THE USA – The top 5 countries purchasing American exports in 2018 were Canada, Mexico, China, Japan and the United Kingdom (source: Commerce Department).

6. VERY DIFFERENT PERIODS – In the last 25 years, i.e., 7/01/94 to 6/30/19, the USA suffered just 2 recessions. In the 25 years before that, i.e., 7/01/69 to 6/30/94, the USA had suffered 5 recessions (source: National Bureau of Economic Research).

7. WHAT IF THEY GOT MAD AND LEFT? – The wealthiest 1% of Californians, i.e., taxpayers reporting adjusted gross income of at least $877,560, pay 48% of the total state income tax collected (source: Institute for Taxation and Economic Policy).

8. FATAL CRASHES – 624,000 Americans have died in car crashes in the last 20 years, i.e., 2000-2019, equal to the 624,000 Americans soldiers that died in World War I (117,000), World War II (405,000), Korean War (37,000), Vietnam War (58,000), and the Afghanistan/Iraqi War (7,000) (source: NHTSA).

9. COST OF DOING BUSINESS – 21 states increased during calendar year 2019 the minimum wage employers in their state are required to pay (source: National Employment Law Project).

10. MORE THAN A DECADE – If the Fed does cut short-term interest rates as expected on Wednesday 7/31/19, it will be the Fed’s first rate cut since 12/16/08, a span of 3,879 days. The S&P 500 closed at 913 on 12/16/08. The S&P 500 closed at 3026 last Friday 7/26/19 (source: Federal Reserve).

11. INFLUENCE OF THE WHITE HOUSE – The Fed’s 7-member Board of Governors includes 2 Obama appointees (Powell and Brainard), 3 Trump appointees (Clarida, Quarles and Bowman) and 2 open positions. Jerome Powell was originally appointed to the board on 5/25/12 by President Obama, then elevated to Chairman on 2/05/18 by President Trump (source: Federal Reserve).

12. BANK TAKEOVER – Lenders foreclosed on 57,499 homes in the first 5 months of 2019, down 43% from 100,958 foreclosures in the first 5 months of 2018 (source: Attom Data Solutions).

13. REAL ESTATE SHIFT – Over the 12 years from 6/30/04 to 6/30/16, the number of “renter” households in the United States increased by +11.2 million to 43.9 million, while the number of “owner” households increased by just +1.0 million to 74.4 million. However, over the last 3 years from 6/30/16 to 6/30/19, the number of “renter” households in the United States was flat, remaining at 43.9 million, while the number of “owner” households increased by +4.1 million to 78.5 million (source: Census Bureau).

14. HOME PRICE – The median sales price of existing homes sold in the USA in June 2019 was $285,700, a record price. However, the median sales price of existing homes sold in July 2006 ($230,200) is equal to $289,750 in today’s dollars, a record price on an inflation-adjusted basis (source: National Association of Realtors).

15. FIRST DOWN! – The world’s most valuable sports franchise is the NFL’s Dallas Cowboys, worth an estimated $5 billion. The Cowboys generate $365 million of operating income per year, or $1 million a day (source: Forbes).

 

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Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. THE MONTH OF AUGUST – The worst performing month for the S&P 500 since 1994 has been August. The stock index has suffered an average loss of 0.6% (total return) during August over the last 25 years (1994-2018). The best performing month since 1994 has been April, gaining an average of +1.9% (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. MISS A LITTLE, MAYBE MISS A LOT – Over the 10 years of trading through 6/30/19 (i.e., 7/01/09 through 6/30/19), the S&P 500 was up +14.7% per year on a total return basis, i.e., including the impact of reinvested dividends. If you missed the 10 best performance days in those 10 years (i.e., 10 days in total, not 10 days each year), your return was cut by more than 4 percentage points to +10.3% per year (source: BTN Research).

3. HIGHER RISK, HIGHER RETURN – The stock market has produced a total return of +14.7% per year over the last 10 years through 6/30/19. The worst quarter over the last decade was a drop of 13.9% in the 3rd quarter of 2011. The S&P 500 was used as the stock measurement for this statistic (source: BTN Research).

4. LOWER RISK, LOWER RETURN – The bond market has produced a total return of +3.9% per year over the last 10 years through 6/30/19. The worst quarter over the last decade was a drop of 3.0% in the 4th quarter of 2016. The Bloomberg Barclays Aggregate bond index, calculated using 6,000 publicly traded government and corporate bonds with an average maturity of 5 years, was used as the bond measurement (source: BTN Research).

5. ONE WAY TO USE THEIR MONEY – A record $806 billion of stock buybacks took place in the USA in 2018. Another $205 billion of buybacks occurred in the 1st quarter 2019 (source: S&P Dow Jones).

6. A LOCK – As of last Friday (7/19/19), the Fed funds future market was priced to reflect a 100% chance that the Fed will reduce short-term interest rates following its 2-day meeting on July 30-31 (source: CME Group).

7. STATE STEPS IN – California began “CalSavers” on 7/01/19, a state-sponsored retirement program for workers within the state that do not have access to an employer-sponsored retirement plan. The program is mandatory for all employers who do not offer a retirement plan and have at least 5 employees and will be phased in over the next 3 years. Self-employed Californians can enroll beginning in September 2019. All participants are limited to contributions up to standard IRA maximums and are provided 5 investment options (source: CalSavers).

8. HAVE STARTED – 58% of 5,000 Americans surveyed currently participate in an employer-sponsored retirement plan or they have begun making pre-tax contributions to an IRA (source: Center for Fin’l Services Innovation).

9. UP AND UP AND UP – US oil production for all of 2019 is projected to be 12.36 million barrels a day, then rising to 13.26 million barrels a day in 2020. Actual oil production for the US in 2009 was 5.35 million barrels a day (source: International Energy Agency).

10. PUTTING IT INTO PERSPECTIVE – The Chinese economy grew by 6.2% in the 2nd quarter 2019, i.e., year-over-year growth rate, the lowest growth rate reported by China in records maintained since March 1992. The last time the United States reported a growth rate of at least +6.2% was in the 3rd quarter 2003. Over the last 30 years, i.e., 120 quarters, the United States has reached or exceeded a +6.2% growth rate in only 6 quarters or just 5% of the time (source: South China Morning Post).

11. WORLD’S BIGGEST – As of 3/31/19, the US economy was $21 trillion in size. As of 3/31/69, i.e., 50 years ago, the US economy was $1 trillion in size (source: Commerce Department).

12. RESULTING FROM OUR TRADE WAR – When comparing the first 5 months of 2019 to the first 5 months of 2018, Chinese exports to the United States have fallen 12% while American exports to China have fallen 19% (source: Commerce Department).

13. SHIFTING AWAY FROM CHINA – US manufacturers have moved some of their supply chains away from China in 2019, increasing imports from Taiwan (up +22% YTD through 5/31/19), from India (up +12% YTD) and from South Korea (up +12% YTD) (source: Commerce Department).

14. NO COMMUTE NECESSARY – 24% of American workers did some of their work or all their work from home in 2018 (source: Department of Labor).

15. DOMINANT – Over a 2-month stretch between 6/02/68 and 7/30/68, St. Louis Cardinal pitcher Bob Gibson started 12 games, pitched 12 complete games, and won all 12 games (source: Major League Baseball).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. EVERY TEN YEARS – The S&P 500 was up +14.7% per year (total return) for the 10-years ending 6/30/19. A decade ago, the S&P 500 had been down 2.2% per year (total return) for the 10-years ending 6/30/09. 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. NOT A DEAL BREAKER – Since the Trump White House increased tariffs on $200 billion of Chinese imports from 10% to 25% on Friday 5/10/19, i.e., just over 2 months ago, the S&P 500 has achieved 6 all-time closing highs. The most recent record close was set on Friday 7/12/19 (source: BTN Research).

3. AFTER THE CUTS BEGIN – The Fed has initiated 5 rate-cutting cycles since 1990, i.e., in 1990, 1995, 1998, 2001 and in 2007. In the 1-year following its 7/13/90 initial rate cut, the S&P 500 gained +3.5%. In the 1-year following its 7/06/95 initial rate cut, the S&P 500 gained +18.7%. In the 1-year following its 9/29/98 initial rate cut, the S&P 500 gained +20.9%. In the 1-year following its 1/03/01 initial rate cut, the S&P 500 lost 13.5%. In the 1-year following its 9/18/07 initial rate cut, the S&P 500 lost 20.6% (source: BTN Research).

4. WHERE DID THEY GO? – The number of publicly listed companies, i.e., companies traded on an exchange, has dropped from a peak of 8,090 in 1996 to just 4,336 today (source: theglobaleconomy.com).

5. CROWDING THE OTHERS OUT – From fiscal year 2019 (i.e., the 12 months ending 9/30/19) to fiscal year 2029 (i.e., the 12 months ending 9/30/29), mandatory spending by the US government is projected to increase +56%, discretionary spending is projected to decrease 1% and outlays for interest on our nation’s debt are projected to increase +129% (source: Congressional Budget Office).

6. WANT A PENSION? – 83% of full-time state and local government employees were participants in a defined benefit pension plan in 2018. Just 16% of full-time workers in the private sector were participants in a defined benefit pension plan in 2018 (source: Urban Institute).

7. BECAUSE OF AMERICAN SHALE – The 15 nations that make up OPEC are the source of just 29.8% of the world’s daily production of oil as of July 2019, its lowest total by percentage in almost 29 years, i.e., since September 1990. OPEC generated 39.5% of the world’s oil in April 1998 (source: International Energy Agency).

8. RECORD TOTAL – US field production of crude oil reached 12.2 million barrels a day for the week ending 6/28/19, its 20th consecutive week producing at least 12 million barrels a day. Until 2/15/19, the USA had never reported a week with daily production of at least 12 million barrels a day (source: Department of Energy).

9. THE VERY RICHEST – The top 1% of wage earners in the US reported at least $480,804 of pre-tax income in 2016 and own an estimated 29% of the total wealth in the country (source: Survey of Consumer Finances).

10. NOT MY BEST DECISION – 57% of Millennials burdened with student debt resulting from their college education regret taking out as many loans as they did. Millennials were born between 1981-97 and are ages 22-38 in 2019 (source: Citizens Bank).

11. CAMPAIGN TOPIC – Student loan debt has doubled in the United States since 12/31/09 and has quadrupled since 6/30/05 (source: Federal Reserve Bank of New York).

12. GRAY HAIR OR NO HAIR – An estimated 56 million Americans will be at least 65 years old by the year 2020, i.e., 1 out of every 6 Americans. An estimated 73 million Americans will be at least 65 years old by the year 2030, i.e., 1 out of every 5 Americans (source: Census Bureau).

13. GOLDEN – President Trump announced on 7/02/19 his intention to nominate Judy Shelton to the Federal Reserve’s Board of Governors. Shelton has called for the United States to return to the gold standard, a practice ended by the United States in 1971. The gold standard requires a country to tie the value of its money to the amount of gold the nation possesses, i.e., a fixed asset would back the dollar’s value (source: BTN Research).

14. HEAD SOUTH – The government divides the USA into 4 geographical areas: Northeast, South, Midwest and West. As of May 2019, the Northeast states had 1.258 million job openings while the states in the South had 2.736 million job openings. The total number of job openings nationwide: 7.323 million (source: DOL).

15. PARITY – After last week’s Major League Baseball All-Star game in Cleveland, the American League has won 45 games, the National League has won 43 games, and 2 games have ended in ties. The American League has scored 373 runs and the National League has scored 370 runs in the 90 All-Star games (source: MLB).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. LOOK-BACK – As of 6/30/19, the total return of the S&P 500 is +10.4% for the trailing 1-year, +14.2% per year for the last 3-years, +10.7% per year for the last 5-years and +14.7% per year for the last 10 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. AT MID-YEAR – The S&P 500 was up +18.5% YTD (total return) through 6/30/19, the index’s best performance at the half-way point of the year since 1997 (22 years ago) when the stock index was up +20.6% YTD (total return) as of June 30th (source: BTN Research).

3. THROW A DART – 418 of the stocks in the S&P 500 were up YTD through 6/30/19, including 221 stocks that were up at least +20% and 40 stocks that were up at least +40% (source: BTN Research).

4. MALL WOES – 4 of the 6 worst performing stocks in the S&P 500 YTD through 6/30/19 are department stores or clothing retailers (source: BTN Research).

5. GOING, GOING, GONE – 7,037 American retail stores have closed YTD through 6/30/19, already exceeding the 5,864 closures that occurred during all of calendar year 2018. This year’s store closures are on pace to exceed the all-time record of 8,139 from 2017 (source: Coresight Research).

6. LONGEST IN HISTORY – The US economic expansion began its 11th year (i.e., 121st month) a week ago today on 7/01/19, making it the longest-running expansion in our nation’s history based upon government data that has been maintained since 1854 or for 165 years (source: National Bureau of Economic Research).

7. IMPACT OF GLOBAL TRADE – Exports make up 12% of the gross domestic product (GDP) of the United States, 19% of the GDP of China, and 50% of the GDP of Germany. GDP is the annual market value of all goods and services produced domestically by a country (source: Economic Cycle Research Institute).

8. WE SELL EVERYWHERE – 44% of the revenues generated by the companies in the S&P 500 come from sales outside the United States (source: S&P Dow Jones Indices).

9. FROM LOWEST TO NOW – The yield on the 10-year Treasury note closed at 1.36% on 7/08/16 (i.e., 3 years ago today), its lowest closing yield ever. 10-year notes have been traded in the USA since 1790, i.e., 229 years of trading. The yield on the 10-year note closed last Friday 7/05/19 at 2.04% (source: Treasury Department).

10. UNPOPULAR RECORD – “Debt held by the public” totaled $15.8 trillion as of 9/30/18, 78% of the size of the US economy. The record high for “debt held by the public” as a percentage of the US economy was 106% in 1946. The government released a projection on 6/26/19 that “debt held by the public” as a percentage of the US economy will reach a new record high “within 13 to 20 years.” “Debt held by the public” plus “intergovernmental debt” ($5.8 trillion as of 9/30/18) equals “total public debt outstanding” (source: Government Accountability Office).

11. HOME DEBT – 65% of the debt of Americans as of 3/31/19 is mortgage debt, i.e., $10.4 trillion of mortgages out of $16.1 trillion of total household debt (source: Federal Reserve).

12. MORE EXPENSIVE ROAD TRIP – Gas taxes were raised in 12 US states as of 7/01/19, ranging from a 19 cent a gallon increase in Illinois and a 10.5 cent a gallon bump in Ohio to just a one-tenth of 1 cent increase in Nebraska and Michigan. The hike in Illinois was the state’s first gas tax increase since 1990 (source: Institute on Taxation and Economic Policy).

13. RAISE TAXES – Proposed House bill HR 860 (“Social Security 2100 Act”) would raise Social Security payroll taxes from 12.4% currently (the combined tax rate for employees and employers) to 14.8% by the year 2043. The combined rate would be raised 0.1 percentage point per year beginning in 2020 (source: Congress).

14. WHAT IF THE WORST HAPPENS? – All 18 major US banks subject to review passed the Federal Reserve’s “stress test” in 2019, the annual evaluation completed on Thursday 6/27/19 to determine a bank’s financial strength under a severe economic downturn. The examination focuses on the banks’ ability to continue to lend money to businesses and individuals under a “worst-case” economic scenario. Fed “stress tests” have been conducted annually since 2009 (source: Federal Reserve).

15. THEY MISSED THE EXTRA POINT – The Baltimore Orioles beat the Cleveland Indians by identical 13-0 scores on consecutive days (June 28-29, 2019), the first time in baseball’s 144-year history that a major league team has shut out its opponent while scoring at least 13 runs in back-to-back games (source: MLB).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. THE HOME STRETCH – The S&P 500 has closed at its calendar year high in the second half of the year (i.e., during the 6 months of July-December) 74% of the time since 1950. In 17 of the last 30 years, the index’s calendar year high has occurred during the month of December. 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. WELL ABOVE AVERAGE – With 1 trading week remaining in the first half of 2019, the S&P 500 is up +18.9% YTD (total return) through Friday 6/21/19. Over the last 25 years (i.e., 1994-2018), the S&P 500 has produced an average gain of +9.1% per year. The first 6 months of the year (i.e., January-June) have gained an average of +4.4% over the last 25 years (source: BTN Research).

3. AT THE BEGINNING – The ongoing bull market for the S&P 500, which began on 3/10/09, has gained +441% (total return) over its 10-year, 3 ½ month duration. The stock index gained +72% during the first 12 months of the bull run, including +27% during the first month of the bull market (source: BTN Research).

4. NUMBER THREE – 2019 is the 3rd year of Donald Trump’s 1st 4-year presidential term. The average return for the S&P 500 during the last 23 “presidential 3rd-years” has been a gain of +16.1% (total return), i.e., an average return based upon data going back to 1927. The last time the S&P 500 was negative for a “presidential 3rd-year” was in 1939 or 80 years ago (source: BTN Research).

5. CRYSTAL BALL – As of 12/17/18, 10 Wall Street strategists predicted where the yield on the 10-year Treasury note would be as of 12/31/19, i.e., a year down the road. All 10 individuals forecasted an increase in the 10-year note yield during the year from its actual 12/31/18 yield close of 2.68%, with the predictions ranging from a low of 2.75% to a high of 3.6%. Instead of rising however, the rate has fallen YTD in 2019 as the yield on the 10-year note closed at 2.06% last Friday 6/21/19 (source: Barron’s).

6. NEGATIVE – The yield on the 10-year German government bond fell to a record low -0.32% on 6/18/19, i.e., a new buyer of that bond is guaranteed to take a loss if he/she holds the bond to maturity (source: Financial Times).

7. NOT AS MUCH – China’s ownership of Treasury securities peaked at $1.20 trillion in August 2017 but has dropped 7.4% to $1.11 trillion as of April 2019 (source: Treasury Department).

8. MAYBE NEXT TIME – The Fed’s 4th meeting of 2019 ended last Wednesday with no change in short-term interest rates. The Fed last cut interest rates on 12/16/08 or 10 ½ years ago (source: Federal Reserve).

9. HOME BUYERS – The average nationwide interest rate on a 30-year fixed rate mortgage was 3.84% last week, just over ½ of 1% above its all-time low of 3.31% achieved at Thanksgiving 2012 (source: Freddie Mac).

10. AT RISK OF A TUMBLE? – The 4 most overvalued housing markets in the world today are Hong Kong, Munich, Toronto and Vancouver (source: UBS Global Real Estate Bubble Index).

11. NOT SAVING ENOUGH – The average 65-year old American male has accumulated retirement savings that will sustain him in retirement for 9.7 years, i.e., to just short of his 75th birthday. The problem: the average 65-year old American male has a life expectancy to 83 years, or 8.3 years beyond the point when his savings run out. This study assumed that male retirees would need retirement income of 70% of the individual’s pre-retirement pay (source: World Economic Forum).

12. MARIA DIDN’T HELP – Puerto Rico has negotiated a restructuring of $35 billion of sovereign debt, reducing that total by 66% to just $12 billion. The new debt total is to be paid off over the next 30 years (source: Puerto Rico Oversight, Management and Economic Stability Act of 2016).

13. SIMPLER RETURN – An estimated 18 million taxpayers completed Schedule A (“Itemized Deductions”) as part of their 2018 tax return, down 61% in just 1 year (from 46.5 million itemizers in 2017). The reduction in the use of Schedule A was largely a function of the increased standard deduction created by the “Tax Cuts and Jobs Act of 2017” (source: Joint Committee on Taxation).

14. JULY FOURTH – When the Continental Congress approved the Declaration of Independence on 7/04/1776, the population of the 13 colonies was 2.5 million, equal to the population of Houston today (source: Census Bureau).

15. JUMP FROM HERE – The 3-point line in men’s college basketball is being moved to 22 feet, 1 ¾ inches for next season. The world long jump record is 29 feet, 4 ¼ inches (source: NCAA Playing Rules Oversight Panel).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. BETTER THAN AVERAGE – The S&P 500 is up +16.3% YTD (total return) through the close of trading last Friday 6/14/19, the completion of 24 trading weeks of 2019. The index has set 4 all-time record closes this year and the 114 trading days already completed in 2019 are split 59/41 between “up” and “down” 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. BONDS – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $43.1 trillion as of 3/31/19. Treasury debt ($15.9 trillion) makes up the largest piece of the US bond market (source: Securities Industry and Financial Markets Association).

3. STOCKS – The total capitalization of the US stock market was $31.1 trillion as of 3/31/19, or 72% of the size of the US bond market as of the same date (source: Wilshire).

4. WAS BAD, NOW BEST – The worst performing stock within the S&P 500 during calendar year 2018 lost 67.1%, i.e., change of the stock price not counting the impact of dividends. That same stock is up +107.0% YTD as of the close of trading last Friday 6/14/19, the best performing stock within the index through 24 weeks of calendar year 2019 (source: BTN Research).

5. THEY MAKE THINGS – US manufacturers employed 12.8 million workers as of 12/31/18, almost identical to the 12.9 million manufacturing jobs in the country as of 12/31/41 or 77 years earlier. However, 264,000 new manufacturing jobs were added during calendar year 2018, the greatest annual increase since 1997 or 21 years ago (source: Department of Labor).

6. TEN YEARS AFTER THE BOTTOM – The 18-month recession that the United States experienced between December 2007 and June 2009 wiped out more than $7 trillion of real estate assets and stock portfolios. At the low point, the collective net worth of Americans fell to $50.4 trillion as of 3/31/09. 10 years later, the balance sheets of Americans have gained +115% from that 2009 bottom to reach a record level of $108.6 trillion as of 3/31/19 (source: Federal Reserve).

7. JOBLESS RATE – The last recession in the USA began at the end of December 2007 and lasted 18 months through June 2009. The nation’s unemployment rate as of 12/31/07 was 5.0%, climbing to 9.5% as of 6/30/09 (source: National Bureau of Economic Research, Department of Labor).

8. LATER THIS YEAR? – The probability of a Fed rate cut as of the end of last week (Friday 6/14/19) at its meeting scheduled for 6/19/19 was 23%. The probability of a Fed rate cut at its 7/31/19 meeting was 87%. The probability of a Fed rate cut at its 9/18/19 meeting was 97% (source: CME Group).

9. BUDGET REVIEW – During the first 8 months of fiscal year 2019, i.e., through 5/31/19, tax receipts are up +2.3% from the previous year to $2.27 trillion while outlays are up +9.3% to $3.01 trillion (source: Treasury Department).

10. TAKING THE KEYS – Banks repossessed 10,634 homes nationwide in May 2019. Banks repossessed 93,777 homes in May 2010, the 2nd worst month ever in American history (source: ATTOM Data Solutions).

11. CONTROLLING SUPPLY – The 15 nations that make up OPEC produced 29.9 million barrels of crude oil per day in May 2019, the cartel’s lowest monthly production in more than 5 years and 2.6 million barrels a day below the 32.5 million barrels a day produced just 7 months earlier in October 2018 (source: Rystad Energy).

12. GUSHER – US field production of crude oil reached 12.4 million barrels a day for the week ending 5/31/19, the largest weekly total reported in the 99 years this statistic has been tracked (source: Department of Energy).

13. YOUNG AND OLD – By the year 2035, the number of Americans at least age 65 (projected to be 78.0 million) will exceed the number of Americans under the age of 18 (projected to be 76.4 million), the first time in our nation’s history that has occurred (source: Census Bureau).

14. NOT A SECOND TIME – There have been just 2 US presidents in the last 75 years who were elected to a first term in office who failed to win their re-election bid for a 2nd term – Jimmy Carter in November 1980 and George H.W. Bush in November 1992 (source: BTN Research).

15. TORONTO ROCKS – The Toronto Raptors beat the Golden State Warriors on 6/13/19 to win the 2019 NBA Finals. The Raptors had a 58-24 record during the 2018-2019 regular season. Baseball’s Toronto Blue Jays had a 25-43 record as of games played through 6/13/19, on pace for a 60-102 record (source: BTN Research).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. THIS YEAR – The S&P 500 stock index is up +15.7% YTD (total return) through last Friday 6/07/19, in spite of suffering a 6.6% tumble (total return) between 4/30/19 and last Monday 6/03/19. 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: source: BTN Research).

2. FUNDING A RETIREMENT – The S&P 500 has averaged +9.1% per year (total return) over the 25 years ending 12/31/18. A lump-sum of $908,089 (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).

3. WHO’S BUYING NOW? – Since Janet Yellen announced on 9/20/17 a plan to shrink the Fed’s balance sheet by having bonds mature without reinvesting the principal into newly issued bonds, the “securities held outright” by the Fed have declined by $575 billion to $3.7 trillion (source: Federal Reserve).

4. CHANGED THEIR MIND – There have been 4 rate-hike cycles initiated by the Fed over the last 25 years, including the most recent cycle that has included 9 rate-hikes from 12/16/15 to 12/19/18, i.e., the “last rate hike” took place 6 months ago. The 3 previous Fed rate-hike cycles flipped from its “last rate hike” to its “first rate cut” after 5 months (July 1995), 7 ½ months (January 2001) and 15 months (Sept. 2007) (source: Federal Reserve).

5. SIX-TO-ONE RETURN – The average American worker who retires next year (in 2020) will have paid $36,000 in Medicare taxes during his/her working lifetime, far less than the $229,000 in Medicare benefits that he/she is projected to receive. The projected lifetime benefit total is net of Medicare premiums paid by the retiree (source: Urban Institute).

6. WHAT A DEAL – The first recipient of a monthly Social Security retirement benefit in January 1940 was 65-year old Ida May Fuller of Vermont. During the 3 years before Fuller retired, she paid $24.75 in payroll taxes (in total, not per year). Fuller lived another 35 years before dying at age 100 in 1975. During her retirement, Social Security paid Fuller $22,889 in retirement benefits, i.e., she received $925 of benefits for every $1 she paid into the program (source: Social Security).

7. YOU BEGIN WORK ON MONDAY – On 9/30/10, 130.4 million Americans had full-time jobs. From that low point, US employers have produced an uninterrupted hiring streak of 104 consecutive months of job gains, i.e., October 2010 through and including May 2019. That run has resulted in 20.7 million new jobs (to 151.1 million full-time workers), an average gain of +199,000 new jobs per month (source: Department of Labor).

8. MONEY – The top 10% of taxpayers received 47% of the $10.2 trillion of adjusted gross income (AGI) earned nationwide in tax year 2016. The bottom 90% of taxpayers received the other 53% of AGI (source: IRS).

9. SUBJECT TO A TARIFF? – 35% of the auto parts used by domestic auto makers are manufactured outside the United States, then imported into America (source: Deutsche Bank).

10. LESS WEIGHT, MORE MILEAGE – Every 10% reduction in the weight of an auto improves its fuel efficiency by 6-8% (source: Department of Energy).

11. BIGGEST CUSTOMER – 80% of Mexico’s exports are shipped to the United States (source: Financial Times).

12. AMERICAN FARMER – Net farm income in the United States (i.e., total gross income in excess of total expenses) is projected to be $69.4 billion in 2019, down 44% from its peak level of $123.4 billion in 2013 (source: Department of Agriculture).

13. BAD BANK – The Enloe State Bank of Cooper, TX failed and required a bailout from the Federal Deposit Insurance Corporation (FDIC) on 5/31/19, the first bank failure in the United States in 17 ½ months. That’s the longest stretch between bank failures since 2/02/07 or more than a dozen years ago (source: FDIC).

14. SERVED OUR COUNTRY – The 18.2 million military veterans in the United States are split 91/9 between men and women (source: 2017 American Community Survey).

15. BIG BRAIN – James Holzhauer’s run on the game show Jeopardy! ended last Monday 6/03/19 after 32 straight wins. He provided the wrong answer to just 36 questions in 33 days (source: ESPN).

 

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Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. HOT AND COLD – The best performing individual stock in the S&P 500 index during the first 5 months of 2019 (i.e., January-May) gained +88%. The worst performing individual stock in the S&P 500 during the first 5 months of 2019 lost 41%. 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. FIVE MONTHS – The S&P 500 was down 6.4% (total return) in May 2019, its first down month of the year. The index is still up +10.7% YTD (total return) through last Friday 5/31/19 (source: BTN Research).

3. JUST THREE – The top company in the Fortune 500, an annual evaluation based upon total revenues for the previous calendar year, has been held by just 3 different companies over the 64 years that the magazine has published the rankings (source: Fortune).

4. TEN YEARS – June 2019 is the 120th consecutive month of an economic expansion for the United States, tying the record set between March 1991 and March 2001. The nation has maintained records on the country’s business cycles, i.e., expansions and contractions, since 1854 (source: National Bureau of Economic Research).

5. NATION’S TOP BANKER – Jerome Powell has chaired 10 Fed meetings since taking over as the head of the Federal Reserve on 2/05/18. Powell has secured a unanimous vote at all 10 meetings to follow the “monetary policy action” recommended by him, i.e., 4 meetings that resulted in ¼ of 1% rate increases and 6 meetings that ended with “no change” to interest rates (source: Federal Reserve).

6. SHORT-STAFFED – The Federal Reserve’s Board of Governors is a 7-member group that is 2 people short today. The group last had 7 members on 7/31/13 or nearly 6 years ago. Members are appointed by the president and confirmed by the Senate (source: Federal Reserve).

7. DECLINING RATE – Of individual tax returns filed in calendar year 2010, 1.11% were audited or 1 out of every 91 returns. Since then, the audit rate has fallen for 7 consecutive years to 0.59% for individual tax returns filed in calendar year 2017, equal to 1 out of every 169 returns (source: IRS Data Book).

8. THIS IS THE MONTH – The month of June has had the greatest number of existing homes sold during each of the last 5 calendar years (2014-2018). 570,000 existing homes were sold in June 2018, an average of 19,000 a day nationwide (source: National Association of Realtors).

9. DEBT-FREE – 40% of US homeowners own their home free and clear of any mortgage debt or home equity loan. Of the 60% of homeowners with an outstanding debt balance, the median debt total is $126,000 (source: American Housing Survey).

10. REALLY BIG COUNTRY – The United States covers 1.997 billion acres in the 48 contiguous states, including state and federally owned land. There are 122.3 million households in the country, including homeowners and renters. If divided equally, each household would own 16.3 acres of land (source: BTN Research).

11. ARE YOU BETTER ON YOUR OWN? – The average American worker who retires next year (in 2020) will have paid $135,000 in Social Security taxes during his/her working lifetime, less than the $193,000 in Social Security retirement benefits that he/she is projected to receive (source: Urban Institute).

12. NEW LAW – The House passed 417-3 the “Setting Every Community Up for Retirement Enhancement Act of 2019” (aka the SECURE Act) on Thursday 5/23/19, legislation that contains multiple provisions to help workers save for retirement. E.g., the bill increases the required minimum distribution age from 70 ½ to 72. The Senate is considering similar but different legislation, a situation that would require a “conference committee” of House and Senate members to reconcile differences between the chambers’ final bills (source: Congress).

13. GOTTA START SOMEWHERE – An estimated 40% of this year’s college graduates will be “underemployed” with their first job, i.e., they will take a job for which they are academically overqualified (source: Strada Institute for the Future of Work).

14. POTUS – The 2020 US presidential election takes place on 11/03/20 or 17 months from today. 23 Democrats have announced their run for the White House, including 6 women and 17 men (source: New York Times).

15. ADVANTAGE RAPTORS? – Golden State is in their 5th straight NBA Finals but the best-of-7 series vs. Toronto will be the 1st in the 5-year run where the Warriors do not have home-court advantage in the finals (source: NBA).

 

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Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. HISTORY – 3 of the upcoming 4 months rank as the bottom 3 performers for the S&P 500 over the last 25 years, i.e., 1994-2018. September is ranked 10th of the 12 months (average total return loss of 0.10%), June is ranked 11th (average total return loss of 0.12%) and August is ranked last (average total return loss of 0.58%). 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. ALWAYS UP? – The median sales price of existing homes and condos sold in the 9 counties that make up the San Francisco Bay Area was $830,000 in March 2019, down 0.1% on a year-over-year basis, the first time a year-over-year drop has occurred in the Bay Area since March 2012 or 7 years earlier (source: CoreLogic, Inc.).

3. SIMPLER RETURN – As of 12/31/17, there were 77 million homeowners in the USA, of which 34 million claimed a mortgage interest deduction on Schedule A of their 2017 Form 1040. As of 12/31/18, there were 79 million homeowners in the USA, of which just 14 million claimed a mortgage interest deduction on Schedule A of their 2018 Form 1040. The reduction in the use of the mortgage interest deduction was the result of the increased standard deduction created by the “Tax Cuts and Jobs Act of 2017” (source: Tax Policy Center).

4. NOT HERE, NOT YET – 59% of 1,804 American small business owners (SBOs) surveyed in February 2019 report that as of that date, the US-China trade war and resulting tariffs had no impact on their businesses. The SBOs surveyed have less than $5 million of annual revenues and less than 100 employees (source: Bank of America).

5. LAST YEAR – US companies exported $120 billion of goods to China in 2018. Chinese companies exported $540 billion of goods to the USA in 2018. The current US-China trade war began with the implementation of tariffs on 7/06/18 (source: Commerce Department).

6. IMPACT OF TARIFFS – US companies exported $26 billion of goods to China in the 1st Q 2019. Chinese companies exported $106 billion of goods to the USA in the 1st Q 2019 (source: Commerce Department).

7. OUT OF BUSINESS – YTD through Friday 5/17/19, approximately 6,400 retail stores have gone out of business and closed across the USA, more than the 5,864 stores that closed nationwide during all of 2018. This year’s closures are on pace to exceed the all-time record of 8,139 store closures in 2017 (source: Coresight Research).

8. BIG AND REALLY BIG – 62 publicly held US companies produced at least $1 billion of sales per week in 2018, up from 58 companies that accomplished that level of weekly sales in 2017. Just 1 domestic company generated more than $1 billion of sales per day during 2018 (source: Fortune).

9. KICKSTARTER FUNDING – Colorado Governor Jared Polis signed HB19-1280 on 5/13/19, state legislation that allows the parents of a Colorado newborn to establish a college savings account with an initial $100 tax-free contribution from the state. The law becomes effective 1/01/20 (and runs for 20 years) for each child born or adopted in Colorado (source: Colorado General Assembly).

10. COLLEGE – During the 2018-19 school year, American colleges awarded 1.88 million bachelor’s degrees, down from a record 1.96 million degrees from the 2016-17 school year (source: Nat’l Ctr. for Education Statistics).

11. RECYCLING – Just 15% of plastic is recycled globally, i.e., 85% of plastic ultimately is burned, dumped into a landfill or dropped into the ocean (source: United Nations).

12. WHO’S RIGHT? – On 3/11/19, President Trump presented a 10-year budget forecast (for fiscal years 2020-29) that projected $49.0 trillion in tax receipts and $56.3 trillion in outlays, resulting in a $7.3 trillion deficit for the decade. On 5/09/19, the Congressional Budget Office analysis of the president’s budget projected $45.2 trillion in tax receipts and $55.1 trillion in outlays, resulting in a $9.9 trillion deficit for the decade (source: CBO).

13. A LOST GENERATION – The economy of Greece is projected to grow +2.4% in 2019 after growing +2.1% in 2018. If Greece’s economy continues to grow at an annual rate of +2% per year going forward, it will not recover back to its 2009 “pre-crisis” size until the early 2030s (source: International Monetary Fund).

14. NEWBORNS – Our nation’s “general fertility rate,” defined as the number of births per 1,000 women between the ages of 15-44, was just 59.0 births in 2018, a record low for birth data that has been tracked nationally since 1909 or for the last 110 years (source: National Center for Health Statistics).

15. WORLD’S BEST – The top 6 golfers in the world as of Monday 5/20/19 have each been ranked # 1 in the world at some point in their careers. The current # 1 golfer is Brooks Koepka (source: Official World Golf Rankings).

 

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. NEED 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 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. 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).

2. EACH DAY – Outlays by the US government during fiscal year 2008 were $2.98 trillion, i.e., $8.2 billion a day. Outlays by the US government during fiscal year 2018 were $4.11 trillion, i.e., $11.3 billion a day (source: Office of Management and Budget).

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

4. NEW JOBS – 92% of the 820,000 new jobs created in the United States YTD through 4/30/19 are in the private sector, i.e., non-government jobs (source: Department of Labor).

5. TICK-TOCK – The US government is projected to run out of “cash on hand” in October or November 2019, i.e., the federal government would not be able to meet its financial obligations because it lacks the authority to borrow additional funds since our “debt ceiling” has not been increased. Unless Congress votes to increase our nation’s $22 trillion “debt ceiling” before it runs out of cash, the US government would default on some of its debt. As of 5/09/19, the Treasury Department had $600 billion of cash available (source: Bipartisan Policy Center).

6. ON THE EDGE – 31% of 1,010 working adults surveyed in February 2019 say they would not be able to pay for daily necessities without utilizing credit card debt or accessing their retirement savings if they were to miss just a single paycheck. 51% of those surveyed say they would have to use a credit card or dip into savings if they were to miss more than 1 paycheck (source: National Opinion Research Center).

7. FEWER FUTURE TAXPAYERS – The greatest number of births in US history (4.32 million) occurred in calendar year 2007, equal to 8 babies born per minute for the entire year. The 3.79 million births that occurred in 2018, the lowest American total since 1986, is equal to 7 babies born per minute (source: Center for Disease Control).

8. EXPENSIVE EDUCATION – Outstanding student loan debt in the USA was $1.49 trillion as of 3/31/19, up +126% (equal to +8.5% per year) from $660 billion of student debt as of 3/31/09 (source: Federal Reserve Bank of NY).

9. IMPACTED BY TARIFFS – 41% of the apparel and 72% of the footwear produced worldwide is manufactured in China (source: American Apparel & Footwear Association).

10. WHO PAYS? – When the United States imposes a 25% tariff on an imported good from China, e.g., a television or a laptop, the tariff is paid to the US Customs and Border Protection Service by an American-based broker who represents the US retailer (the “importer of record”) who is buying the Chinese good, i.e., the Chinese government does not pay the tariff (source: US Customs).

11. THAT HURTS – China’s economy is projected to suffer a 1.5 percentage point reduction if the US implements a 25% tariff on all imports from China, i.e., 6.6% (China’s 2018 actual growth) falling to 5.1% (source: Bloomberg).

12. IT’S WHY THEY ARE EXPENSIVE – 88% of the drugs that enter clinical trials do not receive FDA approval and never come to market for sale to the general public (source: Tufts Center for the Study of Drug Development).

13. KICK THE CAN – The 5 pension plans for state employees in Illinois were 40% “funded” as of 6/30/18, i.e., the end of fiscal year (FY) 2018. Illinois state law requires the plans to be 90% “funded” as of the end of FY 2045. Illinois Governor J.B. Pritzker has recommended the 90% funding requirement be delayed to FY 2052. The “funding ratio” equals the value of the assets supporting the 5 pension plans divided by a present value measurement of the pension obligations of the 5 plans (source: Illinois State Retirement Systems).

14. HIGH-PRICED HOME – Hedge fund billionaire Ken Griffin paid $238 million for a New York City penthouse in January 2019, the most expensive residential purchase in US history (source: New York Times).

15. FAST – High school senior Matthew Boling ran the 100 meters in 10.13, long jumped 25-4 ½ and anchored his team’s 4 x 400 relay team in 44.75 at the Texas state track meet on 5/11/19 (source: Washington Post).

 

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Copyright © 2019 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.