From WSJ: Shares of single-family landlordsInvitation HomesINVH ( 1.90% increase – green up pointing triangle) and American Homes 4 Rent (AMH 1.25% increase) are trading at 35% and 20% discounts to their net asset values, respectively, according to real-estate analytics firm Green Street. Invitation Homes’ stock has traded at a particularly large discount to NAV since interest rates began to rise in early 2022, but the gap has widened by 10 percentage points in the past year.
Put another way, while the average house in the metro areas where Invitation Homes owns its properties sells for $415,000 based on Green Street’s analysis of prevailing market values, the company’s share price implies that investors think $310,000 is more appropriate.
Invitation Homes
StockCharts
American Homes
StockCharts
5. UNG Natural Gas Fund +17% YTD
StockCharts
6. Biotech No Bounce
XBI -4% YTD….and -12% in last 6 months.
StockCharts
7. Mag 7 Pulls Away from Euro Granola Stocks
Europe gains have also been concentrated in one group of stocks.
This next chart shows the prift margins of the S&P going up and to the right. It seems implausible in 2017 that this would continue to increase. But that’s just what happened.
Travel advisers agree. Some of the most sought-after journeys are already sold out for the entirety of 2025 and booking well into 2026. “Think about how River Cruises blossomed in the past decade,” says Jack Ezon, founder and managing partner of luxury travel consultancy Embark Beyond. “Train travel, which is super niche and limited, will go prime time in the same way by 2030.” “Requests for train trips have grown 158% in the past five years, especially among a younger generation,” he adds, as part of a zeitgeisty obsession with throwback luxuries. “It’s the millennial and Gen Zer obsessed with vintage record players and Polaroid cameras, buying the $1,000 cashmere Ritz Paris Frame hoodie and clamoring for a room in an uber-traditional hotel.”
From Seth Godin: Process is the investment we make in inefficiency now to prevent errors from costing us later.
Jet airlines are the safest form of travel ever created, largely because of the inefficient process that we put in place. They’re over tested and over staffed, with checklists and feedback loops in place to ensure that errors don’t occur. It would be way less costly if one person simply jumped onto the plane with you and took off–less costly, but less reliable as well.
If you want to see this taken to a higher level, consider a typical hospital emergency room. If you’ve ever sat waiting, you’ve noticed that it seems inefficient and very process focused. But as a result, the system doesn’t rely on good luck or heroics to save the day. Instead, they’ve invested in process.
An institution that is 100% contemptuous of process may create vividly creative outputs, but it won’t last long. And one that’s 100% process focused will rarely create a breakthrough. We can take a hard look at our culture and decide if we need more (or less) process.
What does it cost to be wrong? What does it cost to avoid being wrong?
1. 10-Year Treasury Yield & Fed Cutting Cycles: What to Expect
Gundlach spent much time discussing December’s big yield curve steepening — when rates on longer-term bonds rise more than shorter ones. Roiling stocks, the 10-year and 30-year Treasury notes have been flirting with 5% levels amid concerns over inflation, a strong economy and fewer rate cuts in 2025. He notes that during past Fed cutting cycles, the 10-year Treasury has never gone up, yet now it has by 100 basis points. “Something is different this time,” he adds.
CNBC
2. 30-Year Mortgage Rates Up 7%
This chart shows massive outperformance of Argentina ETF ARGT vs. Brazil EWZ.
Wealth of Common Sense
3. Higher Rates and Small Cap Stocks
Bespoke Investment Group on R2K vs. 200DMA. The Russell 2000 traded below its 200-day moving average (DMA) on an intraday basis Monday, ending what was the index’s sixth streak of a year or more without trading below that level. Following the end of each of the five prior streaks, the Russell 2000 was higher a year later with a median gain of 13.45%.
Bespoke Investment Group
4. Worst to First-Energy and Healthcare
That is particularly true for the S&P 500 energy sector. It is the top-performing sector-year to date, with the Energy Select Sector SPDR Fund ,an ETF that more or less tracks the S&P 500 energy sector, up 5.4% through Monday’s close, according to Healthcare stocks were in second, up 2.8% year-to-date, while the materials sector — last year’s worst performer — was up 1.2% through Monday. Both the healthcare Select Sector SPDR ETF and the Materials Select Sector SPDR ETF have seen similar performance.
MarketWatch
5. These Sectors Are Helping The Equal Weight S&P Hold 200-Day
Stockcharts
6. All Wall Street Strategists are Bullish
Business Insider
7. Goldman Good Number Today…Double in Stock from Late 2023
Stockcharts
8. Marc Andreessen on China Manufacturing
Autism Capital
9. Stats on American Couples & Marriage
John Burns Research
10. You Make the Job; It Doesn’t Make You
From the Daily Stoic Blog: There was once a promising young Greek politician named Epaminondas whose rise threatened some more established leaders (his full story in Right Thing, Right Now). As a way to blunt his potential, they ‘promoted’ him to a job overseeing the city’s sewers and water.
It was supposed to be a humiliation—or at the very least, a dead end job. Instead, he did such a good job, he endeared himself to the population. With discipline and earnestness, Plutarch wrote, “he proceeded to transform that insignificant office into a great and respected honor, even though previously it had involved nothing more than overseeing the clearing of dung and the diverting of water from the streets.”
Whatever we do, if we do it well, is noble. We told a related story in the Daily Dad email recently from Toni Morrison. She came home one day complaining about her job cleaning someone’s house to her father. She expected him to get angry on her behalf or to pity her. Instead, he said, “Listen. You don’t live there. You live here. With your people. Go to work. Get your money. And come on home.”
What he was teaching her, Morrison later wrote, became a set of principles she based her life around.
1. Whatever the work is, do it well—not for the boss but for yourself.
2. You make the job; it doesn’t make you.
3. Your real life is with us, your family.
4. You are not the work you do; you are the person you are.
What’s in our control is how we do the job. What’s in our control is who we are while we do the job. Whether it’s appreciated, whether it’s an impressive or a lowly job, whether a project succeeds or fails–that’s not up to us. What’s up to us is that we do our best, what’s up to us is that we are the best we’re capable of being.
The rest? The Stoics say is not worth worrying about.
From Bespoke Investment Group: The chart below shows how US crude oil production started to take off after 1901. According to the Department of Energy, in 1900, the US produced 63 million barrels of crude oil annually. Within 10 years, production tripled. Another 10 years later, it more than doubled again and kept rising from there until peaking in 1970.
Production was nearly cut in half from 1970 through 2008 as analysts started to fear the world was running out of oil and prices shot well into the triple-digits. Then, proving the adage, that the cure for higher prices is higher prices, the shale boom arrived, and production since then has rebounded to a historic degree. So much for running out of oil.
Even as the US oil industry exploded in the early 1900s, exports were practically non-existent until more than 100 years after Lucas’ first discovery. Beginning in the 2010s, though, exports surged like nothing ever seen before and now total a record 4+ million barrels per day.
2. Decline in Volume by “Professional Investors”
From the DC Lite Blog: The decline in demand from professional investors suggests the potential for elevated equity volatility.
5. Vanguard Total Bond ETF Trades Back to August Levels
Stockcharts
6. Dividend Growth By Sector
Lawrence C. Strauss for Barrons
7. Crypto Pullback Week
From The Daily Shot Brief: Cryptocurrency: It has been a tough week for cryptos so far, with DeFi tokens underperforming.
@TheTerminal
8. Chinese Investors Can’t Get Enough Money Out of Country
From Bloomberg: Chinese Traders’ Demand for Global Stocks Prompt Rare ETF Halts: Chinese investors’ fierce appetite for overseas shares has triggered rare, full-day suspensions on a pair of exchange-traded funds tracking global equities.
The Invesco Great Wall S and P Consumer Select ETF QDII and Harvest Der Dax ETF QDII have been suspended from trading until further notice after their premiums soared, according to exchange filings issued after market hours on Thursday. This marks an escalated degree of risk warning to investors, as halts on such funds usually last for an hour.
A new analysis led by researchers at the Johns Hopkins Bloomberg School of Public Health found that more than half of calories consumed at home by adults in the U.S. come from ultraprocessed foods.
Ultraprocessed foods contain substances with little or no nutritional value, such as colorings, emulsifiers, artificial flavors, and sweeteners. Examples cover a wide range of products, from chips and hot dogs to prepackaged meals. Researchers have long understood that a substantial proportion of the U.S. diet comes from ultraprocessed foods but it was not clearly understood where those calories were consumed.
Consuming high amounts of ultraprocessed food has been linked to chronic health conditions—cardiovascular disease, obesity, colorectal cancer, among others. The new findings suggest additional measures are needed to promote healthier alternatives for preparing meals at home.
The study was published online December 5 in the Journal of Nutrition.
“The perception can be that ‘junk food’ and ultraprocessed foods are equivalent,” says Julia Wolfson, PhD, MPP, associate professor in the Bloomberg School’s Department of International Health and the study’s lead author.“Yet ultraprocessed foods encompass many more products than just junk food or fast food, including most of the foods in the grocery store. The proliferation and ubiquity of ultraprocessed foods on grocery store shelves is changing what we are eating when we make meals at home.”
For their analysis, the researchers used data from the 2003–2018 National Health and Nutrition Examination Survey (NHANES), a nationally representative annual survey of more than 34,000 adults over 20 years of age.
10. Comments from CES Conference
Vitaliy Katsenelson, CFA on the Global Tech Showdown.
Korean companies are really dominating screen technology. LG and several other Korean companies showed off transparent, glass-like LCD screens at CES. Imagine sitting in your self-driving car, and your windows are both regular see-through glass and LCD screens at the same time. Our lives are slowly becoming what we used to see in sci-fi movies, and these screens are definitely a leap in that direction.
CES is a truly global show, with technology on display that spans every aspect of our future. There were a lot of companies from Asia (especially China). In certain pavilions focused on consumer or business hardware, China completely dominated the exhibits. There were quite a few large American companies and many American startups, mostly focused on software (though all their hardware was manufactured in Asia). America still dominates in software.
A few, mainly Chinese, companies were showcasing their humanoid robots. One robot was slowly but accurately moving and stacking boxes in a defined area. Others were roaming more freely and were good at avoiding objects. At this point, these robots have the IQ of a smart dog, an average cat (now cat lovers will love me), or Siri. I bet in a few years this will have changed.
I was only mildly surprised by how few European companies were at the show.It’s a very broad generalization, but Europe seems to be running on fumes of past glory.Western Europe has become a pro at regulation and mastered the redistribution of wealth (activities that don’t help innovation or economic growth), and not much else.Yes, there are exceptions, but that’s the point – they are exceptions.If Europe doesn’t change course, eventually it will run out of fumes.
The beauty of learning is that you don’t always know everything you’ve learned at the moment of learning. Often, you’re just depositing data points that will crystallize into insights at a much later date.I don’t know if CES will become an every-year tradition or something I do sporadically, but it’s definitely fertile ground for learning.
From Marketwatch: Retail traders have been particularly active in the market lately, Mizuho’s Azarm said, which suggests that they were responsible for much of the action in these more speculative names.
Trading volume in the U.S. equity market exploded earlier this week. Nasdaq Composite trading volume rose to nearly 14 billion shares on Tuesday, the highest level on record going back to 1995, according to Dow Jones Market Data. The market wasn’t as active on Wednesday. According to data tracked by Azarm, roughly 55% of activity in the U.S. market over the past two weeks has been tied to platforms typically used by individual investors.
“This is massive. Even during the 2021 meltup, we hardly saw anything this elevated,” he said, referring to the meme-stock frenzy that saw shares of GameStop Corp. Some of the recent surge in trading volume across the U.S. market appeared to be tied to penny stocks, Joe Saluzzi, partner and co-founder of Themis Trading, told MarketWatch. Volume in shares of companies trading at $1 or less has been unusually high lately, he said.
2. Two-Year Rise in S&P Puts It in 93rd Decile of 2-Year Returns
DC Lite Blog Mortgage demand. “Mortgage demand is crumbling. For the week ending January 3, mortgage loan applications for purchase sank 6.6%, the 4th decline in the last 5 weeks. The level of conventional purchase apps lowest since 2011! 30-year FRM back to 7%.”
