2016 Facts And Figures Quiz

As Nick Colas writes, one thing is certain: 2016 was a truly historic year. 

From Donald Trump’s unorthodox but successful campaign for President to the Brexit vote, popular votes shifted the course of global politics in ways very few could have imagined a year ago. Here is a brief quiz that highlights the year’s politics, developments in technology, and changes in the U.S. labor market/economic policy. 

The idea here, Colas writes, is to (hopefully) shed a little light and (more importantly) humor on the events of 2016 and what they might mean for 2017. Which stock has most contributed to the Dow’s move this year to 20,000? How’s the FANG thing working these days?  And how has a “Real” (60/40 stock/bond) investor done since Election Day (not great actually…).  Read on for the answers and a few other questions about the year. 

From Convergex' Nick Colas

I am a big fan of the weekly National Public Radio show “Wait, Wait, Don’t Tell Me.”  It is, by NPR standards, a nonpartisan news quiz show that uses humor to inform.  If you don’t know the show, check it out.  If you do, you’ll recognize the spirit of the questions below.

The idea here is to highlight the most notable events of 2016 and place them into a greater context.  In conversations with scores of clients and friends in the last few weeks one theme comes up repeatedly: 2016 has been a truly momentous year.  Sometimes the years go by quickly because nothing much new happens.  This one is the opposite - 2016 feels like “You are there” history in the making.

Today we will cover Trump/Brexit, and bit of technology and economics.  We’ll finish off tomorrow with a few other subjects.

Topic #1: Donald Trump

Question 1: President Elect Trump uses social media to deliver his message directly to his supporters.  How many tweets/retweets has he sent since setting up his @realDonaldTrump Twitter account in March 2009?

1. 7,881
2. 22,001
3. 29,909
4. 34,121

Answer:  D. As of this Monday, Trump had sent a total of 34,121 tweets/retweets.  That is an average of 12 messages per day, every day.  And if you put this in historical context, not all that surprising.  FDR had his fireside chats using the then-relatively new medium of radio.  JFK’s good looks played well with television audiences.  Politicians understand that “The medium is the message”.

Question 2: While Mr. Trump has over 17 million Twitter followers, he himself only follows 40 accounts. Which one of these people is on that select list?

1. Geraldo Rivera
2. Piers Morgan
3. YouTube personalities “Diamond and Silk”, two sisters from North Carolina
4. Ann Coulter

Answer: All of the above.  Having the President-Elect follow you on Twitter is essentially the most exclusive club in the world.  By comparison, Augusta National Golf Club has more members, at about 300 currently.

Question #3: Which one of these is listed as a “Signature cocktail” at the bar at Trump Tower NYC? (check all that apply).

1. “You’re Fired”, the bar’s take on a classic Bloody Mary
2. “Make America Great Again”, an Old Fashioned with either rye or bourbon
3. “A Big Beautiful Wall”, a frozen margarita made with American-sourced tequila
4. “The Billionaire Martini”, with Premium Chopin vodka

Answer: A & D.  Worth noting: Mr. Trump himself does not drink alcohol. And if you want to try any of these cocktails, be ready for a wait.  Trump Tower is locked down tight at the moment, as anyone who has been to 56th and 5th can tell you.

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Topic #2: Technology

Question #4: On July 22, 2016, a Japanese company made the very last unit of a product that profoundly changed the way the world consumed entertainment and information.  What was it?

1. A black and white television
2. A stereo cassette deck
3. A VCR machine
4. A cathode ray tube (CRT) television

Answer: C (VCR machine).  Phillips made the first mass market video cassette recorder available in 1972.  The product started to gain broad appeal in the late 1970s as popular movies became available for purchase or rental, allowing consumers to view content at home.  From there it is a straight line to Netflix streaming, Hulu and Apple TV.  And the global long term success of the VCR – 40-plus years in constant production – is a record that will likely never be broken.  For reference, consider that the iPhone is 9 years old.  Only 31 years to go….

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Topic #3: Brexit

Question #5: What do Boston (England, not MA) and Gibraltar have in common when it comes to the Brexit vote?

1. They had the lowest turnout of any region/country for the referendum
2. They represent the two most extreme votes for Remain/Leave of any region/country in the U.K.
3. They were the only two regions/country perfectly indifferent (exactly 50/50 votes) to the outcome
4. None of the above.

Answer: B (the two extremes).  The town of Boston voted 76% to “Leave”, while Gibraltar polled 96% to remain, representing the extremes of the Brexit vote.  Also among the areas with a predominant “Remain” vote; many of the well-known cities in the U.K., including the City of London (75% Remain), Oxford (70%), Cambridge (74%), and Edinburgh (745).  “Remain”, however, only managed to win in three areas: Scotland (62%), London (60%) and Northern Ireland (56%).

In what is, I think, the deepest commonality with the U.S. Presidential election, Secretary Clinton also handily won most of the large American urban centers.  These include Manhattan (90%), Boston (85%), Cook County Chicago (78%), San Francisco (90%) and Los Angeles (75%).  The populist schism that has punched its hallmark into 2016 is most easily understood as a divide between urban/non-urban dweller, which makes it difficult to see how this social rift begins to mend itself.

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Topic #4: Economics

Question #6: Who mused in a recent public speech about the merits of a “High pressure economy” where everything runs a little hotter than usual (wages, employment, inflation) to overcome the last vestiges of the Great Recession, and even cited their spouse to defend the merits of “Running hot”?

1. Donald Trump
2. Janet Yellen
3. Mario Draghi
4. Bill Dudley

Answer: B (Janet Yellen, in a speech titled Macroeconomic Research After the Crisis).  The key question of 2017 will, of course, be just how much “High pressure” the Fed Chair is willing to accommodate.  The U.S. central bank may finally get the fiscal stimulus it has requested for years, thanks to Mr. Trump’s plans to cut taxes, reduce regulation and spur infrastructure spending.  Will Chair Yellen and the Fed allow the U.S. economy to run hotter than normal in 2017/2018, or will they work to tamp down the animal spirits that President Trump and Congress want to encourage?

Question #7: By some measures, the U.S. labor market is back to essentially full employment.  But by others, it still shows troubling signs.  Which one of these issues still plagues the domestic labor market?

1. Participation rates are still declining, with November’s reading below 60%.
2. Teenage unemployment is higher than a year ago, at +16%
3. Average weeks spent unemployed are still 30% higher than the prior worst-ever levels (back in 1984).
4. Unemployment for those people with less than a high school degree is still over 10%.

Answer: C (Average time spent unemployed is 26 weeks as of November 2016, still far worse than any post-World War II recession).  If you have a friend who has been unemployed for more than a few months, you know this is true.  Perhaps their skills don’t meet what employers need.  Or perhaps there is a negative bias to the long term unemployed.  Whatever the reason, there are still 1.9 million people in the U.S. who have been unemployed longer than 6 months and still want a job.  In every prior recovery, it has taken them less time to get back to work.

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Topic #5: Markets

Question #1: You probably know that Energy (up 29%) and Health Care (down 3%) are the best and worst performing large cap sectors in the S&P 500.  But what are the second best and worst sectors in terms of price performance?

Answer: Industrials take silver with a 20% price return YTD, and Consumer Staples (up 4%) get the steak knives for second worst.

Question #2: The Dow Jones Industrial Average is knocking at the door of 20,000.  What stock has contributed the most this year to getting the Dow to this level?

Answer: Goldman Sachs (GS) represents 440 points of the Dow’s 2,480 point move this year, or 18% of the total.  Other major contributors: UnitedHealth (340 points), Caterpillar (230 points) and IBM (220 points).  Goldman now has an 8.2% weighting in the Dow, the largest of any of the 30 components, so watch that name in the final sprint to 20,000.  And in case you were wondering, Apple’s move this year (up 9%) only adds about 60 points to the Dow.

Question #3: Over the last few years, everyone was talking about the FANG stocks (Facebook, Amazon, Netflix and Google).  How did this group do in 2016, assuming an even weighted portfolio?

Answer: The average return for the FANG portfolio is 11.2% YTD, spot on the price return for the S&P 500) of 11.1%. 

Question #4: The S&P 500 is up 6.2% from Election Day, but how much is the classic 60/40 stock/bond portfolio up over the same period?

Answer: It depends on which bond proxy you use in the calculation, but a reasonable answer is a 2.6% return.  That is based on a broad bond market index, which is down 3% on a price basis since Election Day.  If you were only in long dated Treasuries over this period (down 9.2% since Election Day), you are actually flat.

Question #5: If I asked you which ETF drew the most new money thus far in 2016, you’d probably guess SPY (SPDR S&P 500 ETF).  And you’d be right, with $20.3 billion of inflows YTD.  But which U.S. listed ETFs have seen the largest redemptions this year?

Answer: The ETF with the largest outflows is the Wisdom Tree Europe Hedged Equity Fund ($8.1 billion out).  Other ETFs with more than $5 billion of outflows this year to date: Deutsche X-trackers MSCI Currency Hedged Equity Fund ($5.6 billion), PowerShares QQQ ($5.6 billion), WisdomTree Japan Hedged Equity ($5.8 billion) and iShares MSCI EMU ETF ($6.7 billion).  Don’t take that as any measure of investment merit, of course – this is a data point about investment themes. 

Question #6: The long run average of the CBOE VIX is 20.  How many days in 2016 has the VIX closed higher than that?

Answer: If you guessed less than 20, you are wrong (41 days is the answer).  But the error is understandable, because during the second half of the year the VIX has only closed above 20 on 2 days (November 3 and 4).

Question #7: U.S. equity small caps have dramatically outperformed large caps this year, but the two most closely watched indices for this asset class have very different YTD returns.  The Russell 2000 is up 22%, where the S&P Small Cap 600 is up 27%.  Why?

Answer: Sector weightings go a long way to explaining the disparity.  For example, the S&P Small Cap Index has a 19% weighting to Industrials, where the Russell is only 15% exposed to that strongly performing sector. 

Question #8: President-Elect Donald Trump famously used Twitter as a cornerstone of his communication strategy during the campaign.  How much of a “Trump bump” did Twitter’s stock get this year from this high-profile use case for its technology?

Answer: Hard to say.  The stock is down 16.3% year to date, so draw your own conclusions.

Question #9: Simple question – which has done better in 2016: gold or silver?

Answer: It’s not even close.  Silver is up 22% and gold is only up 9%.  Earlier in the year (August) silver was up close to 50% and gold was 28% higher. 

Question #10: Who told Bob Woodward of the Washington Post back in April that “It’s a terrible time right now” to invest in U.S. stocks?

Answer: An easy one to close things out, because I am pretty sure everyone knows it was President-Elect Donald Trump.  Total return for the S&P 500 since that story ran: 11.3%, with more than half of that return coming since Election Day.  Now, I suspect everyone (including Mr. Trump) hopes he is wrong.  Or at least that his future policies will “Make US stocks Great Again”.