Vorisek Financial | Weekly Market Update: January 30, 2019

Good morning!

It was a shutdown that started on 12/22/18 when Congress failed to sign off on 7 of the 12 annual spending bills that it is required by law to authorize by the start of a fiscal year, i.e., in this case by 10/01/18.  Those 7 spending bills, still unresolved as of today, represent an estimated $313 billion of annual government spending (out of a $4.4 trillion annual budget) and impacted 800,000 federal employees (out of 157 million working Americans).  When the partial government shutdown ended after 35 days last Friday 1/25/19, the government had recorded the longest shutdown in our nation’s history, eclipsing the previous record of 21 days (set in 1996) by 2 weeks.  The agreement that was reached however was simply a 3-week stop-gap (to Friday 2/15/19) that allows for additional discussions between Washington lawmakers (source: BTN Research).      

Our nation’s weekly report on initial claims for unemployment benefits (for the week ending 1/19/19) showed that just 199,000 jobless Americans applied for first-time assistance, the lowest level in the United States since 11/15/69 or more than 49 years ago.  By comparison, at the depths of the real estate crisis that began in 2008, first-time claims for jobless benefits reached 665,000 for the week ending 3/28/09 (source: DOL). 

Stocks (as measured by the S&P 500 stock index) peaked on 9/20/18, bottomed on 12/24/18 (falling nearly 20%) and now have retraced 54% of that loss in a span of just one month.  That rapid of a bounce-back is not customary: since the end of WWII, the S&P 500 has taken an average of 24 months to erase bear market tumbles of at least 20% (source: BTN Research).    

Notable Numbers for the Week: 

1.     OTHER PEOPLE’S MONEY - 59% of 1,001 registered voters surveyed in early January 2019 support the idea of raising the top individual marginal tax rate from 37% to 70% (source: Hill-HarrisX poll). 

2.     CRAZY HIGH - For the 13 consecutive years from 1951-1963, the top individual marginal tax rate was at least 91%.  The top individual marginal tax rate for 2019 is 37% (source: Internal Revenue Service).    

3.     JOBS - Iowa had the lowest unemployment rate (2.4%) in the nation as of 12/31/18.  Texas added +391,800 jobs in 2018 (to 12.7 million), more than 3 times the +121,900 jobs added in New York (source: Department of Labor). 

4.     REALLY?! - 1,777 Americans filed with the Federal Election Commission to run for president in 2016, a requirement for candidates who raise or spend at least $5,000 of contributions and expenditures (source: FEC). 

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Joshua Dandurand