2. Large Cap Premium Valuation Over Small Cap Close to Internet Bubble Levels
Wisdom TreeScott Welch, CIMA ®This valuation dispersion can be illustrated differently by examining the ratio of small-cap to large-cap P/E multiples. The discount is as wide as it has been since the tech bubble of the early 2000s (ignoring the anomalous COVID-19 period).
Small Cap to Large Cap Historical P/E Ratio (x100)
It is not just that small-cap stocks are trading at wide discounts to large-cap stocks—they are also trading at a wide discount relative to their own historical averages. “NTM” refers to estimates of the next twelve months earnings, also expressed as “12-month forward estimates.”
3. AI Mentions by S&P 500 Companies Up 366% Since Start of Year
Business Insider-A new analysis by Wall Street Zen found the number of mentions of “AI” and related terms (machine learning, automation, robots, etc.) in S&P 500 earnings calls skyrocketed over the past year and a half, as the chart above illustrates. AI mentions in the first quarter of 2022 totaled 1,156. That dipped to 805 in the third quarter of 2022 before rising 177% to 2,182 in the next quarter. Then, during this year’s second quarter, that ballooned to 7,358 — a 366% increase compared to the start of the year.
4. Non NVDA AI Stokcs….C3.ai +120% in 2023…..-77% Since Inception
8. A Huge Threat to the U.S. Budget Has Receded. And No One Is Sure Why-NYT
NY Times By Margot Sanger-Katz, Alicia Parlapiano and Josh Katz Sep. 4, 2023 For decades, runaway Medicare spending was the story of the federal budget.Now, flat Medicare spending might be a bigger one.
Something strange has been happening in this giant federal program. Instead of growing and growing, as it always had before, spending per Medicare beneficiary has nearly leveled off over more than a decade.
The trend can be a little hard to see because, as baby boomers have aged, the number of people using Medicare has grown. But it has had enormous consequences for federal spending. Budget news often sounds apocalyptic, but the Medicare trend has been unexpectedly good for federal spending, saving taxpayers a huge amount relative to projections.
“Without a doubt, this is the most important thing that has happened to the federal budget in the last 20 years,” said David Cutler, a professor of health policy and medicine at Harvard, who helped the Obama White House develop the Affordable Care Act.
9. According to WSJ 30% of Rural Hospitals at Risk of Closing
WSJ Akiko MatsudaA growing number of hospital operators across the country are in financial distress or have declared bankruptcy under the pressure of labor shortages and high inflation in the wake of the pandemic. Small independent hospitals serving rural communities have been hit especially hard. More than 600, or about 30%, of all rural hospitals in the country are at risk of closing, according to the Center for Healthcare Quality and Payment Reform, a national policy center. As of August, 13 rural hospitals had shut their doors, exceeding seven and three in 2022 and 2021, respectively, according to the Cecil G. Sheps Center for Health Services Research, a unit of the University of North Carolina at Chapel Hill. https://www.wsj.com/articles/hospital-distress-worsens-amid-labor-scarcity-and-inflation-1ca31b87
1. August Saw A Lot of Selling at the Close of Market Day
2. Crude Oil Rally Still Well Below 2022 Highs
Light Crude Oil Chart Held 200 Week Moving Average…Coming up on next resistance level
3. Energy Prices Up and Airlines Down
JETS corrects back to Spring levels with rise in crude oil
4. Recessions and Bonds….Long-Bond Lost Decade
@Callum_Thomas Recession Realities: But one thing I have to keep coming back to is the tyranny of the stats — historically treasuries put in their best performance, and stock-beating performance during recessions. I would note, you don’t need a recession for bonds to do ok, but you do need a recession for bonds to do spectacular (hence why bonds are often referred to as diversifying assets… at least outside of inflationary shocks!).
Treasury Troubles: In real (CPI adjusted) total return terms, long-term US treasuries have seen a lost decade, and a catastrophic -50% drawdown off the peak in mid-2020 (p.s. for anyone who’s new to bonds remember: yields up = price down). Essentially this is what happens when an otherwise safe and conservative asset meets an inflation (+ monetary policy) shock.
1. Rob Arnott Research Affiliates Top Tech Names in 2000 ….20 Year Returns
Following the peak of the tech bubble in March 2000, the average stock in the S&P 500 rose by 25% over the next two years, while a cap-weighted index dominated by tech stocks fell by 21%. Arnott points to the list of tech firms that were the top 10 most-valuable at the peak of the dot-com bubble. None were able to beat the market by the time the next bull run peaked in 2007, and only Microsoft Corp. and Oracle Corp. are ahead today, two decades later.
The goal of establishing routine needs to include time for socializing.
Social connection encompasses three fundamental components: structure, function, and quality.
Social connection helps us live a happier, healthier, and longer life.
As a professor and a mother, the end of summer is always a bittersweet and busy time of year. Whether or not you are gearing up for back-to-school, the end of the summer marks a point where we all feel like we need to get back into a rhythm. This can be a busy time. Whether it is the addition of homework, yard work, or the many other tasks that seem to pop up, we often find ourselves overscheduled and overstressed, yearning to establish a sense of equilibrium in our lives. As we settle into a routine, we must center our lives around the things that matter most and will help us live happy and healthy lives.
When you think of living a healthy life, what do you imagine? Does your list consist of getting more steps in, eating healthier, going to bed earlier, or swapping out soda for sparkling water? These are all important for our health, but most people don’t realize that many other factors dramatically influence physical health. What specifically am I talking about? Social connection.
The evidence supporting the health benefits of social connection is compelling and wide-ranging. Studies have consistently underscored the association between social bonds and a reduced risk of earlier death, bolstered cardiovascular well-being, enhanced immunity against infections, and mitigated levels of inflammation. Those fortified by social networks also report lower rates of depression, anxiety, and other mental health disorders. Moreover, social connection has been linked to better cognitive function and resilience to stress. In essence, fostering social connections is not just about enhancing our emotional well-being; it’s a cornerstone of our physical health and overall quality of life.
In my role as the lead scientific editor for the US Surgeon General Advisory on the Healing Effects of Social Connection and Community, we aimed to seek to create awareness and ignite change to help us focus more on the importance of social connection in our own lives and the communities that we live in. This advisory goes beyond providing evidence of concerning trends about isolation and loneliness in our country to provide detailed recommendations for schools, communities, businesses, governments, and, importantly, individuals. As we understand more about the need for human connection, we are better able to prioritize it in our lives and enjoy the many benefits that come from it.
Social connection encompasses three fundamental components: structure, function, and quality. The structure, or size and variety of social relationships, is the foundation of our social connection by ensuring the presence of people in our lives and regular social contact. Function comes into play as we acknowledge the diverse roles others fulfill, meeting our physical, emotional, and achievement needs. Quality can span the spectrum from highly positive and nurturing to hostile and conflict-ridden, pointing to the need for high-quality and fulfilling relationships and interactions. Together, these exert a multifaceted impact on our health and well-being.
We all face barriers to connection, whether it is a busy schedule, geographical distance, poor health, or our insecurities. As we think about prioritizing our connections, we need to consider each aspect of social connection. Improving and prioritizing our social connections can not only increase our happiness and quality of relationships but also increase our physical health, longevity of our lives, and overall well-being. As you settle into a new routine, seek to improve the elements of connection in your life by asking yourself a few questions:
· Do I prioritize the relationships that matter most to me?
· Do I make time in my busy schedule for socializing?
· Do I regularly check in on the people I care about to see how they are doing?
· Do I have a group (e.g., book club, hobby, fitness, faith) I consistently participate in?
· Do I spend time in my community to provide opportunities to get to know or strengthen my relationships with my neighbors?
· Do I practice kindness, respect, and responsive listening in my interactions with others?
You can build and strengthen your relationships in many ways, but if you find yourself answering “no” to some or all of these questions, ask yourself why not. Are you spending your time on the things that matter most to you? If not, it is time to prioritize what matters most.
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.
