Bill’s By The Number$

Posted by: Vanessa Guadiana | Posted on: May 19th, 2014 | 0 Comments

1. THE HIGHEST EVER – The S&P 500 closed at 1897 last Tuesday 5/13/14, its 10th all-time record close this year.  The stock index set 45 record closes in 2013, the last on 12/31/13 on the final trading day of 2013.  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. FLAT, THEN NOT FLAT – Over the 11-year period from the end of calendar year 1967 to the end of calendar year 1978, the value of the S&P 500 changed by less than 1 point (i.e., an index value of 96.47 on 12/31/67 to an index value of 96.11 on 12/31/78).  Over the subsequent 35 years (1979-2013), the S&P 500 index value grew 19-fold, gaining +12.0% annually on a total return basis (source: BTN Research).
3. BIG UP OR BIG DOWN – From 1970-2007 (i.e., 38 years), the S&P 500 either gained or lost at least 3% in a single trading day 98 times or just over 1% of trading days (i.e., measurement based upon the closing value of the index on consecutive trading days).  During 2008-11, the S&P 500 gained or lost at least 3% in a single trading day 85 times or more than 8% of trading days.  From 1/01/12 through Friday 5/16/14, the S&P 500 has not gained or lost at least 3% in any single trading day, a stretch of 596 trading days (source: BTN Research).
4. MANY YEARS – If the Federal Reserve was to stop its “print-and-purchase” program (aka “Quantitative Easing”) and not reinvest any of the fixed income proceeds as the bonds mature in the future (i.e., the $4 trillion of bonds that were purchased in the last 5 ½ years), it will still take the Fed 5-8 years to reduce its balance sheet to pre-recession levels (i.e., September 2008), according to Senate testimony on 5/08/14 by Fed Chair Janet Yellen (source: Federal Reserve).
5. POPULAR GUY – 40,000 people attended the annual meeting of Warren Buffett’s corporation in Omaha, NE in early May 2014.  Only 12 people attended Buffett’s annual corporate meeting in 1981 (source: BTN Research).
6. THE (UN)GOLDEN YEARS – The number of American homeowners at least age 75 with mortgage debt has more than doubled in the last 10 years, rising from 1 out of every 12 seniors (8.4%) to 1 out of every 5 seniors (21.2%).  30% of American homeowners at least age 65 have an outstanding mortgage, up from 22% a decade ago (source: Consumer Financial Protection Bureau).
7. NO MONTHLY MORTGAGE – 31% of the existing homes sold nationwide in calendar year 2013 were purchased for “all cash” (source: National Association of Realtors).
8. NOT INTERESTED – 54% of US physicians do not accept Medicaid patients, up +10 percentage points (i.e., from 44% to 54%) from 4 years ago (source: Merritt Hawkins & Associates).
9. NO CHANGE – Members of Congress (both Senators and House of Representative members) last received a pay hike in January 2009 when their annual salary was boosted to $174,000.  Since then, Congress has voted 5 times to deny themselves an increase in pay (source: Congress).
10. SURPLUS – The US government reported a $107 billion surplus for April 2014, its first monthly surplus this calendar year.  The $414 billion of tax receipts in April 2014 was the largest monthly total ever collected (source: Treasury Department).
11. MAY BE WORSE – The total of student loans outstanding reached $1.11 trillion as of 3/31/14, a +13% increase over the last year.  Although the student loan delinquency rate is 11.5% (i.e., at least 90 days past due by amount), the calculation assumes that those loans currently in deferment (and not required to make any current repayment) have a 0% delinquency rate, suggesting the 11.5% rate is understated (source: NY Federal Reserve Bank).
12. BEST OF THE REST – The yield on the 10-year Treasury note was 2.57% on 8/05/11, the day that S&P announced a downgrade of the USA from AAA to AA+.  Now 33 months later, the yield on the 10-year Treasury note closed last Friday (5/16/14) at 2.50% as global bond investors continue to buy US debt (source: Treasury Department).
13. BUT WHAT IF? – The average interest rate that Uncle Sam is paying on its interest bearing debt is 2.424% as of 4/30/14, half the cost the government was paying (4.838%) as of 12/31/07 (source: Treasury Department).
14. NOT TOGETHER – From 6/30/04 to 6/29/06, the Fed raised short-term interest rates from 1% to 5.25%, but over the same period the yield on the 10-year Treasury note rose only from 4.62% to 5.22% (source: Federal Reserve).
15. MAKE CONTACT – There have been just 2 MLB players in the last 50 years to have more home runs than strikeouts in a season.  The most recent was Barry Bonds who had 45 HRs and just 41 Ks in 2004 (source: MLB).

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