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Bill’s By The Number$

1. HUGE IMPACT – 43% of the Fortune 500 companies in 2017 (i.e., the 500 largest US companies as measured by annual revenues last year) were founded or co-founded by either an immigrant to the United States or by the child of an immigrant (source: Center for American Entrepreneurship). 1/15/18, #4

2. BIG CITY PEOPLE – 50% of the US population lives in just 143 counties in the USA, i.e., just 4.6% of the 3,142 counties throughout the nation are home to half our citizens (source: Census Bureau). 2/12/18 #11

3. DO I REALLY NEED IT? – Only 37% of all jobs in the United States require education beyond high school, i.e., 63% of American jobs require a high school diploma or less (source: Department of Labor). 2/26/18 #8

4. DISCRETIONARY VS. MANDATORY – Over the next decade (fiscal years 2019-2028), estimated discretionary spending by the US government is $14.1 trillion, an amount that is dwarfed by the government’s $35.9 trillion of projected mandatory spending (source: Office of Management and Budget). 3/12/18 #6

5. MORE WITH LESS – After adjusting for inflation, manufacturing output in the United States is up +62% over the last 30 years, i.e., 12/31/87 to 12/31/17. However, the number of manufacturing jobs in the United States have declined 29% over the same 30 years, falling from 17.8 million to 12.6 million (source: Department of Labor). 4/02/18 #7

6. START SAVING NOW – The average cost of tuition, fees, room and board during the 2017-2018 school year at an average 4-year public college was $20,770, up +5.5% 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 $35,389 during the school year of 2027-2028 (source: College Board). 4/23/18 #9

7. ROBBING PETER TO PAY PAUL – New Jersey passed a 2017 law (“Lottery Enterprise Contribution Act”) that redirects the proceeds from the state’s lottery to the state’s pension system for 30 years. The lottery funds, about $1 billion annually, was supporting K-12 education in New Jersey (source: Manhattan Institute). 5/21/18 #6

8. BIG AND REALLY BIG – 58 publicly-held US companies produced at least $1 billion of sales per week in 2017, up from 39 companies that accomplished that level of weekly sales in 2007. Just 1 domestic company generated more than $1 billion of sales per day during 2017 (source: Fortune). 5/28/18 #5

9. WOULD IT WORK IN SEATTLE? – California is the first state in the nation to require solar panels with new home construction beginning in the year 2020. A 5/09/18 vote by the California Energy Commission will add an estimated $9,500 to the cost of a new home. Solar power generated just 1.3% of electricity in the United States in 2017 (source: U.S. Energy Information Administration). 6/04/18 #7

10. NOT SO GOLDEN – 46% of the San Francisco Bay Area residents surveyed plan to move from California within the “next few years” primarily due to the cost of housing and traffic (source: Bay Area Council poll). 6/11/18 #13

11. HOW MANY STRAWS? – The oft-quoted statistic that Americans use 500 million plastic straws per day was created in 2011 by a then 9-year old Vermont grade schooler (Milo Cress) who claims that he and his mom Odale completed the numerical research for a food column that they wrote 7 years ago (source: NBC News). 7/23/18 #14

12. THE AMERICAN DREAM – Twice as many American homeowners were created in the last year as had been created in the previous 10 years. The number of US homeowners grew by +1.8 million (to 77.9 million) over the 12 months ending 6/30/18, double the +0.9 million new homeowners that were added over the decade ending 6/30/17 (source: Census Bureau). 8/06/18 #10

13. MORE OUT THAN IN – The total cost of the Social Security program in 2018 ($1.003 trillion) is projected to exceed its total income ($1.001 trillion), resulting in the program’s first deficit since 1982 (source: Social Security). 9/17/18 # 14

14. NOT READY – 30 of 50 US states do not have sufficient reserves set aside today to absorb the financial impact of an economic recession, forcing them to raise taxes/fees or reduce benefits (source: S&P Global). 10/01/18 #9

15. LOTS AND LOTS OF PEOPLE – There are 102 cities in China with a population of at least 1 million, the largest Chinese city being Shanghai (22 million). There are 10 cities in the USA with a population of at least 1 million, the largest American city being New York City (9 million) (source: Census Bureau, The Guardian). 10/15/18 #13

 

 

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

Bill’s By The Number$

1. NOT THIS YEAR – The S&P 500 stock index has gained +0.3% YTD (total return) through Friday 12/07/18. The S&P 500 has gained at least +20% (total return) in 17 of the last 50 calendar years (34% of the time), including a record setting 5 years in-a-row from 1995-1999. 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. MARKET DURING RISING RATES – The Federal Reserve began a rate hike cycle on 12/16/15, raising short-term interest rates 8 times over the last 3 years. In the 749 trading days since the initial rate hike, the S&P 500 has gained +10.6% per year (total return). The Fed next meets on December 18-19 (source: BTN Research).

3. FIND A WAY TO START – A November 2018 survey of 1,161 employed adults determined that the average age at which this group began saving for retirement was 31 years old. The most common reason given for not starting sooner was “not making enough money” (source: Nationwide Retirement Institute).

4. IS THE END NEAR? – 65% of 500 global money managers surveyed in October and November 2018 predict that the US bull market will end in 2019. The current bull run is 3 months short of 10 years in length as of today. The survey included investors in 28 countries worldwide (source: Natixis Investment Managers).

5. BEST RESULT IN YEARS – 195,559 homes have been repossessed by lenders in the United States YTD through 10/31/18. 291,579 homes were repossessed in 2017, the lowest nationwide since 2006. Repossessions peaked at 1,050,500 in 2010 (source: Attom Data Solutions).

6. ONE DAY I’LL BE RICH – 37% of US households (45 million out of 121 million total households) will transfer assets estimated to be worth $68 trillion to family heirs and charities over the next 25 years. The $68 trillion represents 64% of the nation’s total household net worth of $107 trillion (source: Cerulli Associates).

7. STRONG – Through 3 quarters of 2018, the US economy has grown +2.4% YTD, a pace that is equal to +3.2% annual growth. That would be the best expansion for our economy in 13 years (source: Commerce Department).

8. HEARING FOOTSTEPS – 30 years ago (1988), the Chinese economy was just 6% of the size of the US economy, i.e., $312 billion to $5.306 trillion. 10 years ago (2008), the Chinese economy was just 31% of the size of the US economy, i.e., $4.598 trillion to $14.715 trillion. Today (2018), the Chinese economy is 63% of the size of the US economy, i.e., $13.1 trillion to $20.66 trillion (source: Trading Economics).

9. TRADE WAR – Before the G-20 summit between President Trump and Chinese President Xi Jinping, China was imposing a 40% tariff on American-made cars coming into China, and the US was imposing a 27.5% tariff on Chinese-made cars coming into the United States (source: Bloomberg Business).

10. LOWEST EVER – The October 2018 jobless rates reported for the states of Texas (3.7%) and Washington (4.3%) were the lowest ever recorded for those 2 states based upon unemployment data tracked at the state level for the last 42 years (source: Department of Labor).

11. KICK THE CAN – In order to avoid the 3rd shutdown of the government during the 2-year Trump administration and 15th shutdown since 1980, Congress passed a short-term spending bill last Thursday 12/06/18. Without the passage of the 2-week spending bill (to 12/21/18), 7 government agencies that have yet to pass a fiscal year 2019 spending bill would have shut down as of midnight on Friday 12/07/18 (source: Congress).

12. OPEC’S WORST NIGHTMARE – The US field production of crude oil reached 11.5 million barrels a day in September 2018, an all-time monthly record volume (based upon records maintained since January 1920) and a +21% increase in production in just the last 12 months (source: Department of Energy).

13. WE QUIT – OPEC member Qatar announced on 12/03/18 that it is vacating its membership, the first country to leave OPEC since the cartel began in 1960. Qatar wants to increase its daily crude oil production by +1.7 million barrels a day (to 6.5 million barrels) at a time that OPEC is reviewing production cuts (source: Qatar Oil Minister).

14. GETTING OLDER – Between 1952 and 2017 (a period of 65 years), the average life expectancy of a newborn American baby has increased by 10 years, i.e., a life expectancy of 68.6 years increasing to 78.6 years. Thus, US life expectancy has increased by 1 year every 6 ½ years (source: Center for Disease Control).

15. ACE VENTURA – Tiger Woods has hit 20 hole-in-ones in his golfing career, including his first ace at the age of 8 (source: Golfworld).

 

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

Bill’s By The Number$

1. THROUGH NOVEMBER – The S&P 500 has gained +5.1% YTD (total return) as of Friday 11/30/18, half of the index’s average return of +10.1% per year over the last 50 years (1968-2017). 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. WINNERS FROM LAST YEAR – An equal investment at the end of 2017 into the 10 stocks in the S&P 500 that gained at least +80% last year is down a collective 1.1% YTD as of Friday 11/30/18 (source: BTN Research).

3. LOSERS FROM LAST YEAR – An equal investment at the end of 2017 into the 10 stocks in the S&P 500 that lost at least 40% last year is up a collective +14.7% YTD as of Friday 11/30/18 (source: BTN Research).

4. BIG BEARS – Since the end of World War II (1945), the S&P 500 has suffered 3 bear markets that sustained losses of at least 40%. The 3 bears are: (1) 48% drop in 1973-74; (2) 49% drop in 2000-02; and (3) 57% drop in 2007-09 (source: BTN Research).

5. SAME YEAR? – The S&P 500 is up +5.1% YTD (total return) through Friday 11/30/18. The Bloomberg Barclays Aggregate bond index is down 1.8% YTD (total return) through Friday 11/30/18. Both indices have not suffered a negative total return result in the same calendar year over the last 40 years, i.e., 1978-2017. 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).

6. MY HOUSE, MY PIGGY BANK – “Cash-out refis,” i.e., a homeowner taking out a new mortgage that is larger than his/her previous mortgage and pocketing the difference, peaked in 2006 when American homeowners pulled out $320 billion of home equity during a rising housing market. Homeowners pulled out just $15 billion of their home equity through “cash-out refis” in the 3rd quarter 2018 (source: Freddie Mac).

7. IN VOGUE AGAIN – Credit card debt in the USA peaked at $1.02 trillion in May 2008 before falling off during the global real estate crisis, eventually hitting a low of $832 billion in April 2011. However, credit card debt has now climbed all the way back to a record level of $1.04 trillion as of August 2018 (source: Federal Reserve).

8. SLOWING DOWN – The median sales price of existing homes sold nationwide increased +3.8% on a year-over-year basis through October 2018. That’s the smallest year-over-year growth in the median sale price in the USA since March 2012 (source: National Association of Realtors).

9. TYPICALLY, UP – As of 12/01/18, the economy of the United States has been expanding (i.e., no recession) for 113 months, the 2nd longest expansionary period in our nation’s history. The US economy has been in a recession during just 20% of the months over the last 100 years (source: National Bureau of Economic Research).

10. SUPPLY UP, DEMAND DOWN – The price of crude oil closed at $60.12 a barrel as of 12/31/17. The price of crude oil closed at $50.93 a barrel as of 11/30/18 (source: NYMEX).

11. TARGET PRICE – The annual operating budget of Saudi Arabia, heavily dependent on the price of oil, required a breakeven crude oil price of $83 a barrel in 2017 and $85-$87 a barrel in 2018 (source: IMF).

12. FOUR MONTHS AWAY – The United Kingdom is scheduled to exit the European Union (EU) on Friday 3/29/19 after 46 years of membership. The “Brexit” decision was put in motion with a 6/23/16 vote. After the UK’s exit, the EU will be comprised of 27 nations (source: BTN Research).

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

14. LOTS AND LOTS OF LAND – John Malone (cable industry billionaire) is the largest private property-owner in the USA, owning 2.2 million acres of land. Ted Turner (cable media mogul) is # 2 on the “land-owning” list with ownership of 2.0 million acres of land (source: Quartz).

15. WHAT A BEAST – Former NBA star Wilt Chamberlain scored a record 50.4 points per game during the 1961-62 regular season, including his incredible 100-point game on 3/02/62. Chamberlain shot just 51% for free throws during his 14-year career but shot 28-32 (88%) from the line on his 100-point night. The durable Chamberlain also played every second of every game (including overtimes) during the 1961-62 regular season (source: NBA).

 

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

Bill’s By The Number$

1. WASHINGTON AND WALL STREET – 2019 will have a Republican in the White House while control of Congress will be split – Republicans still control the Senate and Democrats will now have a majority in the House. Over the last 80 years (1938-2017), the S&P 500 has gained +11.1% per year (total return) when control in Congress was split, regardless of the party in the White House. 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. OVER THE NEXT YEAR – The S&P 500 stock index has gained an average of +15.3% in the 1-year following the last 17 midterm elections, i.e., change of the index’s value not counting reinvested dividends for the 1-year period following the midterm elections from 1950 through 2014. Each one of the 17 “1-year periods,” i.e., 100% of them, resulted in a stock market gain for the S&P 500 (source: BTN Research).

3. CHANGE OF SCENERY – Last Tuesday’s midterm elections (11/06/18) were the 4th consecutive midterms where at least 1 chamber of Congress (either the House or the Senate or both) flipped the controlling party. Voting in 2006 (House and the Senate changed), 2010 (House changed), 2014 (Senate changed) and now 2018 (House changed) has altered the balance of power in Washington (source: BTN Research).

4. GOVERNOR – Prior to last Tuesday’s elections (11/06/18), there were 33 Republican governors nationwide, 16 Democrats and 1 independent. Following last Tuesday’s nationwide voting, the split is now 26 Republicans and 23 Democrats with the Georgia governor race still undecided (source: BTN Research).

5. NEW PAPER – The US issued $19 billion of new 30-year debt last week. The bond carries a 3.375% coupon with an 11/15/2048 maturity. 30-year Treasury debt has been traded since 1977 (source: Treasury Department).

6. BONDS, NOT STOCKS – 73% of the investment portfolios of US life and health insurance companies at the end of 2017 were invested in bonds while just 3% of their assets were invested in stocks (source: NAIC).

7. THAT WOULD HURT – Individual income taxes paid by American taxpayers would have to increase by +46% in order to eliminate our $779 billion deficit from fiscal year 2018 (source: Treasury Department).

8. COMPLETE CYCLE – The jobless rate in the USA was 4.1% in October 1999, then more than doubled over the next decade to reach 10.0% by October 2009, and now has fallen to 3.7% in October 2018. The last time we had an unemployment rate that was lower than 3.7% was in December 1969 (source: Department of Labor).

9. PRODUCING MORE, IMPORTING LESS – As of the end of October 2016, the USA was producing 8.5 million barrels of crude oil per day while we were importing 9.0 million barrels. As of the end of October 2018, the USA was producing 11.2 million barrels of crude oil per day while we were importing 7.3 million barrels. Thus, in the last 2 years, our nation’s production of crude oil has increased +2.7 million barrels a day while our importing of crude oil has declined by 1.7 million barrels a day (source: Department of Energy).

10. EVERY DAY – An estimated 10,400 Americans will turn 65 years old each day next year (2019). This group represents the 9th year of 19 years of “Baby Boomers” turning age 65. An estimated 11,500 Americans will turn 65 years old each day in the year 2029 (source: Government Accountability Office).

11. YOU PROMISED – The Western Pennsylvania Teamsters and Employers Pension Fund filed in early November 2018 for an approval from the Treasury Department to reduce pension benefits by up to 30% to more than 21,000 current retirees. The pension fund, with more than $700 million of assets, is forecasted to be insolvent by 2029 without the reductions. The pension cuts would begin 8/01/19 (source: Pittsburgh Post-Gazette).

12. STRONG BANKS – No US bank has failed and required a bailout in the 329 days through Friday 11/09/18, the longest stretch without a US bank failure since 2/02/07 (source: Federal Deposit Insurance Corporation).

13. ON BORROWED TIME – The total of global debt, i.e., both private sector debt and public sector debt, was equal to a record 213% of world GDP in 2009 at the beginning of the global real estate crisis. The total of global debt in 2016 is even higher on a relative basis, equal to 225% of world GDP (source: International Monetary Fund).

14. STAYING PUT – Between 2016 and 2017, 6 out of every 7 Americans (86%) lived in the same house or apartment on a year-over-year basis, i.e., they did not move (source: Census Bureau).

15. HE’S BACK – As of 11/04/18, Tiger Woods is ranked as the # 13 golfer in the world. In December 2017, Woods was ranked # 1,199 in the world (source: PGA).

 

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

Bill By The Number$

1. OVERALL GAIN – In spite of tumbling 20.5% on the single trading day of 10/19/87 (31 years ago this week), the S&P 500 gained +5.3% (total return) for the entire 1987 calendar year. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its value (source: BTN Research).

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

3. USUALLY UP – The bond market has had just 3 down years in the last 40 years, i.e., 1978-2017. However, the bond market is down 2.1% YTD (total return) through last Friday 10/12/18. The Bloomberg Barclays US Aggregate Bond Index (created in 1986), calculated using publicly traded investment grade government bonds, corporate bonds and mortgage-related bonds with at least 1 year until final maturity, was used as the bond measurement (source: Bloomberg Barclays).

4. NOT AS MANY – Applications to US business schools totaled 140,864 in 2018, a decline of 6.6% from the 150,749 applications submitted in 2017. Business schools attribute the rise of undergraduate student loan debt as a reason many students do not go onto business school (source: Graduate Management Admission Council).

5. CRUDE INTO FUEL – The USA has 135 operable oil refineries in 2018, 123 fewer than the 258 refineries that America had in operation in 1983 or 35 years ago (source: Energy Information Administration).

6. UP AND DOWN – Congress has raised the top individual marginal tax rate 7 times since 1950, most recently in 2013 when they raised the top rate from 35% to 39.6%. Congress has lowered the top individual marginal tax rate 13 times since 1950, most recently in 2018 when they dropped the top rate from 39.6% to 37% (source: IRS).

7. PAYING MOST OF THE BILL – As of March 2018, employers in the private sector pay on average 67% of the healthcare premiums for their employees with families. As of March 2018, state and local government employers pay on average 71% of the healthcare premiums for their employees with families (source: Department of Labor).

8. JAPAN OUT, CHINA IN – In 2008, China’s economy ($4.5 trillion) was smaller than Japan’s ($4.9 trillion). In 2018, China’s economy ($12 trillion) is more than twice the size of Japan’s ($5 trillion) (source: BTN Research).

9. A LOST GENERATION – The Japanese stock market, as measured by the Nikkei 225 index, hit its all-time closing high of 38,916 on 12/29/89 or nearly 29 years ago. The Nikkei 225 closed last week 42% below its 1989 closing high. International securities involve additional risks including currency fluctuations, differing financial accounting standards and possible political and economic volatility (source: BTN Research).

10. LEAVE NOW – During the depths of the mortgage crisis, 1,050,500 homeowners had their homes repossessed during 2010. Just 133,290 homes were repossessed during the first 6 months of 2018 (source: Attom Data).

11. DEBT FOREVER – 44% of homeowners between the ages of 60-70 who have outstanding mortgage debt anticipate still having some mortgage debt when they retire (source: American Financing).

12. LIVE AND WORK HERE – 1.127 million foreigners received “green cards” during fiscal year 2017, i.e., a permit that allows the individual to live and work permanently in the USA. The card’s official name is a “Permanent Resident Card.” The cards have been issued since 1820 (source: US Citizenship and Immigration Services).

13. LOTS AND LOTS OF PEOPLE – There are 102 cities in China with a population of at least 1 million, the largest Chinese city being Shanghai (22 million). There are 10 cities in the USA with a population of at least 1 million, the largest American city being New York City (9 million) (source: Census Bureau, The Guardian).

14. NO JET FUEL REQUIRED – An increase in battery life could allow the production within the next 12 years of a 50-100 seat commercial aircraft with a flying range of at least 1,000 miles (source: Zunum Aero).

15. HOOPS – The NBA’s 73rd regular season begins tomorrow (10/16/18) and will conclude just short of 6 months later on 4/10/19. LeBron James’ debut with the Lakers will be on 10/18/18 against Portland (source: NBA).

 

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

Bill’s By The Number$

1. LAST QUARTER OF THE YEAR – Over the last 25 years (1993-2017), the S&P 500 index has gained an average of +5.0% (total return) over the final 3 months of the year (October-November-December). 20 of the last 25 fourth quarters (80%) have produced a positive total return gain. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. YEAR-TO-DATE – The S&P 500 is up +10.6% YTD (total return) through Friday 9/28/18. The stock index has had only 1 down year (2008) in the last 15 years, i.e., 2003-17 (source: BTN Research).

3. AND IN FIRST PLACE – The top performing individual stock within the S&P 500 for the first 9 months of 2018 is up +200% YTD through Friday 9/28/18, i.e., the stock has tripled in value (source: BTN Research).

4. BIG PERCENTAGE – The market cap of the S&P 500 is 80% of the total market capitalization of all US stocks as of 9/30/18 (source: BTN Research).

5. TRILLIONS – The size of the US bond market is $42 trillion. The size of the US stock market is $32 trillion. The size of the US economy is $20 trillion. The size of the Chinese economy is $12 trillion (source: BTN Research).

6. ANOTHER WAY TO RETALIATE – In its trade conflict with the United States, China may elect to use currency manipulation as a strategy to offset the impact of new tariffs imposed on Chinese imports by the United States. E.g., a Chinese import costing 1,000 yuan (1 yuan is worth approximately 15 cents) would cost an American buyer $150. A 20% tariff would raise the cost to $180. But if the yuan weakened to 12.5 cents, an import costing 1,000 yuan with a 20% tariff would cost $150 (source: BTN Research).

7. UPBEAT – The “Small Business Optimism Index,” a monthly measurement that has been published for 45 years, reached its highest level ever in August 2018. The index is based upon small business owners’ expectations on hiring, business growth and profitability. The August report broke the previous index high set in July 1983 (source: National Federation of Independent Businesses).

8. IT’S OTHER THINGS – Only 12% of Americans surveyed in early September 2018 believe the economy is the “most important” problem facing our country today, i.e., government deficits, jobless rate, inflation, trade, taxes. 86% of Americans surveyed in February 2009 believed the economy at that time was our “most important” problem (source: Gallup Poll).

9. NOT READY – 30 of 50 US states do not have sufficient reserves set aside today to absorb the financial impact of an economic recession, forcing them to raise taxes/fees or reduce benefits (source: S&P Global).

10. THERE FOR THE TAKING – 60% of American workers have access to an employer-sponsored defined contribution plan, e.g., 401(k) plan. 26% of American workers have access to an employer-funded defined benefit pension plan (source: Bureau of Labor Statistics).

11. WHAT IS YOUR END PLAN? – 59% of “working age” Americans (defined as adults between the ages of 21-64) have not accumulated assets in any retirement account – defined benefit pension plan, defined contribution plan (e.g., 401(k) plan) or an IRA (source: National Institute on Retirement Security).

12. FED AT WORK – Projections published by the Federal Reserve following its 6/13/18 meeting suggested they would initiate 2 more rate hikes in 2018 and 3 more rate hikes in 2019. The first of the 2 rate hikes during the remainder of 2018 was announced last Wednesday 9/26/18. There are 2 scheduled Fed meetings remaining in 2018 – November 7-8 and finally on December 18-19 (source: Federal Reserve).

13. IT JUST DEPENDS – The median rent today for a 1-bedroom apartment in San Francisco is $3,400. The median rent today for a 1-bedroom apartment in Omaha, NE is $825. The median rent today for a 1-bedroom apartment in Charlotte, NC is $1,275 (source: GOBankingRates).

14. SERVING TIME – 47 investment bankers worldwide received jail time as a result of the 2008 global recession, including 25 bankers from Iceland. Just 1 American investment banker went to prison, receiving a 30-month sentence for “fraudulently inflating” the prices of mortgage-backed securities (source: Financial Times).

15. REALLY FAST – Reigning Olympic marathon champ Eliud Kipchoge of Kenya won the Berlin Marathon on 9/16/18. His time of 2:01.39 bettered Dennis Kimetto’s 2014 world record by 78 seconds. Kipchoge’s time equates to a 4:38 mile pace for a race that covers 26 miles, 385 yards (source: BTN Research).

 

 

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

Bill’s By The Number$

1. WE WEATHERED THE STORM – Over a 30-day period beginning 9/07/08, the government took over Fannie Mae and Freddie Mac in anticipation of as much as $200 billion of mortgage defaults, the largest bankruptcy in the history of the USA took place (Lehman Brothers), the $700 billion “Troubled Asset Relief Program” (TARP) was signed into law by President George W. Bush, and a bailout of the nation’s largest insurance company (AIG) gave the government 80% ownership of the firm (source: BTN Research).

2. IT ALL RAN TOGETHER – During the 30 years ending 8/31/18, the best 12-month performance and the worst 12-month performance for the S&P 500 occurred over a single 24-month period. The worst 12-months (a total return loss of 43.3%) was the 1-year from 3/01/08 to 2/28/09 and the best 12-months (a total return gain of +53.6%) was the 1-year from 3/01/09 to 2/28/10. 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).

3. NONE – As of the end of 2017, 19% of Millennials and 12% of Baby Boomers had no money (either pre-tax or post-tax) invested in the stock market. Millennials were born between 1981-97 and were ages 20-36 in 2017, while the Baby Boomers were born between 1946-64 and were ages 53-71 in 2017 (source: Vanguard).

4. BEAR THEN BULL – Over a painful 6-months from September 2008 through February 2009 (i.e., 9/01/08 to 2/28/09), the S&P 500 lost 41.8% (total return), including a drop of 16.8% in just the month of October 2008. The index bottomed less than 2 weeks later on 3/09/09 and began a bull market on 3/10/09 that continues to this day (source: BTN Research).

5. MORE CONCENTRATED – America’s 5 largest banks control 47% of all banking assets, up from 29% in 1998 or 20 years ago (source: Federal Reserve Bank of St. Louis).

6. A NEW HIGH – After adjusting numerical data from the past for the impact of inflation, the median household income in 2017 ($61,372) is the highest ever recorded in the United States, besting the previous record for median household income ($60,309) set just the year before in 2016. Before 2016, the peak for median household income was $60,062 set in 1999 (source: Federal Reserve Bank of St. Louis).

7. TAX BREAK – US corporations had until 9/15/18 to contribute to their company’s defined benefit pension plan and still deduct the amount against 2017 income, a tax break that took advantage of last year’s top corporate marginal tax rate of 35%. The top corporate marginal tax rate in 2018 is 21% (source: Tax Cuts and Jobs Act).

8. BLANK CHECK – An estimated 44.4% of all US individual taxpayers will legally pay zero federal income tax for tax year 2018 on their Tax Form 1040 that is due 4/15/19 (source: Tax Policy Center).

9. LESS HELD BACK – The $1.74 trillion of excess reserves held by US banks at the 12 regional Federal Reserve banks as of 8/29/18 is down $470 billion from the $2.21 trillion held a year earlier. Excess reserves are funds held that are above and beyond the federally mandated reserve requirement amounts (source: Federal Reserve).

10. BONDS – There is less outstanding municipal bond debt today ($3.8 trillion) than there was in 2010 ($4.0 trillion). Over the same time period, outstanding Treasury debt has increased +69% to $14.9 trillion (source: SIFMA).

11. PAID FOR HOW? – The state of New Jersey invested $3.2 billion during the current 2019 fiscal year (i.e., the 12 months ending 6/30/19) to fund the defined benefit pension plans of state employees. That amount is projected to more than double to $6.6 billion by fiscal year 2023 (source: State of New Jersey).

12. WE’RE IN A DROUGHT – 3 states (Arizona, California and Nevada) along with Mexico receive water allotments from Lake Mead. Under current water rights agreements, if the water level at Lake Mead falls to 1,075 feet (above sea level) at the end of any year, the federal government has the right to restrict water allocations to Arizona, Nevada and Mexico. As of last Friday, the water level was 1,079 feet (source: www.lakelevels.info).

13. COSTS MORE – 44% of 1,040 retirees surveyed in January 2018 report that their health care expenses in retirement are higher than they anticipated (source: Employee Benefit Research Institute).

14. MORE OUT THAN IN – The total cost of the Social Security program in 2018 ($1.003 trillion) is projected to exceed its total income ($1.001 trillion), resulting in the program’s first deficit since 1982 (source: Social Security).

15. LONE STAR STATE – The University of Texas is # 1 in athletic revenue generated ($215 million) of any NCAA school. Texas A&M ranks # 2 on that list with $212 million of revenue (source: NCAA).

 

 

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Bill’s By The Number$

1. JUST THREE STOCKS – 37% of the S&P 500’s YTD performance of +6.5% (total return) through 7/31/18 was driven by just 3 tech stocks in the index. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight proportionate to its market value (source: S&P Dow Jones Indices).

2. LAST QUARTER – The 3 months of October-November-December rank 2-3-5 in terms of average monthly performance for the S&P 500 index (i.e., October is 2nd best, November is 3rd best and December is 5th best) over the last 25 years. The 3 months have jointly gained + 5.0% per year (total return) over the last 25 years (1993-2017) or 51% of the index’s total return over the entire 25-year period (source: BTN Research).

3. BULL MARKET – The S&P 500 closed at a record high last Friday (8/24/18). The index finished the week at 2875, its 15th record close in 2018 and 203rd closing high since this bull market began on 3/10/09. During this bull run, the index has gained +418% (total return), an average of +19.0% per year (source: BTN Research).

4. UP AND UP – 17 stocks in the S&P 500 gained at least +70% in calendar year 2017. 6 of the 17 stocks have gained at least +40% YTD through last Friday 8/24/18 (source: BTN Research).

5. MEDICARE IS NOT ENOUGH – 62% of American seniors (at least age 65) that file for bankruptcy do so because they are overwhelmed by medical expenses (source: “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society,” Deborah Thorne, University of Idaho).

6. NEED WORK? – 52% of the 2.4 million new jobs created in the United States in the 12 months ending 7/31/18 were produced in just 6 states – Texas (377,100 jobs), California (332,700), Florida (210,600), New York (117,000), North Carolina (106,900) and Washington (102,500) (source: Department of Labor).

7. RISK INVOLVED – Historically, holders of defaulting “junk” bonds that are unsecured by specific physical assets receive back just 40 cents on the dollar through a bankruptcy proceeding. “Junk” bonds are debt offerings of companies rated Ba or lower (by Moody’s) and involve investment risks which may include the loss of principal invested because of default (source: Moody’s).

8. STILL A MESS – 48% of the outstanding loans made by Greek banks are “non-performing” today, including mortgage loans, commercial loans and construction loans. “Non-performing” typically indicates no principal and interest payments have been made on a loan for at least 90 days (source: Bank of Greece).

9. ROLL THE DICE – Between 6/30/17 and 6/30/18, average home prices increased in all 50 US states. Nevada’s +17.0% average home price gain led the nation over the last year (source: Federal Housing Finance Agency).

10. LATE – Just 1 out of every 23 home mortgages in America (4.36%) was at least 1 payment past due as of the 2nd quarter 2018. That result is an improvement from the 1 out of every 10 home mortgages (9.85%) that was at least 1 payment past due as of the 2nd quarter 2010 or 8 years earlier (source: Mortgage Bankers Association).

11. TOUGH TO BE YOUNG – American households headed by individuals under the age of 35 were split 44/56 between homeowners and renters in the 2nd quarter 2004, i.e., 14 years ago. American households headed by individuals under the age of 35 were split 36/64 between homeowners and renters in the 2nd quarter 2018 (source: Census Bureau).

12. PONZI UPDATE – Bernie Madoff has been incarcerated in federal prison in North Carolina for more than 9 years (he began serving his sentence on 7/14/09). Madoff, 80 years old, is scheduled to be released in 121 years on 11/14/2139 (source: Federal Bureau of Prisons).

13. LARGEST FIRE EVER – The ongoing and growing Mendocino Complex fire, the largest in California history, has burned 422,396 acres. Since an average golf course covers 150 acres, the Mendocino fire has consumed the equivalent of 2,816 golf courses (source: Cal Fire).

14. FUNDING THE MILITARY – The Senate began debate last week on a $675 billion defense budget for fiscal year 2019, i.e., the 12 months that begin 10/01/18. Actual defense outlays were $661 billion in 2009, i.e., 10 years ago, and $275 billion in 1999, i.e., 20 years ago (source: Office of Management and Budget).

15. SAME OL’ SAME OL’ – 8 of the top 10 college football teams in the writers’ (AP) poll for the upcoming 2018 season finished in the top 10 of last year’s final writers’ poll. Only Washington (picked # 6 this year) and Miami (picked as # 8) are new top 10 names for the 2018 preseason poll (source: AP).

 

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

Bill’s By The Number$

1. THE BACK END – The highest closing value during the year for the S&P 500 has occurred in the final 4 months of the year (i.e., September-December) in 12 of the last 15 years, 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. INCREASING COSTS – Inflation (using the “consumer price index”) advanced +2.95% on a year-over-year basis ending 7/31/18, inflation’s largest annual increase since December 2011. The consumer price index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).

3. SENSITIVE – The “duration” of the current 2.875% coupon, 30-year Treasury bond was 19.651 “years” as of 8/17/18, i.e., if interest rates go up just 14.6 basis points on the 30-year bond, the resulting 2.875% price decline would offset the bond’s 2.875% coupon over a 1-year time horizon. Duration is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates (source: Ryan ALM).

4. MORE THAN SIXFOLD – Foreigners have increased their holdings of US Treasury securities from $1 trillion in 2000 to more than $6.2 trillion in 2018 (source: St. Louis Federal Reserve Bank).

5. THE RISK – The average interest rate paid by the government on its interest-bearing debt was 2.457% as of 7/31/18. The average interest rate paid on our interest-bearing debt was 4.382% as of 7/31/08 (10 years earlier) or 1.9 percentage points higher. Every 1 percentage point increase in the cost of debt on our nation’s $15.6 trillion of publicly held debt is equal to $156 billion of annual interest expense (source: Treasury Department).

6. COST OF BORROWING A LOT – In June 2018, the Congressional Budget Office projected that by the year 2048 (i.e., 30 years from now) the US government will spend as much money servicing its national debt as it will spend that year on the nation’s Social Security program. Today, our nation’s net interest cost is just 33% of our Social Security outlays (source: Congressional Budget Office).

7. BIG UP, BIG DOWN – In the last 10 years, the largest increase of the yield on the 10-year Treasury note during any quarter was 0.85 percentage points in the 4th quarter 2016. In the last 10 years, the largest decrease of the yield on the 10-year Treasury note during any quarter was 1.60 percentage points in the 4th quarter 2008 (source: Treasury Department).

8. ONE PERCENT HIGHER – Borrowing $100,000 on a 30-year fixed rate mortgage at 4.53% (today’s national average) requires a monthly “principal and interest” payment of $508.47. Borrowing $100,000 on a 30-year fixed rate mortgage at 5.53% requires a monthly “principal and interest” payment of $569.67 (source: BTN Research).

9. WE OWE NOTHING – 3 out of every 8 homeowners (38%) in the USA own their home free-and-clear of any debt, i.e., 29.7 million debt-free homeowners out of 77.9 million total homeowners (source: Census Bureau).

10. WHERE THEIR ECONOMY CAN GROW – Personal consumption by American consumers represents 70% of the US economy. Personal consumption by Chinese consumers represents just 39% of the Chinese economy (source: Business Week).

11. WHO NEEDS A MALL? – Less than 10% of annual retail spending in the United States is completed as an online purchase, less than half of the 23% of retail spending done online by Chinese consumers (source: Bloomberg).

12. GREEN ACRES – The average “farm real estate value” is $3,140 an acre in 2018, including land and buildings, an increase of +3.8% per year over the last 10 years (source: Department of Agriculture).

13. THEY CUT, WE INCREASED – The 14-members of OPEC agreed on 11/30/16 to slash production by 1.2 million barrels a day, along with additional cuts of 600,000 barrels a day from non-OPEC member countries, a combined reduction of 1.8 million barrels a day. US oil producers have responded to OPEC’s action by increasing their field production of crude oil from 8.699 million barrels a day as of 11/25/16 to 10.900 million barrels a day as of Friday 8/10/18, an increase of +2.2 million barrels a day (source: Department of Energy).

14. SOARING COLLEGE COSTS – 44 million Americans owe $1.41 trillion in student loan debt as of 6/30/18, a +139% increase (up +$820 billion) in just the last 10 years (source: Federal Reserve Bank of New York).

15. BLEW IT – The Miami Marlins had an 9-run lead going into the bottom of the 4th inning of their 7/05/18 game vs. the Washington Nationals yet lost the game by 2 runs, the worst collapse during the current 2018 regular season for games played through Thursday 8/16/18 (source: Major League Baseball).

 

 

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

Bill’s By The Number$

1. NOT THE LONGEST . . . YET – The longest bull market for the S&P 500 since 1950 lasted 3,452 calendar days, i.e., the 9 ½ years from 10/11/90 to 3/24/00. The current bull market for the S&P 500 is 3,441 calendar days long as of Friday 8/10/18, i.e., the approximate 9 ½ years from 3/09/09 to last Friday 8/10/18. The current bull would have to last until 8/22/18 (i.e., just 9 days from today) to reach 3,453 calendar days. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. THE ART OF THE DEAL – The S&P 500 has gained +28.6% (total return) in the 392 trading days (approximately 19 months) since the 1/20/17 inauguration of President Donald Trump (source: BTN Research).

3. UP THIS YEAR – Of the 15 stocks in the S&P 500 index that lost at least 30% in calendar year 2017, 12 of those stocks have a positive return YTD through 7/31/18. 4 of the 12 “up” stocks have gained at least +28% YTD in 2018 (source: BTN Research).

4. I’M ALL DONE WITH MY WORK – An average American worker has increased his/her productivity by +101% in the last 40 years, i.e., an average worker can complete in 1 hour as of 12/31/17 the same amount of work that it took him/her 2 hours to finish as of 12/31/77 (source: Department of Labor).

5. LESS AND LESS – US Treasury debt and mortgage-backed securities held by the Federal Reserve as of 8/01/18 was $4.04 trillion, down from $4.24 trillion as of 8/02/17. The $200 billion reduction is the result of the plan outlined by Fed Chairperson Janet Yellen on 9/20/17 that started in October 2017 that involved $10 billion of bonds maturing each month without reinvesting the principal. That monthly amount will increase by $10 billion each quarter before peaking at $50 billion per month in October 2018 (source: Federal Reserve).

6. FOUR-IN-A-ROW – The yield on the 10-year Treasury note closed at 2.86% on 6/30/18, the 4th consecutive quarter that the yield has increased. That’s the first time that the 10-year Treasury note yield has climbed for at least 4 straight quarters since the 4th quarter 2013 (source: Treasury Department).

7. HEALTHY GAIN – The total market capitalization of the US stock market was $31.1 trillion as of 7/31/18. At its bear market low on 3/09/09, the total US market capitalization was $7.6 trillion (source: Wilshire).

8. NOT AS OPTIMISTIC – 65% of Americans surveyed in July 2018 think “it’s a good time to buy a house.” That percentage was as high as 83% in December 2014 and hasn’t been as low as 65% since December 2008 (source: University of Michigan Surveys of Consumers).

9. SEEKING QUALIFIED WORKERS – In June 2018, there were 5.50 million Americans that had their employment end either by quitting, being laid off or getting discharged from work. In June 2018, there were also 5.65 million Americans that were hired into new jobs. Separate from the 5.65 million Americans that were hired, there are still 6.66 million job openings that have yet to be filled, the 2nd highest monthly total ever for a statistic tracked since December 2000 (source: Department of Labor).

10. TRILLIONS – The size of the US economy reached $2.5 trillion in 1979, doubled to $5 trillion in 1988, doubled again to $10 trillion in 2000, and finally doubled again to $20 trillion in 2018 (source: OMB).

11. WHAT WE SPEND – National health expenditures were $3.34 trillion in 2016, projected to grow to $5.70 trillion by the year 2026. 37% of the $3.34 trillion are Medicare and Medicaid expenditures (source: Centers for Medicare & Medicaid Services).

12. REALLY BIG STATES – Alaska, the largest US state (by acre), represents 17.4% of all US land. Alaska’s size (424 million acres) is larger than the combined acres covered by the next 3 largest states – Texas, California and Montana (source: BTN Research).

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

14. WHINERS – Even after reducing their traditional “August recess” to just a single week out of Washington this year, senators will still have 13 weeks of vacation during calendar year 2018, i.e., 3 months (source: Senate).

15. BASEBALL’S FIRST BIG STAR – During Babe Ruth’s first year with the New York Yankees (1920), the team attracted 1.289 million fans for their 77 home games, the first MLB team to top the 1 million mark in attendance. Ruth died of throat cancer on 8/16/48, 70 years ago this week (source: Major League Baseball).

 

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