1. Bond Index AGG is in 4 Year Drawdown…Was Yesterday Turnaround?

Nasdaq Dorsey Wright As of Thursday (6/6), AGG is roughly 19% below its all-time high reached in August 2020. Even if we use total return data (AGG.TR), including coupon reinvestment, the fund is still about 10% below its all-time highs.

What is more punchline worthy is that, as of yesterday, AGG has been in a drawdown for 1000 trading days…that’s nearly four years in real time.

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2. SHY Short-Term Treasury Bond ETF.

50week thru 200week on long-term chart

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3.U.S. Retail Gas Fails to Below 2023 Highs..Downward Trend.

https://ycharts.com/indicators/us_gas_price

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4. What Happens to Names Added to S&P?  CRWD, GDDY, and KKR Added.

Nasdaq Dorsey Wright by Will Gibson

The S&P 500 (SPX) will rebalance at the end of this month. Notable additions to the index include CrowdStrike (CRWD), GoDaddy (GDDY), and KKR (KKR).

Theoretically, a stock’s inclusion in an index should have no impact on its performance. However, being added to a major benchmark like the S&P 500 can increase demand for a stock. Passive funds that track the index must purchase the new addition(s) and being added to an index can also increase stock awareness, especially among retail investors. Although, the performance trends for new adds have not been what you might expect.

In the table below we summarized performance of stocks that were added to the S&P 500 since 2010. We did not include stocks removed from the index due to various nuances with delisting (M&A activity as one example).

In the month prior to joining the index the upcoming additions had an average return of 4% which was about 3.5% higher than S&P 500’s average return, yet most of the alpha-generation opportunity seemed to vanish as the index reconstitution date approaches. On average, the new constituents underperformed the index after their inclusion date. S&P Global has a more detailed study that confirms our observations.

This performance asymmetry seems counterintuitive, but some hedge funds and sophisticated investors have ways to reasonably predict which companies will join the index even before an announcement is made, essentially setting up an arbitrage/front-running strategy. In other words, by the time information is widely public the market has long priced in the potential effects.

That said, all three of the upcoming additions have been high technical attribute stocks on our system since the middle of 2023. So, we would not suggest dumping these names solely based off today’s data because the technical pictures still look constructive for the soon-to-be members.

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5. Oracle Breakout Similar to Apple Chart from Yesterday.

ORCL breaks out of sideways pattern

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6. $6 Trillion in Money Markets But Household Stock Allocations Still at Highs.

Is it time to be max bullish? (rbadvisors.com)

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7. HIMS Compound Pharmacy $200 a Month Weight Loss Treatment Sends Stock Back to 2020 Highs

www.stockcharts.com

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8. One Commodity has Held Up Versus Tech Heavy S&P for 5 Years…Water.

Water ETF PHO +87% 5 Years.

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9. Bill Gates Backing Small Nuclear Reactor Build Out …Good Nuclear.

From Morningbrew Blog

ENERGY

Bill Gates goes nuclear

The guy who helped construct the computer company in a garage-to-billionaire pipeline has put his money where his mouth is. Bill Gates, a proponent of competitive clean energy sources to combat climate change, broke ground on a next-gen nuclear power facility yesterday outside a small Wyoming town.

TerraPower, a company Gates co-founded in 2008 to boost private nuclear investment, is building a first-of-its-kind reactor that it thinks will usher in a new era of scalable clean energy.

What’s the big deal? TerraPower’s new reactor isn’t like old reactors—it’s smaller, cheaper, and may stand a shot at being finished…unlike new traditional reactors, whose death certificates are usually written before they even start running due to delays and cost overruns. The US has only built two reactors in the last 30 years, costing $35 billion, but TerraPower sees itself as #builtdifferent.

• The TerraPower design calls for liquid sodium rather than water to cool the reactor, meaning the power station won’t need extensive (and expensive) heavy piping.
• The reactor will also be able to adjust its output, making it easier to coexist with wind and solar sources and take advantage of selling energy to the grid.

Digging deep

Gates maintains that he’s not involved in the nuclear project to make more money. “I’m involved in TerraPower because we need to build a lot of these reactors,” he said in an interview.

The project still has plenty of unknowns, including whether the reactor will actually be cheaper to build (some critics say it won’t) and whether the Nuclear Regulatory Commission will approve its unorthodox engineering plan.

You need deep pockets to pull this off…but with some of the deepest pockets propping up the project, there’s a chance it can work. Gates has poured $1 billion into the project so far, raised another $830 million, and said he’s prepared to stand by it financially.—CC

Bad Nuclear

Russian Nuclear-powered Submarine Arrives In Cuba

A Russian nuclear-powered submarine and other naval vessels arrived in Cuba Wednesday for a five-day visit to the communist island off Florida’s coast in a show of force amid spiraling US-Russian tensions.

The submarine Kazan, which Cuba says is not carrying nuclear weapons, was accompanied by the frigate Admiral Gorshkov, as well as an oil tanker and a salvage tug.

The Kazan and Admiral Gorshkov, which is one of Russia’s most modern warships, could be seen just off Havana, which is about 90 miles (145 km) from the tip of Florida.

The tanker Pashin and the tug, flying the white, blue and red tricolor of Russia, entered the harbor early Wednesday morning, an AFP reporter said.

The Cuban government announced that Foreign Minister Bruno Rodriguez was meeting his Russian counterpart Sergei Lavrov in Moscow on Wednesday, as the two former Cold War allies further tighten their links.

The unusual deployment of the Russian military so close to the United States — particularly the powerful submarine — comes amid major tensions over the war in Ukraine, where the Western-backed government is fighting a Russian invasion.

Cuban President Miguel Diaz-Canel met with Russian counterpart Vladimir Putin last month for the annual May 9 military parade on Red Square outside the Kremlin.

During the Cold War, Cuba was an important client state for the Soviet Union. The deployment of Soviet nuclear missile sites on the island triggered the Cuban Missile Crisis of 1962, when Washington and Moscow came close to war.

Relations between Russia and Cuba have become closer since a 2022 meeting between Diaz-Canel and Putin.

https://www.barrons.com/news/russian-nuclear-powered-submarine-arrives-in-cuba-35f38414

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10. Deaths Per Year Back to Pre-Covid Levels.

1. Capex Boom U.S. and Japan

https://www.topdowncharts.com

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2. End of Day Rallies…Institutional Buying?

Fundstrat Tom Lee

https://fundstrat.com

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3. Apple’s “Golden” Moment

Bespoke Investment Group
For over a year now, shares of Apple (AAPL) have been stuck between the low $160s and the high $190s as the market impatiently waits for the company to outline its AI strategy.  In just the last seven weeks, though, the stock has tested both ends of the range, and ahead of today’s Worldwide Developers Conference, shares of AAPL are modestly pulling back from the top end of the range. In case you missed it, in last week’s Bespoke Report, we discussed the stock’s performance leading up to, during, and after prior conferences including its performance when it rallied in the weeks leading up to the conference. If you missed that on Friday, make sure to check it out.

As the stock has rallied from its lows in the last several weeks, AAPL is on the verge of completing a golden cross formation, which technical analysts consider a bullish pattern. A golden cross occurs when a stock’s shorter-term moving average (in this the 50-DMA) crosses up through a longer-term moving average (in this case the 200-DMA) as both are rising.  Conversely, the opposite of a golden cross is an iron cross which occurs when the short-term moving average crosses down through a longer-term moving average as both are falling.

As recently as May 1st, AAPL’s 50-DMA was more than 5% below its 200-DMA, but that spread has narrowed quickly in the last six weeks to less than 1% today. The gap is also continuing to narrow fast, and barring an absolute plunge in the stock, it’s likely that the 50-DMA will cross up through the 200-DMA within a week or so.

While golden crosses are a positive technical formation in theory, they don’t necessarily play out that way in practice.  The table below summarizes the performance of AAPL after each prior golden cross and iron cross in the post-iPod era (since 2001).

After the four golden crosses, AAPL traded down over the next week three out of four times, and one and three months later, it was only up half the time. Six and twelve months later, AAPL’s stock was higher three out of four times with the lone exception being its performance after the golden cross in May 2008 just ahead of the financial crisis.

In the post-iPod era, AAPL has experienced five iron crosses with the most recent being in March 2024.  Performance following these prior occurrences was similarly weak over the short term, but six and twelve months later, median returns were stronger than after golden crosses.

What stands out concerning performance following both golden and iron crosses, though, is the fact that the median returns for both golden and iron crosses are weaker than the average for all periods.

https://www.bespokepremium.com/interactive/posts/think-big-blog/apples-golden-moment

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4. Unemployment Moved Above 4%…History of S&P Returns

https://www.nasdaq.com/solutions/nasdaq-dorsey-wright

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5. Tesla Has Gone 648 Days Since making All-Time High

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6. So Much for Inflation at Restaurants

Axios

Restaurants are having their biggest year ever (axios.com)

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7. Used Car Prices Down but Still Above 2020

Wolf Street Blog  
Vehicles with internal combustion engines (ICE) also went through a crazy price spike during the pandemic, up by 64% in May 2022, a huge historic ridiculous price spike that was nevertheless dwarfed by what EVs went through. The Manheim index for ICE vehicles is up 34% from January 2020 (red):

https://wolfstreet.com/2024/06/10/used-car-wholesale-prices-continue-plunge-gave-up-59-of-pandemic-spike-but-still-up-35-from-jan-2020-evs-still-72-ice-vehicles-34

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8. Work from Home by Age Groups

https://www.businessinsider.com/gen-xers-boomers-return-to-office-remote-work-hybrid-wfh-2024-6

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9. Where are U.S. Military Troops Located?

USA FACTS

https://usafacts.org/articles/where-are-us-military-members-stationed-and-why

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10. How to Handle Difficult People Like a Stoic

PSYCHOLOGY TODAY Follow these three principles to guard your equanimity.- Seth J. Gillihan PhD
 
KEY POINTS

• The philosophy of Stoicism offers greater flexibility in how you respond to challenging people.
• It teaches that your interpretations, rather than events themselves, are the true source of upset feelings.
• Peace of mind comes from redirecting your energy to the things you can actually control.

On a recent road trip with my wife and kids, I found myself being tailgated by an apparently angry and impatient driver. I was going a few miles per hour over the speed limit as I passed a semi on a long downhill stretch through the mountains; when I pulled into the right lane, the driver accelerated past me, blowing his horn for about 10 seconds.
I felt my sympathetic nervous system turn on, and resisted the urge to give him the finger or to passive-aggressively honk a “friendly” beep-beep in return. For several minutes afterward, I was silently seething. It felt like he had gotten away with something, as if I had lost and he had won. Each time I replayed the prolonged honk I felt angry and humiliated. Part of me really wanted to chase down his car and pay him back somehow, but I knew nothing good would come of it.
You no doubt have had similar encounters with obnoxious or pushy people, whether on the road or elsewhere. These episodes are a perfect opportunity to practice the principles of Stoicism.

1. Judgments, Not Events, Disturb People
As I ruminated on what had happened, I had to wonder: What had that pushy driver actually done to me? The idea that he had “humiliated” me or “won” was based on multiple layers of interpretation. The facts were much simpler:

• A driver wanted his car to go faster than mine was going.
• He drove close to my bumper when my car was blocking his way, apparently angry and annoyed.
• As his car passed mine, he pressed on his horn for several seconds before speeding away.

The powerlessness and sense of victimhood that I felt were not part of the events themselves. Nothing says that honking without retribution equals “winning.”
article continues after advertisement
As the Stoic philosopher Epictetus wrote in Enchiridion nearly two millennia ago, “It is not events that disturb people, it is their judgments concerning them.”
A few pages later he adds: “Another person will not hurt you without your cooperation; you are hurt the moment you believe yourself to be.”
It wasn’t the driver’s actions that upset me, it was the meaning I gave to them. When someone does something that offends you, ask yourself what is fact and what is interpretation.

2. Don’t Give Your Peace of Mind to Others
The judgments you make drive your emotional reactions. If you want to “win” against others, guard your equanimity. The only way I would lose to that honking driver was by losing my peace of mind.
Why give difficult people power over how you feel and what you do? Your emotional equilibrium is not to be entrusted to the actions of others. You can let people be rude or unreasonable, without acting as if your only recourse is to get upset and respond in kind.
Remind yourself that no one else is responsible for your emotions. “So when we are frustrated, angry, or unhappy,” wrote Epictetus, “never hold anyone except ourselves—that is, our judgments—accountable.” When you do, you’ll discover true freedom in how you choose to respond.

3. Focus on What You Can Control
The Stoics recognized that peace of mind is found by focusing on what you actually are responsible for. Epictetus advised asking yourself, “‘Is this something that is, or is not, in my control?’ And if it’s not one of the things that you control, be ready with the reaction, ‘Then it’s none of my concern.'”

https://www.psychologytoday.com/intl/blog/think-act-be/202404/how-to-handle-difficult-people-like-a-stoic

1. A Few Charts on Market Concentration

The Top 10 stocks in the S&P500 now make up a record-high 35% of the index, see chart below.-Torsten Slok Apollo

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2. Percentage of Stocks Outperforming Index

RBA Advisors

From Callum Thomas
https://www.chartstorm.info

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3. Europe Mag 7 Outperforming U.S. Mag 7 Since 2022

Capital Group

https://www.capitalgroup.com/advisor/insights/articles/2024-midyear-stock-market-outlook.html

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4. Mega-Caps Led Performance in May

www.ndr.com

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5. NVDA Worth $102M Per Employee

Doug Short Advisor Perspectives

The records have been coming thick and fast for AI phenomenon Nvidia recently — and on Wednesday it ticked off two more major milestones. The company crossed the $3 trillion market cap mark and simultaneously surpassed Apple to become the second most valuable company in the world.

There are a lot of ways to value a company: price-to-earnings multiples, discounted cash flow analysis, or EV-to-EBITDA multiples are all favorites of equity analysts… though each is often more of an art than a science. One really simple fundamental metric is: how much value is being ascribed for every person that it employs? For Nvidia, after this latest run-up took it north of the $3T milestone, the company is being valued at more than $100M for each of its 29,600 employees (per its filing that counted up to the end of Jan 2024).

That’s more than 5x any of its big tech peers, and hundreds of times higher than more labor-intensive companies like Walmart and Amazon. It is worth noting that Nvidia has very likely done some hiring since the end of January — the company might just be in growth mode — but even if the HR department has been working non-stop, Nvidia will still be a major outlier on this simple measure.

We are running out of ways to describe Nvidia’s recent run… but a nine-figure valuation per employee is a new one.

www.chartr.com

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6. Bill Ackman Pershing Square Going IPO….Pershing Square Holdings in London PSHZF Trades at Sizable Premium to Big Money Managers

Barrons
One valuation metric is market value relative to assets. Traditional asset managers likeBlackRock are valued at 1% to 3% of assets, while higher-fee alternative managers likeBlackstone, Ares Management, and Blue Owl Capital are valued at 10% to 15% of assets. Pershing Square is valued at nearly 60% of assets.

https://www.barrons.com/articles/bill-ackman-new-fund-pershing-square-usa-4cb5c2c2?mod=past_editions

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7. Copper Hit Friday…Closes Below 50-Day

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8. GOLD Hit Friday….GLD Closes Below 50 Day

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9. Inflation -Fed Funds Minus Core CPI is in Restrictive Zone

Unio Capital

https://uniocapital.com

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10. Russian Demographics Were Bad Before Ukraine War….Now Crisis Mode

WSJ
In the midst of the economic and social upheaval that followed, growing numbers of Russians died from cardiovascular disease, suicides, traffic accidents and other causes—often related to heavy drinking—and women had fewer babies.

By 2003, Russia’s life expectancy had dropped to about 65 years from 69 in 1990, far below many Western countries at the time. A more stable economy, along with policies restricting alcohol purchases and antismoking campaigns, helped push that up to about 70 years in 2022—still below most developed countries, according to United Nations data. The U.S. had a life expectancy of about 78 years. Estonia, a former Soviet republic, had a life expectancy of 79 years. 

By Betsy McKay and Georgi Kantchev 
https://www.wsj.com/world/russia/putin-russia-population-birthrate-war-904d74a7

1. Semi’s vs.Software-Market Ear Blog

https://themarketear.com/newsfeed

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2. Chips Act Grants By Company

https://www.wsj.com/tech/chips-act-funding-semiconductor-investments-us-22cc1ea8?st=hqt5jcabopnl0gc&reflink=desktopwebshare_permalink

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3. Stocks Strongly Linked to Bond Yields vs. History

WSJ By James Mackintosh  The link to bond yields is also split, with the average stock more strongly linked to bond yields—rising when they fall, and vice versa—than any time since 1999 over a 100-day period. The gap between this correlation and that of the ordinary S&P, which has a much weaker link to Treasury yields, is unprecedented in data back to 1990.

Aside from AI, I think this is best explained by corporate profits and interest rates, and to a lesser extent concern about the economy.

The Big Tech stocks that dominate the market sit on huge cash piles, while the biggest companies chose to lock in low interest rates for a long time by refinancing their bonds before the Fed began raising rates in 2022. Smaller companies tend not to have cash piles on which to earn fat savings interest and have more need to issue bonds to raise cash. The smallest don’t even have access to the bond market, one reason the Russell 2000 index of smaller companies has lagged so far behind the S&P this year, eking out a gain of just 1.6%.

https://www.wsj.com/finance/investing/big-tech-companies-unplug-stock-market-from-reality-ff1d3e0e

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4. HIMS Stock Post Weight Loss Supplement Announcement

HIMS post $200 a month weight loss compound pharmacy replacement

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5. Starbucks Held 2022 Lows

SBUX bounced at 2022 lows.

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6. Neurotech Growth

https://dailyshotbrief.com/

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7. Vacancy Rates for Commercial Real Estate

From Irrelevant Investor Blog

https://www.theirrelevantinvestor.com/

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8. More N.Y.C. Rentals Are Available. But Can You Afford One?

NY Times By Michael Kolomatsky

https://www.nytimes.com/2024/05/30/realestate/nyc-rentals-available-price.html

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9. Update on Mortgage Payment Cost….But Rates Dip Below 7% This Week

 

Mortgage rates dip below 7%. ‘Expect them to modestly decline over the remainder of 2024,’ Freddie Mac says-Aarthi Swaminathan

30-year mortgage rate fell on the back of reports of a slowing U.S. economy

Mortgage rates dipped below 7% in the latest week as the U.S. economy showed signs of slowing. 

The 30-year fixed-rate mortgage averaged 6.99% as of June 6, according to data released by Freddie Mac FMCC, +4.08% on Thursday. 

It’s down 4 basis points from the previous week — one basis point is equal to one hundredth of a percentage point. 

A year ago, the 30-year was averaging at 6.71%.

The average rate on the 15-year mortgage was 6.29%, up from 6.36% last week. The 15-year was at 6.07% a year ago.

Freddie Mac’s weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage. 

https://www.marketwatch.com/story/mortgage-rates-dip-below-7-expect-them-to-modestly-decline-over-the-remainder-of-2024-freddie-mac-says-bbb44f2f?mod=home-page

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10. Buying Freedom

Jonathan Clements  |  Jun 1, 2024

IF 20-SOMETHINGS ASK me for financial advice, I suggest getting a job right out of college and saving like crazy, so they quickly get themselves on the fast track to financial freedom.

If 60-somethings ask me for advice, I advocate a phased retirement, seeking part-time work in their initial retirement years and, if they enjoy it, perhaps keeping it up into their 70s.

Yeah, I know, I sound like a real killjoy. My advice raises an obvious question: Is there ever a time when we should cut ourselves some slack and not have a job?

Let me start with this: If you have a burning passion—perhaps to establish yourself as an artist in your 20s or to commit yourself to religious study in your 60s—you already know what you need for a fulfilling life. Everybody else’s opinion, including mine, is of little import.

But what if you don’t have a calling? It’s worth keeping five key ideas in mind:

First, in crass economic terms, adult life is about using our human capital—our income-earning ability—to amass financial capital, so one day we no longer need to rely on our human capital. This “no longer relying on our human capital” is what non-economists call retirement, and it often takes three or four decades of saving and investing to accumulate enough.

Second, beyond paying for retirement and other goals, it’s desirable to amass money because it provides a sense of financial security and it gives us the flexibility to lead our life as we wish. If we sock away a moderate amount of savings early on, we’ll remove one of life’s biggest stressors.

Third, most of us aren’t very good at anticipating what our future self will want. Maybe our greatest desire will be to retire early. Perhaps, in our 40s or 50s, we’ll want to swap into a career that’s less lucrative but more fulfilling. Or maybe we’ll be happy to persevere with our current job. It’s hard to know what we’ll want, which is another reason to save diligently starting early in adult life. The larger our nest egg, the more options we’ll have.

Fourth, our focus often shifts as we grow older. We become less motivated by the prospect of pay raises and promotions, and more focused on doing what we personally care about. With any luck, once we have a better handle on what we really want, we’ll get the chance to pursue those passions more fully during a second career or once we’re retired.

Finally, most of us enjoy striving toward our goals. To be sure, we imagine that the greatest happiness will lie in achieving those goals. But in truth, it’s the striving that offers the great pleasure. This pleasure is captured by the notion of flow, those times when we’re engaged in activities that we’re passionate about, we find challenging, we think are important and we feel we’re good at. At such moments, we can become totally absorbed and lose all sense of time. We should design our life—including our retirement—so we enjoy frequent moments of flow.

The five ideas above help explain why we should save early in life to prepare ourselves for later, when we might want to change how we spend our days. But that still leaves one question unanswered: Why, come retirement, should our days necessarily involve working part-time?

The short answer is, it isn’t necessary. Unless you don’t have enough saved, there’s no need to work part-time in retirement. But I think it’s an idea that deserves more attention. Today, retiring as early as possible is considered a badge of honor, and continuing to work later in life is viewed as somehow offensive to the whole notion of retirement.

But as I’ve argued before, there are all kinds of reasons—financial and otherwise—to continue earning money through our 60s and into our 70s. It can feel good to be a productive member of society, plus retirement can be a whole lot less financially stressful if we still have a little money coming in. What about those savings we earlier amassed? Even if we keep earning money, we’ll likely still find plenty of uses for our savings, including travel, helping family members, supporting our favorite charities and perhaps paying long-term-care costs.

I’m not saying that working part-time in retirement is the right choice for everybody. But if there are activities you find fulfilling, and you can make a little money doing so, why not?

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier articles.

Buying Freedom

1. MCHI China IShares Chart

MCHI breaks above red downtrend line going back to 2021

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2. KWEB China Internet ETF

50day thru 200day to upside in early May

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3. Energy Sell Off

OIH Oil Service ETF closes below 200-day

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4. Another Look at Concentration in S&P…Top 3 Companies 20% of Market

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5. Buffett Indicator

Doug Short Advisor Perspectives

https://www.advisorperspectives.com/dshort/updates/2024/06/04/buffett-valuation-indicator-may-2024

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6. Criticisms of The Buffett Indicator

From Current Market Valuation Blog 
No single metric is illustrative of the health or relative valuation entire market. Common criticisms of the Buffett Indicator are:

Interest Rates-The Buffett Indicator only considers the value of the stock market, but does not consider how stocks are valued relative to alternative investments, such as bonds.
When interest rates are high, bonds pay a high return to investors, which lowers demand (and prices) of stocks.

Additionally, higher interest rates means it’s more expensive for businesses to borrow money, making it harder to borrow cash as a way to finance growth. Any business that takes on debt will face relatively higher interest payments, and therefore fewer profits. Less corporate profits means lower corporate stock values. The corollary to this is also true. Low interest rates means bonds pay less to investors, which lowers demand for them, which raises stock prices in relation to bonds. Low interest rates make it easy for corporations to borrow cash to finance growth. Corporate interest payments will be low, making profits higher.

This is all to say that all else equal if interest rates are high, stock prices go down. If interest rates are low, stock prices go up.

Over the last 50 years the interest rate on 10 Year US Treasury bonds has averaged 5.86%. During the peak of the .com bubble when the Buffett Indicator was very high, the 10Y Treasury rate was a bit higher than average, around 6.5%, showing that low interest rates weren’t juicing the stock market. Today the Buffett Indicator is still quite high relative to its historical trend line, but interest rates are still relatively low, currently at 4.20%.

This can be interpreted to mean that during the .com bubble, equity investors had other good options for their money – but they still piled recklessly into stocks. Whereas today, investing in bonds returns relatively little. Today‘s investors need to seek a return from somewhere, and low interest rates are forcing them to seek that return from riskier assets, effectively pumping up the stock market. While this doesn’t justify the high Buffett Indicator on any fundamental basis, it does suggest that the market today is less likely to quickly collapse like it did in 2000, and that it may have reason to stay abnormally high for as long as interest rates are abnormally low.

For additional detail on the effect interest rates have on stock prices, view our Interest Rate Model.

International Sales
A second fair criticism of the Buffett Indicator is that the stock market valuation reflects international activity while GDP does not. Though GDP does include national exports, it would not include something like the sales Amazon makes in India (sourced from Indian fulfillment centers and sellers). However, Amazon’s India business is definitely priced into its overall stock price, which is listed in the USA. Imagine if the Indian government banned Amazon from the country and shut down all its operations/subsidiaries there. This would lower Amazon’s stock price, which would lower overall US stock market value, but have no impact on US GDP. That is, the Buffett Indicator would fall.
Globalization has expanded steadily over the last 50 years and has been a key driver in the growth of the Buffett Indicator over time, since US stocks have risen in value due to overseas activities not included in US GDP.

This is a very fair criticism of the Buffett Indicator itself — though not necessarily for the valuation model presented here, which looks at the Buffett Indicator relative to it’s own exponentially growing trend line. Our model expects exponential growth of the indicator over time, such that we have a “fair” Buffett Indicator value of 50% in 1960, growing to ~120% in 2020. Part of that natural increase is due to technological advances that lead to higher profits for existing firms, or from the creation of new industries entirely. Another part of that natural increase is because US market value is growing faster than GDP due to the rise of international sales of US-based firms. The key point here is that the model is looking at relative performance against the indicator’s own trend rate, and not just saying “the Buffett Indicator is high”.

https://www.currentmarketvaluation.com/models/buffett-indicator.php

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7. Bitcoin Second Biggest Net Inflow Day Ever

BY TYLER DURDEN  ZEROHEDGE 
After a period of flat to negative flows, the spot ETFs have added $3.7 billion in assets over the past month, to make the aggregate net inflows since inception almost $15 billion. Yesterday completed the sixteenth straight day of net inflows with a second-best-ever $887 million flood of money into the crypto assets.

https://www.zerohedge.com/crypto/fidelity-dominates-bitcoin-etfs-second-biggest-net-inflow-day-ever-crypto-soars

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8. Number of Job Openings Normalizing

https://www.axios.com/

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9. Devastation in Ukraine-NYT

By Jeffrey Gettleman 

Measuring every town, street and building blown apart since the Russian invasion. A map of Ukraine showing damaged areas since the invasion of Russia in 2022 

Sources: Analysis by Jamon Van Den Hoek, Corey Scher and The New York Times

You’re reading The Morning newsletter.  Make sense of the day’s news and ideas. David Leonhardt and Times journalists guide you through what’s happening — and why it matters.
Imagine your hometown being wiped off the map.
Imagine a city where no one lives.
Imagine the landmarks in your life — where you went to school, where you were married, where you worked and played and loved and prayed — erased.
This is what happened to Marinka, a small town in Ukraine’s east with nearly 200 years of history. Photos of it look like those of Hiroshima. Its destruction has become a symbol of Ukraine’s war.
A map of Ukraine showing damaged areas since the invasion of Russia in 2022

Photo by Finbarr O’Reilly for The New York Times
It’s hardly the only Ukrainian town like this. The Times worked with researchers to measure every town, street and building in Ukraine blown apart since the Russians invaded in 2022. In today’s newsletter, we’ll explain how we did it — and what we found.

https://www.nytimes.com/2024/06/04/briefing/ukraine-russia-damage.html

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10. 5 Ways to Emotionally Recover From a Frustrating Mistake

Practical strategies to bounce back and restore your peace of mind. Alice Boyes Ph.D.
We all make frustrating mistakes from time to time. Examples:

• You drop and crack your phone.
• You miss a deadline and have to pay a late fee.
• You ding your car.
• You lock yourself out of your house.
• You forget to take your debit card to a store that only accepts debit cards, so you have to go home to get it, wasting 30 minutes.

These errors can be emotionally stinging, especially if you’re already feeling down on yourself or your emotional reserves are low. Here are five tips for recovering after this type of incident.

1. Give it an hour or two.
Rather than rushing in with strategies to repair your mood, wait an hour or two after the incident to see how much you recover in a small amount of time without doing anything. This will prevent unnecessary work and angst if your emotions substantially repair themselves. You can then deal strategically with whatever remains.

2. Do something smart and purposeful, even if it’s unrelated.
We can’t always fix a specific mistake, but we can take smart and purposeful action to remind ourselves that we’re not hopelessly inept at adulting. Do something, virtually anything, that makes you feel like you’re doing a good job managing your life.

3. Reflect on the pathways that led to the mistake.
Pointlessly dwelling on the causes of mistakes is a form of rumination. Don’t do that, but you can try fruitful reflection. For example, perhaps you had several warning signs of the potential for the mistake (e.g., near misses), and you ignored them. Or, perhaps you made other silly mistakes recently due to feeling scattered or overwhelmed. You’re aware that those states lead to being disorganized or making mistakes due to rushing, but you didn’t do anything to prevent that.

4. Implement a routine that will disrupt the pathway you identified.
If you make silly mistakes when you’re scattered, you probably need a consistent routine to help prevent them. For example, you always check your bag for your debit card before heading to a particular store, and you stick to going to that store on a specific day of the week to make it even more of a strong habit.
If you consistently use a habit, not just when you feel scattered, that will help that sequence of behavior carry over to times you’re rushing, etc.

5. Engage in “at least it wasn’t something worse” thinking.
Forced positive thinking can backfire, but there likely will be a point when it feels beneficial to engage in thoughts like, “At least no one was injured in the accident” or “This was minor in the grand scheme of things.” Most things that go wrong are minor rather than major. Try this thinking style when it feels beneficial to you. If it doesn’t come naturally to you, you can try techniques like describing the situation via ChatGPT and asking what a supportive but realistic friend might say in the situation. This can help you learn compassionate self-talk if it’s not currently in your repertoire.
Small mistakes are annoying, especially if they incur wasted time or money, embarrassment, or rumination. Don’t make the pain of an objective consequence (like wasted time or money) worse by loading up optional consequences (like excessive rumination). Instead, use these tips to analyze and react to the mistake in a smart and productive way.

https://www.psychologytoday.com/us/blog/in-practice/202406/5-ways-to-emotionally-recover-from-a-frustrating-mistake