Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: August 2nd, 2021 | 0 Comments

STOCK PERFORMANCE – The S&P 500 has gained +18.0% YTD (total return) through Friday 7/30/21. The stock index has gained at least +15% (total return) for the calendar year in 13 of the last 25 years. 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).

MARGIN DEBT – The use of margin debt on the New York Stock Exchange (NYSE) increased to $882 billion in June 2021, the 8th consecutive month setting an all-time high, i.e., new monthly records have been set from November 2020 through and including June 2021. Before this 8-month run began, the record level for margin debt was $669 billion set in May 2018 (source: Financial Industry Regulatory Authority).

MEDICAL CARE DELAYED LAST YEAR – The 4 largest publicly held health insurance companies in the United States reported $31.8 billion in profits for 2020, up +20% from their financial performance in 2019 (source: Financial Times).

THE TEN-YEAR NOTE – Tomorrow (Tuesday 8/03/21) is the 2,500th trading day that the 10-year Treasury note has been traded since 8/05/11, the day S&P downgraded the USA’s top-rating that America had held for 70 years. The yield on the 10-year note was 2.57% on 8/05/11. The yield on the 10-year note closed at 1.24% on Friday 7/30/21. Ironically, most bond market watchers anticipated the cost of borrowing for the Treasury Department would rise as a result of the 2011 credit downgrade (source: Treasury Department).

AND THEY ARE BUYING MORE – As of 6/30/21, the Federal Reserve owned 29% of outstanding US Treasury notes and bonds, i.e., $4.5 trillion out of $15.3 trillion (source: Federal Reserve Bank of New York).

DEBT LIMIT DEBATE – The Treasury Department reset our nation’s debt ceiling limit on Sunday 8/01/21 to our government’s outstanding debt as of that date, i.e., approximately $28.5 trillion. The government will now take “extraordinary measures” to borrow funds without “breaching” the new debt ceiling. Ultimately the government will “run out of cash,” mostly likely in “October or November,” unless the debt ceiling is raised again (source: CBO).

IN JUST TEN YEARS – Our national debt has doubled in the last decade, going from $14.34 trillion on 7/29/11 to $28.46 trillion on 7/29/21 (source: Treasury Department).

WHO OWNS, WHO RENTS – In the last 5 years, the number of “owner” households has increased by more than 8 million while the number of “renter” households has declined. The number of “owner” households has increased from 74.4 million as of 6/30/16 to 82.5 million as of 6/30/21. The number of “renter” households has fallen from 43.9 million as of 6/30/16 to 43.6 million as of 6/30/21 (source: Census Bureau).

BUYERS MUST MOVE QUICKLY – 56% of the existing US homes that went on the market for sale in June 2021 that have already secured a buyer were sold for more than the original asking price (source: Redfin).

ROADS AND BRIDGES – The bipartisan infrastructure plan that Congress is debating entails $1.18 trillion in total spending, including $630 billion of infrastructure improvements that were already scheduled to take place plus $548 billion of new proposed spending (source: Congress).

ALL ARE IN THE SOUTH – The top 3 US cities for adding residents between 7/01/19 and 6/30/20 were Phoenix (+25,194 residents), San Antonio (+19,862) and Fort Worth (+19,229). The totals represent net additions, i.e., new residents less those people who have moved away (source: Census Bureau).

WILL NEED A LOT OF NEW BATTERIES – The sale of electric vehicles (EV) is forecasted to exceed the sale of gas-powered vehicles in Europe within 7 years (by 2028), within 12 years (by 2033) in China, and within 15 years (by 2036) in the United States (source: Ernst & Young Global Limited).

STUDENT LOANS – 3 US senators held a press conference on 7/27/21 to encourage President Biden to use his executive power to eliminate $50,000 of student loan debt per borrower. An estimated 38 million borrowers out of 44 million borrowers would have their student loan debt completely wiped out under the plan (source: Forbes).

A NATIONAL CRISIS – 29% of the homeless people in the United States, i.e., 161,000 out of 560,000, are in California (source: Housing and Urban Development).

OLYMPICS – 335 Russian athletes are competing at the Tokyo Summer Olympics even though Russia is banned from Olympic competition until 2022. The workaround has the 335 athletes competing as “neutrals” under the banner of the “Russian Olympic Committee” and technically they do not represent Russia (source: ROC).