CPI Adjusted S&P 500

As the S&P 500 continues to approach its former all time high, below is a long term chart of the index adjusted for CPI.  While we're not too far from the 2007 highs on a nominal basis, the index is still about 11% lower than it was in 2007 on a CPI adjusted basis and 25% lower than the all time high reached in 2000.  The armchair technician in me has drawn a line to point out that we're approaching inflation adjusted resistance.

US Post Office Volumes

The USPS made news today by announcing that it would stop delivering mail on Saturdays.  The postmaster general made an interesting comment on CNBC this morning that part of the problem is that the cost of postage can't be raised by more than the rate of inflation.  Still, it's tough to maintain profitability in any business when volumes look like the chart below.  Since 2000 the number of first class letters handled by the USPS has fallen by 33% to 68 billion.  I wonder how much of what's left is junk mail...



























I hadn't realized this before, but the post office actually files a 10-K which can be found here.  Below is the income statement pulled from the filing.

Is the Yen Crashing?

Considering the magnitude of the move, the Yen's recent depreciation vs. the dollar has garnered surprisingly little attention.  Since September the Yen has gone from USD/JPY 77 to 93.  That's a 20% decline from peak to trough, which is a relatively extreme move for a currency.  Below is a rolling three month change chart for the Yen going back to 1971.  This is the 2nd largest three month move for the Yen in that time frame.

By comparison, the largest 3 month decline for EUR/USD was 20% in 2008 under the stress of the financial crisis.  During the heart of the European financial crisis in 2010/2011, as the world worried that the Eurozone would collapse, the most that the currency depreciated versus the dollar was 13% in a three month period.

McGraw Hill Market Cap Decline

Efficient market theorists should take note that MHP's market cap has fallen by $3B in the last two days on news that the Federal government is suing the company.  For reference BP's settlement with the Justice Department was $4B. Given that McGraw Hill was arguably complicit but not the direct cause of structured credit blowups, it's difficult to see how any settlement could reach multi-billion dollar territory.

Sector SPDR Snapshot

Below is a snapshot of how the Sector SPDR ETFs have performed since 2003.  As the S&P 500 approaches its 2007 high (perhaps not today) four of the sectors have already made new all time highs.  Consumer Staples (XLP), Healthcare (XLV), Consumer Discretionary (XLY) and Tech (XLK) have powered much of this bull market, although Tech (XLK) has not made it past its September high.  Thanks to the dilution in the financial sector it may be a very long time before XLF reaches its former peak.

Click to Enlarge

Cities With Multiple Pro Sports Champions in the Same Year

No market analysis here, but thought it would be interesting to point out that if the 49ers win on Sunday it will be the 14th time in history that a city holds two pro sports championships at the same time.  Below are the other 13 times that it's happened.  

Since the Super Bowl only started in 1967 the years in red are the multi-championship years that hold up in the modern era.  While I'm at it, I should probably put an asterisk next to 2002 as well though.  The Angels are from Anaheim, not Los Angeles.

Source: Wikipedia

S&P Annual Performance After a Big January

This is an update to a post that I first wrote last year, the last time that the S&P 500 had a big rise in the first month of the year.

When the S&P 500 has a good first month, it has statistically been followed by a really good year.  The index has risen by more than 4% in January 18 times in its 56 year history.  In those years it has averaged a 21.1% return for the full year, and it has been up double digits in every one of those years except for 1987 (which was a good year up until the October crash).

The S&P 500 has never been negative in a year with a big January, but it's worth noting that if a similar analysis is performed on the Dow, which has a 118 year history, there are five years (out of 28) that the index was up more than 4% in January and ended negative for the year.  Many of those years were significantly negative too: the average loss was 18.4% and the list includes 1914, 1929 and 1930.  The index ended those years down 30.7%, 17.2% and 33.8% after being up 5.1%, 5.8% and 7.5% in January respectively.

Weird eerie coincidence, the Dow has had a daily crash three times in its history: in 1914, 1929 and 1987.  All three years had big Januaries.