Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: February 7th, 2022 | 0 Comments

TEN YEARS – Since 1950, there have been 63 different 10-year periods (i.e., the 10-years from 1950-59, 1951-60, . . ., 2012-2021). The S&P 500 produced a positive total return in 61 of the 63 decade-long periods. 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).

LOUSY MONTH – 65% of the stocks in the S&P 500 were down in January 2022, including 35 individual stocks that lost at least 15% (source: BTN Research).

HIGH RETURN, HIGH RISK – The NASDAQ Composite fell 9.0% (total return) in January 2022, its worst monthly drop since the tech-heavy index lost 10.0% (total return) in March 2020 at the beginning of the global pandemic. The NASDAQ Composite gained +142.0% (total return) over the 3-years 2019-2020-2021. The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system (source: NASDAQ).

DURING HIS FIRST FOUR-YEAR TERM – Subject to Senate approval, Jerome Powell will serve a 2nd 4-year term as the Federal Reserve Chairman. In the 1,009 trading days since Powell began as chairman on 2/05/2018, the S&P 500 has gained +15.0% per year (total return) over the 4-years (source: BTN Research).

CONSECUTIVE YEARS? – The taxable bond market was down 2.2% YTD (total return) as of 1/31/2022. This is following a 1.5% loss (total return) in 2021. In the last 46 years, the taxable bond market was down just 4 years and never down in back-to-back years. The Bloomberg Barclays US Aggregate Bond Index, calculated using publicly traded investment grade government bonds, corporate bonds and mortgage-related bonds with at least 1 year until final maturity, was used as the bond measurement. The widely followed bond index was created in 1986 but has released backdated performance history calculated to 1976 (source: Bloomberg Barclays).

SOONER THAN EXPECTED? – The Congressional Budget Office forecasted on 2/01/2021 (a year ago) that the number of employed Americans (157.2 million as of 1/31/2022 and up +7.2 million in the last year) would not recover to its pre-pandemic level of 158.9 million (from 2/29/2020) until 2024 (source: CBO).

BROKE – 399,269 Americans filed for personal bankruptcy in 2021, down 24% from 522,808 personal bankruptcy filings in 2020 (source: United States Courts, Table F-2, Bankruptcy Filings).

HOUSING COSTS GO UP – The cost to rent housing nationwide increased by an average of +14.1% in 2021. The average monthly mortgage payment paid by a new US homeowner who put 5% down at purchase increased by +21.6% in 2021 (source: Redfin).

HOUSEHOLDS – During 2021, the number of US renter households increase by 981,000 to 44.0 million, while the number of US owner households increased by 700,000 to 83.5 million (source: Census Bureau).

TRUSTING THE FED – In spite of inflation (measured by the Consumer Price Index) that was up +7.0% in 2021, the long-term inflation expectations of the bond market as of Tuesday 2/01/2022 are for inflation of just +2.43% per year over the next 10 years (source: Federal Reserve Bank of St. Louis, 10-Year Breakeven Inflation Rate).

PASSED ONTO THE CONSUMER – The cost of transporting freight on the ocean route between Asia and the US West Coast for the week of 1/17/2022 was $15,171 per container, an increase of +250% compared to the same week in 2021 (source: Freightos Baltic Index).

WHAT IF? – The average interest rate paid by the US government on its interest-bearing debt was 1.565% as of 12/31/2021, was 2.429% as of 12/31/2019, and was 4.508% as of 12/31/2004 (source: Treasury Department).

NEED FOR MONEY – The Treasury Department will auction this week $110 billion of 3-year notes ($50 billion), 10-year notes ($37 billion) and 30-year bonds ($23 billion), down from the $120 billion of debt that was sold during the government’s November 2021 quarterly auction (source: Treasury Department).

TEACHING CRISIS – A high school graduate at least age 18 who can pass a background check can obtain an “emergency substitute license” to teach in Kansas high schools effective 1/12/2022 through 6/01/2022, waiving the normal requirement of 60 semester credit hours needed from a college (source: Kansas St. Bd. of Education).

DEUCES ARE WILD – On Wednesday 2/02/2022 in a pro basketball game the New York Knicks, Memphis Grizzlies NBA player Desmond Bane (jersey # 22), shot 4 of 18 from the field (22.22% shooting percentage), had 2 assists, 2 turnovers, 2 steals and 2 blocked shots. Bane is in his 2nd NBA season. He made the All-Rookie Second Team following his first year in the league (source: Adam Price Research).