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Bill’s By The Number$

1. THE MONTH OF AUGUST – The worst performing month for the S&P 500 since 1993 has been August. The stock index has suffered an average loss of 0.6% (total return) during August over the last 25 years (1993-2017). The best performing month since 1993 has been April, gaining an average of +1.8% (total return). The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. MISS A LITTLE, MAYBE MISS A LOT – Over the 10 years of trading through 6/30/18 (i.e., 7/01/08 through 6/30/18), the S&P 500 was up +10.2% per year on a total return basis, i.e., counting the impact of reinvested dividends. If you missed the 5 best performance days in those 10 years (i.e., 5 days in total, not 5 days each year), your average return was cut by more than 4 percentage points to +5.8% per year (source: BTN Research).

3. EIGHT IN TWENTY – The S&P 500 has had 8 declines of at least 10% but less than 20% over the last 20 years. The last 10% “correction” ended on 2/08/18 or 5 ½ months ago (source: BTN Research).

4. UNDERPERFORMED – CalPERS, the largest state pension fund in the country with assets of $355 billion, gained just +5.6% per year for the 10 fiscal years ending 6/30/18. CalPERS lowered its assumed rate of return (i.e., its discount rate) from 7.5% in fiscal year 2017 to 7.375% for fiscal year 2018, a change that forced the fund to increase the state’s annual contribution to pensions by $521 million to $5.9 billion (source: CalPERS).

5. PREPARING FOR THE FUTURE – 64% of 1,002 American workers surveyed in January 2018 are “somewhat confident” or “very confident” that they will have accumulated sufficient assets to sustain a “comfortable” retirement. That result is an increase of 10 percentage points from the same survey conducted in January 2009 (source: EBRI Retirement Confidence Survey).

6. GOOD BANKS – As of last Friday (7/20/18), there has not been a bank failure in the United States in 217 days (i.e., more than 7 months) that required a federal bailout from the FDIC. That the longest stretch between bank failures since 9/28/07 or nearly 11 years ago (source: Federal Deposit Insurance Corporation).

7. TOP SHELF INCOME – 1 out of every 22 individual income tax returns (4.5%) filed for tax year 2015 reported adjusted gross income of at least $200,000 (source: Internal Revenue Service).

8. SOCIAL SECURITY STATUS REPORT – There were 62 million Americans who received Social Security benefits (retirement or disability) in 2017. Social Security’s total income (payroll taxes collected plus interest earnings) amounted to $997 billion last year, $45 billion more than the $952 billion of program expenditures and outlays. Social Security actuaries project the program’s expenditures and outlays will exceed total income for the next 10 years (2018-2027), the first annual deficits since 1982 (source: 2018 Social Security Trustees Report).

9. THAT’S ALL? – Trust fund assets ($2.89 trillion) supporting both Social Security retirement benefits and Social Security disability benefits earned interest of +3.0% in 2017 (source: 2018 Social Security Trustees Report).

10. WHERE THE OIL COMES FROM – In the week ending 7/13/18, American oil companies produced 11.0 million barrels of crude oil a day, then turned around and exported 1.5 million barrels of crude a day. The USA also imported 9.1 million barrels a day, with 40% of the imports coming from Canada (source: Department of Energy).

11. THE LAW – Anthony Kennedy, the longest serving current Supreme Court justice, is retiring in a week (7/31/18). Kennedy’s 30 ½ years on the nation’s top judicial court ranks him as the 14th longest serving justice in history. As of 8/03/18, 4 of the 9 current justices will have served at least 24 years (source: Supreme Court).

12. TOP COUNTRIES – More than half (55%) of the manufacturing in the world is done in just 4 countries: China, the United States, Japan and Germany (source: United Nations Conference on Trade and Development).

13. NO COMMUTE NECESSARY – 23% of American workers did some of their work or all their work from home in 2017 (source: Department of Labor).

14. 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).

15. PLAYOFFS – Since 2000, 107 of the 158 baseball teams (68%) in first place or in the wildcard spot at the MLB All-Star break have qualified for baseball’s postseason in the fall. In 2007, all 4 teams that were leading at the summer break in the National League failed to make the playoffs (source: BTN Research).

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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. EVERY TEN YEARS – The S&P 500 was up +10.2% per year (total return) for the 10-years ending 6/30/18. A decade ago, the S&P 500 was up just +2.9% per year (total return) for the 10-years ending 6/30/08. 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. BULL MARKET – Since bottoming on 3/09/09, the S&P 500 has gained +404% (total return) and set 202 record closing highs through trading on Friday 7/13/18, equal to an +18.9% gain per year (source: BTN Research).

3. HIGHER AND HIGHER – Of the 11 S&P 500 bull markets that have taken place since 1949, only the 1990-2000 stock bull market (308 record closing highs) has achieved more daily all-time closing highs than the current bull’s 202 record closing highs (source: BTN Research).

4. INS, OUTS – After 9 months of fiscal year 2018 (i.e., the 9 months ending 6/30/18), the USA has collected $1 of tax receipts for every $1.24 of outlays, creating a deficit to date of $607 billion (source: Treasury Department).

5. CHANGE IS NEEDED – The US Government Accountability Office (GAO) issued a report on 6/21/18 on the “Nation’s Fiscal Health.” The analysis, 60 pages long, describes our country’s “likely fiscal future if policies don’t change.” The study concluded our government’s “current fiscal path is unsustainable” and that the longer “action is delayed, the greater and more drastic the changes will have to be.” The total debt of the USA was $21.2 trillion as of 7/12/18, up from $9.5 trillion of debt on 7/12/08 (source: GAO, Treasury Department).

6. DOUBLE DIGIT BUMP NEXT YEAR – The Congressional Budget Office projected on 5/23/18 that the health insurance premium for the Affordable Care Act “benchmark silver plan” (i.e., the plan which is used to calculate premium subsidies) will increase by +15% from 2018 to 2019 (source: Congressional Budget Office).

7. WHY IT COSTS MORE – Prior to the enactment of the March 2010 “Affordable Care Act,” 85% of the health insurance sold in the United States reimbursed no more than 50% of the medical costs for “in-network covered benefits.” The ACA requires “bronze” plans to pay at least 60% of covered services, “silver” plans must pay at least 70%, “gold” plans must pay at least 80% and “platinum” plans must pay at least 90% (source: ACA).

8. IMPACTS UNION FEES – Because of the 6/27/18 Supreme Court ruling in the “Janus vs. AFSCE Council 31” case, 5 million government employees in 22 states are no longer required to join a union or pay union dues as a condition of employment. Janus is “Mark Janus,” an Illinois state employee who was the lead plaintiff in the court case (source: Supreme Court).

9. CAPITALIST WITH A CONSCIENCE – 6 out of 7 Millennials (86%) would “consider” taking a cut in pay in order to work for a company that follows “a mission and values” that aligned with their own. Millennials were born between 1981-97 and are age 21-37 in 2018 (source: LinkedIn Workplace Culture Trends).

10. HEALTHY ECONOMY, INCREASING DEMAND – On 7/01/18, the price of a barrel of oil was $74.15 while the average price of a gallon of gasoline was $2.85. On 7/01/17 (1 year ago), the price of a barrel of oil was $46.04 while the average price of a gallon of gasoline was $2.24 (source: NYMEX, AAA).

11. REPETITIVE PROCESS – 40% of the robots used in the United States today are in the auto industry (source: Department of Transportation).

12. MAIN SOURCE OF REVENUE – Individual income taxes paid at the state-level represent 23.5% of state and local tax collections. Individual income taxes paid at the federal level represent 47.9% of federal tax collections (source: Tax Foundation).

13. FEW CAN AFFORD TO WAIT – Just 3.7% of American seniors wait until age 70 to begin claiming their monthly Social Security retirement benefits (source: Social Security).

14. HEAD SOUTH FOR WORK – The government divides the USA into 4 geographical areas: Northeast, South, Midwest and West. As of May 2018, the Northeast states had 1.075 million job openings while the states in the South had 2.432 million job openings. The total number of job openings nationwide: 6.638 million (source: Department of Labor).

15. PARITY – Coming into tomorrow’s Major League Baseball All-Star game in Washington D.C., the American League has won 43 games, the National League has won 43 games, 2 games ended in ties, and each league has scored 361 runs in 88 All-Star games (source: MLB).

 

– 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. LOOK-BACK – As of 6/30/18, the total return of the S&P 500 is +14.4% for the trailing 1-year, +11.9% per year for the last 3-years, +13.4% per year for the last 5-years and +10.2% per year for the last 10 years. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. LAST YEAR’S TEN WORST – An equal investment made at the end of the trading day on Friday 12/29/17 in the 10 worst performing individual stocks within the S&P 500 from calendar year 2017 was up +18.8% YTD through 6/30/18. The S&P 500 was up +2.7% YTD (total return) through 6/30/18 (source: BTN Research).

3. FROM LOWEST TO NOW – The yield on the 10-year Treasury note closed at 1.36% on 7/08/16 (i.e., 2 years ago yesterday), its lowest closing yield ever. 10-year notes have been traded in the USA since 1790, i.e., 228 years of trading. The yield on the 10-year note closed last Friday 7/06/18 at 2.82% (source: Treasury Department).

4. WORSE OVER TIME – The growth in the nation’s economy is reported on a quarterly basis and is revised twice after the initial “advance estimate.” For the 1st quarter 2018, growth was originally pegged at +2.3% (a quarter-over-quarter result stated as an annualized number), then reduced to +2.2% growth a month later, and finally dropped to +2.0% growth a month after that. That’s the first time the latter 2 readings have each declined following the initial reading since the 1st quarter 2014 (source: Commerce Department).

5. NOT A RECORD WE WANT – The total debt of the United States is projected to reach $21.5 trillion by the end of fiscal year 2018 (i.e., 9/30/18), equal to 107% of the size of the US economy. That’s the highest level of debt relative to the size of our nation’s economy since 1947 (source: Office of Management and Budget).

6. DEBT RELIEF – Greece, a country with debt equal to 179% of the size of its economy, negotiated on 6/22/18 to delay the repayment to its creditors of 40% of its total debt (96 billion Euros) for 10 years (from 2023 to 2033), a decade-long period during which Greece will make zero principal or interest payments (source: Financial Times).

7. MORE EXPENSIVE – Proposed US tariffs on car imports will add an estimated $5,800 to the price of an imported foreign vehicle (source: Alliance of Automobile Manufacturers).

8. A LOT MORE LEAVING THAN COMING – The cost of renting a 26-foot truck for the 1-way trip from San Jose, CA to Las Vegas, NV is $1,990 for a mid-July 2018 trip. The cost of renting the same 26-foot truck for the return 1-way trip from Las Vegas to San Jose is just $174 for a mid-July 2018 trip. The price difference is the result of an exodus of residents from California, resulting in a shortage of moving trucks in California (source: U-Haul).

9. HOW HIGH ARE YOURS? – 45 US states collect statewide sales taxes, i.e., 5 states (Alaska, Delaware, Montana, New Hampshire and Oregon) have no state sales tax. California has the highest state sales tax (7.25%) in the nation (source: Tax Foundation).

10. FEWER LINES – A draft of the new Form 1040 for tax year 2018 released in late June 2018 has just 23 lines, compared to 79 lines on the existing Form 1040 tax form (source: Internal Revenue Service).

11. KIDS COST MONEY – The annual household costs of a family with 2 adults and 2 children is 140% of the annual household costs of a family with 2 adults and no children (source: Organization for Economic Cooperation and Development).

12. BE PREPARED FOR THIS – The average American household, even after the benefit of Medicare coverage, spends $197,000 in “out-of-pocket” health care costs during retirement. This figure does not include any costs relating to nursing home care (source: Webb and Zhivan).

13. NEXT CENTURY – With a life expectancy of 81.3 years, a baby girl born in the United States next year (2019) could anticipate living until the year 2100 (source: National Vital Statistics Reports).

14. COUCH POTATO – Just 23% of American adults meet the “national physical activity guidelines,” i.e., they complete at least 2 ½ hours per week of “moderate-intensity aerobic physical activity” or at least 1 ¼ hours per week of “vigorous-intensity aerobic physical activity,” or some equivalent combination (source: CDC).

15. STILL THE KING – 33-year old LeBron James agreed to a 4-year, $154 million guaranteed contract on 7/01/18. If James was to play the same number of regular season games and playoff games over the next 4 years that he played during the just completed 2017-2018 basketball season (i.e., 104 games), the 4-time NBA MVP would make $370,000 per game over the duration of his new 4-year deal (source: ESPN).

 

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

Bill’s By The Number$

1. THE HOME STRETCH – The S&P 500 has closed at its calendar year high in the second half of the year (i.e., during the 6 months of July-December) 74% of the time since 1950. In 15 of the last 25 years, the index’s calendar year high has occurred during the month of December. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. JUST BELOW AVERAGE – With 1 trading week remaining in the first half of 2018, the S&P 500 is up +4.0% YTD (total return) through Friday 6/22/18. Over the last 25 years (i.e., 1993-2017), the S&P 500 has produced an average gain of +9.7% per year. The first 6 months of the year (i.e., January-June) have gained an average of +4.5% over the last 25 years (source: BTN Research).

3. YIELD SPREAD – In the last 5 months, the 2-year Treasury note yield has increased 0.48 percentage points while the 10-year Treasury note yield has increased only 0.24 percentage points. Some, but not all financial strategists have concluded that the bond market believes near-term Fed action (impacting the 2-year note yield) will slow the economy longer-term (impacting the 10-year note yield) (source: Treasury Department).

4. BIG IMPROVEMENT – The US unemployment rate was 3.8% as of May 2018. The US “unemployed and underemployed” rate was 7.6% as of May 2018, i.e., the combination of jobless individuals plus workers who are part-time purely for economic reasons. The US unemployment rate was 10.0% as of October 2009. The US “unemployed and underemployed” rate was 17.1% as of October 2009 (source: Department of Labor).

5. BEST AND WORST – Alaska has the nation’s highest unemployment rate in May 2018 (7.2%) while Hawaii (2.0%) has the lowest (source: Department of Labor).

6. MORE OUT THAN IN THIS YEAR – For the last 35 years (1983-2017), the total income of our nation’s Social Security program (i.e., payroll taxes collected plus interest income) has exceeded the total cost of the program (i.e., benefits paid out plus administrative expenses), a streak that is projected to end in 2018 (source: Social Security Trustees Report 2018).

7. THE SAME NUMBER – There are as many Americans with outstanding student loan debt (45 million) as there are retired American workers (45 million) who are receiving monthly Social Security retirement benefits (source: Social Security Trustees Report 2018).

8. GASOLINE – The national average price of gasoline peaked at $2.97 on 5/26/18, just short of $3 a gallon. As of last Friday (6/22/18), gas prices had fallen 25 consecutive days to an average of $2.86 a gallon (source: AAA).

9. A THOUSAND A WEEK PER HOUSEHOLD – Retail sales, tracked monthly in the USA, exceeded $500 billion for the first time ever in May 2018 ($502 billion). That’s equal to $4,184 for every household in the country for the month of May. Retail sales include purchases of groceries, prescription drugs, appliances, furniture, gasoline, clothes, dining out, etc. (source: Commerce Department).

10. IMPORTS – American consumers bought $2.41 trillion of imported goods in 2017. 22% of that total ($526 billion) were purchases of Chinese products, including cell phones, computers and TVs (source: Commerce Department).

11. OLDER FOLKS – The population of the United States has doubled since 1950, while the number of Americans at least age 65 has quadrupled since 1950 (source: Social Security).

12. BOYS AND GIRLS – A baby girl born in the United States in 2017 has a “life expectancy at birth” of 81.4 years, 55 months longer than the “life expectancy at birth” (76.8 years) of an American baby boy born last year (source: Social Security).

13. IN THE BLACK – From October 2008 through March 2012, the US government had 42 consecutive months of deficits. Since then (i.e., April 2012 through May 2018), the US government has generated a surplus in 23 of 74 months or 31% of the time (source: Treasury Department).

14. BEFORE TRADE DISPUTES – US farm income has dropped by 52% over the last 5 years because of falling commodity prices (source: Department of Agriculture).

15. MAJOR CHAMP – Golfer Brooks Koepka won the US Open in Southampton, NY on Sunday 6/17/18. Koepka, 28 years old, won $2.16 million, the same amount he received when he won the same tourney a year earlier. Koepka has the 5th fastest average club head speed (122 mph) on the men’s pro circuit this year (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’s By The Number$

1. CORRECTIONS AND BEARS – The S&P 500 has had 19 “corrections” (declines of at least 10% but less than 20%) and 7 “bears” (declines of at least 20%) in the last 50 years. The last “correction” ended on 2/08/18. The last “bear” ended on 3/09/09. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. BONDS – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $41.7 trillion as of 3/31/18. Treasury debt ($14.9 trillion) makes up the largest piece of the US bond market (source: Securities Industry and Financial Markets Association).

3. STOCKS – The capitalization of the US stock market was $29.2 trillion as of 3/31/18, or just 70% of the size of the US bond market as of the same date (source: Wilshire).

4. END OF THIS MONTH – The 2nd longest economic expansion in US history (based upon data tracked since 1854) will reach 9 years in length as of 6/30/18 (source: National Bureau of Economic Research).

5. 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 $13.2 trillion. The entire $13.2 trillion deficit could be eliminated by either an immediate 2.78 percentage point increase in the combined Social Security payroll tax rate (from 12.40% to 15.18%) or an immediate 17% reduction in benefits that are paid out to current and future beneficiaries (source: Social Security Trustees).

6. MEDICARE – Per a 6/05/18 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 0.82 percentage point increase in combined Medicare payroll taxes (from its current 2.90% to 3.72%) or an immediate 17% reduction in Medicare expenditures (source: Medicare Trustees 2018 Report).

7. 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 2032 or 14 years out (source: Social Security Trustees 2018 Report).

8. TO AGE NINETY – 25% of Americans that reach age 65 will live at least another 25 years to age 90 (source: Social Security Administration).

9. LOTS OF RULES – Medicare covers the cost of 100 days of care at a “skilled nursing facility.” A new 100-day benefit clock begins if the patient has gone 60 days without requiring a “skilled level of care” (source: Medicare).

10. SURPRISE – 23% of households headed by individuals at least age 75 will experience an “extraordinary” out-of-pocket medical expense of at least 1% of household income this year (source: JP Morgan Chase & Co. Institute).

11. A FEW INTO MANY – The monthly collection of jobs data in the United States is a combination of science and art. 60,000 American households are asked to complete employment surveys by the 12th of the month. The employment status of the individuals in those 60,000 households is then extrapolated to project national figures for our country’s actual 120 million households, i.e., just 1 out of every 2,000 households provided the data to calculate our country’s May 2018 jobless rate of 3.8% (source: Department of Labor).

12. IN NEARLY A CENTURY – Oil production in the United States reached 10.9 million barrels per day for the week ending 6/08/18, the highest level recorded for our country per records that have been maintained since 1920 (source: US Energy Information Administration).

13. A FORCE – China has more millennials (400 million) than the population of the United States (328 million). Millennials were born between 1981-97 and are age 21-37 in 2018 (source: Financial Times).

14. BOTH PAY – Medicaid is jointly funded by the 50 states and the federal government. The federal government on average funds 63% of total Medicaid expenses while the states pick up the remaining 37% (source: Medicaid).

15. FORTY YEARS APART – The Washington Capitals beat the Vegas Golden Knights on 6/07/18 to win hockey’s Stanley Cup, the first title in the team’s 44-year history. The Washington Bullets (now the Wizards) beat the Seattle Supersonics on 6/07/78, the franchise’s last NBA title (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. HOT AND COLD – The best performing individual stock in the S&P 500 index during the first 5 months of 2018 (i.e., January-May) gained +83%. The worst performing individual stock in the S&P 500 during the first 5 months of 2018 lost 44%. 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. NO NEW RECORD – The S&P 500 last achieved an all-time closing high on 1/26/18 or 87 trading days ago. That’s the longest stretch without a new closing high for the index since it went 286 trading days with no record closes between 5/21/15 and 7/11/16 (source: BTN Research).

3. JUST THREE – The top company in the Fortune 500, an annual evaluation based upon total revenues for the previous calendar year, has been held by just 3 different companies over the 63 years that the magazine has published the rankings (source: Fortune).

4. LOOKING, NOT FINDING – 7 out of 8 small businesses (88%) in the United States reported in early May 2018 that they were having “difficulties finding qualified candidates” for job openings (source: National Federation of Independent Businesses).

5. DOUBLED – The yield on the 10-year Treasury note closed at 2.83% on 5/31/18, up 0.42 percentage points since 12/31/17 and more than double the 1.36% record low yield achieved on 7/08/16 (source: Treasury Department).

6. MISSION ACCOMPLISHED – On 11/30/16 with the price of oil at $49.44 a barrel, the 14-members of OPEC agreed 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 (including Russia) – a combined reduction of 1.8 million barrels of oil a day. OPEC and Russian oil officials will discuss adding back 1 million barrels a day of production when they meet on 6/22/18. The price of oil closed at $65.81 a barrel on Friday 6/01/18 (source: BTN Research).

7. 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).

8. STRONG BANKS – No US banks failed during the first 5 months of 2018 (January-May), the first time that has occurred since 2006. Ultimately, there were no bank failures in 2006, the last calendar year when that happened. Since 2007, 531 banks have failed, an average of 48 per year over the last 11 years (source: FDIC).

9. THEY REALLY OWE NOTHING – An estimated 45% of the 176.1 million tax returns projected to be filed next year for tax year 2018 will legally pay zero federal income tax (source: Tax Policy Center).

10. ONE TO THREE – The White House released a 10-year budget forecast on 2/12/18 predicting a $363 billion deficit for fiscal year 2028. The Congressional Budget Office released on 5/24/18 an analysis of the White House budget forecast that recast the fiscal year 2028 deficit to $1.087 trillion. Thus, the Trump White House is predicting a $1 billion deficit per day in 2028 while the CBO forecasts a $3 billion deficit per day (source: CBO).

11. JUST IN TIME FOR SUMMER TRAVEL – The Euro was worth $1.1685 as of 5/31/18, down from $1.2012 as of 12/31/17, i.e., Euro down and US dollar up. A stronger greenback means Americans will pay less to travel in Europe this summer (source: BTN Research).

12. RAPID GROWTH – China’s economy has grown tenfold since 2001, rising from $1.3 trillion (stated in terms of US dollars) to $13 trillion today (source: China NBS Data).

13. BABIES – Germany’s fertility rate in 2016, i.e., the average number of births per woman, reached its highest level since 1973. The increase in births is attributed in part to the country’s “parental benefit” that pays each parent of a newborn 65% of their salary for 7 months from a job that remains open for their return to work (source: Eurostat).

14. WAIT OR TAKE EARLY? – 21% of retirees currently receiving monthly Social Security retirement benefits did not begin taking that monthly benefit until at least age 66. 45% of retirees began taking their Social Security retirement benefit at age 62 (source: Employee Benefit Research Institute).

15. MUSCLE CAR – The 2019 Chevrolet Corvette ZR1 pace car used in the 102nd running of the Indianapolis 500 that was held on Sunday 5/27/18 had 755 horsepower (source: Indianapolis 500).

 

– 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. LENGTH OF BULL – At last Friday’s close of 2713, the S&P 500 is down 5.6% from its 1/26/18 record closing high. If the index does not make a new closing high before dropping 20% or more into a bear market, then the official end of the bull market (that began on 3/10/09) would be the current peak reached on 1/26/18. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. MORE TIME OR MORE MONEY – A 30-year old individual investing $523 at the beginning of every month in a pre-tax account earning +8% annually would accumulate $1 million by age 60 assuming the monthly investment is increased +3% per year. A 30-year old will need a monthly investment of $730 (assuming a +3% increase per year in the monthly investment) if the pre-tax account earns only +6% annually to accumulate $1 million by age 60. A 30-year old individual investing $523 at the beginning of every month in a pre-tax account earning +6% annually would accumulate $1 million by age 64 and 4 months assuming the monthly investment is increased +3% per year (source: BTN Research).

3. HUGE PROFITS – The operating earnings per share of the companies in the S&P 500 in the 1st quarter 2018 were up +26.4% on a year-over-year basis, i.e., when compared to operating earnings from the 1st quarter 2017. That’s the largest year-over-year increase in earnings since the 4th quarter 2010 (source: S&P).

4. FALLING BEHIND – Over the last 20 years, i.e., 4/30/98 to 4/30/18, inflation in the United States (using the “Consumer Price Index”) has increased +54.2% or +2.2% annually. An individual living on a fixed-income who has not benefited from “cost-of-living” increases would have only 65% of the purchasing power as of 4/30/18 that he/she had 20 years earlier. The consumer price index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).

5. LOTS OF BORROWING – Student loan debt nationwide has increased +9.2% annually over the last 10 years, i.e., from 3/31/08 to 3/31/18, rising from $580 billion to $1.41 trillion. Outstanding auto loans ($1.23 trillion) as of 3/31/18 are less than outstanding student loans (source: Federal Reserve Bank of New York).

6. 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).

7. LOCATED WHERE? – Venezuela has the most unextracted proven oil reserves (301 billion barrels of crude oil) of any country in the world (source: WorldAtlas.com).

8. OIL – From the end of 2016 to Friday 5/11/18, the number of operating oil rigs nationally is up +59% to 1,045 rigs and the field production of crude oil is up +22% to 10.723 million barrels a day (source: Department of Energy).

9. JUST ANOTHER BILLION A DAY – Social Security outlays by the US government during fiscal year 2017 were $944.9 billion, i.e., $2.6 billion a day. Social Security outlays by the US government during fiscal year 2007 were $586.2 billion, i.e., $1.6 billion a day (source: Office of Management and Budget).

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

11. BIG SURPRISE – 17% of 1,040 retirees surveyed in January 2018 say their health care expenditures in retirement are “much higher than expected” (source: EBRI Retirement Confidence Survey).

12. CHEAPER DRUGS – The US government’s Food and Drug Administration approved 763 generic drugs in 2017, a record number of approvals (source: FDA).

13. MID-TERMS – Democrats lost 63 House seats and 6 Senate seats in the November 2010 elections, i.e., 2 years into the Obama administration’s first term in the White House. The mid-term elections 2 years into the Trump administration’s first term in the White House will take place on 11/06/18 (source: Congress).

14. NOT HAPPY – 5 out of 6 Americans surveyed (83%) in early May 2018 disapprove of “the way Congress is handing its job” (source: Gallup).

15. SOCCER – The 2018 FIFA World Cup begins 6/14/18 with 32 nations competing over the month-long tournament. Fox Sports paid $200 million for broadcasting rights and has planned for more than 350 hours of programming. Team USA and Team Italy failed to qualify for the soccer competition (source: 21st Century Fox).

 

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Bill’s By The Number$

1. MID-TERM VOTING – In the 6 months before the 2010 mid-term elections, the S&P 500 gained +1.6% (total return). In the 6 months before the 2014 mid-term elections, the S&P 500 gained +8.1% (total return). The 2018 mid-term elections will take place in less than 6 months on 11/06/18. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. NERVOUS FOLKS – Only 37% of American adults under the age of 35 are invested in the stock market today, down from 55% in 2002 (source: Gallup).

3. BORROW – The Treasury Department auctioned off $17 billion of 30-year bonds with a 3.125% coupon last Thursday 5/10/18. The new bonds mature on 5/15/2048. The government has auctioned off 30-year bonds since 1977. The lowest yield ever on 30-year paper was 2.10% on 7/08/16 (source: Treasury Department).

4. RARE – Only 6 months in the last 40 years have produced an unemployment rate of 3.9% or less, including the April 2018 jobless rate of 3.9%. 6 months out of 40 years represents just 1.25% of the months over the 4 decades or equal to 1 out of every 80 months (source: Department of Labor).

5. SKILLS REQUIRED – 28% of American jobs do not require any formal educational credential, i.e., not even a high school diploma (source: Department of Labor).

6. JOBS – As of 3/31/18, there were 6.59 million unemployed Americans and 6.55 million job openings. As of 7/31/09, there were 14.60 million unemployed Americans and 2.10 million job openings (source: DOL).

7. HOW THE MATH IS DONE – The calculation of the consumer price index involves weighting the change in prices of goods and services in 8 major categories on a month-over-month basis. The category of “housing” is currently provided the largest weighting of the 8 categories (41.8% of the overall change in prices), more than 4 times as large as the category of “medical care” (8.7%). The consumer price index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).

8. PRETTY AFFORDABLE – 85% of the 11.8 million Americans who obtained their 2018 health insurance via exchanges established through the “Affordable Care Act” receive a subsidy to offset their monthly out-of-pocket cost. Those individuals receiving a subsidy pay on average just $89 per month for coverage after the government provides a $550 monthly subsidy (source: Healthinsurance.org).

9. WILL IT WORK? – 2 states (New York and New Jersey) have enacted legislation that creates a workaround from the $10,000 “state and local tax” (SALT) deduction limitation that is part of the 2017 “Tax Cuts and Jobs Act.” The IRS has yet to rule on the legality of the arrangement in which state taxpayers make a “charitable contribution” to a fund set up by their city, allowing them to receive a “tax credit” against their property taxes (source: BTN Research).

10. MONEY TO SPARE – The US government ran a $214.3 billion surplus in the month of April 2018, the largest monthly surplus ever in US history. The surplus was the difference between $510.5 billion of tax receipts (also a monthly record) and $296.2 billion of outlays (source: Treasury Department).

11. REALLY BIG BATTERIES – Clean-air legislation drafted in the United Kingdom (but not yet passed) would outlaw 98% of the vehicles currently in use by the year 2040. The proposed rules would require new cars to travel at least 50 miles using only electric power (source: Financial Times).

12. OUT OF MY LEAGUE – The median sales price of single family homes for sale today in San Jose, CA is $984,000 (source: Zillow).

13. FOR SALE – The 3.2 months of inventory of existing homes for sale in December 2017 was the lowest total ever recorded. The statistic represents how long the inventory of existing homes for sale would last if the current sales rate continued and no new inventory was added to the market (source: National Association of Realtors).

14. LENGTHY – The USA’s current economic expansion (in its 107th month) is the nation’s 2nd longest expansion based upon data that has been tracked since 1854, i.e., for 164 years (source: Nat’l Bureau of Econ. Research).

15. FOOTBALL – Atlanta Falcon QB Matt Ryan signed a contract extension on 5/04/18 that will pay him $150 million over the 5-years 2019-2023, a record NFL salary of $30 million annually. $100 million of the $150 million is guaranteed money. Ryan will “only” make $19.25 million for the 2018 season (source: NFL).

 

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

Bill’s By The Number$

1. STOCKS – The S&P 500 was down 0.4% YTD (total return) through Monday 4/30/18, its worst YTD performance as of April 30th in any year since 2009 when the stock index was down 2.5% YTD (total return) as of 4/30/09. A bull market that began on 3/09/09 eventually pushed the S&P 500 to a +26.5% full-year gain in 2009. 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 1990, the 6-month periods ending on April 30th have beaten the 6-month periods ending on October 31st in 18 of 28 years, i.e., the 6-month periods that began on May 1st and November 1st from 1990 through and including 2017. The 6-month periods ending April 30th are up +666% (total return) vs. a +89% gain for the 6-month periods ending October 31st. However, the 6-months ending April 30th have lagged the 6-months ending October 31st in 4 of the last 5 years (source: BTN Research).

3. QUITE A RIDE – The individual stock that was the top performing stock within the S&P 500 YTD through 4/30/18 with a gain of +62.8% was also ranked as the # 1 stock within the index for all of calendar year 2013 and again in calendar year 2015. But the stock was also ranked # 430 in 2014 and # 278 in 2016 (source: BTN Research).

4. FIVE DAYS – The best 5 trading days for the S&P 500 over the last 10 years (2008-2017) gained +50.6% (total return), more than the +50.1% gained by the other 2,513 trading days in the decade (source: BTN Research).

5. TAPPING THE BRAKES – Over the course of 55 Federal Reserve meetings from 1/28/09 to 10/28/15 (more than 6 ½ years), the American central bank made no changes to short-term interest rates. After last week’s Fed meeting (the 2nd of the Jerome Powell era) which resulted in “no change” to interest rates, the Fed has now raised short-term rates by ¼ of 1% in 5 of the last 12 meetings (source: Federal Reserve).

6. TEN-YEAR NOTE – The yield on the 10-year Treasury note closed on 5/04/18 at 2.94%, up from 2.41% as of 12/31/17. The last time the yield on the 10-year note closed a year at 3% or above (3.03%) was on 12/31/13. The last time the yield on the 10-year note closed a year at 4% or above (4.03%) was on 12/31/07. The last time the yield on the 10-year note closed a year at 5% or above (5.02%) was on 12/31/01 (source: Treasury Department).

7. NEW WORLD – By 2030, i.e., just 12 years from now, 23% of the “on-the-job” hours of Americans workers could be automated and completed by artificial intelligence and robotics (source: McKinsey & Company).

8. OWE NOTHING – 64% of the 120 million households in the USA are homeowners, a total of 77 million households. 34% of the 77 million homeowners (26 million households) are mortgage debt-free (source: ATTOM).

9. INCREASING DEMAND – The global consumption of crude oil is projected to exceed 100 million barrels a day in the 3rd quarter 2018, the first time ever in history that consumption has reached that level. In 2017 the USA consumed 19.9 million barrels a day of crude oil that had been refined into gasoline, diesel fuel, heating oil and jet fuel (source: Energy Information Administration).

10. COST OF CRUDE – The price of crude oil peaked at $147.27 a barrel on 7/11/08, fell to $26.21 a barrel on 2/11/16 and closed at $69.72 a barrel last Friday 5/04/18 (source: NYMEX).

11. RAPID CITY OR JACKSONVILLE? – The top 3 states for retirement in 2018 are Florida, Colorado and South Dakota. This subjective evaluation was based upon 41 metrics that assessed affordability, health care, quality of life, crime, weather and the state’s tax environment (source: WalletHub).

12. NO MORE “HAPPY HOUR” – Almost 3 out of every 4 workers surveyed (73% of 1,238 individuals) would give up drinking alcohol for life in return for an immediate +10% salary raise (source: LendEDU).

13. LIGHTS ON – US utilities generated 4 trillion kilowatt hours (kWh) of electricity in 2017, split between 63% from fossil fuels (split almost equally between natural gas and coal), 20% from nuclear plants and the remaining 17% from renewable sources, e.g., hydropower and wind (source: Energy Information Administration).

14. YOU’RE OUT, THEY’RE IN – Mid-term elections occur on 11/06/18 or 6 months from yesterday. All 435 House seats and 33 Senate seats are up for reelection in November. In the last 4 mid-term elections (2002, 2006, 2010 and 2014), the balance of power changed in at least 1 of the 2 congressional institutions (source: BTN Research).

15. YOU GO FIRST – The Cleveland Browns had the # 1 draft pick in the first round of the last 2 NFL drafts (2017 and 2018). 4 NFL teams have never had the first overall pick in any NFL draft – Denver Broncos, Jacksonville Jaguars, Baltimore Ravens and the Seattle Seahawks (source: NFL).

 

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

Bill’s By The Number$

1. YEAR-TO-DATE – With 1 day remaining in April, the YTD total return of the S&P 500 is a gain of +0.4%, less than the index’s +3.8% average return for the first 4-months over the last 25 years (1993-2017). 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. MISSING THE BEST – The total return for the S&P 500 over the last 10 years (2008-2017) was a gain of +8.5% per year (total return). If you missed the 10 best percentage gain days over the 10 years (10 trading days in total, not 10 days per year), the +8.5% annual gain drops to an annual gain of +1.3% (source: BTN Research).

3. AVOID THE WORST – The total return for the S&P 500 over the last 10 years (2008-2017) was a gain of +8.5% per year (total return). If you avoided the 10 worst percentage days over the 10 years (10 trading days in total, not 10 days per year), the +8.5% annual gain rises to an annual gain of +16.8% (source: BTN Research).

4. ONE DAY – Of the top 50 “percentage gain days” for the S&P 500 over the last 10 years (2008-2017), only 1 has occurred in the last 6 years (2012-2017), i.e., a +3.9% gain (total return) on 8/26/15 (source: BTN Research).

5. THREE PERCENT YIELD – On 7/08/16, the 1.625% coupon, 10-year Treasury note that matures on 5/15/2026 was priced at $102.36, resulting in a 1.36% yield, the lowest yield ever in history for the 10-year Treasury note. On 4/25/18 (last Wednesday), the 1.625% coupon, 10-year Treasury note that matures on 5/15/2026 was priced at $90.13, resulting in a 3.01% yield. Thus, the value of the 10-year note has dropped 12% over the 22 months since setting a record low yield (source: BTN Research).

6. FROM A RECORD LOW YIELD – When the yield on the 10-year Treasury note bottomed on 7/08/16 at 1.36%, the average interest rate nationwide on a 30-year fixed rate mortgage was 3.41%. The average interest rate on a 30-year fixed rate mortgage is 4.58% today (source: Freddie Mac).

7. NICE PLACE – In the years 2010-16 following the global real estate crisis, 46% of the new homes built in the United States had at least 4 bedrooms (source: Federal Reserve Bank of St. Louis).

8. THEIR FAVORITE OPTION – 34% of 1,015 Americans surveyed in early April 2018 picked real estate as the best long-term investment today. 26% selected stocks as their top long-term choice (source: Gallup).

9. GONE – The individual mandate penalty is eliminated on 1/01/19, i.e., Americans will no longer be penalized for failing to purchase acceptable health insurance coverage. The penalty in 2018 is the greater of a flat amount per uninsured family member ($695 per adult and $347.50 per child under the age of 18) or 2.5% of household income (up to the national average premium of a bronze level health plan) (source: Tax Cuts and Jobs Act).

10. WORKER COST – The average employer in the private sector pays 44 cents in benefits (e.g., Social Security, Medicare, unemployment insurance, workers’ compensation, life and health insurance, paid leave, retirement plans) for every $1 paid in salary (source: Department of Labor).

11. AFTER TAX REFORM – Following the 10/22/86 signing of the “Tax Reform Act of 1986,” the US economy grew by an average of +3.8% per year for the subsequent 3-years, i.e., 1987-88-89. The last time that the US economy grew by at least +3.8% in a single year was in 2004 (source: Department of Commerce).

12. ANOTHER BILL TO PAY – A 65-year old couple retiring in 2018 will need an estimated $280,000 (present value amount stated in 2018 dollars) to pay out-of-pocket health care costs during the couple’s retirement years. The $280,000 figure assumes the couple qualifies for Medicare but does not require nursing home care. This annual forecast has risen from $225,000 in 2008 (source: Fidelity).

13. JUST IN CASE – The biggest banks in the United States, defined as those with at least $122.3 million of customer deposits, are required by the Federal Reserve to maintain a reserve balance of 10% of deposits. Smaller banks have smaller reserve requirements (source: Federal Reserve).

14. NO INCREASE NEEDED – Purdue University announced on 4/12/18 that it will keep in-state tuition at $9,992 for the 2019-2020 school year, the 8th consecutive school year that Purdue has charged $9,992 for in-state tuition. The president of Purdue University is Mitch Daniels, former OMB director (source: Purdue University).

15. BAMBINO – Los Angeles Angels baseball player Shohei Ohtani has won 2 games as a pitcher and has hit 3 home runs from the plate in games this season through 4/26/18. Babe Ruth is the last major leaguer to win 10 games as a pitcher and hit 10 home runs in a single season, a feat Ruth completed in 1918 (source: MLB).

 

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