Category Archives: Daily Top Ten

Topley’s Top 10 – February 02, 2023

1. History Post Nasdaq 10% Nasdaq Jumps

Marketwatch-Nasdaq jumped over 10% in January. Here’s what history shows happens next to the tech-heavy index

Christine Idzelis

But the number of occurrences drops to just 16 when narrowed to rallies of that magnitude following a 12-month stretch in which the index was down, according to Bespoke. In such cases, the firm found the Nasdaq’s performance then tends to be positive over the next year, except in 2001, “when there were four different 10%+ monthly gains and the Nasdaq was lower one year later after all four of them.”

For example, the chart below shows the Nasdaq jumped 12.2% in January 2001, after plummeting 39.3% over the prior 12 months. The index tumbled 30.2% over the next year.

https://www.marketwatch.com/story/wont-get-fooled-again-nasdaq-jumped-over-10-in-january-heres-what-history-shows-happens-next-to-the-tech-heavy-index-11675271801?mod=home-page


2. FANG ETF breaks above Summer 2022 ….Next Resistance 5800

www.stockcharts.com


3. 9 Out of 11 S&P Sectors Now Trading Above 200day

Rob Anderson NDR Research https://twitter.com/_rob_anderson


4. TBF Short Bonds ETF Closes Below 200day Moving Average

Another bullish bond signal


5. As You Would Guess…AGG Bond Index 50day about to go thru 200day to upside.

www.stockcharts.com


6. Carvana +186% in One Month

https://www.google.com/search?q=cvna+chart&rlz=1C1CHBF_enUS898US898&oq=cvna+chart&aqs=chrome..69i57j0i22i30l4j0i390j69i60l2.2209j0j7&sourceid=chrome&ie=UTF-8


7. Fedex Cutting Senior Staff …Stock Rallies

FDX closes above 200day and fills entire gap from big selloff  Sept. 2022


8. KWEB China Internet Stock ETF Double Off Lows

KWEB up 100% from low still not near 200 week moving average.

www.stockcharts.com


9. Home Sales Reduction by Region

Wolfstreet-Sales plunged in all regions, but plunged the most in the West. Year-over-year percent change (NAR map of regions):

Active listings jumped by 55% from a year ago, to 68,900 in December (active listings = total inventory for sale minus properties with pending sales). Just before the holidays, lots of sellers pull their homes off the market, and then put them back on the market for the spring selling season. This happens every year; active listing start to drop before Thanksgiving and don’t rise again until the spring (data via realtor.com):

https://wolfstreet.com/2023/01/20/prices-of-existing-homes-fall-11-from-peak-sales-hit-lockdown-low-cash-buyers-and-investors-pull-back-hard/


10. You Need These 3 Ingredients to Build Stress Resilience

Psychology Today

A review of empirical research on how to increase resilience. Arash Emamzadeh

  • Research indicates that over half of physician visits are due to stress-related issues.
  • Though there is much information on stress management and resilience, much of it is unclear or unreliable.
  • A recent paper concludes that three building blocks of resilience are equanimity, awareness, and flexible coping strategies.

These days, we may be experiencing high levels of stress–due to the pandemic, supply-chain disruptions, inflation, recession, international conflicts, and other issues affecting our health, work, and relationships. Therefore, building stress resilience (the ability to adjust and adapt in response to stress) has become more important.

A recent paper by Steffen and Bartlett (2022), published in Policy Insights From the Behavioral and Brain Sciences, evaluates the empirical evidence on coping with stress and discusses three science-based practices that promote resilience.

Before discussing the three practices, here is a quick word on stress.

Stress: Good or Bad?

Stress can be healthy and promote well-being if:

·  It is experienced positively (as a challenge and opportunity than a threat).

·  It occurs during activities that are freely chosen, enjoyable, and meaningful.

However, when severe, prolonged, and without a recovery period, stress can be harmful and detrimental to health.

Unmanageable stress (called distress) is associated with many negative physical health and mental health outcomes, including anxietydepression, high levels of stress hormones (cortisol, adrenaline), inflammation, poor immune response, metabolic dysregulation, obesity, chronic diseases (e.g., heart disease), and early mortality.

As stress becomes chronic, we are more likely to neglect self-care–be it regular exercise, eating nutritious food, or getting sufficient sleep–and cope with stress in unhealthy ways.

Some examples of unhealthy coping strategies are emotional eating, compulsive pornography use, compulsive shopping, and drug addiction and abuse (e.g., cannabis use disorder).

Given the importance of effective coping with chronic stress, what follows is a review of three empirically supported practices that, according to Steffen and Bartlett, are effective in promoting stress resilience.

The First Building Block of Resilience: Awareness

Coping successfully with stress is possible only if one is aware of it.

So, the natural tendency to avoid stress may prevent us from understanding when and where stress occurs, how it manifests in the body, and the best way to manage it.

Research shows resilient people, though not more worried, are more mindful and aware of stress. This is due to their attitude:

Only when coupled with curiosity and openness (as opposed to heightened vigilance) is awareness linked with lower stress and enhanced coping.

One way to increase awareness of stress is by using biofeedback. Biofeedback training helps people become more conscious of the fight-or-flight response and learn to regulate its effects, such as reducing high muscle tension, heart rate, and blood pressure.

Heart rate variability (HRV) biofeedback is particularly effective for reducing stress, anxiety, and depression. The intervention involves learning to breathe slowly and regularly, roughly six breaths per minute, called resonance frequency breathing.

The Second Building Block of Resilience: Equanimity

A completely stress-free life lacks challenge and excitement. In fact, regular exposure to moderate stress is not only pleasurable but also promotes healthy functioning.

Healthy functioning requires physiological balance, meaning time for engagement but also rest. When there is balance, exposure to stress and the use of effective coping strategies can strengthen the “coping muscles” and make us more resilient.

How a stressor is perceived or interpreted is key. Therefore, building resilience requires a change in perceptions. One approach is to develop a sense of equanimity.

Equanimity means being able to remain in, or quickly return to, a state of psychological stability and calmness. It does not mean indifference or avoidance but a kind of mental balance that encourages responding to all experiences–whether positive, negative, or neutral–with the same level of interest.

The good news is that mindfulness meditation can cultivate equanimity. Particularly effective is regular meditation on suffering, impermanence, and non-self. With repetition, mindfulness can become habitual and gradually enhance your resilience.

The Third Building Block of Resilience: Flexible Coping

Rigid and maladaptive patterns of behavior, especially compulsive avoidance, are common in mental health conditions such as anxiety disorders, mood disorders, obsessive-compulsive disorder, and post-traumatic stress disorder.

This is not surprising because avoidant coping can reduce distress, often immediately. Yet, over time, it tends to amplify fear and lower the quality of life.

Indeed, rigid and maladaptive thinking patterns (including cognitive distortions) are detrimental to resilience.

This brings us to the third building block of resilience, called flexible coping.

Perhaps the best way to enhance flexible coping involves cognitive behavioral therapy (CBT) or CBT self-help techniques.

CBT can improve resilience by teaching effective techniques for reframing negative thoughts and behaving more flexibly in stressful situations.

Exposure therapy and behavioral activation techniques facilitate confronting safe but feared or avoided stimuli (e.g., flying, elevators, social events), identifying what one finds rewarding, and engaging in valued and enjoyable activities regularly.

Our lives are filled with stress and worry. Indeed, research indicates that over half of physician visits are due to stress-related issues.

So, increasing resilience is very important.

Three simple resilience-building skills that can be easily integrated into everyday life are:

1.   Increase your awareness of stress and its manifestations while adopting an attitude of openness and curiosity.

2.   Develop equanimity, a balanced state of mind with neither attachment nor aversion toward experiences.

3.   Increase coping flexibility by evaluating your coping strategies and modifying or replacing them depending on how successful they are in managing specific problems.

You may find HRV biofeedback, mindfulness meditationpsychotherapy, or self-help CBT techniques helpful in strengthening these skills and becoming more resilient.

https://www.psychologytoday.com/us/blog/finding-a-new-home/202301/you-need-these-3-ingredients-to-build-stress-resilience

 

Topley’s Top 10 – February 01, 2023

1. Rally in Stocks After Job Cuts at Tech

Found at Irrelevant Investor Blog https://theirrelevantinvestor.com/


2. Sector Performance January

Sector Divergence-On this last trading day of January, below is a snapshot of how the major US sector ETFs have performed so far this year.  Over these last few weeks as the broad market has rallied, we’ve definitely seen some sector divergence.  Defensive sectors like Consumer Staples (XLP) and Utilities (XLU) have come under selling pressure, while cyclical sectors more tied to the business cycle have surged.  Communication Services (XLC) and Consumer Discretionary (XLY) are both up more than 12% YTD already, while Technology (XLK), Materials (XLB), Real Estate (XLRE), and Financials (XLF) are up more than 5%.  The only sectors down on the year are Consumer Staples, Utilities, and Health Care (XLV).  At the moment, four sectors are overbought (more than one standard deviation above their 50-DMAs) versus three that are oversold (more than one standard deviation below their 50-DMAs).

https://www.bespokepremium.com/interactive/posts/think-big-blog/sector-divergence


3. Money Flows to China…Hedge Funds and Actively Managed Longs

Zerohedge…But a closer look under the hood suggests a deep split between different types of investors. Hedge funds, who tend to be nimble, have increased their net exposure to Chinese stocks to 13%, from about 7% late last year, according to data from Goldman Sachs’s Prime Services unit. That isn’t far away from a peak of 15% in 2020, just before Beijing started cracking down on tech companies.

In comparison, while global mutual funds’ holding of Chinese stocks has increased to 8% from 6%, they still are  underweight China by 420 basis points relative to their benchmarks, as of December. The current position ranks in the 19th percentile over the past decade, analysts including Sunil Koul wrote in a note.

Source: Goldman Sachs

https://www.zerohedge.com/markets/hedge-funds-push-chinese-holdings-close-record


4. Rise in Auto Delinquencies-Remember We Showed the Rise in $1000 a Month Car Payments

Now, more Americans are falling behind on their car payments than during the financial crisis. In December, the percentage of subprime auto borrowers who were at least 60 days late on their bills rose to 5.67%, up from a seven-year low of 2.58% in April 2021, according to Fitch Ratings. That compares to 5.04% in January 2009, the peak during the Great Recession.  Bloomberg ByClaire Ballentine

Rise in Auto Delinquencies

The percentage of borrowers at least 60 days late on their car payments is rising

Source: Fitch Ratings

https://www.bloomberg.com/news/articles/2023-01-27/car-repossessions-grow-as-inflation-slams-consumers?leadSource=uverify%20wall


5. Demand for Gold Soars to Highest in a Decade as U.S. Dollar Weakens

Dave Lutz at Jones Trading GOT GOLD?– Demand for gold surged to its highest in more than a decade in 2022, fuelled by “colossal” central bank purchases that underscored the safe haven asset’s appeal during times of geopolitical upheaval. Annual gold demand increased 18 per cent last year to 4,741 tonnes, the largest amount since 2011, driven by a 55-year high in central bank purchases, according to the World Gold Council, an industry-backed group.

Central banks hoovered up gold at a historic rate in the second half of the year, a move many analysts attribute to a desire to diversify reserves away from the dollar after the US froze Russia’s reserves denominated in the currency as part of its sanctions against Moscow. Retail investors also piled into the yellow metal in a bid to protect themselves from high inflation. Central bank purchases of gold hit 417 tonnes in the final three months of the year, roughly 12 times higher than the same quarter a year ago. It took the annual total to more than double of the previous year at 1,136 tonnes, FT reports.


6. Lumber Rally But a Blip on Long-Term Chart

Lumber 50week crossed below 200week before recent oversold bounce

www.stockcharts.com


7. Rates: Treasury futures positioning is extraordinarily bearish.

The Daily Shot Brief Blog

https://dailyshotbrief.com/


8. The number of ‘millionaire renters’ has tripled — here’s where they live

Marketwatch BY Aarthi Swaminathan A growing number of millionaires are forgoing homeownership in big cities, either because of sky-high home prices or because they prefer to rent.

That’s according to a new report on the nation’s increasingly wealthy renters from RentCafe, a nationwide apartment-search website. An estimated 2.6 million high-earning households live in rentals, and some are a “new ritzy kind of tenant: the millionaire renter,” the RentCafe report said.

The number of people who make over $150,000 a year and rent grew by 82% from 2015 to 2020, according the report. In contrast, the number of renters nationwide over the same time period grew by 3.2%.

The data came from the Integrated Public Use Microdata Series, which incorporates census and survey data. IPUMS is part of an effort run by the University of Minnesota.

The “millionaire renter” seems like an “unlikely new kind of tenant,” the report said. The number of households that earn more than $1 million in income and rent reached 3,381 in 2020, three times as many as in 2015.

The growth in millionaire renters is partly due to high home prices. As of December 2022 , the median rent for an apartment in Manhattan was $4,048, according to Douglas Elliman. The median sales price was $1.1 million.

https://www.marketwatch.com/story/the-number-of-millionaire-renters-has-tripled-here-are-the-cities-where-theyre-most-likely-to-live-11675109227?mod=home-page


9. More and More Data=More and More Cognitive Biases

What the NFL Playoffs and Tech Layoffs Have in Common

They have never had so much data to guide their decisions. But teams and companies still get hiring and firing wrong because of psychological biases.

WSJ By Ben CohenTo understand the forces behind the recent layoffs that have ravaged the tech industry, it helps to start with a curious decision by one Bay Area organization.

At the end of last year’s National Football League draft, with 261 players off the board and time running out, Brock Purdy was still waiting to hear his name called. Then his phone rang. The San Francisco 49ers were taking him with the very last pick. 

In that moment, Mr. Purdy became Mr. Irrelevant, the nickname given to the final player chosen in every NFL draft. A series of increasingly unlikely events would make the quarterback more relevant than he or anyone else imagined. 

The unheralded Brock Purdy came into his rookie season as a third-stringer. When one of the players ahead of him was injured, he earned a promotion to backup. But then came another injury, and he suddenly became the starter. That was seven games ago. The Niners haven’t lost since. 

This weekend, with a television audience of around 50 million people watching at home, the undefeated Brock Purdy will play for a spot in the Super Bowl. 

It’s an amazing story that reveals so much about the circumstances required for success in any business. It also shows that even in professional sports, where performance is neatly quantified into numbers for anyone to scrutinize, the market for talent remains inefficient. Football teams have never had so much data to guide them. They are still prone to all sorts of cognitive biases that distort their hiring and firing decisions. 

The consequences of human psychology can be found in many other workplaces across Northern California these days, as it happens, and one scholar in the heart of Silicon Valley says the brutal round of tech layoffs can also be explained by irrational behavior. 

The reason workers are losing their jobs is not the one that companies provide, said Jeffrey Pfeffer, a professor of organizational behavior at the Stanford Graduate School of Business. It’s not economic concerns. It’s a social contagion. Why have layoffs spread from Amazon.com and Meta Platforms to Google and Microsoft and affected enough people to fill an NFL stadium? His provocative theory is that many of the world’s richest companies are simply imitating each other. FOMO has infected FAAMG stocks

as the San Francisco 49ers’ starting quarterback, was the last player picked in the 2022 NFL draft, earning him the moniker

“They are doing it because other companies are doing it,” Dr. Pfeffer told the university’s news service.

https://www.wsj.com/articles/nfl-playoffs-brock-purdy-tech-layoffs-11674680339?mod=itp_wsj&ru=yahoo


10. MIT neuroscientist shares 4 things she never does to eliminate ‘brain fog and forgetfulness’

Tara Swart, Contributor@TARASWART The alarm goes off. You get dressed, grab your coffee, and head to work. But by lunchtime, you start to feel disorganized. You reread emails because you lack focus and mental clarity.

There’s nothing worse than brain fog. In addition to stress and lack of sleep, it can be caused by the immune system creating an inflammatory response in the brain. This can lead to symptoms like poor concentration and memory, or difficulty making decisions.

As a neuroscientist, I study the causes of brain fog and forgetfulness. To avoid them, here are four things I never do:

1. I never let my body get tense for too long.

Even if you think you’re relaxed, your body may be physically tense (e.g., stiff neck, back or shoulder pain). This can be a result of stress from things like unfinished tasks or looming deadlines.

So when I notice that my body is tense, I immediately do an exercise called “box breathing”:

1.               Inhale through your nose as you slowly count to four seconds.

2.               Hold your breath for a count of four seconds.

3.               Exhale through your nose, releasing all the air from your lungs, as you slowly count to four seconds.

4.               Hold your breath for a count of four seconds.

5.               Repeat for at least four rounds.

Box breathing is a simple way to help calm your brain. Studies also show that it can reduce levels of cortisol, which is the chemical produced when the body is under stress.

2. I never use screens one hour before bedtime.

As tempting as it might be to scroll through Instagram or watch TV before bedtime, these activities can be too stimulating for the brain.

Instead, I try to read a book before turning out the lights. If that doesn’t help me sleep, I do a “relaxation body scan,” squeezing and releasing muscles — starting at my toes and all the way up to my head.

Ideally, we need about eight hours of sleep a night. More than that can lead to a depressed mood, and less than that doesn’t give the brain enough time to rest and reset.

3. I never load up on glucose.

If your gut isn’t healthy, your brainpower can falter, too. I strengthen my gut-brain axis by maintaining a diet rich in hydrating foods, healthy fats and digestible protein.

Most important of all, I try to avoid sugar. Your brain uses glucose (sugar) as fuel, but refined carbohydrates like high fructose corn syrup found in sodas are not good sources of fuel. Your brain gets a burst of too much glucose, then too little.

This can lead to irritability, tiredness, mental confusion, and impaired judgment.

I also eat foods rich in magnesium — whole grains, leafy greens, dried beans and legumes — to help regulate my mood and sleep cycle. And I make sure to have my last caffeinated drink of the day before 10:00 a.m.

4. I never go a day without meditating.

I meditate for at least 12 minutes a day.

Doing this at nighttime can help mitigate brain fog the next day:

1.               Remove all distractions from your room.

2.               Sit or lie down in a comfortable position.

3.               Take deep breaths.

4.               Quietly observe your thoughts.

5.               Whatever thoughts come, simply acknowledge them return your focus to your breathing.

If you don’t like to meditate, you can do a mindful activity such as cooking or taking a quiet walk.

I also recommend coming up with a mantra that you can say in the morning, like: “Brain fog is a state of mind. I will go to bed early tonight and be fine tomorrow.”

By articulating your goals to yourself out loud, you can start to be more intentional about changing your habits. And through that repetition, your brain and body will start to follow suit.

Dr. Tara Swart Bieber is a neuroscientist, medical doctor and senior lecturer at MIT Sloan. She is the author of “The Source: The Secrets of the Universe, the Science of the Brain,” and hosts the podcast Reinvent Yourself with Dr. Tara. She works with leaders to help them achieve mental resilience and peak brain performance, improving their ability to manage stress, regulate emotions and retain information. Follow her on Twitter and Instagram.

https://www.cnbc.com/2023/01/31/neuroscientist-how-to-avoid-brain-fog.html

Topley’s Top 10 – January 31, 2023

1. Goldman Most Shorted +23% YTD Before Yesterday…Companies That Miss Earnings Outperforming

ZeroHedge Blog As shorts were squeezed – with Goldman’s most shorted basket rising 23% since our Jan 9 post…

To this, Nocerino adds that we have been seeing weaker report being bought (ie: MSFT). And as we pointed out on Friday, “companies who miss earnings on EPS have outperformed at the largest pace on record.” Hardly a bearish signal.

https://www.zerohedge.com/markets/furious-squeeze-sent-nasdaq-its-best-start-over-20-years-and-why-bears-are-really-sweating


2. Follow-Up to Yesterday’s Chart on Stock Buybacks.

Dave Lutz Jones Trading–GS thinks the bulk of Companies are outside of the “Buyback Blackout” Window – Approc $4bn of demand overall daily now.


3. Set Up for Interesting Fed Comments this Week…Despite Fastest Pace Ever in Rate Increases…Financial Conditions are Easing

Bloomberg Steve Matthews and Michael Mackenzie

https://www.bloomberg.com/news/articles/2023-01-30/fed-s-wall-street-clash-sets-stage-for-powell-s-hawkish-message?srnd=premium&sref=GGda9y2L


4. Gold Miners vs. U.S. Dollar

This chart shows GDX (gold miners) vs. Weakening U.S. Dollar….Straight up since November


5. Oil Inventories Bouncing Around Lows

John Mauldain Advisor Perspectives Blog 

Notice in the chart below that both the oil giants (supermajors) and midsized oil and gas public companies are barely replacing their current falling production with new production, even as the Biden administration asks them to produce more oil. It’s a longer story, but many public companies not only have pressure from board members and institutions to reduce production (the whole ESG/climate change environment), but for many companies the market is undervaluing any new production. If you are a CEO, the markets reward you for buying your own shares at a discount to their net NAV. Consequently, we see less projected capital expenditures for new production.

Source: The Crude Chronicles

https://www.advisorperspectives.com/commentaries/2023/01/28/growth-pains


6. Largest Betting States in U.S.

The Daily Shot Blog Food for Thought: Lastly,  here are the largest sports betting states.

Source: @OpenAxisHQ

https://dailyshotbrief.com/


7. How do most Americans Become Millionaires?

https://twitter.com/PeterMallouk


8. SEC Whistleblower Cases Double in 3 Years

For your information-Last week, the SEC announced its biggest whistleblower reward so far this year, compensating four joint informants $28m after they “significantly contributed to the success of the action” against the wrongdoers.
Surprisingly, a multi-million dollar payout isn’t uncommon in the world of financial whistleblowing. Just last month, one source was awarded $37m for their efforts in a healthcare bribery case, becoming one of the top ten highest-paid individual informants in the history of the SEC’s whistleblowing scheme.

Snitches get richesCompensating whistleblowers has cost the SEC over $1.3bn since it devised the program in 2010 to incentivize industry insiders to help catch financial criminals. And, while tips have risen almost every year since, the last couple have seen the whistleblowing volume taken to the next level. Whistleblowing tips grew 76% from 6,911 in 2020 to more than 12,000 in each of the last 2 years.Along with increased awareness of the SEC program, it’s hard to argue with the fact that — in the age of remote working — reporting the boss’s underhand dealings is much easier if you’re not making watercooler small talk with them every day.
One new fertile space for financial crime has been crypto. Last year, more than 1,700 tips found their way to the SEC about crypto-related crimes, a category that has grown quickly alongside the sector, with Gemini & Genesis the latest crypto companies targeted by the SEC.

www.chartr.com


9. Undeveloped Land Prices Dropping.

@RickPalaciosJr  John Burns Real Estate

https://twitter.com/RickPalaciosJr


10. 11 Things That 0% Interest Rates Caused

An all-encompassing list of some 2020 phenomena that we’ll never see again.

Now to today’s piece 🤝

In season 9 episode 23 of The Office, Andy Bernard graced us with one of television’s most memorable quotes: “I wish there was a way to know you’re in the good old days before you’ve actually left them.”

Isn’t that the truth?

We experienced a decade of quantitative easing and declining interest rates that culminated with an unprecedented multi-trillion-dollar infusion of capital in 2020. But three years later, the party had to end.

The Fed is raising rates, money isn’t free anymore, and companies have to once again rediscover the lost art of “turning a profit.” Outrageous stuff, isn’t it?

However, we shouldn’t cry because quantitative easing is over, we should smile because it happened 🙂 In remembrance of the last decade, I would like to highlight 11 things that were only possible thanks to 0% interest rates.

Enjoy!

1) Day Trading as a Career

Oh bro, I think $TSLA is consolidating in a bull flag, it’s about to break out!”

“Dude, I made so much money on GameStop, maybe I should just quit my job and trade my portfolio full-time.” 

“Yeah man, the stock market really isn’t that hard. Just buy calls on the stocks that are going to go up.”

If you are a dude who was even somewhat interested in the stock market between January 2020 and January 2022, there is a greater than 75% chance you were in a group chat that looked something like this. Believe it or not, it was actually pretty easy to make money buying call options on tech stocks when every single tech stock only went up for like 15 months.

What many failed to realize was that their alpha was really just levered beta, and levered beta works both ways.

If you thought you were getting rich because of your exceptional research, but you were actually getting rich because you bought call options on high-beta stocks during a period of QE-induced irrational exuberance, you will end up quite poor, ironically, due to this same “exceptional research.”

Which is exactly what happened, as these infallible trading strategies proved to be quite fallible.

But don’t worry, former day trading extraordinaires, because I have some good news: while the whole stock market thing didn’t work out, McDonald’s is hiring.

 

McDonald’s Careers: Application for McDonald’s Jobs | McDonald’s

Jumpstart your job search with helpful information about McDonald’s corporate careers and opportunities available at company owned and franchised restaurants

www.mcdonalds.com

 

2) Chamath’s SPACs

Let me tell you a bit about how SPACs work:

A SPAC is a Special Purpose Acquisition Company. These bad boys raise hundreds of millions of dollars before listing on the stock market as publicly traded bank accounts trading around $10 per share.

SPACs look for private companies to take public, they offer these private companies all of the capital in their treasuries for an X% stake in the company, and they price these deals at $10 per share. For example, your $100M SPAC could take a 10% stake in a private company, and the newly formed, publicly traded company would be worth ~$1B at $10 per share. If the SPAC climbs to $20 per share pre-merger because investors like the deal, the pro-forma valuation is now $2B.

Understand? Good.

Now to Chamath. The self-proclaimed next Warren Buffett had a good pandemic run, one of the best. While he couldn’t have predicted the upcoming SPAC bubble when he closed a deal to take Virgin Galactic public in November 2019, he was well-positioned to ride the wave from 2020 through early 2022.

As SPACs grew more and more popular, the Social Capital CEO leveraged his Twitter presence to juice his investments.

After closing a deal for one of his many SPACs, Chamath Palihapitiya would type up a 25 bullet-point “one-pager” explaining why he liked the stock, share this memo with his millions of followers, and watch as they bid the stock price from $10 to $15, $20, and even $30.

With a few keystrokes and the click of a button, Chamath increased the net present value of future cash flows of his investments by billions of dollars.

Incredible stuff. Unfortunately, a crisp one-pager can’t save a mid-tier car insurance company trading at 40x sales.

Metromile’s stock performance post-one pager.

Fortunately, Chamath likely sold well before the stock crashed. It is important to manage one’s liquidity, after all. God bless Mr. Palihapitiya, the grifter that we needed but didn’t deserve. Someone put this man in the Hall of Fame 🙏🏼

3) ESG Investing

Environmental, Social, and Governance. No one actually knows what any of that means, but you can throw that label on your fund, change your website’s color to a shade of light green, and instantly charge 5x higher expense ratios. Don’t believe me? Let me show you two ETFs: the first is BlackRock’s iShares ESG Aware MSCI USA ETF, while the second is BlackRock’s S&P 500 portfolio. Notice any major differences?

No?

Well, there is one big one: the first ETF charges 400% more in its expense ratios. ESG became this funny thing where everyone knew it wasn’t really a thing, but everyone was trying to pretend like it was a thing because everyone needed everyone to think that they thought that it was a real thing. Perception was infinitely more important than reality.

The truth is that ESG was really just a side quest designed to make capitalism harder.

The economy was running so smoothly for the last 13 years that one day we got bored and said, “Oh your company is profitable? Cool. Now you have to hire a Chief Sustainability Officer, purchase carbon credits from companies that are actually environmentally friendly, and convince the general public that despite having sweatshops in China, your company is still one of the good guys.”

And you know what? Tim Cook managed the impossible.

Per IBD

I personally think ESG was yet another low-interest rate phenomenon, and it’s about to take a backseat to other, more pressing matters. Like making money.

4) Venture capital-subsidized lifestyles

Let’s turn back the clock to May 2020. You, me, and everyone else are stuck working from our apartments all day every day. Your pantry is running low, but instead of rewearing that disgusting cloth mask for the 27th time as you browse the aisles of your local Kroger, you decide to use one of 27,234 different grocery delivery apps that gives you 50% off all purchases made that month.

Next month, you repeat the process with a different app or different email, and the cycle continues. Venture capitalists poured billions into finding the “Uber of groceries,” (and there were a lot of Ubers of groceries) and we consumers benefited by literally getting free food hand-delivered to our apartments.

And this VC-subsidized service wasn’t limited to grocery delivery services either! Ubers and Airbnbs used to be half the price of taxis and hotels, and you could whip a Bird scooter around Washington D.C. for $1.50. At some point, however, all of these companies either began charging more money (profitability does matter!) or they went bust.

5) Miami

RIP Miami, 2021-2022.

Miami is the FUTURE!” yelled an army of tech-bros who ditched California and New York in 2020 for warm weather and zero Covid-restrictions. “This city is full of BUILDERS!”

Well, it just so happens that 1) people have now returned to both New York and Silicon Valley, and 2) most of the “builders” on South Beach were just crypto bros stimulating the bottle service economy every weekend. Miami is a great city, it has great weather, and the beach is fantastic. But the idea that South Beach was going to usurp New York and/or San Francisco as the center of everything was really just a poor extrapolation of Keith Rabois’s Covid vacation.

6) NFTs

Folks were really out here paying $500,000+ for pictures of rocks and monkeys instead of, like, I don’t know, buying a house? “Oh but bro we get exclusive membership to in-person events.” Sick, there really isn’t anything better than spending your weekend at a conference full of folks whose only commonality is that they all spent six figures on pictures that looked something like this:

Out of everything that stemmed from zero percent interest rates, NFT culture was the most insufferable. I welcome the second coming of the Great Depression if it means the JPEGs end up worthless.

7) Adjusted EBITDA

As someone who has now taken four accounting classes across my undergraduate and MBA coursework, I still haven’t read any chapters on this metric known as “adjusted EBITDA.”

I found this to be quite strange, because every earnings report presented by companies that didn’t actually have real EBITDA over the last few years included an extra line called “Adjusted EBITDA.” And this adjusted EBITDA was always a positive number. Pretty cool, right?

On my accounting midterm in October, I couldn’t get my income and cashflow statements to balance correctly. Fortunately, I tapped into my street smarts and added a row for “adjusted EBITDA” where I deducted a few million dollars of expenses and BOOM! everything worked out. I did not make an A on this midterm.

Adjusted EBITDA is a fascinating tool that more companies should have utilized. You literally just take your negative EBITDA and subtract expenses until it’s positive, then call it adjusted EBITDA.

For those curious, the adjusted EBITDA of this blog is approximately $1,000,000. For taxation purposes, however, my net income is -$100,000.

8) Work-Life Balance

We had two years of the good life, working 10 hours a week and moving our mice to look like we were “active.” With companies desperate for workers and everyone receiving stimmy checks from Donny T and Joey B, the employees had all the leverage.

Work overtime? No sir, my life is about ✨balance✨ now. Bringing one’s laptop to Tulum, Cartagena, and Lisbon instead of making the dreaded commute to the office. White-collar America spent 18 months in a labor market facade, the industrial devolution of remote workers refusing to actually remotely work.

It was beautiful, and we called it work-life balance.

And now, with companies cutting jobs and demanding that their employees return to the office, that beautiful, wonderful dream is dead.

9) The Metaverse

Has there ever been more money incinerated on a project that literally no one asked for? After a year of pandemic lockdowns, everyone just wanted to go outside and see their friends again. Meanwhile, Zuckerberg and company thought, “You know what? What if we rebuilt the Sims video game franchise, except we blow $30B along the way?”

Horizon Worlds was such a dud that Meta had to force its employees to use the platform, you couldn’t write a comedy script better:

In a follow-up memo dated September 30th, Shah said that employees still weren’t using Horizon enough, writing that a plan was being made to “hold managers accountable” for having their teams use Horizon at least once a week. “Everyone in this organization should make it their mission to fall in love with Horizon Worlds. You can’t do that without using it. Get in there. Organize times to do it with your colleagues or friends, in both internal builds but also the public build so you can interact with our community.”

The Verge

10) Dudes Working Seven Different Remote Jobs

When you are working in an office, you can’t really do any other jobs that require you to be in an office, because you can’t be in two places at once. And you can’t really do a separate remote job from an office either, because it would look pretty weird to your supervisor if you were working for another company from your cubicle.

However, when you’re working from home, you can work from home for, hypothetically, as many companies as you want. You can have an Amazon laptop and an Apple laptop and a Google laptop and a Microsoft laptop and a bunch of other laptops, and you can earn like $100k+ from all of these jobs at the same time.

So of course, some people did that.

The thing is, if it’s possible to “work” at 10 different jobs at once, it’s probably possible for all 10 companies to lay you off without having much of a drop in productivity. Which is, of course, what began to happen.

Over the last six months, every big tech company not named “Apple” has laid off thousands of workers, putting pressure on the remaining workers to up their game. RIP to the 4 job, 14 hour work week. It was fun while it lasted.

11) Cathie Wood

Has anybody directly benefited more from quantitative easing more than Cathie Wood and Ark Invest? Nope.

Four years ago, no one had heard of Ark Invest or its founder. However, Cathie’s firm was betting big on disruptive companies across the electric vehicle, genomics, and fintech industries. When the market began recovering from its March 2020 Covid crash, Ark’s holdings exploded, and her ETF’s price climbed from $35 to $155.

Suddenly, Cathie was on CNBC and Bloomberg discussing advancements in Tesla’s self-driving technology and innovations in the blockchain space. Ark gave ambitious (to say the least) price targets, claiming Tesla would hit a split-adjusted $1500 per share (a $5T market cap) by 2026, and bitcoin would one day hit $1,000,000 per coin.

By January 2021, she was averaging $3B in net flows (inflows – outflows) per month, but then the tide began to turn. In 2022, the former high-flyer generated -67% returns, one of the worst performances in the market. To quote myself from earlier in this article:

“If you think you were getting rich thanks to your exceptional research, but you were actually getting rich because you bought call options on high-beta stocks during a period of QE-induced irrational exuberance, you will end up quite poor, ironically, due to this same “exceptional research.”

But don’t worry, Cathie will be alright. Despite a terrible performance, her fund brought in $1.6B in new capital in 2022, and she’s still raking in those sweet, sweet management fees. Shout out to the queen 👑

So yeah, the easy money is gone, your NFTs are worthless, and the metaverse is all-but-dead, but at least we helped Chamath and Cathie make some money along the way.

– Jack

If you liked this piece, make sure to subscribe by adding your email below!

https://www.youngmoney.co/p/11-things-0-interest-rates-caused

Found at Abnormal Returns Blog www.abnormalreturns.com

 

Topley’s Top 10 – January 30, 2023

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


2. VIX Volatility Index Hits 6-Month Lows

www.stockcharts.com


3. China vs. India 2023

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

www.stockcharts.com


4. S&P 500 Buyback Machines

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

www.chartr.com


5. Energy Charts

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

Oil Service stocks hit new highs

www.stockcharts.com

 

VDE Vanguard Energy ETF no new high yet


6. Blackrock 60/40 Portfolio

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

www.stockcharts.com


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

WYNN Resorts Doubles Since November

Louis Vuitton Luxury Goods Breaks Out to New Highs

www.stockcharts.com


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

By Michael Kolomatsky


9. NYC Hotel Prices Above Pre-Pandemic Levels

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

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


10. Determination vs. Talent

FS-Farnam Street

The difference between open and closed-minded people:

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

— Source

Insight

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

— Paul Graham

TKP

The Three Types of Listening:

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

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

https://fs.blog

 

Topley’s Top 10 – January 26, 2023

1. S&P 500 Value ETF

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

www.stockcharts.com


2. Netflix Huge Run Right to Resistance

Netflix approaching 200 week moving average and 2022 highs

www.stockcharts.com


3. Jeremy Grantham Still Bearish But Discusses Presidential Cycle.

Still Bearish Grantham But Presidential Cycle in Play

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

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

EXHIBIT 1: PRESIDENTIAL CYCLE

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

Source: Global Financial Data, GMO

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


4. Top Twenty Hedge Funds of All-Time

Barry Ritholtz Blog

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

Source: Financial Times

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


5. Recent IPO Stocks No Rally

www.stockcharts.com


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

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


7. Wealthy Savers Move Out of Bank Accounts.

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

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

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


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

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

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

ByBloomberg News

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


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

Torsten Slok Apollo


10. 4 Reasons Teamwork Is Hard to Build at Work

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

KEY POINTS

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

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

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

1. People today think more like customers than players.

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

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

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

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

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

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

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

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

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

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