Vorisek Financial Weekly Market Update for May 16, 2018

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Good morning!

The USA’s current economic expansion (in its 107th month) is our nation’s 2nd longest expansion based upon data that has been tracked by the government since 1854, i.e., for the last 164 years.  The longest expansion ever in our history: the 120 months that ran from April 1991 through March 2001.  The current stretch of good times also means that we have not had a domestic recession since the country suffered an 18-month economic downturn that ended in June 2009.  The USA has had 18 recessions in the last 100 years, an average of 1 every 67 months (every 5 ½ years), yet as of today we are nearly 9 years removed from our last recession (source: National Bureau of Economic Research). 

The price of oil jumped to its highest level in 3 ½ years as tensions between the US and Iran spiked when President Trump withdrew the US from its 2015 nuclear deal with Tehran.  Geopolitical pressures have added to the efforts of the OPEC countries who have been working to restrain the world supply of crude oil, causing its price to nearly triple in the last 25 months, i.e., from $26.21 per barrel on 2/11/16 to last Friday’s close of $70.70 per barrel (source: NYMEX).    

The US government ran a $214.3 billion surplus in April 2018, the largest monthly surplus ever in US history.  The total was the difference between $510.5 billion of tax receipts (also a monthly record) and $296.2 billion of outlays.  The USA did not collect as much as $510.5 billion in tax receipts in a full fiscal year (all 12 months) until 1980 (source: Treasury Department).         

Notable Numbers for the Week:

  1. BORROW - The Treasury Department auctioned off $17 billion of 30-year bonds with a 3.125% coupon last Thursday 5/10/18.  The new bonds mature on 5/15/2048.  The government has auctioned off 30-year bonds since 1977.  The lowest yield ever on 30-year paper was 2.10% on 7/08/16 (source: Treasury Department). 

  2. NERVOUS FOLKS - Only 37% of American adults under the age of 35 are invested in the stock market today, down from 55% in 2002 (source: Gallup).  

  3. REALLY BIG BATTERIES - Clean-air legislation drafted in the United Kingdom (but not yet passed) would outlaw 98% of the vehicles currently in use by the year 2040.  The proposed rules would require new cars to travel at least 50 miles using only electric power (source: Financial Times).   

  4. OUT OF MY LEAGUE - The median sales price of single family homes for sale today in San Jose, CA is $984,000 (source: Zillow).

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