Broker Check

Weekly Market Update

January 6, 2020

A Review of the Weekly Market Update

January 6, 2020

Calendar year 2019 was replete with multiple financial concerns, most of which never came to pass: a distracting trade war with China; a Federal Reserve that flipped from rate-tightening to rate-easing; a global economic slowdown that could have been a drag on U.S. multinational firms. Instead, the S&P 500 soared, gaining +31.5% for 2019 (total return), its best year since 2013, and the 13th year in the last 25 years when the index produced at least a +15% gain (total return). The S&P 500 is up +10.6% per year over the last half century (1970-2019), having been positive in 15 of the last 17 years, and in 40 of the last 50 years (source: BTN Research).

Taxable bonds were also up (using the Bloomberg Barclays U.S. Aggregate Bond Index as a proxy), gaining +8.7% for the year, its best result since 2002. Taxable bonds have gained an average of +5.9% annually for the last 30 years, but significantly, have only suffered down-years in 3 of the last 44 years, or just 7% of the time (source: Bloomberg).

The spread between “the number of births” and the “number of deaths” in America each year is getting smaller (now less than 1 million) as the number of babies born in the USA continues to fall. Between 7/01/18 and 7/01/19, the Census Bureau estimated that the U.S. population grew from 326.7 million to 328.2 million, an increase of just +0.48%, i.e., less than ½ of 1% growth rate between 2018-2019. That’s the lowest year-over-year growth rate in the United States since 1918, or 101 years earlier (source: Census Bureau).

Notable Numbers for the Week:

1. UP vs. DOWN - The split between “up” and “down” trading days for the S&P 500 over the last 50 years (i.e., 1970-2019, encompassing a total of 12,613 trading days) is 53% “up” and 47% “down.” The split during calendar year 2019 (there were 252 trading days last year) was 60/40 (source: BTN Research).

2. TIME IN THE MARKET - Since 1950 (i.e., 1950-2019), the S&P 500 index has been up 54% of 17,613 trading days, 60% of 840 months, 66% of 280 quarters and 73% of 70 years (source: BTN Research).

3. LIVING LONG - The life expectancy at birth of an American baby in 1970, i.e., 50 years ago, was 70.8 years. The life expectancy at birth of an American baby today is 78.6 years. Thus, life expectancy in the United States has increased 7.8 years over the last half century, i.e., American life expectancy at birth is increasing at the rate of 1 ½ years every decade (source: Center for Disease Control).

4. OIL PRICES - The price of oil ended 2019 at $61.06 a barrel, up +34% from its 2018 close of $45.41 a barrel. Oil was $26.21 a barrel as of 2/11/16 and was $147.27 a barrel as of 7/11/08 (source: CME Group).

This material does not constitute a recommendation to engage in or refrain from a particular course of action. The information within has not been tailored for any individual. The opinions expressed herein are those of Michael A. Higley as of the date of writing and are subject to change. MML Investors Services, LLC (MMLIS) provides this article for informational purposes, and does not make any representations as to the accuracy or effectiveness of its content or recommendations. Mr. Higley is not an employee of MMLIS and any comments, opinions or facts listed are those of Mr. Higley.

This commentary is brought to you courtesy of MML Investors Services, LLC (Member FINRA, Member SIPC). Past performance isn’t indicative of future performance. An index is unmanaged and one cannot invest directly in an index. Material discussed is meant for informational purposes only and it is not to be construed as specific tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, it is not guaranteed. Please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice. Clients must rely upon his or her own professional advisor before making decisions with respect to these matters. This e-mail may include forward-looking statements that are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. CRN202201-258127

© 2019 Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001. All rights reserved.