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Bill’s By The Number$

Posted by: Kim Vo | Posted on: August 8th, 2016 | 0 Comments

1. STOCKS AND POLITICS – In the last 50 years (1966-2015), the S&P 500 has been up +18.3% per year (total return) under a Democratic President and a Republican-led Congress, 4 times the +4.5% annual return achieved under a Republican President and a Congress controlled by the Democrats. The stock index gained +11.9% per year when the White House and Congress were controlled by the same political party. When the House and the Senate were controlled by different parties (regardless of which party is in the White House), the S&P 500 has been up +9.2% per year. 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).

2. WHAT’S THE IMPACT? – The S&P 500 gained +11.0% per year (total return) over the 70+ years that the USA was top ranked by the credit rating agency Standard & Poor’s, i.e., the time period of 1941 through Friday 8/05/11. The S&P 500 gained +15.2% per year (total return) over the 5 years since the USA was downgraded by Standard & Poor’s on Friday 8/05/11, i.e., the time period 8/05/11 through Friday 8/05/16 (source: BTN Research).

3. WHAT HAVE YOU DONE FOR ME LATELY? – Of the 14 stocks in the S&P 500 index that gained at least +45% in calendar year 2015, 6 stocks have a negative return YTD through 7/31/16 (source: BTN Research).

4. 2016 COMEBACK – Of the 22 stocks in the S&P 500 index that fell at least 45% in calendar year 2015, 11 stocks have gained at least +20% YTD through 7/31/16 (source: BTN Research).

5. WRONG – JPMorgan Chase predicted in August 2011 that the yield on the 10-year Treasury note would increase by at least 0.6 percentage points over the “medium term” as a result of the 8/05/11 rating downgrade by Standard & Poor’s. The yield on the 10-year Treasury note was 2.57% as of the 8/05/11 downgrade. The yield on the 10-year Treasury note was 1.59% as of the close of trading on Friday 8/05/16 (source: JPMorgan Chase).

6. STARTED IN 1694 – The Bank of England cut its benchmark interest rate to 0.25% last Thursday (8/04/16), the lowest rate ever in its 322-year history and its first rate cut since March 2009. The move, widely expected since the 6/23/16 Brexit vote, is designed to stimulate the British economy by encouraging increased borrowing by corporations and consumers (source: Bank of England).

7. GUTSY MOVE – House of Representative member Reid Ribble (R-WI) has introduced legislation (“Save Our Social Security Act”) that over several years would increase the “full retirement age” for Social Security from 67 to 69. The last time the nation’s Social Security program underwent major reform was 1983. The changes implemented at that time included a rise in the retirement age in stages from 65 to 67. The chairman of the National Commission on Social Security Reform in 1983 was Alan Greenspan (source: Congress).

8. SPENDING – Americans spent $3.63 billion less at gas stations in June 2016 when compared to June 2015, but they spent $2.55 billion more at restaurants and bars in June 2016 than in June 2015 (source: Census Bureau).

9. ABOVE THE MAX – Earnings up to $118,500 in 2016 are subject to payroll taxes. 90% of earnings were subject to payroll taxes in 1983. Just 83% of earnings will be subject to payroll taxes in 2016 (source: Tax Foundation).

10. SEVEN YEARS AGO – There were 7.77 million out-of-work Americans as of 7/31/16. There were 14.60 million out-of-work Americans as of 7/31/09 (source: Department of Labor).

11. ALL THIS YEAR – The price of oil ended 2015 at $37.04 a barrel, fell 29% to $26.21 by 2/11/16, then rose +95% to $51.23 by 6/08/16, and now has fallen back 18% to close at $41.98 a barrel as of Friday 8/05/16 (source: Nymex).

12. IN THE BANK – As of 8/01/16, only 3 banks have failed YTD in the United States, the fewest number of bank failures as of August 1st in any calendar year since 2007 (source: Federal Deposit Insurance Corporation).

13. HE WON – The 2016 Presidential election is 3 months from today (11/08/16). In the 2012 election, Barack Obama won 51.1% of the popular vote, a total of 66 million votes (source: PresidentElect.us).

14. NOT ENOUGH INFLATION – The “consumer price index” (CPI) has reached at least +2% on a trailing 12-month basis in only 3 of the last 50 months, i.e., May 2012 through June 2016. The Federal Reserve’s target rate of annual inflation for the United States is +2% (source: Department of Labor).

15. BUCKEYE BULLET – 80 years ago tomorrow (8/09/36), American sprinter Jesse Owens won his 4th gold medal at the 1936 Olympics held in Berlin, Germany. Owens, an Ohio State athlete who went to high school in Cleveland, won gold in the 100 meters, 200 meters, long jump and the 4 x 100 meter relay (source: History.com).

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