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Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: June 22nd, 2020 | 0 Comments

1. STOCKS AND POLITICS – In the last 50 years (1970-2019), the S&P 500 has been up +17.5% per year (total return) under a Democratic President and a Republican-led Congress, 3 times the +5.4% annual return achieved under a Republican President and a Congress controlled by the Democrats. The stock index gained +12.3% per year when the White House and Congress were controlled by the same political party. When the House and the Senate were controlled by different parties as is the case in 2020 (regardless of which party is in the White House), the S&P 500 has been up +10.8% 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. TARGET OF SEVEN – CalPERS is the largest state pension fund in the country with assets of $395 billion. CalPERS lowered its assumed rate of return, i.e., its discount rate, to 7.0% as of 1/21/20 (source: CalPERS).

3. FED ACTION – When the Federal Reserve cut short-term interest rates to near zero on 12/16/08 during the global real estate crisis, they did not raise rates again until 12/16/15 or 7 years later. The Fed has once again cut short-term interest rates to near zero, this time on 3/15/20. On Wednesday 6/10/20, Fed Chair Jay Powell said the nation’s central bank has no plans to raise interest rates for possibly as long as 2 ½ years, i.e., through the end of 2022 (source: Federal Reserve).

4. COST OF MONEY WENT DOWN – During the 7 years that the Fed kept short-term interest rates near zero between 12/16/08 and 12/16/15, the average interest rate on a 30-year fixed rate mortgage fell from 5.47% to 3.95% (source: Freddie Mac).

5. OUT OF THIN AIR – From the end of 2008 to the end of 2010, the Fed “digitally created” $1.4 trillion of new money that was used to purchase Treasury bonds as part of its “Quantitative Easing” program. From Thursday 3/12/20 through Friday 6/12/20, the Fed “digitally created” $2.9 trillion of new money that was used to purchase Treasury bonds and corporate bonds (source: Federal Reserve).

6. AT A MINIMUM – The Treasury Department maintains a “checking account,” aka the Treasury General Account, designed to cover 5 days of future “outlays,” or a minimum balance of $150 billion (source: Treasury Dept.).

7. KEEP WORKING – 71% of 1,008 American adults surveyed in late April 2020 say that the COVID-19 pandemic has negatively impacted their retirement plans. 51% say that the pandemic has also forced them to be “more open” to the idea of having some type of income-paying job during retirement (source: TD Ameritrade).

8. GONE – Household wealth in the United States fell by $6.5 trillion (from $117.3 trillion to $110.8 trillion) during the first 3 months of 2020 (source: Federal Reserve).

9. MISS THE OFFICE – 1 in 3 American workers (32%) surveyed in May 2020 does not want to “work from home” when the option to return to an office environment is offered (source: Deutsche Bank Research).

10. BIG CITIES – The median rent for a 1-bedroom apartment in Chicago in May 2020 was $1,097. The median rent for a 1-bedroom apartment in San Francisco in May 2020 was $2,445 (source: Apartmentlist.com).

11. WHERE YOU LIVE – The average single-family home in the USA has appreciated +33.4% over the 5 years ending 3/31/20. Homes in Idaho (+69.6%) have experienced the greatest growth in value while homes in North Dakota (+9.3%) have seen the least percentage increase in value (source: Federal Housing Finance Agency).

12. FORECLOSURES – The moratorium imposed by Congress to prevent lenders from repossessing homes from delinquent homeowners who have federally back mortgages was extended last week from 6/30/20 to 8/31/20. An average of 9,974 homes per month were repossessed by lenders during the 1st Q 2020 before the ban was implemented. Just 5,490 homes were repossessed in total during April and May (source: Attom Data Solutions).

13. PANDEMIC DEATHS – 4,617 Americans died from the COVID-19 pandemic in the 1-week ending Friday 6/19/20 as of 9am ET, bringing the national death total to 119,187. The 4,617 deaths were the smallest “Friday-to-Friday” death total recorded since Friday 3/27/20 or 3 months ago (source: Meet the Press – First Read).

14. DOLLAR IS KING – 61% of the world’s foreign exchange reserves, i.e., cash holdings of central banks around world, were held in US dollars as of the end of calendar year 2019 (source: International Monetary Fund).

15. PERFECTION – In Major League Baseball’s 144-year history through the end of the 2019 season, there have been just 23 perfect games. The last perfect game – Felix Hernandez on 8/15/12 (source: MLB).

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