1. 10-Year Treasury Yield & Fed Cutting Cycles: What to Expect
Gundlach spent much time discussing December’s big yield curve steepening — when rates on longer-term bonds rise more than shorter ones. Roiling stocks, the 10-year and 30-year Treasury notes have been flirting with 5% levels amid concerns over inflation, a strong economy and fewer rate cuts in 2025. He notes that during past Fed cutting cycles, the 10-year Treasury has never gone up, yet now it has by 100 basis points. “Something is different this time,” he adds.
CNBC
2. 30-Year Mortgage Rates Up 7%
This chart shows massive outperformance of Argentina ETF ARGT vs. Brazil EWZ.
Wealth of Common Sense
3. Higher Rates and Small Cap Stocks
Bespoke Investment Group on R2K vs. 200DMA. The Russell 2000 traded below its 200-day moving average (DMA) on an intraday basis Monday, ending what was the index’s sixth streak of a year or more without trading below that level. Following the end of each of the five prior streaks, the Russell 2000 was higher a year later with a median gain of 13.45%.
Bespoke Investment Group
4. Worst to First-Energy and Healthcare
That is particularly true for the S&P 500 energy sector. It is the top-performing sector-year to date, with the Energy Select Sector SPDR Fund ,an ETF that more or less tracks the S&P 500 energy sector, up 5.4% through Monday’s close, according to Healthcare stocks were in second, up 2.8% year-to-date, while the materials sector — last year’s worst performer — was up 1.2% through Monday. Both the healthcare Select Sector SPDR ETF and the Materials Select Sector SPDR ETF have seen similar performance.
MarketWatch
5. These Sectors Are Helping The Equal Weight S&P Hold 200-Day
Stockcharts
6. All Wall Street Strategists are Bullish
Business Insider
7. Goldman Good Number Today…Double in Stock from Late 2023
Stockcharts
8. Marc Andreessen on China Manufacturing
Autism Capital
9. Stats on American Couples & Marriage
John Burns Research
10. You Make the Job; It Doesn’t Make You
From the Daily Stoic Blog: There was once a promising young Greek politician named Epaminondas whose rise threatened some more established leaders (his full story in Right Thing, Right Now). As a way to blunt his potential, they ‘promoted’ him to a job overseeing the city’s sewers and water.
It was supposed to be a humiliation—or at the very least, a dead end job. Instead, he did such a good job, he endeared himself to the population. With discipline and earnestness, Plutarch wrote, “he proceeded to transform that insignificant office into a great and respected honor, even though previously it had involved nothing more than overseeing the clearing of dung and the diverting of water from the streets.”
Whatever we do, if we do it well, is noble. We told a related story in the Daily Dad email recently from Toni Morrison. She came home one day complaining about her job cleaning someone’s house to her father. She expected him to get angry on her behalf or to pity her. Instead, he said, “Listen. You don’t live there. You live here. With your people. Go to work. Get your money. And come on home.”
What he was teaching her, Morrison later wrote, became a set of principles she based her life around.
1. Whatever the work is, do it well—not for the boss but for yourself.
2. You make the job; it doesn’t make you.
3. Your real life is with us, your family.
4. You are not the work you do; you are the person you are.
What’s in our control is how we do the job. What’s in our control is who we are while we do the job. Whether it’s appreciated, whether it’s an impressive or a lowly job, whether a project succeeds or fails–that’s not up to us. What’s up to us is that we do our best, what’s up to us is that we are the best we’re capable of being.
The rest? The Stoics say is not worth worrying about.
From Bespoke Investment Group: The chart below shows how US crude oil production started to take off after 1901. According to the Department of Energy, in 1900, the US produced 63 million barrels of crude oil annually. Within 10 years, production tripled. Another 10 years later, it more than doubled again and kept rising from there until peaking in 1970.
Production was nearly cut in half from 1970 through 2008 as analysts started to fear the world was running out of oil and prices shot well into the triple-digits. Then, proving the adage, that the cure for higher prices is higher prices, the shale boom arrived, and production since then has rebounded to a historic degree. So much for running out of oil.
Even as the US oil industry exploded in the early 1900s, exports were practically non-existent until more than 100 years after Lucas’ first discovery. Beginning in the 2010s, though, exports surged like nothing ever seen before and now total a record 4+ million barrels per day.
2. Decline in Volume by “Professional Investors”
From the DC Lite Blog: The decline in demand from professional investors suggests the potential for elevated equity volatility.
5. Vanguard Total Bond ETF Trades Back to August Levels
Stockcharts
6. Dividend Growth By Sector
Lawrence C. Strauss for Barrons
7. Crypto Pullback Week
From The Daily Shot Brief: Cryptocurrency: It has been a tough week for cryptos so far, with DeFi tokens underperforming.
@TheTerminal
8. Chinese Investors Can’t Get Enough Money Out of Country
From Bloomberg: Chinese Traders’ Demand for Global Stocks Prompt Rare ETF Halts: Chinese investors’ fierce appetite for overseas shares has triggered rare, full-day suspensions on a pair of exchange-traded funds tracking global equities.
The Invesco Great Wall S and P Consumer Select ETF QDII and Harvest Der Dax ETF QDII have been suspended from trading until further notice after their premiums soared, according to exchange filings issued after market hours on Thursday. This marks an escalated degree of risk warning to investors, as halts on such funds usually last for an hour.
A new analysis led by researchers at the Johns Hopkins Bloomberg School of Public Health found that more than half of calories consumed at home by adults in the U.S. come from ultraprocessed foods.
Ultraprocessed foods contain substances with little or no nutritional value, such as colorings, emulsifiers, artificial flavors, and sweeteners. Examples cover a wide range of products, from chips and hot dogs to prepackaged meals. Researchers have long understood that a substantial proportion of the U.S. diet comes from ultraprocessed foods but it was not clearly understood where those calories were consumed.
Consuming high amounts of ultraprocessed food has been linked to chronic health conditions—cardiovascular disease, obesity, colorectal cancer, among others. The new findings suggest additional measures are needed to promote healthier alternatives for preparing meals at home.
The study was published online December 5 in the Journal of Nutrition.
“The perception can be that ‘junk food’ and ultraprocessed foods are equivalent,” says Julia Wolfson, PhD, MPP, associate professor in the Bloomberg School’s Department of International Health and the study’s lead author.“Yet ultraprocessed foods encompass many more products than just junk food or fast food, including most of the foods in the grocery store. The proliferation and ubiquity of ultraprocessed foods on grocery store shelves is changing what we are eating when we make meals at home.”
For their analysis, the researchers used data from the 2003–2018 National Health and Nutrition Examination Survey (NHANES), a nationally representative annual survey of more than 34,000 adults over 20 years of age.
10. Comments from CES Conference
Vitaliy Katsenelson, CFA on the Global Tech Showdown.
Korean companies are really dominating screen technology. LG and several other Korean companies showed off transparent, glass-like LCD screens at CES. Imagine sitting in your self-driving car, and your windows are both regular see-through glass and LCD screens at the same time. Our lives are slowly becoming what we used to see in sci-fi movies, and these screens are definitely a leap in that direction.
CES is a truly global show, with technology on display that spans every aspect of our future. There were a lot of companies from Asia (especially China). In certain pavilions focused on consumer or business hardware, China completely dominated the exhibits. There were quite a few large American companies and many American startups, mostly focused on software (though all their hardware was manufactured in Asia). America still dominates in software.
A few, mainly Chinese, companies were showcasing their humanoid robots. One robot was slowly but accurately moving and stacking boxes in a defined area. Others were roaming more freely and were good at avoiding objects. At this point, these robots have the IQ of a smart dog, an average cat (now cat lovers will love me), or Siri. I bet in a few years this will have changed.
I was only mildly surprised by how few European companies were at the show.It’s a very broad generalization, but Europe seems to be running on fumes of past glory.Western Europe has become a pro at regulation and mastered the redistribution of wealth (activities that don’t help innovation or economic growth), and not much else.Yes, there are exceptions, but that’s the point – they are exceptions.If Europe doesn’t change course, eventually it will run out of fumes.
The beauty of learning is that you don’t always know everything you’ve learned at the moment of learning. Often, you’re just depositing data points that will crystallize into insights at a much later date.I don’t know if CES will become an every-year tradition or something I do sporadically, but it’s definitely fertile ground for learning.
From Marketwatch: Retail traders have been particularly active in the market lately, Mizuho’s Azarm said, which suggests that they were responsible for much of the action in these more speculative names.
Trading volume in the U.S. equity market exploded earlier this week. Nasdaq Composite trading volume rose to nearly 14 billion shares on Tuesday, the highest level on record going back to 1995, according to Dow Jones Market Data. The market wasn’t as active on Wednesday. According to data tracked by Azarm, roughly 55% of activity in the U.S. market over the past two weeks has been tied to platforms typically used by individual investors.
“This is massive. Even during the 2021 meltup, we hardly saw anything this elevated,” he said, referring to the meme-stock frenzy that saw shares of GameStop Corp. Some of the recent surge in trading volume across the U.S. market appeared to be tied to penny stocks, Joe Saluzzi, partner and co-founder of Themis Trading, told MarketWatch. Volume in shares of companies trading at $1 or less has been unusually high lately, he said.
2. Two-Year Rise in S&P Puts It in 93rd Decile of 2-Year Returns
DC Lite Blog Mortgage demand. “Mortgage demand is crumbling. For the week ending January 3, mortgage loan applications for purchase sank 6.6%, the 4th decline in the last 5 weeks. The level of conventional purchase apps lowest since 2011! 30-year FRM back to 7%.”
5. Stocks Most Overvalued in 20 Years Versus Corporate Bonds and Treasuries
Dave Lutz at Jones Trading: US bond markets are signaling that equity bulls may be a little too exuberant now. Stocks are close to the most overvalued against corporate credit and Treasuries in about two decades. The earnings yield on S&P 500 shares, the inverse of the price-earnings ratio, is at its lowest level compared with Treasury yields since 2002, signaling that equities are at their most expensive relative to fixed income in decades.
For company debt, the S&P 500’s earnings yield, at 3.7%, is close to the lowest relative to the 5.6% yield of BBB rated dollar corporate bonds since 2008. “Bonds are less expensive than the ‘risky asset’ stocks,” said Michael O’Rourke, chief market strategist at JonesTrading. “As Treasuries remain under pressure pushing yields higher, equity valuations should adjust lower to remain competitive.”
6. FUBO Stock Story
Via MorningBrew:That moment when the popular kid asks you to bundle 🥰: In an effort to snag subscribers from YouTubeTV, Disney and small-fish sports streamer FuboTV are combining their live television forces to become the second-largest cable dupe in the US, Bloomberg reported yesterday.
Fubo’s stock more than tripled on the announcement. As part of the team-up:
Fubo will retain its name and CEO but will reorganize to absorb Disney’s Hulu + Live TV business (which doesn’t include regular ol’ Hulu). Disney will own 70% of the new-and-improved Fubo and will appoint most of its board.
Fubo will go from 1.6 million North American subscribers—near-bottom of the online television provider totem pole—to a combined 6.2 million with Hulu + Live TV (vs. YouTubeTV’s 8 million).
Fubo will also be able to create a new broadcast service and mini sports/news/entertainment bundles with Disney-owned channels, including ESPN and ABC.
Enemies to lovers: Fubo spent last year as Disney’s opp after it sued to block a joint Warner Bros./Fox Corp./ESPN sports streaming bundle called Venu. Under the new deal, Fubo will settle its lawsuit—which would’ve been heard yesterday—for $220 million plus a $145 million loan from Disney. Venu is now expected to resume its launch.
Separate bedrooms: Once the deal closes in the next 12 to 18 months, you’ll still access Hulu + Live TV from the Hulu app, and Fubo through the FuboTV app—at least for now. “Having two separate platforms today, obviously, it’s not ideal,” said Fubo co-founder and CEO David Gandler
9. Major Country Re-Introduces Strict Covid Rules as Mystery New Chinese virus Spreads
From The Express News: Members of the public are advised to avoid public places and to wear masks in public if they are showing symptoms of Human Metapneumovirus.
The local government has issued guidance encouraging individuals to shun public settings if experiencing symptoms related to Human Metapneumovirus (HMPV) and has recommended mask-wearing in crowded locales after identifying three cases of the respiratory ailment.
In recent developments, three children have contracted the disease: an eight-month-old boy and a three-month-old girl diagnosed in Bengaluru, and a two-month-old patient from Rajasthan currently receiving treatment in AhmedabadDespite the reimplementation of Covid-related mandates, Indian officials have appealed for calm, pointing out that HMPV is an established virus, with cases already reported both domestically and around the world. In fact, media sources indicate that a six-month-old in Kolkata had the illness as early as November.
10. How the Unconscious Mind Guides Our Behavior
From Psychology Today: Buried memories, past relationships, and hidden feelings affect our daily lives.
Key points
It’s easy to dismiss the idea of the unconscious mind as an old theory, but it has real, measurable effects.
The way you feel about yourself, your loved ones, and other people can be influenced by unconscious bias.
Past experiences can have powerful effects on what you remember and how you remember it.
Raise your hand if the concept of the unconscious mind brings to mind a cartoon iceberg, showing 10 percent of its mass above water shining brightly in the sun, and 90 percent underwater, dark, gloomy, and mysterious—something you probably saw in your Psych 101 textbook.
Some people consider the unconscious a discredited notion, a fusty old concept associated with Sigmund Freud, his Viennese couch, and his cigars—something people once believed could only be reached through dreams or fantasies. But no! The unconscious mind is alive and well in each of us, and has powerful effects on our everyday functioning.
Our emotions, our memories, and even the way we see ourselves (and those who are dear to us) are deeply influenced by unconscious beliefs and feelings. These effects have been studied extensively over the past few decades, offering plenty of evidence for the power of the unconscious mind.
Take emotions, for instance. It’s not hard to understand how your feelings can be affected by unconscious beliefs and desires; it’s face valid, as a social scientist might say. (Perhaps you’re romantically interested in someone you believe you shouldn’t want to be with—a conflict that can generate a lot of frustrated energy.)
In fact, every school of thought in the field of psychotherapy—from psychoanalysis to CBT to relational treatment—is premised in large part on the notion that your past experiences will influence the present. (To say it another way, the way you feel now is filtered through your expectations, which are derived from your previous experiences.)
In psychoanalysis, as Jonathan Shedler, Clinical Professor of Psychiatry and Behavioral Sciences at UCSF says, feelings and conflicts from the past can be retained and can “leak out” into the present (Shedler, 2022). “Conflicts involving anger are… commonplace,” Shedler writes. “Some people, especially those with a certain kind of depressive personality, seem unable to acknowledge or express anger toward others but instead treat themselves in punitive and self-destructive ways.”
Personally, I saw this in a former patient, T, a woman with obsessive-compulsive disorder: She repeatedly worried over, checked, and re-checked the leftovers in her family refrigerator. T’s main concern, which came out as therapy progressed, was her chronic worry that her mother’s food had been poisoned, to which she responded by checking the food for any such poison. But in so doing, T became concerned that she might have accidentally put poison in the food herself… which motivated her to go back and check it again.
Beneath her worry, T acknowledged, was the anger she felt toward her mother, which caused T to fantasize about getting revenge with poison and to cover those fantasies with an act ostensibly undertaken to save her mother’s life. T’s compulsive symptoms, as I saw it, represented a defense against her own disavowed anger.
Unconscious knowledge and beliefs can also affect the way you see yourself and the other people around you. Neuroscientists might put this in the context of conceptual activation—which is to say, the notion that within your “neural network,” two different but similar ideas can be lightly activated by each other.
Drew Westen, professor of Psychology and Psychiatry at Emory University, puts it this way: “When we attend to something, our brain simply enhances activation of the same… circuits that represent information that is peripheral to consciousness or even outside of awareness.” Practically speaking, this is the neural mechanism through which new people are experienced through the lens of your memories of people from the past.
Likewise, I saw this effect play out in my own private practice: M, an adult male patient who argued frequently with his romantic partner, told me that his father had abandoned his family when he was a teen. His feelings of betrayal pervaded many of his relationships, and they intruded into our therapy as well: When M cancelled a session just hours before it was scheduled to begin, I urged him to come in to see me later in the day, and told him that I’d have to assess my late-cancellation fee if he did not do that.
M became enraged, accusing me of using him only for the sake of profit and fully discounting our long working relationship. When I told him that the fee that his particular insurance company would pay me for our session was actually less than my standard late-cancellation fee, he stopped mid-rant. The reality of our work together no longer matched the assumptions about human relationships that he’d drawn from his tragic personal experience, and it was difficult for him to see me in a new light.
Unconscious processes can also affect what you remember and how you remember it. Quite often it is possible for one’s memory to record knowledge or experience while leaving no conscious trace of having done so.
People suffering from prosopagnosia—who have lost the ability to recognize different faces—“nevertheless produce differential electrophysiological responses to familiar versus unfamiliar faces” (Bruyer, 1991). And experiments with people whose brains are damaged in the hippocampal region—a part of the brain utilized in creating new memories—suggest that people whose memories are impaired, and who cannot remember events in their own histories, can still somehow retain the emotional significance of those events.
The well-known and well-studied amnesiac Henry Molaison (often referred to as “H.M.”), became unable to form new memories after brain surgery in 1953. After visiting his mother in the hospital, Molaison remembered nothing of the visit, but “was nevertheless able to feel in some vague way that something had happened to his mother.”
He could also learn to carry out new tasks (using procedural memory, which is said to be distinct from the autobiographical memories that Molaison could not make), like writing words upside-down and backward. Although Molaison was able to learn to do this through regular practice, Westen said in 1999 a paper presented at the Annual Meeting of the Rapaport-Klein Study Group, “he had no idea that he had ever seen the task before.”
Even without priming, though, a basic understanding of the unconscious and its effects on human behavior can lead to a new, more fruitful perspective. It’s not always possible to be aware of the influence of the past on your present-day feelings and decisions, but it’s important to acknowledge that this influence is there and that it can run deep.
I’ll close with a telling anecdote about a 1996 study of college students, from the Journal of Personality and Social Psychology, entitled “Positive Illusions About the Self.” It’s probably not too difficult to think of someone suffering from excessively positive illusions in that way; what this experiment suggested was that these people might be unconsciously using these illusions to defend against inner self-doubt.
In the study, Richard Robins and Jennifer S. Beer gathered a large number of first-year college students, matched them according to grades and standardized test scores, and separated out the students who were prone to self-aggrandizement of their academic skills and artificially heightened expectations of their college performance. After two years in school, these self-enhancing students were no more pleased with their performance than the other, more realistic group—but they were 32 percent more likely to have dropped out of college entirely. Unconsciously, perhaps, they had always suspected that their abilities wouldn’t hold up in a college environment, but instead of acknowledging their fears and seeking assistance, they defensively overstated them.
All of us, then, can learn from the example of these students: Understanding the influence of our unconscious minds can offer useful and important information about ourselves, and we ignore this information at our own risk.
Plug Power (PLUG) shares surged for a second straight session after the Treasury Department announced final rules on tax credits for producing clean hydrogen.
The tax credits were made available through the Inflation Reduction Act of 2022. The Treasury Department noted in its statement Friday that the rules underwent “significant changes and flexibilities that address several key issues to help grow the industry and move projects forward,” while adhering to the emissions requirements included in the act.1
Officials explained that the changes “clarify how producers of hydrogen, including those using electricity from various sources, natural gas with carbon capture, renewable natural gas (RNG), and coal mine methane can determine eligibility for the credit.”
9. The Female vs. Male Bachelor Degree Gap is Widening
10. This Money Bias is the Biggest Barrier to Building Wealth
Via CNBC: It’s officially the time of year when you get around to that thing you’ve been putting off. And for millions of Americans, that means coming to grips with their finances.
If you’ve been avoiding funding your 401(k) or opening a brokerage account, you’re not alone. Nearly half of U.S. adults — 48% — report owning no investable assets, according to a 2024 survey from Janus Henderson.
And for many, the reasoning behind the procrastination is simple: Investing is (seemingly) too complex.
It’s a pattern of thinking that, if not overcome, could cripple many young people financially, says Amos Nadler, founder of Prof of Wall Street and a Ph.D. in behavioral finance and neuroeconomics.
“It’s a bias that we call ‘complexity aversion,’” he says. “And it’s the biggest barrier to building wealth for people who are not in markets or who have never invested before.”
Here’s how this cognitive bias could be costing you money.
The importance of overcoming complexity aversion
On a very basic level, people who put off doing essential financial tasks have the same fears as those who can’t bring themselves to start an exercise routine — they don’t want to make a mistake or feel foolish.
Just as someone might say they don’t know the first thing about how all that fancy gym equipment works, a financially avoidant person might say, ”‘Man, this is over my head,’” says Nadler. ”‘I’m just not a numbers person.’”
Feeling this way about money is tied closely with another common cognitive bias known as risk aversion. Essentially, not only are you afraid you’ll screw up, but you fear that you’ll lose out on money you put time and effort into accumulating. And because fear of losing what you have can outweigh the joy of building wealth, you stay put.
The impulse is, “I’ve worked hard for it, and I’m risk averse. I’d rather just have the cash,” Nadler says. “I know inflation is eating away at my cash, but the market so volatile, so I’m scared.”
But the need to start investing — especially among young people — extends beyond the need for your money to keep up with inflation. By procrastinating on this particular financial project, you’re losing what many experts call your most valuable asset: time.
The longer you’re in the market, the more time your money has to grow at a compounding rate. For every year you delay getting started in the market, you potentially shave thousands of dollars off your future net worth.
Play around with an online compounding interest calculator, and you’ll likely discover that sitting on the sidelines for even a few years can have a massive effect on your long-term gains.
Consider a 20-year-old who invests $200 a month into a retirement portfolio that earns an annualized total return of 8%. By the time she’s ready to retire at age 67, she’ll have $1.25 million saved. If she starts at age 25, with all other conditions the same, her total drops to about $830,000. And if she puts things off until age 30, she’d retire with $547,000.
How to move past complexity aversion
So, how do you get started? You could always open a brokerage account or self-fund a retirement account, such as an IRA. Doing so requires just a few easy steps.
But if your employer offers a workplace retirement account, such as a 401(k), opting in may be an even easier way to get started. Designate a percentage of your salary to contribute to the account out of each paycheck and select one or more mutual funds for your portfolio.
These plans commonly hold low-cost, highly diversified options, such as index and target-date funds, which give investors exposure to large swaths of the market.
