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Bill’s By The Number$

1. EVERY TEN YEARS – The S&P 500 was up +7.4% per year (total return) for the 10-years ending 6/30/16. A decade ago, the S&P 500 was up +8.3% per year (total return) for the 10-years ending 6/30/06. 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. FINALLY ANOTHER RECORD – Before closing at an all-time high of 2137 on Monday 7/11/16, the S&P 500 had gone 285 trading days since its last record close of 2131 that was set on 5/21/15 (source: BTN Research).

3. BULL MARKET – Since bottoming on 3/09/09, the S&P 500 has gained +274% (total return) and set 112 record closing highs through trading on Friday 7/15/16 (source: BTN Research).

4. POST-BREXIT – In the first 2 trading days following the 6/23/16 “Brexit” vote in the UK, the S&P 500 dropped 5.3% (total return). Since then, the S&P 500 has gained +8.2% (total return) in the next 13 trading days through last Friday 7/15/16 (source: BTN Research).

5. PENSION PROBLEMS – The 5 separate New York City pension plans for the city’s civil workers, teachers, police and fire fighters have assumed a 7% annual rate of return (aka the discount rate) on pension assets since 2013. The discount rate is used to calculate the present value of pension liabilities and has historically been benchmarked to high-quality corporate bond yields. If NYC was to lower its discount rate from 7%, that action would produce a higher present value amount of liabilities and would force greater annual pension plan contributions by the city (source: New York State Financial Control Board).

6. IN AND OUT – After 9 months of fiscal year 2016 (i.e., the 9 months ending 6/30/16), Uncle Sam has collected $1 of tax receipts for every $1.16 of outlays, creating a deficit to date of $401 billion (source: Treasury Department).

7. MORE AND MORE OF THE PIE – Social Security and Medicare together accounted for 39% of Federal outlays during the first 9 months of fiscal year 2016, i.e., the 9 months ending 6/30/16. Social Security and Medicare together accounted for 33% of Federal outlays during fiscal year 2006, i.e., the 12 months ending 9/30/2006 (source: Treasury Department).

8. PAYING ON TIME – The percentage of home mortgages nationwide that are “current and performing” is 94.9% as of 3/31/16, i.e., no monthly payments are outstanding (source: Office of the Comptroller of the Currency).

9. BAND-AID APPROACH – 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 2023 or 7 years out (source: Social Security Trustees).

10. DOWNGRADE – There are 8 countries in the world that have been downgraded in 2016 by each of the 3 major credit rating agencies (S&P’s, Moody’s and Fitch Ratings), including Saudi Arabia and Brazil (Financial Times).

11. THEY ARE TEN, WE ARE FIVE – The unemployment rate for the 19 nations that use the Euro as their common currency was 10.1% as of 5/31/16, the lowest level in the Eurozone since 7/31/11. The unemployment rate in the USA as of 6/30/16 was 4.9% (source: Bloomberg).

12. BIGGER AND BIGGER HOMES – The medium square footage of new single family homes built in the United States in 2015 was 2,467 square feet, an increase of 547 square feet over the last 20 years. That’s equivalent to a 23’ x 23’ addition to new homes today when compared to 1995 home construction (source: Joint Center for Housing Studies of Harvard University).

13. NO WONDER THEY BUY AMERICAN DEBT – 80% of the sovereign debt of Germany and Japan has negative yields today (source: Citigroup).

14. GOLD SHINES – The price of gold has increased +26% YTD, i.e., from $1,060.30 per ounce at the close on 12/31/15 to $1,337.58 per ounce at the close on Friday 7/15/16 (source: CME Group).

15. WE LOVE THE LONG BALL – The longest home run hit in a regular season game at PETCO Park (San Diego, CA) is 471 feet by Adrian Gonzalez on 4/26/09 off of pitcher Ross Ohlendorf. Miami Marlin Giancarlo Stanton hit 15 home runs of at least 480 feet in last week’s home run derby competition held at PETCO Park during the 2016 All-Star Game activities, including 3 homes runs of 497 feet each (source: Major League Baseball).

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Copyright © 2016 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

  1. IMPACT ON THE STOCK MARKET – The last time that the Federal Reserve raised interest rates was on 12/16/15.  In the 1st month following the 12/16/15 Fed hike to short-term rates, the S&P 500 fell 9.2% (total return).  In the 6 months following the 12/16/15 Fed hike to short-term rates (to Thursday 6/16/16), the S&P 500 gained +1.4% (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. ELECTION YEAR 2016 – 16 of the last 18 presidential election years have produced a positive total return for the S&P 500 stock index.  The only “down election years” dating back to 1944 were in 2000 and 2008 (source: BTN Research).
  3. IMPACT ON LONGER PAPER – The last time that the Federal Reserve raised interest rates was on 12/16/15.  In the 1st month following the 12/16/15 Fed hike to short-term rates, the yield on the 10-year Treasury note dropped from 2.30% to 2.04%.  In the 6 months following the 12/16/15 Fed hike to short-term rates (to Thursday 6/16/16), the yield on the 10-year note dropped from 2.30% to 1.58% (source: BTN Research).
  4. TIME LAG – When the Fed began a rate hike cycle in 1994, there were 46 days between the 1st and the 2nd rate hikes.  For the rate hike cycle that began in 1999, there were 55 days between the 1st and the 2nd rate hikes.  For the rate hike cycle that began in 2004, there were 41 days between the 1st and the 2nd rate hikes.  Today (6/20/16) is the 187th day since the Fed’s 1st rate hike on 12/16/15 (source: Federal Reserve).
  5. IS THIS THE NEW NORM? – Over the 25 years from 1991-2015, the average yield on the 10-year Treasury note was 4.7%.  As of the close of trading last Friday 6/17/16, the yield on the 10-year Treasury note was 1.62% (source: Treasury Department).
  6. STOCKS AND BONDS – The size of the US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was $40.5 trillion as of 3/31/16, +71% larger than the $23.7 trillion US stock market as of the same date (source: Securities Industry and Financial Markets Association, Wilshire).
  7. UNCLE SAM SPENDING – During fiscal year 2015, mandatory spending by the US government represented 68% of total outlays, while discretionary spending was 32% of the total.  There is no annual spending cap in place on mandatory spending, while discretionary spending is capped by Congress each year (source: CBO).
  8. RETIREES ARE MILLIONAIRES? – The maximum retirement benefit paid by Social Security to an individual retiring in 2016 at the full retirement age of 66 is $2,639 per month.  $3.167 million invested in a pre-tax account earning 1% annually on a tax-deferred basis would generate $31,668 per year or $2,639 per month of taxable income, i.e., income taxes are due upon withdrawal from the pre-tax account (source: Social Security).
  9. DON’T TRUST THEM – Only 20% of 1,027 adults surveyed in early June 2016 have “quite a lot” of confidence or “a great deal” of confidence in newspapers and the accuracy of the information they print, the lowest level recorded on a statistic that has been tracked annually for 24 years (source: Gallup).
  10. STAYING PUT – 85% of Americans have not moved in the last 12 months (source: Census Bureau).
  11. BUSINESS OR PLEASURE? – 79% of airplane trips taken by Americans are for leisure purposes (source: US Travel Association).
  12. MANY DON’T HAVE THE OPTION – 58% of American workers have access to an employer sponsored retirement plan, i.e., either a defined benefit pension plan or a  defined contribution plan such as a 401(k) (source: The Pew Charitable Trusts).
  13. IT’S WHY YOU HAVE INSURANCE – The average cost of care on an annual basis for someone hospitalized during the year is $25,000, including expenses for the cost of surgery, doctor care, hospital stay, nursing care, drugs and rehabilitation (source: Center for Retirement Research at Boston College).
  14. SHOW ME THE MONEY – 64% of 4,000 people surveyed said that if given the choice they would select having “more money” as opposed to having “more time” (source: Social Psychological and Personality Science).
  15. INEXACT SCIENCE – During the last 10 years (2006-2015), only 16 ballplayers that were “top 10” picks in Major League Baseball’s First Year Player Draft, i.e., 16 of 100 draft choices over the decade, have been selected to play in professional baseball’s mid-season All-Star Game (source: MLB).
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    Copyright © 2016 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

  1. THE LAST YEAR – The S&P 500 achieved its all-time closing high on 5/21/15 (i.e., 1 year ago).  In the 12 months since peaking at 2131, the S&P 500 has fallen 1.6% on a total return basis.  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. LOWER STILL – The yield on the 10-year Treasury note closed at 2.19% on 5/21/15.  The yield on the 10-year Treasury note closed last Friday 5/20/16 at 1.84% (source: Treasury Department).  
  3. ONE YEAR, ONE TRILLION – The national debt was $18.152 trillion as of 5/21/15.  The national debt was $19.212 trillion as of Thursday 5/19/16 (source: Treasury Department).
  4. EITHER MORE OR LONGER – 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 just +6% annually in order 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).
  5. 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).
  6. HOW WE SPEND – Internet and catalog sales (aka “non-store retailers”) totaled $45.2 billion in April 2016, an increase of +10.2% over sales from April 2015.  Overall retail sales totaled $453.4 billion in April 2016, an increase of +3.0% over sales from April 2015.  Thus, internet sales are growing more than 3 times as fast as total sales but represent just 10% of total retail sales nationwide (source: Commerce Department).
  7. NO BIG SURPRISE – The top 3 problems facing our nation (based upon a survey of 1,025 adults in early May 2016) were 1) the economy, 2) dissatisfaction with the government, and 3) unemployment/jobs (source: Gallup).
  8. WHEN PRICES ARE LOWER – The price of oil closed at $107.26 a barrel on 6/20/14, but has since fallen 56% to $47.67 a barrel as of Friday 5/20/16.  Since that June 2014 high point, more than 40 US companies in the oil industry have filed for bankruptcy protection (source: Bloomberg Business Week).
  9. SIX MONTHS AWAY – In the last 6 presidential elections (i.e., 1992-2012), 18 states have gone for the Democratic candidate each time (e.g., California, New York, Michigan), 13 states have gone for the Republican candidate each time (e.g., Utah, Nebraska, South Carolina), and the remaining 19 states have gone “blue” some years and “red” in other years (e.g., Ohio, Florida, Colorado) (source: BTN Research).
  10. REALISTIC RETURN? – The average defined benefit pension plan in the public sector (i.e., government) uses a discount rate of 7.7%.  The discount rate is used to calculate the present value of pension liabilities and has historically been benchmarked to high-quality corporate bond yields.  A higher discount rate drives a lower present value amount of liabilities and would result in lower pension plan contributions by an employer (source: Illinois State Board of Investment).
  11. DOWNGRADED – Until last week, Saudi Arabia and the state of California had the same credit rating (Aa3) from Moody’s.  The rating agency downgraded Saudi Arabia one notch to A1 last Monday 5/16/16 (source: Moody’s).
  12. IT WAS NO BIG DEAL – Today (5/23/16) is the 1,200th trading day since S&P downgraded the United States from a top credit rating on Friday 8/05/11 (source: BTN Research).
  13. THE ANGRY MIDDLE CLASS – The median household income in 83% of the most densely populated metropolitan areas in the United States (190 of 229 urban areas representing 75% of our nation’s population) declined between 1999 and 2014 after adjusting for inflation (source: Pew Research Center).
  14. NO ROOM AT THE INN – There are 54,600 migrants (many from Syria) currently stuck in Greek refugee camps who are not being allowed to travel north into other European countries (source: UN Refugee Agency).
  15. THEY BOOED SANTA CLAUS – The Philadelphia Eagles had the # 2 pick in the 2016 NFL draft that was held on 4/28/16.  The Philadelphia Phillies will pick # 1 in the 2016 MLB draft to be held 6/09/16.  The Philadelphia 76ers will pick # 1 in the 2016 NBA draft to be held 6/23/16 (source: BTN Research).

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Copyright © 2016 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

  1. SAME STAT, DIFFERENT LENGTH – The split between “up” days and “down” days for the S&P 500 is 54/46 for the last 100 trading days (through Friday 5/06/16), 54/46 for the last 1,000 trading days and 53/47 for the last 10,000 trading days.  The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation.  It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).
  2. ONE MAN’S PREDICTION – Robert Kiyosaki predicted in his 2002 book “Rich Dad’s Prophecy” that 2016 would result in the worst stock market crash in history.  Kiyosaki believed that as the first “baby boomers” (born in 1946) reached age 70 ½ and were forced to take “required minimum distributions,” stock values would fall significantly (source: BTN Research).
  3. DOWN LAST YEAR, UP THIS YEAR – Of the 25 individual stocks in the S&P 500 index that gained at least +25% (change of stock price not counting the impact of dividends) during the first 4 months of 2016 (i.e., YTD through Friday 4/29/16), 23 of the individual stocks suffered a loss in price during calendar year 2015 (source: BTN Research).
  4. MONTH AFTER MONTH – Since finishing at a bear market low close on 3/09/09 (i.e., 86 months ago today), the S&P 500 has gained +254% (total return).  The stock index has gained just +1% (total return) in the last 12 months but has gained +15% (total return) over the last 24 months (source: BTN Research).
  5. COST OF MONEY – The yield on the 10-year Treasury note has closed below 2% for the last 69 consecutive trading days (through and including last Friday 5/06/16), the longest stretch of sub-2% closes since the 10-year note had a streak of 187 consecutive trading days below 2% through 1/25/13 (source: Treasury Department).
  6. VERY LITTLE – 54% of 1,500 American adults surveyed have accumulated less than $25,000 of savings and investments (in both pre-tax and post-tax accounts), a total that does not include the value of personal possessions, any real estate or the present value of a defined benefit pension plan or Social Security benefits (source: Employee Benefit Research Institute).
  7. TRILLIONS AND TRILLIONS – As of 4/30/16, the market capitalization of the US stock market is $23.9 trillion, the market capitalization of the S&P 500 is $18.9 trillion, the national debt is $19.2 trillion and the size of the US economy is $18.2 trillion (source: BTN Research).
  8. TOO MUCH DEBT – America’s national debt is 105% of the size of the US economy today.  Our national debt was 54% of the size of the US economy in 1960 (source: White House).
  9. MAKING LESS STUFFManufacturing in the United States represented 21% of the economy in 1980, falling to 12% today.  Manufacturing jobs in the United States represented 18.6 million jobs as of 12/31/80, a total that has fallen 34% to 12.3 million jobs as of 4/30/16 (source: Department of Labor, United Nations).
  10. CAN’T GET AHEAD – 45% of the 118 million households in the United States live “paycheck-to-paycheck” (source: National Endowment for Financial Education).
  11. WE’RE NOT TOTALLY HONEST – The US government projects that an average US taxpayer pays only 81.7% of his/her total federal income tax bill (mostly driven by unreported income), adding up to an estimated $458 billion annual “tax gap,” i.e., the difference between what all US taxpayers should have paid in federal income taxes vs. what they actually paid (source: Internal Revenue Service).
  12. JUST OK – The “gross domestic product” (GDP) of the United States grew by +0.5% in the first quarter 2016 (i.e., quarter-over-quarter change expressed as an annualized result), a performance that is greater than just 14 of the previous 100 quarters dating back to the first quarter 1991 (source: Department of Commerce).
  13. COLLEGE BOUND – Of the 2.97 million students that graduated from American high schools in 2015, 2.05 million (69%) were enrolled in a college or university in the fall of 2015 (source: Department of Labor).
  14. UNPOPULAR – 72% of Americans surveyed in April either have “no opinion” or are “opposed to” the “free trade agreements” that the USA has signed, e.g., North American Free Trade Agreement (NAFTA) (source: Gallup).
  15. HOOPS UPSET – The Denver Nuggets (33-49 regular season record) were the only NBA team to defeat both the Golden State Warriors (73-9 record) and the San Antonio Spurs (67-15) during the just concluded regular season (source: NBA).

 

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Copyright © 2016 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

  1. YEAR-TO-DATE – The total return of the S&P 500 through the first 4 months of 2016 (i.e., through Friday 4/29/16) is +1.7%, short of its +4.0% average return for the first 4-months over the last 25 years (1991-2015).  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. LOTS OF TAXES – The government is projected to collect tax receipts equal to 18.3% of “gross domestic product” during fiscal year 2016, higher than any fiscal year since 2001 (source: Congressional Budget Office).  
  3. LAST DECADE – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) has increased +51% in size in the last 10 years to $39.92 trillion as of 12/31/15 (source: Securities Industry and Financial Markets Association).
  4. UPWARD MOBILITY – Just 16% of college graduates who were born into families in the bottom 20% of wage earners remain in the bottom 20% of wage earners during their adult lives (source: Brookings Institute).
  5.  NO CHANGE – Since raising interest rates on 12/16/15 (its first hike in 9 ½ years), the Fed has held 3 additional meetings (including last week’s) where no further action has been initiated (source: Federal Reserve).
  6.  BORROWING MONEY – The Treasury Department auctioned off $175 billion of bills and notes last week (no long-term bonds were auctioned), the largest single week of auctions YTD.  There are 23 “primary dealers” responsible for underwriting US debt offerings.  Each of the banks is required to bid on a pro-rata basis on every US Treasury auction (source: Financial Times).
  7.  TAXES – 90% of American taxpayers pay more in payroll taxes (that support Social Security, Medicare and unemployment benefits) than they pay in federal income tax (source: Peter G. Peterson Foundation).
  8.  JUST A COUPLE LEFT – There were 60 AAA-rated companies by the rating agency S&P in 1980, a number that fell to 30 by 1995, then to 6 in 2008 and down to just 2 top-rated companies as of last week (source: S&P).
  9.  TO BE PRECISE – It was reported last week that the current bull market for the S&P 500 is now the 2nd longest bull in history at 7.15 years in length.  Technically, if the current bull fails to reach a new closing high (above its 5/21/15 record close of 2131) before suffering a 20% tumble, the bull’s length will be restated to 6.20 years (i.e., it ended on 5/21/15), the 3rd longest in history as opposed to the 2nd longest (source: BTN Research).
  10.  NOT AS MANY TODAY – In 2007 (the year before the global financial crisis began), 65% of Americans had money invested in the US stock market either through pre-tax accounts or post-tax accounts.  Today (2016), just 52% of Americans have money invested in the US stock market (source: Gallup).
  11.  THE MAGIC OF COMPOUND INTEREST – $1 growing at 8% on a tax-deferred basis will accumulate to $10.06 over 30 years.  $1 growing at 4% on a tax-deferred basis will accumulate to $3.24 over 30 years.  Thus, achieving a return 2 times as great will produce a balance more than 3 times as large over 30 years.  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).
  12.  PUTIN WANTS TO TURN THE CLOCK BACK – It has been 25 years since the Union of Soviet Socialist Republics (USSR), aka the Soviet Union, dissolved in 1991 and split into 15 separate countries including Russia, Ukraine and Kazakhstan (source: BTN Research).
  13.  AT THE STATE LEVEL – Legislation has been proposed in Illinois to increase their top marginal state income tax rate to 9.75% (from 3.75% currently) as a result of the state’s financial woes (Illinois has $7 billion in unpaid bills).  There are just 3 states nationwide with top marginal rates higher than 9.75% (source: Tax Foundation).
  14.  RECORD LOW – The lowest close ever for the 10-year Treasury note was 1.39% on 7/24/12.  10-year notes have been traded in the United States for 63 years since April 1953.  The 10-year note yield closed at 1.83% last Friday 4/29/16 (source: Treasury Department).
  15.  NOT AN EXACT SCIENCE – The 2016 NFL Draft was conducted last week in Chicago.  The top 2 picks (Jared Goff and Carson Wentz) were both quarterbacks.  Warren Moon (University of Washington) and Dave Krieg (Milton College) are 2 quarterbacks who rank in the top 20 in NFL history for regular season passing yards and both went undrafted following their college careers (source: NFL).
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    Copyright © 2016 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

  1. BELOW – With just 4 trading days remaining in the 1st quarter 2016, the S&P 500 has gained +0.1% YTD (total return).  The average 1st quarter gain for the index in the last 25 years (i.e., 1991-2015) has been +2.1%.  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.  SIX WEEKS – In the last 29 trading days since bottoming on Thursday 2/11/16, the S&P 500 has gained +11.6% (total return) through last Thursday 3/24/16 (the stock market was closed on Friday 3/25/16), a result that exceeds the index’s trailing 50-year (1966-2015) average annual return of +9.7% (source: BTN Research).
  3. FEW STOCKS, LARGE IMPACT – The 5 largest stocks in the S&P 500 made up 11% of the total stock market capitalization of the index as of 2/29/16.  Thus, 1% of the stocks in the index (i.e., 5 out of 500) represented 11% of the total value of the index.  The S&P 500 is a market-cap weighted index (source: S&P).
  4. APRIL ROCKS – The S&P 500 has averaged a gain of +1.88% (total return) during the month of April over the last 25 years (i.e., 1991-2015), ranking April as the best performing month during that period.  The month of October (up +1.85% on average) is the # 2 performing month.  The month of August (down 0.57% on average) has been the worst performing month (source: BTN Research).
  5. NEEDED HELP – In the last 10 years (2006-2015), 518 banks have failed in the USA and have required a bailout from the Federal Deposit Insurance Corporation.  Over the same decade, just 17 life insurance companies have failed and were taken over by a state insurance department (source: FDIC, NOLHGA).
  6. STUDENT DEBT43 million Americans have some level of student debt from attending college (source: Federal Reserve Bank of New York).
  7. THE COST OF BUSINESS – The breakeven oil price for Saudi Arabian oil producers is $7 a barrel.  The breakeven oil price for Russian oil producers is $46 a barrel (source: Deutsche Bank).
  8. LOSING THE SAFETY NET – Beginning on Friday 4/01/16, the first of at least 500,000 Americans (to as many as 1 million Americans) will be dropped from the “Supplemental Nutrition Assistance Program” (SNAP) aka “food stamps.”  A 3-month limit on “food stamp” benefits that has been waived since 2008 was reinstated at the beginning of 2016 in 22 states (source: Center on Budget and Policy Priorities).
  9. IMPLICATIONS FOR INTEREST RATES? – When the Fed raised short-term interest rates in mid-December 2015, the committee’s post-meeting statement laid out a road map that included 4 rates hikes per year (of ¼ of 1% each) amounting to a total rate increase of +3 percentage points over the next 3 years.  Now just 3 months into that schedule, the Fed announced on Wednesday 3/16/16 that due to a sluggish global economy, they will cut in half the number of expected rate hikes in 2016 from 4 to 2 (source: Federal Reserve).
  10. FEWER HOMES ON THE MARKET – The number of existing homes for sales in the USA has fallen 47% in the last 6 years.  There were 3.531 million homes for sale as of 2/28/10, reducing to 1.880 million as of 2/29/16 (source: National Association of Realtors).
  11. WHAT, ME WORRY? – In spite of the S&P 500 falling 6.5% (total return) during last December and this January, 84% of retired American investors surveyed in the first week of February 2016 left their stock portfolios unchanged during the 2-month market drop (source: WF/Gallup Investor and Retirement Optimism Index survey).
  12. TOO MUCH VODKA – The life expectancy of American males at birth is 76.4 years.  The life expectancy of Russian males at birth is 64.0 years (source: Center for Disease Control, American Enterprise Institute).
  13. RAIN DANCE – 73% of California is experiencing at least a “severe drought” (note that the continuum of droughts is defined as a range from “severe” to “extreme” to “exceptional”) as of 3/22/16, down from 93% a year ago.  5% of the United States is experiencing at least a “severe drought” as of 3/22/16, down from 14% a year ago (source: U.S. Drought Monitor).
  14. IN vs. OUT – In 2015, US imports from China were 4 times as large as US exports to China.  In 2015, US imports from Japan were 2 times as large as US exports to Japan (source: Department of Commerce).
  15. SELECT GROUP – 25 ballplayers will make the opening day rosters of 30 major league baseball teams later this week, a total of 750 big league ballplayers.  Coming into the 2016 pro baseball season, 18,663 men have appeared in at least 1 game at the major league level (source: Major League Baseball).
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Bill’s By The Number$

  1. JUST OVER A MONTH TO GO – The S&P 500 index is up +3.5% YTD (total return) through Friday 11/27/15.  The S&P 500 would have to gain +6.2% from now through the end of 2015 in order to gain +9.9% for the entire year.  The index’s trailing 50-year average annual return is +9.9%.  The last December when the S&P 500 gained at least +6.2% was in 2010.  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. OUTSIDE THE USA48% of the revenue of the average company within the S&P 500 is derived from sales made to foreign buyers.  59% of the revenue of technology companies within the S&P 500 is derived from sales made to foreign buyers (source: S&P Dow Jones Indices).   
  3. RATE HIKE IS COMING – The yield on the US government 2-year note closed at 0.94% last Monday 11/23/15, the highest yield on the 2-year note since it closed at 0.96% on 5/04/10 or more than 5 ½ years ago.  As recently as 10/14/15, the 2-year note closed at 0.57% (source: Treasury Department).   
  4. FUTURE SALE OF GREEK DEBT – Greece, which has not been able to borrow any money in the global debt marketplace since July 2014, hopes to issue sovereign debt in the first half of 2016 (source: Financial Times).   
  5. TEN YEARS, NO GROWTH – The median sales price of existing homes sold nationwide during the month of October 2015 was $219,600.  The median sales price of existing homes sold nationwide during the month of October 2005 (i.e., 10 years ago) was $229,000 (source: National Association of Realtors). 
  6. AMERICAN DREAM? – The national homeownership rate in the USA as of 9/30/15 was 63.7%, down from a peak of 69.2% at 12/31/04.  Every 1 percentage point reduction in the homeownership rate represents 1.2 million households that have changed from homeowner status to renter status (source: Census Bureau).  
  7. CONFIDENT ENOUGH TO QUIT – 42% of the 2.72 million Americans that quit their jobs in September 2015 live in the South, i.e., 16 southern states.  Only 14% of the 2.72 million Americans that quit their jobs in September 2015 live in the Northeast, i.e., 9 northeastern states (source: Bureau of Labor Statistics).    
  8. IMPACT OF INFLATION – An adjusted gross income (AGI) of $80,580 was required to rank in the top 1% of US taxpayers in 1980.  An AGI of $74,955 was required to rank in the top 25% of US taxpayers in 2013 (source: Internal Revenue Service).
  9. PENALTY – Excluding individuals that have qualified for an exception, Americans not covered by Medicare, Medicaid, an employer’s plan or by a privately obtained plan must have secured health insurance for 2015 through a state or federal exchange or pay a 2015 penalty of “the greater of” $325 per person or 2% of income.  The 2016 fine is “the greater of” $695 per person or 2.5% of income (source: Affordable Care Act).   
  10. WHERE THE MONEY GOES – There were 53.8 million Americans on Medicare as of the end of 2014.  The average Medicare beneficiary spends 23% of his/her monthly Social Security retirement benefit on “out-of-pocket” Medicare costs (source: Centers for Medicare & Medicaid Services).  
  11. CAN’T WORK – 2.8% of America’s working-age population was receiving Social Security disability benefits in 1994, a percentage that has increased to 5.1% today (source: Social Security).  
  12. PROGRESS – Our nation’s $439 billion budget deficit for fiscal year 2015 (i.e., the 12 months ending 9/30/15) represents a deficit of 2.5% of GDP.  Both numbers (i.e., $439 billion deficit and 2.5% of GDP) are the lowest numbers nationally since fiscal year 2007 (source: Congressional Budget Office).  
  13. GOING UP – Since the nation’s debt ceiling was lifted on Monday 11/02/15 (i.e., 4 weeks ago today), our government’s outstanding debt has risen by $567 billion to $18.720 trillion.  Legislation signed into law by President Obama on that date suspends the debt ceiling limit until 3/15/17 (source: Treasury Department).     
  14. EVERY DAY – An estimated 9,300 Americans will turn 65 years old each day next year (2016).  This group represents the 6th year of 19 years of “Baby Boomers” turning 65.  An estimated 11,400 Americans will turn 65 years old each day by the year 2029 (source: Government Accountability Office). 
  15. NO WONDER THEY WON THE FOOTBALL GAME – The Green Bay Packers won Super Bowl # 1, beating the Kansas City Chiefs 35-10 on 1/15/67.  Of the Packers’ 22 starters on offense and defense, 9 Green Bay players have been elected to the NFL’s Hall of Fame (source: National Football League). 

 

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Copyright © 2015 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

  1. LATE IN THE YEAR – The S&P 500 index has closed at its calendar year high during the month of December in 17 of the last 30 years, i.e., 1985-2014.  The index’s high close (so far) during 2015 (2130.82) was achieved on Thursday 5/21/15.  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. FOUR – Next year (2016) will be the 4th year of Barack Obama’s 2nd 4-year presidential term.  The S&P 500 has been positive on a total return basis during 17 of the last 20 “presidential 4th years” (source: BTN Research). 
  3. NOT BIG EARNERS – 85% of the 52.8 million tax returns filed in 2013 that did not pay any federal income tax reported less than $30,000 of adjusted gross income (source: Internal Revenue Service).  
  4. MAJORITY PAY NOTHING – 67% of the 67.8 million tax returns filed in 2013 that reported less than $30,000 of adjusted gross income did not pay any federal income tax (source: Internal Revenue Service).     
  5. TAX GAMEPLAN – House Speaker Paul Ryan (R-WI) said on 11/15/15 that the 3 things he would like to change within the US tax code would be 1) simplify the tax code, 2) collapse the number of brackets to 2 or 3 from the current 7, and 3) change the way multinational firms are taxed so as to encourage them to bring $2.1 trillion of untaxed profits that are currently held overseas back to the United States (source: CBS News).  
  6. IMPACT ON HOMEOWNERSHIP? – Republican Presidential candidate Dr. Ben Carson has proposed the elimination of the mortgage interest deduction from the US tax code.  Only 26% of all US tax filers claim the mortgage interest deduction (source: Internal Revenue Service).  
  7. PENSION BACKSTOP – The Pension Benefit Guaranty Corporation (PBGC) was forced to take over an average of 10 failed pension plans per month over the last 12 fiscal years (2004-2015), a total of 1,454 pension plans taken over during the dozen years.  The PBGC protects defined benefit pension plans in the private (non-government) sector (source: Pension Benefit Guaranty Corporation). 
  8. ALMOST ALL SENIORS – 88% of Americans at least age 65 received a monthly Social Security benefit payment during fiscal year 2015 (i.e., the 12 months ending 9/30/15), either in the form of a monthly retirement benefit, a survivor benefit or a disability benefit (source: Social Security Administration).   
  9. OIL – The International Energy Agency (IEA) predicted on 11/10/15 that the world’s crude oil market will continue to be oversupplied through the end of the decade, i.e., through 2020.  The IEA forecasts that the price of crude oil will not recover to $80 a barrel until 2020.  Crude oil closed at $40.59 a barrel on Thursday 11/19/15 (source: IEA).   
  10. STRONGER BANKING SYSTEM – Only 8 banks have failed in the United States YTD through 11/16/15, on pace to be the fewest number of bank failures in our country since 2007 when just 3 banks failed.  Over the 7 years from 2008-14, 507 banks failed, an average of 72 per year (source: Federal Deposit Insurance Corporation).   
  11. HIGHER THIS YEAR – Through the first 10 months of 2015 (i.e., YTD through 10/31/15), lenders have foreclosed on 369,920 homes in the United States, an average of 1,217 per day.  The 10-month total is +33.2% higher than our nation’s 10-month YTD foreclosure total from calendar year 2014 (source: RealtyTrac).  
  12. IN THE WRONG DIRECTION – Japan has reported 2 consecutive quarters of negative growth, officially putting the country in a recession.  Japan’s economy contracted 0.8% in the 3rd quarter 2015 (i.e., quarter-over-quarter change expressed as an annualized result), a slump that followed a 0.7% contraction in the 2nd quarter 2015.  Japan exited its last recession in October 2014 (source: Financial Times).  
  13. TRAVEL TO PARIS – France attracts more tourists (83 million) each year than any other country in the world.  7.5% of France’s $2.3 trillion economy is generated through tourism (source: CNBC).     
  14. WE TEACH THE WORLD – 51.4% of the 974,926 foreign students studying at American colleges during last year’s school year (2014-15) are natives of China, India or South Korea.  New York University (NYU) has more foreign students than any college in the United States (source: Institute of International Education).    
  15. IT’S A TEAM GAME – Josh Donaldson of the Toronto Blue Jays was voted the MVP of the American League last Thursday (11/19/15) for the 2015 regular season.  World Series champion Kansas City Royals surprisingly had only 1 player finish in the top 17 of the AL MVP vote.  Lorenzo Cain, the Royals’ center fielder, finished 3rd in the voting (source: Major League Baseball).  

 

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Copyright © 2015 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

  1. NOT MUCH LEFT – With just 7 trading weeks remaining in calendar year 2015, the S&P 500 is up +0.1% YTD (total return) through the close of trading on Friday 11/13/15.  That return is well below the stock index’s 50-year (1965-2014) average annual return of +9.9%.  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. RECORDS – The S&P 500 did not exceed its record closing high from 10/09/07 until 3/28/13, a span of 5 ½ years.  In the last 31 ½ months (since 3/28/13), the S&P 500 has set an additional 107 all-time closing highs, including 44 more in 2013, 53 in 2014 and 10 YTD in calendar year 2015 (source: BTN Research). 
  3. ABOVE AVERAGE – The ongoing bull market for the S&P 500 is the 11th for the index since 1950 and has reached 6.7 years in length.  The average length of all 11 bulls since 1950 is 5.0 years (source: BTN Research).   
  4. JUMP ON – 5 days before the current bull market began in March 2009 only 18.9% of individual investors were “bullish” on US stocks.  34.3% of individual investors were “bullish” last week (source: AAII).    
  5. THE LAST MONTH – 21 of the last 25 Decembers have produced a positive total return for the S&P 500.  The average December performance since 1990 is a gain of +2.0%, the best of any month (source: BTN Research).  
  6. INCREASE EVERYONE – Individual income taxes paid by American taxpayers to the IRS would have to increase by +28% in order to eliminate our $439 billion deficit from fiscal year 2015 (source: Treasury Department).  
  7. CRAZY NUMBERS – A child born in 2015 that begins kindergarten in the fall of 2020 would attend college between the years of 2033 and 2037.  If that child attended an average private 4-year college and if the annual price increases for private colleges experienced over the last 30 years (+5.5% per year) continued into the future, the aggregate 4-year cost of the child’s college education (including tuition, fees, room & board) would total $496,673 or $124,168 per year (source: College Board).   
  8. SOMEWHAT LESS CRAZY NUMBERS – A child born in 2015 that begins kindergarten in the fall of 2020 would attend college between the years of 2033 and 2037.  If that child attended an average public in-state 4-year college and if the annual price increases for public colleges experienced over the last 30 years (+5.6% per year) continued into the future, the aggregate 4-year cost of the child’s college education (including tuition, fees, room & board) would total $224,887 or $56,222 per year (source: College Board).  
  9. HERE AND THERE – As of the end of October 2015, the United States was domestically producing 9.16 million barrels of crude oil per day while we were importing 6.94 million barrels of crude oil per day, i.e., a 57/43 split between domestic production and imports.  As of the end of October 2010, the United States was domestically producing 5.59 million barrels of crude oil per day while we were importing 8.58 million barrels of crude oil per day, i.e., a 39/61 split between domestic production and imports (source: Department of Energy).       
  10. IMPACT OF LOW RATES – With still 1 ½ months to go in calendar year 2015, more money has been raised in the United States through corporate debt offerings ($815 billion) than in any year in our nation’s history.  The old record ($746 billion) was set in calendar year 2014 (source: Dealogic).   
  11. WHAT THE WEALTHY DO – 17% of the net worth of American households is held in pre-tax accounts, e.g., pension plans, 401(k)s, IRAs.  However, the top 1% of American households (ranked by wealth) has only 8% of their net worth in pre-tax accounts (source: Federal Reserve).   
  12. REPUTATION DESERVED? – 5 out of 9 adults surveyed worldwide (55%) in September 2015 believe that capitalism results in the “rich getting richer” and the “poor getting poorer.”  More than 1,000 adults in 7 nations were surveyed globally (source: Legatum Institute).   
  13. GENDER SPECIFIC – 67% of the 5.1 million Americans suffering from Alzheimer’s disease in the United States today are women (source: Brigham and Women’s Hospital).   
  14. SHAKEN, NOT STIRRED – The 24th James Bond movie (“Spectre”) was released in America on Friday 11/06/15.  The movie cost $303 million to make (the most expensive Bond movie ever), including $34 million of cars destroyed during filming (source: Daily Mail).     
  15. FOOTBALL – Through week 9 of the NFL season (i.e., as of 11/09/15), 3 teams (Patriots, Bengals and Panthers) were 8-0, the 1st time more than 2 teams have begun a season with an 8-game winning streak (source: NFL). 

 

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Copyright © 2015 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

  1. IN THE NEXT QUARTER – The S&P 500 was down 6.4% (total return) in the 3rd quarter 2015, the 8th time since 1990 that the stock index was down at least 5% in the 3rd quarter of a calendar year.  The S&P 500 was up in the subsequent 4th quarter in 6 of 7 years, only failing to rebound in the 4th quarter of 2008.  The average return for the index in the 6 positive 4th quarters was a 3-month gain of +12.7% (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. MOSTLY UP – The S&P 500 has produced a negative total return in only 5 of the last 25 fourth quarters, i.e., the months of October-November-December over the years 1990-2014.  The 5 down 4th quarters took place in 1994, 2000, 2007, 2008 and 2012 (source: BTN Research).   
  3. WHO KNEW? – The # 1 individual stock within the S&P 500 YTD through 9/30/15 (up +112%) was ranked # 430 (out of 500 stocks) during calendar year 2014 while losing 7% last year (source: BTN Research).    
  4. GETTING THAT JOB – 57% of job recruiters believe that an applicant’s grade point average (GPA) is “unimportant” when evaluating a candidate, but 87% of recruiters judge prior job experience as a key factor in hiring (source: Jobvite Recruiter Nation Survey).   
  5. THE GRASS IS GREENER – The average American worker will hold 9.9 jobs between the ages of 25 to 48 (source: Bureau of Labor Statistics).  
  6. PONZI UPDATE – Less than 2 weeks before Bernie Madoff was arrested on 12/11/08, his investors were told they held assets worth $65 billion on $17.5 billion of money actually invested.  The court-appointed trustee to the case has since recovered $11 billion of the $17.5 billion, returning $7.25 billion to victims in the Ponzi scheme.  An additional disbursement of $800 million has been made to victims as a result of SIPC insurance (source: CNN).   
  7. NEXT THREE MEETINGS – As of last Friday 10/09/15, the bond market is priced to reflect a 8% chance of a Fed rate hike at its 10/28/15 meeting, a 37% chance of a Fed rate hike at its 12/16/15 meeting, and a 47% chance of a Fed rate hike at its 1/27/16 meeting (source: CME Group).  
  8. THE ORIGINAL PLAN – President Barack Obama sent to Congress his budget plan for fiscal year 2015 (i.e., the 12 months that ended 9/30/15) on 3/04/14, i.e., 19 months ago.  His plan called for $3.34 trillion of tax receipts, $3.90 trillion of government outlays and a $561 billion budget deficit (source: White House).  
  9. THE REALITY – The latest estimates for fiscal year 2015 (i.e., the 12 months ending 9/30/15) are $3.25 trillion of tax receipts and $3.70 trillion of spending, producing a $455 billion deficit (source: Treasury Department).  
  10. DEADLINE – According to a Treasury Department letter sent to Congress on 10/01/15 regarding our nation’s debt ceiling, the government “is likely to exhaust its extraordinary measures on or about 11/05/15” to keep our outstanding debt below its current $18.152 trillion limit.  The letter warns that “without sufficient cash, it would be impossible for the USA to meet all of its obligations for the 1st time in our history” (source: Treasury Department). 
  11. PUT IT ON THE CARD – Total credit card debt in the USA as of 8/31/15 was $918.5 billion, an average of $8,004 of credit card debt for every household in the nation (source: Federal Reserve).   
  12. WORK FOR THE GOVERNMENT – The number of federal government workers has decreased by 402,000 over the last 25 years (i.e., 9/30/90 to 9/30/15), but the number of state and local workers (excluding teachers) has increased by +2.1 million over the same period (source: Department of Labor).       
  13. BIG BALANCE SHEET – “Quantitative Easing” in the United States ended on 10/29/14, i.e., a year ago.  The Fed’s balance sheet had $4.219 trillion of “securities held outright” on 10/29/14.  The Fed’s balance sheet had $4.238 trillion of “securities held outright” on 10/07/15 (source: Federal Reserve). 
  14. JUST LEND IT OUT – The ¼ of 1% that the Fed currently pays to US banks on the $2.543 trillion of excess reserves the banks hold at the 12 regional Fed banks (as of 9/30/15) is equal to $17.4 million in daily interest (source: Federal Reserve).        
  15. MONEY BALL – The major league baseball teams with the 3rd (Nationals), 4th (Tigers), 5th (Red Sox), 6th (Giants) and 7th (Angels) highest 2015 opening day payrolls did not qualify for postseason play.  But the teams with 25th (Pirates) and the 29th (Astros) highest 2015 opening day payrolls did make the playoffs (source: Major League Baseball).     

 

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Copyright © 2015 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.