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Bill’s By The Number$

Posted by: Kim Vo | Posted on: May 30th, 2017 | 0 Comments

1. CLOSE TO THE BOTTOM – June is ranked 11th out of the 12 months for average total return performance of the S&P 500 stock index since 1992, i.e., the last 25 years. Only the month of August has historically produced a poorer average stock performance than June. 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. BREAKEVEN – The 3 summer months (June-July-August) have produced an average loss of 0.1% (total return) for the S&P 500 stock index over the last 25 years, i.e., 1992-2016 (source: BTN Research).

3. THEY ARE NOT DONE YET – Between now and the end of 2018, the Federal Reserve has 13 scheduled meetings. The median estimate of Federal Open Market Committee (FOMC) policymakers suggests 5 separate rate hikes of ¼ of 1% each will occur by 12/31/18. The next Fed meeting is June 13-14 (source: Federal Reserve).

4. TOO PESSIMISTIC – An annual survey of Americans at least age 65 gave the US stock market at least a 50% chance of rising in the upcoming year only 1 time over 12 annual surveys that were conducted from 2002-2013. The US stock market (as measured by the S&P 500) was actually up 10 of the 12 years (down in 2002 and 2008), gaining +105% (total return), an average of +6.2% per year (source: University of Michigan).

5. VERY SENSITIVE – The “duration” of the current 3% coupon, 30-year Treasury bond was 19.764 “years” as of last Friday 5/26/17, i.e., if interest rates go up just 15 basis points on the 30-year bond, the resulting 3% bond price decline would completely offset the bond’s 3% coupon over a 1-year time horizon (source: Ryan ALM).

6. MAKING REGULAR PAYMENTS – 11.0% of college student loans are at least 90 days delinquent as of 3/31/17. Just 3.8% of auto loans are at least 90 days delinquent as of 3/31/17. Both rates represent the percentage of loans delinquent calculated on a “dollar” basis and not on a “per loan” basis (source: Federal Reserve Bank of New York).

7. STUDENT LOANS – Within 4 years of their 2008 graduation from college, 69% of individuals with student loans were making regular payments on the debt, 17% had fully repaid the debt, 9% were making no payments and 5% had already defaulted on the loans (source: National Association of College and University Business Officers).

8. AFTER FIVE MONTHS – The number of operating oil rigs and operating natural gas rigs in the United States is up +38% YTD, reaching 908 operating rigs as of last Friday 5/26/17 (source: Baker Hughes).

9. UP, NOT DOWN – President George W. Bush, just a month into office, delivered his first address before Congress on 2/27/01. Bush encouraged members of Congress to “join me to pay down $2 trillion in our national debt during the next 10 years.” From 2/27/01 to 1/20/09 (the day Bush left office approximately 8 years later), the national debt of the United States had increased $4.9 trillion to $10.6 trillion (source: Treasury Department).

10. SO HE THINKS – President Donald Trump released last Tuesday (5/23/17) a 10-year budget forecast that projects the USA achieving a balanced budget (i.e., annual tax revenues equal to or greater than annual outlays) during fiscal year 2027. When the current fiscal year 2017 ends on 9/30/17, the USA will have failed to record a balanced budget in 52 of the last 57 fiscal years, i.e., 1961-2017 (source: Congressional Budget Office).

11. LIVING ON THE EDGE – 44% of 6,600 adults surveyed in October 2016 could not pay for an unexpected $400 emergency expense out of cash reserves, forcing them to borrow the funds or liquidate an asset to pay the expense (source: Federal Reserve’s Survey of Household Economics and Decisionmaking).

12. BORDERING STATES – Colorado had the lowest unemployment rate (2.3%) of any state in April 2017. New Mexico had the highest unemployment rate (6.7%) of any state in April 2017 (source: Department of Labor).

13. NOT A CITIZEN AT BIRTH – There were 27.0 million “foreign-born” persons in the US labor force in 2016, comprising 16.9% of the American workforce. The percentage of “foreign-born” workers was 13.3% in 2000 (source: Department of Labor).

14. EXPENDABLE – 26% of 1,100 adults surveyed in April 2017 fear that it is “very likely or somewhat likely” that their current job will be eliminated within 20 years, replaced by technology, automation or a robot (source: Gallup).

15. FINALS FOES – LeBron James, 4-time NBA MVP, and Stephen Curry, 2-time NBA MVP, were both born in the same hospital. James was born on 12/30/84 at Summa Akron City Hospital in Akron, OH, the same hospital where Curry was born just over 3 years later on 3/14/88 (source: ESPN).

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