Topley’s Top 10 – August 12, 2021

1. Stocks Trading Over 20x Price to Sales Well Above 1999-2000

2. Stocks Expensive But…Almost 80% of Companies Beating Earnings.

Dave Lutz at Jones Trading-Bespoke notes the beat rate for top-line sales continues to break all prior records. 78.66% of companies have beaten consensus sales estimates over the last 3 months.

3. Big Divergence in Breadth Nasdaq….

Chart of the Day

There’s a big spread among the Nasdaq stocks.
(sentimentrader.com)

4. Job Openings in America Continue to Explode

The most impressive labor market chart around

Myles Udland

The number of jobs open in America continues to explode.

On Monday, the Job Openings and Labor Turnover Survey (JOLTS) for June showed some 10.1 million jobs were open at last check, a record for the series which dates back to 2001. This marks the fourth straight month this series has turned in a record high.

And amid this rise in employment vacancies, a chart showing this surge in demand for workers serves — in our view — as the best distillation of the current state of the labor market.

There were more than 10 million jobs open at the end of June, the fourth-straight month this series hit a record high. (Source: FRED)

https://news.yahoo.com/the-most-impressive-labor-market-chart-around-morning-brief-090419105.html

5. Number of Baby Boomers Retiring Doubled in 2020..Shrinking Labor Force

Demographics

The working-age population—defined as those age 15 to 64—declined in 2019 for the first time in decades, then again in 2020. Blame it on the boomers. While the oldest of Americans born between 1946 and 1964 reached retirement age a decade ago, members of the generation exited the workforce at a faster rate during the pandemic. Boomer retirements more than doubled in 2020 from the previous year, according to an analysis from the Pew Research Center. Some quit work sooner than planned, taking advantage of surging stock prices and home values; others did so under duress, having lost jobs in the recession and facing little prospect of finding employment again. Powell has said early retirements are one reason companies are having trouble finding qualified workers.

Good Full Read Bloomberg-The Mystery of the Missing Workers Explained… By Olivia Rockeman
https://www.bloomberg.com/news/features/2021-08-05/why-is-u-s-labor-force-shrinking-retirement-boom-opioid-crisis-child-care?sref=GGda9y2L

6. Steel About to Make New Highs on Infrastructure Bill

SLX-Steel ETF

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www.stockcharts.com

7. July Inflation Numbers Coming…Look Back on 12 Month

https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category.htm

8.White House to call on OPEC to boost oil production as gasoline prices rise

Pippa Stevens@PIPPASTEVENS13

Ylan Mui@YLANMUI

KEY POINTS

The White House will call on OPEC and its allies to increase oil production as gas prices rise.
The Biden administration said OPEC+’s decision to gradually ease production cuts is “simply not enough” during a “critical moment in the global recovery.”
The national average for a gallon of gas stood at $3.186 on Tuesday, up roughly $1 over the last year.
The White House is also calling on U.S. regulators to scrutinize prices at the pump.

https://www.cnbc.com/2021/08/11/as-gas-prices-rise-white-house-says-opec-action-is-simply-not-enough-calls-for-ftc-scrutiny.html

9.Inflation Probably Cooled Off in July. It’s Still a Problem.–Barrons

Lisa Beilfuss

Customers shop for produce at a supermarket on June 10, 2021 in Chicago, Illinois. Inflation rose 5% in the 12-month period ending in May, the biggest jump since August 2008. Food prices rose 2.2 percent for the same period.
Investors will get the latest read on inflation Wednesday morning, when the Labor Department releases its July Consumer Price Index.

Economists across Wall Street expect prices to have risen at a slower pace than in June, when the CPI was much hotter than expected. Those polled by FactSet anticipate a 5.3% rate of increase versus a year earlier, down a tenth from the June gain. From a month earlier, economists see a 0.5% rise, down from June’s 0.9% pace. Excluding the impacts of food and energy, expectations are for increases of 4.3% and 0.4%, respectively.

Slowdowns in the rapid rates of price inflation would be welcome, especially after June’s report blew out expectations. Investors, however, shouldn’t be overly relieved at readings at or close to consensus.

“A 0.5% [total CPI reading] may give off the air of inflation slowing down but we caution not to read it that way,” says George Goncalves, head of U.S. Macro Strategy at MUFG. ”If 0.5% and 0.4% is where numbers come in at, that would add to a string of elevated monthly prints that started in April and would be more confirming of a trend all else equal,” he says.

Key to interpreting the latest CPI numbers will be the shelter component. Economists say such prices—which account for about a third of the CPI basket—are starting to build as home prices continue to boom and rents follow. Shelter costs are slower-moving and not temporary, meaning any further increases threaten the notion that rising inflation is transitory. “If one annualizes the 3-month run rate of CPI shelter we are back to levels last seen during 2004-06,” says Goncalve.

Also important to watch: components that are most impacted by the reopening, such as used cars and travel prices. Many Federal Reserve officials have continued to dismiss the string of rapid increases, both longer and higher than predicted, as fleeting because of reopening bursts. The surge in car prices, connected to the chip shortage, is expected to dissipate. The extent to which overall inflation is driven by reopening areas—and the extent to which price inflation bleeds into other areas—will help determine whether the “transitory” narrative remains viable.

https://www.barrons.com/articles/inside-a-housing-market-that-ignored-the-pandemic-51628523736?mod=article_inline

10. Want to Improve Your Career? Become an Uncertainty Killer

Posted August 10, 2021 by Nick Maggiulli

There’s lots of great career advice out there.
Follow your passion. Find a mentor. Expand your network
Unfortunately, advice like this tends to be too abstract to be useful most of the time. For example, let’s say you find a mentor. How do you know if they are the right mentor? You don’t. The same can be said for lots of other career advice out there. Sometimes it’s just too fuzzy to be helpful.

To counteract this, I want to provide you with a singular concrete idea that you can use in your career right away. More importantly, this idea will apply to anyone who works with other people. Whether you have a boss to support, clients to impress, or individuals to manage, this specific advice will work wonders for you and your career. What is it?

Reduce uncertainty for others as much as you can.
Become an uncertainty killer. That’s it.

I guarantee that if you can make other peoples’ lives more certain, they will sing your praises. You will build trust at every turn and create allies wherever you go. People may even publicly call you “a machine” and impart positive attributes to you that you may not actually have.

Why does this work? Because people hate uncertainty. And there’s overwhelming evidence to demonstrate this.

For example, a University College of London study found that people were far more stressed when there was a chance of getting an electrical shock than when they knew one was coming with confidence. Robert Sapolsky relates a similar finding in Why Zebras Don’t Get Ulcers:

During the onset of the Nazi blitzkrieg bombings of England, London was hit every night like clockwork. In the suburbs the bombings were far more sporadic, occurring perhaps once a week. Fewer stressors, but much less predictability. There was a significant increase in the incidence of ulcers during that time. Who developed more ulcers? The suburban population.

Both of these stories illustrate how the uncertainty around a stressor can cause more harm than the stressor itself. This is why reducing uncertainty creates so much value for people. As Rory Sutherland stated in Alchemy:

The single best investment ever made by the London Underground in terms of increasing passenger satisfaction was not to do with money spent on faster, more frequent trains – it was the addition of dot matrix displays on platforms to inform travelers of the time outstanding before the next train arrived.

Why do you think companies like Uber, Amazon, and McDonald’s have so many people that use their services? Because they all reduce uncertainty in their given markets. Uber reduces the uncertainty around finding a ride, Amazon reduces the uncertainty around getting a package, and McDonald’s reduces the uncertainty around how their food will taste. You may not like any of these products/services, but they are all extremely certain in their delivery.

You could make the same argument for Dominos and its now famous pizza tracker (an uncertainty killer of the highest degree):

But instead of talking about reducing uncertainty in abstract terms, let’s look at a real world example of how you can minimize uncertainty in your career.

Reducing Uncertainty in Practice

Imagine it’s Monday morning and your boss comes to you and asks you to do a project that they want finished during the week. After briefly discussing the details you get to work. Two days later (on Wednesday) you get an email from your boss saying, “Have you finished the project that we discussed on Monday yet?”

Assuming you haven’t finished it, there are basically three ways you can respond to their email:

(1) Reply, “Not yet.”

(2) Reply, “Not yet, but it will be finished by [x].”

(3) Don’t reply at all.

Obviously (3) is the worst thing you can do, but I’d argue that (1) isn’t all that much better. Both response (1) and (3) provide no information to your boss about the status of the project. They are still just as clueless following your response as they were before they asked you the question. Their uncertainty hasn’t been reduced at all.

Given this, response (2) is the best response, right? You provide the immediate answer and include a time estimate about when the project should be finished.

Nope. This was a trick question. The problem is that response (2) is also a failure because your boss never should have had to ask about the status of the project in the first place. The fact that they asked means that they felt uncertain. It means that you were not providing them with enough information to make them feel at ease.

If you had provided them with a timely update, then they wouldn’t have needed to spend the time to ask you. And with time being the biggest constraint for most people, the ability to free up more of your boss’s time and mental energy is worth its weight in gold. This doesn’t imply that you need to provide updates every 10 minutes. However, it does imply that you should find a cadence that makes them more certain about working with you.

This is what I mean by reducing uncertainty. You have to make sure that information is flowing in a way so that you become a trusted resource wherever you go. The more consistently you do this, the less time and energy others will spend worrying about you and your ability to get things done.

Don’t just do this with your boss either. Do it with everyone you work with. Practice reducing uncertainty so that it becomes second nature to you. Practice it until you become an uncertainty killer. Then watch what happens.

Why Reducing Uncertainty Matters For Your Finances

Though Of Dollars And Data is a personal finance/investing blog, I know empirically that building wealth is highly correlated with your income. Therefore, when I write an article on enhancing your career (and increasing your income), it is far more likely to improve your financial situation than when I write about an investment related topic. This is why reducing uncertainty matters so much for your finances.

Because we can’t control what happens in markets. Reducing uncertainty in this realm is a very difficult task. Those that claim otherwise are what I like to call “liars” (or Jim Simons).

But, we can control what actions we take each and every day in our careers. We can control how we communicate. And we can control how we work with others. Of all the things I know, of this I am quite certain.

Thank you for reading!

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https://ofdollarsanddata.com/become-an-uncertainty-killer/