Topley’s Top Ten – March 15, 2018

1.Treasuries Go Range Bound.

Range Trading

As for Treasuries themselves, they have settled into a new trading range after an almost 1 percentage point increase in the 10-year yield from September to late February. That stability has kept it from retesting the 3 percent level for now, a move above which is seen as a risk to many markets.

— With assistance by Andrew Janes, and Joanna Ossinger

Wages Also Range Bound

Wages: Same As It Ever Was?


Kevin Flanagan, Senior Fixed Income Strategist—Wisdom Tree

The jobless rate remained at 4.1% for the fifth consecutive month, which is the low watermark for this expansion. The alternate measure of job creation, civilian employment, has been surging thus far in 2018, producing a two-month average of just under +600,000.

Average Hourly Earnings

Let’s turn our attention to wages. Average hourly earnings (AHE) rose at an annual rate of +2.6% in February, following a downward revision of 0.1 percentage points for the prior month. In other words, the +2.9% surprise to the upside in January has now been dialed back a bit to +2.8%. Remember, one of the lynchpins behind the rise in the UST 10-Year yield this year was an increase in inflation expectations, led by said “January surprise.” The current pace leaves wages essentially “stuck in the mud,” at least for the time being, illustrated by the fact that the average year-over-year increase over the last two years has been that same +2.6% (see the graph).


So, when will that jobs trend translate to higher wages? According to the new Fed chair, a key force behind the frustrating lack of significant progress has been the result of “the weak pace of productivity growth in recent years.” Powell also stated that given the economic backdrop and strong job creation, he expects to see wages rising. This line of reasoning is definitely justified, but thus far, the results have been lacking. Nevertheless, there does seem to be an expectation that later this year, the annual rate of increase for AHE will eventually hit, and possibly eclipse, the +3.0% threshold. The bottom line is that, barring any unforeseen circumstances, the Fed will not be dissuaded from raising interest rates this year, a development expected for next week’s FOMC meeting.

Wisdomtree Blog

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Topley’s Top Ten – March 12, 2018

1.Where Does This Bull Market Rank? Second Largest and Second Longest.

Posted by lplresearch

We shared the following chart in our latest Weekly Market Commentary, “The Bull Is 9, Can It Make 10?”, which shows that this is the second largest and second longest bull market ever—with only the ‘90s bull standing in the way of the record books.

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Topley’s Top Ten – March 6, 2018

1.Semiconductors Record Year in 2017…Followed by 22.7% Jan. Gain in Sales.

Traditionally bullish indicator sector blows out sales….

January sales of semiconductors topped records marking a year and a half of consecutive monthly gains, according to the Semiconductor Industry Association in a statement late Monday. January chip sales rose 22.7% to a record $37.6 billion, SIA said. Year-over-year sales in the Americas saw the largest rise with a gain of 40.6%, followed by Europe with a 19.9% rise, “Asia Pacific/All Other” seeing a 18.6% rise, China gaining 18.3%, and Japan rising 15.1%. “After notching its highest-ever annual sales in 2017, the global semiconductor industry is off to a strong and promising start to 2018, posting its highest-ever January sales and 18th consecutive month of year-to-year sales increases,” said John Neuffer, SIA president and chief executive, in a statement. Over the past 18 months, the PHLX Semiconductor Index SOX, +0.89%has grown 71%, compared with a 24% gain by the S&P 500 index SPX, +1.10% and a 39% gain on the Nasdaq Composite Index COMP, +1.00%

Semiconductor Index…More than a double from 2016 pullback.

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Topley’s Top Ten – February, 27 2018

1.Buffet Warns on Margin Debt.

Warren Buffett offers his ‘strongest argument’ against a practice investors are doing in record numbers

Akin Oyedele

Berkshire Hathaway CEO Warren Buffett has argued against borrowing money to invest in stocks.

  • So-called margin debt rose to a record in January.
  • Margin calls, in which brokers demand a cash replenishment of their clients’ accounts, were among the reasons strategists cited for the pace of the recent stock sell-off.

Warren Buffett doesn’t recommend going into debt to buy stocks.

But that’s exactly what investors are doing in record numbers.

Margin-debt balances — loans individual investors take from their brokers to beef up their portfolios and maximize returns — rose to a record $665.72 billion in January, according to datafrom the Financial Industry Regulatory Authority.

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