By The Numbers October 2018
1. LAST QUARTER OF THE YEAR – Over the last 25 years (1993-2017), the S&P 500 index has gained an average of +5.0% (total return) over the final 3 months of the year (October-November-December). 20 of the last 25 fourth quarters (80%) have produced a positive total return gain. 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 is up +10.6% YTD (total return) through Friday 9/28/18. The stock index has had only 1 down year (2008) in the last 15 years, i.e., 2003-17 (source: BTN Research).
3. AND IN FIRST PLACE – The top-performing individual stock within the S&P 500 for the first 9 months of 2018 is up +200% YTD through Friday 9/28/18, i.e., the stock has tripled in value (source: BTN Research).
4. BIG PERCENTAGE – The market cap of the S&P 500 is 80% of the total market capitalization of all US stocks as of 9/30/18 (source: BTN Research).
5. TRILLIONS – The size of the US bond market is $42 trillion. The size of the US stock market is $32 trillion. The size of the US economy is $20 trillion. The size of the Chinese economy is $12 trillion (source: BTN Research).
6. ANOTHER WAY TO RETALIATE – In its trade conflict with the United States, China may elect to use currency manipulation as a strategy to offset the impact of new tariffs imposed on Chinese imports by the United States. E.g., a Chinese import costing 1,000 yuan (1 yuan is worth approximately 15 cents) would cost an American buyer $150. A 20% tariff would raise the cost to $180. But if the yuan weakened to 12.5 cents, an import costing 1,000 yuan with a 20% tariff would cost $150 (source: BTN Research).
7. UPBEAT – The “Small Business Optimism Index,” a monthly measurement that has been published for 45 years, reached its highest level ever in August 2018. The index is based upon small business owners’ expectations on hiring, business growth, and profitability. The August report broke the previous index high set in July 1983 (source: National Federation of Independent Businesses).
8. IT’S OTHER THINGS – Only 12% of Americans surveyed in early September 2018 believe the economy is the “most important” problem facing our country today, i.e., government deficits, jobless rate, inflation, trade, taxes. 86% of Americans surveyed in February 2009 believed the economy at that time was our “most important” problem (source: Gallup Poll).
9. NOT READY – 30 of 50 US states do not have sufficient reserves set aside today to absorb the financial impact of an economic recession, forcing them to raise taxes/fees or reduce benefits (source: S&P Global).
10. THERE FOR THE TAKING – 60% of American workers have access to an employer-sponsored defined contribution plan, e.g., 401(k) plan. 26% of American workers have access to an employer-funded defined benefit pension plan (source: Bureau of Labor Statistics).
11. WHAT IS YOUR END PLAN? – 59% of “working age” Americans (defined as adults between the ages of 21-64) have not accumulated assets in any retirement account – defined benefit pension plan, defined contribution plan (e.g., 401(k) plan) or an IRA (source: National Institute on Retirement Security).
12. FED AT WORK – Projections published by the Federal Reserve following its 6/13/18 meeting suggested they would initiate 2 more rate hikes in 2018 and 3 more rate hikes in 2019. The first of the 2 rate hikes during the remainder of 2018 was announced last Wednesday 9/26/18. There are 2 scheduled Fed meetings remaining in 2018 – November 7-8 and finally on December 18-19 (source: Federal Reserve).
13. IT JUST DEPENDS – The median rent today for a 1-bedroom apartment in San Francisco is $3,400. The median rent today for a 1-bedroom apartment in Omaha, NE is $825. The median rent today for a 1-bedroom apartment in Charlotte, NC is $1,275 (source: GOBankingRates).
14. SERVING TIME – 47 investment bankers worldwide received jail time as a result of the 2008 global recession, including 25 bankers from Iceland. Just 1 American investment banker went to prison, receiving a 30-month sentence for “fraudulently inflating” the prices of mortgage-backed securities (source: Financial Times).
15. REALLY FAST – Reigning Olympic marathon champ Eliud Kipchoge of Kenya won the Berlin Marathon on 9/16/18. His time of 2:01.39 bettered Dennis Kimetto’s 2014 world record by 78 seconds. Kipchoge’s time equates to a 4:38 mile pace for a race that covers 26 miles, 385 yards (source: BTN Research).