Vorisek Financial Weekly Market Update for April 11, 2018

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Good morning!

During Janet Yellen’s 4-years as Chair of the Federal Reserve, the S&P 500 gained +72.4% (total return), an average return of +14.6% per year.  The stock index achieved 156 all-time closing highs while suffering through just 3 corrections, i.e., drops of at least 10% but less than 20%) during Yellen’s stint as our nation’s top banker.  Since Jerome Powell replaced Yellen as Fed Chair on 2/05/18 (just 43 trading days ago), the S&P 500 has lost 5.4% (total return), has achieved no new closing highs, and already has had a 10.2% correction (source: BTN Research).     

Bond market watchers have anticipated rising Treasury yields in 2018 because of expected Fed rate hikes.  The yield on the 10-year Treasury note closed last week at 2.78%, up from 2.41% at the end of 2017.  But the demand for US debt from foreign investors has prevented interest rates from climbing even higher.  Foreign investors bought a greater percentage of Treasury notes and bonds during the month of February 2018 than in any month since May 2016, keeping bond prices up and yields down in the United States (source: Treasury Department).

After adjusting numerical data from the past for the impact of inflation, the median household income in 2016 ($59,039) is the highest ever recorded in the USA, besting the previous record for median household income ($58,665) set in 1999.  Median household income declined because of recessions in the country, falling back during our economic downturns that began in 2001 and 2007 (source: Federal Reserve Bank of St. Louis).       

Notable Numbers for the Week:

  1. TOP PERFORMER - April has been the best month for the S&P 500 over the last 25 years (i.e., 1993-2017), having gained an average of +1.81% (total return), just ahead of October’s +1.80% average gain (source: BTN Research).     

  2. JUST NOT ENOUGH - Almost 2 out of every 3 American workers (65%) believe that even if they continue to work until age 65 that they will not accumulate enough savings “to meet their retirement needs” (source: Transamerica Center for Retirement Studies).    

  3. AFFORDABLE CARE ACT - 11.8 million Americans obtained their 2018 health insurance coverage through a state-based marketplace (12 states), through a state operating its own marketplace on the federal platform (5 states), or through a state using the federally-facilitated marketplace (33 states).  The 11.8 million total is down 3.7% from 2017 (source: National Academy for State Health Policy).

  4.  HOME ON THE RANGE - There are 2.1 million American farms today, down from 5.4 million farms in 1950.  The average American farm today feeds 165 people each year in the US and abroad (source: American Farm Bureau Federation).

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