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.
It takes 24 stocks to reduce portfolio volatility to within 10% of the market volatility over the last five years, according to calculations from quantitative strategists at UBS. They ran similar tests going back to 2009, and found 28 was the median number that brought portfolio volatility to within 10% of the market’s. Granted, UBS tested stocks were picked randomly and without regards to a diversification aim.Marketwatch By Steve Goldstein
4. S&P 500 Index Longest Streak Without 1.5% Down Day Since 2018
5. Tesla vs. GM Chart Making a Run at Previous Highs
Tesla huge outperformance vs. F/GM this year
6. Crypto $54 Million in Outflows Last Week..80% Bitcoin
Bloomberg By Teresa Xie Despite wins against the US Securities and Exchange Commission and new Bitcoin ETF filings, investors withdrew nearly half a billion dollars from cryptocurrency products over the last nine weeks. The crypto market saw outflows totaling $54 million last week, making it the fifth consecutive week of selloffs, according to a new report by CoinShares. Bitcoin comprised 85% of outflows, reaching $45 million. “A lot of investors are concerned that the crypto market has seen some good news in recent months and it has not helped the Bitcoin and others to rally at all,” Matt Maley, chief market strategist at Miller Tabak + Co., said in an email. https://www.bloomberg.com/news/articles/2023-09-18/crypto-funds-see-almost-500-million-in-outflows-over-nine-weeks?srnd=premium&sref=GGda9y2L
7. Planet Fitness Breaks Thru 2021-2022 Lows
Post-Covid favorite PLNT breaks below October 2022 lows
Mom and Pop Business Owners’ Day: Landlords of Small Rental Properties
By: Nadia Evangelou While March 29 is designated as Mom and Pop Business Owners’ Day, let’s take a look at some facts about mom-and-pop landlords and small rental properties. In real estate, mom-and-pops are owners of small rental properties (1-4 units), and they do the day-to-day management of these properties. But being a mom-and-pop landlord can be challenging, especially when someone is starting out and doing everything from evaluating and purchasing rental properties, finding and screening tenants, collecting rents, keeping the books, dealing with taxes, observing local laws, and performing routine maintenance and repairs.
Many millions of words have been written on how to be happy, which is both a blessing and a curse. If you’re an entrepreneur in the market for tips, there certainly is no shortage of suggestions from everyone from scientists to billionaires to Albert Einstein. But who has time to wade through thousands of articles? And which of the many ideas out there should you try first?
What you need to get started is condensed and easily applicable advice from someone who knows what they’re talking about. A quote from British philosopher Bertrand Russell fills the bill, and better yet, his suggestion is backed by modern research.
The secret of happiness in just 35 words?
Russell was a celebrated mathematician and philosopher who died back in 1970 at the age of nearly 100. He’s the source of many popular quotes, which writer Thomas Oppong recently rounded up on Medium. If you’re looking for a reminder of the downsides of materialism, the value of intellectual humility, or the high chance worrying what others think of you will lead to regret, then it’s well worth a quick read.
But one quote from Russell’s 1930 book The Conquest of Happiness struck me in particular as packing a whole lot of profundity into just 35 words: “The secret of happiness is this: Let your interest be as wide as possible and let your reactions to the things and persons who interest you be as far as possible friendly rather than hostile.”
As Russell explains in the book, the world is huge and we are small. You’ll never have enough time for everything you want to do in your limited years. That truth could bring despair if you constantly fight against it. Instead of struggling, he advises you pick interests that captivate you (his very personal examples are “the Council of Trent, or the life history of stars,” but football or knitting would do just as well) and get lost in exploring them. This way you can temporarily slip the constraints of time and find momentary happiness.
In short, practice openness and get some hobbies or interests. Then use them to find flow. It’s a simple enough prescription, but it’s actually one that’s backed by modern science.
Modern research agrees
Openness has been linked by research not only to creativity and intelligence, but also to slower mental aging. Being open to new experiences seems to help keep the mind young. So, science certainly has found benefits to being friendly rather than hostile to new people, interests, and ideas. And should that initial curiosity develop into a hobby or interest of some sort, so much the better.
A stack of studies shows that having diverse interests helps us develop a broader sense of self. You’re not just an entrepreneur and a dad, for instance, you’re also a bowling league champion, a surfer, or a sourdough master. Which means that whenever we run into difficulties in one of these areas of life, we can draw strength and confidence from others. When business is rocky, the surfing waves might be rocking.
Not only are hobbies and interests a resilience booster and a stress killer, they also help us enter a state of flow. This is that feeling you get when you’re doing something you genuinely enjoy and lose all sense of time. Psychologists have identified flow as a sure route to happiness — when you’re deeply absorbed in an activity, you are not fretting about the future or the past.
Charlie Bilello A net 51% of US Banks are now tightening their lending standards, the highest since 2020 and at levels that have coincided with recessionary periods in the past.
3. Overall Loan Growth of U.S. Banks 3.6%
WSJ By Telis Demos One way for American banks to offset the pressure coming from rising deposit costs would be to boost business: More loans, even if earning less individually, could still lead to overall revenue growth.
But right now, their lending is expanding very slowly. As of the latest Federal Reserve weekly tally, overall loan growth at U.S. banks has been 3.6% on an annualized, seasonally adjusted basis so far in the third quarter—well below the long-term average of 7%, according to Autonomous Research analyst Brian Foran.
4. Ten Largest Companies Percentage of S&P….Hit 40% in 1990 and 2000…..34% Last
The ten largest companies in the S&P500 make up 34% of the index, and these ten mega-cap companies have an average P/E ratio of 50, see chart below.
Torsten Slok, Ph.D.Chief Economist, PartnerApollo Global Management
5. Crude Oil and Natural Gas Diverge
Bespoke As crude oil topped $90 per barrel for the first time since last November, it’s interesting to see how prices of natural gas have seen little movement. It used to be that the two commodities moved somewhat in unison with each other, but that has not been the case this year. As shown in the chart below, since crude oil really started to take off at the end of Q2 it has rallied more than 28%. Nat gas meanwhile not only hasn’t rallied, but it’s down over 3%!
As a result of the recent divergence between the two, the ratio of crude oil to natural gas has surged this year and currently sits at over 30. Besides earlier this year, the only time since 1990 that the ratio between the two was as high or higher was back in the period spanning late 2011 through early to mid- 2013.
Josh Watzkin on why the second mistake is worse than the first:
“One idea I taught was the importance of regaining presence and clarity of mind after making a serious error. This is a hard lesson for all competitors and performers. The first mistake rarely proves disastrous, but the downward spiral of the second, third, and fourth error creates a devastating chain reaction.”
There was a sea change this around too…for a little bit.Last year during the rising inflation and interest rate environment, growth stocks got killed while value stocks finally had their time in the sun after a decade of tech stock dominance.
Yet here we are again with the same huge growth stocks leading the way. The Nasdaq 100 is up 40% this year after falling 33% last year.
The Man Group performed some research on the top 100 stocks in the S&P 500 each decade going back to the 1960s to show that many of the leaders from the previous era typically fall from their perch:
This happened every decade…until the 2010s.
The top stocks more or less remained the top stocks.
History tells us tech stocks should underperform in a meaningful way eventually.
… moments ago we got the latest Chinese data dump for the month of August, which showed that – as expected – the world’s 2nd biggest economy has rebounded from the bottom and may be stabilizing. Here are the highlights:
August Retail sales +4.6%, beating exp. +3.0%, Last +2.5%
August Industrial Output +4.5%, beating exp. +3.9%, Last +3.7%
Jan-Aug Fixed Investment +3.2%, missing exp. +3.3%, Last 3.4%
Jan-Aug Property Development investment -8.8%, Last -8.5%
China apparent oil demand +22.7% to 14.74mm b/d, unchanged from July
New property construction falls -24.4% YTD y/y to 639MM sq.m
August new home prices, excluding affordable housing, -0.29% m/m
Psychology Today Studies show curiosity is a powerful tool for mental health and well-being. Jennifer Gerlach LCSW
Curiosity can be thought of as the psychological equivalent of a healthy heartbeat.
Strong curiosity is a sign of mental health.
There are many ways to cultivate curiosity, such as revisiting childhood joys or doing something unexpected.
There is something magical about walking through a path in the fall looking up at the leaves, or finding a song for a moment that you want to lean into to understand where the artist stood. This enchantment is curiosity.
Research points to the many benefits of curiosity from improvements in memory (Gruber, & Ranganath, 2019), creativity, and precious “flow” states (Schutte and Malouff, 2020). It is associated with higher life satisfaction (Proctor et al., 2011) and, contrary to the adage that curiosity kills the cat, has also been linked with aging well (Sakaki et al., 2018).
When we feel safe, we are free to explore. When we feel in a space of threat, our focus narrows and we lose interest. Evolutionarily, this makes sense. At moments during which our ancestors faced the threats of their day, often predators, it would not have been wise to stare in wonder at the leaf. We are the descendants of the people who didn’t get eaten.
Today, most fears we face are social and last longer than a run from a bear. Yet, we have many barriers to feeling safe and being curious. Repeated traumatic experiences or anxiety can put us in a space where the threat system is hyper-activated making it difficult for us to access our drive for discovery.
Loss of interest in activities is a hallmark symptom of depression. Even schizophrenia is often associated with negative symptoms marked by a decrease in seeking pleasurable activities, the byproduct of anhedonia, avolition, and emotional blunting.
Conversely, recent research shows that curiosity may be a protective factor against anxiety and depression (Zainal, & Newman, 2023), as well as that creative interventions can improve curiosity (Schutte and Maloff, 2022), garnering individuals a whole host of benefits.
Perhaps we can think about curiosity as the psychological equivalent of a healthy heartbeat. As we struggle with mental health, it’s common for us to lose our pulse with our curiosity. Similarly, by engaging curiosity through exercises of creativity there is much to be gained.
While curiosity is not often discussed as a key therapeutic tool, many therapists utilize it. As a psychotherapist, my office space is designed to encourage a hammock swing for my clients to sit on, a treasure chest filled with varying objects, and art supplies.
Most other therapists also take this into account when cultivating a therapyenvironment. Art therapists have engaged curiosity and creativity in healing for decades, and certain therapy styles, such as compassion-focused therapy, involve activities to activate the soothing/affiliative system in which we are often free to be curious.
So how can you grow your sense of curiosity? Here are five ways:
1. RevisitChildhoodJoys. When you were a kid, did you like to fly kites? What about riding your bike around the neighborhood? These things still exist. Engaging joys from the past can lift our curiosity.
2. Do Something Unexpected. Routine drives away opportunities for new things. Sometimes, it is worthwhile to take a turn into something unplanned. This could be something as simple as stopping at the apple butter stop as you are driving home or taking a different route to work.
3. Pick Something Random and Learn About It. Many of us have had interests in the past that we let go of. Did you stop learning about space when you realized that your life path was not headed toward becoming an astronaut? Curiosity is not about learning only things that have practical significance. The world is wide and there is so much to marvel at.
4. Ask Questions. Curiosity thrives on wonder. Sometimes we have questions that we never ask. We don’t allow ourselves to open those doors. It’s OK to ask questions. Questions often deepen connections.
5. Explore a New Place. You don’t have to get on an airplane to travel. Maybe there is a restaurant you have never eaten at or a park you have never visited. Allowing yourself to experience these new places could foster curiosity.
1. Two Break-Out Charts…10 Year Treasury and Energy SPDR
XLE energy etf
2. Gasoline Prices Hit Resistance for at these Levels for Last 12 Months
3. Shrinking Stock of Crude Oil Reserves
Nasdaq Dorsey Wright
4. T-Bills…Retail Buys $1 Trillion of New Notes in Three Months
Bloomberg-With rates on cash and cash-like instruments at the highest in more than two decades and offering more income than benchmark US debt or stocks, assets in money-market funds have swelled to a record. But nowhere is that appetite for liquid, high-yielding instruments more apparent than in the market for T-bills where investors have snapped up more than $1 trillion of new notes in just the last three months.
9. Depopulation of Italy…Number of Deaths Exceeding Births
For the first time, the number of births in a year fell below 400,000 – representing an average of 1.25 babies per woman, according to official figures for 2022.
This means that the replacement rate is now negative, since the number of deaths currently exceeds the number of births – 12 deaths for every seven births.
Our brain is like a computer processor: It has a finite amount of processing power, or intellectual resources, that can be used in a given moment. Any competing task (or emotional state) that occupies too much of our intellectual firepower impacts our ability to concentrate, focus, problem-solve, be creative, or use other cognitive abilities; as a result, our functioning IQ is temporarily lowered.
To demonstrate this principle, try walking while counting down from 1,000 by sevens (1,000, 993, 986, etc.). You will soon stop walking. Why? Your brain has to work so hard to do this math that it doesn’t have enough resources left to tell your legs to put one foot in front of the other.
Most common competing tasks do not have a significant impact on our ability to work or study. Most of us can do homework while listening to music and can become absorbed in a book while eating.
However, some psychological habits, like the 5 below, consume such huge amounts of intellectual resources that they diminish our cognitive capacities. Few people are aware that these psychological habits have such a detrimental effect, so they are unlikely to pause what they’re doing—and this can seriously affect a person’s ability to perform a task at full capacity.
1. Brooding
Replaying upsetting, frustrating, or distressing events over and over again—especially when doing so frequently or habitually—can make our minds race with thoughts or stir us up emotionally, severely taxing our intellectual resources. In addition to impacting our cognitive functioning, brooding (also known as ruminating) can present real dangers to our emotional and even our physical health. (See “The Seven Hidden Dangers of Brooding.”)
We all feel guilty from time to time. When we do, we typically apologize or take some kind of action to resolve our guilty feelings. However, when guilt is not addressed and repeatedly pops into your mind, it creates a huge cognitive distraction that seriously impairs cognitive functioning. The solution is to put guilty feelings behind you as best you can. (See “The Secret of Effective Apologies.”)
3. Ineffective Complaining
Most people are likely to share their frustrations with friends rather than discuss them with someone who could help resolve them. The problem is that each time we tell our tale, we become frustrated and annoyed. Anger and frustration require significant processing power and enable ineffective complaints to become a regular drain on our brainpower.
4. Overanalyzing Rejection
Rejection creates emotional pain that significantly impacts our mood and has a serious impact on cognitive functioning. It also causes us to become self-critical, a habit that further damages our self-esteem, extending the duration of our emotional distress—and with it, our compromised cognitive abilities. (See “10 Surprising Facts about Rejection.”)
5. Worrying
Many people don’t consider worrying harmful. “I’m just a bit of a worrier,” we might say with a wry smile. But worrying creates an uncomfortable and unpleasant emotional state, and it can be seriously distracting. When we’re worried about something, it tends to take priority in our minds, and push everything else to the side. Fortunately, it’s easier to address and resolve worry (by thinking through potential solutions) than it is anxiety. (See “The Difference Between Anxiety and Worry.”)
