Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: September 4th, 2020 | 0 Comments

THROUGH AUGUST – The S&P 500 was up +9.7% YTD (total return) through 8/31/20. The S&P 500 has gained an average of +10.6% per year (total return) over the last 50 years (i.e., 1970-2019). The stock index has been up during 40 of the last 50 years, i.e., 80% of the time. 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).

COMPARING THE STARTS – Since hitting a bear market low on 3/23/20, the S&P 500 has gained +54.5% (total return) in 116 trading days through last Friday 9/04/20. By comparison, the recently ended 11-year bull market for the S&P 500 (lasting from 3/09/09 to 2/19/20) gained +53.3% (total return) during its first 116 trading days on its way to a +529% (total return) overall bull market gain (source: BTN Research).

LUMP-SUM NEEDED – A present value (PV) amount of $195,929 is required to fund a $1,000 per month payment for 20 years with a +3% annual increase for maintenance of purchasing power if a +5% annual rate of return is maintained into the future. The PV amount is $269,006 if the required payment period is 30 years. The calculations ignore the impact of taxes and are for illustrative purposes only and are not intended to reflect any specific investment alternative (source: BTN Research).

CHEAP MONEY – The yield on the 10-year Treasury note closed at 695% on 8/31/20, down from 1.91% as of 12/31/19. The all-time low close for the 10-year note is 0.501% set on 3/09/20 (source: Treasury Department).

THE MOST PAID – The maximum Social Security benefit paid to a worker retiring at full retirement age in 2020 is $3,011 per month, triple the $975 per month maximum benefit paid 30 years ago (source: Social Security).

GOING FAST – 68% of the 597,000 existing home sales that took place in the United States in July 2020 were listings that were on the market less than 1 month (source: National Association of Realtors).

THEY COUNT QUICKER – The USA released on 7/30/20 its “advanced estimate” on the change of our “Gross Domestic Product” (GDP) for the 2nd Q 2020, followed by a 2nd estimate on 8/27/20 and a final 3rd estimate on 9/30/20. By comparison, China’s target is to report its quarterly GDP results 15 days after the end of the quarter and to revise its quarterly data only following the end of the calendar year (source: Department of Commerce).

TWO TRILLION – As of 3/31/20, the size of the US economy was estimated to be $21.54 trillion. As of 6/30/20, the size of the US economy has been estimated to be $19.49 trillion (source: Department of Commerce).

WE’RE A LITTLE BUSY – Congress is required by federal law to pass 12 spending bills each year before the beginning of the government’s fiscal year that starts on October 1st. The spending bills determine the amount of money to be spent on the nation’s discretionary programs, i.e., not mandatory spending. However the last year when this work was completed in time by October 1st was in 1997 or 23 years ago (source: Congress).

WASHINGTON IMPASSE – Congress returns from its August recess this week. Negotiations on another stimulus bill Currently, Democrats would support no less than a $2.2 trillion bill, while Republicans would support no more than a $1.3 trillion bill (source: Congress).

TWICE AS MUCH IN HALF THE TIME – US banks set aside $114.7 billion in the first half of 2020 in loan loss provisions, i.e., an income statement expense that is established in anticipation of loan losses resulting from defaults, bankruptcies and renegotiated loans. US banks set aside $55.5 billion in loan loss provisions during all of calendar year 2019 (source: FDIC).

JUST GOT MORE EXPENSIVE – A homeowner that refinances his/her mortgage after 9/01/20 may be subject to a new charge of ½ of 1% on the total loan value. As of 9/01/20, Fannie Mae and Freddie Mac, government sponsored enterprises that buy mortgages from the lenders that originate the debt, have added a 0.5% fee to refinanced loans they purchase. Lenders are expected to pass the cost onto consumers (source: Fannie Mae).

PANDEMIC IMPACT – Emergency rooms visits nationwide during the month of April 2020 were down 42% when compared to emergency rooms visits from April 2019 (source: Center for Disease Control).

MASSIVE LOSSES – Hurricane Katrina (2005) caused $75 billion of damages, more than 6 times the estimated $12 billion of damages caused by last month’s Hurricane Laura (source: CoreLogic).

ARE WE PLAYING? – Of the 130 FBS college football teams (Football Bowl Subdivision), 76 are playing a fall 2020 schedule while 54 teams are not playing (source: NCAA).