Topley’s Top Ten – January 3, 2020

1.Who was Qassem Soleimani, and why is his death a major development in U.S.-Middle East relations?

An Iranian carries the portraits of Iran’s Supreme Leader Ayatollah Ali Khamenei and Gen. Qassem Soleimani, left.


Qassem Soleimani, leader of the foreign wing of Iran’s Islamic Revolutionary Guard Corps, was killed in a U.S. airstrike at Baghdad’s international airport Friday, local time, escalating long-brewing animosities between Tehran and Washington.

President Donald Trump authorized the airstrike that killed Soleimani, a top Iranian general who is considered one of the most revered military leaders in the Islamic Republic: “At the direction of the president, the U.S. military has taken decisive defensive action to protect U.S. personnel abroad by killing,” the U.S. Department of Defense said in a statement.

In a tweet, Iran’s Foreign Minister Mohammad Javad Zarif described the strike that killed the general as an act of international terrorism: “The US’ act of international terrorism, targeting & assassinating General Soleimani—THE most effective force fighting Daesh (ISIS), Al Nusrah, Al Qaeda et al—is extremely dangerous & a foolish escalation,” he wrote on Twitter. “The US bears responsibility for all consequences of its rogue adventurism,” he said.

The US’ act of international terrorism, targeting & assassinating General Soleimani—THE most effective force fighting Daesh (ISIS), Al Nusrah, Al Qaeda et al—is extremely dangerous & a foolish escalation.

The US bears responsibility for all consequences of its rogue adventurism.

The U.S. has said that the assassination of Soleimani was an attempt to deter attacks against U.S. embassies, service members or diplomats.

Here’s why the death of the general is particularly significant in the intensifying tensions between the U.S. and Iran.

Who was Soleimani?

“He’s probably the most powerful figure that is generally unknown outside Iran and the Middle East. He’s essentially Iran’s viceroy for Iraq,” Jim Phillips, Middle East analyst for conservative think tank the Heritage Foundation, was quoted as saying in a 2015 interview with NBC News.

Soleimani rose to prominence during the 1980–’88 Iran-Iraq War, and by 2013 had become one of Iran’s most important figures.

Soleimani was named major general of the Quds Force in 1998 and ran it until his death. The Quds Force has no equivalent in the U.S. but has been described as “analogous to a combined CIA and Special Forces,” according to an article in the New Yorker back in 2013. The Quds Force, which is estimated to consist of about 20,000 personnel, has been designated a terrorist group by the U.S. since 2007, according to reports.

The New Yorker article also described Soleimani as “ the single most powerful operative in the Middle East today,” citing former CIA officer John Maguire.

Reports have had also described Soleiman as second to only the Supreme Leader Ayatollah Ali Khamenei in power in Iran.

In fact, Khamenei has referred to Suleimani as “a living martyr of the revolution,” and last March expressed hope that he would die as one.

“I hope that Allah the Exalted will reward and bless him, that he will help him live a blissful life and that he will make his end marked by martyrdom,” Khamenei said as he awarded Soleimani the Order of Zulfaqar — the highest miliary honor in Iran that was established in 1856 and had not been awarded since 1979 until it was revived to honor the Quds Force commander.

To some U.S. leaders, Soleimani has been viewed as a shadowy figure. Secretary of State Mike Pompeo referred to him as “dangerous as Islamic State leader Abu al-Baghdadi,” who was killed in a U.S.-led raid in northwestern Syria in late October.

“Qassem Soleimani has the blood of Americans on his hands, Bret, as does the force that he leads, and America is determined each time we find an organization, institution or an individual that has taken the lives of Americans, it is our responsibility,” Pompeo told Fox News’s Bret Baier in an interview back in April 2018, after the U.S. designated Iran’s Revolutionary Guards Corps a foreign terrorist organization, marking the first time that the U.S. has labeled an entity of another government as a terrorist organization.

It isn’t clear how Iran will respond to the death of the revered leader, but analysts and observers on Friday were speculating that Tehran would consider Soleimani’s death an act of war.

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Topley’s Top Ten – January 2, 2020

1.334 Out of 500 S&P Companies Shrank Shares Thru Buybacks This Year.

Yet unprecedentedly low interest rates have allowed the private and public sectors to borrow cheaply and seemingly without cares. U.S. corporations have been able to issue bonds to repurchase shares, arbitraging the cheaper cost of debt versus equity capital, as Nicholas Colas, co-founder of DataTrek Research, points out in a research note. Some 334 of the S&P 500 companies shrank their shares outstanding in the past year, with 115 of them cutting their share count by at least 4%. The U.S. government, meanwhile, runs a trillion-dollar annual budget deficit with the economy at full employment, and the markets barely notice.

Count on This: Next Year’s Financial Markets Won’t Be So Nice-Randall W. Forsyth

PKW Buyback ETF +31% vs. S&P 28% 1 Year

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Topley’s Top Ten – December 30, 2019

1.Ten Years Into Expansion Discretionary Spending for Consumers and Corporates is Still Below Historical Average.

Check out Torsten Slok on CNBC Monday

I will be on CNBC tomorrow at 10 am to discuss the outlook for markets in 2020. This expansion has been characterized by an extreme degree of caution among consumers and corporates. Because of the experience in 2008-2009, households and companies have been hesitant to spend too much money and take too much risk. As a result, ten years into this expansion, discretionary spending for consumers and corporates is still below its historical average. As the chart below shows, this is highly unusual compared with previous cycles. The lack of willingness to spend on consumer durables and corporate capex is also the reason why this expansion has been so weak. And it is also the reason why this expansion could continue for many more years; we are simply less vulnerable to shocks in 2020 because there are few imbalances in the economy, see again chart below and here and here.


Let us know if you would like to add a colleague to this distribution list.

Torsten Sløk, Ph.D.
Chief Economist
Managing Director

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Topley’s Top Ten – December 27, 2019

1.Since 1928 the S&P is Up Just Over 50% of Trading Days But that Translates to a 18,000% Return.

Happy holidays from Bespoke!  Please see the bottom of this email for a great membership deal.  Also, tune in to CNBC between 12:15 PM ET and 1:15 PM ET today to see Bespoke’s Paul Hickey.

52.3%.  That’s the percentage of all trading days throughout the S&P 500’s history since 1928 that have been up days for the market.  Even though just barely more than 50% of trading days have been up days, it has translated into a price change of 18,157% for the S&P 500.

Casinos are wildly profitable using a similar format.  They only have to win slightly more than 50% of all bets made to make a tremendous amount of money.  The beautiful thing about investing in the stock market is that you get to be the casino for once!

2019 has been a great year for the S&P 500 with a gain of more than 28%.  As shown below, the index only needed to trade higher on 59.3% of days to generate a 28% gain.  But positive days occurring 59.3% of the time in a trading year is actually very rare.  Only five other years since 1928 have seen up days more consistently with the most recent coming in 1995 when 61.9% of all trading days were positive. 

(Past performance is no guarantee of future results.)

Our 2020 Outlook report is a must-read heading into the new year.  Really. 

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Bespoke Investment Group

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