1. What Happens After A Stock Reaches 10 Largest Stocks in U.S.
Future expectations are already in the price
Investors should remember that any expectations about the future operational performance of a firm are already reflected in its current price. While positive developments for the company that exceed current expectations may lead to further appreciation of its stock price, those unexpected changes are not predictable.
To this point, charting the performance of stocks following the year they joined the list of the ten largest firms shows decidedly less stratospheric results. On average, these stocks outperformed the market by an annualised 0.7% in the subsequent three-year period. Over five- and ten-year periods, these stocks underperformed the market on average.
With Technology rallying and once again outperforming to start the new trading week, we wanted to note that the sector’s weighting in the S&P 500 has pushed above 27% recently up to 27.2%. That’s nearly twice as big as the next biggest sector in the S&P — Health Care — at 14.5%. Just three other sectors have weightings above 10%, and they’re all just only slightly above the 10% mark — Communication Services, Consumer Discretionary, and Financials. We’d note that Amazon (AMZN) makes up about a quarter of the Consumer Discretionary sector’s 10.8% weighting in the S&P, and while it is technically a retailer, between its web services division, and strong technology platform, you could argue that its just as much a Technology stock as it is Consumer Discretionary.
Industrials and Consumer Staples have seen their weightings dip below 8%, and the four smallest sectors each have weightings of just 2-3%.
At the moment, Tech’s 27.2% weighting in the S&P is larger than the weightings of the six smallest sectors combined.
The personal savings rate hit a historic 33% in April, the U.S. Bureau of Economic Analysis said Friday.
“There is a tremendous uncertainty and virus fear that is lingering and that is restraining people’s desire to go out and spend as they normally would,” said Gregory Daco, chief U.S. economist at Oxford Economics.
With the U.S. consumer accounting for more two-thirds of the economy, the economic recovery depends on whether the increase in savings is a result of shutdowns or structural changes in consumer habits, analysts said.
The increase in savings came as spending declined by a record 13.6% for the month.
1. Record 78% of Investors Say Market in Overvalued.
Dave Lutz Jones Trading
Pain trade is still up: Record net 78% of investors say stock market is “overvalued.” Most since start of the series in 1998. On the market rally, 37% say it’s a bull market while 53% say it’s a bear market rally
Among surveyed investors, 18% expect a V-shaped recovery and 64% expect a U- or W-shaped bounce – Second wave of Covid-19 remains biggest tail risk
Trillions are now whooshing by at a breath-taking pace. The US gross national debt – the total of all Treasury securities outstanding – jumped by $1 trillion over the past five weeks, from May 4 through June 8, and by $2.5 trillion for the 11 weeks since March 23.
The total US national debt outstanding has reached $26 trillion, according to the Treasury Department. I’ve been fretting about this debt on my site since 2011. In recent years, I innocently added a green upward arrow with “Debt out the wazoo” to my gross-national-debt charts, unaware that this tongue-in-cheek label would turn into a factual, data-based technical term:
3. This Always Ends Badly…..Retail Investors Favorite Trading Stocks Outperforming.
The Goldman analysts report that much of the outperformance by individual investors occurred in the middle of May, as upbeat data on declines in the spread of the deadly pandemic and less-bad economic reports encouraged bargain hunting in cyclicals, including small-capitalization stocks, and shares of companies that are economically sensitive and would therefore benefit from signs of improvement in the business climate.
Such stocks were “quickly embraced by value-seeking retail investors, and now make up a large portion of our retail basket,” Goldman researchers wrote (see attached chart).
A portfolio of stocks being bought by mom-and-pop investors is trouncing Wall Street pros — here’s what they’re buying-Mark DeCambre
Stone’s Weekly Market Guide – Week of June 15, 2020 Bill Stone
Chart of the Week: After a few weeks of outperformance, value went back to underperforming growth last week. For simplicity of explanation, this analysis uses the Russell indexes but other methodologies would have directionally the same results. Short-term, this poor performance is understandable since value stocks generally have more leverage to economic outcomes and more debt. The underperformance of value also holds since the February market peak with value fairing worse on the downside along with growth recently exceeding its February peak (see chart). Despite value being a factor that has led to long-term outperformance, the value has historically been subject to long periods of underperformance as the price of admittance to superior gains. Aside from some brief respites, value (+14.2% annualized) has underperformed growth (+19.2% annualized) by a wide margin since the global financial crisis bottom in March 2009.This differential means $100 became about $632 in growth versus $345 in value. Despite the grim performance comparison, the valuation differential between the two styles argues for at least a more balanced allocation between the two currently rather than focusing only on growth stocks. For those interested in more details, AQR recently wrote some excellent pieces about value underperformance linked here.
(Bloomberg Opinion) — The Federal Reserve realizes that it doesn’t have to buy U.S. corporate bonds, right?
I ask this question only somewhat in jest. In a surprise move, the central bank announced Monday that it would start to buy individual company bonds under its $250 billion Secondary Market Corporate Credit Facility, specifically by following a diversified index of U.S. corporate bonds created expressly for its program. “This index is made up of all the bonds in the secondary market that have been issued by U.S. companies that satisfy the facility’s minimum rating, maximum maturity and other criteria,” the Fed said in a statement. Notably, issuers of bonds acquired through this program don’t need to provide certifications, unlike the stipulations for individual debt purchases.
It’s not immediately clear why this is necessary, nor how this will impact markets any differently than the facility’s current purchases of exchange-traded funds. So far, the secondary-market vehicle has bought about $5.5 billion of ETFs. As my Bloomberg Opinion colleague Tim Duy quipped on Twitter, it’s as if policy makers said “we want to expand beyond ETFs, so we will purchase individual bonds such that we mimic an ETF.”
Predictably, the largest investment-grade bond ETF, ticker LQD, surged in the wake of the announcement to its biggest intraday gain since April 9. That was the day the Fed changed the parameters of its credit facilities to allow for purchases of high-yield ETFs and debt from fallen angels that were investment grade as of March 22.
The most surprising part of this is there is virtually no evidence that the corporate-bond market needs this kind of intervention — it has been working nearly flawlessly for months. Sure, the credit ratings of several brand-name companies have been lowered since Covid-19 started to spread across America in March. Some even fell into junk, like Ford Motor Corp., Kraft Heinz Co. and Macy’s Inc. For countless others, their business model has radically changed for at least the next several months, if not years.
And yet the average yield demanded by investors for investment grade debt fell last week to just 2.23%
The EIA released the latest edition of their Electric Power Monthly on May 26th, with data for March 2020. The table above shows the percentage contribution of the main fuel sources to two decimal places for the last two months and the year 2020 to date.
The Table immediately above shows the absolute amounts of electricity generated in gigawatt-hours by the main sources for the last two months and the year to date. In March the absolute amount of electricity generated decreased slightly, joining the years 2015 and 2016 as the only years since 2013 that did not see a slight increase in electricity production between February and March. Coal and Natural Gas between them, fueled 56.95% of US electricity generation in March. The contribution of zero carbon and carbon neutral sources increased from 41.55% in February to 41.99% in March. The percentage contribution from Natural Gas in March edged back above 40% at 40.41%, increasing from 39.76% in February.
7. Student Loans are 44.8% of the FED’s Total Assets
But back to our quiz. Student loans may be a liability on the consumer balance sheet, but they constitute an asset for Uncle Sam. Just how big? It’s about 44.8 percent of the total Federal assets. This is 10.8 times larger than the 4.2 percent for the Total Mortgages outstanding and 3.6 times the size of Taxes Receivable at 12.5 percent.
The 44.8 percent referenced is below its peak. Here is a look at how this metric has changed since 1995.
The Fed’s Financial Accounts: What Is Uncle Sam’s Largest Asset?-by Jill Mislinski, 6/12/20
10. 4 Signs That Will Instantly Identify Someone with Remarkable Leadership Skills
The way to create effective working teams starts here.
BY MARCEL SCHWANTES, FOUNDER AND CHIEF HUMAN OFFICER, LEADERSHIP FROM THE CORE@MARCELSCHWANTES
Getty Images
Now more than ever, companies need to create cultures centered on employees. Strong cultures create effective working teams that attract top talent, while weak cultures can quickly lead to burnout or employees heading for the exit.
Companies facing these high stakes are eager to create a place where employees want to go to work. But they can struggle to find the right person to own culture. Who will invest in leading their organization’s unique blend of people and purpose?
Latane Conant, CMO of 6sense, an account engagement platform, sees the tie between a company delivering great customer experiences and having great employee experiences. She has made it her mission to develop an employee-centered community unified by a common purpose.
Conant shared with me four key perspectives on how leaders can build meaningful company cultures:
1. Build trust through transparency
Companies need trust to create a productive community and culture, which derives from honesty and openness. While leaders may be forthcoming with each other, Conant says that transparency should be extended throughout the organization.
Conant advises executives to create a clear and transparent vision and detailed plans, and then revisit the company strategy regularly.
Conant also says marketing teams and its senior leaders must embrace and champion strategic transformation. “Marketing has to evangelize new strategies and set the tone for everybody else,” she said. “They have to wear it proudly, nail the pitch to their coworkers and be the cheerleaders your company needs to make the transformation work.”
2. Prioritize connection
In companies, connection happens constantly, and Conant says good cultures prioritize communication and connection. To foster healthy connections, she recommends shoutouts and public feedback recognizing employees working the strategic plan. She is also a firm believer in the all-hands meeting.
“Do not skip your all-hands meeting! It should be treated as a sacred space, where your employees gather to talk about what matters most,” Conant said. “Once you start blowing off the meeting or rescheduling it constantly, you lose your chance to keep everyone focused on the company’s strategic plan and vision.”
3. Lead by example
While leaders work to agree on company direction, Conant says they should also gather feedback on how teams perceive their leadership. Like the all-hands meeting, she encourages leaders to conduct at least biweekly one-on-one meetings with employees to have two-way conversations and help employees achieve their own career goals.
Conant also believes leaders show trust by providing examples of their own experiences — both successes and failures — when they talk with employees. While it’s scary to start, she says leaders who model the openness they preach will find it happening organically within their teams.
4. Have more fun
Conant encourages leaders to ask their employees what they enjoy doing, then incorporate fun into the day job. Make work a place people want to be — beyond perks like a snack-filled fridge.
Conant is also using data to evaluate her office’s “Fun Factor.” Her team deploys a biweekly survey asking how much fun employees had. She reviews the results and determines what changes to make to bring more fun into the job.
Most importantly, she says, leaders have to model fun. “If leaders want their employees to take part in trivia nights or karaoke, then they have to get up and sing along, too.”
Whether it’s championing the strategic plan, creating open and collaborative spaces or having fun, intentional planning and commitments to community help companies create a place employees want to be.
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania.. To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results. Material compiled by Lansing Street Advisors is based on publically available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data. Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only
1. SMH Semiconductor Chart Hits New Highs…. Bi-Partisan Legislation Passes Congress of the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS for America Act)
CHIPS for America Act Would Strengthen U.S. Semiconductor Manufacturing, Innovation
Wednesday, Jun 10, 2020, 4:58pm
by Semiconductor Industry Association
New bipartisan legislation, introduced in the Senate by Sens. Cornyn (R-Texas), Warner (D-Va.), Risch (R-Idaho), Sinema (D-Ariz.), and Rubio (R-Fla.) and in the House by Reps. Matsui (D-Calif.) and McCaul (R-Texas), would counter competing nations’ massive government incentives and strengthen U.S. economy, national security
WASHINGTON—June 10, 2020—The Semiconductor Industry Association (SIA) today applauded the introduction in Congress of the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS for America Act), bipartisan legislation that would invest tens of billions of dollars in semiconductor manufacturing incentives and research initiatives over the next 5-10 years to strengthen and sustain American leadership in chip technology, which is essential to our country’s economy and national security. The bill was introduced today by Sens. John Cornyn (R-Texas), Mark Warner (D-Va.), Jim Risch (R-Idaho), Kyrsten Sinema (D-Ariz.), and Marco Rubio (R-Fla.) in the Senate, and a House version is slated to be introduced Thursday by Reps. Michael McCaul (R-Texas) and Doris Matsui (D-Calif.).
“Semiconductors were invented in America and U.S. companies still lead the world in chip technology today, but as a result of substantial government investments from global competitors, the U.S today accounts for only 12 percent of global semiconductor manufacturing capacity,” said Keith Jackson, President, CEO, and Director of ON Semiconductor and 2020 SIA chair. “The CHIPS for America Act would help our country rise to this challenge, invest in semiconductor manufacturing and research, and remain the world leader in chip technology, which is strategically important to our economy and national security. We applaud the bipartisan group of leaders in Congress for introducing this bill and urge Congress to pass bipartisan legislation that strengthens U.S. semiconductor manufacturing and research.”
The U.S. currently maintains a stable chip manufacturing footprint, but the trend lines are concerning. There are commercial fabs in 18 states, and semiconductors rank as our nation’s fifth-largest export. However, significant semiconductor manufacturing incentives have been put in place by other countries, and U.S. semiconductor manufacturing growth lags behind these countries due largely to a lack of federal incentives.
The CHIPS for America Act includes a range of federal investments to advance U.S. semiconductor manufacturing, including $10 billion for a new federal grant program that would incentivize new domestic semiconductor manufacturing facilities. The bill also includes a refundable investment tax credit for the purchase of new semiconductor manufacturing equipment and other facility investments.
Research is critical to advancing semiconductor innovation in the U.S. American semiconductor design and manufacturing companies invest approximately one-fifth of revenue in R&D, almost $40 billion in 2019, representing the second-highest rate of research investment of any industry. Federal government investment in semiconductor research, however, is only a small fraction of total semiconductor R&D in the U.S. and has been relatively flat as a share of GDP for many years. Meanwhile, China and others are increasing their government research investments.
The CHIPS for America Act would make significant federal investments at the Department of Defense, the National Science Foundation, and the Department of Energy to promote semiconductor research and drive chip technology breakthroughs. The bill would establish a National Semiconductor Technology Center to conduct research and prototyping of advanced chips, as well as create a center on advanced semiconductor packaging. These investments are needed to enable U.S. companies to maintain their technological edge in semiconductor materials, process technology, architectures, designs, and applications.
“As global competitors invest big to attract advanced semiconductor manufacturing to their shores, the U.S. must get in the game and make our country a more competitive place to produce this strategically important technology,” said John Neuffer, President and CEO of the Semiconductor Industry Association. “We commend the bipartisan original cosponsors in both the Senate and House for their leadership in introducing this bold, timely legislation and urge Congress to move forward on a bipartisan basis to strengthen the bill and bolster domestic semiconductor manufacturing and research.”
3. Electric Dominating Global Auto Maker Market Cap-Bespoke
In today’s Chart of the Day, we detailed Tesla’s (TSLA) rise above $1,000 and what other stocks like Google (GOOGL) and Amazon (AMZN) have looked like when they first crossed $1,000. With TSLA reaching these kinds of levels, it also now has a record share of the total market cap of global automobile makers. Including the electric car company with the other 20 companies in the S&P Global 1200 Automobile Index, TSLA accounts for just over 22% of the total market cap. That is the second-largest of any company behind only Toyota whose $210.69 bn (USD-adjusted) accounts for 24.43%. As we have detailed in the past, TSLA’s market cap is now significantly larger than other US automobile producers like Ford (F), General Motors (GM), and Harley Davidson (HOG). In fact, it is now more than double the market caps of those companies combined! The rest of the world’s automobile companies including Japanese names like Honda and German names like BMW and Daimler (Mercedes) account for 69.58% of the total market cap.
Although TSLA accounts for a massive share of world automaker’s market cap, it still makes up for a very small share of these companies’ total revenues. In fact, its $24.58 bn in sales in 2019 only accounted for 1.29% of all these companies’ total revenues. Albeit it is a high growth name, that leaves it with one of the higher valuations on a P/S and P/B basis. A similar dynamic can be seen for other high-end brands like Italian brand Ferrari and German brand Porsche. The same can be said for another electric vehicle stock that has received a large amount of headline attention recently, Nikola (NKLA). NKLA likewise is another name with a fairly large disparity between its sales and share of market cap. Another high growth name and recent IPO, Nikola actually had no revenues in 2019 but is valued at $23.46 bn or 2.56% of total market cap. That is more than some other major global brands like Hyundai, Suzuki, and Subaru to name a few. Click here to view Bespoke’s premium membership options for our best research available.
But at the same time, used car prices have been tanking. Over the last few months we detailed how used car prices were set to cripple what little interest in new cars remains, how dealers are scrambling to desperately offer incentives and how ships full of vehicles are being turned away at port cities due to a lack of space and inventory glut.
Today, we want to take a look at where the used car price plunge – which continues to put pressure on the industry – is having the biggest impact. A new report from CoPilot, a car shopping app, looks at the recent drop in used car prices in the U.S.
Research firm Manheim has indicated that wholesale prices dropped as much as 11% in April, but also that this price drop hasn’t fully hit the retail market yet. The report predicts that since “dealers have largely avoided purchasing new inventory in recent weeks, they aren’t in a rush to cut prices as a way to move their existing inventory.”
Where Used Car Prices Are Crashing The Most In The USby Tyler Durden
7. FAANG Stocks Making Acquisitions in Crisis…Top 25 R&D Public Companies Listed
The Economy Is Reeling. The Tech Giants Spy Opportunity.
Many companies are retreating. But Amazon, Apple, Facebook, Google and Microsoft are placing bets to get even bigger.
PWC
The 2018 Global Innovation 1000 study
The Global Innovation 1000 study analyses spending at the world’s 1000 largest publicly listed corporate R&D spenders. The interactive data tool below lists the Top 25 largest corporate R&D spenders from the years 2012-2018 worldwide. You can use the tool to filter by year, company name, country, and industry group to view R&D expenditures, Revenue, and R&D intensity (R&D expenditure as a percentage of Revenue). In order to see the complete list of Top 1000 corporate R&D spenders from the years 2012-2018 see the “Download the Data” section. Click here for the methodology.
About 80% of Americans who have died of Covid-19 are older than 65, and the median age is 80. A review by Stanford medical professor John Ioannidis last month found that individuals under age 65 accounted for 4.8% to 9.3% of all Covid-19 deaths in 10 European countries and 7.8% to 23.9% in 12 U.S. locations.
The Covid Age Penalty-New patient data offers a guide to opening while protecting seniors.By The Editorial Board
New York (CNN Business)Nearly three months after Covid-19 upended daily life, one thing is becoming increasingly clear: Americans are dealing with coronavirus by drinking. A lot.
Since March 7, alcohol sales have grown nearly 27%, according to Nielsen. Two big winners are domestic beers and spiked seltzer, with the former being practically on life support just a year ago.
Customers have been turning away from domestic brews, instead preferring pricier imports, such as Corona, appropriately, and lower-calorie alternatives like White Claw or even straight-up liquor, particularly tequila. But the affordability and larger pack sizes have helped sales of domestic brands, such as Busch Light, Miller Lite and Natural Light, surge higher.
Budget beer has boomed for two reasons: price and familiarity, according to Daniel Blake, vice president of US value brands at Anheuser-Busch. He believes shoppers were in a “stock up” mode as people sheltered in place and had to limit their trips. People were also buying “larger and more trusted brands with an emphasis on affordability,” he told CNN Business.
Blake oversees marketing for Busch Light and Natural Light. Both beer brands have created viral promotions, including Busch Light’s dog adoption campaign that gave 500 people a three months’ supply of beer. Sales have risen since mid-March because they both “bring fun into [buyers’] lives and also do good.”
He said that the beer brands aren’t changing their marketing and are launching new products to sustain growth. For example, Busch Light is adding a limited-time apple-flavored beer in July. Natural Light is rolling out a variety pack of its Natty Light Seltzer brand with a new strawberry-kiwi flavor.
Natty Light Seltzer launched last summer and he said sales “exceeded our expectations.” Anheuser-Busch (BUD) has a number of spiked seltzer brands as it tries to dethrone White Claw and Truly from the top two spots — both combined have a market share of 77%. The remaining top three brands — Bud Light Seltzer, Corona Seltzer and Smirnoff — make up a combined 16% of sales, according to Nielsen.
The category is keeping its monster-growth pace, leading to several brands launching new spiked seltzers at a dizzying clip. Last month, Anheuser-Busch launched Social Club Seltzer, a premium seltzer with cocktail flavors, like an Old Fashioned.
Seltzers have racked up nearly $1 billion in sales from March 7 to May 30, according to Nielsen. In comparison, spiked seltzer sales totaled $1.5 billion in all of 2019. That makes it an enviable category for large and small alcohol companies to dip their toes into, even if competition keeps tightening.
“Within the hugely successful and growing hard seltzer segment, new and ‘old’ brands alike can succeed even if their market share is relatively small or declining, because the total pool of sales of hard seltzer within US retail is growing at such a high rate,” Danelle Kosmal, VP of Beverage Alcohol at Nielsen, told CNN Business.
“As such, with new launch after new launch, manufacturers may lose market share but continue growing their sales,” she added.
Dr. Mercola (of the Mercola Video Library) interviewed three centurions for this very information, and many other people have as well. Quite a few of us (more now than ever) have relatives or know someone who is 100 or over.
One lady I know is 104 is full of sassy attitude and enjoys talking to people and sharing her wealth of wisdom. From my conversations with her and the interviews, here’s what we discovered about the secrets to living a happy and fulfilling life.
1. Happiness comes from what we do
At 100 years old, or older, people don’t seem to sit around and smile about the things they accumulated in life. Rather, it’s more about their life experiences. Happy memories can go a long ways toward happiness later on!
One man over 100 years old said he did all he wanted to do. Now he wants to be helpful and keep going.
“I have so many beautiful memories,” said a woman over 100. “I got to do all the things I wanted to.”
That tells us to jump in and live life – remember that it’s about really living and making memories with people we love.
Science backs this up as well. We know people derive more happiness that is long-term from experiences such as vacations rather than from possessions.
2. Happiness comes from a positive attitude and optimism
People over 100 seem to remember life through rose tinted glasses, making it sound like an adventure even through hard times, like war.
“I’ve always been lucky,” says one centurion despite living through 2 great wars!
She also talked about how “everything makes me happy. I love talking to people… going shopping.”
Common advice from people who are doing well at 100 is to “Decide to be content.” Others say, “Don’t chase happiness. Just be satisfied.”
Deciding life is good changes our perception and makes life better, and apparently it helps you live much longer!
3. Happiness comes from living in the NOW
Age is only a number. You live for the day and keep going.
This is wisdom from someone with a very long past-but they enjoy the present.
The past is the past; we can’t change it. But we can rob ourselves of our present happiness and good emotional health by hanging onto old regrets, grudges, and pain.
To experience the ultimate feelings of inner calm and living in the now, I highly recommend that you follow this link to 7 Minute Mindfulness…
You’ll gain inner peace, happiness and feel ‘uncluttered’ in your life.
4. Love and Partnership is critical for long life
Centurions often talk about their “good” marriage, all their happy memories, and all their good times together. It’s another area where they might be applying rose-tinted glasses, but it’s apparent that they got emotional support and felt like they have a life partner.
They also say that people today give up too easily these days-so there was hard work involved, but at the end of their life that part isn’t really important anymore.
“Being happily married and happy in general is the remedy for all illness.”
We don’t have studies on how marriage or long-term relationships affect life span, but you don’t have to be a scientist to take note: centurions all speak about their decades long marriage with a smile on their face.
Even people who have been widowed for a few decades say they have many, many warm memories about their married life, and that still makes them happy.
5. Eat natural, real food to feel good and live long
Many people who are 100 say they feel strong and like they’re 69 or 79. These are the people who stay active physically and mentally, and have a lot to share with other people.
Many people over 100 talk about eating fresh food that they grew themselves.
And older people will tell you over and over: eat in moderation!
6. Learn to adapt for a better and longer life
“Life goes on regardless” is a common theme. People who live well into old age understand that there is hardship in life but they know life goes on and they must too.
If you live 7, 8, 9, 10 or more decades, you’re going to see a lot of change.
People who adapt and change with the times do better. It’s part of having a positive attitude-they’re excited for new opportunities instead of fearing change.
7. Help others
Helping others is one way to build relationships and connections, and it makes you feel great.
It’s another common theme among people who live to be over 100.
Being kind and helping others gives you a sense of purpose too, and it fights depression and anxiety. Not only that, it’s a way of staying active and productive after you retire.
It’s a win-win for everyone involved, and being older and retired can mean having more time for volunteering.
8. Always keep learning!
Older people will advise to get a good education to help you go far in life, and science has shown that people with a Bachelor’s degree actually do live about a decade longer than people who don’t have one. (From the U.S. Centers for Disease an Control Prevention)
Older people will tell you to keep learning all through life, both in and out of school.
Be curious-it makes life more interesting and fun. And it helps you stay engaged with life and the changing technology and times. That helps you adapt too.
9. Practice mindfulness
People over 100 tend to live in the moment as it comes, rather than worrying about plans, regrets, and getting caught up in pressure and worry.
They cherish special time with family and friends, the colours and smell of a new flower in spring, or the feel of the grass on their feet.
When life is enjoyed in the moment, it’s just better…
…And people who live in the moment more tend to live longer, happier lives!
For the ULTIMATE experience of mindfulness, I highly recommend that you check out 7 Minute Mindfulness.
This method will make your mind as calm as water…
I’m talking about a method that will allow you to sink into relaxation, and feel abundantly positive and happy within minutes…
It will fill your life with joy and satisfaction…
And teach you how to easily defeat any life problems that you may be facing.
And it only takes 7 minutes!
Actively practicing mindfulness is one of the best things you can do for yourself.
When we disconnect from the mental chatter (the past, future, worry, expectations and judgements), we are able to approach life with greater perspective – we tend to see the opportunities, instead of carrying around the weight of worry and mental baggage.
There’s a wealth of research on the long term and short term health benefits of mindfulness, including boosting your immune system, Preventing cellular aging, and reducing the likelihood of age-related diseases. (UCLA)
If you’d like disconnect from the mental chatter but don’t have time for long drawn out meditation, then try 7 Minute Mindfulness.
In just 7 minutes you can release the stress that builds up, wipe away the mental chatter, and relax your mind and body… so you can enjoy a long and prosperous life!
Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania.. To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results. Material compiled by Lansing Street Advisors is based on publically available data at the time of compilation. Lansing Street Advisors makes no warranties or representation of any kind relating to the accuracy, completeness or timeliness of the data and shall not have liability for any damages of any kind relating to the use such data. Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Indices that may be included herein are unmanaged indices and one cannot directly invest in an index. Index returns do not reflect the impact of any management fees, transaction costs or expenses. The index information included herein is for illustrative purposes only
I apologize for almost a month of missed blog posts but I have launched a new firm Lansing Street Advisors. The blog suffered in the short-term transition but we are planning a comeback that is stronger than ever. Please enjoy today’s post and the daily should be back in your inbox starting Monday but most important there is much more to come around Lansing Street Advisors. Thanks for reading and hope your families are healthy.
Matt
1. The Monopolies of Our Time…The Super 6 Stocks
Jeff Gudlach DoubleLine.
Take these six stocks out of the market and the USA has returns similar to the rest of the world over the last five years! That’s the story of the stock market in a nutshell.
In the state of Texas, hospitalizations for the virus are up 42% since Memorial Day. The state of Arizona just issued a warning that they’re getting close to full capacity in their hospitals. Many states that have reopened are experiencing surges of cases and deaths, along similar trajectories of the spikes seen in the early days for New York, New Jersey, California, Michigan, etc.
And while this uptick in cases hits dozens of states, the S&P 500 grinds ever higher, led by the now-expected large cap growth rally. This is also being accompanied by a surge in corporate credit enthusiasm along with a three-ring circus of speculative feats, penny stock freak shows and momentum magic acts.
Why isn’t the market spooked by what some are describing as the virus’s “second wave”?
I have a few reasons I’ve listed. I may not know much about virology, epidemiology or public health, but I know a lot about people and investor attitudes, so here is my best attempt to understand it:
1. We did this already. It’s easy to scare investors. It’s harder to keep them scared. There’s a lot of regret from investors who sold toward the bottom as stocks recovered right in their faces just weeks later. There is an unwillingness to have the same thing happen again, to the same people, so the hesitance to swing back to cash on virus headlines is high. The White House has stopped talking about this subject. Let’s assume half of the investor class takes its cues from the President because of party affiliation and decides to ignore it too. Maybe more than half.
2. The Fed is literally telling us, in word and in deed, that they believe the best way to satisfy their dual mandate of price stability and full employment is to continue to purchase tens of billions worth of securities every month, from corporate bonds to Treasurys. They are not going away. They are saying they are not going away. The message has gotten through. And as they buy low risk assets from the holders, those holders turn around and put that cash into higher risk assets. The Fed takes your place in the money markets while you run off and join Ringling Brothers.
3. We are better equipped to handle new cases. Think about how much medical professionals, EMTs, nurses, doctors and hospitals have learned since February. There’s no way we’ll be as overwhelmed on a patient by patient basis as we were in New York this winter. Right?
4. Nursing homes. Everyone I talk to points out the statistic of how many of the deaths occurred in nursing homes versus outside of them. The last person to relay a stat to me said 30%. The person before that said 25%. Who knows what data they’re quoting, from what date and from what place? It’s just what they believe – that infections among the most vulnerable populations made the virus look much more deadly than it is. I know this is very controversial, and I’m not saying it’s true – I think this is just what people feel now. So they are less afraid for their lives, and acting that way with their investment portfolios.
5. Gains embolden us. This is a fact. We are less afraid, as an investor class, when it seems like money is growing on trees. That’s what 50% rebounds in large, well-known stocks will do. That’s what “the best 50-day period for US stocks ever” will do. Money attracts money.
6. It’s global. Stock markets around the world are rallying as central banks around the world do some version of what the Federal Reserve has done. European stimulus and even policy change have gone further than ever. Italy is selling a new class of sovereign bonds to its citizens that include a coupon linked to the future GDP growth of the country’s economy (they’re called Futura, nice). Chinese stocks are on fire, German stocks are up 20% in a month, etc.
7. Casino! Popular sports commentators (and their legions of followers) have pivoted to playing the stock market in the absence of games to bet on. We haven’t seen this much excitement from retail investors in 20 years. I was there last time, there are a lot of similarities but valuations are more reasonable and there are way less IPOs dumping new shares on us now. New brokerage account openings are skyrocketing. Fidelity is running ads on active trader subreddits. Barstool’s Dave Portnoy has introduced perhaps hundreds of thousands of young men to the game they never knew they could love. This may not be moving the $1.5 trillion market cap for Apple, but it is definitely influencing the prices of smaller stocks and more speculative ETFs. We’ll see if this phenomenon persists as the NBA gets started in July and the NFL season approaches.
UPDATED!!! Including this chart from my pal Jon Krinsky – Nasdaq trading volumes have exploded!
8. Treatments and vaccines. Stock market participants tend to be optimists. I can’t know for sure, but I would guess two thirds of them believe that, between J&J, Moderna, Astra Zeneca and the hundreds of other trials taking place, something big is coming in the vaccine space. Enthusiasm for improved treatments is probably running on a parallel course.
9. Masks. They cost nothing and they work. In metropolitan areas around the country, people are wearing them. Takeout from restaurants, counters retrofitted with plexiglass and clear acrylic shields, delivery – we may not have the “old economy” but the new post-virus economy features businesses scratching and clawing their way back, which I love to see. Investors have decided that life will go on in the towns they live in, so why wouldn’t they invest accordingly?
10. Statistics. You can make a statistic say whatever you want, depending on when you start counting from. A lot of the data we’re seeing – in both corporate earnings reports and the overall economy – is coming off the bottom. Some of the percentage gains, for things like housing and airport traffic, are almost cartoonishly outsized. A Harvard economics professor remarked recently that Trump will have some of the best economic growth data in history to run on this summer because we are rebounding off of such low levels from the spring. You can fool a lot of people this way, and investors can always be relied upon to fool themselves.
Anyway, that’s what I think is going on. What do you think? Tell me here.
“It’s not a second wave, they never really got rid of the first wave,” says Dr. Scott Gottlieb on outbreaks in Arizona, Texas, South Carolina and North Carolina. There has been little evidence of a “Second Wave” in European countries that unlocked before the USA.
4. Tesla Valuation Close to Toyota….Tesla Produced 103,000 Vehicles vs. Toyota 2.4 Million….Nikola Electronic Truck Maker Skyrockets.
Electric truck maker Nikola looks like Tesla 2.0 — except even riskier…Formed thru a Reverse Merger ….Zero Trucks Sold.
By Russ Mitchell Los Angeles Times (TNS)
A week before Nikola, the electric truck start-up, debuted its shares on the public market, it was time to spin up the hype machine. For some reason its founder and chief executive, Trevor Milton, wanted to talk about how much he loves Tesla.
You’d think he’d count Tesla as a rival, if not an enemy. Each aims to capture the market for long-haul diesel trucks. Each seeks to claim the mantle of brilliant inventor Nikola Tesla, who helped bring electricity to the masses by championing alternating current technology. Whenever the subject comes up, Tesla Chief Executive Elon Musk dumps on Nikola’s core technology, electric fuel cells, deemed by Musk as irredeemably inferior to Tesla’s own lithium ion battery power systems. “Fool cells,” he calls them.
But here was Milton, blowing kisses. “There are probably no bigger fans around the world than Nikola employees. Look at our parking lot. Teslas all over the place,” he said.
“We’re huge fans and the reason is this: Tesla paved the way for EVs” while traditional car companies “talked trash on them all day, every day. But they got it done.”
It’s easy to see why Milton, 38, might want to bill his company as the second coming of Tesla. Nikola’s position is similar to Tesla’s when the electric-car maker started out in the early 2000s: a renegade start-up promoting untried technology to push internal combustion incumbents out of the driver’s seat.
Like Tesla, Nikola also must raise loads of money to fund operations and capital expenses from investors willing to bear year after year of losses.
It’s worked for Tesla: Look at its jaw-dropping stock price. The company has never earned an annual profit, its growth rate is slowing and a viral plague has pushed the world economy into deep recession. Yet Tesla investors remain so optimistic they’ve pushed the stock to almost $900, giving the company a market capitalization of about $162 billion. If you were Milton, wouldn’t you want in on that kind of action?
Both Milton and Musk have become billionaires thanks to new investment dollars flowing into their companies, not on company profits. Nikola’s revenue is negligible, a few hundred thousand dollars a year from engineering contracts. Since its founding in 2015, it has lost a cumulative $188.5 million. Whereas Tesla had debuted a car before its IPO in 2010, the low-production Roadster, Nikola has yet to sell a single truck.
Glory days may lie ahead, but the only trucks either company has to show are prototypes. Both have announced ambitious timelines while raising money and then let the schedules slip. Nikola claims $10 billion worth of “orders” for 14,000 semi trucks, but government filings make clear that those are more like expressions of interest, cancelable, with no deposit money required. Musk says there’s strong demand for the Tesla Semi, but he hasn’t released any order or reservation numbers at all. He also has claimed advances in battery technology that will allow its big-rig haulers to travel 500 miles between charges, but hasn’t yet demonstrated such performance in real life.
Another parallel: Milton and Musk have both been criticized for the way they’ve advanced their own interests during the COVID-19 crisis. Musk restarted production at its Fremont assembly plant May 11, defying orders from the Alameda County public health department.
Milton, meanwhile, was taken to task on CNBC for initially declining requests to return $4 million in federal Paycheck Protection Program forgivable loans meant to help small businesses. This, despite $85 million cash in Nikola’s bank account as of the end of 2019, and with a go-public deal in the works to provide Nikola with $735 million in new capital.
About that deal, consummated Thursday: It was financed by a complicated financial arrangement that avoided a traditional initial public offering, or IPO. Basically, a shell company was created and listed on Nasdaq. That company bought Nikola and folded it into the shell in what’s known as a reverse merger, raising the company’s valuation to $12 billion, up from $3 billion just last fall.
7. Digitization of daily life is here to stay…U.S. Mobile Payments Well Behind China and India.
From Capital Group American Funds –Digitization of daily life is here to stay
Some of the recent demand activity reflects an amplification of already established trends. Cloud demand, for example, was sky-high before the COVID-19 outbreak. But the events of 2020 have kicked that theme into overdrive. In the stay-at-home era, e-commerce, mobile payments and video streaming services have soared in popularity, occasionally pushing the limits of technology. While the levels of online activity are likely to moderate, the pandemic could be a catalyst for even stronger e-commerce growth in the years ahead.
“The response to the COVID-19 crisis — keeping everyone at home — has accelerated this powerful trend of digitizing the world,” explains Capital Group portfolio manager Mark Casey, Co-President of Fundamental Investors®.
“Services that were already useful have in some cases become almost essential. Many people felt compelled to try grocery delivery for the first time, for example, and subscriptions to Netflix skyrocketed.”
There’s also room to advance, Casey adds. While e-commerce has grown in popularity, it still represents only about 11% of U.S. retail sales last year, and mobile payments stood at similarly low levels. “Given where we are now in the consumer-technology space, the growth potential is truly exciting.”
Among the many ways the novel coronavirus outbreak has affected the wine and hospitality industries is the rejuvenation of the 375-milliliter bottle of wine. Easily shippable for virtual tastings and a sensible substitute for by-the-glass service, the small-format bottle is especially suited to pandemic life.
“Most people don’t want to open three or four [standard] bottles of wine at home to do a traditional tasting, so the half bottles have been a very nice alternative,” says Laura Kirk Lee, vice president of sales and marketing for Knights Bridge Winery. “We find that our guests enjoy the opened bottles with dinner after the virtual tasting.”
Rachel Martin, vintner/owner of Oceano Wines, sent half-bottles of her Chardonnay along with recipes and videos as “care packages” to members of The Supper Club in Los Angeles, San Francisco and Austin. “In St Louis, I hosted an Oceano virtual tasting block party where we sent a couple of cases of half bottles to residents, and they distributed them to their friends and family,” she says.
Frank Pagliaro, owner of Frank’s Wine in Wilmington, Delaware, increased his selection of half bottles by 60% to accommodate virtual tastings. Suzie Kukaj-Curovic, director of public relations for Freixenet Mionetto USA, says smaller-format sales have increased, though modestly, at less than 10%.
Will this enthusiasm continue once customers regain greater access to winery tasting rooms and in-store retail tastings?
“We had started offering virtual tastings before Covid-19 because we wanted to stay connected,” says James Blanchard of Blanchard Family Wines. “We’ve been selling a lot of 375s, and I think our virtual tastings will continue for some time.”
Other wineries express similar sentiments about continuing online tastings even after tasting rooms reopen. At a recent webinar sponsored by Silicon Valley Bank, winery consultant Paul Leary emphasized the importance for producers to maintain contacts forged during the pandemic. “The worst thing we can do is to go back to our old ways,” he says. “You now have the opportunity to go directly into the customers’ dining rooms.”
Wines in cans, another 375-ml option, have also grown in popularity during the shutdown. It raises the issue of whether some wineries will see half bottles as a suitable alternative for consumers.
“The question is whether the consumer trend will trade down to value over premium wines, like the previous recession, and what will premium wines do [to] make up sales—reduce price or seek alternate packaging in 375 ml,” says Todd Nelson, director of marketing for Winesellers, Ltd. “I don’t know if this kind of trend to smaller formats will translate very much for the high-end premium.”
Rob McMillan, EVP for the Silicon Valley Bank Wine Division, points out that sales of half-bottles increased 20% in 2019 while standard 750-ml bottles declined slightly. This growth trend continued into the first quarter of 2020. In his annual report, McMillan gave another reason for increased interest in premium 375-ml bottles.
“As boomers retire, they will join millennials as frugal consumers and change their consumption and spending,” he says. “But as any wine lover will tell you, it’s hard to drink good wine and go backward to lesser-quality wine.”
It is still too early for most restaurants, many of which have pivoted to takeout and delivery sales, to reorder wines of any size. Nevertheless, wineries have begun to order additional half bottles for upcoming bottling runs. “We are getting more requests than normal for 375-ml bottles,” says TJ Hauser, president of Hauser Packaging. “It’s too early to tell if wineries are using them as a stopgap for virtual tastings or whether 375s will become a more permanent trend in the industry.”
Jason Haas, Tablas Creek Vineyard partner and general manager, has decided to give the format a second look.
“Before the pandemic, we saw a sustained decrease in the interest in half-bottles, to the point that we’ve been considering eliminating them,” he says. “But for virtual tastings, they’re really ideal. It’s definitely opened up new connection possibilities with our customers, but will people still want to do virtual tastings once they can visit wineries again? Right now, we’re in a holding pattern.”
Instead of eliminating the format, Haas says Tablas Creek will be reordering the same numbers of half-bottles for the next bottling period in case the resurrected interest becomes permanent.
9. A Single Session of Exercise Alters 9,815 Molecules in Our Blood
The types of molecules also ranged widely, with some involved in fueling and metabolism, others in immune response, tissue repair or appetite. And within those categories, molecular levels coursed and changed during the hour. Molecules likely to increase inflammation surged early, then dropped, for instance, replaced by others likely to help reduce inflammation.
“It was like a symphony,” says Michael Snyder, the chair of the genetics department at Stanford University and senior author of the study. “First you have the brass section coming in, then the strings, then all the sections joining in.”
Interestingly, though, different people’s blood followed different orchestrations. Those who showed signs of insulin resistance, a driver of diabetes, for instance, tended to show smaller increases in some of the molecules related to healthy blood sugar control and higher increases in molecules involved in inflammation, suggesting that they were somewhat resistant to the general, beneficial effects of exercise. The levels of other molecules ranged considerably in people, depending on their current aerobic fitness.
Over all, the researchers were taken aback by the magnitude of the changes in people’s molecular profiles after exercise, Dr. Snyder says. “I had thought, it’s only about nine minutes of exercise, how much is going to change? A lot, as it turns out.”
This study was small, though, and looked at a single session of aerobic exercise, so cannot tell us anything about the longer-term molecular effects of continued training or of how, precisely, changes in molecular levels subsequently alter health. It also did not include young volunteers under 40.
Dr. Snyder and his colleagues are planning follow-up experiments with more volunteers and sustained exercise programs. They hope to establish whether certain molecular responses to exercise might distinguish people who would benefit from emphasizing resistance exercise over endurance training and whether specific molecular profiles indicate who has higher or lower aerobic endurance. This information could allow physicians and researchers to check fitness with a simple blood draw instead of a treadmill stress test.
What makes someone great at their job? Having knowledge, smarts and vision, to be sure. But what really distinguishes the world’s most successful leaders is emotional intelligence — or the ability to identify and monitor emotions (of their own and of others).
Companies today are increasingly looking through the lens of emotional intelligence when hiring, promoting and developing their employees. Years of studies show that the more emotional intelligence someone has, the better their performance.
What most people fail to realize, though, is that mastering emotional intelligence doesn’t come naturally. Tom, for example, considers himself an emotionally intelligent person. He’s a well-liked manager who is kind, respectful, nice to be around and sensitive to the needs of others.
And yet, he often wonders, I have all the qualities of emotional intelligence, so why do I still feel stuck in my career?
This is a common trap: Tom is defining emotional intelligence too narrowly. By focusing on his sociability and likability, he loses sight of all other essential emotional intelligence traits he may be lacking — ones that can make him a stronger, more effective leader.
After spending 25 years writing books and fostering research on this topic, I’ve found that emotional intelligence is comprised of four domains. And nested within these domains are 12 core competencies.
Don’t shortchange your development by assuming that emotional intelligence is all about being sweet and chipper. By reviewing the competencies below and doing an honest assessment of your strengths and weaknesses, you can better identify where there’s room to grow.
1. Self-awareness
Self-awareness is the capacity to tune into your own emotions. It allows you to know what you are feeling and why, as well as how those feelings help or hurt what you’re trying to do.
Emotional self-awareness: You understand your own strengths and limitations; you operate from competence and know when to rely on someone else on the team. You also have clarity on your values and sense of purpose, which allows you to be more decisive when setting a course of action.
Developing the skills:
Every moment is an opportunity to practice self-awareness. One of the biggest keys is to acknowledge your weaknesses. If you’re struggling with something at work, for example, be honest about the skills you need to work on in order to succeed.
Be conscious of the situations and events in your life, too. During times of frustration, pinpoint the root and cause of your frustration. Think about any signals that accompany how you feel in that moment.
2. Self-management
Self-management is the ability to keep disruptive emotions and impulses under control. This is a powerful skill for leaders, especially during a crisis — because will people look to them for reassurance, and if their leader is calm, they can be, too.
Emotional self-control: You stay calm under pressure and recover quickly from upsets. You know how to balance your feelings for the good of yourself and others, or for the good of a given task, mission or vision.
Adaptability: This shows up as agility in the face of change and uncertainty. You’re able to find new ways of dealing with fast-morphing challenges and can balance multiple demands at once.
Achievement orientation: You strive to meet or exceed a standard of excellence. You genuinely appreciate feedback on your performance, and are constantly seeking ways to do things better.
Positive outlook: You see the good in people, situations and events. This is an incredibly valuable competency, as it can build resilience and set the stage for innovation and opportunity.
Developing the skills:
During moments of distress, do not brood or panic. Take a deep breath and check in with your emotions. Instead of blowing up at people, let them know what’s wrong and offer some solutions.
Accept that there will always be sudden changes and challenges in life. Try to understand the context of the given situation and adjust your strategy or priorities based on what is most important at the time.
3. Social awareness
Social awareness indicates accuracy in reading and interpreting other people’s emotions, often through non-verbal cues. Socially aware leaders are able to relate to many different types of people, listen attentively and communicate effectively.
Empathy: You pay full attention to the other person and take time to understand what they are saying and how they are feeling. You always try to put yourself in other people’s shoes in a meaningful way.
Organizational awareness: You can easily read the emotional currents and dynamics within a group or organization. You can sometimes even predict how someone on your team or leaders of a company you do business with might react to certain situations, allowing you to approach situations strategically.
Developing the skills:
First and foremost, social awareness requires good listening skills. Do not talk over someone else or try to hijack the agenda. Ask questions and invite others to do the same.
Challenging your prejudices and discovering commonalities is also key. Practice putting yourself in other people’s shoes. When we do this, we are often more sensitive to what that person is experiencing and are less likely to tease, judge or bully them.
4. Relationship management
Relationship management is an interpersonal skill set that allows one to act in ways that motivate, inspire and harmonize with others, while also maintaining important relationships.
Influence: You’re a natural leader who can gather support from others with relative ease, creating a group that is engaged, mobilized and ready to execute the tasks at hand.
Coach and mentor: You foster the long-term learning by giving feedback and support. You put your points into persuasive and clear ways so that people are motivated as well as clear about expectations.
Conflict management: You’re comfortable dealing with disagreements between multiple sides and can bring simmering disputes into the open and find win-win solutions.
Teamwork: You interact well as a group member and can work with others. You participate actively, share responsibility and rewards, and contribute to the capability of your team as a whole.
Inspirational leadership: You inspire and guide others towards the overall vision. You always get the job done and bring out your team’s best qualities along the way.
Developing the skills:
If you’re a constantly negative person, you’ll have a very difficult time managing long-term relationships. Instead of focusing on “the worst that can happen,” try to see yourself as an agent of positive change.
Don’t be afraid to go against the grain of conventional norms or take risks, either. These kinds of people ultimately leave the people they work with feeling inspired, motivated and connected.
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In last night’s Closer, we noted that as of yesterday’s close, the S&P 500 (SPY) sat over 15% away from its 2/19 all time high. But as for the index’s individual stocks, about 12.4% have retaken their 2/19 levels. As shown in the chart below, Health Care sector stocks on average are the closest at 5.29% below their levels on 2/19. Consumer Staples are the only other stocks that are less than 10% away from those levels on an average basis. Conversely, Energy, Financials, and Real Estate have the furthest to go, all down around 30% or more.
Meanwhile taking a look across industries, there is only one group of stocks that’s currently above its 2/19 levels on an average basis: Pharmaceuticals, Biotechnology, & Life Sciences. While stocks of that industry have pushed above by 1.2% on average, the other groups are not even close with the next closest to doing so being Food & Staples Retailing at 7.6% below 2/19 levels. In addition to Food & Staples Retailing, Food, Beverage, & Tobacco, and Health Care Equipment & Services are the only others that are even within 10% away. On the other end of the spectrum, Banks, Energy, and Consumer Durables & Apparel are down the most.
It is difficult to think about the E in the P/E ratio when the economy is shut down and half of blue-chip companies don’t want to provide guidance on full-year earnings because of all the uncertainty. The Fed probably doesn’t worry much about if the forward multiple is 18, 20, or 25, their clear goal is to support markets at least as long as we are in lockdown and maybe until the unemployment rate has moved into the single digits again. With this backdrop the chart below isn’t particularly helpful if one wants to understand if stocks are going up or down from here. For more see also here and here, and also here.
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Torsten Sløk, Ph.D. Chief Economist Managing Director Deutsche Bank Securities
The Latest Data-With the Q1 GDP Advance Estimate, we now have an updated look at the popular “Buffett Indicator” — the ratio of corporate equities to GDP. The current reading is 156.3%, up from 156.0% the previous quarter.
This morning, we highlighted the recent performance of sector ETFs noting how Health Care has led the way higher rising the furthest above its 50-DMA. Consumer Discretionary (XLY), Technology (XLK), Materials (XLB), Communication Services (XLC), and Consumer Staples (XLP) each had also risen above their 50-DMAs. Given their outperformance, as shown in the table below, headed into today these were the sectors closest to their levels on the S&P 500’s last all time high on February 19th. The Health Care ETF (XLV) actually headed into today less than 2% away from its 2/19 levels and XLP was also under 10% away.
#Fed balance sheet has hit fresh ATH at $6,367.9bn as Powell keeps printing press rumbling. Total assets rose by another $284.7bn, now equals to 29.1% of US GDP, fresh record. Since Fed announced its bailouts on Mar15, it has printed and handed to Wall Street $2,055.9bn. pic.twitter.com/ESchAzdrEb
1.Market Cap of 5 Largest Companies Equals Record 19% of S&P
Bloggers note we now have New highs for concentration at the top as measured by the market cap of 5 largest S&P companies as a % of S&P500 (as per yesterday)
Money talks but it can’t sing, it can’t dance and it can’t walk. Pop star, Neil Diamond, understood this long before the coronavirus put our lives on hold. But the plan the Fed and Congress put in place to rain money everywhere will hopefully allow us to sing, dance and walk until this crisis is over.
First, my thoughts and prayers go out to everyone impacted by the pandemic, especially patients and all the brave medical personnel on the front lines. In this new reality, it may seem like working from home in blue jeans is going to last forever; it won’t. We’ll eventually get back to normal, but I believe Congress won’t be able to bail out corporations as easily today as it did with banks, airlines and cruise lines during the 2008-09 global financial crisis. It is my opinion that taxpayers and voters won’t put up with airlines spending 96 percent of their free cash flow on stock buybacks and they won’t tolerate helping “American” cruise lines stay afloat, when those companies—domiciled offshore– pay almost no U.S. taxes.
When we got through the global financial crisis in 2009, I was emotionally exhausted. But I consoled myself with the fact that it would be at least a quarter of a century before we’d have to live through volatility like that again. But here we are, barely a decade later, and it’s déjà vu all over again. Just a few weeks ago, we had a perfect storm of plummeting stocks, plunging oil prices and rock bottom interest rates all at the same time. This perfect storm caused the worst liquidity crisis since 2008. At one point there was a bid/offer spread of 100 basis points on U.S. Treasuries, leaving the rest of the bond market frozen. An entire frightening week went by in which no corporation could borrow money in the credit markets.
Meanwhile, the stock market saw the fastest 30 percent drop in history. In fact, it was only the fourth time in 75 years that a conservative 60/40 portfolio was down 20 percent. Not only that, but the stock market volatility index (aka the VIX) reached a high of 82.69 breaking the previous record set in 2008
A record month for records
Consider this: During one two-week stretch in March, the Dow Jones Industrial Average experienced its best single day since 1933 as well as its two worst since days since the Black Monday crash of 1987.
According to Dorsey Wright research, the Dow registered 10 separate days in March 2020 that ranked among the largest single-day moves since 1985. The Dow had five of its 20 best single day returns in March 2020 as well as five of its 20 worst single-day returns. To put these extremes into perspective, we have seen only two days since 2009 that ranked in the 20 best or 20 worst days since 1985 – December 26, 2018 when the Dow gained 4.98% and August 8, 2011 when the index lost 5.55%. No other month since 1985 has had nearly as many eye-popping single-day moves as March 2020 did.
I know it’s hard to fathom, but in March, we surpassed the crashes of 1929 and 1987 with the fastest 30 percent correction ever. Even during the Internet bubble of 2000, it took over 250 days for the market to lose 20 percent–it took just 22 days during the March madness of 2020.
1.Volatility-In the Last 2 Weeks the Dow Jones its Best Day Since 1933 and its 2 Worse Days Since 1987 Crash.
Within the last two weeks, the Dow Jones Industrial Average DJIA has experienced its best day since 1933, which came two days ago on March 24 when the index gained 11.37%, as well as its two worst days since the Black Monday crash of 1987, which came on March 12 and March 16 when the Dow notched single-day losses of -9.99% and -12.93%, respectively. This month, DJIA has had 10 days which rank in the largest one-day moves since 1985, as it has had five of its 20 best and five of its 20 worst one-day returns. To put this into perspective, since 2009 we have had only two days that ranked in the 20 best or 20 worst – December 26, 2018 when DJIA gained 4.98% and August 8, 2011 when the index lost -5.55%. No other month since 1985 has had nearly as many of the largest one day moves as March 2020 – October 2008 and October 1987 tie for second which each month owning five. While the sheer number of large moves this month has been unprecedented in recent history, as you can see in the table below, it is not unusual to have these extreme days come in close proximity.
More than 90% of NYSE issues went up yesterday – When so many issues rallied while the S&P was in a bear market in the past, SPX had a VERY STRONG tendency to rally over the next few weeks and months. “Up 100% of the time over the next year by a median of +29%”
FED Backstopping Everything On the policy side the day started with a bang as the Fed continues to try and do everything in its power to provide liquidity and support from a monetary perspective. First and foremost the new round of quantitative easing is effectively unlimited as Treasury and MBS purchases are open-ended from a previously announced $700bn. They also announced facilities to provide support for corporate bonds, asset-backed securities, and variable rate demand notes. The Fed also expanded the previously announced Money Market Mutual Fund Liquidity Facility and the Commercial Paper Funding Facility to include a wider range of eligible securities. The Fed also expects to announce the Main Street Business Lending Program that will support lending to eligible small and medium-sized businesses. The actions take the Fed across the line – joining the ECB – in buying corporate bonds and the Fed can now buy Fixed Income ETFs which will hopefully be a big stabilizing force in what has been a troubling segment of the market over the last few weeks.-Goldman Sachs
1.2020 Crash Equal to 1929 and 1987
Stocks are falling faster than they did during the financial crisis, the crash of 1987 or the Great Depression. Investors are retreating from corporate bonds at the swiftest pace ever. An index of raw materials is at all-time lows. And funding shortages around the world have fueled a race for dollars, powering the U.S. currency to a nearly 18-year high.
By Amrith Ramkumar WSJ
1.Big Numbers Coming for Deficit…View In Relation to GDP.
Barrons March 18: Just how big could fiscal stimulus get? During the Great Recession, the federal budget deficit peaked around 10% of gross domestic product. Were the federal government to run a similar deficit this year, it would amount to about $2.2 trillion. But even this 10% figure probably does not represent the true upper bound on federal borrowing. During World War II, the federal budget deficit peaked at nearly 30% of GDP in 1943, and was more than 20% each year in the 1943-45 period. A federal budget deficit of 30% of GDP today would amount to nearly $7 trillion. Of course, financing these deficits required extraordinary efforts, such as sizable war-bond programs and direct coordination between the Treasury and the Federal Reserve. While we doubt the fiscal response will be anything quite that big, the federal government possesses significant fiscal ammunition, particularly when real interest rates on Treasury securities remain negative.—Michael Pugliese https://www.barrons.com/articles/wall-street-views-on-the-virus-the-economy-and-the-markets-51584748842?mod=past_editions
We were at recession level deficits before recession.
Sell-off lasted 6 months and took DOW 34% lower (-40% from highs set some months before the flu), stocks rallied 25% in less than 2 months following the trough. It took 18 months to erase the flu sell-off. The corona cycle likely will be faster and swifter because there was not electronics, twitter or texting back then!
Zach Goldberg
Head of Franchise Sales
Office: 212.284.2314
Cell: 240.355.5342
Disclaimer: http://www.jefferies.com/salesandtradingdisclaimer/
1.Trump Considers Delay in Mortgage Payments…Look for Massive Rental Relief.
Debt Deferrals – Trump Considering Plan to Let Homeowners Delay Mortgage Payments– “We’re thinking of the potential of several months of payments for a lot of homeowners” says the MBA. Also NYers with student debt, medical debt & other state-referred debtwill have payments frozen for at least 30 days. Dave Lutz at Jones Trading.
The S&P 500 index has now plunged 29% in the 18 trading days since the peak in February 19 and is below where it had first been on March 1, 2017 – which was over three years ago. In other words, the S&P 500 unwound three years’ worth of gains in 18 trading days.
S&P 500 Plunged Most Since 1987, Gave Up in 18 Days the 42% Gains of Past 3 Years. Boeing Shares Collapsed-Wolf Richter
1.It’s Not
2008…U.S. Financial Stress at 2011 Levels.
A lot of my incoming client
conversations today are about the key question: “How bad is it?”. In other
words, what is the net impact on the economy and corporate earnings of lower
rates and a lower dollar versus lower equities and wider credit spreads? Tick-by-tick
measures of financial conditions show that financial conditions are currently
as tight as they were during the euro crisis in 2011. In other words, any
recession and slowdown in earnings associated with the ongoing moves in markets
will not be as bad as during the financial crisis in 2008/2009, see chart below
and here.
———————————————–
Let us know if you would like
to add a colleague to this distribution list.
Torsten Sløk, Ph.D. Chief Economist Managing Director Deutsche Bank Securities
Much
of the pessimism surrounding the virus focuses on the Chinese under-counting
the number of infected to save face. However, it’s important to note that a
shortage of specialized test kits has caused health officials in many countries
to rely on observable symptoms for diagnoses, and because coronavirus mimics
the flu and pneumonia in its early stages, it’s also possible that authorities
may be over-counting as well.
Instead of looking at it from a total confirmed case perspective, we think the
number of total active cases provides a better look into what is happening.
This measure takes total confirmed cases and subtracts deaths and recoveries.
This gives the total amount of people who have the potential to spread the
virus further.
According to Worldometer, which
aggregates statistics from health agencies across the world, total active cases
peaked about a week ago at 58,747 and have since been declining. Even with all
the new cases we are seeing in South Korea, Italy and Iran (where data is
suspect). There have been 30,597 cases with an outcome (2,699 deaths and 27,898
recovered). In other words, the total active cases now stand at 49,923, a drop
of 15% from the peak on February 17th.
One death is too many, but to put that number into a little bit of perspective,
according to the World Health Organization, in the United States alone for the
2019-2020 season, there have been at least 15 million flu illnesses, 140,000
hospitalizations and 8,200 deaths. Imagine if everyone with an internet
connection followed the spread of this annual flu, case by case, hour by hour.
It’s true that the death rate from Coronavirus appears to be around 2% in
China, which is much higher than the death rate from the normal flu, but like
the flu increases with age. However, outside of China the death rate is far
less than inside China, roughly 1%. And, there is already a drug that will
combat COVID-19 moving toward first phase clinical trials. It took three months
for this to happen in 2020, versus 20 months for SARS back in 2002/03 – a
testament to advances in drug technology.
From a macro-economic point of view, the real question is how will this impact
the US economy over the coming year. In short, our view has not changed. The US
we believe is relatively insulated, with a fantastic health system. The US
started the year with solid economic data and so far, nothing has changed. In
fact, with all the data we already have on hand, we are expecting around 2%
growth in Q1. Most of the impact to the US from the corona virus will come in
Q2.
Capital goods exports to China along with imports from China are sure to be
depressed given the struggles to reopen factories abroad. Most Chinese
factories are still only operating at about 50-60% of capacity. Shipping giant
Maersk has already said it has cancelled more than 50 trips to and from Asia.
With China being home to seven of the world’s busiest container ports there is
bound to be some impact. Inventories in the US will be depleted more rapidly,
but once the virus subsides, expect faster accumulation of inventories in the
second half of the year.
Revenues and earnings from companies that are highly exposed to China will
definitely be affected. China being shut down for a month will have a global
impact. But lower earnings in the first half of the year should be made up by a
strong rebound in the second half of the year with payback from lost months.
Demand remains strong and there has been no visible impact yet on the job market
as shown by initial unemployment claims. Supply disruption is the issue. We
suggest looking through any earnings weakness as we expect it to be transitory.
One small nugget of good news is that many companies had already been shifting
supply chains from China due to the Trump Tariffs. If they weren’t considering
it before they will be now as they realize the importance of diversification.
Expect this trend to accelerate moving forward.
The US consumer is on solid footing and will continue to be one of the key
drivers to US economic growth in the year to come. We believe, just like all
the other viruses we have seen over the past decades that have dissipated, the
Coronavirus will be no different. Some have suggested that the 1918 Spanish
Flu, which killed hundreds of thousands in the US could happen again. No one
knows, but 2020, is not 1918. Technology and news move much faster and the US
rebounded from the Spanish Flu when all was a said and done. We suspect that
any drop in earnings or economic activity will be short lived, and more than
made up for in the year to come. Don’t panic, stay invested.
Wall Street
banks recorded their third straight day without any high-grade bond
offerings, an unheard of event
As Bloomberg puts it, “it has been a
remarkable turn of events for a market where investors had been snapping up
almost anything on offer amid a global dash for yield. Europe had
been enjoying its strongest ever start to a year for issuance, and
sales of U.S. junk bonds have been on the busiest pace in at least a decade.
With so many borrowers having postponed their issuance plans, a
, a calming in global markets could kickstart
debt sales again.”
“Coronavirus Paralyzes Global
Credit Market As New Issuance Crashes To Zeroby Tyler Durden
5.U.S. Small
Cap Russell 2000 6th Time in History This Oversold.
The small-cap Russell 2000 has generally underperformed large-caps for much of the past two years (it still has not gotten back up to its summer 2018 all time highs), and this recent weakness leaves it much more dramatically oversold than other major indices. As of yesterday’s close, the Russell sat over 4 standard deviations below its 50-DMA. That compares to the prior day when it was just over 2 standard deviations below and the day before when it was within one standard deviation of its 50-DMA.
This is only the sixth day in the index’s history that it had gotten this oversold. The last time this happened was in August 2011. Prior to that there was one occurrence in August 1990 and another cluster of three days in during the October 1987 crash. Performance following these prior instances have been very mixed. While the 1987 and 1990 instances were followed by severe declines in the Russell 2000 over the next few months, more recently in 2011 performance was very strong over the next year. Join Bespoke Premium to access Bespoke’s most actionable stock market research and analysis. Start a two-week free trial now!
7.The top 5 technologies that will change health care over
the next decade
Dr. Bertalan Mesko, aka The Medical Futurist,
says with advancements in exoskeleton technology, AI’s ever-increasing
importance in health care, and technologies like 5G and quantum computing soon
going mainstream, there’s much to be excited about
Illustration by Doug Chayka
ByDR.BERTALAN MESKO
The past decade was
about the rise of digital health technology and patient empowerment. The next
decade will be about artificial intelligence, the use of health sensors and the
so-called Internet of Healthy Things and how it could improve millions of lives.
The cultural
transformation of health care we call digital health has been changing the
hierarchy in care into an equal-level partnership between patients and
physicians as 21st century technologies have started breaking down the ivory
tower of medicine. But these milestones are nothing compared with what is about
to become reality.
With advancements in
exoskeleton technology, AI’s ever-increasing importance in health care, and
technologies like 5G and quantum computing soon going mainstream, there’s much
to be excited about.
Here are the five
biggest themes for health and medicine for the next 10 years.
Artificial intelligence in medicine
Developments in
artificial intelligence will dominate the next decade. Machine learning is a
method for creating artificial narrow intelligence — narrow refers to doing one
task extremely well — and a field of computer science that enables computers to
learn without being explicitly programmed, building on top of computational
statistics and data mining. The field has different types: it could be
supervised, unsupervised, semi-supervised or reinforcement learning, among
If we consider how
AlphaGo, the AI developed by Google’s DeepMind lab, beat world champion Lee
Sedol at the classic Chinese game Go by coming up with inventive moves that
took experts by surprise, we can get a glimpse at what AI can hold for health
care. Such moves were made possible by the combination of neural networks and
reinforcement learning that this AI uses. This enabled the software to operate
without the restrictions of human cognitive limitations, devise its own
strategy and output decisions that baffled experts.
We can expect to see
the same surprises in medical settings. Imagine new drugs designed by such
algorithms; high-level analysis of tens of millions of studies for a diagnosis;
or drug combinations nobody has thought of before. When applied to medicine, an
algorithm trained via reinforcement learning could discover treatments and
cures for conditions when human medical professionals could not. Cracking the
reasoning behind such unconventional and novel approaches will herald the true
era of art in medicine.
In global health, for
example, an algorithm can provide a reliable map of future measles outbreak hot
spots. It uses statistics on measles vaccination rates and disease outbreaks
from the Centers for Disease Control and Prevention, as well as non-traditional
health data, including social media and a huge range of medical records. That’s
just one example, but the field is already buzzing with smart algorithms that
can facilitate the search for new drug targets; improve the speed of clinical
trials or spot tumors on computed tomography (CT) scans.
However, while experts
believe that AI will not replace medical professionals, it also seems true that
medical professionals who use AI will replace those who don’t.
A myriad of health sensors
Medical technology went
through an amazing development in the 2010s, and there’s now no single square
centimeter of the human body without quantifiable data. For example, AliveCor’s
Kardia and Apple Watch measure electrocardiogram and detect atrial fibrillation
with high sensitivity. The EKO Core digital stethoscope records heart and lung
sounds as a digital stethoscope, while blood pressure is monitored with the
Omron Blood Pressure Smartwatch, the MOCAcare pocket sensor, and blood pressure
cuff, the iHealth Clear, the Skeeper, a pocket cardiologist, or the Withings
Blood Pressure Monitor, and of course, dozens of traditional blood pressure
cuffs.
There are dozens of
health trackers for respiration, sleep, and, of course, movement. And while
researchers can’t decipher your dreams yet — they are working on it, alongside
figuring out all kinds of brain activity. For example, through EEG. That’s a
method that records electrical activity in the brain using electrodes attached
externally to the scalp. The NeuroSky biosensor and the Muse headband use it to
understand the mind better and in the latter case allow for more effective
meditation. As you see, there’s not much left unmeasured in your body — and it
will even intensify in the future. For example, we expect digital tattoos to
become commercially available within five years, which will not only measure
the majority of the above-mentioned vital signs, but they will do so
continuously. These tiny sensors will notify us when something is about to go
wrong and we will need medical advice or intervention.
Moreover, with
developments in 3-D printing as well as circuit-printing technologies, flexible
electronics and materials, applying so-called digital tattoos or electronic
tattoos on the skin for some days or even weeks became possible.
Made of flexible, waterproof
materials impervious to stretching and twisting coupled with tiny electrodes,
digital tattoos are able to record and transmit information about the wearer to
smartphones or other connected devices. While these are only in use in research
projects, they could allow health-care experts to monitor and diagnose critical
health conditions such as heart arrhythmia, heart activities of premature
babies, sleep disorders and brain activities noninvasively. Moreover, by
tracking vital signs 24 hours a day, without the need for a charger, it is
especially suited for following patients with high risk of stroke, for example.
Although we are not there yet, there are certain promising solutions on the
market such as MC10’s BioStampRC Sensor.
Quantum computing puts medical decision-making
on a new level
In 2019, Google claimed
“quantum supremacy” and made the cover of Nature magazine. One example of how
this technology will have a major impact on the health-care sector is quantum
computing taking medical decision-making to a whole new level and even
augmenting it with special skills. What if such computers could offer perfect
decision support for doctors? They could skim through all the studies at once,
they could find correlations and causations that the human eye would never
find, and they might stumble upon diagnoses or treatment options that doctors
could have never figured out by themselves.
At the very endpoint of
this development, quantum computers could create an elevated version of PubMed,
where information would reside in the system but not in the traditional written
form — it would reside in qubits of data as no one except the computer would “read”
the studies anymore.
In addition, the
applications of quantum computing to health care are manifold, ranging from
much faster drug design to quicker and cheaper DNA sequencing and analysis to
reinforced security over personal medical data. While the technology does hold
such promises, we still have to be patient before practical solutions can be
implemented in medicine. However, with continued progress in this area, even
though quantum computing has been something from a science fiction novel, this
decade will see the first such computer used in the clinical practice too.
Chatbots as the first line of care
Symptom checkers that
function on the same principle as chatbots are already available, free of
charge. However, these rely on the user inputting symptoms and complaints
manually. We yearn for one that can make predictions and suggestions based on a
user’s data, like sleep tracking, heart rate and activity collected via
wearables. With such features, those bots can help users make healthier choices
without having to drag themselves to their doctor.
There was a “Black
Mirror” episode titled “Rachel, Jack, and Ashley Too” that featured an
incredibly smart and emotional chatbot that had human-like conversations with
the character. Think about having a similar personalized chatbot that’s
accessible via your smart device and with additional health and lifestyle
features. This chatty virtual being can wake you up at the appropriate time
based on your sleep pattern and advise you to take your antihistamines as the
pollen concentration is particularly high during your commute that day, before
you even get out of bed. It can even recommend what you should consume for each
meal based on your nutrigenomic profile. It could find the best words for you
to motivate you to go to the gym. It could find the best jokes that help you
get into a good mood. But would you rather bend to the rules of an AI,
essentially forgoing your freedom of choice, than experience life based more on
your own will?
5G serving the whole ecosystem of digital
health
5G networks will enable
data to be downloaded at more than 1 gigabit per second, allowing for downloads
10 to 100 times faster than the currently available 4G services. 4G networks
can only serve around a thousand devices within a square kilometer, while 5G
can serve a million. It will make the era of the Internet of Things (IoT)
possible by connecting a huge amount of health trackers with laptops,
smartphones and many more digital devices. There will be no connection issues
or latency, as the trackers will be able to work in harmony while getting the
most out of our data.
Such a boost will allow
for more reliable communication, which is a must in areas like telesurgery,
remote consultation and remote monitoring. With bigger bandwidth and faster
connection, there might be a boost in wearables as health IoT networks become
more stable and reliable, and further help with patient engagement in relation
to their health.
Major applications of
5G are expected to be apparent starting in 2021.
Dr. Bertalan Mesko, Ph.D., is The Medical Futurist and director
of The Medical Futurist Institute,
analyzing how science fiction technologies can become reality in medicine and
healthcare. As a geek physician with a Ph.D. in genomics, he is a keynote
speaker and an Amazon Top-100 author.
Engaging with the unfamiliar can
keep mind and body fit. So how to pump up one’s levels of curiosityAnyone
who has spent time around kids knows that their young minds are powered by
curiosity. The average child probably asks more questions in 10 minutes than
the average adult does in 10 days. Kids are curiosity personified.
But as people age, their
reservoirs of curiosity tend to dry up. Studies have found that, on average, a
person’s openness to new experiences and new sensations declines
steadily with age. At the same time, apathy increases. While plenty of older adults buck these trends,
there’s some truth to the cliché of the narrow-minded, novelty-averse fogey who
rigidly adheres to his time-worn routines and opinions.
For years, mental health
researchers have noted this age-related dip in curiosity. They’ve also noticed
that high levels of curiosity often correlate with many different measures of
mental health and vigor. One 2018 paper from the journal Neuroscience
& Biobehavioral Reviews found evidence that maintaining curiosity
in old age is protective against cognitive and physical decline. Compared to
the incurious, older adults who score high in curiosity tend to perform better
on tests of memory and general cognitive functioning. The authors of
that study point out that curiosity activates brain areas that are involved in
other high-level cognitive processes, and over time this increased activation
could help explain some of curiosity’s brain benefits.
And in people both young and
old, research has found that high and consistent levels of
curiosity correlate with mental well-being and life satisfaction. Curious people also
seem protected from depression.
The more that experts examine
curiosity, the more they find evidence to suggest that it’s the secret sauce in
a happy, fulfilling life. “If you take the fundamental things that people tend
to want out of life — strong social relationships and happiness and
accomplishing things — all of these are highly linked to curiosity,” says Todd
Kashdan, a professor of psychology at George Mason University and author
of Curious?
What exactly does it mean to
be curious? “If you go by the typical dictionary definition, curiosity is
simply a desire to seek out new knowledge or experiences,” Kashdan says. While
this definition is a useful starting point, he says curiosity also involves a
willingness to engage with complex, unfamiliar, and challenging concepts or
endeavors.
Kashdan has helped develop
two widely used scientific models for measuring curiosity. The newer of these
models breaks curiosity down into five different categories or
“dimensions.” He terms the first of these “joyous exploration,” and it hews
closely to the dictionary definition of curiosity. The second and third
dimensions have to do with a person’s level of focus and commitment when
confronted with the uncertainties that newness breeds. “When you explore new
terrain” — whether it’s an exercise class you’ve never attended or a dinner
date with a new friend — “you’ll probably be exposed to feelings of stress and
anxiety,” he says. While these states tend to be thought of as negative, he
says curious people are not easily deterred by them. In other words, they
display resilience or “grit” (to use the buzzword du jour) when exploring new
concepts or scenarios.
The more that experts
examine curiosity, the more they find evidence to suggest that it’s the secret
sauce in a happy, fulfilling life.
“The fourth dimension is
thrill-seeking, which is a willingness to take financial or social or personal
risks in pursuit of new experiences,” he explains. He says thrill-seeking could
take the form of extreme sports, experimenting with psychedelics, or starting a
new business venture. The fifth and final dimension is “social curiosity,” he
says, which is taking an interest in other people’s views and opinions.
People who score high on
some or all of these five measures of curiosity almost transcend questions of
happiness or fulfillment. “When you lose yourself in the exploration of things
that are new and that you find interesting, you’re not stopping to ask yourself
if you’re happy or depressed,” Kashdan says.
That said, there’s some
evidence that the relationship between curiosity and happiness is
bidirectional, meaning one fuels the other. A 2019 study in the Journal of Personality found
that on days when people experience positive emotions like happiness, they also
tend to display more curiosity than on days when they aren’t happy. These sorts
of findings have led some researchers to hypothesize that positive emotions may
exist in part to help encourage curiosity and the fruitful exploration it
encourages.
“There’s the ‘broaden and
build’ theory that says positive emotions have a lot of function, and one of
them is to get us to engage in things we wouldn’t normally do,” says David
Lydon-Staley, first author of that study and a postdoctoral researcher in the
department of bioengineering at the University of Pennsylvania. Curiosity can
lead to new relationships, new skills, or new areas of knowledge that enrich a person’s
life at many levels, he explains.
But is it possible to pump
up one’s levels of curiosity? Lydon-Staley’s research found that exercise seems
to promote curiosity — perhaps by improving a person’s mood. (The
mood-elevating effects of exercise are well established.)
Kashdan says having strong
personal relationships also seems to feed curiosity. “Having secure attachments
is like having a home base in a game of tag,” he says. “They allow people the
freedom to be less inhibited and to explore.”
But by far the best way to
feed curiosity is to engage with new people, new places, and new points of
view. Kashdan says an aversion to the unfamiliar — or what he calls “premature
closure” — stifles curiosity. But novelty, even if uncomfortable or scary at
first, acts like curiosity fertilizer. “The more you interact with new
experiences or information, the more you realize you don’t know, which makes
further exploration more attractive,” he says. At the same time, engaging with
something new tends to drain it of its power to cause anxiety. “The highest
level of anxiety you feel is always during the anticipation of something new,”
he says. “Stick it out, and you see that the anxiety is manageable and can even
be enjoyable.”
There may be safety and
security in the familiar. But there’s evidence that curiosity and the novel
experiences that nourish it may pave the way toward a more meaningful and
fulfilling life.
Sellers are following the
virus – China was smoked 1st, then Koreas, now Euros..
The Bank of Korea announces its policy decision on Thursday, with rising
risks of an interest-rate cut
2.Primary Concern Coronavirus….Places Where Cases Increased
Fastest Over the Past 7 Days are Outside of China.
That prospect is looking increasingly remote
now. For most of the past month, just a percentage point of so of new daily
infections have occurred outside China. Since Thursday, that proportion has
risen to a fifth. Nearly half of cases so far found outside of China have
been reported in the past four days.
3. Scoop: Coronavirus threatens shortages of about 150 drugs Caitlin Owens
About
150 prescription drugs — including antibiotics, generics and some branded
drugs without alternatives — are at risk of shortage if the coronavirus
outbreak in China worsens, according to two sources familiar with a list of
at-risk drugs compiled by the Food and Drug Administration.
Why it matters: China
is a huge supplier of the ingredients used to make drugs that are sold in the
U.S. If the virus decreases China’s production capability, Americans who rely
on the drugs made from these ingredients could be in trouble.
What they’re saying: The
FDA declined to comment on the list, but said in a statement that it’s
“keenly aware that the outbreak could impact the medical product supply
chain,” and has devoted additional resources toward identifying potential
vulnerabilities to U.S. medical products stemming specifically from the
outbreak.
The agency has been in contact with hundreds of drug
and medical device manufacturers, and it’s also coordinating with global
regulators like the European Medicines Agency.
It pointed out that there aren’t any vaccines, gene
therapies or blood derivatives licensed by the FDA that are manufactured
in China, although raw materials for many products do come from China and
other southeastern Asian countries. The agency is in contact with
biologics manufacturers to monitor supply concerns.
“If a potential shortage or disruption of medical
products is identified by the FDA, we will use all available tools to
react swiftly and mitigate the impact to U.S. patients and health care professionals,”
said an FDA spokesperson.
The intrigue: FDA
commissioner Stephen Hahn is not a member of the task force that the
administration has assembled to handle the coronavirus. Only two of the dozen
members of the task force are physician-scientists, BioCentury noted on Friday.
Politico reported
Friday night that the White House is worried about how the coronavirus
outbreak could shape President Trump’s re-election prospects, and some
administration officials are concerned that the virus is already spreading
within the U.S., undetected.
The bottom line: Whether
or not the coronavirus spreads within the U.S., any potential drug shortages
would be felt acutely by the American patients that rely on them.
4 Dividend and Treasury Yield Spreads At Multiyear Highs
Meanwhile, Treasury yields are cratering with the 10-Year down over 10 bps. That is the largest one-day decline in the 10-Year yield since August 14th of last year when it fell 12.43 bps. That brings the yield down to 1.37%, which is the lowest level since July 2016.
Going further out on the curve, the yield on the 30-Year Treasury bond is now at a record low of 1.82%. Similar to the 10 Year, that is nearly a 10 basis point decline from Friday.
Given these moves, holding constant the difference in risks associated with the two assets, the spread between the S&P 500’s dividend yield is higher than the 10-Year yield by its widest margin since September of 2016 at 0.575, eclipsing the previous high from last August. Prior to 2016, the spread was higher throughout much of 2012.
The spread between the S&P 500’s dividend yield and the 30-Year Treasury, on the other hand, is at its highest level in over a decade. The spread now stands at 0.119 which is the widest the spread has been since January 2009, and is favoring stocks (positive spread) for the first time since September. Unlike the spread between the S&P 500’s dividend yield and the 10-Year yield which has flipped back and forth between favoring stocks and Treasuries over the past decade, the 30-Year yield has much more consistently favored bonds. In fact, outside of today and briefly last September, the only other time we’ve seen a positive spread was in 2016. Get Bespoke’s most actionable ideas and analysis with a Bespoke Premium membership. Click here to start a two-week free trial.
Blackrock–The euro
area is more exposed to Chinese export demand than the U.S. See the chart
above. And it has extra exposure to China through foreign affiliate sales,
especially in the car industry. But the euro area also relies less on
intermediate inputs from China in its domestic production than the U.S. or Japan,
making it less susceptible to any supply chain disruptions.
How often does that
5% sell-off become an even larger sell-off?
The results are hypothetical results and are
NOT an indicator of future results and do NOT represent returns that any
investor actually attained. Indexes are unmanaged and do not reflect management
or trading fees, and one cannot invest directly in an index.
Those 5% sell-offs
often become 10% sell-offs at 47% of the time. But only 21% of the time do they
hit the dreaded 20% sell-off.
If the 5% sell-off
does not become a 20% sell-off, it will reach the reference high, on average,
in 80 trading days, or about 4 months, which is not that long.
7.Follow Up
to Yesterday’s Comments on Q4 2019 Record E-Commerce Sales.
Business Insider
Here are three major takeaways based on the US retail industry’s
recently reported performance for Q4 2019 and 2019 overall.
-E-commerce cracked 10% of total retail sales in 2019, and its performance is still propelling the overall industry’s growth. The segment accounted for approximately 11% of total retail sales in 2019, up from its previous high of 9.9% in 2018. And e-commerce sales grew 14.9% for the year, accelerating from its 13.6% increase a year ago, while total retail sales growth in 2018 actually decelerated from 4.7% in 2018 to 3.4% in 2019. Because merchants must embrace e-commerce to boost their own growth, the roles of solutions providers like BigCommerce and Shopify, as well as marketplaces like Amazon, could expand further in the coming years, due to their ability to help merchants without the resources to develop their own e-commerce platforms to begin selling online.
-The industry managed to elevate its performance in Q4 despite the short holiday schedule. There were six fewer days between Thanksgiving and Christmas in 2019 than there were in 2018, and since Thanksgiving can serve as a milestone that triggers holiday shopping, the abridged holiday season could have limited retailers’ ability to rack up lucrative holiday sales. Merchants seem to have overcome this obstacle considering the industry’s improved performance in the holiday quarter. Further, this season’s success indicates that deploying tactics like offering sales early — Walmart launched its holiday deals in October this year — should be implemented in years with longer holiday schedules too, in hopes of extending the holiday season and creating more sales opportunities.
-While e-commerce is a key growth driver for retailers, offline retail remains the largest sales opportunity — making an omnichannel approach key to a merchant’s success. Retail sales other than e-commerce made up 89% of 2019’s sales, so brick-and-mortar retail remains the focal point of US retail. This is likely why e-tailers like Amazon and severaldigitalbrands and payments companies like Stripe have been pushing into physical stores, since it gives them access to the channel and another way to attract volume. Since we are likely still decades away from e-commerce bringing in the majority of retail sales, sellers looking to maximize their performances should be working to sell both online and in-store in order to tap into e-commerce’s growth and physical retail’s size, while also developing offerings like click-and-collect to take advantage of the strengths of both channels.
Research has
determined that EQ determines an employee’s overall success when it comes
to work, relationships, and general well-being. In the age of artificial
intelligence and automation, emotional intelligence may be not only
what saves us from the robots, it may also be what saves us from
ourselves. Consider these findings:
EQ is one of the top 10 job skills required for
workers to thrive in 2020.
Let’s
flip the coin. What about low emotional intelligence, or
even no emotional intelligence at all? What does that look
like in practice, and how can we identify those habits that are holding us
back?
5 questions to assess low emotional intelligence
For
the record, if you recognize some of your own habits as you read over the
signs, cut yourself some slack and know that you’re not broken or bad. What it
does mean is, you suffer from blind spots. You may not see them but those
around you–peers, co-workers, customers, family members–can firmly nod in
agreement that they do, sometimes routinely.
Rest
assured that anyone is capable of changing these scenarios to improve
their lives or leadership skills. But there’s got to be a first step:
identifying whether your EQ is low or not. Here’s how you will
know.
1. Are you quick to judge?
People
with low EQ often jump to conclusions quickly because they don’t have a good
understanding of how to read other people’s emotions or their own. Since
those who judge are typically negative and impulsive, they may form a
negative impression of someone before assessing the context of a situation
and their initial emotions for truth and accuracy. Sadly, what they may be
left with is a distorted view of something or someone.
2. Do you have a hard time accepting criticism?
Taking
criticism can wreak havoc emotionally on a person who lacks EQ.
However, in honest, self-confident, high-EQ individuals, it is much easier
to accept criticism because they are able to process their
emotions, assess their strengths and weaknesses, and take note of
something they need to improve on.
3. Do you increasingly feel stressed or anxious?
I’m
not negating stress–we all experience some level of it; it is inevitable.
But people with high EQ, as opposed to their low-EQ
counterparts, have the capacity to get perspective on a
situation, seek input from various angles, and practice mindfulness
before spiraling down the devious path of anxiety.
4. Are you a bad listener?
Low-EQ
individuals lack empathy; they often neglect to listen to the opinions and
thoughts of others to consider another point of view. Recent
research published in Harvard Business Review supports evidence
that leaders who listen well “are perceived as people leaders,
generate more trust, instill higher job satisfaction, and increase
their team’s creativity.”
5. Do you find it hard to recover from mistakes?
High-EQ
individuals are resilient; low-EQ individuals dwell on mistakes and have a
tough time bouncing back. To these people, I offer one simple solution that
will change your world for the better: Heal from the hurt, learn from your
mistake, let go of the past, and move on to your glorious future.
In
closing, building up your EQ could have a profound
effect on your personal and work relationships. But first, assess where
you stand in relation to the tenets of emotional intelligence and ask some key “hold
up the mirror” questions to determine where you measure up.
1.High
P/E Stocks Outperformance Vs. Low P/E Stocks Surpasses Internet Bubble.Wisdom
Tree
But even
the best performing value factor was no contest for a market that has avoided
value stocks like the Bubonic plague. Figure 2 is my favorite chart right now.
If the
Bear Lurks, High P/E Stocks Are the Dreaded “Phone Ringers”Jeff
Weniger, CFA
Figure 2:
10-Year Rolling Annualized Outperformance, Low P/E vs. High P/E Stocks
Face it:
The amount by which high P/E stocks have outperformed low P/E stocks in the
last 10 years exceeds the amount observed at the apex of the dot-com bubble.
1.Technology Sector vs. 1999. 1995-1999
Information Technology Returned 700%
Information technology stocks have rallied 47.8% in the past
12 months, according to FactSet data. But that “still pales in comparison to
the Tech Bubble.” Over the past five years, the sector has returned 149%;
between 1995 and 1999, the sector returned nearly 700%. Meanwhile, the tech
group’s forward price/earnings ratio trades at a 22% premium to the S&P 500
now, on a relative basis, the analysts wrote, below the long-term average of
31%.
2.
Utilities are trading at the highest absolute forward P/E and highest relative
P/E to S&P 500 Value over the past 20 years:
Percy Allison Desk Strategist Jefferies LLC
Defensives
have steeply outperformed offensives:
Source: Jefferies
Trading Desk
Utilities
are trading at the highest absolute forward P/E and highest relative P/E to
S&P 500 Value over the past 20 years:
Source: Jefferies
Trading Desk
3.Coronavirus
vs. SARS
The new coronavirus and SARS come from the same family of
viruses that usually infect animals, but can sometimes evolve and spread to
humans.
Investors and analysts often compare the two viruses to gauge
the potential economic impact from the latest outbreak.
The SARS outbreak nearly 20 years ago caused China’s economic
growth to slow from 11.1% year over year in the first quarter of 2003 to 9.1%
in the following three months.
Growth in retail sales and industri al production
in China was also slower around May 2003, but expansion in exports remained
steady throughout that year.
4 charts show how SARS hit China’s economy nearly 20 years ago
Job openings have also rolled over, as you can
see in the yellow line in the chart below. On the other hand, openings remain
comfortably above the number of unemployed persons in the United States—notwithstanding
the aforementioned skills gap problem.
Sleight of Hand: Dissecting the Latest Employment DataBy Liz Ann Sonders
9.Healthcare Sector Trading at Discount to
Historical Average
As the graph below illustrates, the S&P 500 Index is trading
at a premium (>100%) to its historical average forward price-to-earnings
ratio (PE), while the broad health care space trades at a discount (<100%)
to its historical average.
It’s not clear to me why
business plans are the way they are, but they’re often misused to obfuscate,
bore and show an ability to comply with expectations. If I want the real truth
about a business and where it’s going, I’d rather see something else. I’d
divide the modern business plan into five sections:
Truth
Assertions
Alternatives
People
Money
The truth section
describes the world as it is. Footnote if you want to, but tell me about the
market you are entering, the needs that already exist, the competitors in your
space, technology standards, the way others have succeeded and failed in the
past. The more specific the better. The more ground knowledge the better. The
more visceral the stories, the better. The point of this section is to be sure
that you’re clear about the way you see the world, and that you and I agree on
your assumptions. This section isn’t partisan, it takes no positions, it just
states how things are.
Truth can take as long as
you need to tell it. It can include spreadsheets, market share analysis and
anything I need to know about how the world works.
The assertions section
is your chance to describe how you’re going to change things. We will do X, and
then Y will happen. We will build Z with this much money in this much time. We
will present Q to the market and the market will respond by taking this action.
This is the heart of the
modern business plan. The only reason to launch a project is to change
something, and I want to know what you’re going to do and what impact it’s
going to have.
Of course, this section will
be incorrect. You will make assertions that won’t pan out. You’ll miss budgets
and deadlines and sales. So the alternatives section tells me
what you’ll do if that happens. How much flexibility does your product or team
have? If your assertions don’t pan out, is it over?
The people section rightly
highlights the key element… who is on your team, who is going to join your
team. ‘Who’ doesn’t mean their resume, who means their attitudes and abilities
and track record in shipping.
And the last section is all
about money. How much do you need, how will you spend it, what does cash flow
look like, P&Ls, balance sheets, margins and exit strategies.
Your local VC might not like
this format, but I’m betting it will help your team think through the hard
issues more clearly.
1.Global Supply of Stocks and Bonds at 20 Year Low.
Investors will face the tightest global supply
of stocks and bonds in a year since 2000, a silver lining for fund managers
that are grappling with the onset of global growth concerns at the start of
2020.
That’s
based on calculations from Morgan Stanley strategists who don’t expect a deluge
of issuance to be among the problems investors could confront this year.
Analysts say too much debt or equity supply can sometimes overwhelm fund
managers and other institutional investors, weighing on short-term returns.
“The
supply/technical backdrop in 2020 looks manageable, and is not high on our list
of full-year concerns,” Morgan Stanley analysts wrote in a late Friday note.
The global supply of stocks and bonds is
the tightest in 20 years, says Morgan Stanley—Sunny OH. Marketwatch
1.The 10 Largest Companies in the S&P Have a Combined Market Cap of More Than 3x the Entire Russell 2000 Index.
The march higher took on a familiar feel as
larger names continued to outpace smaller. The pull of large companies has
become so strong that, as shown [below] [to the right], the 10 largest
companies in the S&P 500 have a combined market cap of MORE THAN 3X
THE ENTIRE RUSSELL 2000® INDEX of small companies.
This type of stampede into pricey mega-caps has historically ended poorly for
those who followed the crowd.
We continue to see elevated P/E ratios. The S&P’s trailing 12-month P/E is currently 21.9, while Real Estate is at 49.9, Technology is up to 27.5, and Consumer Discretionary is at 25.3. The only sector with a P/E ratio below 19 is Financials at 14.5.
Absolute levels of valuations like the chart above don’t tell you much. The chart below shows where valuations stand for sectors relative to levels seen over the last ten years. As shown, the S&P 500’s current P/E ratio is higher than 97.9% of all other P/E readings seen for the index over the last ten years. That’s high! And three sectors have valuations in the 98th percentile or higher, with Technology at the top at 100%. Over the last ten years, Tech’s P/E ratio has never been higher.
The only sector where valuations are currently “average” compared to the last ten years is Financials. Sign up for Bespoke Premium and get half off your first three months. Click here for this special offer.
Qassem Soleimani, leader of the foreign wing of
Iran’s Islamic Revolutionary Guard Corps, was killed in a U.S. airstrike at
Baghdad’s international airport Friday, local time, escalating long-brewing
animosities between Tehran and Washington.
President Donald Trump authorized the airstrike that
killed Soleimani, a top Iranian general who is considered
one of the most revered military leaders in the Islamic Republic: “At the
direction of the president, the U.S. military has taken decisive defensive
action to protect U.S. personnel abroad by killing,” the U.S. Department of
Defense said in a statement.
In a tweet, Iran’s
Foreign Minister Mohammad Javad Zarif described the strike that killed the
general as an act of international terrorism: “The US’ act of international
terrorism, targeting & assassinating General Soleimani—THE most effective
force fighting Daesh (ISIS), Al Nusrah, Al Qaeda et al—is extremely dangerous &
a foolish escalation,” he wrote on Twitter. “The US bears responsibility for
all consequences of its rogue adventurism,” he said.
The US’ act of international terrorism, targeting &
assassinating General Soleimani—THE most effective force fighting Daesh (ISIS),
Al Nusrah, Al Qaeda et al—is extremely dangerous & a foolish escalation.
The US bears responsibility for all consequences of its rogue adventurism.
The U.S. has said that
the assassination of Soleimani was an attempt to deter attacks against U.S.
embassies, service members or diplomats.
Here’s why the death of
the general is particularly significant in the intensifying tensions between
the U.S. and Iran.
Who was Soleimani?
“He’s probably the most powerful figure that is
generally unknown outside Iran and the Middle East. He’s essentially Iran’s
viceroy for Iraq,” Jim Phillips, Middle East analyst for conservative think
tank the Heritage Foundation, was quoted as saying in a 2015 interview with NBC News.
Soleimani rose to prominence during
the 1980–’88 Iran-Iraq War, and by 2013 had become one of Iran’s most important
figures.
Soleimani was named major general of the Quds
Force in 1998 and ran it until his death. The Quds Force has no equivalent in
the U.S. but has been described as “analogous to a combined CIA and Special
Forces,” according to an article in the New
Yorker back in 2013. The Quds Force, which is estimated to
consist of about 20,000 personnel, has been designated a terrorist group by the
U.S. since 2007, according to reports.
The New Yorker article also
described Soleimani as “ the single most powerful operative in the Middle East
today,” citing former CIA officer John Maguire.
Reports have had also
described Soleiman as second to only the Supreme Leader Ayatollah Ali Khamenei
in power in Iran.
In fact, Khamenei has
referred to Suleimani as “a living martyr of the revolution,” and last March
expressed hope that he would die as one.
“I hope that Allah the Exalted will reward and
bless him, that he will help him live a blissful life and that he will make his
end marked by martyrdom,” Khamenei said as
he awarded Soleimani the Order of Zulfaqar — the
highest miliary honor in Iran that was established in 1856 and had not been
awarded since 1979 until it was revived to honor the Quds Force commander.
To some U.S. leaders, Soleimani has been viewed
as a shadowy figure. Secretary of State Mike Pompeo referred to him as “dangerous
as Islamic State leader Abu al-Baghdadi,” who was killed in
a U.S.-led raid in northwestern Syria in late October.
“Qassem Soleimani has the blood of Americans on
his hands, Bret, as does the force that he leads, and America is determined each
time we find an organization, institution or an individual that has taken the
lives of Americans, it is our responsibility,” Pompeo told Fox News’s Bret
Baier in an interview back in April 2018, after the U.S. designated Iran’s
Revolutionary Guards Corps a foreign terrorist organization,
marking the first time that the U.S. has labeled an entity of another
government as a terrorist organization.
It isn’t clear how Iran will respond to the
death of the revered leader, but analysts and observers on Friday were
speculating that Tehran would consider Soleimani’s death an act of war.
1.334 Out of
500 S&P Companies Shrank Shares Thru Buybacks This Year.
Yet unprecedentedly low interest rates have allowed the private
and public sectors to borrow cheaply and seemingly without cares. U.S.
corporations have been able to issue bonds to repurchase shares, arbitraging
the cheaper cost of debt versus equity capital, as Nicholas Colas, co-founder
of DataTrek Research, points out in a research note. Some 334 of the S&P
500 companies shrank their shares outstanding in the past year, with 115 of
them cutting their share count by at least 4%. The U.S. government,
meanwhile, runs a trillion-dollar annual budget deficit with the economy at
full employment, and the markets barely notice.
Count on This: Next Year’s Financial
Markets Won’t Be So Nice-Randall W. Forsyth
1.Ten Years
Into Expansion Discretionary Spending for Consumers and Corporates is Still
Below Historical Average.
Check out Torsten Slok on
CNBC Monday
I will be on CNBC tomorrow
at 10 am to discuss the outlook for markets in 2020. This expansion has been characterized by an extreme
degree of caution among consumers and corporates. Because of the experience in
2008-2009, households and companies have been hesitant to spend too much money
and take too much risk. As a result, ten years into this expansion,
discretionary spending for consumers and corporates is still below its
historical average. As the chart below shows, this is highly unusual compared
with previous cycles. The lack of willingness to spend on consumer durables and
corporate capex is also the reason why this expansion has been so weak. And it
is also the reason why this expansion could continue for many more years; we
are simply less vulnerable to shocks in 2020 because there are few imbalances
in the economy, see again chart below and here
and here.
———————————————–
Let us know if you would like
to add a colleague to this distribution list.
Torsten Sløk, Ph.D. Chief Economist Managing Director
1.Since
1928 the S&P is Up Just Over 50% of Trading Days But that Translates to a
18,000% Return.
Happy holidays from Bespoke! Please see the bottom of this email for a great membership deal. Also, tune in to CNBC between 12:15 PM ET and 1:15 PM ET today to see Bespoke’s Paul Hickey.
52.3%. That’s the percentage of all trading days throughout the S&P 500’s history since 1928 that have been up days for the market. Even though just barely more than 50% of trading days have been up days, it has translated into a price change of 18,157% for the S&P 500.
Casinos are wildly profitable using a similar format. They only have to win slightly more than 50% of all bets made to make a tremendous amount of money. The beautiful thing about investing in the stock market is that you get to be the casino for once!
2019 has been a great year for the S&P 500 with a gain of more than 28%. As shown below, the index only needed to trade higher on 59.3% of days to generate a 28% gain. But positive days occurring 59.3% of the time in a trading year is actually very rare. Only five other years since 1928 have seen up days more consistently with the most recent coming in 1995 when 61.9% of all trading days were positive.
(Past performance is no guarantee of future results.)
Our 2020 Outlook report is a must-read heading into the new year. Really.
If you haven’t maxed out on holiday spending or if you have research budget left for 2019, consider joining Bespoke for HALF OFF for the next 12 months! Our 2020 Outlook report is included with whichever member From 2006 to 2017, the number of PE-backed companies increased 106% while the number of publicly traded companies fell 16%. ship level you choose.
1.Volatility of Equities
40% Lower When Bond Yields Below 3%
Barrons…That’s
key, since continued low rates provide the ideal environment for equity
investors, writes James Paulsen, chief investment strategist at the Leuthold
Group, in a client note: “At least for the last 93 years, the opportunity to
invest in stocks when the 10-year Treasury yield is below 3% has proved to be a
‘gift’.” (The benchmark note ended the week at 1.82%, down 0.02 of a percentage
point.)
Adding
equities to a portfolio when yields are under 3% sharply boosts returns without
significantly increasing overall risk, Paulsen finds, based on the record from
1926 to 2019. The volatility of an all-equities portfolio is 40% lower when
bond yields are below 3%, he further found, while future 12-month returns were
negative only 18% of the time. When bond yields rise to 3% to 4%, however,
the risk-reward trade-off for adding stocks is much less attractive, he says.
We Have a Trade Deal and Brexit
Clarity. That’s Good News for Stocks.
4.How SALT Has
Iced Home Prices in High Tax States
Wed,
Dec 11, 2019
In the past couple of days, we’ve released
a few more sections of our 2020 Outlook Report including those
on Washington, Commodities, and Housing. In addition to gauging the
overall health of the economy and potential for future economic growth, in
the Housing section, we also discussed home
price trends using the gold standard for housing prices: the Case-Shiller Home
price indices. Below is a complimentary excerpt from the Housing section of our 2020 Outlook Report. To view the
entire section and gain access to all of the other sections (plus the rest of
our research offering), join Bespoke Premium with this 2020 special offer.
The Case-Shiller indices saw home price growth slow sharply in 2018 from the
6% to 7% YoY range all the way down to the 2% range, but in 2019 home price
appreciation began to pick back up. One significant cause of the
fluctuations in home prices over the past couple of years has been the
implications of tax policy.
Prior to the passage of the Tax Cuts & Jobs Act (TCJA) at the end of
2017, relatively high and low tax metro areas had no consistent home price
trends relative to each other. The Trump tax bill capped SALT (state and
local taxes) deductions, however, which hurts higher-tax metro areas like DC,
LA, New York, and Chicago more than lower-tax metro areas like Denver, Las
Vegas, Charlotte, and Dallas. This has resulted in home prices rising more in
low-tax jurisdictions versus high-tax jurisdictions in each month since early
2018 as shown in the chart below. This trend is not likely to last forever,
especially as the effects have already waned in 2019 compared to 2018, but the
TCJA has certainly been a big penalty for homeowners in high tax metros, and
the data proves that out.
5.Percentage
of Investment Grade Corporate Rated Single A or Higher at an All-Time Low.
Jeffrey Gundlach on the Corporate Bond Market:
The percentage of the investment grade
corporate bond market that’s rated single A or higher is at an all-time low. It used to
be two-thirds of the corporate bond market was rated single A or higher, 25 years ago. Now it is 35% of
that market. So, the rating is actually worse. So, the yield spread should be
higher than average. Not at near a low level.
So, that is a very bad
sign.
Is the glass half full or half empty? Whether you’re an optimist
or a pessimist, your tendency could be hindering your ability to achieve career
success and attain a rich life.
If it is, Mark Ford explains how you can move forward.
Boldness
in taking on new business opportunities is considered a virtue by many… and
timidity a vice.
I’m not
so sure.
When I am
bold, I often gamely invest my time and money into projects that are foolish,
unnecessary, and/or unlikely to succeed. When I am feeling timid, I shy away
from good and likely opportunities.
Emotional
tendencies matter. If you know your basic nature, you’ll be able to make better
business and investment decisions by taking contravening measures against your
dominant mood.
But how
do you figure out such a thing?
Determining
Your Basic Nature
Are you
fundamentally an optimist or a pessimist? Answering the following questions
should help you find out.
When offered investment or business opportunities, are you
instantly and positively excited?
Do you often take on projects that you regret later on?
Do you enjoy meeting new people, seeing new sights and going on
adventures?
When talking about a new business or investment with friends or
colleagues, do you tend to exaggerate the benefits and profit potential?
Do you often take on social obligations you later regret?
If you
answered yes to three or more of the questions above, I would call you
generally optimistic. You may even be overly optimistic.
Now
answer these five questions.
Do you feel that, generally speaking, you have more challenges
and obligations than you can properly handle?
In social situations, do you find yourself often thinking about
business obligations or problems? Do you have difficulty staying in the “here
and now”?
Would you rate your boss and colleagues negatively?
Do you often feel anxious or even sad about going on business
trips or attending business functions?
Do you fantasize about retiring or quitting your job and getting
another one?
If you
answered yes to three or more of these last five questions, you might have
pessimistic tendencies. If you answered yes to all five, you are probably
overly pessimistic.
Admittedly,
this is not a scientific test. But optimism and pessimism aren’t really
scientific terms.
And as I
said above, emotional tendencies matter when it comes to business decisions. To
push back against your dominant mood, here is what I recommend doing…
Optimists,
Curb Your Enthusiasm
Understand
that there is a part of your brain that is not operating efficiently. That is
the part that, in other people, causes doubt and fear.
Be happy
that you have a frame of mind that gives you the feeling that you can
accomplish just about anything, but promise yourself that you’ll run all your
important impulses through an outside filter.
Don’t
sign any contracts or agree to any business deals without running them by a
trusted lawyer and accountant first. Tell your advisors that their job is to
spot the problems and to be tough on you when you try to dismiss them with
quick rhetoric. (That’s what you’ll want to do when they toss a pail of cold
water on your fire.)
Don’t buy
anything expensive on the spot. Don’t hire anyone on the spot. Don’t fire
anyone on the spot. Don’t take a job on the spot.
Don’t
send out “reactive” emails on the spot. Wait 24 hours, and then either delete
or modify the email. If, in reading the email 24 hours later, you get angry
again and want to send it out unchanged, hold off for another 24 hours. Don’t
send out that first email under any circumstances. You will regret it.
Don’t
ever say anything in an email about anyone unless you wouldn’t mind them
reading it… because they surely will. The same rule applies to anything written
in letters or spoken on the phone or in person.
Pessimists,
Fill Your Glass a Bit More
Accept
the fact that you have some deficiency in your brain chemistry. Recognize that
your instinctive tendency to see the dark side can sometimes limit your success
by dampening your enthusiasm or the enthusiasm of others.
Be happy
that you have a natural ability to detect the potential problems in every
situation. Use that talent to assess the risks and problems inherent in any
major venture you undertake.
Make it a
habit to always say something positive before you say whatever it is that’s on
your mind.
After you
get through writing your daily task list, spend five or 10 minutes visualizing
every task. Imagine yourself happily achieving the objective. Even if you find
the job odious and the person you are doing it with repugnant, find some way to
imagine actually enjoying the experience.
This may
seem like advice that borders on the silly – it certainly did to me when I
first tried it – but you’ll be amazed at how well it works.
Practice
smiling in the mirror. Do this as often as you can stomach it. And then do it
some more. Again, this advice may seem ludicrous… but it will work.
When
talking on the phone, smile. The person on the other end is cueing off the
energy from your voice. If you want him to respond enthusiastically to your
ideas, you need to breathe that enthusiasm into the tone of your voice.
Every
time you see someone for the first time, greet him or her with a firm
handshake, a smile and a confident “eye lock.”
Recognize
What Mood You Are In
You may find
that your mood swings between optimism and pessimism. If you are like me, that
swing can be very large.
After
going through a rather deep depression some time ago, I began to chart my
mental state in terms of how I felt, what I thought about and what sort of
functionality I had.
At the
bottom of the scale, I felt suicidal, had repetitively negative thoughts, and
could not get out of bed or even carry on a conversation. At the top of the
scale, I was euphoric. I loved everyone and everything I encountered.
By
logging my moods, I discovered that when I was below a 6, I made bad decisions.
I shied away from every challenge or opportunity, including many that could do
me nothing but good.
When I
was above an 8, I often made bad decisions in the other direction. I would take
on almost any new project or invest in any new business opportunity.
Nowadays,
I follow a rule that keeps me in good stead. I never make business or
investment decisions unless I’m in the 6 to 8 range.
You don’t
have to use my system to get the same effect. Simply recognize that if you have
significant mood swings, you should defer decisions when you are feeling
especially good or bad.
In other
words, say yes to new opportunities only when you are not being swayed by your
emotions. Whether optimistic, pessimistic or something in between, recognize
that whatever your goals are, you’ll have a better chance of achieving them if
you approach them with a level mood.
Advisor
Perspectives welcomes guest contributions. The views presented here do
not necessarily represent those of Advisor Perspectives
Clickhereto watch a video and learn more about
Evidence Based Advisor Marketing.
If your ego
is too loud, it stops you from reaching your goals and having a happier, more fulfilling
life.
That’s the
message from Scott Barry Kaufman, a psychologist at Columbia University, in an
insightful article published
in Scientific American.
The problem
Kaufman
defines your ego as, “that aspect of the self that has the incessant need to
see itself in a positive light.” He claims that, “the more the ego is quieted,
the higher the likelihood of actually reaching one’s goals.”
His views
are shared by Mark R. Leary, the author of The Curse of Self. Leary
observed that “egoism” can “profoundly affect people’s lives, interfering with
their success, polluting their relationships with other people, and undermining
their happiness.”
Kaufman and
Leary advocate self-awareness and reflection. Both are essential for reaching
your goals. Problems arise when our egos are so “noisy” they actually impede
the goals we are trying to achieve. Kaufman puts it this way: “A noisy ego
spends so much time defending the self as if it were a real thing, and then
doing whatever it takes to assert itself, that it often inhibits the very goals
it is most striving for.”
The
solution
Instead of
adopting a defensive posture in an effort to prove you are “right,” and being
concerned about self-enhancement, Kaufman suggests you quiet your egos, which
will foster a sense of well-being, health, self-esteem and other benefits.
Having a
quiet ego means being less concerned about getting across your point of view
and more concerned with identifying with the experience of others. Instead of
dominating a conversation, show your interest in what others are saying. Not
only is your behavior a form of kindness, it will be perceived by the other
person as being compassionate.
Those with
quiet egos have a “detached awareness,” which permits them to see both sides of
an issue. They are open to reexamining their thoughts, positions and beliefs.
They have
an “inclusive identity.” They are cooperative and compassionate toward
others, rather than focusing on themselves.
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Why it’s
important
Success as
an advisor is largely dependent on your ability to make an emotional connection
with prospects and clients. A “noisy” ego leaves little room for focusing on
others. Your bandwidth is absorbed by a preoccupation with yourself – how you
are being perceived, your views on the issues, your background and expertise.
The list goes on…and on.
When you
quiet your ego, you appreciate it’s not about you. It’s about your ability to
focus intensely on your prospect, client, loved ones and colleagues.
On a macro
level, Kaufman observes, “I don’t think it’s an overstatement to say that the
cultivation of these skills in our society would lead to greater mental health,
useful reality-based information, as well as peace and unity among humans.”
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investing insights by signing up for his free, weekly newsletterhere.
1.Trading in
U.S. Stocks Has Increased 177% Over the Last 15 Years.
Phil Mackintosh-Nasdaq–Nasdaq Says Fears ETFs Are
Eating Stock Liquidity Are Unfounded – Trading in U.S. stocks has increased 177%
over the last 15 years, Phil Mackintosh, the exchange’s chief economist,
wrote in a note last week.
U.S. markets hosted about $164
billion additional stock trades every day last year versus 2004; by contrast, average daily
ETF trading has increased $93 billion over the same time frame, albeit from a
smaller base.
These
are the 20 best-performing stocks of the past decade, and some of them will
surprise you–Some lesser-known companies have special advantages in their
industries PHILIPVAN DOORN
After delivering three interest-rate cuts this
year, the Federal Reserve seemed to indicate that it “would need to see a
really significant move up in inflation that’s persistent before we even
consider raising rates to address inflation concerns.” As a result of
this, the bank expects fund rates to remain unchanged in 2020.
Earlier this year, the bank’s economists put the risk of a US
recession within the next 12 months at one in three. Now it’s cut the chances
to one in five.
“The
current expansion is now the longest in US business cycle records dating to the
1850s, and some recession fears may simply reflect an instinctive sense that
its time is nearly up,” the economists said.
“This
has not been an unreasonable thought historically, as the two usual late-cycle
risks-inflationary overheating and financial imbalances-often did grow over
time. But so far both risks look limited,” they added.
Low recession risk, faster growth, and
unemployment at a 70-year low — here are Goldman Sachs’ predictions for the US
economy in 2020–Yusuf Khan
1.When
You’re Born Will Affect Returns….Two 30 Year Comparisons.
When you’re born has a
huge impact on lifetime investment returns. Genetics play a role
in our health, and when we’re born has a big effect on our portfolio. An
investor born in 1902 that invested 100% in U.S. stocks (VTI) from 1932 to 1962 earned 10.2% per
year – turning $100,000 into an inflation-adjusted $1.8 million.
Shifting the investment window to
1965 to 1995 results in only earning $343,000. We can’t control when we’re
born, so it’s important to focus on what we can control: saving more money,
reducing fees, and increasing diversification.
1.New
All-Time Highs in Equities Still Led by Large Cap.
When we examine these
areas of the broader market by way of the aggregated S&P 1500 Index, we
find that a total of 237 stocks (about 16%) within the index have moved to new
all-time highs since October 1st. As shown in the chart below, we can see that
some areas of the market are participating more in this rally than others.
Large caps have led the way, not only by performance but also by
headcount, accounting for 116 of the 237 stocks (48.9%) moving to new
highs. Mid-caps are next in line with 94 stocks (39.6%), followed by small
caps with 27 stocks (11.4%).
1.M2 Money
Supply Growing at 10.4% Clip Over Last 3 Months.
“Jason
DeSana Trennert, who runs Strategas Securities, notes that the M2 money
measure—cash, checking, savings deposits, small certificates of deposit, and
money-market funds—has been growing at a rapid 10.4% annual clip over the
past three months.
Supporting that growth
has been the rapid expansion of the Federal Reserve’s balance
sheet, which has climbed at a 31% yearly rate over that span. While the Fed
says its monthly buying of $60 billion of Treasury bills doesn’t represent
quantitative easing—the central bank’s past rounds of securities purchases to
stimulate the economy—Trennert calls it a “distinction without difference for
owners of risk assets,” such as stocks. The expansion has been international,
adds Evercore ISI, which points out that the balance sheets of the European
Central Bank and the Bank of Japan also are headed
higher.”
Going back to 1928, there have been 17 occasions when the S&P
500 has scored an annual gain bigger or equal to 25%.
And 71% of the time, the S&P 500 is positive in
the following year with an average gain of 7%, a CNBC analysis using
FactSet data found.
The S&P 500 has only had five negative years following a 25%
annual return since 1928.
The
record-breaking rally has brought the S&P
500′s return this year to nearly 25%, and if the gains hold up for
the rest of the year, the market could have more room to run in 2020 if history
is any guide.
Going back
to 1928, there have been 17 occasions when the S&P 500 has scored an annual
gain bigger or equal to 25%. And 71% of the time, the S&P 500 is positive
in the following year with an average gain of 7%, a CNBC analysis using FactSet
data found.
The S&P
500 was up 24.5% for the year through Friday’s close. Futures were pointing to
some more gains on Monday.
The average
is skewed by a 36% loss in 1936 around the Great Depression. Looking at the
average performance in the “modern” era from 1950 forward, the average annual
performance is a gain of 11.25% for the S&P 500 after a banner year.
The S&P
500 has only had five negative years following a 25% annual return since 1928.
Wall Street
strategists and investors have said it’s all coming down to President Donald Trump and
the China trade war if the market can close out the year with solid gains. The
market has been moving on any development in the U.S.-China trade war for
nearly two years.
Optimism on
a trade resolution has risen recently after the two countries reached a truce
and started working up a so-called phase one deal. White House economic advisor
Larry Kudlow said the two countries were “getting close” to reaching a trade deal,
sending stocks to new all-time highs.
To be sure,
next year could be unpredictable due to the upcoming presidential
election. Wall Street is already worried about the
ascent of Massachusetts senator Elizabeth Warren and her wealth tax proposals.
Notable investors including billionaire Paul Tudor Jones and longtime
investor Leon Cooperman have warned of a market correction, should Warren take
the White House.
1.Investors have Sold $230 Billion in
Shares this Year Amid a 20% Rise in Global Markets
That said, Citi Says Next Leg in
Bull Market Coming as Outflows Turn Around – Investors have sold a net $230
billion in shares this year amid a 20% rise in a gauge of global stocks – That has only
happened twice before and when the trend reversed, inflows helped spur another
20% gain over the next year, they said. “November is on track to be the
first month of inflows into emerging and developed market equities funds in two
years,” the Citi team wrote. “If they continue, this could add further momentum
to the rally.”
1.Per capita liquid milk
consumption in the U.S. has declined more than 40%
since 1975.
And the company’s
deeply distressed 6.5% bonds maturing in March 2023 recently traded at 15.5
cents on the dollar to yield 87.6%, according to IHS Markit. The spread is
8,584 basis points above comparable Treasury yields.
Dean Foods declares
bankruptcy …The drop to penny stock.
No. 1 milk company declares bankruptcy
amid drop in demand
