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Bill’s By The Number$

1. STOCK PERFORMANCE – Even though 35% of the stocks in the S&P 500 are down at least 20% YTD through last Friday 7/31/20, the cap-weighted index is up +2.4% YTD. 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. BONDS – The taxable bond market is up +7.7% YTD (total return) through 7/30/20. The last time the bond market had a calendar year performance better than +7.7% was in 2011 or 9 years ago when bonds gained +7.8%. The Bloomberg Barclays Aggregate bond index, calculated using 6,000 publicly traded government and corporate bonds with an average maturity of 5 years, was used as the bond measurement (source: BTN Research).

3. SPENDING SPREE – Since cutting short-term interest rates to near zero on 3/15/20, the Fed has purchased $1.7 trillion of Treasuries through Wednesday 7/29/20. The Fed now owns $4.3 trillion of US government debt or 25% of the total Treasury securities outstanding (source: Treasury Department).

4. UNCLE SAM BORROWS – There was $17.2 trillion of treasury securities outstanding as of 3/31/20. There was just $3.0 trillion of treasury securities outstanding as of 12/31/00 (source: SIFMA).

5. WHATEVER IT TAKES – The 11 emergency lending facilities opened by the Fed over a 2-month period beginning on 3/17/20 were to be in place through 9/30/20. On 7/28/20, the Fed announced that all 11 facilities would remain open through 12/31/20 (source: Federal Reserve).

6. IT’S FOR YOUR OWN GOOD – Effective 7/14/20, Colorado became the 9th US state to offer a pre-tax retirement plan to private sector workers who do not have access to an employer-sponsored plan. Colorado companies lacking a retirement plan are now required to “auto-enroll” its employees in the state-run retirement plan, but workers may “opt-out.” An estimated 40% of Colorado’s workers are employed by companies with no retirement plan (source: National Conference on Public Employee Retirement Systems).

7. THEY WILL HAVE TO CUT BACK – An estimated 55% of working-age households today are not saving enough money before retirement to allow them to maintain their current standard of living into their retirement years (source: Center for Retirement Research).

8. RECORD DROP – The US economy fell a record 32.9% in the 2nd quarter 2020, i.e., quarter-over-quarter change expressed as an annualized result. In reality, the economy as of 6/30/20 is just 9.5% smaller than the size of the economy as of 3/31/20 after removing the impact of inflation. A 9.5% drop occurring for 4 consecutive quarters, i.e., (1.0-0.095) ^ 4 = 0.671, equals a 32.9% annualized tumble (source: Department of Commerce).

9. HOW BAD? – Under a “worst-case” scenario, the United States could lose at much as $19.9 trillion of “potential growth” in its economy over the next 5 years if the COVID-19 pandemic causes a prolonged depression (source: Centre for Risk Studies at the University of Cambridge).

10. FIVE MONTHS TO GO – Our national debt has increased $3.3 trillion YTD through Thursday 7/30/20 to reach $26.5 trillion. Before this year, the largest calendar year addition to the national debt was the $1.7 trillion debt increase that occurred during calendar year 2010 (source: Treasury Department).

11. DEATHS – As of 9am ET on Friday 7/31/20, 8,138 Americans had died from the pandemic over the trailing week. That’s largest Friday-to-Friday death total since 5/22/20 (source: NBC News, Meet the Press: First Read).

12. PLEASE VOTE – The 2020 presidential election will take place on 11/03/20 or 3 months from today. 138 million Americans voted in the 2016 presidential election, equal to 58.1% of the nation’s voting-eligible population, i.e., 100 million voting-eligible Americans did not vote in the 2016 race (source: United States Elections Project).

13. HELP! – As of the 2nd quarter 2020, there were 40.8 million US households that were renters, representing 32% of 126.8 million US households. A July 2020 survey estimates that 23.6 million of the 40.8 million renters (58%) fear they have “no to slight” chance of being able to pay their rent in August (source: Census Bureau).

14. IT’S A WORRY – 68% of 842 small business owners surveyed in May 2020 are “very” or “moderately” concerned about their increased exposure to getting sued as they reopen their businesses (source: National Federation of Independent Business Research Center).

15. OUT OF THE GAME – Major league baseball player Daniel Bard was the winning pitcher in the Colorado Rockies’ 7/25/20 game, his first MLB win since 5/29/12, a 2,979-day gap between wins (source: MLB).

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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. TIME IN THE STOCK MARKET – If you selected any single month at random to invest in the S&P 500 during the 25-years ending 6/30/20, you achieved a positive total return 66% of the time. If you extend your investment time horizon to just 1 year, you achieved a positive total return 80% of the time. If your time horizon was 5 years, you also achieved a positive total return 80% of the time. 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. BEFORE ELECTION DAY – The S&P 500 has lost 1.1% on average (total return) over the 3 months leading up to the last 8 presidential elections, i.e., the 3 months of August-September-October over the 8 election years from 1988 through 2016. The stock index was up in 5 of the 8 election years from August-to-October but has been down in 2 of the last 3 election years over the 3-month period (source: BTN Research).

3. NEVER BEEN HIGHER – The NASDAQ Composite closed at an all-time high of 10,767 on Monday 7/20/20, its 12th record close since a national emergency was declared in the United States on 3/13/20. The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system (source: NASDAQ).

4. T-NOTE – The yield on the 10-year Treasury note last closed above 2% on 7/31/19, i.e., a year ago. Every day since 7/31/19, the yield on the 10-year Treasury note has been below 2% and it has been below 1% each day since 3/19/20. From 1946 to 9/06/11, the yield on the 10-year Treasury note did not close below 2%. 10-year Treasury notes have been traded in the USA since 1790, i.e., 230 years of trading (source: Treasury Department).

5. CHEAP MONEY – The national average interest rate for a 30-year fixed rate mortgage as of 7/16/20 was 2.98%, an all-time record low, producing a $421 monthly “principal and interest” payment per $100,000 borrowed. The national average rate rose slightly to 3.01% on 7/23/20 (source: Fannie Mae).

6. TAKE ADVANTAGE OF LOW RATES – $1.2 trillion of corporate bonds were issued by “investment grade” companies in the first half of 2020, a record volume in US history for top-rated firms during the January-to-June time period (source: Securities Industry and Financial Markets Association).

7. LOST THEIR HOME – Banks repossessed 527,906 single-family homes in the 1st half of 2010 during the global mortgage crisis that began in late 2008. A decade later, banks repossessed just 37,917 single-family homes during the 1st half of 2020 at the beginning of the COVID-19 pandemic (source: Attom Data Solutions).

8. SELLERS’ MARKET – There were 350,000 fewer existing single-family homes for sale in June 2020 vs. June 2019, i.e., 1.57 million for sale this year vs. 1.92 million for sale last year (source: Nat’l Association of Realtors).

9. JUST IN CASE – The 5 largest banks in the USA announced in mid-July 2020 their plans to set aside $35 billion to prepare for what could be a wave of future defaults – mortgages, credit cards, personal loans, auto loans and corporate bankruptcies. The banks estimate that $24 billion of the $35 billion of potential losses could occur over the next 12 months (source: CNN).

10. HOSPITALS – Between 3/01/20 and 6/30/20, American hospitals lost $51 billion per month of revenue due to cancelled and foregone medical services (source: American Hospital Association).

11. IMMENSE IMPACT – The Mayo Clinic furloughed or cut the hours of 29,500 of its 70,000 employees (42%). Mayo estimates the pandemic will cause $3 billion in canceled surgeries for them in 2020 (source: Mayo Clinic).

12. GOOD USE OF MONEY – Every $1 the IRS spends on “examinations and collections” results in $3 of increased tax revenue (source: Congressional Budget Office).

13. DIFFERENT STATES – In both Florida and Texas, general sales tax revenue makes up at least 60% of their total tax revenue collected, the highest percentages in the nation. General sales tax revenue makes up just 12% of Vermont’s total tax revenue. Neither Florida nor Texas has a state income tax (source: Census Bureau).

14. BUMPY SKIES – The 3/27/20 CARES Act allocated $25 billion to 11 US airlines to be used for the payroll and benefits of the individual airline companies. The legislation prohibits the 11 airlines that received CARES Act money from implementing any layoffs until 10/01/20 (source: CARES Act).

15. THE BEST – Jon Rahm won the PGA’s Memorial Tournament on 7/19/20, moving him to # 1 in the World Golf Rankings. Rahm appeared in “Faces in the Crowd” in Sports Illustrated on 10/06/14 while he was in college. He was the world’s # 1 ranked amateur golfer for a record 60 weeks through 6/22/16 (source: BTN Research).

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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. DURING A SLOWDOWN – The USA was in an 18-month recession from the end of December 2007 through the end of June 2009, a 1 ½ year period in which the S&P 500 gained +13.3% (total return). The USA is now in another recession, this latest downturn beginning at the end of February 2020. 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. YEAR-TO-DATE – The S&P 500 lost 30.43% (total return) for the first 56 trading days of 2020 through 3/23/20. Since then, the S&P 500 has gained +45.01% (total return) for the next 81 trading days through 7/17/20. The YTD result for the index is +0.88% (total return), i.e., (1 – 0.3043) x (1.4501) = 1.0088 (source: BTN Research).

3. LAST MONTH, LAST YEAR – The US government suffered an $864 billion budget deficit during June 2020, i.e., $241 billion of tax receipts vs. $1.1 trillion of outlays. The US government had a $984 billion budget deficit for the entire 2019 fiscal year, i.e., the 12 months ending 9/30/19 (source: Treasury Department).

4. SPENDING DECLINES AS WE AGE – The average retired couple spends 23% less money in their 6th year of retirement compared to what they spent in their 1st year of retirement (source: Health and Retirement Survey).

5. SEEMS CRAZY – If a bond investment was offered at a negative interest rate of 0.5%, that means investors (the lenders) would be willing to pay the issuer of the bond (the borrower) a rate of 0.5% per year for the duration of the bond for the privilege of lending the borrower money (source: BTN Research).

6. BLAME IT ON COVID-19 – Crude oil production in the United States has fallen from 13.1 million barrels a day as of Friday 3/13/20 (the day President Trump declared a pandemic-driven national emergency) to 11.0 million barrels a day as of Friday 7/10/20 (source: Department of Energy).

7. THIS FALL – 57% of colleges anticipate they will offer “in-person” class instruction for the upcoming 2020-21 school year, just 9% will offer only online class instruction, while 29% of schools will provide a combination of “in-person” and online class instruction. The remaining 5% of schools have yet to decide as of Friday 7/10/20 (source: Chronicle of Higher Education).

8. ROTTEN THINGS HAPPEN – 46% of 1,500 US adults interviewed online during the first week of July 2020 are “very worried” or “somewhat worried” about losing their job (source: Economist/YouGov Poll).

9. WHO HAS A JOB? – The number of employees of the federal government has increased by 18,000 from the end of February 2020 to the end of June 2020, while the number of employees of local governments has declined by 1.2 million over the same 4-month period (source: Department of Labor).

10. END OF THIS WEEK – The extra $600 per week of federally funded unemployment benefits that was provided in the 3/27/20 CARES Act runs out as of Saturday 7/25/20 or Sunday 7/26/20, depending upon the state of residence of the out-of-work individual. State-funded jobless benefits continue for at least 30 weeks in 46 of the 50 US states (source: CARES Act).

11. IT CAN WAIT – An estimated 40% of American adults at least age 18 have delayed getting medical care over the previous month as of 7/15/20 due to the COVID-19 pandemic. American adults make up 249 million of our 330 million population (source: Census Bureau).

12. CAN’T TOUCH ME – As of 7/09/20, an estimated 25% of the 5.4 million renters in New York City have not made a monthly rental payment since March 2020. A 3/27/20 federal moratorium prevents NYC landlords from evicting delinquent tenants or charging them late fees (source: Community Housing Improvement Program).

13. STATES WILL NEED HELP – From 3/13/20 (the date of President Trump’s declaration of a national emergency) to 6/30/20, the COVID-19 pandemic reduced state revenue across the country (e.g., state income tax and sales tax) by an estimated $75 billion. For the 2021 fiscal year that began on 7/01/20 for most states, the 50 US states will experience an additional revenue reduction of an estimated $125 billion (source: Tax Policy Center).

14. WE NEED JUST ONE – There are 197 vaccines for the COVID-19 pandemic currently in the development stage, none of which has yet to receive FDA approval (source: Milken Institute).

15. BRAD PAISLEY’S BUDDY – Former NFL quarterback Peyton Manning earned $3.4 million from advertisements and royalties for the 1-year ending 2/29/20, more than what any current or former NFL player earned over the same time period. Manning last played on 2/07/16 in Super Bowl # 50 (source: NFL Players’ Association).

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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. LOOK-BACK – As of 6/30/20, the total return of the S&P 500 is +7.5% for the trailing 1-year, +10.7% per year for the last 3-years, +10.7% per year for the last 5-years and +14.0% per year for the last 10 years. 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. TOUGH CROWD – Just 121 of the stocks in the S&P 500 were up YTD through 6/30/20. 153 stocks were down at least 25% YTD as of 6/30/20, including 33 stocks down at least 50% YTD (source: BTN Research).

3. WHERE DID THEY GO? – The number of publicly listed companies, i.e., companies traded on an exchange, has dropped from a peak of 8,090 in 1996 to just 4,397 today (source: theglobaleconomy.com).

4. YOUR HOME – 62% of first lien home mortgages are federally backed, i.e., the loans are guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Administration or the Veterans Benefits Administration. The government announced on 6/17/20 that the moratorium on foreclosures and evictions on federally backed, single-family mortgages has been extended to 8/31/20. Borrowers who experience “financial hardship” due to the pandemic may extend the moratorium for an additional 6 months to 2/28/21 (source: Federal Housing Finance Agency).

5. THE RICHEST – The top 1% of wage earners in the USA reported at least $515,371 of pre-tax income in 2017 and own an estimated 39% of the total wealth in the country (source: Center on Budget and Policy Priorities).

6. STILL DOWN BUT COMING BACK – As of the date that the CARES Act was signed into law by President Trump (3/27/20), total spending by American consumers was down 30.2% from total spending in the country in January 2020. As of 7/01/20, total spending by American consumers had rebounded and was down just 9% from total spending in January 2020 (source: Opportunity Insights Economic Tracker).

7. TAKE IT AND SPEND IT – The CARES Act authorized non-taxable distributions of $1,200 per individual and $500 per child (under the age of 17). 159 million electronic payments and checks totaling $267 billion were paid to income-eligible Americans (source: CARES Act).

8. NEED A LOAN? – The $349 billion of PPP loans (Paycheck Protection Program) to small businesses (less than 500 employees) from the CARES Act was all loaned out by 4/16/20, prompting Congress to authorize an additional $310 billion of PPP loans as of 4/24/20. As of 6/30/20, $130 billion of the $310 billion had yet to be loaned out. The deadline for applying for PPP loans is Saturday 8/08/20 (source: Congress).

9. DEATHS – The first American death from the COVID-19 pandemic occurred on 2/06/20. As of 9am ET on 7/06/20, i.e., 5 months later, 130,937 Americans had died from the pandemic. 93% of the American death total has occurred in the last 3 months, i.e., since 4/06/20 (source: NBC News, Meet the Press: First Read).

10. JUST IN CASE – 45% of Americans surveyed in May 2020 have living wills in place. Living wills document an individual’s “end of life” medical care wishes in case he/she loses the ability to communicate (source: Gallup).

11. OTHER PANDEMICS – Dating back to the 14th century, i.e., the 100 years that began 1/01/1301, there have been 15 pandemics where more than 100,000 people died, not counting the current COVID-19 pandemic. We are in the 21st century today, i.e., the 100 years that began 1/01/2001 (source: Federal Reserve Bank of St. Louis).

12. HOW LONG? – 37% of 1,000 American voters interviewed during the last week of June 2020 anticipate that the US economy will “fully recover” within a year from now, i.e., 63% of those interviewed believe it will take at least another year for the US economy to come all the way back (source: FT-Peter G. Peterson Foundation).

13. HEAD SOUTH – The government divides the USA into 4 geographical areas: Northeast, South, Midwest and West. As of May 2020, the Northeast states had 972,000 job openings while the states in the South region had 2.070 million job openings. The total number of US job openings: 5.397 million (source: Department of Labor).

14. BIG RED NUMBERS – On 4/24/20, the CBO forecasted a budget deficit for fiscal year 2020, i.e., the 12 months ending 9/30/20, of $3.7 trillion or 18.1% of our $20.4 trillion economy. The “deficit dollar amount” record in the USA is $1.41 trillion from fiscal year 2009. The “deficit as a percentage of GDP” record in the USA is 29.6% from fiscal year 1943 (source: Congressional Budget Office, Office of Management and Budget).

15. VERY LARGE HUMAN BEINGS – The average weight of a starting offensive lineman in the NFL in 1970, i.e., 50 years ago, was 254.3 lbs. The average weight of the projected starting offensive linemen in the NFL for the upcoming 2020 season is 315 lbs., or nearly 61 lbs. heavier (source: Elias Sports Bureau).

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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. EVERYTHING CHANGED – President Trump declared a national emergency as a result of the COVID-19 pandemic on Friday 3/13/20, nearly shutting down the US economy. Retail sales in the country in April 2020 ($413 billion) declined 22% from retail sales in February 2020 ($527 billion) (source: Commerce Department).

2. MASSIVE JOB LOSSES – First-time applications for unemployment benefits in the last 3 months through 6/20/20 (47.2 million) were more than 15 times the number of first-time applications for jobless benefits filed (3.1 million) in the 3 months before the pandemic struck the United States (source: Department of Labor).

3. QUICK RESPONSE: Over a 4-week period ending Friday 4/10/20, Jay Powell and the Federal Reserve launched or reopened 8 lending facilities to provide more than $2 trillion of loans to distressed corporations, municipalities, states, investors, investment companies and money market funds (source: BTN Research).

4. CARES ACT – President Donald Trump signed the $2.3 trillion CARES Act on 3/27/20, including $301 billion of direct payments to individuals, $349 billion in loans/grants for small businesses, and $454 billion given to the Treasury Department to provide a backstop on $4.5 trillion of Fed loans to big businesses (source: CARES Act).

5. BUYING ASSETS – The Fed is projected to buy $3.5 trillion in Treasury securities by 12/31/20. Technically, the Fed does not buy Treasuries directly from the government, but rather it buys previously issued Treasury securities from 21 “primary dealers,” i.e., commercial banks and brokerage houses that are trading counterparties of the New York Federal Reserve (source: Federal Reserve).

6. HE SAID IT – Scott Pelley of “60 Minutes” asked Fed Chair Jay Powell on 5/17/20 “where does it (the new money flooding our system) come from?” Powell responded “We print it digitally. So as a central bank, we have the ability to create money digitally. And that actually increases the money supply” (source: 60 Minutes).

7. WHERE IT COMES FROM – The money used by the Federal Reserve in its lending programs and asset-buying programs was “digitally created” by the Fed, i.e., the Fed does not technically “print” money (it does not have a printing press) but rather it creates money with the press of a button on a keyboard. The Fed is forecasted to create $5 trillion of new money between March 2020 and December 2020 (source: Federal Reserve).

8. MONEY MULTIPLIER – When the Fed acquires assets from banks, e.g., Treasury securities, the Fed issues electronic credits to the banks in exchange for the assets. Banks can then use the money from the asset sale to make loans equal to 10 times the amount of money digitally created by the Fed (source: Federal Reserve).

9. GETTING A LOT BIGGER – The Fed’s balance sheet reached $6.14 trillion as of 6/24/20, up from $3.89 trillion as of 3/11/20, largely the result of purchases of Treasury securities (source: Federal Reserve).

10. USED ONE OTHER TIME – The Fed has “digitally created” money to buy government securities once before – during the 2008 global real estate crisis. Between 11/05/08 and 10/29/14, the Fed’s balance sheet grew from $490 billion to $4.2 trillion as a result of 3 “Quantitative Easing” programs (source: Federal Reserve).

11. LOW COST – The 2008-14 “Quantitative Easing” programs were designed to lower long-term rates for mortgages and other debt after the nation’s 2008-09 recession. It worked – the yield on the 10-year Treasury note and the average interest rate on a 30-year fixed rate mortgage both fell to all-time lows in 2012 (source: BTN Research).

12. MONEY SUPPLY – The nation’s money supply (M1) has increase from $3.73 trillion as of 3/11/20 to $5.23 trillion as of 6/15/20, a function of the Fed’s “digital creation” of money and of low interest rates motivating consumers to borrow money at historically low rates (source: Federal Reserve Bank of St. Louis).

13. PRINTING TOO MUCH? – Some, but not all economists, feared that our “digital creation” of money in 2008-14 and again in 2020 could lead to hyperinflation, something that occurred in Germany in 1921-23, in Argentina in 1975-1990, and in Zimbabwe in 2007-09 (source: BTN Research).

14. TEXTBOOKS AREN’T ALWAYS RIGHT – Economic textbooks agree – creating “too much” money that chases “too few” goods will lead to inflation. But it did not happen after 3 “Quantitative Easing” programs in 2008-14. US inflation averaged just +1.8% per year over the 5 years from 2015-19 (source: Bureau of Labor Statistics).

15. IF RATES WENT UP – Rising interest rates (as a result of rising inflation) would raise the government’s funding costs. The US is paying an average of 1.983% on its “interest-bearing” debt today. $20 trillion of our $26 trillion national debt is interest-bearing (the other $6 trillion is debt the government owes itself). Every 1% swing in our cost of money would result in $200 billion of additional interest costs per year (source: Treasury Department).

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. STOCKS AND POLITICS – In the last 50 years (1970-2019), the S&P 500 has been up +17.5% per year (total return) under a Democratic President and a Republican-led Congress, 3 times the +5.4% annual return achieved under a Republican President and a Congress controlled by the Democrats. The stock index gained +12.3% 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 as is the case in 2020 (regardless of which party is in the White House), the S&P 500 has been up +10.8% 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. TARGET OF SEVEN – CalPERS is the largest state pension fund in the country with assets of $395 billion. CalPERS lowered its assumed rate of return, i.e., its discount rate, to 7.0% as of 1/21/20 (source: CalPERS).

3. FED ACTION – When the Federal Reserve cut short-term interest rates to near zero on 12/16/08 during the global real estate crisis, they did not raise rates again until 12/16/15 or 7 years later. The Fed has once again cut short-term interest rates to near zero, this time on 3/15/20. On Wednesday 6/10/20, Fed Chair Jay Powell said the nation’s central bank has no plans to raise interest rates for possibly as long as 2 ½ years, i.e., through the end of 2022 (source: Federal Reserve).

4. COST OF MONEY WENT DOWN – During the 7 years that the Fed kept short-term interest rates near zero between 12/16/08 and 12/16/15, the average interest rate on a 30-year fixed rate mortgage fell from 5.47% to 3.95% (source: Freddie Mac).

5. OUT OF THIN AIR – From the end of 2008 to the end of 2010, the Fed “digitally created” $1.4 trillion of new money that was used to purchase Treasury bonds as part of its “Quantitative Easing” program. From Thursday 3/12/20 through Friday 6/12/20, the Fed “digitally created” $2.9 trillion of new money that was used to purchase Treasury bonds and corporate bonds (source: Federal Reserve).

6. AT A MINIMUM – The Treasury Department maintains a “checking account,” aka the Treasury General Account, designed to cover 5 days of future “outlays,” or a minimum balance of $150 billion (source: Treasury Dept.).

7. KEEP WORKING – 71% of 1,008 American adults surveyed in late April 2020 say that the COVID-19 pandemic has negatively impacted their retirement plans. 51% say that the pandemic has also forced them to be “more open” to the idea of having some type of income-paying job during retirement (source: TD Ameritrade).

8. GONE – Household wealth in the United States fell by $6.5 trillion (from $117.3 trillion to $110.8 trillion) during the first 3 months of 2020 (source: Federal Reserve).

9. MISS THE OFFICE – 1 in 3 American workers (32%) surveyed in May 2020 does not want to “work from home” when the option to return to an office environment is offered (source: Deutsche Bank Research).

10. BIG CITIES – The median rent for a 1-bedroom apartment in Chicago in May 2020 was $1,097. The median rent for a 1-bedroom apartment in San Francisco in May 2020 was $2,445 (source: Apartmentlist.com).

11. WHERE YOU LIVE – The average single-family home in the USA has appreciated +33.4% over the 5 years ending 3/31/20. Homes in Idaho (+69.6%) have experienced the greatest growth in value while homes in North Dakota (+9.3%) have seen the least percentage increase in value (source: Federal Housing Finance Agency).

12. FORECLOSURES – The moratorium imposed by Congress to prevent lenders from repossessing homes from delinquent homeowners who have federally back mortgages was extended last week from 6/30/20 to 8/31/20. An average of 9,974 homes per month were repossessed by lenders during the 1st Q 2020 before the ban was implemented. Just 5,490 homes were repossessed in total during April and May (source: Attom Data Solutions).

13. PANDEMIC DEATHS – 4,617 Americans died from the COVID-19 pandemic in the 1-week ending Friday 6/19/20 as of 9am ET, bringing the national death total to 119,187. The 4,617 deaths were the smallest “Friday-to-Friday” death total recorded since Friday 3/27/20 or 3 months ago (source: Meet the Press – First Read).

14. DOLLAR IS KING – 61% of the world’s foreign exchange reserves, i.e., cash holdings of central banks around world, were held in US dollars as of the end of calendar year 2019 (source: International Monetary Fund).

15. PERFECTION – In Major League Baseball’s 144-year history through the end of the 2019 season, there have been just 23 perfect games. The last perfect game – Felix Hernandez on 8/15/12 (source: MLB).

– Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –
Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. HOW HAVE STOCKS DONE? – The S&P 500 is up +12.8% (total return) since President Donald Trump declared a national emergency on Friday 3/13/20, i.e., the 13 weeks from 3/13/20 to last Friday 6/12/20. 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. THEY PRINT, THEY BUY – The Fed was purchasing $75 billion per day of Treasury bonds in mid-March 2020 when it launched “Unlimited Quantitative Easing.” The daily debt purchases made by the Fed have slowed, dropping to just $4.5 billion per day of Treasury bonds acquired last week (source: Federal Reserve).

3. BORROWING TRILLIONS – From Friday 3/13/20, the date of President Donald Trump’s declaration of a national emergency, through last Thursday 6/11/20, the national debt of the United States has increased $2.62 trillion, rising from $23.44 trillion to $26.06 trillion (source: Treasury Department).

4. NO KIDDING – The United States officially dropped into a recession on 2/29/20, its 6th recession in the last 40 years, i.e., since 1980. The announcement confirming the start of this economic downturn was released on 6/08/20, exactly 100 days after the recession started. The next most recent recession in the country began at the end of December 2007 and lasted 18 months through June 2009. The announcement of the 2007 recession was released on 12/01/08, 336 days after the recession started (source: Nat’l Bureau of Economic Research).

5. THE “CARES ACT” EFFECT – The nation’s 13.3% jobless rate as of 5/31/20 (released on Friday 6/05/20) would have been an estimated 16.3% if the workers who were being paid wages from funds obtained through a “Payroll Protection Program” (PPP) loan were counted as “temporarily laid off” instead of “actively employed” (source: Bureau of Labor Statistics).

6. HELP WANTED SIGNS – The number of job openings in the United States has fallen by just short of 2 million in the last 2 months. There were 7.004 million job openings nationwide as of 2/29/20, a total that has dropped to 5.046 million as of 4/30/20 (source: Department of Labor).

7. NOT INFLATION, BUT DEFLATION – The Consumer Price Index (CPI) fell 0.1% on a month-over-month basis in May 2020, the 3rd consecutive month of “negative inflation.” The last calendar year in which inflation was negative, i.e., deflation, was 1954 or 66 years ago (source: Bureau of Labor Statistics).

8. NO GUARANTEE – The city of Detroit filed for bankruptcy on 7/18/13. A court approved reorganization plan was finalized on 11/07/14 which included pension cuts to 32,000 active and retired city workers. All 32,000 impacted workers, except for police and firefighters, suffered a 4.5% reduction to their pension and they lost all “cost-of-living” adjustments in the future (source: US Bankruptcy Court, Judge Steven Rhodes).

9. DO WHATEVER IT TAKES – The Fed established the $500 billion Municipal Liquidity Facility on 5/26/20. The program can purchase short-term debt directly from US states. Illinois became the first US state to utilize the facility, borrowing $1.2 billion on 6/05/20 for a period of 1-year at a cost of 3.82%. Illinois faced a revenue shortfall due to a pandemic-driven delay in its tax collections (source: Federal Reserve).

10. BIG DECLINE – The state of Texas received $2.61 billion in sales tax revenue in May 2020, down $400 million from the $3.01 billion of sales tax revenue collected in May 2019 (source: Texas Comptroller Glenn Hegar).

11. IMPACT OF LOW PRICES – US field production of crude oil was 11.1 million barrels a day for the week ending 6/05/20, the 10th consecutive week of declining domestic oil production. The total decline over the 10 weeks was 1.9 million barrels a day from a peak of 13.0 million barrels a day as of 3/27/20 (source: Department of Energy).

12. PANDEMIC DEATHS – As of 6/06/20, 37% of the COVID-19 deaths in the United States had occurred at nursing homes (source: Washington Examiner).

13. WE WANT OUT TOO – 42% of Italians surveyed in late April 2020 would vote in a referendum to leave the European Union, following a similar exit made by the United Kingdom on 1/31/20 (source: Tecne survey).

14. NO DISCOUNT – The University of Southern California has announced its 2020-21 tuition will increase by +3.5% from the prior year regardless of whether classes are to be held in person or online (source: LA Times).

15. FANS WERE MISSING – The world’s top 3 golfers were paired together for the first 2 rounds of the PGA golf tournament in Ft. Worth, TX last Thursday and Friday. The trio, Rory McIlroy (# 1), Jon Rahm (# 2) and Brooks Koepka (# 3) had combined career PGA earnings of $101 million before last week (source: PGA).

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Bill’s By The Number$

1. KEEPS GOING UP – The S&P 500 has gained +43.4% (total return) through the close of trading last Friday 6/05/20 since falling to a bear market low close on 3/23/20. 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: source: BTN Research).

2. NOT BUYING IT – 39% of investors surveyed as of last Thursday 6/04/20 are “bearish” on US stocks for the upcoming 6 months (source: American Association of Individual Investors).

3. FUNDING A RETIREMENT – The S&P 500 has averaged +10.2% per year (total return) over the 25 years ending 12/31/19. A lump-sum of $838,914 (in a pre-tax account) will sustain a 20-year payout of $100,000 per year (i.e., $2 million of gross distributions before taxes) assuming the funds continue to earn +10.2% annually. This mathematical calculation ignores the ultimate impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance. Actual results will fluctuate with market conditions and will vary (source: BTN Research).

4. SO LOW – As of the close of trading on 6/05/20, the yield on the 10-year Treasury note (0.91%) has been below 2% for 212 consecutive trading days, i.e., since 8/01/19, the longest stretch below 2% in US history. The highest closing yield for the 10-year Treasury note in history was 15.84% on 9/30/81 (source: Treasury Department).

5. OIL – The price of West Texas Intermediate (WTI) crude oil rose from $18.84 a barrel as of 4/30/20 to $35.49 a barrel by 5/31/20 (up $16.65 a barrel), an +88.4% increase. Both monthly gains (by dollar and by percentage) are all-time records for WTI crude. The oil benchmark closed at $39.55 a barrel last Friday 6/05/20 (source: NYMEX).

6. BEING CAREFUL – Spending by Americans in April 2020 dropped a record 13.6% on a month-over-month basis, i.e., $13.90 trillion of “seasonally adjusted annual spending” in March 2020 free-falling to $12.01 trillion in April 2020, a drop of $1.89 trillion. If this level of decline continued for 12 consecutive months, that would mathematically be equal to every American household (there are 124.4 million households in the country) reducing their out-of-pocket spending by $15,200 over the course of a year (source: Commerce Department).

7. HIGHEST EVER – As of the end of April 2020, 43 US states reported their highest unemployment rate in history. US states have measured monthly jobless rates since January 1976 (source: Department of Labor).

8. LESS MONEY – There were 155.8 million Americans who had jobs as of mid-March 2020. 77% of those workers (119.2 million) have “experienced loss of employment income” since 3/13/20, the date of President Trump’s declaration of a national emergency (source: US Census Bureau Household Pulse Survey: May 21-26).

9. JUST WAITING – 23% of millennials surveyed indicate they will not be buying a home “anytime soon” as a result of the COVID-19 pandemic. Millennials were born between 1981-97 and are ages 23-39 in 2020. The survey was compiled from data gathered from 1,300 American adults in April 2020 (source: Quicken.com).

10. GREAT TIME TO BUY – The average interest rate nationwide on a 30-year fixed rate mortgage fell to 3.15% on Thursday 5/28/20, the lowest ever recorded in US history. That means home buyers would pay just $430 per month in “principal and interest” payments for every $100,000 borrowed (source: Freddie Mac).

11. GETTING SMALLER – The median size of 903,000 new single-family homes completed in America during 2019 was 2,301 square feet. A decade earlier, the median size of 520,000 new single-family homes completed during 2009 was 2,417 square feet (source: Census Bureau).

12. PLEASE REMAIN SEATED – The 3/27/20 CARES Act allocated $25 billion to the US airline industry to be used for payroll and benefits of individual airline companies. The $25 billion was allocated to only 11 airlines, with 82% of the money allocated to just 4 airlines (source: CARES Act).

13. PANDEMIC DEATHS – 6,799 Americans died from the COVID-19 pandemic in the 1-week ending last Friday 6/05/20 at 9am ET, bringing the national total to 108,840. The 6,799 deaths were up from 6,539 deaths the prior week, breaking a streak of 6 consecutive weeks of declining deaths (source: Meet the Press – First Read).

14. HARD HIT – Just 2 states – New York and New Jersey – account for 35% of the nation’s COVID-19 deaths as of last Friday morning 6/05/20 at noon ET (source: CovidTracking.com).

15. SAVING MONEY – Brown University of the Ivy League began the 2019-2020 school year with 38 varsity athletic teams. On 5/28/20, Brown eliminated 11 of the 38 varsity teams in a cost-cutting effort (source: Golf Digest).

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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. THROUGH THE END OF MAY – The S&P 500 is down 5.0% YTD (total return) through 5/29/20. Just 121 stocks in the index are up YTD. 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. TRILLIONS – From its 2/19/20 stock market high, US stocks lost $12.7 trillion in market capitalization through the stock market low close on 3/23/20. From its 3/23/20 low point, US stocks have gained $8.8 trillion in market capitalization through the close of trading last Friday 5/29/20 (source: Wilshire).

3. LOTS OF BORROWING – By the end of fiscal year 2020, i.e., the 12 months ending 9/30/20, the US Treasury anticipates it will have issued $4.5 trillion in new debt, more than triple the $1.28 trillion of new debt issued in fiscal year 2019 (source: Treasury Department).

4. BACK UP OFF THE MAT – Since downgrading California’s general obligation credit rating in February 2009 and again in January 2010, the rating agency S&P has upgraded California’s credit rating 3 times – in January 2013, again in November 2014 and finally in July 2015 (source: California State Treasurer).

5. LET IT BE PERPETUAL – Existing home prices in the United States have risen for 35 consecutive quarters through the end of the 1st quarter 2020, i.e., from 6/30/11 through 3/31/20. Existing homes in Idaho, up +12.6% on average for the 12 months ending 3/31/20, have experienced the greatest year-over-year appreciation of any US state (source: Federal Housing Finance Agency).

6. WHEN IT STARTED – The first death in the United States from the COVID-19 virus occurred on Thursday 2/06/20 in Santa Clara County California or just under 4 months ago. As of last Friday, 5/29/20 9am ET, 102,041 Americans had died from the COVID-19 virus (source: NBC News Meet the Press – First Read).

7. SPENDING MORE – 45% of 1,008 adults surveyed in April 2020 say they have increased their monthly spending while quarantined due in part to costs related to groceries and streaming services (source: TD Ameritrade).

8. BY THE END OF THIS MONTH – Paycheck Protection Program (PPP) loans made under the 3/27/20 CARES Act allows for loan forgiveness, i.e., the loan becomes a grant, if an employer who had laid off employees between 2/15/20 to 4/26/20 is able to rehire his/her employees to 2/15/20 levels by 6/30/20. Please consult your PPP lender for details (source: CARES Act).

9. JUST BEFORE WE VOTED – The highest unemployment rate at the end of the month just prior to a presidential election in the United States was 7.8% as of 10/31/12. President Barack Obama won a 2nd term in office by defeating Mitt Romney in the 11/06/12 election. Note that monthly jobless data has been tracked in the United States since 1948 (source: Department of Labor).

10. THEN AND NOW – The USA’s last recession ran for 18 months from December 2007 to June 2009. During those 18 months, first-time jobless claims averaged 484,231 per week. In the last 10 weeks during the COVID-19 pandemic, first-time jobless claims have averaged 4.1 million per week, or more than 8 times the level that occurred during the nation’s mortgage crisis a dozen years ago (source: Department of Labor).

11. GET READY – Spending for ads related to the 2020 political races in the House, Senate and the White House are projected to reach a record $6.7 billion. 54% of the spending historically occurs in the final 10 weeks before election day, i.e., from the last week of August to the first Tuesday in November (source: Advertising Analytics).

12. OUCH! – Illinois contributed $600 million on behalf of the state’s 5 state pension systems for fiscal year 1996. 25 years later, Illinois’ pension contribution will be $9.7 billion for fiscal year 2021 (source: Illinois.gov).

13. NO HURRY TO RETIRE – 45% of American workers expect to work past age 65. 30 years ago, just 18% of American workers anticipated working past age 65 (source: Employee Benefit Research Institute 2019).

14. WHERE DO YOU LIVE? – 39% of the US population live in cities that have at least 50,000 people, but only 4% of US cities have a population of at least 50,000 (source: Census Bureau).

15. FOURTH AND LONG – The University of Nebraska football team has sold out their stadium for 375 consecutive home games, dating back to the # 1 sellout on 11/03/62. The football stadium, which holds 85,458 fans, brought in $30 million in ticket sales in 2019. If forced to reduce attendance to 20,000 per game for the 2020 season due to the pandemic, the club will lose $23 million in ticket revenue this year (source: Omaha World Herald).

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Copyright © 2020 Michael A. Higley. All rights reserved. Email mick.higley@mahbtn.com for subscription information.

Bill’s By The Number$

1. THIS IS WHERE WE ARE – The S&P 500 is down 7.8% YTD (total return) as of the close of trading last Friday 5/22/20. Just 92 stocks in the index are up YTD. In calendar year 2019, only 62 stocks in the S&P 500 were down for the entire 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. THE WORST – Since peaking on 2/19/20, the S&P 500 lost 33.8% (total return) over the next 23 trading days through Monday 3/23/20. That’s the worst 23-day trading period in the last 30 years (source: BTN Research).

3. NEARLY THE BEST – Since bottoming on 3/23/20, the S&P 500 has gained +32.6% (total return) over the next 43 trading days through last Friday 5/22/20. That’s the 2nd best 43-day trading period in the last 30 years, bested only by a +37.8% gain (total return) achieved between 3/09/09 and 5/08/09, the first 43 trading days of the 11-year bull market that ended on 2/19/20 (source: BTN Research).

4. NEW NOTE – The US government auctioned off $20 billion of new 20-year Treasury notes last week on 5/20/20, its first sale of 20-year paper since 1986. Subsequent auctions of 20-year Treasury notes are scheduled each month going forward. In 1986, the auction of 20-year notes occurred quarterly (source: Treasury Department).

5. RECORD SIZE, RECORD YIELD – The US government auctioned off $32 billion of new 10-year Treasury notes on 5/12/20, the largest sale of 10-year notes in our history. The notes were sold at a yield of 0.70%, a record low yield at auction. The government has issued 10-year notes since 1790 (source: Treasury Department).

6. PANDEMIC DEATHS – 8,598 Americans died from the COVID-19 pandemic in the 1-week ending last Friday 5/22/20 at 9am ET, bringing the national total to 95,502. The number of COVID-19 deaths has averaged 13,498 per week over the previous 6 weeks (source: Meet the Press – First Read).

7. A DISINCENTIVE TO GO BACK TO WORK – An estimated 65%-75% of out-of-work Americans who are receiving unemployment benefits are being paid more money per week than they were receiving pre-pandemic from their employment (source: J.P. Morgan “Eye on the Market”).

8. UP BUT STILL WAY DOWN – During April 2019, an average of 2.34 million passengers were screened each day by the TSA at airports across the US. Air passenger travel deceased quickly following President Trump’s declaration of a national emergency on 3/13/20. The low point for air travelers was just 87,534 flyers on 4/14/20, off 96% from the April 2019 daily average. As states have hit the “reboot button,” airline passenger traffic has inched upward, reaching 318,449 last Thursday 5/21/20 (source: Transportation Security Administration).

9. A JACKSON A DAY – Retail sales in the USA in April 2020 were $403.9 billion, down 16.4% or $79.5 billion from just a month earlier. The monthly decline is equal to every US household (124.4 million) spending $21 less per day during April than the dollar amount they spent per day in March (source: Commerce Department).

10. FEWER FOR SALE – There were 1.47 million homes for sale in the USA at the end of April 2020, down 20% from the 1.83 million homes for sale in April 2019 and down 34% from the 2.22 million homes for sale 5 years ago in April 2015 (source: National Association of Realtors).

11. HALF A YEAR – The shortest US recession in the last 100 years was the 6-month economic downturn that ran from January 1980 to July 1980 (source: National Bureau of Economic Research).

12. ALL FOR EXACTLY THE SAME SERVICES – Private US health insurance pays on average $241 for health care services for every $100 that Medicare pays and for every $72 that Medicaid pays (source: RAND, Health Affairs).

13. IN ONE MONTH – The price of West Texas Intermediate crude oil closed at $33.25 a barrel last Friday 5/22/20, up from $13.78 a barrel just a month earlier on Wednesday 4/22/20 (source: NYMEX).

14. PANDEMIC PAIN – 46 of the 50 states have fiscal years (FY) that run from July 1st to June 30th, with 4 states (New York, Texas, Alabama and Michigan) having other FY end-dates. The collective projected spending of all 50 states for FY 2020 was $900 billion, to be offset by collective projected tax revenue of $900 billion. The COVID-19 pandemic has upset the financial forecasts of all 50 US states, now anticipating a collective loss of $105 billion for FY 2020 and $290 billion for FY 2021 (source: The Center on Budget and Policy Priorities).

15. IT’S THE SHOES – Basketball superstar Michael Jordan wore 2 different sizes of shoes – his left shoe was a size 13 and his right shoe was a size 13 ½ (source: Sotheby’s New York).

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