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Bill’s By The Number$

Posted by: Vanessa Guadiana | Posted on: January 26th, 2015 | 0 Comments

  1. SUPER MARIO – The European Central Bank (ECB) announced plans on Thursday 1/22/15 to begin monthly purchases of 60 billion Euros of sovereign and private sector debt for 18 months  beginning in March 2015, i.e., total purchases of 1.1 trillion Euros (i.e., approximately $1.25 trillion US dollars) with newly printed money from the ECB.  Europe’s version of “quantitative easing” (QE) is designed to counter deflation in the Eurozone, i.e., to create some inflation (source: BTN Research).   
  2. WHAT WE DID – The first installment of QE in the United States was announced in November 2008 when the global financial crisis was exploding worldwide.  QE # 1 lasted until March 2010 (a total of 17 months) and resulted in $1.725 trillion of bond purchases by the Fed (source: BTN Research).     
  3. LOWEST EVER – Economic turmoil throughout Europe has driven global debt investors to the US Treasury market.  Increased demand for 30-year US paper has pushed prices up and yields down.  The closing yield last Friday 1/23/15 for the 30-year bond was 2.37%, its lowest closing yield ever.  The 30-year Treasury bond has been traded globally since 1977 (source: Treasury Department).  
  4. SKIN IN THE GAME – 20% of American workers today have health insurance that has an annual deductible of at least $2,000 (source: Kaiser Family Foundation). 
  5. MAKE LESS – The Affordable Care Act (ACA) allowed a 2-year increase in fees paid to primary care physicians treating Medicaid patients, a pay bump that ended 12/31/14.  Unless an individual state decided to maintain the fee increase using state funds, doctors seeing Medicaid patients will experience a pay cut in 2015 (source: ACA).     
  6. SOTU 2015 – In President Obama’s Tuesday 1/20/15 “State of the Union” address, he proposed “middle class” tax breaks that are estimated to cost $235 billion over 10 years, including a $500 tax credit for 2-worker married couples and 2-years of free community college education for students.  To pay for the tax breaks, Obama proposed new taxes on the wealthiest Americans that would raise an estimated $320 billion of revenue over the next 10 years, including an elimination of the “step-up” in basis on inherited assets (source: White House).  
  7. CAPITAL GAINS TAXES – President Obama also proposed on 1/20/15 to raise the top tax rate on long-term capital gains (LTCGs) to 28% from 20% today (note that LTCGs are taxed at 23.8% when you add-in a Medicare surtax from the ACA).  LTCGs were taxed at 28% between 1987 and 1997 (source: Internal Revenue Service).       
  8. EVEN SPLIT – 45% of 3,154 Americans surveyed in September 2014 believe that “poor people have it easy” because of government benefits they receive.  Another 47% of the 3,154 surveyed believe that “poor people have it hard” because the government benefits they receive “don’t go far enough” (source: Pew Research).  
  9. ROAD TRIP? – The average nationwide price of a gallon of gasoline has fallen for 114 consecutive days through Friday 1/23/15, i.e., from 10/02/14 to 1/23/15, resulting in a drop in price of $1.30 a gallon (source: AAA).   
  10. GONE – 27 residents of Illinois moved out of the state each day during the last year (i.e., a net number of those leaving Illinois when compared to those people moving into Illinois), a total loss of 9,972 in population for the state over the 12 months.  That is the largest drop in population of any US state (source: Census Bureau).     
  11. GOLDEN STATE – If the state of California was a country, its $2.2 trillion economy would rank as the 8th largest in the world, ahead of Russia, Italy, India, Canada, Australia and Spain (source: World Bank).  
  12. RULE – The CFTC reduced the amount of leverage American currency traders could use to “50-to-1” effective 10/18/10 for major currencies from the standard then commonly used of “100-to-1” leverage, i.e., to trade $100,000 of currency with “50-to-1” leverage, an investor would have to deposit just $2,000 into his/her margin account.  The CFTC’s initial January 2010 proposal was to limit leverage to “10-to-1,” a suggestion that at the time was considered “shocking” by currency traders (source: Commodity Futures Trading Commission).     
  13. COLLECTOR CAR – A 1964 Ferrari sold for $8.7 million at auction on 1/16/15 in Phoenix, AZ.  The Ferrari 250 LM, 1 of just 32 built, uses a V12 engine with 320 horsepower (source: RM Auction).   
  14. THEY LIKE OUR STUFF – $2.5 trillion of the $6.1 trillion of US Treasury securities that are held by foreigners are owned by residents of China and Japan, i.e., 41% of the total (source: Treasury Department). 
  15. SUPER RICH – Super Bowl quarterback Tom Brady’s rookie contract with the New England Patriots in June 2000 was a 3-year deal worth $866,500, i.e., approximately $289,000 per year.  On 12/29/14, Brady signed a 3-year, $27 million contract, i.e., approximately $289,000 every 12 days (source: BTN Research).


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