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Bill’s By The Number$

Posted by: Kim Vo | Posted on: December 12th, 2016 | 0 Comments

1. BEST, WORST AND ALL OF THEM – The S&P 500 is up +12.9% YTD (total return) through the close of trading last Friday 12/09/16. The best trading day YTD for the stock index was a gain of +2.5% achieved on Friday 1/29/16 and the worst trading day YTD was a loss of 3.6% on Friday 6/24/16. 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. THE MAGIC OF COMPOUND INTEREST – A San Francisco home on the market today for $6.95 million was originally purchased by the current owner’s grandfather for $30,000 in 1926. The $6.95 million list price reflects a +6.2% annual growth rate for the last 90 years. If the home had grown by +10% per year for 90 years, the current list price would be $159 million or 23 times the $6.95 million price tag (source: BTN Research).

3. END OF LIFE – Total Medicare spending in fiscal year 2016 was $595 billion. 25% of that total ($150 billion) was spent during the final 12 months of life of beneficiaries (source: Medicare).

4. THE DOCTOR WILL BE IN SHORTLY – Healthcare spending in the United States reached $3.2 trillion in 2015 (18% of the nation’s economy), equal to per person spending of $9,990. 20 years earlier (1995), per person healthcare spending in America was $3,788 (source: Health Affairs).

5. BOND ROUT – Our nation’s 2% coupon 10-year Treasury note with a par value of $1,000 was trading for $1,093 as of the close of trading on Monday 11/07/16 (i.e., the day before the presidential election), resulting in a current yield of 1.83%. The same 2% coupon 10-year Treasury note with a par value of $1,000 was trading for $811 as of the close of trading last Friday 12/09/16, resulting in a current yield of 2.47%. Thus, the value of the 10-year Treasury note has fallen 26% in the last 5 weeks since the early November election (source: BTN Research).

6. IT WAS LOW – The yield on the 10-year Treasury note closed at 1.36% on Friday 7/08/16, the lowest closing yield ever for 10-year paper. 10-year notes have been traded in the USA since 1790, i.e., 226 years of trading. From that all-time low close, the yield on the 10-year note has risen more than 1 percentage point in just 5 months to close at 2.47% last Friday 12/09/16 (source: Treasury Department).

7. REALLY LONG-TERM PAPER – Steve Mnuchin, President-elect Donald Trump’s nominee for Treasury Secretary, has said that he would consider the issuance of US Treasury bonds with maturities of 50 to 100 years, as opposed to the 30-year maximum duration currently used. Mexico sold 100-year government bonds in April 2015, the 3rd time since 2010 that Mexico has sold 100-year bonds (source: Bloomberg).

8. THE FED – The 7 members of the Fed’s Board of Governors are nominated by the President and confirmed by the Senate. The group has functioned with just 5 members since late May 2014. Incoming President Trump hopes to fill the 2 vacant positions. Janet Yellen’s 4-years as Fed Chair runs through 2/03/18 (source: Federal Reserve).

9. HIS PARTY – Republican Donald Trump will begin his first term as President with a Republican majority in the Senate and the House, the first Republican to enjoy that level of Congressional support at the beginning of his first term in office since Dwight Eisenhower in 1953 (source: Congress).

10. DON’T EVEN TRY TO GUESS – In January 2007, the Congressional Budget Office’s “10-year Projection” forecasted budget surpluses for 5 consecutive years beginning in fiscal year 2012 (i.e., years 2012-16) totaling $914 billion. Instead the actual deficits over fiscal years 2012-16 were a combined $3.3 trillion (source: CBO).

11. LONG LIFE – The life expectancy of a baby born in the USA in 2015 is 78.8 years, a decline of 0.1, the statistic’s first “year-over-year” drop after 21 consecutive years of increase (source: National Center for Health Statistics).

12. PAYING FOR COLLEGE – Outstanding student loan debt is $1.279 trillion as of 9/30/16. 11.0% of student debt (by dollar) is at least 90 days delinquent or is in default as of 9/30/16. The delinquency calculation understates the actual delinquency rate since student loans that are now in deferment are treated as if they are “current” with regard to their payment status (source: Federal Reserve Bank of New York).

13. I QUIT – 69% of workers retire by age 65, but only 5% of workers retire before age 55 (source: Census Bureau).

14. CAN’T WAIT – The normal retirement age (NRA) in 2017 to be eligible for full Social Security benefits is 66 years. 57% of men and 64% of women take their benefits before they reach their NRA (source: LIMRA).

15. LONG SEASON – The NFL’s Cleveland Browns were 0-12 going into their 12/11/16 game vs. the Bengals. The 2008 Detroit Lions were the last NFL team to have a winless season, losing all 16 games that year (source: NFL).

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