2. Small Cap Volatility …Small Cap Vol Index at Lows?
Not sure of reason for low volatility in small caps…No one cares?
3-4. Earlier this Year Pundits were Predicting Dollar Crash….Yuan, Yen, and Euro Straight Down vs. U.S. Dollar
Chinese Yuan to Dollar Straight Down
Japanese Yen to Dollar about to make new lows
Euro to Dollar straight down
5. History of October Stock Returns
Nasdaq Dorsey Wright The histogram below is another visual that helps us wrap our hands around October’s past behavior. It categorizes each October’s return into a performance bracket, allowing us not only to see that there have been more up Octobers than down Octobers, but also the degree to which they have been up or down. If we look at the extremes, notice that only five Octobers since 1950 (including 2018) have experienced a decline worse than -5%. The most common experience in October has been a gain in the range of 2.5% – 5%.
6. TLT 20-Year Treasury $89 Tick will Break to New Lows
7. Europe Stagflation?
Torsten Slok Apollo Consensus expectations show that the market is expecting Europe to be in stagflation in 2023 and in 2024, see charts below.
The classic textbook response to stagflation by the central bank is to keep interest rates high until inflation is under control, and then wait for growth to eventually restart.
This is also what we should be expecting from the ECB. The implication for markets is high short rates and low growth in earnings.
8. These are the most overvalued housing markets in the world, according to UBS-Miami and L.A. Only Two U.S. Cities on “Overvalued” List
10. U.S. Sends Drone Ships to Western Pacific in First Deployment Near China
WSJ Autonomous vessels could aid Navy in tracking China’s fleet and provide attack options
By Alastair GaleYOKOSUKA, Japan—Two prototype U.S. drone ships have arrived in Japan for their first deployment in the western Pacific, testing surveillance and attack capabilities that the Navy might find useful against China’s larger fleet.
U.S. Navy Cmdr. Jeremiah Daley said unmanned surface vessels that operate autonomously could substitute for larger ships such as destroyers in groups hunting enemy targets. “For example, one destroyer and two USVs could replace three destroyers. It’s a force multiplier,” he said.
Daley spoke Thursday on board the unmanned surface vessel Ranger, a 190-foot-long ship originally designed for the oil industry that resembles a flatbed truck. It sat docked at the port of Yokosuka, near Tokyo, home to the U.S. Seventh Fleet.
While the Ranger doesn’t currently carry missiles, it can carry and launch missiles in modules loaded onto its flatbed rear section.
2. Flurry of IPO’s the Past Two Weeks are Top of Watch List
Barrons ByEric J. SavitzRecent IPO performance hasn’t helped matters. Goldman Sachs points out that the 2020-21 IPO class had “abysmal performance,” underperforming the Russell 3000 by 48 percentage points in the first 12 months after the IPOs. The worst performers are companies priced at more than 15 times sales, like Arm. Not a single IPO with that valuation level outperformed in the first two years, with an average return that’s 84 percentage points—yes, 84!—behind the market.
3. MSCI China Stock Index Down $2 Trillion in Value
4. Homebuilders Need Land
Yahoo Finance Dani RomeroLennar’s (LEN) CEO Stuart Miller warned about the next big headache for housing — land.
“We believe that the new supply of homes will be limited as developed land is scarce and increasingly more expensive to develop,” Miller said on the company’s quarter earnings call Friday after blowing past quarterly orders and raising its fourth quarter deliveries forecast. “This will continue to limit available inventory and maintain supply/demand imbalance.”
Homebuilders are hungry for land. Yet, the US, a country that offers wide open spaces, is short of land for housing. Builders like Lennar have been able to grow through acquisitions of companies with coveted land pipelines.
5. American Dream Mall $3 Billion in Debt…One Idea Start Knocking Down Malls for Homes?
Zerohedge Owners the Ghermezian family were having trouble preventing the mall from “hemorrhaging cash”, according to Bloomberg at the time, who also noted that the family had already hired advisors to help restructure the project’s $3 billion in debt.
Lenders for the project, including J.P. Morgan, Goldman Sachs and Soros Fund Management, stood to face losses on about $1.7 billion in construction loans, we noted last summer. The project was carrying about $1.1 billion in municipal debt at the time.
Neil Shapiro, a New York real estate attorney, said of the project last year:“It’s been like watching a train wreck that goes on forever. There aren’t a lot of projects that lose at least $3 billion that we’re still talking about as projects.”
The financial difficulties plaguing the mall serve as a cautionary tale about the dangers of over-leveraging that we believe we are going to see over and over again as the Fed maintains its tight grip on the gears of the economy, via its “higher for longer” stance.
Barrons By Josh Nathan-Kazis That means a potentially monumental tab for insurers: By 2030, J.P. Morgan analysts expect the amount spent on GLP-1 obesity treatments in the U.S. to be about $50 billion, or a tenth of the $421 billion spent on outpatient drugs in the U.S. in 2021.
Of course, curbing obesity would have the potential to save the healthcare system a lot of money. A recent USC Schaeffer paper argued that Medicare coverage of obesity medicines would save the program more than $700 billion over 30 years. But those savings, if they do materialize, won’t do much to mitigate the shorter-term crisis.
Are personality and intelligence linked? Plenty of people think so.
A friend is convinced that seemingly disorganized people — messy desk, workshop, workspace, whatever — are the most creative. Another believes — maybe because he admittedly embodies it — the trope of the genius who sometimes treats people poorly because they’re so smart. (Steve Jobs, maybe?) Another thinks highly intelligent people tend to be less happy because they’re tormented by bigger-picture concerns; to him, “happy” must mean “simple.”
Science says they’re wrong.
For example, take the seemingly inverse relationship between intelligence and happiness: Research shows levels of happiness are lowest in the lowest IQ groups and highest in the highest IQ groups. (I don’t know my IQ; since it’s bound to be low, my ignorance is bliss.) The same is true for the stereotypical moody genius, as research shows “negative emotionality” is a strong predictor of lower intelligence.
So what are some science-relationships between personality and intelligence? Let’s start by defining personality and intelligence:
· Personality is how you think, feel, and act. (Think the Big 5 independent traits: neuroticism, extroversion, conscientiousness, openness, and agreeableness.)
· Intelligence is your ability to understand and apply information. Some cognitive abilities are acquired, like learning to read financial statements. Others are at least somewhat more innate, like the ability to match patterns. (Which of course is an ability that can also be acquired.)
Turns out there are plenty of links between personality and intelligence, but they tend to be more nuanced. According to a meta-analysis of over 1,300 studies that involved millions of people, openness — not “I’ll tell you all my secrets” but a willingness to engage and explore new experiences, ideas, information, etc. — is the only personality trait with a substantial correlation to intelligence.
Otherwise, the “big” links aren’t really linked. That messy desk doesn’t mean you’re more creative. Then again, it could: While conscientiousness is linked to higher cognitive ability, “routine-seeking” predicts lower intelligence.
Extroversion has almost no correlation to intelligence, although being more sociable does have a negative relationship to some cognitive abilities; as other research shows, the most intelligent people tend to love spending time alone.
Which leads to the real point.
If you hope to get smarter — and who doesn’t? — don’t feel limited by your personality. And don’t try to change your personality. You don’t need to be more or less extroverted, more or less neurotic, more or less agreeable, etc.
You should just try to be more open to new ideas, new information, and new experiences.
The smartest people are constantly revising their understanding, reconsidering a problem they thought they’d already solved. They’re open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking.
Science backs him up. A series of experiments published by Harvard Business Review show that while changing your mind might make you seem less smart, changing your mind is actually smarter. For example, entrepreneurs who adapted, revised, and changed their positions during a pitch competition were six times more likely to win the competition.
The next time you question your intelligence, think about how often you’ve changed your mind in recent days.
If the answer is “not often,” you’re likely not as open as you could be.
Instead, take Thinking, Fast and Slow author Daniel Kahneman’s approach. As Kahneman says, “No one enjoys being wrong, but I do enjoy having been wrong, because it means I am now less wrong than I was before.”
Because wisdom isn’t found in certainty. Wisdom is knowing that while you might know a lot, there’s also a lot you don’t know. Wisdom is trying to find out what is right rather than trying to be right.
Want to be more open? Don’t be afraid to be wrong. Don’t be afraid to admit you don’t have all the answers. Don’t be afraid to say “I think” instead of “I know.”
As Adam Grant writes in Think Again, “Arrogance leaves us blind to our weaknesses. Humility is a reflective lens: it helps us see them clearly. Confident humility is a corrective lens: it enables us to overcome those weaknesses.”
In short, you and I already know what we know. What we don’t know is what other people know.
3. 10 Year Yields Just Getting Back to Long-Term Trend.
Jim Reid Deutsche Bank Overnight a major milestone was reached. 10yr US government yields hit their long-term average yield (since 1790) of 4.5% for the first time since 2007. In some ways this could be seen as a concern, since we’re “only” now at normal historical levels, despite the fact inflation is still elevated and record peacetime deficits are predicted for the rest of your careers however old you are. The good news is that at least value has returned. It’s going to be much more difficult for longer-term investors to lose money in Treasuries now than it was for most of the last decade in both nominal, and to a lesser degree, real terms.So a challenging set up for Treasuries in the years ahead but the price is at least now reasonable if history is your guide.
4. Timing Impact of Higher Rates.
The Daily Shot Brief The United States: According to Oxford Economics, the maximum impact of the Fed’s tightening will be felt over the next couple of quarters
Jack Ablin Cresset The cumulative growth in incomes and profits underscores that trend. Between 1983 and 2002, the cumulative growth in profits and personal income moved in lockstep. Though the financial crisis crushed profits, since 2009 corporate profit growth has run substantially ahead of personal income. Artificially low interest rates were partially to blame, but a significant portion of the profit advantage was the result of a greater share of productivity gains gravitating to the bottom line. Over the last 20 years, cumulative wage growth among unionized, goods-producing workers expanded 60 per cent. Adjusted for inflation, however, their wages contracted three per cent in the interim. Adjusted for inflation and productivity, their compensation plunged 30 per cent.
Flags of China and U.S. are displayed on a printed circuit board with semiconductor chips, in this illustration picture taken February 17, 2023. REUTERS/Florence Lo/Illustration/File Photo Acquire Licensing Rights
WASHINGTON, Sept 22 (Reuters) – The U.S. Commerce Department on Friday is issuing final rules to prevent semiconductor manufacturing subsidies from being used by China and other countries deemed to pose American national security concerns.
The regulation is the final hurdle before the Biden administration can begin awarding $39 billion in subsidies for semiconductor production. The landmark “Chips and Science” law provides $52.7 billion for U.S. semiconductor production, research and workforce development.
The regulation, first proposed in March, sets “guardrails” by limiting recipients of U.S. funding from investing in expanding semiconductor manufacturing in foreign countries of concern like China and Russia, and limits recipients of incentive funds from engaging in joint research or technology licensing efforts with foreign entities of concern
1. Two Charts to Watch…..CART and ARM IPOs this Week Giving Back Gains Fast
Instacart Highs were Over $40
ARM High was Over $65
2. SMH-Semiconductor ETF Clear Support Line at $140 Level
Blue trendline in danger of being penetrated on a $140 print.
3. NVDA -16% Correction Off Highs….Trades Back Down to Summer Support Levels
4. Commodities Charts Holding Up in Long-Term Trend Charts
5. Rising Rates Make Big Companies Even Richer
The amount companies earn from cash in the bank is going up even as interest costs fixed during the pandemic stand still WSJ By James MackintoshThe winners from higher rates were high-quality borrowers, who locked in low interest rates around the pandemic with bonds maturing further in the future than any time this century. Higher rates have little immediate impact on their borrowing costs—only affecting bonds when they are refinanced—while they earn more on their cash piles straight away.
6. Higher Rates Not Slowing Apollo Private Lending Arm
Bloomberg Apollo to Raise About $2.5 Billion to Lend in Private MarketsThe fund will add more cash to Apollo’s $50 billion of assets under management in direct lending. AOP II will have similar targets as the first generation of the fund, which focused on large corporate borrowers — firms that generate in excess of $100 million EBITDA — primarily in North America and Western Europe, according to an August press release.
Colorado Buffaloes head coach Deion Sanders in Fort Worth. Photo: Getty Images
They believe.
That’s what Colorado head coach Deion Sanders said about his team after the Buffaloes won a nail-biting, double-overtime thriller against in-state rivals Colorado State. Sanders had called the game “personal,” after Colorado State coach Jay Norvell took a dig last week at Sanders’s penchant for wearing a hat and sunglasses during interviews.
The phrase “we believe” has quickly become the Buffaloes’ rallying cry.
A couple of weeks ago, after the Buffaloes upset a highly respected TCU team in their season-opening win, Sanders confronted a reporter he claimed had written a disparaging report about the Buffaloes.
“You believe now?” Sanders asked, with a huge smile on his face.
And earlier this week, in an appearance on the popular ESPN talk show First Take, Sanders invoked the word over and over again in the course of 30 seconds:
“We believe.”
“We just believe … “
“We truly believe … “
“We just truly believe.”
Before you dismiss Sanders’s use of the phrase as pure hype, consider that there’s actually a firm foundation for using this type of speech to motivate others, and it’s rooted in the science of emotional intelligence.
Here’s a breakdown of the power of belief, and how you can use it to help you run your business and your life. (If you find value in this lesson, you might be interested in my free course, which teaches you how to build emotional intelligence in yourself and your team.)
Want to get the most out of others? Make them believe
For decades, research has indicated that teachers, mentors, and coaches who focus on nurturing students and highlighting their potential get better results.
“Today, we have compelling evidence that interest precedes the development of talent,” writes psychology professor Adam Grant in his best-selling book Give and Take. “It turns out that motivation is the reason that people develop talent in the first place.”
To illustrate, Grant cites a classic study led by Harvard psychologist Robert Rosenthal.
Rosenthal teamed up with Lenore Jacobson, an elementary school principal. Students from 18 classrooms, ranging from kindergarten through fifth grade, were all given a “Harvard cognitive ability test.” The test measured verbal and reasoning skills deemed critical to learning and problem-solving.
Afterward, Rosenthal and Jacobson shared the test results with teachers: About 20 percent of the students had shown potential for making “unusual intellectual gains” in the next year. Armed with the knowledge that their students had such high potential, teachers set high expectations for their success.
In turn, the students also believed they had high potential, and they delivered: When those students took the test a year later, they had improved more than fellow students–their IQ points rose at greater rates, and they were still outgaining classmates two years later.
But there’s one very interesting detail to this story: The students labeled as high potential didn’t really score higher on the test. Rosenthal chose them at random.
“The study was designed to find out what happened to students when teachers believed they had high potential,” writes Grant. “Rosenthal randomly selected 20 percent of the students in each classroom to be labeled as bloomers, and the other 80 percent were a control group. The bloomers weren’t any smarter than their peers–the difference ‘was in the mind of the teacher.'”
In other words, the teachers’ expectations helped create self-fulfilling prophecies.
Sanders, who is also known as Coach Prime (a nod to the nickname “Primetime” from his NFL playing days), seems to be doing the same at Colorado. Yes, the kids he coaches have talent. But so do the players at the opposing schools Colorado has faced so far this season.
Yet Colorado is undefeated so far, despite playing higher-ranked opponents the first two games and falling far behind in their third game. Much of the Buffaloes’ success could be attributed to the sky-high confidence their coach has infused them with.
So, how can you apply this principle to your business, or even your personal life?
Many of the people under your care won’t possess the inherent belief that they’re “good” at something. Many lack self-confidence. They’ve been scarred by the way they’ve been trained to see their own performance, or by perceived failures at work or in life.
You can help change that.
When you focus on your people’s strengths, you motivate them. When you nurture their potential, you help them become the best version of themselves.
Train yourself to see the good in others by asking yourself the following questions:
What are they good at?
How can I praise them for what they’re good at, sincerely and specifically?
How can I help them leverage those strengths further?
How can I help them improve their weaknesses through constructive feedback?
Remember, as a leader, you are in a unique position to inspire and motivate those you work with. If you believe, they will too.
Because whether or not you like Coach Prime or his team, you have to admit:
The Colorado Buffaloes believe. And that belief has them doing some extraordinary things.
Jim Reid Deutsche Bank As today’s CoTD shows, recessions have generally got much rarer through time, especially since 1982. Since then the US, Germany and France have only seen 4, whilst the UK and Canada have only seen only 3. The 4 US recessions of the last 40 years contrasts with the 9 recessions in the prior 40 years and 10 over the previous 40 years, both much higher growth periods. Since 1982, the average US expansion has lasted 8.6 years and only 8% of that time has been spent in recession. Before 1982, the average was 2.8 years and 35% respectively. Europe had a long period (25-30 years depending on country) without a recession post-WWII but that was largely a growth catch-up with all the rebuilding after the conflict rather than a structural shift. In this period, the US saw 4 recessions.
4. XRT Retail Shoppers ETF Chopping Sideways…Now higher gas and higher rates?
5. AMZN vs. XRT Retail ETF……Breaks Out to New Highs
6. Homebuilders Rally Right Back to 2021 High then Pause
7. 15% of Home-Purchase Agreements Cancelled
8. History of Soft Landing Calls
The Daily Shot Brief The United States: Increased talk of a “soft landing” tends to precede a recession.
WSJ By Sam GoldfarbIt is one of the biggest surprises on Wall Street: the outsize performance of risky corporate loans. Since the start of last year through Monday, loans backed by companies including PetSmart and in the Morningstar LSTA U.S. Leveraged Loan Index delivered a return of 9.4%, buoyed by higher interest rates and a resilient economy. Investment-grade bonds lost 13% in that time, counting price changes and interest payments, while the S&P 500 lost 3.9%.
Few investments have been as maligned as leveraged loans, the low-rated debt often used to fund private-equity company buyouts. When the Federal Reserve started aggressively raising rates last year, many analysts warned that these loans were vulnerable because their rates rise and fall with those set by the central bank.
10. Share of Children Earning More That Their Parrent—Professor Galloway Blog
No Mercy No Malice BLOG Ground zero for many of the biggest challenges facing America can be traced to one core problem: For the first time in our nation’s history, 30-year-olds aren’t doing as well as their parents were at 30.
