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January 2, 2018

The S&P 500 gained a robust +21.8% (total return) in 2017, the 9th consecutive “up” year for the stock index (tying a record set between 1991-1999) and the 14th of the last 15 years that have resulted in a positive return.  The split between “up” and “down” trading days was 57/43 last year, besting the trailing 50-year average split of 53/47.  Remarkably, the +21.8% gain was just the 8th best annual performance for the stock index in the last 25 years (source: BTN Research).

24 oil producing countries agreed a month ago (11/30/17) to extend a deal that was first negotiated in late November 2016.  The pact to curb global oil production by 1.8 million barrels a day has now been extended through the end of 2018 and is designed to keep oil prices above $60 a barrel.  That pricing threshold was finally reached on the last trading day of 2017 (Friday 12/29/17) when the price of oil closed at $60.12 a barrel, its first close above $60 since 6/24/15 or 2 ½ years ago (source: CME Group).

The Trump White House promised “a big, beautiful, Christmas present” for Americans in the form of tax reform.  Whether the “Tax Cuts and Jobs Act of 2017” (the legislation signed into law by President Donald Trump on 12/22/17) delivers as promised will be a topic that is debated for years to come.  In the short-term however, 95% of US taxpayers are forecasted to experience “flat to declining” tax bills for calendar year 2018, i.e., on their Form 1040 that is due 4/15/19 (source: Tax Policy Center).

Notable Numbers

INSIDE THE INDEX – 147 of the individual stocks (i.e., 29% of the stocks) in the S&P 500 gained at least +30% in 2017.  51 stocks (i.e., 10% of the stocks) gained at least +50%.  125 stocks (i.e., 25% of the stocks) finished the year with a stock price lower than where it started the year (source: BTN Research).

FROM THE MARCH 2009 LOW – Since dropping to a bear market low on 3/09/09 (i.e., approximately 106 months ago), the S&P 500 stock index has gained +378% (total return) through the close of trading on Friday 12/29/17 or an average gain of +19.4% per year over the near 9-year bull run (source: BTN Research).

TEN-YEAR NOTE – The yield on the 10-year Treasury note ended 2017 at 2.41%, just under the 2.44% it finished at as of 12/31/16.  The yield on the 10-year note was 2.57% on 8/05/11, the day S&P downgraded the USA’s top-rating that it had held for 70 years (source: Treasury Department).

HOUSING – The average interest rate nationwide on a 30-year fixed rate mortgage was 3.99% at the end of 2017.  The record low national average was 3.31% as of 11/22/12 (source: Freddie Mac).

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