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Bill’s By The Number$

1. MISS A LITTLE, LOSE A LOT – The S&P 500 is up +15.8% YTD (total return) through the close of trading last Friday 5/10/19. Removing the 4 best trading days for the index in 2019 reduces the S&P 500’s YTD total return to a gain of +7.2%. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. THERE HAVE BEEN A DOZEN TUMBLES – From its all-time closing high of 2946 on 4/30/19, the S&P 500 has fallen 2.2% to its closing value of 2881 as of last Friday 5/10/19. During the index’s bull run that started on 3/10/09, the S&P 500 has withstood 12 drops of at least 5%, including 6 drops of at least 10% and 3 drops of at least 15% (source: BTN Research).

3. ALL THE STOCKS – Through the close of trading last Friday 5/10/19 (week # 19 of calendar year 2019), the market capitalization of all US stocks has increased +$4.3 trillion YTD to $31.7 trillion. At the start of the current bull market for stocks (an advance that began on 3/10/09), the market capitalization of all US stocks was $7.6 trillion (source: Wilshire).

4. ONE INDICATOR – The “price/earnings” ratio for the S&P 500 as of Friday 5/10/19 was 18.6, i.e., the raw index divided by the index’s trailing 12-months earnings per share before considering extraordinary items. The index’s long-term “price/earnings” ratio (dating back to 1954) is 16.7 (source: Bloomberg).

5. BORROW – The Treasury Department auctioned off $19 billion of 30-year bonds with a 2.875% coupon last Thursday 5/09/19. The new bonds mature on 5/15/2049. The government has auctioned off 30-year bonds since 1977. The lowest yield ever on our nation’s 30-year paper was 2.10% on 7/08/16 (source: Treasury Department).

6. MAYBE THEY WILL? – The Fed Funds futures market is forecasting a 57% chance of a December 2019 rate cut by the Federal Reserve as of the close of trading last Friday 5/10/19 (source: CME Group).

7. THE RIGHT SKILLS ARE NEEDED – As of 3/31/19, there were 6.2 million unemployed Americans and 7.5 million job openings. As of 7/31/09, there were 14.6 million unemployed Americans and 2.1 million job openings (source: Department of Labor).

8. LOWEST EVER – 9 states reported jobless rates at the end of March 2019 that were the lowest ever for their respective states, including Vermont (2.3%), South Carolina (3.2%) and Pennsylvania (3.9%). States have tracked unemployment rates since January 1976, i.e., for the last 43 years (source: Bureau of Labor Statistics).

9. INTO THE TRASH CAN – 61% of 600 human resource managers who were surveyed do not review the resumes of job applicants who are lacking a 4-year college degree (source: Harvard University).

10. AGING POPULATION – Between 1950 and 2018, the US population doubled from 159.1 million to 332.8 million while the number of Americans at least age 65 quadrupled from 12.8 million to 52.4 million (source: Social Security 2019 Trustees Report).

11. MORE YEARS IN RETIREMENT – From 1950 to 2018, the life expectancy of a 65-year-old American male has increased from 12.8 years to 18.1 years, i.e., an increase of 64 months. From 1950 to 2018, the life expectancy of a 65-year-old American female has increased from 15.1 years to 20.6 years, i.e., an increase of 66 months (source: Social Security).

12. NOT A PENNY – 23% of working Americans save nothing from their monthly income for their future retirement (source: First National Bank of Omaha 2019 Savings Survey).

13. IN THE RED NOW – The Social Security Trust Fund paid out $853.5 billion in 2018, more than the $831.0 billion the fund produced in total income. The 2018 deficit breaks a streak of 34 consecutive years (1984-2017) of “income exceeding cost.” As recently as 2009, the annual surplus was $134 billion (source: OASI Trust Fund).

14. MONEY TO SPARE – The US government ran a $160.3 billion surplus during the month of April 2019. The surplus was the difference between $535.5 billion of tax receipts (the largest monthly amount collected in our nation’s history) and $375.2 billion of outlays (source: Treasury Department).

15. GAME HAS CHANGED – Pitcher Babe Ruth went 24-13 in 1917 with a 2.01 ERA over 326.3 innings and led the American League with 35 complete games. 101 years later in 2018, there were 42 complete games thrown by pitchers in MLB across all 30 teams (source: MLB).

 

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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. STOCKS – The S&P 500 was up +18.3% YTD (total return) through Tuesday 4/30/19, its best YTD performance as of April 30th in any year since 1987 when the stock index was up +20.1 YTD (total return) as of 4/30/87. Calendar year 1987 included an October market crash, but still produced a full year gain of +5.3%. 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. SELL IN MAY? – In analyzing the S&P 500 since 1989, the 6-month periods that begin on November 1st have beaten the 6-month periods that begin on May 1st in 19 of 30 years, i.e., the performance over the 30-years from 5/01/89 through 4/30/19. The 6-month periods ending April 30th are up +731% (total return) vs. a +119% gain for the 6-month periods ending October 31st (source: BTN Research).

3. WAY DOWN, WAY UP – The top performing stock within the S&P 500 YTD through 4/30/19 had a gain of +68.8%. That same stock lost 32.2% during calendar year 2018 (source: BTN Research).

4. FOURTEEN – The best 14 trading days for the S&P 500 over the last 10 years (2009-2018) gained +86.2% (total return), more than the +84.2% gained by the other 2,502 trading days in the decade (source: BTN Research).

5. ALL ARE TOO HIGH – On 12/17/18, 10 Wall Street strategists forecasted the yield of the 10-year Treasury note as of 12/31/19, i.e., a year into the future. The 10 predictions ranged from a low of 2.75% to a high of 3.60%. The yield on the 10-year Treasury note closed at 2.50% as of Tuesday 4/30/19 (source: Barron’s).

6. REALLY LOW – The USA has reported an unemployment rate lower than the April 2019 jobless rate of 3.6% only 17 times since January 1954, equal to just 2% of the preceding 783 months (source: Department of Labor).

7. MANY TRILLIONS – The US economy was worth $21.1 trillion as of 3/31/19. The national debt was $22.0 trillion as of 3/31/19. The S&P 500 was worth $24.8 trillion as of 3/31/19. (source: BTN Research).

8. GOOD START – It was only the “advance” estimate on the growth of the US economy during the 1st quarter 2019, but the +3.2% increase (i.e., quarter-over-quarter change expressed as an annualized result) reported on 4/26/19 represents a rate that has not been bested during any calendar year since 2005 (source: Department of Labor).

9. LONG-TERM ISSUE – The estimated Social Security shortfall today (i.e., a present value number) between the future taxes anticipated being collected and the future benefits expected to be paid out over the next 75 years is $13.9 trillion. The entire $13.9 trillion deficit could be eliminated by an immediate 2.70 percentage point increase in the combined Social Security payroll tax rate (from 12.40% to 15.10%) or an immediate 17% reduction in benefits that are paid out to current and future beneficiaries (source: Social Security Trustees).

10. MOVED MONEY AROUND – The Disability Insurance (DI) Trust Fund had been projected to be depleted by the 4th quarter 2016 per a 7/22/15 Social Security Trustee report. This forced Congress to allocate more of the 12.4% combined payroll taxes collected from employers and employees for 3 years (2016-17-18). The additional funds (from 1.8 percentage points to 2.37 percentage points out of the 12.4 percentage points) has now pushed the DI Trust Fund’s exhaustion date to 2052 or 33 years out (source: Social Security Trustees 2019 Report).

11. MEDICARE – Per a 4/22/19 report, the trust fund supporting Medicare Part A (hospital insurance) is projected to be depleted by 2026. The long-term (75-year) present value shortfall in the trust fund could be corrected by an immediate 0.91 percentage point increase in combined Medicare payroll taxes (from its current 2.90% to 3.81%) or an immediate 19% reduction in Medicare expenditures (source: Medicare Trustees 2019 Report).

12. DOLLARS IN, DOLLARS OUT – At the end of 2018, Medicare was covering 59.9 million Americans (18% of our population). The program was cash positive in 2018, taking in $756 billion of income (including $10 billion of interest income) while paying out $741 billion in benefits (source: Medicare).

13. MAYBE NEVER? – 34% of American workers surveyed anticipate that they will be at least age 70 before they retire (source: EBRI 2019 Retirement Confidence Survey).

14. THREE BUCKS – The last time the average price of gasoline in the USA was at least $3 a gallon was on 10/31/14. The average price nationwide was $2.90 as of last Friday 5/03/19 (source: AAA).

15. GRONK’S HIGH SCHOOL – Miles Sanders of Penn State was drafted by the Philadelphia Eagles in round # 2 of the recent NFL draft. Sanders would be the 14th player from Woodland Hills H.S. in Pittsburgh to play in the NFL. Former New England Patriot Rob Gronkowski is a 2007 graduate of Woodland Hills (source: ESPN).

 

– 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. YEAR-TO-DATE – With 2 days remaining in April, the YTD total return of the S&P 500 is a gain of +18.0%, well ahead of the index’s +3.7% average return for the first 4-months over the last 25 years (1994-2018). 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. HIGHEST CLOSE EVER – The S&P 500 achieved an all-time closing high last Friday 4/26/19 when it finished the trading day at 2940, the index’s 209th record close during the ongoing bull market that began on 3/10/09. The S&P 500 was launched on 3/04/57 or 62 years ago (source: BTN Research).

3. SINCE CHRISTMAS EVE – The low close in calendar year 2018 for the S&P 500 (2351) took place on 12/24/18. Since then, the index has gained +25.9% (total return) in just over 4 months to close at 2940 as of the close of trading on Friday 4/26/19 (source: BTN Research).

4. ALMOST HALF – 44% of the individual stocks within the S&P 500 are up at least +20% YTD through last Friday 4/26/19 (source: BTN Research).

5. IN THE YEAR 2034 – Social Security trustees announced on 4/22/19 that the trust fund backing the payment of Social Security benefits (OASI retirement benefits) would be zero in 2034. A zero “trust fund” does not mean the payment of Social Security benefits would also go to zero, but rather would drop to 77% of their originally promised levels through the year 2095. When the trustees released their report in 2009 (i.e., 10 years ago), the Social Security Trust Fund was projected to be depleted in 2039 (source: Social Security Trustees 2019 Report).

6. HIGHER HERE THAN THERE – The US economy is projected to grow +2.2% in 2019, nearly a percentage point higher than the +1.3% projected growth rate for the collective economies of the 19-nations that make up the Eurozone (source: International Monetary Fund).

7. HALF AS MUCH – Inflation, as measured by the “consumer price index” (CPI) was up +2.2% annually for the last 25 years, i.e., 1994-2018. Inflation was up +4.3% annually over the 50 years before that, i.e., 1944-1993. The CPI is a measure of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).

8. TWICE AS LONG – On Wednesday 5/01/19, the USA will begin its 119th month of an economic expansion, i.e., the nation has been expanding since July 2009. The average length of all 33 expansions in the country since 1854 (not counting the current expansion) is 58 months (source: National Bureau of Economic Research).

9. IT TAKES TIME – The last economic expansion in the USA (before the current ongoing expansion) ended in December 2007, i.e., a recession began in January 2008. The announcement confirming the end of the expansion was made on 12/01/08 or a year after the expansion ended (source: Business Cycle Dating Committee).

10. NEW JOB SKILLS NEEDED – Employers in 12 different industries worldwide anticipate that the split between “work performed by humans” vs. “work performed by machines” will shift from 71/29 in 2018 to 58/42 within just 3 years. The 12 industries include automotive, aviation, energy, financial services, infrastructure, oil & gas, and professional services (source: World Economic Forum, The Future of Jobs Report 2018).

11. WHAT A SURPRISE – A divorced person who was married for at least 10 years is eligible to collect a Social Security survivor benefit when their ex-spouse dies, even if the ex-spouse had remarried. Please consult a Social Security expert for details (source: Social Security Administration).

12. ONE OUT OF FOUR – 24% of the 535 members of Congress today are women, including 25 (out of 100) senators and 102 (out of 435) House members (source: Congress).

13. AGAIN – The US government has incurred a $691 billion deficit halfway through fiscal year 2019, i.e., as of 3/31/19, well on its way to an 18th consecutive year resulting in a budget deficit (source: Treasury Department).

14. STUDENT LOANS – Presidential candidate Elizabeth Warren (D-MA) proposed on 4/22/19 that households making less than $100,000 in adjusted gross income (AGI) would be able to cancel up to $50,000 in student loan debt. The ability to eliminate student loan debt would phase out pro-ratably through a household AGI of $250,000, e.g., a household making $130,000 could wipe out $40,000 of student loan debt (source: ElizabethWarren.com).

15. NO GUARANTEE – The 6 highest paid quarterbacks in the NFL in 2018 – Aaron Rodgers (Green Bay), Matt Ryan (Atlanta), Kirk Cousins (Minnesota), Jimmy Garoppolo (San Francisco), Matthew Stafford (Detroit) and Derek Carr (Oakland) – did not make the post-season playoffs last season (source: NFL).

 

– 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. ON THIS DATE – Through last Thursday 4/18/19 (the stock market was closed on “Good Friday”), the S&P 500 was up +16.6% YTD (total return). The S&P 500 has been up as much as +10% YTD (total return) as of April 18th in only one other year in the last 15 years – a +10.8% YTD performance as of 4/18/12 or 7 years ago. 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. A LOT IN A FEW – Half of the net wealth created in the US stock market going back to 1926 was produced by just 90 publicly held companies (source: Hendrik Bessembinder, Arizona State University).

3. BIGGEST – The largest defined benefit pension plan in America (measured by assets) is the California Public Employees Retirement System (CalPERS) with assets of $375 billion as of 9/30/18 (source: CalPERS).

4. TEN-YEAR PAPER – The yield on the 10-year Treasury note closed at 2.56% on 4/18/19. The 10-year note yield closed at 2.98% on 4/18/09 (10 years ago). The 10-year note yield closed at 5.23% on 4/18/99 (20 years ago). The 10-year note yield closed at 9.06% on 4/18/89 (30 years ago) (source: Treasury Department).

5. STRONGER BANKS – As of last Monday (4/15/19), the US banking system had gone 16 months since the nation’s last bank failure took place on 12/15/17. That’s the longest stretch without a bank bailout in our country since February 2007 or more than a dozen years ago. Over the last 10 years, 480 banks failed nationwide, including 157 during calendar year 2010 alone (source: Federal Deposit Insurance Corporation).

6. IN JUST TEN YEARS – The average cost of tuition, fees, room and board during the 2018-2019 school year at an average 4-year public college was $21,370, up +5.4% per year over the last 30 years. If that same rate of inflation continues over the next decade, 1-year of college (at an average in-state public college) will cost $36,040 during the school year of 2028-2029 (source: College Board).

7. EXPORTS TAKE OFF – For the week ending Friday 4/12/19, the US exported 2.4 million of barrels of crude oil per day. 5 years earlier (4/11/14), the US was exporting 67,000 barrels of crude oil per day or just 3% of its current export level. The surge in US oil exports started in late 2015 following the lifting by Congress of a 40-year ban on most overseas oil sales (source: US Energy Information Administration).

8. NOT WHERE YOU’D THINK – The state of North Dakota has the highest percentage of adult residents who have a net worth of at least $5 million (source: Internal Revenue Service).

9. NOTHING?! – 45% of the 76 million “Baby Boomers” in the USA have no retirement savings. “Baby Boomers” were born between 1946 and 1964, i.e., the oldest “boomers” turned 65 years old in 2011. “Boomers” reaching age 65 in 2019 represent the 9th year of 19 years of “Baby Boomers” (source: Insured Retirement Institute).

10. GOTTA HAVE IT – Americans pay “out-of-pocket” on average just 15% of the total health care expenditures they generate in a year. “Out-of-pocket” expenses include deductibles and co-payments for services and prescription drugs but does not include the cost of health insurance premiums. The remaining 85% of annual health care expenditures is covered by insurance (source: Health Care Cost Institute).

11. TALENT DROP-OFF – 44% of employers surveyed report they are “having difficulty” hiring new employees with skills equal to that of the firm’s retiring employees (source: Robert Clark, Willis Towers Watson).

12. WHAT’S YOUR PERCENTAGE? – Americans pay an estimated 84% of the federal income taxes that would be collected if all taxpayers were 100% honest. The nation’s “net compliance rate” is equal to “tax paid voluntarily and timely” plus “enforced and other late payments” divided by “total true tax” (source: Internal Revenue Service).

13. CUT IN HALF – Banks repossessed 35,787 homes during the 1st quarter 2019, an average of 11,929 per month. Banks repossessed 230,305 homes during all of 2018, an average of 19,192 per month. Banks repossessed 291,579 homes during all of 2017, an average of 24,298 per month (source: ATTOM Data Solutions).

14. MISTER KNOW-IT-ALL – James Holzhauer of Las Vegas has won 11 consecutive Jeopardy games through Friday 4/19/19, winning a total of $771,920. Ken Jennings holds the all-time Jeopardy record, winning 74 straight games and $2.52 million in 2004 (source: Jeopardy).

15. BUT CAN TIGER DRAIN A THREE-POINTER? – At the end of 2017, Tiger Woods was ranked # 1,199 in the world golf rankings and NBA basketball star Steph Curry was ranked # 1,928. Last week, Woods was ranked # 6 in the world and Curry was ranked # 2,041 (source: PGA).

 

– 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. FOUR OUT OF FIVE TIMES – Since 1950, there have been 65 different 5-year periods (i.e., the 5-years from 1950-54, 1951-55, 1952-56, . . . 2014-18). The S&P 500 has produced a positive total return result in 51 of the 65 periods, i.e., 78% 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. HARD TO CATCH UP – A 30-year old employee who is investing $500 at the beginning of every month in a tax-deferred 401(k) will accumulate $588,032 by age 60 if the funds grow at +7% per year. If that individual was forced to suspend his/her monthly deferral for just 5 years from ages 35-39, he/she would have to earn +8.8% per year from ages 40-60 to accumulate $588,032 by age 60. 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. DOLLAR CUT-OFFS – For tax year 2016 (the latest year that tax data has been released), it took $480,804 of adjusted gross income (AGI) to rank in the top 1% of taxpayers, $197,651 of AGI to rank in the top 5%, $139,713 of AGI to rank in the top 10%, and $80,921 of AGI to rank in the top 25% (source: Internal Revenue Service).

4. 3/29/51 – The top 3% of taxpayers in tax year 2016 made $256,673 of adjusted gross income (AGI), received 29% of all AGI nationwide, and paid 51% of the federal income taxes paid by all US taxpayers (source: Internal Revenue Service).

5. IMPACTS THE SIZE OF CONTRIBUTIONS – The average assumed rate of return, i.e., the discount rate, used by the pension plans maintained by state and local governments has dropped from 7.9% in 2010 to 7.3% today (source: National Association of State Retirement Administrators).

6. LOWEST IN YEARS – The percentage of Americans that are unemployed or are working part-time only because they are unable to find full-time work has fallen to 7.3% of the civilian labor force as of March 2019, the lowest percentage reported for this statistic since December 2000 (source: Department of Labor).

7. STUFF HAPPENS – 45% of American adults surveyed are “concerned” that a major health event (e.g., surgery, sickness or disability) could force them into a personal bankruptcy filing (source: Gallup).

8. ONE FOLLOWS THE OTHER – From the end of 2018 to the close of trading last Friday 4/12/19, the price of a barrel of oil has increased +41% (from $45.41 to $63.89 a barrel) and the price of a gallon of gasoline has increased +24% (from $2.266 to $2.811 a gallon) (source: NYMEX, AAA).

9. MADE UP OF – The $57.8 trillion of projected spending outlays for the US government over the next 10 fiscal years (2020-2029) is split between 64% of mandatory spending (e.g., Medicare, Medicaid, Social Security), 24% of discretionary spending (e.g., defense) and 12% of net interest costs (source: Congressional Budget Office).

10. IN LESS THAN A GENERATION – The average cost of 1-year of college at an average 4-year public institution (including tuition, fees, room and board) has tripled over the last 22 years, rising from $7,142 for academic year 1996-97 to $21,370 during academic year 2018-19 (source: College Board).

11. HOME BUILDING – 876,000 single-family homes began construction in 2018, the 7th year of increasing home starts since this measurement bottomed at 431,000 in 2011. The all-time US record for home starts in a single year: 1.72 million in 2005 (source: Census Bureau).

12. DOWNTURN – The United States has been in a recession during just 83 months over the last 50 years, equal to 14% of the months during the last half century (source: National Bureau of Economic Research).

13. NEARING A RECORD – The last recession in the United States ran for 18 months and ended in June 2009 or nearly 10 years ago. The longest expansionary stretch in history (based upon records maintained since 1854) is 120 months, the decade from March 1991 to March 2001 (source: National Bureau of Economic Research).

14. WOULD THEY EVER SELL? – At the end of 2018, China owned $1.12 trillion of US Treasury debt, 7% of the $15.61 trillion of Treasury debt that was outstanding as of 12/31/18 (source: Treasury Department).

15. LUCK OF THE (NORTHERN) IRISH – Rory McIlroy won $2.25 million by winning the Players Championship on 3/17/19, the most money ever paid for winning a PGA Tour sanctioned event (source: PGA).

 

– 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. THEN WHAT HAPPENED? – The S&P 500 has produced a quarterly performance better than the 1st quarter 2019 gain of +13.6% (total return) just 16 times in the last 50 years, i.e., 16 out of the 200 quarters or 8% of the time. The quarter following those 16 big quarters resulted in a gain 14 times. The 2 negative “follow-up” quarters occurred in 1975 and 1991. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. DOWN THEN UP – The S&P 500’s 4th quarter 2018 loss of 13.5% (total return) was followed by a 1st quarter 2019 gain of +13.6%, just the 6th time in the last 50 years that a “double-digit loss” quarter has been followed by a “double-digit gain” quarter (source: BTN Research).

3. LARGE IMPACT – The 13 largest stocks in the S&P 500 make up 25% of the total stock market capitalization of the index as of the close of trading last Friday 4/05/19. Thus, 3% of the stocks in the index represent 25% of the total value of the index. The S&P 500 is a market-cap weighted index (source: S&P).

4. BEST – April has been the best month for the S&P 500 over the last 25 years (i.e., 1994-2018), having gained an average of +1.92% (total return), just ahead of November’s +1.81% average gain (source: BTN Research).

5. REPURCHASE THE STOCK – Companies in the S&P 500 spent $806 billion on stock buybacks in 2018, breaking the old record for share buybacks of $589 billion set in 2007 (source: S&P).

6. WE’RE THE HIGH YIELDER – 10-year government debt in the United States was yielding 2.49% as of the close of trading last Friday 4/05/19. 10-year government debt in Germany was yielding 0.01% as of the close of trading last week (source: Wall Street Journal).

7. HALF WORK, HALF DON’T – 156.7 million Americans have full-time jobs today, 48% of our 328.7 million citizens (source: Department of Labor).

8. TRADE SCHOOL, NOT COLLEGE – There are 30 million full-time jobs in the United States today (19% of all jobs nationwide) that pay at least $55,000 per year and don’t require a bachelor’s degree from college (source: Georgetown University Center on Education and Workforce).

9. CAN’T CATCH UP – Student loan debt reached $1.46 trillion as of 12/31/18, up +8.6% per year over the last decade. An estimated 2 million millennials are living in rental housing today or they are back living with their parents instead of owning a home due to high student loan debt. Millennials were born between 1981-97 and are ages 22-38 in 2019 (source: J. P. Morgan Chase & Co.).

10. TAXES ARE DUE – The top 50% of taxpayers (ranked by adjusted gross) paid 97% of the $1.44 trillion of federal income tax collected in tax year 2016 (the latest year for which information has been released) (source: IRS).

11. UNPREPARED – 58% of Americans have not executed a will and other estate planning documents, e.g., a medical directive that specifies what actions (if any) should be taken to prolong an individual’s life (source: Caring.com).

12. SHOOTING FOR SEVEN – The 5 pension funds of the New York City Retirement Systems, totaling $186 billion of assets as of 12/31/18, was 76% funded as of 6/30/18. For the fiscal year ending 6/30/19, New York City will contribute $9.7 billion to the plans based upon an assumed rate of return of 7%, the target performance return for the 5 plans since 2012 (source: New York State Comptroller).

13. PLANNING FOR THE FUTURE – 53% of 2,217 American workers surveyed in February 2019 say they would not work for an employer who did not offer some form of a retirement plan. 68% of this group expressed “concerns” that they may come up short in their efforts to accumulate funds for a “comfortable retirement” (source: Prudential American Workers Survey).

14. LONG-TERM AVERAGE – The 80-year (1939-2018) average growth rate of the US economy is +3.6% per year. However, the actual growth rate of the US economy has reached +3.6% or greater in only 1 of the last 18 years, i.e., in 2004 (source: Commerce Department).

15. JUST A GAME – 252 players (out of 750) on the opening day rosters of major league baseball teams, i.e., 34% of all ballplayers, have salaries of at least $5 million for the 2019 season. That’s equal to $30,864 per game for each of the scheduled 162 games to be played during the regular season which runs to 9/29/19 (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. WAY ABOVE AVERAGE – The S&P 500 gained +13.6% during the 1st quarter 2019 (total return). The average 1st quarter gain for the index in the last 25 years (i.e., 1994-2018) has been +1.7%. The S&P 500 has gained an average of +9.8% per year (total return) over the last 50 years (i.e., 1969-2018). 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. A GAIN THIS YEAR – 88% of the stocks in the S&P 500 were trading at a price as of the close of business on Friday 3/29/19 that was higher than where they ended 2018 (source: BTN Research).

3. TWO OUT OF THREE – From its 12/31/18 closing value, the S&P 500 gained +328 points to close at 2834 last Friday 3/29/19. Since the beginning of 1950 (69 years ago), the S&P 500 has been “up” 66% of the quarters, i.e., 183 out of 277 quarters since 1/01/50 (source: BTN Research).

4. TRILLIONS – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $43.0 trillion as of 12/31/18. The US stock market was worth $27.4 trillion as of 12/31/18 (source: Securities Industry and Financial Markets Association).

5. YIELD CURVE – Some but not all economists view an inverted yield curve as a sign of future economic weakness. The last 7 recessions in the USA (since 1965) have been preceded by an inverted yield curve, i.e., the 3-month Treasury bill yield exceeding the 10-year Treasury note yield. There were also 2 “inversions” that were not followed by a recession within a 12-month period (source: Federal Reserve Bank of Cleveland).

6. RECORD HIGH TOTAL – 117 Chinese corporate bonds worth $16 billion defaulted in 2018, an all-time default record by amount in China (source: Fitch Statistics).

7. FUTURE PLANS – 48% of households in America headed by individuals at least age 55 have no retirement savings, 26% have a defined contribution (DC) plan (e.g., 401(k) or IRA) but no defined benefit (DB) pension plan, and the remaining 26% have both a DC and a DB plan (source: Government Accountability Office).

8. PREPARE FOR IT – A 65-year old American couple has a 48% chance that at least one of them will live to age 90, i.e., at least a 25-year life expectancy (source: Social Security Administration).

9. END OF LIFE – 1 out of 3 Americans at least age 85 has Alzheimer’s (source: The Atlantic).

10. LONG-TERM PREDICTION – In January 2019, the Congressional Budget Office (CBO) forecasted annual budget deficits for the US government of at least $1 trillion for 8 consecutive years beginning with fiscal year 2022, i.e., 2022-2029. The government has suffered an annual budget deficit of at least $1 trillion during just 4 fiscal years in history, i.e., 2009-2012 (source: CBO, Treasury Department).

11. NOT SO ACCURATE – In January 2008 (11 years ago), the CBO forecasted aggregate budget surpluses (totaling $830 billion) for the US government for the 7 fiscal years beginning with fiscal year 2012, i.e., 2012-2018. In reality, the government suffered budget deficits during each of those 7 fiscal years, a total of $4.7 trillion of deficits over the 7-year period (source: CBO, Treasury Department).

12. A DIFFERENT OPINION – Stephen Moore, co-author of a Wall Street Journal op-ed article from 3/14/19 titled “The Fed Is a Threat to Growth,” was nominated by President Donald Trump on 3/22/19 to serve on the Federal Reserve’s 7-member Board of Governors. In the op-ed piece, Moore penned that “the real (US) economy is ready to reignite, but (Jerome) Powell’s tight-money policy is acting like a wet blanket.” Moore’s appointment is subject to Senate approval (source: White House).

13. INCREASED BUYING POWER – The average interest rate nationwide on a 30-year fixed rate mortgage was 4.06% last week, its lowest level of 2019. As recently as 11/15/18, the 30-year fixed rate mortgage had an average interest rate of 4.94% (source: Freddie Mac).

14. JUST A SELECT FEW – The US Supreme Court receives approximately 7,000 requests each year to hear cases that have already been adjudicated in a lower court. The nation’s top court accepts just 100-150 cases for their review from the 7,000 petitions (source: Supreme Court).

15. WILL NEVER BE MATCHED – There were 8 complete game shutouts in the American League in 2018, compared to 11 in the National League. St. Louis Cardinal pitcher Bob Gibson had 13 complete game shutouts during the 1968 baseball season, the all-time record in MLB (source: Major League Baseball).

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Bill’s By The Number$

1. COMPARING FIRST QUARTERS – With just a week remaining in the 1st quarter 2019, the S&P 500 has gained +12.3% YTD (total return). If that result holds up during the upcoming week, it would be the best 1st quarter performance for the stock index since 2012 when the S&P 500 gained +12.6%. The 2019 performance is on pace to be just the 5th first quarter in the last 30 years that has produced at least a +10% gain. 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. BOUNCE BACK – There have been 10 bear markets for the S&P 500 since 1946, i.e., at least a 20% drop from a previous closing high. It has taken 26 months on average for the S&P 500 to bounce back from the low point in the previous 10 bear markets and achieve a new closing high (source: BTN Research).

3. QUICK RETURN – From a 9/20/18 all-time closing high of 2931, the S&P 500 dropped 19.8% to close at 2351 on 12/24/18, falling just short of the 20% threshold that would have made it the 11th bear market for the index since 1946. It will take less than a +5% index gain from last Friday’s close (on 3/22/19) to achieve a new all-time closing high, just 3 months removed from the near-bear market low set on 12/24/18 (source: BTN Research).

4. HOUSEHOLDS WITH MONEY – A household with a $1 million net worth ranks in the top 88% of households in America. A household with a $4 million net worth ranks in the top 97% of households in America. A household with an $11 million net worth ranks in the top 99% of households in America (source: DQYDJ.com).

5. WORK TO BE DONE – 3 of the top 4 occupations projected to create the greatest number of new jobs nationwide between 2016-2026 are in the health care industry – personal care aides (+777,600 new jobs), registered nurses (+438,100 new jobs) and home health aides (+431,200 new jobs) (source: Department of Labor).

6. BARELY MOVED – The Fed began a rate-tightening cycle on 12/16/15 that has resulted in 9 rate hikes. In the 39 months since the initial rate hike on 12/16/15 through last Friday 3/22/19, the yield on the 10-year Treasury note has increased just 0.14 percentage points from 2.30% to 2.44% (source: Treasury Department).

7. ONE MONTH, ONE YEAR – The US government ran a $234 billion budget deficit in February 2019, its largest monthly deficit in history. As recently as 2007, the nation’s budget deficit for the entire fiscal year ($161 billion) was less $234 billion. Until fiscal year 1991, the US government had not recorded an annual deficit as high as $234 billion (source: Treasury Department).

8. REVERSE COURSE – The Federal Reserve began shrinking its balance sheet in October 2017 by having bonds mature without reinvesting the principal into new bonds. “Quantitative Shrinking” has resulted in $465 billion of existing bonds roll off the central bank’s balance sheet as of last week. The Fed announced on Wednesday 3/20/19 it will stop the “shrinking strategy” by the end of September 2019 (source: Federal Reserve).

9. NO ONE TO ARGUE WITH – 76% of all US businesses are 1-person self-employed entities, operating with zero additional employees (source: Census Bureau).

10. FOUR-TO-ONE – China had 15.2 million births in 2018, nearly 4 times the 3.9 million births in the United States last year (source: Census Bureau).

11. LUMP-SUM – IRS Notice 2015-49 (issued in July 2015) stated that the IRS would prevent employers from making a lump-sum payout offer to retirees who had already begun to receive monthly payments from a defined benefit pension plan but would allow lump-sum offers to be made to pension participants who had yet to begin the monthly payouts. But IRS Notice 2019-18 (issued 3/06/19) changes the previous IRS position, now allowing employers to make a lump-sum payment offer to any pension participant (source: IRS).

12. DIFFERENT RULES – The admission rate at Harvard for applications from the children of wealthy donors, alumni and faculty is 34%. The admission rate at Harvard for all other applications is 6% (source: Harvard University).

13. RARELY – Just 7% of 1,509 presidential vetoes in US history have been overridden by a two-thirds vote of the House (290 of 435 members) and the Senate (67 of 100 members) (source: Congress).

14. AT THE PUMP – The national average price of gasoline has been flat or increased for 38 consecutive days between Tuesday 2/12/19 and Friday 3/22/19, jumping 34 cents a gallon to $2.61 a gallon (source: AAA).

15. SELECT GROUP – Coming into the 2019 professional baseball season (the 144th all-time), 19,103 men have appeared in at least 1 game at the major league level (source: Major League Baseball).

 

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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. INSIDE THE TEN-YEAR BULL – If the 2,517 trading days from the 10-year bull market for the S&P 500 through Friday 3/08/19 are ranked from “best” to “worst,” the bottom 2,464 trading days (98% of all days) produce a zero-total return, while the top 53 trading days (just 2% of all days) create a +400% 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. CONCENTRATED IN A FEW – The wealthiest 10% of the 122 million households nationwide own an estimated 84% of all domestic stock values (source: National Bureau of Economic Research).

3. THREE BILLION SHORT – President Trump’s fiscal year 2020 budget plan that was released on 3/11/19 calls for $3.645 trillion of tax revenue, $4.746 trillion of outlays, resulting in a $1.101 trillion deficit for the 12 months ending 9/30/20. That’s equal to $10 billion of daily tax revenue vs. $13 billion of daily outlays (source: White House).

4. NEW NUMBERS – The 10-year budget proposal (for the fiscal years 2020-2029) that was released on 3/11/19 forecasts $49.0 trillion of tax receipts and $56.3 trillion of outlays, resulting in a $7.3 trillion deficit over the decade. The baseline numbers against which the White House compares its most recent forecast included $48.9 trillion of tax receipts and $59.0 trillion of outlays, resulting in a $10.1 trillion deficit (source: White House).

5. KEY ASSUMPTION – The 10-year budget proposal (for the fiscal years 2020-2029) that was released on 3/11/19 assumed GDP annual growth of +2.8% to +3.1% annually. The United States has achieved GDP annual growth of at least +2.8% in just 5 of the last 15 years (2004-2018). Gross Domestic Product (GDP) is the annual market value of all goods and services produced domestically by the US (source: White House).

6. REQUIRED SPENDING – Over the next decade (fiscal years 2020-2029), estimated discretionary spending is $13.4 trillion, an amount that is dwarfed by the government’s $35.9 trillion of projected mandatory spending (source: White House).

7. CREATIVE ACCOUNTING – The US debt ceiling was reinstated at $21.988 trillion as of 3/02/19 (the limit had been suspended from 2/09/18 to 3/01/19). The Treasury Department is projecting they will avoid a default on any government-issued debt instruments until September 2019 by delaying some regular outlays, e.g., pension payments made to the US Postal Service retirement fund (source: Treasury Department).

8. SNAIL MAIL – US Postal Service employment hit a peak level of 909,000 workers in April 1999 (20 years ago). As of January 2019, the number of postal workers had fallen 33% to 607,000 (source: USPS).

9. WAGE GAINS – The year-over-year increase in the average hourly earnings of all private sector workers was +3.4% in February 2019, i.e., wages of $27.66 per hour in February 2019 vs. wages of $26.75 per hour in February 2018. That’s the largest year-over-year percentage increase reported in the private sector since April 2009 (source: Department of Labor).

10. WORTH IT? – The average college graduate with a bachelor’s degree will earn $2.8 million over his/her lifetime. The average high school graduate with no additional higher education will earn $1.5 million over his/her lifetime (source: Center on Education and the Workforce).

11. IMPACT OF INFLATION – To rank in the top 1% of US taxpayers took $80,580 of adjusted gross income (AGI) in 1980. To rank in the top 25% of US taxpayers took $80,921 of AGI in 2016 (source: Internal Revenue Service).

12. HONEST FOLKS – American taxpayers pay an estimated 84% of the federal income taxes that would be collected if all taxpayers were 100% honest in completing their returns, i.e., an 84% “voluntary compliance rate” (VCR). Germany’s VCR is 68% and Italy’s VCR is 62% (source: Internal Revenue Service, The Atlantic).

13. CONSTANT PRESSURE – 23% of 3,462 American workers surveyed admit that they live “paycheck-to-paycheck” all the time (source: CareerBuilder).

14. NEW EMPLOYEE PERK – A major US insurance company will begin in January 2020 to make matching contributions to the 401(k) accounts of its employees who are repaying student loans. The company will match dollar-for-dollar the payments made by an employee to repay a student loan up to 5% of the employee’s salary to a maximum $6,500 per year (source: Pensions & Investments).

15. BEST – For NBA games through 3/14/19, the Milwaukee Bucks (51-17) have the best record in the league. The last time the Bucks had the league’s best record for the season was in 1974 or 45 years ago (source: NBA).

 

– 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. BULL MARKET YEAR-BY-YEAR – The bull market for the S&P 500 reached 10 years in length as of the close of trading last Friday 3/08/19, having gained +400.1% over the period. The 2 best years (out of the 10 years) for the S&P 500 were the 1st year (up +72.3%) and the 5th year (up +23.7%). The 2 worst years (out of the 10 years) were the 7th year (down 2.2%) and the just finished 10th year (up +0.4%). Each of the annual returns are total return results which include the impact of reinvested dividends. 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). (source: BTN Research).

2. HALF AS MUCH – The total return for the S&P 500 over its 10-year bull market (i.e., 3/10/09 through 3/08/19) was a gain of +17.5% per year (total return). If you missed the 20 best percentage gain days over the 10-year bull run (i.e., 20 days in total, not 20 days per year), the +17.5% annual gain is cut in half to an +8.6% annual gain. There were 2,517 trading days over the entire 10 years (source: BTN Research).

3. REALLY BIG NUMBERS – President Trump is expected to release an overview of his fiscal year (FY) 2020 budget today, to be followed by budget details on Monday 3/18/19. Total FY 2020 government spending is projected to reach $4.69 trillion or just short of $13 billion a day (source: White House).

4. COMING SOON? – 10% of 281 economists surveyed in February 2019 believe the United States will be in a recession by 12/31/19. 42% of the group believe a recession will have started by 12/31/20 (source: National Association for Business Economics).

5. CONVOY – The US trucking industry moves 61% of the freight transported within the USA (measure by dollar value) and 65% of the freight transported to Canada and Mexico from the US (source: Bureau of Labor Statistics).

6. BUYING AND SELLING – The United States exported $2.5 trillion of goods and services in 2018, the largest total in history and up +36% in the last 10 years. The United States imported $3.1 trillion of goods and services in 2018, also the largest total in history and up +22% in the last 10 years (source: Commerce Department).

7. MAKING THINGS – The 12.8 million manufacturing jobs in the United States as of February 2019 is the nation’s largest total since December 2008 (source: Department of Labor).

8. PENT UP DEMAND – The increase in the number of “owner” households in the USA in the last 2 years almost matches the increase in the number of “owner” households in our country in the previous 14 years. From the end of 2002 to the end of 2016, the number of “owner” households increased by +3.8 million to 75.7 million. From the end of 2016 to the end of 2018, the number of “owner” households nationwide increased by +3.7 million to 79.4 million (source: Census Bureau).

9. HOMES – The average single-family home in the USA increased in value +5.7% during 2018. Home values in Idaho increased +11.9% (top state) while home values in North Dakota were flat (bottom state) (source: FHFA).

10. RENTAL RESTRICTIONS – Oregon Governor Kate Brown signed legislation on 2/28/19 that makes Oregon the 1st US state to impose statewide rent controls. The new law limits annual rent increases to “inflation plus 7%.” New apartment construction is exempted from the restrictions for 15 years (source: Oregon Senate Bill 608).

11. NO DOCTOR NEEDED – 25.5% of Americans had no claims for any health care service (i.e., they did not see a doctor or visit a clinic) or filled a drug prescription in 2017 (source: Health Care Cost Institute).

12. US AND THEM – The Chinese economy grew by +6.6% in 2018, its lowest growth rate since 1990. The US economy grew by +2.9% in 2018, its best growth rate since 2005 (source: National Bureau of Statistics of China, Commerce Department).

13. SELL THE FARM – US farms suffered its worst credit crisis in 1987 when high interest rates and falling land prices were the backdrop for 5,788 Chapter 12 bankruptcies nationwide. Just 498 farms filed for bankruptcy in 2018. Chapter 12 bankruptcy is available only to family farmers or commercial fishermen and is less expensive and less complex than a Chapter 11 bankruptcy filing (source: Department of Agriculture Farm Service Agency).

14. GUSHER – US field production of crude oil reached 12.1 million barrels a day for the week ending 2/22/19, the largest weekly total reported in the 99 years this statistic has been tracked (source: Department of Energy).

15. STRONG MAN – Iosua Opeta, an offensive lineman from Weber State, had 39 bench-press reps of 225 lbs., the most recorded at the NFL Scouting Combine in Indianapolis that ended 3/04/19 (source: NFL).

 

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