Chart of The Day: Median Single Family Home Is Still -38% Off Its Peak...

For some perspective on the all-important U.S. real estate market, today's chart illustrates the inflation-adjusted median price of a single-family home in the United States over the past 41 years.

Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased jumped, too.

That brings us to today's chart which illustrates how the inflation-adjusted median home price is currently -38% off its 2005 peak.

That's a -$100,000 drop!

In fact, a home buyer who bought the median priced single-family home at the 1979 peak has actually seen that home lose value (a -8.5% loss adjusted for inflation). Not an impressive performance considering that more than three decades have passed. It is worth noting that the median priced home is currently in the bottom half of a price range that existed from the late 1970s into the mid-1990s.

Chart & Commentary Courtesy of Chart of The Day

Cancer, Heart Attack and Stroke Stats...

• 61% — Percentage of new critical illness claims caused by cancer.

• 14% — Percentage of new critical illness claims caused by heart attacks.
  
  
  

• 5% — Percentage of new critical illness claims caused by strokes.
  
  

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, April 22, the S&P 500 closed @ 1337, and that was...
  
   +9.1% ABOVE its 12-Month moving average which stood @ 1226.
   +9.4% ABOVE its 40-Week moving average which stood @ 1222.
   +1.3% ABOVE its 10-Week moving average which stood @ 1320.


Therefore, the INTERMEDIATE-Term trend IS NEUTRAL to Moderately BULLISH and the LONG-Term trend is BULLISH.

The Higher Education Bubble Explained...

Survey: Is There A Greater Probability of a +20% Rally or a -20% Correction?

Since the last time this survey of stock market strategists was done in January 2011, the number of respondents who see a -20% decline as being more likely than a +20% rally has reversed.

Now the majority (by nearly 2 to 1) expects a -20% decline    before the next +20% rally.

Survey: Is There A Greater Probability of a +20% Rally or a -20% Correction?

Who Pays Income Tax? How Much? And Is Everyone Paying Their Fair Share?

The Bottom 50% of earners pay almost nothing, and the Top 1% pay close to 40% of the income tax collected.

The Bottom 90%, which in 2008 included all returns with adjusted gross income of up to $114,000, were paying 30%, down from 44% in 1987.

That means that the Top 10% pay a whopping 70%!!!

Are the Bottom 90%, at only 30%, paying their fair share?

Very high incomes are produced not so much by wages and salaries but by capital gains and bonuses, which rise and fall with booms and busts.

In good years, the government gets a windfall and can't resist the urge to take on new spending commitments. In bad years, revenues collapse, but the spending can't be so easily rolled back.

As the tax system has grown more top-heavy, its revenues have also grown more volatile. The income-tax take spiked to an all-time high in 2000, hitting 10% of GDP for the first time ever. In 2010, it sank to 6.2%, its lowest level in more than 50 years.

Source: IRS and Investors Business Daily

"U.S. May Lose AAA Rating In 2018" - Investor's Business Daily

The U.S. is 7 years away from a possible debt downgrade under President Obama's budget, based on Moody's standard for gauging the nation's creditworthiness.

The Congressional Budget Office's (CBO) analysis of the president's plan showed that by 2018, debt service would equal $725 billion, or 18.2% of the $4.0 trillion in projected federal revenue.

That would exceed the 18% threshold that Moody's has said would constrain policy options and would be inconsistent with a triple-A rating.

If an 18% interest-to-revenue ratio were hit due to a steady increase in debt, "the rating would certainly have to be reconsidered," Steven Hess, Moody's lead analyst for the U.S. rating, wrote in an e-mail. "But depending on an assessment of what was being done about the future level of debt, a downgrade would not be automatic."

Over the 10-year period, CBO projected that public debt would double over the coming decade to $20.8 trillion. Debt would reach 87.4% of gross domestic product at the end of fiscal 2021.


U.S. May Lose AAA Rating In 2018 - Chart & Commentary Courtesy of Investor's Business Daily

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, April 15, the S&P 500 closed @ 1320, and that was...
  
   +7.8% ABOVE its 12-Month moving average which stood @ 1224.
   +8.6% ABOVE its 40-Week moving average which stood @ 1215.
   +0.1% ABOVE its 10-Week moving average which stood @ 1319.


Therefore, the INTERMEDIATE-Term trend IS NEUTRAL to Moderately BULLISH and the LONG-Term trend is BULLISH.

The Tax Code Is A Drag...for Taxpayers and on the Economy

This year, it will take the average taxpayer 23 hours just to fill out Form 1040 — up from 21 hours last year, according to the IRS. It now takes 7 hours to fill out the so-called 1040 EZ.

Tax complexity isn't merely a hassle for taxpayers, it's a huge drag on the economy. It takes more than 6 billion hours — or $163 billion a year — for companies and individuals to figure out what they owe, the IRS says. And the Government Accountability Office estimates that the distortions and inefficiencies created by the complex tax code cause up to $733 billion in "dead weight losses." Together, these costs equal 6% of GDP.

The ornate tax code also makes compliance harder and cheating easier, contributing to what the IRS figures is more than $290 billion in unpaid taxes — effectively raising taxes that much more on everyone else.

To get a sense of just how mind-bogglingly complex the federal tax code is, consider:

• More than 80% of individuals hire someone or buy software to help file their taxes, though only 64% of filers owe them, according to the Tax Foundation. So millions of filers pay for help to learn that their tax liability is zero.

• About two-thirds of low-income filers pay to have their taxes done, the Tax Policy Center found.

• The tax code has at least 6 definitions of a child, more than a 12 different education-related tax breaks and at least 16 different kinds of tax-favored savings plans.

Source: Investor's Business Daily

Quote of The Day: On Ignorance

"Ignorance isn't bliss.

It's expensive."

5 Reasons to Be Bullish About America in Long Run

1) The United States is the home of the entrepreneur.

2) The United States is the most open/flexible society the world has ever seen.

3) The brightest minds from around the world dream of coming to the United States.

4) English is the universal language.

5) Americanization remains a powerful and growing – though resented – economic and social trend throughout the world. (To quote the advertising/marketing giant WPP Group’s CEO, Sir Martin Sorrell, “Globalization is a misnomer. The better word is Americanization.”)

~Jeffrey Saut via Real Clear Markets

The Path To An Incredible Shrinking U.S. Deficit...

Last week, Congressman Paul Ryan released his plan for massive budget cuts that would fundamentally alter the spending profile of the U.S. government over the long-term.

The headline number on the cuts: $6.2 trillion over the next 10 years.

In terms of the cut to government spending, Ryan's plan, "Brings government spending to below 20 percent of the economy, a sharp contrast to the President’s budget, in which spending never falls below 23 percent of GDP over the next decade."

They said the cuts were incredible, and they look it. Whether or not a program like this will ever be achieved is unknown, but its proposed impact on debt as a percent of GDP is dramatic.

Read more @ BusinessInsider.com - A Choice of Two Futures

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, April 8, the S&P 500 closed @ 1328, and that was...
  
   +8.4% ABOVE its 12-Month moving average which stood @ 1225.
   +9.9% ABOVE its 40-Week moving average which stood @ 1209.
   +0.8% ABOVE its 10-Week moving average which stood @ 1318.


Therefore, the INTERMEDIATE-Term trend IS NEUTRAL to Moderately BULLISH and the LONG-Term trend is BULLISH.

Quote of The Day: A Nation of Makers or A Nation of Takers?

"More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees."


- Stephen Moore, Wall Street Journal

S&P 500 Earnings Rise Sharply In The Past Year...

The aggregate annual earnings of the S&P 500 companies are +38% higher today than they were just 1 year ago (source: S&P). 

Bodes well for the economy and the stock market.

1st Quarter 2011 Stats: S&P 500, Small Caps, Foreign Stocks, T-Notes

The S&P 500 gained +5.9% in the 1st quarter of 2011.  For all of calendar year 2010, the S&P 500 gained +15.1%.  The S&P 500 has gained an average of +9.7% per year (total return) over the last 50 calendar years (i.e., 1961-2010) (source: BTN Research).    

As of its end of the 1st quarter closing value (1326), the S&P 500 is still -18% below its all-time closing high of 1565 set on 10/09/07. (source: BTN Research).     

The international stock index EAFE gained +3.4% YTD (total return) through 03/31/11 and is up +10.4% on a trailing 1-year basis as of the end of the first quarter this year.  The EAFE stock index has bested the S&P 500 on a total return basis in 7 of the previous 10 calendar years.  The EAFE is an unmanaged index that is generally considered representative of the international stock market (source: BTN Research). 

The small-cap Russell 2000 is up +7.9% YTD (total return) through 03/31/11 and is up +25.8% on a trailing 1-year basis as of that date.  The Russell 2000 index is an unmanaged index of small-cap securities which generally involve greater risks (source: BTN Research).     

The yield on the 10-year Treasury note was 3.46% on 03/31/11.  The yield on the 10-year Treasury note was 8.05% on 03/31/91 or 20 years ago (source: Treasury Department). 

1st Quarter 2011 Stats: Oil, Gasoline & Gold Jump

  
The price of a barrel of oil was $106.72 as of March 31, 2011, up +16.8% from its $91.38 per barrel price as of December 31, 2010 (source: CME Group).

The national average cost of a gallon of gasoline increased by +54 cents during the quarter, rising from $3.07 a gallon on December 31, 2010 to $3.61 a gallon as of March 31, 2011 (source: AAA).

The price of gold, which set an all-time nominal record close of $1,421 an ounce (i.e., non-inflation adjusted) on the December 31, 2010, set a new record close of $1,439 an ounce on March 31, 2011 (source: CME Group).

 

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, April 1st, the S&P 500 closed @ 1332, and that was...
  
     +8.7% ABOVE its 12-Month moving average which stood @ 1226.
   +10.8% ABOVE its 40-Week moving average which stood @ 1202.
     +1.5% ABOVE its 10-Week moving average which stood @ 1313.


Therefore, the INTERMEDIATE-Term trend IS Moderately BULLISH and the LONG-Term trend is BULLISH.

Small-Cap & Mid-Cap Stocks Post New Recovery Highs!

On Friday April 1st, small-cap and mid-cap stocks (not shown) posted new weekly bull market recovery highs.

When these two sectors lead the market higher, it's been a bullish omen, historically.

In addition, downside stock market risk has been below average and upside potential has been above average in similar historical climates.

How Conditions Have Changed And The Cost of Living Has Soared Since January 2009...

The Primary Retirement Concerns for Seniors...

A retirement planning survey by the Illinois-based Society of Actuaries finds the main retirement concerns seniors have are...
    
     1) Keeping the value of investments up with inflation

     2) The effect of interest rates on income

     3) The affordability of health care and long-term care

     4) Outliving assets

     5) Maintaining a reasonable standard of living


Other findings include...

80% — Percentage of those who do NOT look ahead more than 20 years when making important financial decisions, and only 5% look to or beyond their life expectancy.

68% — Percentage of retirees who have created a plan to manage their money each year to avoid outliving their finances.

73% — Percentage of retirees who have considered allocating their investments and savings to different types of assets. Just 24% of retirees, however, have purchased or plan to buy any guaranteed income products. 

Source: Senior Housing News

The So-Called Housing Recovery Is A Mirage...

U.S. new home sales slumped badly in February ― down -16.9% month-over-month or -89% at an annual rate. While some may claim that adverse weather conditions played a role, the reality is that activity was down in every region of the country ― not only down, but to unprecedented lows, too.

How can anyone really be talking about a normal recovery when housing is still in depression?

Let’s talk about normal. What’s normal is that at this stage of the post-recession recovery, new home sales would have risen +27% from the time the expansion began ― not having sagged -37% to fresh all-time lows.

The big news was on pricing. No matter how far the builders cut production, demand continues to recede at even a faster rate. Median new home prices slid -13.9% month over month, following a -0.8% decline in January, taking them to $202,100 ― the lowest they have been since December 2003.

This may not be deflation as far as consumer prices go, but it is serious deflation on the most critical part of the household balance sheet. And sadly, more deflation is very likely on its way.

Chart and Commentary Courtesy of David Rosenberg of Gluskin Sheff

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, March 25, the S&P 500 closed @ 1314, and that was...
  
   +9.1% ABOVE its 12-Month moving average which stood @ 1204.
   +9.9% ABOVE its 40-Week moving average which stood @ 1195.
   +0.4% ABOVE its 10-Week moving average which stood @ 1308.


Therefore, the INTERMEDIATE-Term trend IS NEUTRAL and the LONG-Term trend is BULLISH.

Ugh. Technology and Financials Have Yet to Recapture Their 2000 Bull Market Peaks

According to Sam Stovall, Chief Investment Analyst with Standard & Poor's, talking with Maria Bartiromo on CNBC on 03/21/2011:


Since the Technology Crash of 2000 (03/24/00):

• The technology sector is still down today by -60% from the 03/24/00 highs.
  
  
• The telecom sector is still down today by -60% from the 03/24/00 highs.
  
  
• The financial sector is still down today by -55% from the 03/24/00 highs.
  
  
• The Nasdaq is still down today by -43% from the 03/24/00 highs.
  

In the 34-month bear market following the 03/24/00 tech boom:

• The technology sector melted down -82%.
  
  
• The telecom sector crumbled -73%.

Since the stock market crash starting 10/12/2007:

• The financial sector is still down by -83%.
  
  
  

Sobering Stats on Americans Age 45 and Older...

AARP’s Closer Look Survey conducted in November of last year reveals the financial affect that social and economic changes and issues have on Americans age 45 and older. Some key findings were:

22% of those 45 and older said their work hours were cut, took a pay cut, or lost other types of work-related income.

28% of those aged 45-64 lost work-related income, compared to 9% of those 65 and older. The number of those who said they had a loss of work-related income has increased 5 percentage points since November 2009.

42% of respondents 45 and older reported having hardship related to health care, such as trouble paying medical bills, putting off needed care or not getting prescriptions refilled or resorting to splitting pills.

57% of African-American and 52% of Hispanic adults 45 and older reported having health care-related hardships, compared to 40% of whites. 

57% of those with hardships have had to withdraw or stop contributing to their retirement savings also reported health care-related hardships, compared to 26% who did not.


Source: AARP