Vorisek Financial Weekly Market Update for March 14, 2018

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Good morning!

Few stock investors in early March 2009 had expected this: a robust bull market right on the heels of a brutal bear market that had just wiped out 57% of the value of the S&P 500 in only 17 months.  This stock market run reached 9 years in duration as of last Friday (3/09/18), ranking it as the 2nd longest bull market since World War II.  Over the entire 9 years, the S&P 500 has gained +398% (total return), an average of +19.5% per year.  The release of a blockbuster jobs report was the most recent catalyst: +313,000 new net jobs in February, the best monthly jobs gain since July 2016 (source: Department of Labor).          

Combine a recovering stock market with a bounce back of home values and you get an improving balance sheet.  The collective net worth of Americans reached a record $98.7 trillion as of 12/31/17, up +7.8% in the last year.  During the 2008-09 global real estate crisis, the aggregate net worth of Americans fell by $8.2 trillion over just 1 ½ years and bottomed at $50.4 trillion on 3/31/09 (source: Federal Reserve).       

Steel and aluminum tariffs are scheduled to take effect in just 11 days on Friday 3/23/18.  Both Canada and Mexico are exempt from the US tariffs, while other countries (e.g., Japan and Australia) are expected to apply for a similar status.  For those nations unable to secure a tariff exemption, a concern is where will they redirect the steel and aluminum originally intended for the United States.  If the forwarded materials are shipped to various ports across Europe, the flood of imports could drive their steel and aluminum prices down, putting their domestic plants at risk (source: BTN Research).                       

Notable Numbers for the Week:

  1. BEST/WORST - The bull market for the S&P 500 reached 9 years in length as of the close of trading last Friday 3/09/18, having gained +398.0% (total return) over the period.  The best year (out of the 9 years) for the S&P 500 was the 1st year (up +72.3%).  The worst year (out of the 9 years) was the 7th year (down 2.2%) (source: BTN Research). 

  2. A LOT IN A FEW - Just 2.2% of the banks and savings institutions in the United States hold 83% of the deposits maintained in FDIC-insured institutions nationwide as of 12/31/17.  There are a total of 5,670 banks and savings institutions holding $17.4 trillion of deposits as of the end of last year (source: FDIC).  

  3. DISCRETIONARY VS. MANDATORY - Over the next decade (fiscal years 2019-2028), estimated discretionary spending by the US government is $14.1 trillion, an amount that is dwarfed by the government’s $35.9 trillion of projected mandatory spending (source: Office of Management and Budget).       

  4. LEFT THE INDUSTRY - From 2.44 million construction workers nationwide as of 2/28/10, the total is down 70% (to 732,000 workers) as of 2/28/18, but up +314,000 in just the last 4 months (source: DOL).    

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