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Bill’s By The Number$

1. AT THIS TIME OF THE YEAR – Through last Friday 4/20/18, the S&P 500 was up +0.4% YTD (total return), the worst YTD performance for the stock index as of April 20th in any year since 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. BETTER BANKS TODAY – As of today (Monday 4/23/18), 0 banks in the United States have failed YTD and required a bailout from the Federal Deposit Insurance Corporation. As of 4/23/10, 57 banks had failed YTD. Just 8 banks failed during all of calendar year 2017 (source: FDIC).

3. MOSTLY SHORT-TERM BORROWING – Of the $2.4 trillion in bills, notes and bonds that the United States Treasury has issued YTD through Friday 4/20/18 (equal to $151 billion borrowed per week), only 7% of the debt is 10-year notes or 30-year bonds (source: Treasury Department).

4. CONSISTENTLY UPSIDE DOWN – Projections by the Congressional Budget Office (CBO) on 4/09/18 forecast annual deficits of at least $1 trillion for 9 consecutive years beginning in fiscal year 2020. The US has recorded a “trillion-dollar deficit” in just 4 fiscal years in our nation’s history (source: CBO).

5. DO WE CARE? – Former Speaker of the House John Boehner (R-OH) predicted on 4/13/18 that “mark my words, give it about 6 months, and this (government budget deficits) will become the # 1 issue” (source: CNBC).

6. EXTREME GLOBAL BORROWING – The International Monetary Fund reported last Wednesday 4/18/18 that global debt reached $164.4 trillion in 2016, 225% of the size of the $73 trillion global economy. The 225% is the highest level ever recorded, eclipsing global debt of 213% of the worldwide economy in 2009. 45% of the 2016 global debt (incurred by 190 countries worldwide) is from the USA ($48.1 trillion of public and private debt) and from China ($25.5 trillion) (source: IMF Fiscal Monitor April 2018).

7. DOUBLE IN A DECADE – Field production of crude oil in the United States was 10.540 million barrels a day for the week ending Friday 4/13/18, the 8th consecutive week of increasing domestic oil production and more than double the 5.096 million barrels a day of crude oil production for the week ending 4/11/08 or a decade earlier (source: Department of Energy).

8. EXPENSIVE GAS – The average price of a gallon of gasoline was $2.751 last Friday 4/20/18, up 26.5 cents YTD. The last time that the average price of gasoline nationwide was $3 a gallon was on 10/31/14 (source: AAA).

9. 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).

10. THE THING TO DO – 70% of high school graduates enroll in college less than a year after graduation (source: Department of Labor).

11. NOT A POPULAR JOB – The trucking industry has a shortage today of approximately 30,000 drivers, a critical factor behind the rising cost of moving freight in the United States. Trucks move 71% of all US freight nationwide (source: American Trucking Associations).

12. LET’S WATCH A SHOW – The proposed tariffs on imports from China would increase the cost of TVs made in China and sold in the USA by +23%. 47% of all TVs bought in the USA are imported from China (source: Consumer Technology Association).

13. TWICE AS MANY NEW RENTERS – As of the end of 2017, there were 120.2 million households in the USA, split 64/36 between homeowners (77.2 million) and renters (43.0 million). Since the end of 2011 (i.e., 6 years earlier), the number of homeowners (75.3 million as of 12/31/11) has increased by +1.9 million while the number of renters (38.8 million as of 12/31/11) has increased by +4.2 million (source: Census Bureau).

14. JUST A FEW HAVE ONE – Only 23% of American workers (in both the public and the private sector) have a defined benefit pension plan (source: National Compensation Survey for 2017).

15. DON’T CRY FOR ME – Professional golfer Brian Davis has never won a PGA event but has earned a career total of $13.3 million, the most career money earned by a non-winner. Davis has finished runner-up in 5 PGA events in 352 tournaments (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. THREE IN-A-ROW – The S&P 500, down on a total return basis in February and March this year, has been negative 3 or more consecutive months just 3 times in the last decade. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. HARD TO CATCH UP – A 30-year old employee who is investing $500 at the beginning of every month in a tax-deferred 401(k) will accumulate $588,032 by age 60 if the funds grow at +7% per year. If that individual was forced to suspend his/her monthly deferral for just 5 years from ages 35-39, he/she would have to earn +8.8% per year from ages 40-60 to accumulate $588,032 by age 60. This mathematical calculation ignores the ultimate impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance. Actual results will fluctuate with market conditions and will vary (source: BTN Research).

3. DOLLAR CUT-OFFS – For tax year 2015 (the latest year that tax data has been released), it took $480,930 of adjusted gross income (AGI) to rank in the top 1% of taxpayers, $195,778 of AGI to rank in the top 5%, $138,031 of AGI to rank in the top 10%, and $79,655 of AGI to rank in the top 25% (source: Internal Revenue Service).

4. TOP FIVE AND THE REST – The top 5% of US taxpayers (based upon adjusted gross income) paid more federal income tax ($866 billion) during tax year 2015 (the latest year that tax information has been released) than the federal income tax paid ($588 billion) by the bottom 95% of taxpayers. 141 million tax returns were filed for tax year 2015 (source: Internal Revenue Service).

5. PUT IT ON THE CARD – Credit card debt in the USA was $1.03 trillion as of February 2018, its highest level ever. Credit card debt was $1.02 trillion in May 2008 (source: Federal Reserve).

6. TEN-YEAR GUESS – The US government is projected to run a $12.4 trillion budget deficit over the next decade, i.e., $44.2 trillion of tax revenues vs. $56.6 trillion of spending outlays over the 10 fiscal years from 2019 to 2028. This forecast was released on Monday 4/09/18 (source: Congressional Budget Office.

7. TOTAL DEBT – The United States did not reach a national debt of $12.4 trillion until 2/18/2010, 221 years after our government began keeping financial records in 1789 (source: Treasury Department).

8. MADE UP OF – The $56.6 trillion of projected spending outlays for the US government over the next 10 fiscal years (2019-2028) is split between 62% of mandatory spending (e.g., Medicare, Medicaid, Social Security), 26% of discretionary spending (e.g., defense) and 12% of net interest costs (source: Congressional Budget Office).

9. RETIRE HERE – Social Security benefits are taxed by just 13 US states, i.e., 37 states do not count monthly Social Security benefits as taxable income at the state level (source: Internal Revenue Service).

10. PLANNING AHEAD – 71% of American workers have access to an employee-funded defined contribution retirement plan (e.g., 401(k) plan) through their employer (source: Transamerica Center for Retirement Studies).

11. BELIEVE IT WHEN I SEE IT – Chinese automobile sales in 2017 were 28.88 million vehicles. Just under 1% of that total (266,657) were Chinese purchases of cars exported from the United States. A speech made by Chinese President Xi Jinping on Tuesday 4/10/18 included a promise to reduce tariffs on imported American vehicles (source: China Association of Automobile Manufacturers).

12. WOULD THEY SELL OUR BONDS IN A TRADE WAR? – At the end of 2017, the Chinese government owned $1.18 trillion of US Treasury debt (bills, notes and bonds), 8% of the $14.47 trillion of US Treasury debt that was outstanding on 12/31/17 (source: Treasury Department).

13. COSTLY DISASTERS – The United States experienced 16 “billion-dollar” weather and fire disasters in 2017, causing damage of $309 billion. The 16 disasters from last year ties the 2011 record for the most number of “billion-dollar” disasters ever and the $309 billion amount toppled the previous record high of $219 billion (adjusted for the impact of inflation) set in 2005 (source: National Centers for Environmental Information).

14. NOT THAT MANY – A study released on 3/22/18 estimates that just 4% of personal bankruptcies are “associated with a prior hospital admission” (source: Myth and Measurement – The Case of Medical Bankruptcies).

15. BIG MONEY TODAY – Patrick Reed pocketed $1.98 million for winning the 2018 Masters. Arnold Palmer won $1.86 million during his 62-win PGA career (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. TIME FLIES – The S&P 500 bull market that began on 3/09/09 is now in its 110th month. The average bull market for the stock index since 1950 (including the current bull) has lasted 62 months. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. DOWN EARLY – The S&P 500 lost 0.8% in the first quarter 2018, the 9th time since 1990 that the stock market was negative during the first 3 months of the year. The S&P 500 went on to record a positive return for the entire year in 5 of the previous 8 years that started with a loss (1992, 1994, 2003, 2005 and 2009) and suffered full-year losses in the other 3 years (1990, 2001 and 2008) (source: BTN Research).

3. SINCE TRUMP WAS ELECTED – The S&P 500 has gone 48 trading days since last setting an all-time closing high on 1/26/18, the longest stretch between record closes since 11/21/16 or 13 days following Donald Trump’s election win (source: BTN Research).

4. BEST – April has been the best month for the S&P 500 over the last 25 years (i.e., 1993-2017), having gained an average of +1.81% (total return), just ahead of October’s +1.80% average gain (source: BTN Research).

5. FINALLY, A NEW HIGH – After adjusting numerical data from the past for the impact of inflation, the median household income in 2016 ($59,039) is the highest ever recorded in the United States, besting the previous record for median household income ($58,665) set in 1999 (source: Federal Reserve Bank of St. Louis).

6. YOU BORROW, YOU PAY – 94.5% of home mortgages (by number, not by dollar) are “current and performing” as of 12/31/17. Just 2.4% of home mortgages were “seriously delinquent” (defined as 60 days or more past due) as of 12/31/17 (source: Office of the Comptroller of the Currency).

7. ONE PERCENTAGE POINT HIGHER – A 4% 30-year fixed rate mortgage has a monthly “principal and interest” payment of $477.42. A 5% 30-year fixed rate mortgage has a monthly “principal and interest” payment of $536.82 (source: BTN Research).

8. HALF WORK, HALF DON’T – 155.2 million Americans have full-time jobs today, 47% of our 327.5 million citizens (source: Department of Labor).

9. JUST NOT ENOUGH – Almost 2 out of every 3 American workers (65%) believe that even if they continue to work until age 65 that they will not accumulate enough savings “to meet their retirement needs” (source: Transamerica Center for Retirement Studies).

10. DON’T HAVE IT, DON’T SPEND IT – Just 47% of American workers report that they do an “excellent” or “very good” job of “living within a budget” (source: Society of Actuaries).

11. NOT UP TO SNUFF – The 75-year (1943-2017) average growth rate of the US economy is +3.1% per year. However, the actual growth rate of the US economy has reached +3.1% or greater in only 2 of the last 17 years, i.e., 2004 and 2005 (source: Commerce Department).

12. AFFORDABLE CARE ACT – 11.8 million Americans obtained their 2018 health insurance coverage through a state-based marketplace (12 states), through a state operating its own marketplace on the federal platform (5 states), or through a state using the federally-facilitated marketplace (33 states). The 11.8 million total is down 3.7% from 2017 (source: National Academy for State Health Policy).

13. REMOVES AN INCENTIVE FOR BANKS TO LEND – The 1.75% that the Federal Reserve currently pays to banks on the $1.985 trillion of excess reserves the banks hold at the 12 regional Fed banks (as of 3/28/18) is equal to $95.2 million in daily interest. The Fed began paying ¼ of 1% on excess reserves as of 10/06/08 at the beginning of the global real crisis and has subsequently increased the rate paid 6 separate times, most recently to 1.75% as of 3/22/18 (source: Federal Reserve).

14. HOME ON THE RANGE – There are 2.1 million American farms today, down from 5.4 million farms in 1950. The average American farm today feeds 165 people each year in the US and abroad (source: American Farm Bureau Federation).

15. FOUR GREAT DAYS – No golfer had ever completed all 4 rounds in the 60s at the Masters as of the start of the 2018 tournament last week, a championship event that has been played since 1934. Par at the Augusta National Golf Club is 72 (source: Golf Digest).

 

– 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. FIRST THREE MONTHS –The S&P 500 lost 0.8% (total return) in the 1st quarter 2018, breaking the index’s streak of 9 consecutive positive quarters. The loss was just its 2nd down quarter in the last 5 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. DOWN THEN UP – The last time that the S&P 500 was down on a total return basis for the 1st quarter yet finished up for the full calendar year was in 2009 when the index lost 11.0% during the first 3 months of the year but was up +26.5% for the entire year (source: BTN Research).

3. HOT STOCK AND COLD STOCK – The best performing individual stock in the S&P 500 during the first quarter 2018 gained +57.2%. The worst performing individual stock in the S&P 500 during the first quarter 2018 lost 38.5% (source: BTN Research).

4. A GAIN THIS YEAR – 40% of the stocks in the S&P 500 were trading at a price as of the close of business on Thursday 3/29/18 that was higher than where the stocks ended 2017 (source: BTN Research).

5. TENFOLD – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $40.8 trillion as of 12/31/17. The US bond market was worth $4.1 trillion as of 12/31/85 (source: Securities Industry and Financial Markets Association).

6. WHAT ARE BOND BUYERS TELLING US? – The yield spread is the difference between the yields on the 10-year Treasury note and the 2-year Treasury note. That spread fell to just 0.47 percentage points last Thursday 3/29/18, i.e., 2.74% less 2.27%. The yield spread hasn’t been that low since 10/15/07 (source: BTN Research).

7. 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).

8. WRONG TREND – Net interest costs of the federal government made up 6.6% of total federal outlays in fiscal year 2017. But the expectation of higher interest rates in the future and rising federal debt levels are projected to push net interest costs to 12.0% of total federal outlays by fiscal year 2023 (source: CBO).

9. TWICE AS MUCH – Student loan debt, equal to $1.38 trillion as of 12/31/17, has doubled in just over 8 years. Student loan debt was $690 billion as of 9/30/09 (source: Federal Reserve Bank of New York).

10. LEVEL PLAYING FIELD – Insider trading is the buying or selling of a publicly traded security with the benefit of material, nonpublic information. Persons convicted of insider trading may be forced to repay any profits gained or losses avoided, along with being subject to civil penalties that can be up to 3 times the amount of the profits gained or losses avoided because of the insider trades. Violators are also subject to a maximum prison term of 20 years (source: SEC).

11. THE ART OF THE DEAL – 6 days after President Trump announced steel and aluminum tariffs on 3/01/18, the White House released plans to exempt Mexico and Canada from those tariffs. By the time the tariffs became effective on Friday 3/23/18, 32 additional countries had been added to the growing exception list, including all 28 European Union (EU) countries plus Argentina, Australia, Brazil and South Korea. Further exemptions are expected over the next month (source: White House).

12. UP LAST YEAR – The US homeownership percentage (i.e., “owner” households as a percentage of total households) was 63.4% in 2016, the lowest percentage nationwide since 1965 or 51 years earlier when the rate was just 63.0%. The homeownership percentage rose to 63.9% in 2017 (source: Census Bureau).

13. EXPENSIVE – Healthcare spending makes up 18% of the $20 trillion US economy, equal to $11,000 per year for each of our nation’s 327 million citizens (source: Centers for Medicare & Medicaid Services).

14. NEW HOMES – The average profit earned by builders of new single-family homes constructed in the USA in 2017 was 10.7% of the home’s total sales price. The average single-family home built last year had a total cost of $428,000, resulting in an average profit of $46,000 (source: National Association of Home Builders).

15. SISTER JEAN – Michigan played Loyola University Chicago in a NCAA semifinal basketball game last weekend. Michigan has annual athletic department spending of $155 million. Loyola has annual athletic department spending of $10 million (source: University of Michigan, Loyola University Chicago).

 

– 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. BELOW AVERAGE – With 4 trading days left in the 1st quarter 2018, the S&P 500 has lost 2.8% YTD (total return). The average 1st quarter gain for the index in the last 25 years (i.e., 1993-2017) has been +1.9%. The S&P 500 consists of stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. FED ACTION – The Federal Reserve raised short-term interest rates by ¼ of 1% (to a max 1.75%) last Wednesday 3/21/18, its 6th rate hike since 12/16/15 (27 months ago) and the first rate-hike since Jerome Powell became the Fed Chair on 2/05/18. In the 570 trading days since the # 1 rate hike in this tightening cycle, the S&P 500 has gained +30.9% (total return), an annualized gain of +12.6% per year (source: BTN Research).

3. HALF OF ONE PERCENT – The Federal Reserve began a rate-tightening cycle on 12/16/15. In the 27 months since then (through Friday 3/23/18), the yield on the 10-year Treasury note has increased 0.52 percentage points from 2.30% to 2.82% (source: Treasury Department).

4. STRONGER DOLLAR – While the Fed has been raising interest rates to keep our economy from overheating, the dollar has increased in value. From the Fed’s initial rate increase (12/16/15) to last week’s 6th rate hike, the dollar has risen +13% against the euro (source: BTN Research).

5. OH REALLY? – When asked on 7/01/05 on CNBC about the potential “bubble” developing in the US real estate market that could cause a recession, then Fed Chairman Ben Bernanke replied “I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had declines in house prices on a nationwide basis. So, what I think is more likely is that house prices will slow.” From 6/30/07 to 3/31/11, the average price of a single-family home in the USA fell 21.5% (source: Federal Housing Finance Agency).

6. BREXIT – The UK will leave the European Union at 11 p.m. London time on 3/29/19, 1 year from Thursday. The vote which set Brexit in motion took place on 6/23/16. In the 2 trading days following that vote, the S&P 500 fell 5.3% on a total return basis (source: BBC).

7. ENERGY INDEPENDENCE? – American oil producers have pumped at least 10 million barrels a day of crude oil for the last 7 weeks, hitting 10.407 million barrels per day for the week ending Friday 3/16/18. The last time US oil producers hit 10 million barrels a day of crude oil was in 1970 (source: Energy Information Administration).

8. ONE MONTH, ONE YEAR – The US government ran a $215 billion budget deficit in February 2018. As recently as 2007, the budget deficit for the entire fiscal year ($161 billion) was less $215 billion. Until fiscal year 1986, the US government had not recorded an annual deficit as high as $215 billion (source: Treasury Department).

9. WHO GETS WHAT – 64% of 1,503 adults surveyed in January 2018 believe that the federal government provides “too much help” to wealthy Americans. 65% of the same group believes “not enough help” is provided to older Americans (source: Pew Research Center).

10. DEMOGRAPHIC SHIFT – By the year 2035, the projected number of Americans seniors aged 65 and up (78.0 million) will exceed the number of American children under the age of 18 (76.4 million), the first time in US history that will have occurred (source: Census Bureau).

11. I CHOOSE NOT TO RUN – As of 3/15/18, 53 members of the House of Representatives (36 Republicans and 17 Democrats) have decided not to seek reelection in November 2018. That’s the largest number of the 435 House incumbents not seeking another 2-year term in the House since 1992 (source: Vital Statistics on Congress).

12. ONE FOR EACH – There were 6.3 million job openings in the USA as of 1/31/18. There were 6.7 million jobless Americans as of 2/28/18 (source: Department of Labor).

13. REALLY LOW – The unemployment rate in the United States today is 4.1%. The last time the jobless rate in the country was less than 4% was December 2000 (source: Department of Labor).

14. FOR LOTS OF REASONS – Major US retailers closed 6,955 stores nationwide during calendar year 2017, a total greater than the number of closures that occurred in any single year during the global financial crisis that began 10 years ago (source: Fung Global Retail & Technology).

15. SELECT GROUP – 25 ballplayers will make the opening day rosters of 30 major league baseball teams later this week, a grand total of 750 big league ballplayers. Coming into the 2018 professional season, the 143rd all-time, 18,856 men have appeared in at least 1 game at the major league level (source: Major League Baseball).

 

– 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. SINCE THE DOWNGRADE – The USA was downgraded by S&P from a top credit rating on 8/05/11 or 1,663 trading days ago (6 ½ years ago). Since 8/05/11, the yield on the US 10-year Treasury note has risen from 2.57% to 2.85% and the S&P 500 has gained +164% on a total return basis, equal to +15.9% per 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 market value (source: BTN Research).

2. LONGER – The 11 bull markets for the S&P 500 since the end of World War II have averaged 5.2 years in length. The current bull market reached 9 years in length on 3/09/18 (source: BTN Research).

3. HUGE NUMBERS – The US stock market was worth $29.6 trillion as of 12/31/17. The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $40.8 trillion as of 12/31/17 (source: Wilshire, Securities Industry and Financial Markets Association).

4. INCOME – The top 1% of US taxpayers earned 8.5% of the nation’s adjusted gross income (AGI) in 1980, rising to 20.8% of AGI in 2000, peaking at 22.9% of AGI in 2007 and finally dropping to 20.7% of AGI in 2015, the latter percentage being the most recent data that has been released by the government (source: IRS).

5. THE BABY INDICATOR – The number of births in the United States began to decline at least 6 months before each of the nation’s last 3 recessions, suggesting that a falling birth rate may be a leading indicator in predicting recessions. Researchers hypothesize that couples may delay having children when their short-term views of the economy turn negative (source: National Bureau of Economic Research).

6. IMPORTS AND EXPORTS – Total exports of goods and services by US corporations reached $2.33 trillion in 2017, up +41% from the $1.65 trillion of goods and services exported in 2007. Our nation’s $2.90 trillion of imports in 2017 still exceeded our exports by $568 billion (source: Commerce Department).

7. NEIGHBORS TO THE NORTH – The United States exported more goods to Canada in 2017 ($282.4 billion) than the combined amount that we exported to China ($130.4 billion), Japan ($67.7 billion) and the United Kingdom ($56.3 billion) (source: Commerce Department).

8. THE BANKING INDUSTRY – As of last Friday (3/16/18), no US bank had failed YTD and required a financial bailout from the FDIC. This is the latest in any calendar year with no bank failures YTD since 2006, the last year in which no bank failures occurred during the entire year. Over the last 5 calendar years (2013-17), 63 banks failed in the United States, an average of 13 per year (source: Federal Deposit Insurance Corporation).

9. BEEN THERE, DONE THAT – The 5 Eurozone countries (i.e., the countries that use the Euro as their common currency) that received a financial bailout between February 2010 and July 2012 were Greece, Ireland, Portugal, Spain and Cyprus. Greece is the only country of the 5 that has yet to exit its bailout program as structured by its European creditors but is on track to do so in August 2018 (source: BTN Research).

10. WE DON’T MAKE A LOT OF STUFF – There were 12.6 million manufacturing jobs in the United States as of 2/28/18. There were 13.1 million manufacturing jobs in the United States as of 2/28/42 or 76 years ago (source: Department of Labor).

11. TWENTY-ONE TRILLION – The total debt of the US government as of Thursday 3/15/18 was $21.03 trillion, consisting of $15.36 trillion of “debt held by the public” and another $5.67 trillion of “intergovernmental debt” (source: Treasury Department).

12. RETIRE WITH DEBT – Only 38% of American retirees are debt-free, i.e., 62% of American retirees have outstanding mortgage debt, credit card debt, auto loan debt or student loan debt (source: Society of Actuaries).

13. A GIFT, NOT A LOAN – 28% of student loan borrowers (by number, not by dollar) default on their student loans (source: Looney and Yannelis 2015 study).

14. ROADS AND BRIDGES – American drivers pay federal taxes of 18.4 cents a gallon on gasoline, revenue that is used to pay for roads, bridges and mass transit projects in the USA. The gas tax rate was last raised in the USA in 1993 or 25 years ago (source: Highway Trust Fund).

15. GUARANTEED CONTRACT – The Texas Rangers owe Prince Fielder $72 million over the 2018-19-20 seasons even though he stopped playing in July 2016 due to his 2nd neck surgery. MLB teams typically take out insurance contracts that pays the ballclub in the event of a player’s career-ending disability (source: Texas Rangers).

 

– 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. NINE YEARS LONG – The ongoing bull market for the S&P 500 reached 9 years in length as of the close of trading on Friday 3/09/18, having achieved 202 all-time closing highs during the 9 years. The index’s 9 ½ year bull from October 1990 to March 2000 had 308 record closing highs. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. BULL MARKET BY YEAR – The bull market for the S&P 500 reached 9 years in length as of the close of trading last Friday 3/09/18, having gained +398.0% over the period. The 2 best years (out of the 9 years) for the S&P 500 were the 1st year (up +72.3%) and the 5th year (up +23.7%). The 2 worst years (out of the 9 years) were the 7th year (down 2.2%) and the 3rd year (up +6.1%). Each of the annual returns are total return results which include the impact of reinvested dividends (source: BTN Research).

3. TRUMP TIME – In the 285 trading days since Donald Trump was inaugurated as US president on 1/20/17 (i.e., just short of 14 months ago), the S&P 500 has gained +25.5% (total return) through the close of trading last Friday 3/09/18 (source: BTN Research).

4. SMALL-CAPS – Since 1981, there have been 28 different 10-year periods, i.e., the 10-years from 1981-90, 1982-91, 1983-92, . . . 2008-17. The small-cap Russell 2000 stock index has gained at least +8% per year (total return performance) in 19 of the 28 decade-long periods, i.e., 68% of the time. The Russell 2000 index is an unmanaged index of small-cap securities which generally involve greater risks (source: BTN Research).

5. A LOT IN A FEW – Just 2.2% of the banks and savings institutions in the United States hold 83% of the deposits maintained in FDIC-insured institutions nationwide as of 12/31/17. There are a total of 5,670 banks and savings institutions holding $17.4 trillion of deposits as of the end of last year (source: FDIC).

6. 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).

7. STARTING DATE – 48% of women and 42% of men begin taking their monthly Social Security retirement benefits at age 62, the earliest age possible. Just 4% of women and just 2% of men delay taking their Social Security retirement benefits at age 70 or later (source: Social Security Administration).

8. O CANADA! – Canada is the # 1 source of both US steel imports and US aluminum imports in 2017, having sold 5.5 million metric tons of steel and 3.3 million metric tons of aluminum (source: Commerce Department).

9. SMALL PERCENTAGE – Steel imports were $29 billion and aluminum imports were $19 billion last year, combined to make up less than 2% of our nation’s $2.9 trillion of imports in 2017 (source: Commerce Department).

10. JUST PUT IT ON THE CARD – Legislation signed into law by President Donald Trump on 2/09/18 suspended our debt ceiling limit until 3/01/19, i.e., there is no statutory limit on our nation’s borrowing until then. The debt limit has been raised, temporarily extended or suspended 78 times since 1960 (source: Treasury Department).

11. SAVE NOT SPEND – The personal savings rate in the United States rebounded to 3.2% in January 2018, up from a near historic low of 2.4% in December 2017. The monthly statistic, tracked since 1959, reached an all-time high of 17.0% in May 1975 and fell to a record low of just 1.9% in July 2005 (source: Commerce Department).

12. DREAMERS – An average of 1,100 DACA permits (Deferred Action for Childhood Arrivals) expire each day, requiring the undocumented immigrant to apply for a 2-year renewal that provides deportation protection and a work permit (source: U.S. Citizenship and Immigration Services).

13. LEFT THE INDUSTRY – From 2.44 million construction workers nationwide as of 2/28/10, the total is down 70% (to 732,000 workers) as of 2/28/18, but up +314,000 in just the last 4 months (source: Labor Department).

14. EYES ON THE ROAD – 47 of 50 US states prohibit all text messaging while driving. Missouri bans only drivers under the age of 22 from texting while driving, while Arizona and Montana have no ban on texting (source: National Conference of State Legislatures).

15. WHEN IT REALLY MATTERS – The 2008 Detroit Lions NFL football team went 4-0 in the preseason, and then lost every game in a 0-16 regular season. The 2017 Cleveland Browns NFL football team went 4-0 in the preseason, and then lost every game in a 0-16 regular season (source: NFL).

 

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Bill’s By The Number$

1. NINE YEARS – In the first 3-years following its 3/09/09 bear market closing low of 677, the S&P 500 gained +114% through 3/09/12 (i.e., total return result including the impact of reinvested dividends). In years 4-9 (i.e., the next 6 years) from 3/09/12 to last Friday 3/02/18), the S&P 500 has gained an additional +125%. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

2. NOT ALWAYS UP – The nearly 9-year bull market run for the S&P 500 that began on the morning of 3/10/09 has gained +381% (total return) through last Friday 3/02/18, an annualized return of +19.1% per year. During the entire 9 years, the index has had 5 separate “corrections” of at least 10% but less than 20%. The ending dates of the 5 “corrections” are 7/02/10, 10/03/11, 8/25/15, 2/11/16 and 2/08/18 (source: BTN Research).

3. BAD CALL – The S&P 500 bottomed at 677 on 3/09/09, the end of a 17-month bear market in which the stock index fell 57%. A weekly survey of stock investors indicated 70% of them were bearish as of 3/04/09, the highest bearish measurement ever recorded by this study (source: American Association of Individual Investors).

4. LONG TIME – The USA has kept records on economic expansions and contractions since 1854. The current expansion, which began in July 2009, is in its 105th month. It is the 3rd longest expansion in history, trailing only expansions that ran from 1991-2001 and from 1961-69 (source: National Bureau of Economic Research).

5. IS A TRADE WAR NEXT? – President Trump announced plans on Thursday 3/01/18 to have the USA impose tariffs of 25% on steel imports and tariffs of 10% on aluminum imports for an undefined period. The tariff order could be signed into law this week. 17 million Americans are employed today by steel-using businesses, e.g., the automobile industry and the construction industry (source: National Tooling and Machining Association).

6. VERY RICH PLAN – Defined benefit pension plans can be funded to produce an annual benefit at retirement as high as $220,000 in 2018, up from $185,000 in 2008 (source: Internal Revenue Service).

7. SAVING – 51% of pre-retirees say that their efforts to save for retirement are “behind schedule” while only 15% of pre-retirees are “ahead of schedule” (source: Society of Actuaries Risks and Process of Retirement Survey).

8. PARTICIPATION – If the USA had 4 unemployed people for every 100 individuals either working or seeking work, the nation’s unemployment rate would be 4%, i.e., 4 divided by 100 (note the nation’s actual jobless rate was 4.1% as of 1/31/18). People who have given up looking for work are not counted in the unemployment calculation. Counting 1 additional out-of-work person who is no longer looking for work, the new math would be 5 divided by 101, resulting in a 5.0% national unemployment rate (source: BTN Research).

9. COLLEGE COSTS – The cost of tuition, fees, room and board at an average in-state public college has increased +5.5% per year over the last 30 years, reaching $20,770 for the 2017-2018 school year. If college costs had instead risen only by the rate of inflation (using the CPI) over the last 30 years (+2.6% per year), then a year of college would cost $9,012 during the current school year. The consumer price index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies (source: College Board, Department of Labor).

10. BORROWING EACH WEEK – Through the first 2 months of 2018 (i.e., through 2/28/18), the Treasury Department has conducted weekly auctions in which they have borrowed $1.43 trillion. The duration of the debt ranges from 4 weeks to 30 years (source: Treasury Department).

11. SIMPLER RETURN – Only 19.3 million US taxpayers are expected to claim itemized deductions in tax year 2018, down from an estimated 46.5 million itemizers from tax year 2017, a result of the 2018 limitation on “state and local taxes” and a doubling of the standard deduction (source: Tax Policy Center).

12. IMPROVING TREND – American banks repossessed 292,000 homes in 2017, 379,000 homes in 2016 and 450,000 homes in 2015 (source: ATTOM Data Solutions).

13. SAME HOUSE AFTER SIXTY YEARS – Warren Buffett lives in the same home today in Omaha, NE that he purchased for $31,500 in 1958. Buffett, 87 years old, is worth $78 billion (source: Forbes).

14. MAESTRO – Former Fed Chairman Alan Greenspan turns 92 years old tomorrow (3/06/18). Greenspan was the Fed’s Chairman for 18 ½ years beginning 8/11/87 through 1/31/06 (source: Federal Reserve).

15. BACK-TO-BACK – The 2000 New York Yankees professional baseball team was the last major league team to repeat as World Series champs, a feat the Houston Astros will try duplicate in 2018 (source: MLB).

 

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Bill’s By The Number$

1. HISTORICAL PERSPECTIVE – Since 1950, there have been 59 different 10-year periods (i.e., the 10-years from 1950-59, 1951-60, 1952-61, . . . 2008-2017). The S&P 500 index produced an average annual total return of less than +7% during 15 of the 59 decade-long periods (25% of the time). 19 of the 59 periods (32% of the time) resulted in an average annual total return of at least +14%. 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. CLOSING HIGH – Since 1980 (i.e., the 38 years from 1980-2017), the closing high for the S&P 500 has occurred during the month of December 19 times. The closing high for the index has occurred during January just 4 times, most recently in 2008. The closing high for the index YTD was set on 1/26/18 (source: BTN Research).

3. CORRECTIONS AND BEARS – In the 50 years from February 1968 to February 2018, the S&P 500 has had 19 declines of at least 10% but less than 20% or once every 2.6 years, including last week’s 10.2% drop through Thursday 2/08/18. A correction is defined as a stock market decline of at least 10% but less than 20%. In the 50 years from February 1968 to February 2018, the S&P 500 has had 7 declines of at least 20% or once every 7.1 years. A bear is defined as a stock market decline of at least 20% (source: BTN Research).

4. JUST A CRAZY FLUKE? – On the day that Janet Yellen was sworn in as Fed Chair (2/03/14), the S&P 500 was down 2.3% (total return), the worst trading day for the index in 2014. On the day that Jerome Powell was sworn in as Fed Chair (2/05/18), the S&P 500 was down 4.1% (total return), the worst trading day for the index since 8/18/11 (source: BTN Research).

5. DAY ONE – On the day that Janet Yellen was sworn in as Fed Chair (2/03/14), 10.2 million Americans were unemployed. On the day that Jerome Powell was sworn in as Fed Chair (2/05/18), 6.7 million Americans were unemployed (source: Department of Labor).

6. YOU DO THE MATH – The 4.1% unemployment rate for January 2018 that was reported by the government on 2/02/18 is based upon a survey of just 60,000 households that was completed during the week of 1/08/18. The employment status of the individuals in those 60,000 households is then extrapolated to project national figures for our country’s actual 120.2 million households (source: Department of Labor).

7. DEBT UNLIMITED – For the 6th time since 2013, Congress has suspended our nation’s debt ceiling limit. The bill, signed by President Trump on Friday morning 2/09/18, will allow our government to borrow as much money as needed between now and 3/01/19 to satisfy our country’s obligations. Our national debt, currently at $20.5 trillion, is projected to reach $22 trillion by 3/01/19 (source: Committee for a Responsible Federal Budget).

8. SHORT-TERM – 48.4% of Treasury debt at the end of FY 2017 (9/30/17) had a maturity of 3 years or less, i.e., debt that will mature by 9/30/20 and will either be rolled over or paid off (source: Treasury Department).

9. WOW – 25% of California’s residents receive their health insurance through Medicaid. Only New Mexico (31%) and West Virginia (26%) have a higher percentage of Medicaid beneficiaries (source: Kaiser Family Foundation).

10. TOP TEN – The top 10% of US taxpayers (based upon 2015 tax data) reported adjusted gross income (AGI) of at least $138,031, received 47% of all AGI and paid 71% of all federal income taxes for the year (source: IRS).

11. 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).

12. COST TO BORROW – The average interest rate on a 30-year fixed rate mortgage rose to 4.32% last week, the highest level seen in the United States since December 2016 (source: Freddie Mac).

13. RISING WAGES – The average hourly wage paid to workers in the private sector rose to $26.74 an hour (approximately $53,000 of annual compensation) in January 2018, up +2.9% in the last year. The last time private sector wages grew this much on a year-over-year basis was in May 2009 (source: Department of Labor).

14. COLLECTOR CAR – A 1965 Ferrari 275 GTB Speciale automobile sold for $8.1 million at auction in Arizona in mid-January 2018. The car originally sold for $14,000 in 1965 (source: Gooding & Company).

15. SPRING IS IN THE AIR – Training camps for major league baseball teams open this week. The minimum salary for a major league baseball player for 2018 is $545,000. To rank in the top 1% of all US taxpayers (based upon 2015 tax data) required an adjusted gross income level of at least $480,930 (source: MLB).

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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. FIRST QUARTER – Over the last 25 years (1993-2017), the S&P 500 has gained an average of +1.93% (total return) during the 1st quarter (January-February-March), a total that represents 20% of the index’s 25-year average annual return of +9.69%. 51% of the index’s overall gain has occurred during the 4th quarter (October-November-December) over the last 25 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. HOW OFTEN? – In the 75 years from 1943-2017, the S&P 500 had 28 declines of at least 10% but less than 20% or once every 2.7 years. A correction is defined as a stock market decline of at least 10% but less than 20% (source: BTN Research).

3. THE LAST TIME – The last “10% correction” for the S&P 500 was a 13.3% drop over the 3 months that ended 2/11/16, or approximately 2 years ago (source: BTN Research).

4. BOTH ARE AT FAULT – The national debt increased +86% during George W. Bush’s 8 years as president, reaching $10.6 trillion as of 1/20/09. The national debt increased +88% during Barack Obama’s 8 years as president, reaching $19.9 trillion as of 1/20/17 (source: Treasury Department).

5. SALES PRICE – The median sales price of existing homes sold in the United States in December 2017 was $246,800, down from an all-time peak median sales price of $263,300 from June 2017. The low point for this statistic during the 2008-12 real estate crisis: $154,600 in January 2012 (source: National Association of Realtors).

6. TRADE WAR COMING? – The White House announced on 1/22/18 tariffs on washing machines imported from foreign countries. The measure, targeted at 2 South Korean companies, will result in a 20% tariff in the first year on the first 1.2 million washing machines that are imported. Both South Korean companies are considering building manufacturing plants in South Carolina and Tennessee because of the charge (source: White House).

7. MOSTLY SHORT – The 3-day government shutdown that ended on 1/22/18 was the nation’s 13th shutdown since 1980, i.e., an average of 1 shutdown every 3 years. 10 of the 13 shutdowns lasted 3 days or less, another lasted 5 days, another lasted 16 days and the longest lasted 21 days (source: Congress).

8. MORE TO COME – The median forecast of Federal Open Market Committee members is that the Federal Reserve will implement 3 separate 0.25% rate hikes in 2018. Over the last dozen years, the Fed implemented 4 rate hikes in 2006, 1 in 2015, 1 in 2016 and finally 3 more rate hikes in 2017 (source: Federal Reserve).

9. REALLY RICH – When measured in November 2017, the 3 wealthiest Americans (Bill Gates, Jeff Bezos and Warrant Buffett) were worth $249 billion, more than the combined net worth of the bottom half of the US population, i.e., 160 million Americans (source: The Guardian).

10. OVEREXTENDED – The 4 largest retail banks in the United States suffered $12.5 billion in defaulting credit cards in 2017, up from $10.5 billion in 2016. There are more open credit card accounts today (488 million) in the United States than there are citizens (327 million) (source: Mercator Advisory Group).

11. HIGH MARK – Total outstanding credit card debt of Americans reached $1.023 trillion in November 2017, a record high, exceeding the previous record high of $1.021 trillion from April 2008 (source: Federal Reserve).

12. WHY GO? – Just 36% of 32,585 currently enrolled college students are “confident” that they will graduate from college “with knowledge and skills needed to be successful in the workplace” (source: Strada-Gallup Survey).

13. EDUCATION – 90% of American adults at least age 25 have graduated from high school. 34% of American adults at least age 25 have a bachelor’s degree from college. 13% of American adults at least age 25 have a master’s degree (source: Census Bureau).

14. A LITTLE BETTER – S&P upgraded the long-term sovereign credit rating of Greece from “B-” to “B” on Friday 1/19/18. “B-” is the 15th of 22 classifications given by the rating agency, extending from a top-rating of “AAA” down to a bottom rating of “D” (source: S&P Global Ratings).

15. SUPER REPLAY – Super Bowl # 52 matching the Patriots vs. the Eagles will be a rematch of the same teams from Super Bowl # 39 (played on 2/06/05). Tom Brady quarterbacked the Patriots in the 2005 title game. Current Eagles quarterback Nick Foles was just a sophomore at Westlake High School in Austin, TX in February 2005, having turned 16 years old on 1/20/05 (source: BTN Research).

 

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