January By the Numbers 2
See what is going on in the market and around the country in this week's "By the Numbers"! Click the link to the PDF below to read more.
1. WASHINGTON AND WALL STREET –
Democrat Joe Biden was sworn in as President # 46 on 1/20/21, and Democrats have control of Congress by achieving a voting majority in both the House and the Senate. Over the last 60 years (1961-2020), the S&P 500 has gained +11.8% per year (total return) when one party controls the White House, the Senate and the House. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock's weight in the index proportionate to its market value (source: BTN Research).
2. FIFTY-FIFTY -
The political split in the Senate today is technically not 50-50, but rather is 50 Republicans, 48 Democrats and 2 Independents who caucus with the Democrats, effectively making it a 50-50 split. The last time the Senate was split 50-50 was in 2001, George W. Bush’s first year in office (source: Senate).
3. UP/DOWN -
The S&P 500 has been up 40 of the last 50 years, i.e., 1971-2020, gaining an average of +10.9% per year (total return). The index had an average annual gain of +18.4% (total return) during the 40 “up years” while losing an average of 14.8% per year (total return) during the 10 “down years” (source: BTN Research).
4. OUR PART OF THE WORLD -
The US stock market had a total capitalization of $41 trillion as of 12/31/20, 39% of the world’s $104 trillion stock market capitalization (source: S&P).
5. WHERE DOES THIS MONEY COME FROM? -
The Fed is buying $120 billion of bonds each month - $80 billion of Treasury debt and $40 billion of mortgage-backed securities. The Fed confirmed on 12/16/20 that the purchases will continue “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals” (source: Federal Reserve).
6. DEBT -
The USA increased its national debt by $7.77 trillion in the last 4 years, i.e., 2017-20. The USA increased its national debt by $7.67 trillion in the previous 7 years, i.e., 2010-16 (source: Treasury Department).
7. ONE IDEA -
President Biden proposed during his campaign a $15,000 tax credit for “first-time” home buyers, available to home buyers who have not owned a residence within the previous 3 years. The tax credit would be “refundable” (if you didn’t use the full amount of the credit, the unused balance is refunded to you) and “advanceable” (you are allowed to claim the credit immediately as opposed to waiting until you file your Form 1040 for the tax year in which you purchased a home). Biden described the tax credit as a form of “down-payment assistance” (source: Biden 2020 Presidential Campaign).