|The price of crude oil fell 9% last week (to $48.49 a barrel), its lowest level since OPEC announced a production cut in late November 2016. In anticipation of reduced oil supply (OPEC’s plan was for a pullback of 1.8 million barrels a day), crude had climbed back to a 2017 high of $54.45 a barrel before reacting to last week’s report of a record US stockpile of 528 million barrels of oil. That total is up +49 million barrels since the end of 2016. Combining the rise of American crude oil inventories with 8 consecutive weeks of an increase in domestic operating oil rigs creates a perfect storm that slowed what had been a bullish oil market (source: Department of Energy).
The aggregate net worth of Americans reached a record $92.8 trillion as of 12/31/16. At the depths of the global recession that began at the end of 2007, Americans’ net worth had fallen to just $50.4 trillion as of 3/31/09, down 14% (off $8.2 trillion) in just the prior 18 months (source: Federal Reserve).
The yield on the US 10-year Treasury note has climbed back above 2.5%, finishing last week at 2.58%. That’s a 0.90 percentage point increase in just the last 6 months and miles above the 1.36% all-time record low yield achieved on 7/08/16. Bond investors are anticipating the next Fed rate hike, one that could come as soon as this week. The bond market is currently priced to reflect a 89% chance of ¼ of 1 percentage point hike at this week’s 2-day Fed meeting that ends on Wednesday 3/15/17 (source: Federal Reserve).
|NO BIG DAILY DROP – As of the close of trading last Friday (3/10/17), the S&P 500 has gone 103 consecutive trading days without suffering at least a 1% decline over any single trading day. That’s the longest stretch the stock index has gone without a 1% drop since it had a run of 105 trading days without a 1% tumble that ended on 12/15/95 or more than 21 years ago (source: BTN Research).
DISCRETIONARY VS. MANDATORY – Over the next decade (fiscal years 2018-2027), estimated discretionary spending by the US government will total $13 trillion, an amount that is dwarfed by the government’s $34 trillion of projected mandatory spending (source: Office of Management and Budget).
A LOT IN A FEW – Less than 2% of the banks and savings institutions in the United States hold 82% of the deposits maintained in FDIC-insured institutions nationwide as of 12/31/16. There are a total of 5,913 banks and savings institutions holding $16.8 trillion of deposits as of the end of last year (source: FDIC).
US AND THEM – China has a target of +6.5% for economic growth during calendar year 2017. The United States has achieved year-over-year growth of at least +6.5% just once in the last 50 years, i.e., growth of +7.3% during calendar year 1984 (source: National People’s Congress).