Daily Top 10 – March 31, 2017

1.AAPL +24% First Quarter…6 Record Highs in March Alone.

AAPL hit $89 in 2016 and showed up on fundamental value screens…+60% off lows.

2.Households Hit 2007 Levels in Equity Holdings.

Households now have more than $20 trillion of equity holdings, representing 38.5% of their total financial assets, which includes houses and other tangible properties.

Those levels are now close to the peak seen in 2007, though still below the levels during the late 1990s dot-com bubble, when nearly half of U.S. household wealth was in stocks, said Ned Davis, founder and senior investment strategist at Ned Davis Research Group, in a note.

 Anora Mahmudova-Marketwatch


3.Europe Cheap Valuations and Recovering Economies??  Currency Dependent?

Euro up 4 weeks in a row but a blip in 3 year down trend.


4.Euro Stocks Have Best March Since 2010

Euro Stoxx chart 50day thru 200day to upside…Well below new highs.

5.Commercial Loans $100 Billion Downtrend in 6 Months.

Why Is Commercial Loan Growth Stalling?

By Amey Stone
Goldman Sachs economists devote a report this week to the “sharp deceleration” in commercial and industrial loan growth that amounts to about a roughly $100 billion downtrend in the past six months.

It is a surprising red flag in a sea of economic data that is mostly healthy.

Goldman’s Spencer Hill says it’s creating “cognitive dissonance among market participants” and notes:

Explanations such as a step-down in investment demand or a sudden tightening in credit conditions seem at odds with recent growth and financial indicators, including a strong start to the year for corporate debt issuance.

Both those reasons would be bad signs for the economy.

But Hill has a different explanation.

He believes the reason for the drop is that energy firms are borrowing a lot less from banks than they used to (partly because many went bankrupt). He writes convincingly:

A decline in credit facility usage by commodities firms – driven by a combination of voluntary repayments, collections, and defaults – would arguably be large enough to explain the current shortfall in C&I loan growth. For example, assuming the commodities sector was borrowing a third of its available loan commitments as of quarter-end 1Q16, then a 35% reduction in this balance over the remainder of the year would result in a decline in bank lending of $108bn.]


 C&I Loans Big Recovery Off Bottom Now Flattening.


6.Chinese Economic Numbers Come in Better.

A reading below 50 suggests activity levels declined. The distance from 50 indicates how quickly activity levels improved or declined compared to a month earlier.

So, at 51.8, activity levels not only improved, they did so at a faster pace.

That suggests that the momentum built over the second half of 2016 is now strengthening in early 2017.

China Bureau of Statistics/Business Insider Australia

The separate non-manufacturing PMI — measuring activity levels in other sectors of the economy including construction — also strengthened smartly, rising to 55.1 in March, up from 54.2 in February.

That marked the fastest improvement in activity levels since May 2014.

China National Bureau of Statistics/Business Insider Australia

The NBS said that PMIs for individual sectors such as retail trade, air transport, information technology, and monetary and financial services all came in above the 55.0 level.

And there was no sign that construction activity is cooling.

“The expansion of the construction industry has accelerated,” the NBS said, noting that the PMI measuring business activity was 60.5, up 0.4 points on February.

Truly rapid.

Individual PMIs measuring housing construction and civil engineering activity levels came in at 61.5 and 60.6 respectively.

Read the original article on Business Insider Australia. Copyright 2017. Follow Business Insider Australia on Twitter.

7.  Read of the Day…Drug overdoses were the leading cause of death in 2015 for Americans 25 to 44, the study found.

Overdoses are killing more Americans than ever, making up for a decrease in motor vehicle deaths. (Traffic fatalities did tick back up in 2015.) The overall rate of premature deaths bottomed out in 2012, rose slightly in 2013 and 2014, and rose at a faster pace in 2015, the report says.

Read Full Story at Bloomberg

8.  5 Sources of Stress and Anxiety in the Modern World

If you’re stressed and anxious, this might be part of the problem.

Posted Mar 30, 2017

Source: Anne Lowe/PublicDomainPictures.net
According to the National Institute of Mental Health, 40 million adults in the US are affected by anxiety, and millions more are afflicted depression-related disorders.

Overall, they estimate 18% of all adults have some form of mental illness. And most of the rest of us have too much stress in our lives, especially during the prime productivity and child-rearing ages of 18-55. [1]

Some folks suffer for very specific reasons—perhaps because of a brain lesion, a genetic mutation, specific episodes of trauma, or an idiosyncratic chemical imbalance.

But many folks with diagnosable disorders simply suffer from more intense versions of the same things that almost everyone is suffering from. Some are just harder-hit than others because of their particular social circumstances, or because they are slightly more susceptible (a difference in degree, not in kind).

So why is there so much stress, anxiety, and depression these days?

Evolutionary psychologists will tell us that part of the problem is that there’s a mismatch between the current environment (with its cities, bureaucracies, inequality, and social media) and the environment of evolutionary adaptation (tribal life on the savanna).

In order to explore this possibility a bit, we will consider some of the ways the modern world is different from the one our ancestors on the savanna might have encountered.

Here are 5 ways reasons the modern world might produce more stress, anxiety and depression than that of our distant ancestors.

  1. We interact with a greater diversity of people.

As we meet new people over the course of a year, we confront a greater diversity of skills, knowledge, and values than people have ever encountered before.

Diversity is the source of much good. Diverse groups of qualified people usually come up with better solutions to problems than less diverse groups.

However, modern diversity also strains our brains—especially the diversity in values.

A person has a family. A person also has workmates, schoolmates, and playmates. And people join churches or special interest groups that meet weekly or monthly, in person or on the internet.

Perhaps our families are Democrats our work mates are Republicans, and our school mates are Communists.

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Perhaps our families are Catholics, our workmates are Protestants, and our schoolmates are Atheists.

Our families like country music, our school mates like rap and pop, and our work mates like classic rock.

Some of these differences are trivial, and some are not.

Somehow we have to figure out a way to get along with those people in our lives who have influence over our wellbeing. And we must be careful how we do this.

People have a stake in whether we agree with them or not. They need to know what to expect from us, and whether we’re with them or against them. And we need to figure out when it’s necessary to be with them and when it’s OK to be against them, because being on the side of one person sometimes requires being opposed to another.

When our grandfather makes an insensitive statement about members of a different group, perhaps we don’t rebuke him, but give a polite smile and change the subject. Then we feel guilt at the thought of what our friends would think of our not speaking out.

When a friend complains about the alienation of the work force at the hands of greedy capitalists, we might want to respond in a way that keeps us in good standing with our friend (whether we agree with her or not). But we also have our boss and family members in the back of our heads judging how we respond.

The normative landscape is rugged. And these examples are vastly oversimplified. Most issues are not ones you are simply for or against, but there are dozens of nuanced positions to take. And many groups contain members all along a given value spectrum.

It’s fair to ask whether our brains are fully equipped to handle the degree of diversity we face today.

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  1. We compare ourselves to higher standards.

We watch TV and everyone is beautiful. We are not as beautiful. How many people in a tribe of 150 look like Rosario Dawson? How many look like Jamie Dornan?

We watch TV and everyone is rich. Entrepreneurs are always successful. Authors always get published. People’s houses are considerably nicer than ours.

We watch the Olympics and realize we might as well not even know how to run or swim. And it dawns on us that our synchronized swimming partner sucks.

Only those in the top 1% of 1% of 1% have an opportunity to display their talents, wealth, and beauty before the general public. And those are the people we compare ourselves to. It’s a nearly impossible standard.

It’s natural to want to be the prettiest girl in the tribe, to have the most resources, or to be the best in the known world at something that others understand and respect. Once upon a time we could set goals like that and get away with it.

Today we draw our competition from a pool of 7 billion people, and wanting to be among the elite is most often a recipe for discouragement.

  1. We specialize more.

Aristotle read all the intellectual writings that existed in Greece in his time, and then went on to add a substantial chunk to this body of knowledge himself.

Even as recently as 1600—if you were reasonably bright and had enough time on your hands—you could have a good grasp of all academic knowledge. You could read all the “classics”. You could master the known mathematics, philosophy, rhetoric and so on.

From 1600 to 1900 you could not master all human knowledge, no matter how bright you were; but, if you worked hard, you could aspire to master a single field—like mathematics, physics, philosophy or history.

By 1950, you were lucky to master a sub-discipline like Chinese history.

Today you’re lucky to master a sub-sub-sub discipline—like the history of the first 100 years of the Ch’in Dynasty from the perspective of a house servant.

Today we have to work harder than ever to get mastery of ever smaller fields. And the payoff for this work is smaller than ever.

If you were a scholar in the year 1500 and you went to a cocktail party and someone introduced you as “a scholar”, that meant something. That meant you knew EVERYTHING.

Today, you go to a family reunion and tell them you’ve worked for 20 years to become an expert on the realism/anti-realism debate in the meta-ethics sub-sub field of Philosophy, and your relatives don’t know what to think of that. Then they ask around and find out you make $35,000/year, and they figure it must not be very important.

You tell someone you develop web-based software. They hear “computers” and they want you to fix their printer. You can’t fix their printer, so you must not really know computers.

We often don’t understand what our neighbor does for a living, and we don’t know how to explain what we do.

We might even be the best in the world at some small little leaf far out on the tree of skill or the tree of knowledge, but no one we grew up with cares.

  1. Markets are more efficient (a.k.a. “It’s the economy, stupid!”)

If you provide a good no one else provides, you can charge a high price and make good money. This probably won’t last long, though. If your profit margin is high enough, others will notice the opportunity and set up shop to compete with you. This will drive down prices. With enough competition, prices will fall to a level not much higher than the cost of production.

As consumers, we love this. As entrepreneurs we find it frustrating.

This same dynamic applies to the labor market. If you have a skill very few others have, you can charge a high price for your labor. However, if your wages are high enough, others will notice the opportunity and begin developing the skills they need to compete with you. If the supply of qualified workers grows faster than the need for the service, wages will fall.

As business owners we love this. As workers we hate it.

On balance efficient markets might work out well for us. The benefits we receive from lower prices and cheaper labor offset the frustrations that come from having to sell our goods and labor at lower prices.

But efficient markets might also fail us personally. If we lose our job, because there’s too much competition for our position, the equation won’t balance in our favor – at least in the short term. And in the long term some people reap more reward from efficient markets than others.

Overall, efficient markets have led to higher standards of living on average. Life spans are up. Physical possessions are up. Entertainment options are up. Education levels are up.

But are we happier?

Maybe. And maybe not. Once upon a time our place in the tribe was secure. Our skills were highly valued, and they would remain that way our whole productive lives. Today our place is not secure. If there’s a lot of competition for our position, we can be replaced with someone better. And there’s almost always someone better.

Today’s worker can be replaced regardless of how hard they work or how good they are.

Not only that, but whole companies can be replaced. If another company comes along and provides a better or cheaper alternative, everyone can be out of a job through no fault of their own.

Whether you own the business, or you work for wages, in the modern world you very likely live your days with a sword of Damocles hanging over your head.

  1. Innovationhappens faster.

We live in exciting times. New discoveries are being made every year in almost every field of science. New gadgets are being invented every year. And our existing technologies are being improved every year.

It’s well known that computers have been getting faster. Until recently computer clock speeds had doubled roughly every 18 months since computers were first developed. Your smart phone is (much) more powerful than the computers NASA used to run the Apollo Project. There’s reason to think this pace of improvement has slowed, and will continue to slow, but we are finding other ways, such as parallel computing, to keep finding improvements.

Some improvements are happening even faster. The Human Genome Project set out to sequence the human genome in 1989. It took 13 years and 3 Billion dollars to finish.

Toward the end of the Human Genome Project a private company working in parallel reduced the cost in money and time to $200 million and about one year.

Just 15 years later a machine can sequence a genome in less than a day at a teeny fraction of the cost.

Have you heard about 3-D printers? These machines take a 3-D design for a coffee mug or a bracelet, or pretty much any solid object you can imagine, and print them layer by layer out of plastic. Individuals with a sense of design can invent new gadgets all by themselves.

Currently the production models of these printers make objects from a single material. And you can’t print a ham sandwich yet. But Star Trek replicators can’t be that far off.

And did you know that we can now re-grow body parts and organs?

True. A woman recently grew a new ear for herself under the skin of her forearm.

Imagine what would happen if we could combine the 3-D printer technology with the ability to grow new body parts. Then you could print a new liver for yourself in your basement.

You laughCheck this out.

These are exciting times. But they are also disorienting and turbulent times.

New innovations come along so quickly in part because we have such high degrees of specialization, diversity and market efficiency—three factors mentioned above.

But the influence goes the other way as well. New inventions and discoveries require new specializations. Rapid innovation also contributes to some of the negative effects of the efficient market. Not only can we lose our job. Not only can our company go out of business. But with new technologies, entire industries can be swept away.

If 3-D printing becomes extremely cheap and more versatile (and why wouldn’t it?), all you need is a design you can draw up on your computer (or download from someone else’s computer) plus some raw goo, and you can make nearly anything you want. This cuts out a lot of middle men. Many manufacturing jobs will become obsolete. And many of those workers will need to work very hard to become relevant again.

Not only does rapid innovation make it difficult to keep job skills relevant, it also makes it difficult to stay “in the know”.

Many older folks in their 80s and 90s have not embraced (and likely will not embrace) the internet. When they grew up electric appliances and automobiles were new industries. Many still walked and rode horses as their primary form of transportation in their youth. In many ways they had more in common with the young people in the Roman Empire than they have in common with young people today.

They have been left behind. They are irrelevant. After years of helping to build our world, our world no longer has any use for them. And they don’t understand the world they are leaving behind.

Before you pity them, realize something. Because the pace of innovation is increasing, it’s going to be worse for us. We will one day be even more “out of touch” than our octogenarians are today.


Those are 5 differences between our modern world and life on the savanna. And those 5 differences might go some way toward explaining why there is so much anxiety in the world today.

We could go deeper at this point and explore how each of these factors affect our basic psychological needs. And we could even try to come up with some remedies for our modern maladies. If that interests you, I take up those themes in “Stop Setting Goals That Don’t Make You Happy.”

Jim Stone PHD