Category Archives: Daily Top Ten

1. U.S. Treasurys are seeing longer bear market than stocks did in the 2008 financial crisis or the 2000 dot-com crash

Longer-term U.S. Treasurys are experiencing a bear market longer than what stocks endured during the 2000-02 dot-com crash and the 2007-08 financial crisis, according to DataTrek Research.

It has been three years and two months, or 800 trading days, since the iShares 20+ Year Treasury Bond ETF TLT, which invests in long-term Treasurys, reached an all-time high on Aug. 4, 2020. The fund has since fallen 50%, noted Jessica Rabe, co-founder at DataTrek.

A bear market is traditionally defined by an index falling by 20% or more from a recent high.

In comparison, the S&P 500 SPX recorded a 49% loss over 637 trading days from its cycle peak on March 23, 2000, to its trough on Oct. 9, 2002, as the dot-com bubble burst. The large-cap U.S. equity gauge fell 57% over 355 trading days from its peak in 2007 in the aftermath of the global financial crisis.

DATATREK

Long-term Treasury yields have surged lately, with the 30-year BX:TMUBMUSD30Y and the 10-year Treasury rates last week hitting their highest levels since 2007, respectively, before pulling back. The yield on the 10-year Treasury retreated 15.6 basis points to 4.627% on Tuesday, and the 30-year Treasury fell 11.5 basis points to 4.826% on Tuesday.

https://www.marketwatch.com/story/u-s-treasurys-are-seeing-longer-bear-market-than-stocks-did-in-the-2008-financial-crisis-or-2000-dotcom-crash-ef47cb66?mod=home-page

2. The Greatest Treasury Bear Market Ever.

From Irrelevant Investor Blog https://theirrelevantinvestor.com/2023/10/11/animal-spirits-5/

3. One Data Point for Bears.

4. Large Bank Write Offs

Bloomberg By Shelly Hagan The biggest US banks are poised to write off more bad loans than they have since the early days of the pandemic as higher-for-longer interest rates and a potential economic downturn are putting borrowers in a bind. JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., which report third-quarter results Friday, will join Bank of America Corp. — which comes Tuesday — in posting roughly $5.3 billion in combined third-quarter net charge-offs, the highest for the group since the second quarter of 2020, according to data compiled by Bloomberg.

5. Aerospace and Defense ETF Bounces From Israel Attack…Still Well Below Highs.

ITA down for the year…no bull run post Ukraine…50day thru 200day downside bearish end of September.

6. Private Credit The New Kings of Wall Street.

WSJ By Matt Wirz High interest rates, driven by the Federal Reserve’s higher-for-longer policy, are shaking up how corporate loans get done. Soaring rates brought down banks such as Credit Suisse and Silicon Valley Bank and forced others to reduce lending. As those lenders stepped back, private-credit fund managers stepped up, financing one jumbo loan for American corporations after another.

This shift is accelerating a trend more than a decade in the making. Hedge funds, private-equity funds and other alternative-investment firms have been siphoning away money and talent from banks since a regulatory crackdown after the 2008-09 financial crisis. Lately, many on Wall Street say the balance of power—and risk—has hit a tipping point.

“There’s been a steady progression, but since Covid and the banking crisis this year we’ve really seen the banks rein in risk,” said David Snyderman, head of alternative credit and fixed income at Magnetar Capital.

https://www.wsj.com/finance/fed-rate-hikes-lending-banks-hedge-funds-896cb20b

7. Energy ETF Held 200-Day.

XLE bounced at 200-day…watch list chart….last time it broke 200-day it stayed below for 3 months

Zerohedge WTI was hovering just below $84 ahead of the API print and extended losses after the big draw…

https://www.zerohedge.com/energy/wti-extends-losses-after-api-reports-massive-crude-inventory-build

8. Homebuilders Held 200-Day with 8% Mortgage Rates

9. Third Political Party Support Hits Record Highs

10. Understanding and Overcoming FOBO (Fear of Better Options)

Darius Foroux FOBO or Fear of Better Options is a psychological phenomenon where someone avoids making a decision out of fear that there may be a better option.

FOBO is the nagging feeling that there might be a better choice out there, which leads to analysis paralysis.

Can you relate to the following? You’ve had a long day and decide to watch something nice on Netflix.

You keep browsing the hundreds of attractive movies and TV shows you haven’t seen and finally end up NOT watching something because you wasted an hour trying to decide.

Now, that’s not the end of the world. But when we let FOBO creep into our lives, it bleeds into more important areas.

Having FOBO makes decision-making stressful not just for us but for the people around us too.

By understanding the root causes of FOBO and having an effective strategy, you can regain control over your decisions and lead a more productive and stress-free life.

FOBO is as old as humanity

US venture capitalist, Patrick McGinnis, the one who coined the terms FOBO and FOMO (Fear of Missing Out), suggests that FOBO is not a new human behavior.¹

“These feelings are biologically part of who we are. I call it the biology of wanting the best. Our ancestors a million years ago were programmed to wait for the best because it meant they were more likely to succeed.”

However, the widespread adoption of advanced technology and the internet has accelerated FOMO and FOBO. We can now easily compare ourselves with others (which brings out feelings of FOMO) and overwhelm ourselves with choices (leading to FOBO).

As McGinnis pointed out:

“Go on Amazon to buy a pair of white shoelaces and you have over 200 choices, whereas 50 years ago you would go to Woolworths and choose between three… The other factor – which is more emotional – is that FOBO is driven by narcissism, because when you have FOBO, you’re prioritizing your own interests far above anyone else’s, leaving everyone around you in limbo.”

McGinnis relates FOBO to the natural “fear of letting go.”

To choose something, people have to let go of other options. When you overthink things, it becomes easier to mourn “what could have been.” And it gets harder to decide.

Are you a maximizer or satisficer?

Some psychologists have found a basis for the FOBO phenomenon. When it comes to decision-making, people can be divided into two groups: “Maximizers” or “satisficers”.²

Maximizers are people who make choices based on maximum benefit in the long term, while satisficers choose depending on what benefits them now.

For example, maximizers may pay more for a larger car than they actually need in case they want a bigger one later. While a satisficer is likely to pick the car that is good for now. Maximizers also tend to focus more on what was lost rather than what they already have.

Both groups have been studied extensively, but one study aimed to explore whether “maximizers show less commitment to their choices than satisficers in a way that leaves them less satisfied.”³

In other words, are maximizers more likely to be unhappy with their choice once they finally make it? The study’s conclusion: Absolutely yes. The researchers concluded:

“Maximizers miss out on the psychological benefits of commitment… High-level maximizers certainly cause themselves a lot of grief.”

Commitment is the path to genuine joy

Back in college, I had many classmates who didn’t know what they wanted. They kept changing courses, trying to “find” themselves.

Those folks eventually ended up hopping from one degree to the other, never finishing anything.

Here’s the thing: Most of us won’t know what we want. This applies to both big and small decisions.

Which course should you take in college? Should you pursue grad school? Is it a good idea to start a side business? What would you want for dinner: Italian or Chinese?

I learned from experience that the best way to know what you truly want is to choose the closest thing that feels right for you. And then commit to it.

Maybe it works out. Or maybe not. But you can always pivot later. That’s the key.

Throughout my entire time in business school, I was convinced I would work for a large corporation. I thought I would get a traineeship and then spend the rest of my career climbing the corporate ladder to eventually become a bank CEO or something.

But as I was writing my master’s thesis in 2010, I realized that wasn’t the right option. The European economy was decimated and the chances of me landing a decent job were slim.

At the same time, my father wanted to start a business, so we ended up doing it together. Years later, I still ended up getting a corporate job, then quit only a year later to become a full-time writer.

I applied my entrepreneurship skills to my writing. And I’ve been doing that now since 2015.

If you had asked me ten years ago whether I’d known this is what I would want to do with my life — my younger self would likely say no!

But things worked out because I committed to all my choices.

That’s one other thing I learned about succeeding. It’s all about consistency.

So choose something you can be consistent about. And stick with it. When you do that, the best option automatically comes to you. And you don’t even have to chase it.

https://dariusforoux.com/fear-of-better-options/ Found at Abnormal Returns Blog www.abnormalreturns.com

Topley’s Top 10 – October 09, 2023

October 9, 2023

Matt Topley

Daily Top Ten No Comments

1. U.S. Venture Capital Valuations are Down 50%

Torston Slok Apollo As the costs of capital have normalized, venture capital valuations have declined by 50%, see chart below.

2. The Longest Bond Bear Market Ever

Charlie Bilello The Longest Bond Bear Ever. https://bilello.blog

The higher bond yields of today have come after much pain for existing investors.

This is by far the longest bond bear market in history, at 38 months and counting.

And with the current drawdown of over 15%, absent a sharp decline in yields it will take a good while longer for investors to recover from these losses.

The 15% loss in the US bond market over the past three years is unprecedented. But it’s important to remember that what preceded this decline was also unprecedented – that being the lowest bond yields in history

3. Put/Call Ratio Surged Last Week Hitting 5 Year High Levels

Equities: The put-call ratio surged this week, pointing to bearish sentiment.

Source: The Daily Shot https://dailyshotbrief.com

4. This Spread Keeps Getting Larger

5. Defensive Consumer Staple Stocks Leading this Selloff

VDC Vanguard Consumer Staples ETF…50day thru 200day to downside.

6. Bitcoin Less Volatile than U.S. Treasuries in 2023

Bespoke Investment Group Bitcoin Grows Up-When you think about volatility in various asset classes, crypto is typically considered the most volatile, and based on how it has traded over the last seven years, the reputation is well deserved. Since the start of 2017, when bitcoin’s price first crossed above $1,000 through now, bitcoin’s average daily percentage move has been 2.7% (chart below). This year, though, the average daily percentage move has been significantly less at a subdued 1.57%, and just recently, its average daily move over the prior two months dropped below 1%. That’s less volatile than the treasury market! There’s still three months left in the year, but barring some major volatility, bitcoin is on pace for its least volatile year in terms of day-to-day volatility on record. As the years have progressed, bitcoin has clearly become a more seasoned asset class.

https://www.bespokepremium.com/interactive/posts/think-big-blog/bitcoin-grows-up

7. 17 Days Left in Strategic Petroleum Reserve

https://twitter.com/KobeissiLetter

8. BYD Chinese EV Car Company Catching Tesla

9. Average Family Health Premium has Increased from $6k in 2000 to $21,000 in 2022

10. 7 Tips for Improving Athletic Performance-Psychology Today

Learning how to stay in the moment. Ran D. Anbar M.D.

KEY POINTS

Sometimes, athletes’ worries transform into anger or physical symptoms.
The best way to excel during a competition is to focus on the play at hand.
By focusing on the present, athletes are more are more likely to be able to play “in the zone.”

Athletes often report that they have trouble keeping their minds in the game. They may worry about a previous missed play, whether they will make a poor play, whether they will live up to their coaches’ expectations, or whether they will win.

Some worry about injuring themselves, especially if they have previously experienced an injury. In team sports, athletes often worry about letting down their team, team cohesion or conflicts with teammates, and occasionally become upset with the failures of their teammates.

Sometimes, athletes’ worries transform into anger, which they might take out on themselves, their teammates, or even their coaches, relatives, or friends. In other cases, their worries can turn into physical symptoms such as shortness of breath, stomachaches, or headaches. In the latter case, if the athletes are evaluated by a medical practitioner who focuses on addressing their symptoms, rather than the underlying anxiety, patients sometimes are treated needlessly with medications.

The best way to excel during a sports competition is to focus on the play at hand as much as possible. During a competition, thinking about what just happened, or how the play may be affected by factors outside of the athlete’s control, serve as distractions that can lead to a poorer outcome in the game.

For instance, worrying about how the outcome of a single play could affect the entire game adds extra stress that can end up disrupting the play. It should also be emphasized that when team athletes play poorly, including because they become distracted, this can affect the morale and performance of their teammates.

A famous quote by theologist Reinhold Niebuhr is worth keeping in mind while thinking about how to best perform in a competition:

“God grant me the serenity
To accept the things I cannot change,
Courage to change the things I can, and
Wisdom to know the difference.”

During a competition, athletes should focus only on what they can change: their own performance at that time, and, in team sports, being as supportive as possible of their teammates, which can enhance their team performance.

There are several methods that athletes can use to train themselves to focus on the present. By doing so, athletes are more apt to find themselves playing seemingly effortlessly “in the zone.”

Practice Mindfulness. Mindfulness exercises can be used to train the brain to focus on a single thought. For instance, athletes can learn to focus solely on their breath while meditating. When they find their mind wandering from thinking about the breath, they should gently, and non-judgmentally refocus on their breathing. By learning how to better focus their minds during meditation, athletes can similarly learn to focus better on the play at hand.

Calm Breathing. Remaining calm during sports can help athletes stay in the moment. Athletes can calm themselves with their breathing, while resting between plays: They can inhale slowly through the nose, hold their breath momentarily, and then exhale slowly through the mouth. This breathing pattern can be repeated several times to achieve even more calmness.

Be Aware of the Details. Again, while resting between plays, athletes can pay attention to small details, which helps ground them in the moment. For instance, an athlete might pay close attention to what they can see, hear, smell, and touch during a competition. How are any boundaries marked? With chalk, paint, or rocks? What does the equipment (if applicable) look and feel like? What sounds are made during the sport? What odors might be perceived where the sport takes place?

Focus on the Process. Focusing on the mechanics of a play, including the correct actions that need to be taken by the athlete and reactions of the competitors, helps keep the mind in the present.

One Play at a Time. Rather than thinking about competitions as a whole, it can be helpful to focus on accomplishing one play at a time to the best of the athletes’ ability. This approach allows athletes to string together multiple well-executed maneuvers, with minimal distractions.

Embrace Pressure and Mistakes. Athletes can learn to view handling pressure and mistakes as ways to improve rather than as impediments to their performance. Dealing well with mistakes at the moment they occur, including through correcting them efficiently, and moving on to the next play, presents learning opportunities. Athletes also can rise to new levels of achievement by considering the knowledge that is gained from difficult experiences and thereafter implementing new approaches to their athletic endeavors.

Rehearse in Hypnosis. The hypnotic state can be used as an arena in which athletes can practice remaining in the moment during competitions. Athletes can repeatedly imagine participating in their sport while being “in the zone” and thereby train their minds to remain focused during actual competitions.

Takeaway

Athletes should remember that they have the power within themselves to better focus their minds, and thus excel in their sport. It is important to remain patient during this process as mind/body skills improve with repetition in the same way that athletic success improves with physical practice.

https://www.psychologytoday.com/us/blog/understanding-hypnosis/202309/7-tips-for-improving-athletic-performance

Topley’s Top 10 – October 06, 2023

October 6, 2023

Matt Topley

Daily Top Ten No Comments

1. Found this Chart in an 2020 Slide Deck…We Hit 140-Year Low in Yield on 60/40 Portfolio Before Fed Started Raising Rates.

2. U.S. Dollar About to Break-Out to New Highs.

3. U.S. Tech Stocks vs. China’s Tech Stocks

This chart shows Nasdaq 100 vs. China Tech ETF….U.S. straight up

4. Long-Term Treasuries Equal to Stock Market Crash of Great Financial Crisis

Callum Thomas @Callum Thomas (Weekly S&P500 #ChartStorm). Deep Drawdown: A “wow-chart” to kick-off this session — turns out long-term treasuries are suffering a deeper peak-to-trough drawdown than what happened to stocks during the great financial crisis. I would note that this is price only, and the total return is slightly less bad (albeit only by 5 ppts). But still, simply catastrophic.

Source: @JackFarley96

5. A Couple Sentiment Charts from Dave Lutz at Jones Trading.

SentimentTrader notes We’ve reached the “relentless” phase of the rise in yields. News articles mentioning that word and the bond market have spiked to the 2nd-highest in 8+ years. It was only higher once, which was almost exactly a year ago.

The level of Excessive Pessimism is now below what was registered at the December 2022 and March 2023 lows, based on the NDR_Research Daily Trading Sentiment Composite

6. Real rates rising in recent months on soft landing hopes

Nasdaq Dorsey Wright In fact, real 10 year rates are already well above expected long-term inflation. Since April, inflation expectations have been mostly unchanged, at around 2.5%. That means “real” (after inflation returns) rates have gone from negative (-1.0%) in 2022, to almost +2.5%.

That’s partly because the economy is strong. In the last few months, there’s been plenty of strong economic data (low unemployment, resilient consumer spending, upward revisions to business investment). That in turn means we don’t need negative real rates any more to avoid a recession.

7. Microsoft Pulls Right Back to May Support Level…Low Key -15% Correction.

8. FANG+ ETF Did Not Break One-Year Trendline.

BLUE trendline line below holding so far

www.stockcharts.com

9. U.S. Pending Home Sales Index

10. This Is What Good Sleepers Think About While Falling Asleep (and How Bad Sleepers Can Steal Their Magic)…From INC.

Change what you think about in bed, and you can transform yourself into one of those people who fall asleep instantly.

BY JESSICA STILLMAN, CONTRIBUTOR, INC.COM@ENTRYLEVELREBEL

My daughter has unfortunately inherited my husband’s complete disinterest in sleep, and basically from birth has fought any and all attempts to put her to bed (thanks, honey). To cope with her tossing and turning, we developed a game we call “sleepy thoughts.” Every time I tuck her in at night I offer some pleasant but distracting scenario or a question for her to think about.

If you were an astronaut on a mission to Mars, who would you want to take with you and why? If you could have any birthday party you can dream up, what would it be like? Please describe in great detail. What is cuter, a marmot, an otter, or a bunny? (I was solidly team marmot, while she was forcefully in favor of the otter.)

I do this because I prefer her to be pondering cake flavors and furry critters rather than bothering me with complaints in the evening. But I just read an article that suggests I may have stumbled onto a real, scientifically validated trick for easier bedtimes, and one that exhausted adult entrepreneurs can use on themselves as well.

The bedtime thoughts of good sleepers versus insomniacs

The insight comes from a pair of Australian psychologists, Melinda Jackson and Hailey Meakin, who have investigated a question that is as everyday as it is impactful: What exactly do people think about when they’re lying in bed trying to sleep at night, and how does that impact their sleep?

If you’ve ever watched the person next to you peacefully conk out in a matter of minutes and wondered exactly what is happening in their head, Jackson and Meakin’s recent article for The Conversation may finally satisfy your curiosity.

“It turns out people who sleep well and those who sleep poorly have different kinds of thoughts before bed,” they write. “Good sleepers report experiencing mostly visual sensory images as they drift to sleep — seeing people and objects, and having dream-like experiences. They may have less ordered thoughts and more hallucinatory experiences, such as imagining you’re participating in events in the real world.”

Contrast that with insomnia sufferers, who tend to have pre-sleep thoughts that are “more focused on planning and problem-solving. These thoughts are also generally more unpleasant and less random than those of good sleepers. People with insomnia are also more likely to stress about sleep as they’re trying to sleep, leading to a vicious cycle; putting effort into sleep actually wakes you up more.”

Good sleepers imagine what it would be like to live in ancient Rome, or what they’d do if they met their childhood Hollywood crush. Bad sleepers are doing their taxes in their heads. Which, after you hear the psychologists lay it out, explains a lot about why some of us drift off on a cloud of idle imaginings and others can never seem to relax enough for sleep.

“Sleepy thoughts” work for adults too

While it’s fun to have science verify what many people suspected, noting that bad sleepers have trouble shutting off the worry and planning portions of their brains is hardly a huge shock. What’s more useful in Jackson and Meakin’s piece is when they move to suggestions on how people can use this insight to actively become more like those people who fall asleep in seconds.

I give my daughter “sleepy thoughts” to keep her out of my hair. But reading this article suggested to me that I may have inadvertently also found a way to nudge her toward the kind of bedtime imaginings that lead to easier, better sleep. And the psychologists confirm that adults can use this basic idea too.

“The good news is there are techniques you can use to change the style and content of your pre-sleep thoughts. They could help reduce nighttime cognitive arousal or replace unwanted thoughts with more pleasant ones. These techniques are called ‘cognitive refocusing,'” they explain.

Another, more colloquial way to describe this technique would be distracting yourself with pleasant night time “sleepy thoughts.” “Decide before you go to bed what you’ll focus on as you lie there waiting for sleep to come. Pick an engaging cognitive task with enough scope and breadth to maintain your interest and attention — without causing emotional or physical arousal. So, nothing too scary, thrilling, or stressful,” they instruct.

Feel free to steal my idea and ponder the relative cuteness of various animals, but Jackson and Meakin also offer some more adult-friendly suggestions like mentally redesigning a room in your house, replaying a particularly thrilling section of the big game (and maybe coming up with a game plan for the next one), or reciting lyrics from your favorite album.

Hopefully, these pleasant, diverting thoughts will crowd out any impulse you have to go over and over your to-do list or replay the most embarrassing moment of your day. And that, studies show, can lead to measurable improvements in your ability to get to sleep fast and slumber peacefully.

No one sleep technique is a silver bullet, though, so the article also stresses the importance of decent sleep hygiene. If you’re binge-watching horror films for hours before bed or going to sleep at wildly different times every night, don’t expect any kind of sleepy thought to be a magic solution. “Cognitive refocusing” is a useful technique to have in your arsenal though, as are these other research-backed tips on how to fall asleep faster we’ve featured here on Inc.com in the past.

INC.COM The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

This Is What Good Sleepers Think About While Falling Asleep (and How Bad Sleepers Can Steal Their Magic) | Inc.com