By The Numbers April 2019
1. WAY ABOVE AVERAGE – The S&P 500 gained +13.6% during the 1st quarter 2019 (total return). The average 1st quarter gain for the index in the last 25 years (i.e., 1994-2018) has been +1.7%. The S&P 500 has gained an average of +9.8% per year (total return) over the last 50 years (i.e., 1969-2018). The S&P 500 consists of 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. A GAIN THIS YEAR – 88% of the stocks in the S&P 500 were trading at a price as of the close of business on Friday 3/29/19 that was higher than where they ended 2018 (source: BTN Research).
3. TWO OUT OF THREE – From its 12/31/18 closing value, the S&P 500 gained +328 points to close at 2834 last Friday 3/29/19. Since the beginning of 1950 (69 years ago), the S&P 500 has been “up” 66% of the quarters, i.e., 183 out of 277 quarters since 1/01/50 (source: BTN Research).
4. TRILLIONS – The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $43.0 trillion as of 12/31/18. The US stock market was worth $27.4 trillion as of 12/31/18 (source: Securities Industry and Financial Markets Association).
5. YIELD CURVE – Some but not all economists view an inverted yield curve as a sign of future economic weakness. The last 7 recessions in the USA (since 1965) have been preceded by an inverted yield curve, i.e., the 3-month Treasury bill yield exceeding the 10-year Treasury note yield. There were also 2 “inversions” that were not followed by a recession within a 12-month period (source: Federal Reserve Bank of Cleveland).
6. RECORD HIGH TOTAL – 117 Chinese corporate bonds worth $16 billion defaulted in 2018, an all-time default record by amount in China (source: Fitch Statistics).
7. FUTURE PLANS – 48% of households in America headed by individuals at least age 55 have no retirement savings, 26% have a defined contribution (DC) plan (e.g., 401(k) or IRA) but no defined benefit (DB) pension plan, and the remaining 26% have both a DC and a DB plan (source: Government Accountability Office).
8. PREPARE FOR IT – A 65-year old American couple has a 48% chance that at least one of them will live to age 90, i.e., at least a 25-year life expectancy (source: Social Security Administration).
9. END OF LIFE – 1 out of 3 Americans at least age 85 has Alzheimer’s (source: The Atlantic).
10. LONG-TERM PREDICTION – In January 2019, the Congressional Budget Office (CBO) forecasted annual budget deficits for the US government of at least $1 trillion for 8 consecutive years beginning with fiscal year 2022, (i.e., 2022-2029). The government has suffered an annual budget deficit of at least $1 trillion during just 4 fiscal years in history, (i.e., 2009-2012)(source: CBO, Treasury Department).
11. NOT SO ACCURATE – In January 2008 (11 years ago), the CBO forecasted aggregate budget surpluses (totaling $830 billion) for the US government for the 7 fiscal years beginning with fiscal year 2012, (i.e., 2012-2018). In reality, the government suffered budget deficits during each of those 7 fiscal years, a total of $4.7 trillion of deficits over the 7-year period (source: CBO, Treasury Department).
12. A DIFFERENT OPINION – Stephen Moore, co-author of a Wall Street Journal op-ed article from 3/14/19 titled “The Fed Is a Threat to Growth,” was nominated by President Donald Trump on 3/22/19 to serve on the Federal Reserve’s 7-member Board of Governors. In the op-ed piece, Moore penned that “the real (US) economy is ready to reignite, but (Jerome) Powell’s tight-money policy is acting like a wet blanket.” Moore’s appointment is subject to Senate approval (source: White House).
13. INCREASED BUYING POWER – The average interest rate nationwide on a 30-year fixed rate mortgage was 4.06% last week, its lowest level of 2019. As recently as 11/15/18, the 30-year fixed rate mortgage had an average interest rate of 4.94% (source: Freddie Mac).
14. JUST A SELECT FEW – The US Supreme Court receives approximately 7,000 requests each year to hear cases that have already been adjudicated in a lower court. The nation’s top court accepts just 100-150 cases for their review from the 7,000 petitions (source: Supreme Court).
15. WILL NEVER BE MATCHED – There were 8 complete game shutouts in the American League in 2018, compared to 11 in the National League. St. Louis Cardinal pitcher Bob Gibson had 13 complete game shutouts during the 1968 baseball season, the all-time record in MLB (source: Major League Baseball).