Standard & Poor’s has maintained stock indices for 95 years (back to 1923). From just 90 stocks that were tracked in 1926, the commonly recognized S&P 500 took shape in 1957 and is the premier equity benchmark used by money managers. The index achieved 2 all-time records last week. The S&P 500 closed on Friday (8/24/18) at 2875, its highest close ever. Last week’s rally also pushed the index’s current bull run (which began on 3/10/09) to 3,455 days in length, its longest duration in history (source: BTN Research).
The spread between the 10-year Treasury note yield and the 2-year Treasury note yield fell to just 19 basis points last Friday, i.e., 2.82% less 2.63%, the tightest spread between the 2 debt instruments since 8/2/07 or 11 years ago. Some, but not all, economists view a flattening yield curve as a sign of future economic weakness. In fact, the last 7 recessions in the USA have been preceded by an "inverted" yield curve, i.e., the 2-year note yield exceeding the 10-year note yield (source: Federal Reserve Bank of Cleveland).
As had been expected, the Treasury Department released “proposed” regulations last week that would stop states from implementing a workaround to the $10,000 “state and local tax” (SALT) deduction limitation that is part of the 2017 “Tax Cuts and Jobs Act” (TCJA). The government rejected the arrangement by which taxpayers would make a “charitable contribution” to a fund set up by their city, while at the same time allowing them then to receive a “tax credit” against their property taxes. Taxpayers in just 2 states (California and New York) utilize 33% of the deduction (by dollar) and just 6 states get 51% of the SALT deduction’s use (source: Internal Revenue Service).
Notable Numbers for the Week:
UP AND UP - 17 stocks in the S&P 500 gained at least +70% in calendar year 2017. 6 of the 17 stocks have gained at least +40% YTD through last Friday 8/24/18 (source: BTN Research).
MEDICARE IS NOT ENOUGH - 62% of American seniors (at least age 65) that file for bankruptcy do so because they are overwhelmed by medical expenses (source: “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society,” Deborah Thorne, University of Idaho).
NEED WORK? - 52% of the 2.4 million new jobs created in the United States in the 12 months ending 7/31/18 were produced in just 6 states – Texas (377,100 jobs), California (332,700), Florida (210,600), New York (117,000), North Carolina (106,900) and Washington (102,500) (source: Department of Labor).
ROLL THE DICE - Between 6/30/17 and 6/30/18, average home prices increased in all 50 US states. Nevada’s +17.0% average home price gain led the nation over the last year (source: FHFA).
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