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Friday, October 18, 2019

Week of June 24, 2019

1. THE HOME STRETCH – The S&P 500 has closed at its calendar year high in the second half of the year (i.e., during the 6 months of July-December) 74% of the time since 1950. In 17 of the last 30 years, the index’s calendar year high has occurred during the month of December. 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. WELL ABOVE AVERAGE – With 1 trading week remaining in the first half of 2019, the S&P 500 is up +18.9% YTD (total return) through Friday 6/21/19. Over the last 25 years (i.e., 1994-2018), the S&P 500 has produced an average gain of +9.1% per year. The first 6 months of the year (i.e., January-June) have gained an average of +4.4% over the last 25 years (source: BTN Research).
3. AT THE BEGINNING – The ongoing bull market for the S&P 500, which began on 3/10/09, has gained +441% (total return) over its 10-year, 3 ½ month duration. The stock index gained +72% during the first 12 months of the bull run, including +27% during the first month of the bull market (source: BTN Research).
4. NUMBER THREE – 2019 is the 3rd year of Donald Trump’s 1st 4-year presidential term. The average return for the S&P 500 during the last 23 “presidential 3rd-years” has been a gain of +16.1% (total return), i.e., an average return based upon data going back to 1927. The last time the S&P 500 was negative for a “presidential 3rd-year” was in 1939 or 80 years ago (source: BTN Research).
5. NEGATIVE – The yield on the 10-year German government bond fell to a record low -0.32% on 6/18/19, i.e., a new buyer of that bond is guaranteed to take a loss if he/she holds the bond to maturity (source: Financial Times).
6. NOT AS MUCH – China’s ownership of Treasury securities peaked at $1.20 trillion in August 2017 but has dropped 7.4% to $1.11 trillion as of April 2019 (source: Treasury Department).
7. MAYBE NEXT TIME – The Fed’s 4th meeting of 2019 ended last Wednesday with no change in short-term interest rates. The Fed last cut interest rates on 12/16/08 or 10 ½ years ago (source: Federal Reserve).
8. HOME BUYERS – The average nationwide interest rate on a 30-year fixed rate mortgage was 3.84% last week, just over ½ of 1% above its all-time low of 3.31% achieved at Thanksgiving 2012 (source: Freddie Mac).
9. AT RISK OF A TUMBLE? – The 4 most overvalued housing markets in the world today are Hong Kong, Munich, Toronto and Vancouver (source: UBS Global Real Estate Bubble Index).
10. NOT SAVING ENOUGH – The average 65-year old American male has accumulated retirement savings that will sustain him in retirement for 9.7 years, i.e., to just short of his 75th birthday. The problem: the average 65-year old American male has a life expectancy to 83 years, or 8.3 years beyond the point when his savings run out. This study assumed that male retirees would need retirement income of 70% of the individual’s pre-retirement pay (source: World Economic Forum).
11. MARIA DIDN’T HELP – Puerto Rico has negotiated a restructuring of $35 billion of sovereign debt, reducing that total by 66% to just $12 billion. The new debt total is to be paid off over the next 30 years (source: Puerto Rico Oversight, Management and Economic Stability Act of 2016).
12. SIMPLER RETURN – An estimated 18 million taxpayers completed Schedule A (“Itemized Deductions”) as part of their 2018 tax return, down 61% in just 1 year (from 46.5 million itemizers in 2017). The reduction in the use of Schedule A was largely a function of the increased standard deduction created by the “Tax Cuts and Jobs Act of 2017” (source: Joint Committee on Taxation).
13. JULY FOURTH – When the Continental Congress approved the Declaration of Independence on 7/04/1776, the population of the 13 colonies was 2.5 million, equal to the population of Houston today (source: Census Bureau).
14. JUMP FROM HERE – The 3-point line in men’s college basketball is being moved to 22 feet, 1 ¾ inches for next season. The world long jump record is 29 feet, 4 ¼ inches (source: NCAA Playing Rules Oversight Panel).

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