1. Two Charts from Callum Thomas…Retail Bulled Up and Hedge Funds Bull Up
Ravenous Retail: Also, retail have not been shaken in the slightest, and in figuring out whether the correction is healthy or not, one sign of health would be a shaking out vs apparent surge in retail flows.
Hedge Fund Tech Bandwagon: And hedgies are also bulled up… got to get that bonus and there’s been one sure thing to ride this year. Often find that the hedge fund crowd pile into the main momentum play of the market, and it works fine, and gets their P&L targets filled… until it (usually suddenly and violently) stops working and they all rush to reduce risk.
2. China Trading at ½ the U.S. P/E Ratio …Apple stock share of MSCI index is Bigger than Entire Chinese Market.
WSJ By James MackintoshThe question is: How cheap should China be? Past evidence suggests it can get much cheaper in a crisis. In the 2008-09 financial crisis, China traded at 6.6 times forward earnings, and was below 10 for most of the time from 2011 to 2015. It is also one of the few countries whose history includes a thriving stock market that went to zero, after the Communist revolution in 1949.
Yet, China is remarkably cheap compared with the U.S. The gap between the U.S. and China valuations has only been this wide briefly in 2020 and 2021, according to MSCI data starting in 2003.
3. China Share of Exports to U.S., Europe and Japan are in Steady Decline.
Torston Slok Apllo The share of Chinese exports to the US, Europe, and Japan has declined steadily over the past twenty years, see the first chart below.
Similarly, China is today the top export destination for eight of the G20 countries, up from zero in 2000, see maps below.
4. Grayscale Bitcoin Chart
GBTC still 20% discount to NAV….almost 3x off bottom….right against 200-week moving average
5. Nike and Under Armour No Post-Covid Recovery
NIKE 2021 high was $175
UA 2021 high $23…..$7 last
6. Chewy Covid Favorite About to Make New Low
7. Energy Stocks Making New Highs…XLE Energy Sector ETF
The real estate marketplace says qualified buyers can save up to buy a home in less than a year.
BYMINDA ZETLIN, AUTHOR OF ‘CAREER SELF-CARE: FIND YOUR HAPPINESS, SUCCESS, AND FULFILLMENT AT WORK‘@MINDAZETLIN
Real Estate marketplace Zillow is offering some home buyers the opportunity to purchase a home with a downpayment of just 1 percent. For those who qualify, Zillow will kick in 2 percent more at closing, for a total down payment of 3 percent. The new program is already in place in Arizona, and will roll out to other states, the company says. It’s a very, very smart move, one every business can learn from.
The idea is to help people who can afford to pay a mortgage but don’t have enough saved for even a 3 percent down payment, the company says. It notes that in the Phoenix area, someone making $79,200 a year–80 percent of the local median income–and saving 5 percent of that income can have enough for a 1 percent down payment on a $275,000 home in 11 months, compared with 31 months for a 3 percent down payment.
Buying with only a 1 percent downpayment may or may not be a smart move for a home purchaser. But offering that 1 percent option is a brilliant move on Zillow’s part. First, consider that Zillow is a marketplace whose business model is to sell advertising on its site (especially now that Zillow has stopped buying and selling houses on its own behalf). That business model is brilliant to begin with because it means that the company is insulated from fluctuations in real estate prices. As long as companies have houses and other things to sell, they’ll want to advertise, and Zillow can lap up those ad dollars whether the real estate market is up or down.
Want to Be a Millionaire? First You Need to Find Your Purpose00:0But what happens when things grind to a near-standstill because no one is selling or buying homes–which is the situation we’re in right now? Then, there’s a lot less advertising and Zillow’s revenues can suffer. So the company has every interest in getting transactions moving again. Allowing people to buy a home with a $2,750 down payment instead of $8,250 is one way to help make that happen.
That’s the first thing that’s smart about Zillow’s 1 percent down payment initiative. The second thing that’s smart is that it was clearly intended to generate some headlines for the company, and it has done just that. The last time Zillow was in the headlines was for a much less happy reason–the company announced it was shutting down its program to buy and flip homes and laying off 25 percent of its staff after some serious losses. Good publicity is hard to create and often more valuable than paid advertising. The 2 percent of downpayments Zillow is kicking in are creating a ton of publicity for Zillow. For the company, this is money very well spent.
1. Novo Nordisk Riding Weight Loss Drug to Becoming Europe’s Most Valuable Company
Chart Blog Outweighed Novo Nordisk, the Danish pharma company responsible for Ozempicand Wegovy— two of the buzziest drugs in the weight loss game — has been bulking up, with its market cap. recently crossing the$400 billionthreshold, surpassing Denmark’s annual GDP. With sales up 30%, net profit rising 43%, and supply restrictions still in place for its most popular medication, Novo unsurprisingly raised its outlook for 2023 in its report earlier this month, as demand for the company’s “wonder drugs” continues to rise. Very good shape The drug maker’s ascent has been meteoric, especially for a company celebrating its 100th birthday in a few months. The hype around its two flagship treatments — which both trace back to the 2012 development of semaglitude, designed to tackle type 2 diabetes — has catapulted Novo Nordisk to second on the list of Europe’s most valuable public companies, only behind luxury fashion giant LVMH. For another sense of scale, Novois now worth more than McDonald’s and Netflixcombined.
The company’s become so large, the government in Denmark — a nation of fewer than 6 millionpeople — is considering publishing separate economic statistics that strip out the “Novo effect”. The pharma giant’s success comes at a good time for Denmark after one of the country’s other iconic brands, Lego, suffered a rare misstep and recorded its largest profit drop for almost 2 decades.
US health officials are recommending easing restrictions on marijuana, a move that sets the stage for potentially expanding the cannabis market across the country.
A top official at the Department of Health and Human Services wrote Drug Enforcement Agency Administrator Anne Milgram calling for marijuana to be reclassified as a Schedule III drug under the Controlled Substances Act, according to a letter dated Aug. 29 that was seen by Bloomberg News.
A DEA spokesperson confirmed the department had received the letter with HHS’s recommendation. With final authority to reschedule a drug, DEA will now initiate its own review, the spokesperson said.
3. In the past 3 weeks, more than 400,000 news articles were published that mentioned China. More than 33,000 of them were explicitly negative. That’s the highest ratio in at least a decade
Dave Lutz Jones Trading CHINA PMIS– China’s August PMIs look set to show broad deterioration, with the official services gauge falling close to the contraction threshold and the manufacturing gauge showing activity shrinking at a faster rate. Brisk travel during the summer holiday season likely failed to offset a host of negatives – including a deepening housing slump – that have hurt investment and consumption, Bloomberg says.
“In the past 3 weeks, more than 400,000 news articles were published that mentioned China. More than 33,000 of them were explicitly negative. That’s the highest ratio in at least a decade. The only other time that came close was 8 years ago almost to the day”
(SentimentTrader) – the End of 2013 was not a bad time to own China Equities. SHCOMP rallied 159% over the next 2 years
4. China Moves Over the Last Month
5. Chinese Internet Stock ETF Sideways for Almost 2 Years
Zerohedge Investors bought a total of $36.4 billion worth of homes in the second quarter, down 42% from a year earlier. That’s still above pre-pandemic levels, but dropping closer to it: Investors bought a total of $34 billion in the second quarter of 2018, and a total of $31.9 billion in the second quarter of 2019. The typical home purchased by investors in the second quarter cost $470,120, comparable with the $467,885 median price a year earlier.
In terms of market share, investors bought 15.6% of homes that were sold in the U.S. during the second quarter, down from 19.7% a year earlier and a record high of 20.4% in the beginning of 2022.
And while investors’ market share is still above pre-pandemic levels (15.6% compared with roughly 14% in the second quarters of both 2018 and 2019), real estate investors are steadily pulling back.Their market share has dropped or remained flat every quarter since it peaked at the start of 2022.
Overthinking can paralyse decision-making and cost your career- Eva M. Krockow Ph.D.
KEY POINTS
Overthinking simple decisions can lead to analysis paralysis and prevent us from making a choice altogether.
In sports, overthinking can result in athletes experiencing the yips, a sudden loss of skill.
The yips are a psychological phenomenon, which is surprisingly difficult to overcome and can cost careers.
Ever heard of Buridan’s ass? No, not that kind ofass!
I’m talking about the horse-like animal otherwise known as the donkey. More specifically, the donkey is famously stuck in a choice dilemma described by French philosopher Jean Buridan. The donkey in question faces a tricky choice. She finds herself in the middle of two identical haystacks. With both stacks equal in distance, size, and hayey goodness, the donkey has absolutely no preference for either. Deeply troubled, she looks from one haystack to the other. Which one should she choose? She supposes she might be able to gobble up both, but again: Which one should be first? The despairing ass finds herself trapped in an impossible conundrum. Hours and days pass by, until she suffers the tragic consequences of her indecision, eventually succumbing to starvation.
What do you make of this little tale? Fair enough, it’s hard to feel sorry for a donkey who starves to death with perfectly good food in plain sight. Indeed, the entire story seems somewhat far-fetched. After all, when do we ever find ourselves presented with completely identical options? And isn’t it obvious that a random choice is always preferable to starvation? Also, if the dilemma is too tough to resolve, couldn’t the ass just walk away and find herself a third haystack to munch on?
Analysis paralysis
It’s easy to discount Buridan’s ass as just another philosophical thought experiment with little real-life relevance. But hold your horses (or donkeys) and wait until you write it off completely! The starving ass offers an important lesson for human decision-making that’s often overlooked: Overthinking your choices can have dangerous consequences.
By obsessively weighing up similar or near-identical options, we stand very little to gain. After all, the outcomes are likely to be almost the same. However, the lengthy decision process may lead to unnecessary delays or even prevent us from making a choice altogether—often at a significant personal detriment. Umming and erring over which outfit to buy may mean you wear the same old clothes forever. Not being able to choose between two parties may leave you spending the evening at home alone. Struggling to commit to one of two lovers may mean you lose them both.
This phenomenon of indecision, often referred to as analysis paralysis, may be linked to perfectionist attitudes and the desire to identify the very best option, which I discussed in a recent post on satisficing. Additionally, it can be worsened by the availability of too many options, resulting in choice overload that leaves you feeling overwhelmed.
Overthinking in sports
Interestingly, the tendency to overthink choices and actions can even interfere with trained intuition and experience. A striking example of this comes from the context of competitive sports such as golf, tennis, or cricket, where skilled athletes sometimes report the sudden loss of skills acquired during years of practice. The phenomenon is commonly referred to as the “yips”, “choking,” or the “twisties” depending on the context, and research suggests it may be linked to heightened levels of anxiety, self-conscious overthinking, and perfectionism. By trying to consciously master certain movements or actions, athletes affected by the yips may end up bypassing their muscle memory and fail to perform to the standard they are used to.
Researchers have tried to understand the bizarre phenomenon through qualitative studies. One project involved interviewing competitive cricket players who had suffered the yips, and identifying common themes associated with their symptoms. Extreme anxiety and panic were reported frequently, with one interviewee explaining: “I felt very nervous and out of control—I know it sounds stupid but it was like I’d been taken over, I just couldn’t do it.” Trying to compensate for their nerves, it appeared that the affected cricketers tried to overthink and control their subsequent movements. This strategy was rarely followed by success, as illustrated by the following comment: “I was telling myself when to let it go [the ball] because I realized I was not letting the ball go at the right time, so I was saying to myself “let it go” and, of course, you can’t say that because by the time you’ve said that your arm is down on the ground.”
Sudden, cruel, and often difficult to overcome, the yips have ruined entire careers, for example, forcing gymnast Simone Biles to withdraw from the Olympics and Stephen Hendry to abandon his previously skyrocketing career in snooker.
Researchers, sports psychologists, and athletes agree that it’s hard to understand “the yips” if you haven’t experienced them yourself. If you’re struggling to understand the concept of overthinking, I leave you to ponder the following little poem:
The Centipede’s Dilemma Katherine Craster A centipede was happy – quite! Until a toad in fun Said, “Pray, which leg moves after which?” This raised her doubts to such a pitch, She fell exhausted in the ditch Not knowing how to run.
1. Longest Streak without 2% Move in S&P Since 2018
Dave Lutz Jones Trading The SPX has now gone more than 5 months without a 2% move. This is the longest such streak since 2018 notes the Twits.
2. World Oil Demand Breakout
Callum Thomas Topdown Charts Fundamental Breakout: I’m a big fan of using technical breakouts as a prompt to take a closer look at a certain asset or market (to then go and build out the rest of the picture) —but a less common approach is to look at breakouts in fundamental indicators.
The chart shows world oil demand (across all products, think: gasoline, diesel, jet fuel, LPG, etc), what should be no surprise is the collapse in 2020 (as humanity collectively hit the pause button on travel), and also should be no surprise is the subsequent stop-start reopening rebound.
Some of the richest people in the world are (land)banking on a new California utopia.
The New York Times reports that several of the techiest bros have banded together to buy up $800 million worth of land in Solano County, California—just a few hours outside of the San Francisco Bay Area—with the intent to build a new city.
With Silicon Valley-area real estate constantly getting snapped up faster than you can say “vest,” Big Tech moguls have grown frustrated with the lack of housing options impacting their ability to expand their workforces. The new city, pitched as a clean-energy, public-transit-accessible, high-density urban area, is meant to combat the problem.
That explains why the land’s mystery buyers turned out to be a who’s who of tech entrepreneurship. The NYT found:
The company making the purchases is Flannery Associates, the creation of former Goldman Sachs trader Jan Sramek.
Investors include Sequoia Capital Chairman Michael Moritz, LinkedIn co-founder Reid Hoffman, venture capitalists Marc Andreessen and Chris Dixon of a16z, Stripe co-founders Patrick Collison and John Collison, and Emerson Collective founder (and Steve Jobs’s widow), Laurene Powell Jobs.
Will it be a real city or a pie in the sky?
To the list of billionaires above, this city represents the greatest opportunity since a man built a computer in his garage, relieving some of California’s massive housing shortage and creating thousands of new jobs, increased tax revenue, and infrastructure investment.
But…California is a notoriously difficult place to build new houses, and most of the property that Flannery bought is not zoned for residential use.
Rep. John Garamendi, who represents a district where some of the land is, told Bloomberg that Solano County’s residents would likely need to pass a rezoning initiative for the development to have a chance—and he said that’s unlikely. It probably won’t help that many residents were sued by Flannery in 2018 for allegedly conspiring to raise land prices.—CC
10. I’m the former VP of HR at Microsoft. I’ve witnessed many bad managers in my career — and they almost all had these 4 traits-Business Insider
Chris Williams is a former Microsoft VP of HR and a podcaster, consultant, and TikTok creator.
He writes that bad managers are often self-centered and overly focused on their image.
Williams also says that bad managers are so afraid of failure that their teams bury any evidence of it.
Bad managers stress about how they look to their boss: Do I look strong or weak? Do they think I’m an idiot? How do my peers see me? What about those above my boss?
Bad managers fret about what their team thinks of them. They want desperately to be looked up to. They must have all the answers. Rather than focus on issues, it’s all about appearances. They want to appear strong, unflappable, even invincible to their team.
A few managers do this out of ego. They need to be the center of attention, the focus of their world. They want everything in their team to be for their benefit. Perhaps to enhance their career. More often to stoke their ego.
But the egotists are the exception, not the rule. More common are the worriers. The nervous managers cowering under the weight of their own imposter syndrome. You can tell them from the egotists by their tentative approach to problems. Afraid of being exposed, they put on the bravest of faces. But it’s just a mask. Worried what others must think of them. Not realizing how rarely others ever do.
Failing to see that it’s the results that count, they worry about image. Their image. So, they try to control every aspect of their presentation to others.
Instead of working with their team to create the results that would get them notice, they make it all about themselves.
2. Input-focused
Most bad managers are inordinately focused on the inputs to their processes, not the output results of the team.
They stress about employees who are two minutes late or too often in the restroom. They track their employees’ every move, their every keystroke. They worry about hours input, not results output.
Their obsession with image spills out here as well. They stress about professional appearance, not professional results. They want everyone to always at least look busy. There’s no greater crime than a happy employee enjoying their time with their co-workers. It’s all business, all the time.
These managers relentlessly track everything, all the wrong things. They track time spent with the customer, not whether the customer was satisfied. They track keystrokes per minute, not problems resolved. They monitor employees as if they were robots, looking for the slightest variation from their ideal automaton.These managers lose sight of the forest for the trees. Instead of being obsessed with results, sales, and happy customers, they are focused on the inputs — the inputs that feel easier to control.
3. Afraid of failure
A spin off from the obsession with image, these bad managers are deeply afraid of failure. Particularly any appearance of failure that might reflect poorly on them.
Rather than embracing the odd failure as the inevitable consequence of a team that’s pushing the boundaries, these managers are obsessed with perfection. Instead of searching for causes, they hunt for someone to blame. Rather than finding a chance for all to learn, they see a reason to be embarrassed.
Outwardly, they bury any evidence of a misstep, hoping it never sees the light of day. Worried it will reflect badly on their record, they find excuses or culprits. Anywhere else to cast the negative light.
Consequently, the team becomes trained to also bury any evidence of failure.Results are even falsified to prevent disclosure of any outcome that falls short of perfection. Just like their manager, they grow averse to failure. The better to avoid the harsh consequences of discovery.
The team becomes tentative, careful in every step. No risks are taken, and no boundaries are even approached, lest the result be the smallest failing. Safe and cautious to the point of being timid, the team underperforms. Only to earn the further ire of the perfectionist in chief.Rather than push the team the bad manager plays everything safe. Rather than learn from, even embrace, failure, they lash out and bury it.
4. Information hoarder
All of this leads to a manager who treats information as a precious commodity to be hoarded — rather than a gift to be shared.
The bad manager controls the narrative both into and out of the team. They maintain strict control over communication outside the team. They monitor email and meetings, insisting on being copied or included. They meticulously review and edit every scrap of information that might find its way to the higher-ups.
Afraid of upsetting the team, the bad manager hides bad news they learn from above or around them. They portray it as heroically shielding the team from the noise. In reality, they are postponing the inevitable discovery through other sources. Without control of the news, the manager only looks worse, their greatest fear.The manager and the team soon find themselves lying to each other. And to everyone outside. “Everything’s great here; no need to worry about us.” Even as the fires of doom burn ever closer.
Teams run by bad managers often resemble cults in this way. They become isolated islands cut off from the rest of the organization. “I can’t tell you, that’s need to know” or “you wouldn’t understand” are common refrains.These teams rarely outperform, but you’d never know that from the limited available information — information hoarded jealously by their bad manager.
Managers like this are famous — for the wrong reasons
With this array of common traits, bad managers often become famous within the organization. But not in the way they would hope. They are looked on with disdain, even pity, from the outside. Smart employees warn their peers to avoid them. Refugees from the team tell stories far and wide. Many simply quit to escape the pain.
If you find yourself on their team, the best approach is to find a way out. They will likely outlast you, and wear you down.
Which highlights their most troublesome trait, the bad manager endures. They even ramp up their tactics. Their carefully masked image of success hides them from consequences. The organization suffers, often rewarding the behavior that makes them such bad managers in the first place. Like cockroaches in the end times, bad managers find a way to endure.
Chris Williams is a former vice president of HR at Microsoft and a leadership advisor, podcaster, TikTok creator, and author.
6. Credit Card Delinquency Rates Much Higher for Small Banks.
Despite the unemployment rate being at the lowest level in 50 years, credit card delinquency rates at small banks are at the highest level on record, see chart below. Imagine where these lines will be once the labor market finally begins to soften. Torsten Slok, Ph.D.Chief Economist, PartnerApollo Global Management
7. China Evergrande Group is Now a Penny Stock…$340B in Debt.
3. Shrinking Number of Stocks vs. Growing Number of Private Equity Backed Companies
Callum Thomas Privatization: This should be a shocking chart for passive index investors — more and more of the universe of US companies are ending up in the hands of private equity, with relatively fewer staying or joining public markets. One implication would be potentially a less diversified listed market over time, but also potential risks in private markets due to less transparency and greater leverage that typically comes with private equity investors. It also gives nod to the flood of capital into alternative assets in the zero-interest rate period and in the wake of the dot-com and financial crisis bear markets (that in-part drove investors into the ostensibly lower volatility of private equity vs listed companies).
A once-hot sliver of the exchange-traded funds universe focused on thematic investing is having another difficult year.
Investors have yanked roughly $2.6 billion from these types of ETFs so far in 2023, putting them on pace for their worst year of outflows in data going back to 2001, according to Bloomberg Intelligence. If the trend holds it will be the second consecutive year of cash leaving thematic funds, the first such losing streak of the last two decades.
Much of the cash drainage can be attributed to funds that are part of the ARK Investment Management suite, where the firm’s Innovation fund (ticker ARKK) has seen more than $450 million flee this year. Money has also come out of the ARK Next Generation Internet ETF (ARKW), as well as out of the ARK Genomic Revolution ETF (ARKG), among others.
5. Chinese Small Cap Stocks Approaching 10-Year Lows
ECNS Chinese small cap ETF broke 10-year in late 2022….Now making another run at new low.
6. Real U.S. Wages Moved Back to Positive Territory
9. Get Ready for $20B in Spending on Presidential Election
Chartr Blog Indeed, data from OpenSecrets reveals that the most recent presidential election set a new record as the most expensive cycle in history — and by some way, with political spending for the 2020 showdown tallying an eye-watering $14.4bn, or a staggering $16bn if adjusted for inflation.
