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November 27, 2017

Last week (# 47 of the year) may have been shortened by the Thanksgiving Holiday but it followed the success pattern seen throughout this year.  The S&P 500, created 60 years ago in 1957, produced 2 more all-time closing highs, the latter being the 55th this year and 181st going back to this bull’s inception in March 2009.  The index’s YTD total return is +18.4%, frosting on top of a bull-run that has gained +362% (an annualized +19.2% gain) during the ongoing 8 ¾ year streak.  But bull markets do not last forever.  In the last 70 years (1947-2016), the S&P 500 has had 38 drops of at least 10%, including 11 bear market tumbles that produced losses of at least 20%.  The last 10% or greater decline for the S&P 500 occurred in February 2016 (source: BTN Research).

The price of oil closed last week (Friday 11/24/17) at $58.95 a barrel, a 29-month high.  OPEC meets on Thursday (11/30/17) and expectations are that the 14-nation cartel, along with Russia, will extend production cuts that were first implemented in November 2016.  As recently as 2/11/16, oil was trading at $26.21 a barrel (source: BTN Research).

Jay Powell’s confirmation hearing with the Senate Banking Committee is scheduled for this week.  Powell, a Board of Governors member since 2012, would be the first Fed Chair in 30 years not to have a Doctoral Degree in economics.  The 64-year old Powell would become just the 6th Fed Chair in the last 40 years (source: Federal Reserve).

Notable Numbers

HEALTH CARE – 23% of health care spending in the USA is incurred by just 1% of Americans.  The healthiest 50% of Americans account for just 3% of total health care spending nationally.  Prior to the passage of the Affordable Care Act in 2010, 35 states had “high-risk” pools to insure their high-cost sicker citizens (source: Kaiser Family Foundation).

THE AMERICAN DREAM? – The national homeownership rate in the United States as of 9/30/17 was 63.9%, down from a peak of 69.2% as of 12/31/04.  Every 1 percentage point reduction in the homeownership rate represents 1.2 million households that have changed from homeowner to renter status (source: Census Bureau).

BACKSTOP – The Pension Benefit Guaranty Corporation (PBGC) was forced to take over an average of 10 failed pension plans per month over the last 15 fiscal years (2003-2017) or 1,767 pension plans over the 15 years.  The PBGC protects defined benefit pension plans in the private (non-government) sector (source: PBGC).

EVERY DAY – An estimated 10,100 Americans will turn 65 years old each day next year (2018).  This group represents the 8th year of 19 years of “Baby Boomers” turning age 65.  An estimated 11,500 Americans will turn 65 years old each day in the year 2029 (source: Government Accountability Office).

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