Bill’s By The Number$

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

DOWN AND DOWNER – The S&P 500 was down 3.0% (total return) in February 2022, following its 5.2% drop in January 2022. 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).

ROUGH START TO THE YEAR – As of the close of trading on Monday 2/28/2022, 308 individual stocks in the S&P 500 were down YTD (source: BTN Research).

DEFAULT – Russia announced on 8/17/1998 that it was unable to service its government debt (both short-term and long-term) with a face value of $45 billion, causing ripples in the global economy. The S&P 500 fell 11.6% (total return) within 2 weeks (to 8/31/1998) before recovering. From 8/17/1998 to 2/17/1999 (6 months), the S&P 500 was up +13.8% (total return), continuing a bull run that would end on 3/24/2000 (source: BTN Research).

HIS OPINION – In his 2/27/2021 annual investor newsletter (i.e., a year ago), Warren Buffett 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.” Taxable bonds were down 3.4% (total return) over the 1-year from 2/27/2021 to 2/27/2022. 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: Berkshire Hathaway, Bloomberg Barclays).

MOST DON’T MAKE A LOT OF MONEY – 31.5% of the 148.2 million tax returns that were filed nationwide for tax year 2019 (the latest year for which data has been released) did not pay any federal income tax, a total of 46.7 million tax returns. 83.5% of these “non-taxable” returns (39.0 million returns) reported adjusted gross income of less than $44,269 (source: Internal Revenue Service).

I’M GOING ELSEWHERE – 47.4 million Americans quit their full-time jobs in 2021, the highest annual number recorded in the United States based on data tracked since 2001 (source: Department of Labor).

PLEASE? – 49% of 639 small business owners surveyed in December 2021 report they have job openings that they are unable to fill (source: National Federation of Independent Business).

SIX MILLION – Worldwide deaths from COVID-19 were 5.98 million as of Friday morning 3/04/2022, while US deaths were 956,000 (source: Johns Hopkins University).

INTERNATIONAL TRANSACTIONS – The Society for Worldwide Interbank Financial Telecommunications (SWIFT) was formed 49 years ago in 1973. The non-profit cooperative formed by European bankers operates worldwide in 193 countries and electronically moves transactions between 11,000 financial institutions (source: SWIFT).

COULD THE INVASION IMPACT THESE EXPORTS? – 12% of the world’s wheat exports and 16% of the world’s corn exports come from Ukraine (source: Department of Agriculture).

TOO MUCH SUPPLY? – The Federal Reserve owned $1.37 trillion of mortgage-backed securities (MBS) on 3/11/2020, 2 days before President Trump declared a national emergency due to the global pandemic. 2 years later (3/02/2022), the Fed has doubled its MBS to $2.69 trillion. To implement its plan to reduce its MBS, the Fed will sell MBS outright or allow the MBS to mature. Either plan may result in an increasing supply of MBS in the bond market which may drive prices of MBS lower and push mortgage yields higher (source: Federal Reserve).

BRAND NEW HOMES – The median sales price of a new home sold in the USA in January 2022 was $423,300, an all-time record high both on a nominal basis and on an inflation-adjusted basis (source: Census Bureau).

NOT ALWAYS UP – For 17 consecutive quarters (from 3/31/2007 through 6/30/2011), the average price of American single-family homes fell in value (source: Federal Housing Finance Agency).

NEW VOICES WANTED – Senator Rick Scott (R-FL) introduced on 2/22/2022 “An 11 Point Plan to Rescue America,” including a recommendation to enact a 12-year term limit for members of Congress. As of Tuesday 3/01/2022, 123 members of the House (out of 435) and 53 members of the Senate (out of 100) have served in Washington at least 12 years (source: GovTrack.us).

BLUE BLOODS – On 2/26/2022, the top 6 men’s teams in the AP basketball poll – Gonzaga, Arizona, Auburn, Purdue, Kansas and Kentucky – all lost games on the same day for the first time in history (source: ESPN).