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October 3, 2016

Congress was looking at its 13th government slowdown since 1980, but instead our elected officials agreed on a 10-week band-aid that approved short-term government spending for the fiscal year that began Saturday 10/01/16.  First the Senate (72-26 vote) and then the House (342-85 vote) passed a “continuing resolution” on Wednesday (9/28/16) that will keep the government running through 12/09/16.  President Obama signed the legislation the following day, less than 48 hours before federal agencies would have run out of money.  The agreement provides $1.1 billion to combat the Zika virus but no funds to aid Flint, MI and its water crisis (source: BTN Research).

The 14 countries that make up OPEC agreed last Wednesday to limit their collective oil production for the first time since 2008.  OPEC will reduce its daily output by 750,000 barrels in November 2016 to 32.5 million barrels a day.  The cuts, driven by weak global demand and record inventory, pushed the price of oil up $3.76 last week (+8.5%) to $48.24 a barrel (source: NYMEX).

Over the last 25 years (1991-2015), the S&P 500 stock index has gained an average of +5.1% (total return) over the final 3 months of the year.  20 of the last 25 fourth quarters (80%) have produced a positive total return gain.  Through the close of trading last Friday 9/30/16, the S&P 500 is up +7.8% YTD (total return).  The index has had only 1 down year (2008) in the last 13 years, i.e., 2003-15 (source: BTN Research).


Notable Numbers

RISK/REWARD – 106 individual stocks in the S&P 500 (i.e., 106 of 500 stocks or 21% of the stocks in the index) gained at least +20% during the first 9 months of 2016 (change of the stock price without factoring in the impact of dividends) including 25 stocks that are up at least +40% YTD through 9/30/16.  161 stocks (32% of the stocks in the index) have dropped in value since the end of 2015 (source: BTN Research).

MORE THAN A TRILLION A YEAR – The national debt as of 9/30/06 was $8.507 trillion.  The national debt as of Thursday 9/29/16 was $19.533 trillion.  Thus, the national debt has increased just over $11 trillion over the last 10 fiscal years, i.e., fiscal years 2007-2016 (source: Treasury Department).

MONEY – 9 of the 10 highest paying bachelor degrees by salary potential for 2016 college graduates were engineering degrees, including Petroleum Engineering and Systems Engineering (source: PayScale.com).

LOUSY MATH – The California Public Employees’ Retirement System projected that the investments backing state employees’ pensions would grow from $159.1 billion in 1999 to $613.5 billion in 2016 due to an +8.25% annual rate of return plus yearly contributions.  Actual fund size in 2016 was just $295.1 billion (source: CalPERS).

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