Morningstar Runs the Numbers

Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

1.8% The Federal Reserve Board decided not to raise the Fed funds rate at its Federal Open Market Committee Meeting this week. The Fed also revised its estimate of GDP growth to 1.8% from 2.0% for the remainder of 2016, which Morningstar director of economic analysis Bob Johnson thinks still may be slightly optimistic:

For this year, 2016, they dropped their forecast from 2% to 1.8%. So, recollect we're in the range of 1.5% to 2% for this year, so they've dropped back into the middle of our range. And I'm even thinking more like 1.5% than 2%, so I think they're probably still going to end up being a little high.

$4.47/Share

Following changes to the Global Industry Classification Standard and pending a change to its current benchmark, $15 billion

XLF will be shedding its current real estate holdings in the form of a special dividend, which will be paid to XLF shareholders in shares of XLRE, as well as a small cash residual that will solve for the fact that fractional shares in XLRE cannot be issued. The ex-date for XLF is Sept. 19, 2016… According to SSgA, the estimated distribution for the special dividend will be 0.14 shares of XLRE or approximately $4.47 per share of XLF as of Sept. 9, 2016.

200 Miles The Smithsonian reported this week that the longest lightning bolt on record flashed across the sky in June 2007.

On June 20, 2007, during a thunder storm in Oklahoma, a lightning bolt streaked across half the state. This is the longest lightning bolt ever recorded, stretching 199.5 miles from outside Tulsa to the Texas border, according to a press release. Originating at an altitude of six miles, the lightning touched down in several locations on its journey and was visible as far away as Colorado.

5 Jobs This week was Retirement Matters Week on Morningstar.com. Each day, Morningstar director of personal finance Christine Benz took a deep dive into one critical portfolio-planning issue that retirees face. Topics include asset allocation, choosing investments, managing a sustainable withdrawal rate, assessing the role of Social Security in portfolio planning, and creating a long-term care and estate plan.

-1.0% YTM Morningstar senior analyst Eric Jacobson explains how a bond can have a negative yield in the secondary market and how the math actually works.

…If yields were to fall all the way to negative 1% in the marketplace, our hypothetical 10-year Treasury with a 1% coupon would actually command a large premium--$211 in this example--to its face value in order to compensate a seller enough to give up its future coupons… The bond's price high enough that, at a certain point, receiving the bond's principal and interest payments will represent a loss equal to a negative 1% annualized yield to maturity.

$16.4 billion Morningstar senior markets research analyst Alina Lamy reports that August was a slow month in terms of fund flows, with markets relatively flat and no dramatic movement in flows. However, passive funds continued to rake in money:

U.S. equity funds continued to bleed cash on the active side. Passive U.S.-equity funds continued to attract investor money, although August's estimated inflow of $16.4 billion was only half as large as the $33.8 billion they received in July.

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