Topley’s Top 10 – January 30, 2023

1. S&P 50 Day thru 200 Day to Upside

2. VIX Volatility Index Hits 6-Month Lows

3. China vs. India 2023

After 2022 India outperformance….China taking lead 2023….this chart shows MCHI (China) vs. INDA (India)…50 day thru 200 day to upside.

4. S&P 500 Buyback Machines

This week, energy giant Chevron announced plans to buy back $75bn of its shares, five times the oil giant’s current buyback plan, along with an increase in dividend payouts. A prevailing theme from our 2022 in 5 charts was how it was the year for stuff-that-comes-out-of-the-ground — with Chevron’s oil and gas clearly no exception.
Along with dividends, buybacks are one of the two main ways that companies reward shareholders for their investment. By buying shares in the open market and then retiring them, buybacks reduce the share count in the company. So if you own a slice of Chevron — and the company does a buyback — your slice of the company gets bigger… and therefore more valuable. Although technically illegal in the US until 1982, buybacks have become the preferred way for companies to throw off cash. That’s partly because companies can be more opportunistic about them, but it’s also because they essentially reward shareholders with capital gains, rather than income, which is generally more tax efficient. Apple has been the king of the buyback, splurging $500bn+ on purchasing more than one-third of its outstanding shares in the last 10 years.
The buyback blowbackAt the company level, buybacks can sometimes signal a lack of imagination — suggesting that the company hasn’t got any projects that it deems worth pursuing relative to just returning cash to shareholders.
More widely, buybacks have become something of a political football. Last year, after much back-and-forth, a new 1% tax on buybacks was signed into law. On 2022’s figures, that would net the US treasury ~$8bn a year, which some have lauded as a victory for the non-shareholder class, while others have called it simply a “tax on savers & investors”.

www.chartr.com

5. Energy Charts

$Brent Crude Oil 50day thru 200day back in September….multiple lower highs

Oil Service stocks hit new highs

VDE Vanguard Energy ETF no new high yet

6. Blackrock 60/40 Portfolio

60/40 closes above 200 day after failing twice in Nov/Dec 2022…however 50day still below 200day….200day still sloping downward

7. China $2 Trillion in Savings Pent Up from Covid Lockdown

WYNN Resorts Doubles Since November

Louis Vuitton Luxury Goods Breaks Out to New Highs

8. Which Are the Best States for Raising a Family?

By Michael Kolomatsky

9. NYC Hotel Prices Above Pre-Pandemic Levels

Torsten Slok The chart below shows the price of staying at a hotel in Manhattan, Midtown, and Times Square, and the average daily rate is now above its pre-pandemic level. Looking across a broad range of daily and weekly indictors the consumer is still doing fine. The interest rate-sensitive components of GDP are softer, but the overall picture continues to look like a soft landing, see also our attached chart book.

Torsten Slok, Ph.D.Chief Economist, PartnerApollo Global Management

10. Determination vs. Talent

FS-Farnam Street

The difference between open and closed-minded people:

Over time, the person who approaches life with an openness to being wrong and a willingness to learn outperforms the person who doesn’t.

— Source

Insight

“One sign that determination matters more than talent: there are lots of talented people who never achieve anything, but not that many determined people who don’t.”

— Paul Graham

TKP

The Three Types of Listening:

“Listening to win is, ‘Let me make the problem go away by telling you, you don’t have a problem.’ Listening to learn is getting underneath what’s being said and reflecting back to the person. And listening to fix is, ‘Let me take your problem and solve it for you, or help you solve it.'”

A new episode of The Knowledge Project Podcast is now available, featuring a conversation with Carolyn Coughlin. This episode is filled with practical insights on improving your relationships by becoming a better listener. Listen or read the transcript.

https://fs.blog

Topley’s Top 10 – January 26, 2023

January 26, 2023

1. S&P 500 Value ETF

Run right up to 2022 highs…see if it breaks out

2. Netflix Huge Run Right to Resistance

Netflix approaching 200 week moving average and 2022 highs

https://www.google.com/search?q=how+are+u.s.+treasuries+taxed&rlz=1C1CHBF_enUS898US898&oq=how+are+u.s.+treasuries+taxed&aqs=chrome..69i57j33i22i29i30i625j33i22i29i30.6185j0j7&sourceid=chrome&ie=UTF-8

3. Jeremy Grantham Still Bearish But Discusses Presidential Cycle.

Still Bearish Grantham But Presidential Cycle in Play

GMO Research-Jeremy Grantham -The important fact here – see Exhibit 1 – is that for 7 months of the Presidential Cycle, from October 1^st of the second year (this cycle, 2022) through April 30^th of the third year (2023), the returns, since 1932, equal those of the remaining 41 months of the cycle! This has a less than one-in-a-million probability of occurring by chance, pretty remarkably, and it has been about as powerful in the last 45 years as the previous 45 years. We are now in this sweet spot, which once again is up nicely so far. The logic and nuances are spelled out in Appendix 1. Suffice it to say that this positive influence may help to support the market for a few more months.

The Presidential Cycle Politicians have always liked to be re-elected. Decades ago, they worked out what factor moves the vote the most. It is provably the state of the labor market in the 6-month run up to the election. Even brilliant performances before that do not count; they are apparently lost in the mists of time. Administrations aim to achieve precisely this objective, and to do so they must stimulate the economy 12 to 18 months earlier because the economy is large and complicated and has plenty of inertia. So, on or around the 4^th quarter of year 2 – this cycle, 2022 – they start some extra stimulus. I say “extra” because there are always other considerations at work. The interesting part for U.S. investors is that the stock market is far more sensitive to this extra stimulus than the economy and employment are (as we saw with the Covid stimulus in 2020 and 2021). Thus, to get a modest, but politically important, twitch in labor numbers, we see for the stock market the remarkable data shown earlier, in which since 1932 the 7-month stimulus window delivers six times the monthly returns of the rest of the cycle. My favorite aspect of this effect though was that the UK market had, from 1932 through 2012 when I last looked, a bigger jump on the U.S. presidential cycle than even the U.S. had! (Europe had half the effect and even Japan had half of that.) The U.S. administration, with 85 years of help from a “completely independent” (ahem) Fed, clearly rules the global waves. There are no prizes for guessing which was the only Fed era where this political market cycle absolutely did not exist – Paul Volcker’s.

EXHIBIT 1: PRESIDENTIAL CYCLE

S&P 500 Annualized Real Total Return, 1932-2022

Source: Global Financial Data, GMO

4. Top Twenty Hedge Funds of All-Time

Barry Ritholtz Blog

LCH Investments list of the best-performing hedge fund managers of all time

Source: Financial Times

https://ritholtz.com/2023/01/10-wednesday-am-reads-319/

5. Recent IPO Stocks No Rally

https://www.psychologytoday.com/us/blog/navigating-the-new-workplace/202301/4-reasons-teamwork-is-hard-to-build-at-work

6. Biggest Losing Sector of 2022 …Rallies 12% YTD

XLC-rally to start year but still a blip on long-term chart

7. Wealthy Savers Move Out of Bank Accounts.

WSJBy Rachel Louise Ensign-Wealthy savers are starting to take their cash out of bank accounts in search of higher yields.

Big banks are still paying paltry interest on checking and savings accounts despite the Federal Reserve’s steepest rate increases in decades. Their wealth-management customers are done waiting: They are moving the extra savings they accumulated during the pandemic into products whose rates have more closely tracked the Fed.

The typical savings account is paying a 0.33% interest rate, according to the Federal Deposit Insurance Corp. Treasury notes, money-market funds and brokered certificates of deposit, meanwhile, are all paying between 4% and 5%.

8. Exodus of Wealthy Chinese Accelerates With End of Covid Zero

-China could face at least $150 billion capital flight: Natixis

-Resumption of travel opens gates for China’s wealthy to leave

ByBloomberg News

https://www.bloomberg.com/news/articles/2023-01-25/rich-chinese-plan-to-leave-with-money-with-covid-zero-s-end?srnd=premium&sref=GGda9y2L

9. Population Over 65 Projected to Rise from 34% to 46%

Torsten Slok Apollo

10. 4 Reasons Teamwork Is Hard to Build at Work

The question of teamwork is not going away in the workplace. Bruce Tulgan, JD

KEY POINTS

Most of today’s workers realize they are less likely than those of prior generations to have long-term careers with one organization.
Today’s employees are less likely to trust the “system” or any organization to take care of them, and thus show less loyalty.
Because workers today usually do not stay with one company for very long, they make fewer efforts to adapt within their current workplace.

It is too easy to explain away why today’s workforce seemingly disregards the value of joining something larger and making personal sacrifices for the greater good. After all, “Question Authority!” has been a hackneyed cliché for longer than it has been a true slogan.

But the question of teamwork is not going away in the workplace. There are four reasons why it is so difficult to build.

1. People today think more like customers than players.

Yes. They know that their employer is the one paying them. But still, they look at their relationship with any established institution, no matter how small or how large, and they think, “What do you have for me? And what currency do I need to use to get what I want or need from you?”

Most workers are grateful to have a source of income and maybe some benefits. They are grateful to be accepted, validated, and wanted. They are grateful to have access to a hub of resources from which to acquire experience, training, and networking, a place to be that has computers, phones, and bathrooms, and maybe a kitchen, gym, and some office supplies. They are grateful for the future doors that might be opened by this current job. But let’s not get carried away. It’s not like they are likely to be here for a long time, anyway.

Most people today realize they are much less likely than those of prior generations to have long-term uninterrupted careers with one organization. They are less likely to be exclusively employed by one organization at any given time, work full-time, or work on-site. They are also less likely to trust the “system” or organization to take care of them and thus less likely to show what looks like loyalty—a desire to belong, deference to authority, willingness to make short-term sacrifices for the good of the whole, and an eagerness to contribute regardless of credit or rewards.

2. How workers think about their relationships with lateral coworkers is changing.

These relationships involve a high degree of interdependency in pursuit of concrete goals every step of the way, and the stakes are high. Adults are in the workplace to earn their livelihoods. There are lots of opportunities to disappoint and/or be disappointed.

3. How people look at individuals in positions of authority is changing.

Once again, they think like customers—in this case, specifically, your customer. Workers do not typically look at other people in the workplace trying to figure out “their proper place” in the context—i.e., how they can adapt in order to “fit in” with others who clearly have longstanding relationships and a well-established course of dealing. Instead, they look at you—and everyone else in the room—and think, “I wonder what role you might play in this chapter of my life story?”

4. Nobody is expecting to follow the old-fashioned career path anymore.

Why should workers take the trouble to adapt to one company’s approach to how they should manage themselves when they won’t even be there that long? They think, “Seriously, what am I supposed to do? Adapt my schedule, work habits, style, and attitude for every new job?” Even if they could be convinced to adapt for an employer eventually, they are very unlikely to be ready to do it from the get-go; certainly not early in their first or second real job.

Topley’s Top 10 – January 25, 2023

January 25, 2023

1. Semiconductor ETF Technical Signal

SMH-50day thru 200day to upside …

https://i0.wp.com/lplresearch.com/wp-content/uploads/2023/01/chart-8.png?ssl=1

2. What is the Market Telling Us About Inflation?

Torsten Slok Apollo-Recession fears are subsiding, and inflation swaps are pricing that inflation will be at the FOMC’s 2% target in July, see charts below. This has very significant implications for markets.

Most importantly, with inflation back at 2% within a few months, the Fed will soon stop being so hawkish. In other words, the market is telling us that the soft landing will be accomplished over the coming six months. And, if inflation in six months is no longer a problem, then the Fed put is coming back. Because then the Fed will again have the flexibility to focus on unemployment, growth, and earnings instead of focusing entirely on too high inflation.

This is all good news for credit, equity, and capital markets.

3. 10-Year Break Even Inflation 2.12%

@Charlie Bilello Finally, market-based inflation expectations are confirming the move lower, with 10-year breakevens down to 2.12%, their lowest level since February 2021.

The last 8 recessions in the U.S. were all preceded by an inversion in the yield curve, though the lead time shows considerable variation.

4. Some Positive Trends

LPL Research

5. Money Supply Goes Negative from Covid Spike Highs

https://twitter.com/NorthmanTrader

6. Gold Rally on U.S. Dollar Weakening…Closing in Early 2022 Highs

https://www.bloomberg.com/?sref=GGda9y2L

7. Decline of 2 Straight Months of Total Number of Hours Worked.

Bloomberg ByKristine AquinoMacquarie’s David Doyle and Neil Shankar argue that a number of red flags are popping up in the labor market and that a recession is on the cards. Among the stats they highlight is a decline for two straight months in the total number of hours worked, something that they point out has only only occurred in three other periods since 2006.

8. Existing Home Sales -36% From Highsalloway Blog

https://dailyshotbrief.com/

9. Multi-Family Starts Sill Below All-Time Highs from 1970s

By Wolf Richter for WOLF STREET.Construction starts of multifamily projects, such as condo and apartment buildings, with five or more units jumped by 14.5% in 2022 from the prior year, to 529,000 units, according to data from the Census Bureau today. This was:

Up 35% from the range between 2015 and 2020.
Up 75% from the range in the decade before the Financial Crisis.
The highest annual total since 1986, nearly matching the three peak-years of that boom.
Way below the crazy boom of the early 1970s that then turned into an epic bust.

https://wolfstreet.com/2023/01/19/residential-construction-splits-multifamily-starts-in-2022-jumped-to-highest-since-1980s-boom-single-family-starts-dropped/

10. Lean Into Their Strengths Rather Than Disdain Their Weaknesses

Daily Stoic Emails

Marcus Aurelius was clearly torn about his fellow man. He was loving and kind and spoke repeatedly of serving the common good. He was also clearly frustrated and disappointed with the flaws of the people around him. Like many great men, he had trouble understanding that not everyone had his gifts, not all of them were capable of what he was capable of.

You can see in Meditations how he wrestled with these feelings. In the opening passage, he talks about just how obnoxious and annoying (and awful) the people he was likely to meet in the course of the upcoming day. And then, just as you think it can’t get any more depressing and dark, he turns around and reminds himself that they’re doing the best they can, and that it’s not their fault that they have been cut off from truth.

In the passage that inspired The Obstacle is the Way, Marcus is less forgiving. He talks about how the people who obstruct or bother us are “irrelevant”—how we can shut our minds off to them. It’s a theme that comes up a lot: People are a problem. People are weak. Push them away. You get the sense that he would have been hard to work for, hard to have as your father, hard to please—even for talented and committed people.

If only Marcus Aurelius could have heard the (fictional) advice from his adopted grandfather, Hadrian, that Marguerite Yourcenar writes into her prize-winning book Memoirs of Hadrian. “Our great mistake,” she has Hadrian say, “is to try to exact from each person virtues which he does not possess, and to neglect the cultivation of those which he has.” How much happier Marcus would have been had he been more able to see the good in people, and how much better a leader he could have been had he leaned into their strengths rather than disdained their weaknesses.

Each of us would benefit from that advice as well. We have to focus on what we can learn from other people. We have to focus on what is special and unique about them instead of zeroing in on the ways they are not as good as us. We have to be forgiving and patient, kind and appreciative. We have to engage with what they bring to the table, not lament the things they take from it. Then we have to work to make those people around us better…not write them off as hopeless and broken.

Lean Into Their Strengths Rather Than Disdain Their Weaknesses (dailystoic.com)

Topley’s Top 10 – January 24, 2023

January 24, 2023