Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: March 8th, 2021 | 0 Comments

LAST TWO BULLS – From its 3/23/20 bear market low, the S&P 500 has gained +74.6% (total return) in the 240 trading days through Friday 3/05/21. From its 3/09/09 bear market low, the S&P 500 gained +67.4% (total return) in the first 240 trading days of what became a nearly 11-year bull market run that ended on 2/19/20. 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).

IN MY LIFETIME – Last year’s (2020) contraction of the US economy (down 3.5%) was the largest drop our nation has experienced since 1946 or 74 years earlier (source: Bureau of Economic Analysis).

WHAT A COMEBACK – Many American employers have recovered and as of 2/28/21 they have hired back 67% of the 25.4 million jobs that were lost last year during the 2 months of March-April 2020 (source: DOL).

PANDEMIC BILL – The $1.9 trillion “American Rescue Plan Act of 2021” that the House passed would provide stimulus payments to an estimated 93% of US households (117 million). The Senate version of this legislation would provide stimulus payments to 87% of US households (110 million) (source: Penn Wharton Budget Model).

IT’S THE RENTERS THAT ARE HURTING – Just 1 in 39 homeowners (2.5%) was at least 3 months behind in paying their monthly mortgage as of 12/31/20. However 1 in 5 renters (20.5%) was at least 3 months behind in paying their monthly rent as of 12/31/20 (source: Consumer Financial Protection Bureau).

YOUR HOME – 62% of home mortgages (33.4 million) are federally backed, i.e., the loans are guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Administration or the Veterans Benefits Administration. The government announced on 2/16/21 that the moratorium on foreclosures and evictions on federally backed, single-family home mortgages had been extended to 6/30/21 (source: Federal Housing Finance Agency).

QUICK, BEFORE RATES RISE – 13% of outstanding home mortgages nationwide as of 12/31/20, i.e., 7.2 million mortgages out of 53.9 million mortgages, were refinanced during 2020 (source: Federal Reserve Bank of NY).

IMPACT ON BOND INVESTORS – The yield on the 10-year Treasury note rose 0.37 percentage points (from 1.09% to 1.46%) in February 2021. That’s the largest monthly rise in the 10-year note yield since November 2016 when the yield went from 1.84% to 2.37%, a jump of 0.53 percentage points (source: Treasury Department).

HIS OPINION – Legendary investor Warren Buffett released his annual letter to investors on 2/27/21. Referring to the recent rise in the yield of the 10-year Treasury note, Buffet opined that “bonds are not the place to be these days. Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future.” The release was Buffett’s 56th annual letter (source: Berkshire Hathaway).

IN SEARCH OF YIELD – American corporations issued $52 billion of “junk-rated” bonds in January 2021, the 3rd highest monthly volume of “junk” bonds in US history. A record $438 billion of “junk” bonds were issued in calendar year 2020. “Junk” or “high yield” bonds are rated below “Baa” by Moody’s or rated below “BBB” by S&P (source: S&P Global Market Intelligence).

ALMOST FIVE YEARS EARLY – The Congressional Budget Office (CBO) released a 10-year forecast on 1/19/16 (i.e., 5 years ago) of the projected size of our national debt. The non-partisan agency predicted that our national debt, $18.9 trillion in size as of 1/19/16, would reach $28.003 trillion as of 12/31/25. As of last Monday 3/01/21, the national debt was $28.004 trillion (source: CBO).

WHO OWNS WHAT – 39% of the US government debt that is “held by the public” was foreign owned in 2019 (the most recent year that data is available), down from 48% in 2008 (source: USA Facts).

PAY NOTHING ON APRIL 15^TH – 35% of the 153.8 million tax returns that were filed nationwide for tax year 2018 (the latest year for which data has been released) did not pay any federal income tax, a total of 53.4 million tax returns. 90% of these “non-taxable” returns (48.0 million returns) reported adjusted gross income of less than $40,000 (source: Internal Revenue Service).

PANDEMIC, AND AFTER – The price of West Texas Intermediate (WTI) crude oil fell to $22.76 a barrel as of 4/09/20, i.e., 11 months ago. As of Friday 3/05/21, WTI crude oil closed at $66.09 a barrel (source: NYMEX).

MONEY WENT TO MADOFF INSTEAD – Instead of paying professional baseball player Bobby Bonilla $5.9 million as he was owed in 1999, the New York Mets negotiated to pay Bonilla $1,193,248 every July 1st from 2011 through 2035, a total of $29.8 million over 25 years (source: New York Mets).