April 10, 2017

Former Fed Chairman Alan Greenspan made headlines on 12/05/96 when he delivered his famous “irrational exuberance” speech.  Greenspan’s comments, directed at what he believed to be unrealistic stock values, proved to be premature as the S&P 500’s bull market run (which was 74 months old at the time) continued on for nearly 40 months while gaining an additional +105%.  The current edition of the Fed made their own headlines last Wednesday (4/05/17) with the release of minutes from their mid-March 2017 meeting.  The group observed that “some measures of (equity) valuations, such as price-to-earnings ratios, have risen above historical norms.”  The Fed’s published comments came just 3 days before the S&P 500’s current bull market reached 97 months in length (source: BTN Research).

The 2-day summit last week between President Donald Trump and Chinese President Xi Jinping illustrated the difference between campaigning and governing.  Candidate Trump proposed a 45% tariff on Chinese imports.  President Trump emphasized the positive tone of the US-China relationship, critical to America’s position on rebel nation North Korea (source: BTN Research).

The good news on the labor front: the nation’s 4.5% jobless rate in March 2017 was our lowest level since May 2007.  The bad news: the +98,000 new net jobs created last month was just our 2nd month below +100,000 in the last 24 months (source: DOL).


Notable Numbers

WHAT’S IMPORTANT – 54% of 4,200 American workers surveyed would switch jobs for a better retirement plan (source: Transamerica Center for Retirement Studies).

REMOVES AN INCENTIVE FOR BANKS TO LEND – The +1% that the Federal Reserve currently pays to banks on the $2.185 trillion of excess reserves the banks hold at the 12 regional Fed banks (as of 3/29/17) is equal to $59.9 million in daily interest.  The Fed began paying ¼ of 1% on excess reserves as of 10/06/08, increased the rate paid to ½ of 1% as of 12/17/15, increased again to ¾ of 1% as of 12/15/16, and finally to +1% as of 3/16/17 (source: Federal Reserve).

HAS TO TRAVEL A LONG WAYS – Oil pumped in Saudi Arabia and exported to the USA takes 90 days to reach America.  Saudi Arabia is the # 2 country that the USA imports petroleum products from, trailing only Canada (source: Energy Information Administration).

PERSONALIZED MEDICINE – 10 years ago, it cost $10 million and took several weeks to “sequence a genome,” i.e., mapping out a person’s entire genetic code.  Today, the work can be completed for $1,000 in just a few hours (source: Financial Times).