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Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: March 30th, 2020 | 0 Comments

1. STARTED OFF WITH A BANG – The S&P 500 had a nearly 11-year bull market (exactly 2,756 trading days) that ran from 3/10/09 through 2/19/20, gaining +529% (total return), equal to an average annual gain of +18.3%. The very first trading day of the bull market (3/10/09) produced a +6.4% gain (total return), ultimately ranking as the # 2 best trading day out of all 2,756 trading days. 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. WHEN THE BEAR BOTTOMS – The S&P 500 has fallen 34% as of Monday 3/23/20 from its all-time closing high set on 2/19/20, the index’s 12th bear market since the end of WWII. The average return for the S&P 500 in the first-year following the bear market low close in the previous 11 bears is +39.2%, more than 3 times the +12.6% average gain in the 2nd year following the bear market low close (source: BTN Research).

3. VERY SHORT-TERM LOANS – The Fed reopened the “Commercial Paper Funding Facility” (CPFF) on 3/17/20, a tool first used in the 2008 financial crisis. The facility allows the Fed to buy the “commercial paper” of large US companies, i.e., a short-term corporate IOU used to finance a company’s day-to-day operations. On 3/23/20, the CPFF was expanded to allow the Fed to also buy from municipalities. In both cases, the corporations and municipalities using the CPFF had lost access to private financing at reasonable rates (source: Federal Reserve).

4. DONE DEAL – President Donald Trump signed the $2.3 trillion coronavirus stimulus legislation on Friday 3/27/20, including $301 billion of direct payments to individuals (i.e., payments of $1,200 per eligible individual and $500 per child under the age of 17), targeted by the White House to be received on 4/16/20 (source: Congress).

5. A LOT OF MONEY – The $2.3 trillion stimulus legislation, officially called the “Coronavirus Aid, Relief and Economic Security” Act (CARES), represents government spending equal to 52% of the $4.447 trillion of actual government outlays during all of fiscal year 2019 (source: Treasury Department).

6. FORGIVEN – $349 billion of the $2.3 trillion stimulus package is for small businesses that have less than 500 employees in the form of loans that will be forgiven if used for payroll and rent (source: CARES).

7. LEVERAGE – $454 billion of the $2.3 trillion stimulus allows the Fed to make $4.5 trillion of loans to big businesses (500+ workers). The details: Congress has allocated $454 billion to the Treasury Department which will use the money to support loans made by the Fed of 10 times that amount, i.e., $4.5 trillion of loans. The loan guarantees provided by Treasury (on the entire $4.5 trillion of loans) include the requirement that companies receiving a Fed loan cannot pay dividends or buy back its traded shares for 1 year (source: CARES).

8. NO JOB – First-time jobless claims for the week ending 2/01/20 were 201,000, its lowest level since 11/15/69. Just 7 weeks later, jobless claims for the week ending 3/21/20 were 3.283 million, a US record (source: DOL).

9. MORE THAN SIX FEET – The NY Stock Exchange began conducting its trading electronically as of Monday 3/23/20, eliminating floor trading for the first time since its founding in 1792. The action taken is temporary as a result of the COVID-19 virus and floor trading is expected to be reinstalled in the future (source: NYSE).

10. DEBT LOAD – The $1.51 trillion of outstanding student loans in the United States are held by 43 million Americans, equal to an average of $35,100 per individual (source: Federal Reserve Bank of New York).

11. COST TO PRODUCE – Saudi Arabia’s cost of producing a barrel of oil is $9, the lowest in the world. The cost of producing a barrel of shale oil in the United States is $23 (source: Rystad Energy).

12. LEARNING ON THE FLY – The United States has 1.5 million college teachers. Before the COVID-19 virus forced the closure of all US colleges, 70% of the 1.5 million faculty members had never taught a class online (source: Bay View Analytics).

13. THE FIRST REPORT – The World Health Organization (WHO) reported on Saturday 1/04/20 that a “cluster of pneumonia cases of unknown cause” had taken place in Wuhan, China. The first death caused by COVID-19 was reported on Saturday 1/11/20 (source: WHO).

14. BEFORE CORONAVIRUS – 44% of hourly paid workers in the United States experienced a “financial hardship” during 2019, e.g., difficulty paying rent/mortgage, a utility bill, a medical bill or buying food (source: Urban Institute).

15. NO GAMES PLAYED – MLB’s opening day was scheduled for last Thursday 3/26/20. The last time baseball’s opening day was delayed was in 1995 due to a labor dispute between the owners and players (source: MLB).

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