Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: April 5th, 2021 | 0 Comments

STOCKS – In the last 30 years, the best 12-month performance for the S&P 500 occurred over the 1-year period that ended last Wednesday 3/31/21. The S&P 500 gained +56.4% (total return) from 3/31/20 to 3/31/21. Ironically, 3/31/20 was the date that the Trump White House announced US pandemic deaths could be 100,000 to as high as 240,000. Pandemic deaths were 3,000 on 3/31/20. Pandemic deaths were 551,000 as of 3/31/21. 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).

MOST INVESTORS WERE WRONG – As of 3/31/20, i.e., a year ago, 66% of stock investors were “bearish” (50%) or “neutral” (16%) on the direction of the US stock market over the upcoming 6 months (source: American Association of Individual Investors).

BEST STOCK MONTH – April has been the # 1 best month for the S&P 500 index over the last 30 years, i.e., 1991-2020, gaining an average of +2.17% (total return). The month of November (average gain of +1.92%) has been the # 2 best performing month over the last 3 decades (source: BTN Research).

A FORCE – As of mid-February 2021, retail stock traders represent 23.0% of all US equity trading (by dollar volume), more than double the 10.1% they accounted for in 2010 (source: Bloomberg Intelligence).

BONDS – Long-dated Treasuries lost 15.8% (total return) over the 1-year ending 3/31/21. The Bloomberg Barclays Long US Treasury Index, which includes all Treasury securities with a remaining maturity of at least 10 years and having at least $250 million of outstanding face value, was used as the proxy (source: Bloomberg).

IN SEARCH OF YIELD – American corporations issued $140 billion of “junk-rated” bonds in the first quarter 2021, the highest quarterly volume of “junk” bonds in US history. “Junk” or “high yield” bonds are rated below “Baa” by Moody’s or rated below “BBB” by S&P (source: Refinitiv).

THEY’RE BUYING BONDS – The Fed is buying $120 billion of bonds each month – $80 billion of Treasury debt and $40 billion of mortgage-backed securities. The Fed confirmed on 3/17/21 that the purchases will continue “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals” (source: Federal Reserve).

FED TARGETS – In Chairman Jerome Powell’s 3/17/21 post-meeting press conference, he said the Fed will not raise interest rates until our nation records a 3.5% unemployment rate and annual inflation of at least 2%. The country’s jobless rate as of March 2021 was 6.0% and inflation, using the “personal consumption expenditures” (PCE) index preferred by the Fed, was up +1.6% for the 1-year through 2/28/21 (source: Federal Reserve).

WEALTHIEST – The top 10% of US households (as measured by net worth) own 70% of all assets nationwide as of 12/31/20, i.e., $85.6 trillion out of $122.9 trillion. The bottom 50% of US households own just 2% of all assets as of 12/31/20, i.e., $2.5 trillion out of $122.9 trillion (source: Federal Reserve).

LOWEST PAID, HARDEST HIT – 82% of the net job losses in the United States in calendar year 2020 were suffered by workers in the bottom 25% of wage earners (source: Economic Policy Institute).

WORK-FROM-HOME – 25% of the workforce in the advanced economies worldwide could work from home between 3-5 days a week without any loss of productivity (source: McKinsey & Company).

TAXES – Property taxes levied on office buildings and on private residences make up an estimated 30% of the tax revenue collected by American cities and towns, i.e., local governments (source: Urban Institute).

WAIT TILL THE COST OF MONEY GOES UP – During fiscal year 2020, i.e., the 12 months ending 9/30/20, the US government spent $345 billion for interest payments on the national debt or $945 million a day. 5 years earlier, i.e., fiscal year 2015, the US government spent $223 billion for interest payments on the national debt or $611 million a day (source: Treasury Department).

ADDING MORE DEBT – Total US household debt, including mortgages, credit cards and auto loans, was $12.67 trillion as of 12/31/08. Over the next 5 years, total household debt fell $1.15 trillion to $11.52 trillion as of 12/31/13. But over the last 7 years, total household debt has increased $3.04 trillion to $14.56 trillion as of 12/31/20 (source: Federal Reserve Bank of New York).

HE DOES BOTH – Los Angeles Angels baseball star Shohei Ohtani, a 2-way player, hit a 468-foot home run as a batter and reached 100 mph as a pitcher during Spring Training 2021 in Arizona (source: MLB).