Topley’s Top 10 – June 12, 2023

Daily Top Ten No Comments

1. History of Low Volatility Index Reading (VIX)

@Charlie BilelloIt doesn’t appear to be. Looking out 1 to 5 years, average forward returns for the S&P 500 from the lowest 10% of $VIX levels (<12) were not only positive, but in many cases higher than the returns from all other $VIX levels (>12).

https://twitter.com/charliebilello?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor

2. Comparing Historical Bear Markets

From Irrelevant Investor Blog https://theirrelevantinvestor.com

3. Mega-Cap Stocks 8.5% from 2021 Highs

MGC never broke 200-week moving average below in red

www.stockcharts.com

4. 1 Out of 4 Russell 3000 Stocks Have Fallen 75%

Madison FallerGlobal Investment Strategist Elyse AusenbaughGlobal Investment Strategist

https://privatebank.jpmorgan.com

5. Growth vs. “Pure Growth”

https://www.linkedin.com/in/lizannsonders/

6. RPG Pure Growth ETF Negative for 2023

©1999-2023 StockCharts.com All Rights Reserved

www.stockcharts.com

https://finance.yahoo.com/quote/RPG/holdings/

7. Hourly Earnings Smallest Advance in 2 Years

https://www.bloomberg.com/news/articles/2023-06-12/fed-backs-away-from-wages-focus-bolstering-case-for-rate-pause?srnd=premium&sref=GGda9y2L

8. Tesla Profit Margins

Food for Thought: Lastly, here is a look into Tesla’s profit margin:

Source: @crtrud, @BW  Read full article

The Daily Shot Brief https://dailyshotbrief.com

9. Top 10 EV’s 2023-Ranked by Driving Range

Zerohedge-Below are the top 10 EVs for 2023, ranked by their EPA combined driving range.

For further context, we’ve also included price. These values are for the specific trim that achieves the stated range. In some cases, more expensive trims are available but have a lower range (e.g. Tesla Plaid).

Model EPA Combined Driving Range Price*
Lucid Air 516 mi (830 km) $138,000
Tesla Model S 405 mi (652 km) $84,990
Hyundai Ioniq 6 361 mi (581 km) $45,500
Tesla Model 3 358 mi (576 km) $55,990
Mercedes-Benz EQS 350 mi (563 km) $104,400
Tesla Model X 348 mi (560 km) $94,990
Tesla Model Y 330 mi (531 km) $52,990
GMC Hummer EV Pickup 329 mi (529 km) $110,295
Rivian R1T 328 mi (528 km) $74,800
BMW iX 324 mi (521 km) $87,100

Note that the EV market is rapidly evolving, and the data in this table has a limited shelf life. For example, Rivian is releasing a battery option dubbed the “Max pack” which promises up to 400 miles, but is not yet EPA rated.

https://www.zerohedge.com/technology/these-are-10-longest-range-evs-2023

10. Longevity doctor shares the No. 1 diet he follows to ‘beat diseases and live longer’: It’s a ‘unique blend’ of foods

Dr. William Li, Contributor@DRWILLIAMLI

As a doctor and food scientist, I’ve spent 20 years studying how our diets can help us beat diseases and live longer.

I’ve always taken a natural food-based approach, and much of my diet is inspired by a unique blend of two of the greatest food cultures in the world: Mediterranean and Asia. I call it the “MediterAsian” diet.

Both the Mediterranean region and Asia have areas known as Blue Zones, where people age better and are overall healthier.

Here are six staples of MediterAsian eating that can help you boost immune health and stay healthy:

1. Fruits

Apples: An apple a day might keep the doctor away, but three apples a day can help reduce body fat. They’re versatile, great for salads, and delicious as a snack or baked in a dessert.

Pears: Pears are an excellent source of dietary fiber (a medium-sized fruit has 6 grams) for gut health.

Pro tip: to find a ripe pear, hold the fruit by its base with one hand, and with the other, pinch the flesh at the bottom of the stem. If the flesh gives slightly, it’s ready to eat.

Grapefruit: Grapefruit flesh contains disease-fighting flavonoids and vitamin C, which is a powerful DNA-protecting antioxidant and anti-inflammatory substance.

Avocados: The fats in avocados are healthy monounsaturated fatty acids, which can reduce blood levels of bad LDL cholesteroland lower your risk of heart disease.

2. Vegetables

Broccoli: Broccoli is potent in sulforaphane, which protects stem cells, improves gut health and metabolism, and amplifies immune responses.

Soy: Soy is eaten as a bean, made into tofu, fermented, and can even be transformed into wine. It has been associated with lowering the risk of cardiovascular disease by 20% and diabetes by 23%.

Carrots: An ancient root vegetable that originated in Southwest Asia, carrots are a good source of dietary fiber for gut health. A half cup of grated carrot has 2 grams of fiber.

Mushrooms: Mushrooms contain a soluble fiber called beta-D-glucan, which stimulates defenses to grow new blood vessels needed for healing wounds. At the same time, it can prevent harmful blood vessels from feeding cancers.

3. Legumes

White beans: Beans are a nutritious food that can help reduce cardiovascular risk factors by lowering blood cholesterol levels. They also contain valuable nutrients like iron, zinc, magnesium and folate.

Lentils: Lentils are a classic legume in Mediterranean cuisine. A half cup of dry lentils contains 18 grams of fiber, which is more than half of the recommended daily intake for men and women.

4. Bottles and jars

Extra virgin olive oil (EVOO): EVOO is the most desirable form of olive oil. The “extra virgin” refers to oil that is not refined, and as a result, contains tiny bits of ripe olives. The oil and bits are the source of potent polyphenols that activate health defenses.

When I buy EVOO, I scan the label on the bottle to identify which olive varietals were used. Many are made from a variety of olives, which can taste very nice, but I prefer monovarietal oil, which is less likely to be diluted with cheaper oils.

Apple cider vinegar: Studies have found that the acetic acid in apple cider vinegar reduces body fat, improves insulin sensitivity, and lowers blood sugar.

Fermented bean paste: Stroll through the middle aisles of any Asian grocery store, and you’ll see many kinds of fermented bean paste. Made from fermented soy, they contain bioactives that fight fat cells.

5. Seafood

Salmon: Salmon is high in omega-3s, which get absorbed into fat cells and are metabolized. Then they create proteins that are released like cellular firefighters into the surrounding fat mass to extinguish the inflammation caused by fat.

Roe: If you’re exploring unique tastes, you must try the roe (eggs) of certain seafoods. Roe is naturally packed with omega-3s, so it takes remarkably little to get a major dose of healthy fats.

Sardine: Sardines are a time-honored seafood of the Mediterranean. They contain bioactives that can improve metabolism and lower blood cholesterol.

6. Liquids

Matcha tea: Matcha is a green tea known for its vivid green color. Studies have found that matcha can counter the metabolic effects of a high-fat diet.

Oolong tea: A study by the U.S. Department of Agriculture showed that drinking six cups of oolong tea three days a week improved overall metabolism.

Dr. William Li, MD, is a physician, scientist and the New York Times bestselling author of“Eat to Beat Your Diet: Burn Fat, Heal Your Metabolism, and Live Longer”and“Eat to Beat Disease.”His groundbreaking work has led to the development of more than 40 new medical treatments and impacts care for more than 70 diseases including cancer, diabetes, blindness, heart disease and obesity. Follow him on Twitter@drwilliamli.

https://www.cnbc.com/2023/06/10/mediterasian-diet-is-the-no-1-way-to-beat-diseases-and-live-longer-says-doctor-and-food-scientist.html

Topley’s Top 10 – June 09, 2023

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1. Historical Data on S&P 500 Rallying 20% Off Low

What Happens when the S&P enters a new “Bull Market”? – 13 times stocks 20% off lows and a yr later higher 12 times and up 17.7% on avg.  6 months later up 10% on avg.  3 times made new lows, 2x in tech bubble and once in Financial Crisis, Ryan notes

2. Small Caps had First Big Outperformance of Year

The last few days have seen Small Caps up 7% and Nasdaq down 1%-Zerohedge

https://www.zerohedge.com/markets/big-tech-bonds-bullion-battered-billionaire-druckenmiller-warns-more-shoes-drop

3. Tech Also Leading Small Cap Sectors

Nasdaq Dorsey Wright

4. One-Quarter of Small Cap Companies Not Generating Enough Cash to Cover their Debt Service

Jack Ablin Cresset We estimate that about one-quarter of the Russell 2000 companies, representing nearly one million jobs, are currently not generating enough cash flow to cover their debt service payments. Unless interest rates suddenly turn lower, these companies will either default or face debt restructuring and the banks will have to write down the loans.

https://cressetcapital.com/post/taking-the-pulse-of-credit-conditions/

5. Major Homebuilders Breakout to New Highs

Toll Brothers New Highs

NVR New Highs

6. Lumber Makes New Lows as Major Homebuilders Make New Highs?

92% of Homes in U.S. are Wood Framed….this chart compared Lumber to Homebuilders ETF XHB…straight down.

7. Consumer Discretionary ETF Bullish Action

50day thru 200day to upside in XLY.

8. Netflix Closes Above 200-Week Moving Average

First close above in 18 months.

9. Global M&A 500 Deals to Less than 200

M&A activity has declined over the past two years, and this trend will continue, driven lower by central banks increasing the costs of capital as they continue to fight inflation.

Torsten Slok, Ph.D.Chief Economist, Partner

10. The Being Outside Vaccine-Scott Galloway

No single thing caused our loneliness crisis, and there is no one remedy. However, stepping outside is a step in the right direction. Being outside offers a wealth of positive benefits: It lowers blood pressure and heart rate, enhances immune function, and decreases the likelihood of diabetes and cardiovascular mortality. Exposure to sunlight increases testosterone levels in men, while trips to the park improve health outcomes and create resilience in children who’ve experienced trauma, abuse, and poverty. Spending two hours per week outside has been shown to significantly increase health and happiness. Some doctors prescribe time spent in nature. The Swedes have a word for this, friluftsliv, “living close to nature,” and they offer tax breaks for companies with policies that encourage it. The biggest threat to this lifestyle? The crowding out of the outside world by our devices, consumed mostly in the inside world.

https://www.profgalloway.com/yes/

Topley’s Top 10 – June 07, 2023

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1. Bullish IPO ETF Chart

One of the victims of 2022 speculative crash….IPO ETF showing life…50day thru 200day to upside….New 2023 High.

IPO ETF Chart breaking above a downtrend line going back to 2021

2. Yesterday….The Market Came Within a Few Basis Points of This Record Going Back to 2008

Marketwatch The last time the Russell 2000 gained more than 2.5% and the Dow finished the day lower was on Oct. 10, 2008, according to Dow Jones Market Data. By William Watts

Yesterday Russell 2000 +2.63% vs. Dow +3 basis points.

https://www.marketwatch.com/story/small-cap-stocks-are-surging-tuesday-as-broader-u-s-market-sleeps-heres-why-83b78016?mod=search_headline

3. Russell 2000 Small Cap Returns Post S&P 500 Coming Out of Bear Market

Dorsey Wright We are working with a limited testing history here, as there simply have not been that many bear market environments for the S&P 500 since the origin of our Russell 2000 data in December 1978. Still, the data adds to the unique story the Russell 2000 has shown over the last eight months. Forward returns for RUT following the conclusion of the S&P 500 bear market have been mixed. Some periods show sharp upside movement, like 1982, 2009, and 2020. Others show more muted movement or weakness. Those returns also do not seem to be dependent on the extent of the rally leading up to the bear market conclusion.

4. America is Undergoing a Factory Construction Boom

https://twitter.com/SteveRattner

5. Last Year’s Laggards Chart

Capital Group

https://www.capitalgroup.com/ria/insights/articles/big-tech-turnaround-can-it-continue.html?sfid=238885404&cid=81002566&et_cid=81002566&cgsrc=SFMC&alias=A-btn-BigTechRally

6. NVDA Still Well Below Revenues of Other FAANG Stocks

Bespoke-Recent high flyer and trillion dollar market cap club hopeful, NVIDIA (NVDA), may be one of the largest stocks by market cap in the S&P 500, but it is far from the largest in terms of revenues.

https://twitter.com/bespokeinvest

7. Argentina ETF Close to Double Off Bottom

Argentina has upcoming election that has free market conservatives leading.

MELI 21% of ETF

https://www.globalxetfs.com/funds/argt/

8. Battery Electric Vehicles…Winner and Losers

The Global Adoption Of Battery Electric Vehicles Is Gaining More Traction

ARK Invest_Illustration_Sam Korus_Final_Circle 400 px

By Sam Korus | @skorusARK
Director of Research, Autonomous Technology & Robotics

Battery electric vehicle (BEV) sales surpassed 10% share of global light vehicle sales in the first quarter of 2023, as shown below. For the past three years, BEV adoption during the first quarter has lagged that in the fourth quarter, perhaps because of Chinese New Year. This year, however, BEV share broke that seasonal trend.

Not all automakers have participated in the upside. Tesla, BYD, VW, and GAC Motor, for example, accounted for ~75% of the year-to-date BEV sales growth on a year-over-year basis through April 20231—even though they account for only ~48% of total sales—while ~40% of automakers reported BEV sales declines. Macroeconomic headwinds seem to be separating the winners from the losers.

Source: Irle, V. 2023. “Global EV Adoption is on steady increase.” Twitter. Based on data from EV-volumes.com, as of June 2, 2023. https://twitter.com/viktorirle/status/1664633210158850049

https://ark-invest.com/research-center/

9. Interest Only Loans on Commercial Real Estate

10. It’s Terribly Hard to Change Our Minds

The Daily Stoic What new information could there have possibly been for Seneca, in 62 AD, when he finally broke with Nero? Nero had been deranged for years (as detailed in James Romm’s excellent book Dying Every Day). He had been blood thirsty for years, unfit for leadership since almost the beginning. Seneca knew better from the beginning–the man was a philosopher and historian and could not have been deceived for long.

​We can sit here and judge. We can shake our heads in bafflement. But we really shouldn’t. The fact that Seneca eventually worked up the courage to participate in the Piso Conspiracy to unseat his former boss shouldn’t be dismissed as “too little too late” because later is better than never.

Because not everyone did come around. In fact, most people never do–then or now. When we are wrong, when we’ve had our blinders on, when we’ve been implicated in something, even complicit in it, it’s so terribly, terribly hard to change our minds. It is hard to admit error, harder still to admit guilt, and the hardest to take steps to rectify it.

Instead of condemning those who have the fortitude, the awareness, the conscience (or even the desperate motivation of last-minute self-preservation), we should celebrate it. We should make soft landings for them, so as to encourage future folks. We should, as Marcus Aurelius tried to do, forgive. We should sympathize and realize how easily we could be in their position. We should take note of their example and make sure we are learning from it in our own lives.

Judgment is easy. Changing is hard–hard enough that late is still better than never.

https://dailystoic.com/

Topley’s Top 10 – June 06, 2023

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1. The Equity Risk Premium Chart in Unchartered Waters

The ERP is defined as the difference between the expected earnings yield and the yield on safe Treasurys, with a higher number meaning investors are being compensated more for putting money in stocks.  He said more than 100% of the reset on PE last year was due to higher 10-year Treasury yields. “Historically, that ‘moment of recognition’ for the market typically occurs when the forward NTM [next 12 months] EPS forecast for the S&P 500 goes negative on a y/y [year over year] basis.” The expected liquidity drain from the debt ceiling passage may help push this process along, he said. By Barbara Kollmeyer Marketwatch

https://www.marketwatch.com/story/morgan-stanley-sees-an-earnings-wipe-out-ahead-for-wall-streets-unloved-stock-rally-dec4b3be?mod=home-page

2. Non-Profit Tech Stocks Outperforming Since May 1

https://dailyshotbrief.com/

3. Record Shattering Inflows into Tech Funds

Dave Lutz Jones Trading Wall Street hasn’t been this bearish on the stock market in more than a decade. Tech shares are a different story – Hedge funds and other speculative investors have built up a big bet that the S&P 500 will decline, marking their most bearish positioning since 2007. At the same time, they are preparing for a rally in the technology-focused Nasdaq-100, with net bullish wagers in recent weeks approaching the highest levels since late last year, WSJ reports.

4. Crude Oil Charts

Crude oil held previous 2023 lows

Crude Oil held above 200-week moving average

www.stockcharts.com

5. History of VIX Levels

Nasdaq Dorsey Wright The below chart shows the average level of the VIX in each calendar year from 1990 forward. As we can see, there have been a few different environments of either amplified or reduced volatility over the last 20+ years. After seeing average levels north of 20 in 1990, the VIX retreated to an average level south of 15 from 1993 through 1995. We then rose in several consecutive years to an average level north of 25 from 1998 through 2002, peaking at almost 28 in 2001. Volatility then declined through 2006, before ramping up again at the onset of the financial crisis in 2007. By 2012, volatility from that crisis had largely subsided, and we saw eight consecutive years of an average VIX level south of 20. While we are not quite halfway through 2023, we have seen this year’s average VIX level drop below 20 yet again, potentially suggesting another period of dampened volatility could be around the corner. https://www.nasdaq.com/solutions/nasdaq-dorsey-wright

6. Follow-Up to Yesterday’s Private Credit Charts

Bloomberg-Defaults Rising Slowly.

https://finance.yahoo.com/news/private-credit-poised-multi-trillion-052540561.html

7. The Fed Expansion During Banking Stress Already Reversed

8. Commercial Real Estate Loan Concentration at 700+ Banks

Torsten Slok, Ph.D. Chief Economist, PartnerApollo Global Management. Two years ago, the number of banks exceeding the FDIC’s CRE loan concentration guidelines was about 300. Today there are almost 700, see chart below.   In other words, US banks have become much more vulnerable to a decline in commercial real estate prices.

Our latest credit market outlook is attached.

9. Baseball Shot Clock Working

www.chartr.com

10. The Four Attitudes of Calm

Research shows that four attitudes can dampen the fires of excessive stress. George S. Everly, Jr. PhD, 

KEY POINTS

  • Excessive stress arises from the amygdala within the brain.
  • Research indicates it is possible to dampen overactivity in the amygdala by changing attitudes.
  • Adopting the “four attitudes of equanimity” can reduce stress and change your life for the better.

Equanimity is a sense of calm and composure. It’s the polar opposite of stress. Myriad posters, t-shirts, and greeting cards espouse the virtues of staying calm, especially when adversity strikes. Actually doing so remains a challenge for many of us. It may be that adopting four fundamental attitudes can help you dampen, even extinguish, the fires of excessive stress and develop the equanimity so many seek but so few actually achieve.

The Raging Inferno

So, from whence do the fires of human distress arise? With the risk of oversimplification, the anatomical center of human stress is the limbic system. In 1952, Paul MacLean coined the term “limbic system” to refer to the functionally integrated system responsible for human emotion. Located deep within the center of the brain, it consists of the hypothalamus, amygdala, thalamus, and hippocampus. Of these four components, the amygdala is of greatest interest to our discussion. The amygdala consists of two almond-shaped anatomic nexuses. In addition to regulating autonomic physiology in everyday life, the amygdala also gives rise to the “fight or flight” response. It serves to alert and arouse the body in instances of fear, anger, aggression, panic, and traumatic stress. The amygdala is believed to be the primary culprit in the vast majority of stress-related physical illnesses. So, you can see that keeping the amygdala from becoming a raging inferno of hyperactivity would be desirable. But how?

Activate the “Cut-off Switch”

In his pioneering research, Herbert Benson (Benson, Beary, & Carol, 1974) asserted that the consistent practice of meditation could dampen the activity of the amygdaloid-based “fight or flight” response and reduce the likelihood of its over-reacting. Subsequent research confirmed his assertions (Everly & Lating, 2019). But perhaps there are easier and even quicker ways to dampen the flames of an overheating amygdala.

What’s the best way to put out a fire? Answer: Deprive the fire of fuel. What’s the best way to stop a broken waterline from flooding your house? Answer: Close the main water supply line. Pretty simple, right? Wouldn’t it be nice if there was a way to cut off that which fuels the fires of stress and anxiety? Well, there is. Research shows that attitudes can regulate stress and anxiety. By adopting four specific attitudes you can dampen the activity in brain regions from which stress and anxiety arise, especially the amygdala.

Four Attitudes of Equanimity

Research has shown that there are at least four attitudes that you can invoke that serve to reduce activity in the amygdaloid nuclei. Those are the attitudes I refer to as the “four attitudes of equanimity” (calm). They are: gratitude, forgiveness, acceptance, and hope. Functional neuroscience has shown these attitudes activate the angular gyrus, the anterior cingulate cortex, and prefrontal cortices, all of which have the ability to dampen acute arousal in the amygdala almost instantaneously. In doing so, they can provide you with an opportunity to pause, reflect, reassess, and perhaps react differently. More specifically, gratitude mitigates loss and envy. Forgiveness extinguishes anger and vengeance. Acceptance can quash worry, frustration, and misdirected protestation. And hope offers transcendence.

https://www.psychologytoday.com/us/blog/when-disaster-strikes-inside-disaster-psychology/202306/the-four-attitudes-of-calm

Topley’s Top 10 – June 05, 2023

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1. VIX Volatility Index Breaks Lower to Pre-Covid Levels

www.stockcharts.com

2. The Nonbank Financial System Controls $239 Trillion…..Half the World’s Financial Assets

Barrons-By Reshma Kapadia The nonbank financial system now controls $239 trillion, or almost half of the world’s financial assets, according to the Financial Stability Board. That’s up from 42% in 2008, and has doubled since the 2008-09 financial crisis. Postcrisis regulations helped shore up the nation’s biggest banks, but the restrictions that were imposed, coupled with years of ultralow interest rates, fueled the explosive growth of nonbank finance.

https://www.barrons.com/articles/shadow-banks-account-for-half-of-the-worlds-assetsand-pose-growing-risks-8f4b5961?mod=past_editions

3. Deal Funding in AI Space

Madison Faller and Jonathan Linden  JP Morgan Private Wealth

4. Sectors Drawdowns from Prior Highs

Equities: This chart shows sector drawdowns from prior highs.

Source: @bespokeinvest

5. More Data on Bank Insiders Record Buying of own Stocks

Zero Hedge Another measure of insider sentiment is the buyers-to-sellers ratio, which compares unique insider buying to unique insider selling. The average quarterly ratio for banks since 2011 has been 1.8 to 1, according to the report. So far in the second quarter, the ratio is at a record high of 14.7 to 1.

“Insiders in this group are expressing a strong belief that the regional-banking system as a whole is sound, that there’s not a danger of a wide-scale collapse,” Ben Silverman, director of research at VerityData, said in a Bloomberg interview.

https://www.zerohedge.com/markets/small-bank-insiders-are-buying-shares-their-companies-near-record-pace

6. Heavy Truck Sales Not Signaling Recession

by Calculated Risk on 6/02/2023 03:08:00 PM

Note: “Heavy trucks – trucks more than 14,000 pounds gross vehicle weight.” Heavy truck sales declined sharply at the beginning of the pandemic, falling to a low of 308 thousand SAAR in May 2020.  

Heavy truck sales were at 558 thousand SAAR in May, up from 548 thousand in April, and up 20% from 464 thousand SAAR in May 2022.    Usually, heavy truck sales decline sharply prior to a recession.   Sales were strong in May.

Found at Abnormal Returns Blog. www.abnormalreturns.com

7. The Best Performing Stocks Over the Last 30 Years

@Charlie Bilello

8. Investments in Solar Power Eclipse Oil for First Time

WSJ Will Horner More than $1 billion a day is expected to be invested in solar power this year, which is higher than total spending expected for new upstream oil projects, the IEA said in its annual World Energy Investment report.  https://www.wsj.com/articles/investments-in-solar-power-eclipse-oil-for-first-time-c7bc6707#:~:text=More%20than%20%241%20billion%20a,annual%20World%20Energy%20Investment%20report.

Solar ETF bearish chart.

www.stockcharts.com

9. Estimated Office Space Occupancy

https://ritholtz.com/

10. Common causes of bad decisions: Farnum Street Blog

1. Assumptions based on small sample sizes 
2. Wanting the world to work the way we want rather than the way it does 
3. Conforming to expectations/authority/group (social default) 
4. Blindness to large trends (blind spots) 
5. Not asking, “and then what?”

www.fs.com