Vorisek Financial Weekly Market Update for April 25, 2018

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Good morning!

Just 4 weeks into 2018, it looked as if the new year was going to continue upward for domestic stocks.  The S&P 500 had reached its 14th record high (in just 18 trading days) as of Friday 1/26/18 and the stock index was up +7.6% YTD (total return).  Since then, equities have given back most of the year’s gains and much of the news that previously would have been dismissed as background noise now has equity investors concerned.  The S&P 500’s YTD gain of +0.4% is the smallest gain reported by the stock index as of April 20th in any year since 2009 (source: BTN Research).        

The International Monetary Fund reported last week that global debt had climbed to an overwhelming $164.4 trillion in 2016, 225% of the world’s $73 trillion global economy.  The 225% is the highest percentage ever recorded by the IMF, eclipsing global debt of 213% of the worldwide economy in 2009 during the international real estate crisis.  45% of the global debt total is produced from just 2 nations out of 190 countries worldwide: The USA ($48.1 trillion of public and private debt) and China ($25.5 trillion) (source: International Monetary Fund Fiscal Monitor April 2018). 

Not a single bank in the United States has failed YTD and required a bailout from the Federal Deposit Insurance Corporation.  The $2 trillion of “excess reserves” currently held by US banks is more 15 times the size of the $132 billion of reserves required under today’s banking laws (source: Federal Reserve). 

Notable Numbers for the Week:

  1. MOSTLY SHORT-TERM BORROWING - Of the $2.4 trillion in bills, notes and bonds that the United States Treasury has issued YTD through Friday 4/20/18 (equal to $151 billion borrowed per week), only 7% of the debt is 10-year notes or 30-year bonds (source: Treasury Department). 

  2. DOUBLE IN A DECADE - Field production of crude oil in the United States was 10.540 million barrels a day for the week ending Friday 4/13/18, the 8th consecutive week of increasing domestic oil production and more than double the 5.096 million barrels a day of crude oil production for the week ending 4/11/08 or a decade earlier (source: Department of Energy). 

  3. PRICY GAS - The average price of a gallon of gasoline was $2.761 last Sunday 4/22/18, up 27.5 cents YTD.  The last time that the average price of gasoline nationwide was $3 a gallon was on 10/31/14 (source: AAA). 

  4. NOT A POPULAR JOB - The trucking industry has a shortage today of approximately 30,000 drivers, a critical factor behind the rising cost of moving freight in the United States.  Trucks move 71% of all US freight nationwide (source: American Trucking Associations).  

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