Topley’s Top 10 – August 31, 2020

1. City and State Governments Contribute 20% of U.S. GDP

Infographic: Which States are Contributing the Most to U.S. GDP? | Statista


This chart shows the share of U.S. gross domestic product by state and region in 2019.

Pie chart

Federal aid amounts to some 5% of total municipal revenue, while state aid is 20% to 25%. In other words, a city’s tax structure accounts for 70% to 75% of what it can spend to meet the health, safety, and welfare needs of its residents and visitors.   


Cities and States Are Facing a $1 Trillion Budget Mess. There Will Be More Trouble Ahead.

Leslie P. Norton and Stephen Kleege

2. FANG Performance Disparity Grows Wider.

FANG Explosion-Bespoke Investment Group

Fri, Aug 28, 2020

The ten members of the NYSE FANG+ index went on an epic run in the mid to late–2010s that many thought was “bubble” like at the time.  From early 2016 to mid-2018, the FANG+ stocks went up 200%.  After peaking in June 2018, though, the FANG+ index fell nearly 50% before finally finding a floor.  After the big decline in late 2018, many investors moved on from the FANG trade, but now anyone that did is kicking themselves.

The FANG+ stocks went on another big run in 2019 and early 2020 only to collapse 34% during the one-month COVID Crash in late February and early March.  Since making its COVID-Crash low on March 18th, however, the FANG+ index has experienced one of the most remarkable runs that any investor can expect to see in their lifetimes.  As shown in the second chart below, the FANG+ index is up more than 60% over the last six months, and it has more than doubled since its March 18th low.  Those prior highs made back in 2018 are now a distant memory with the index now ~85% above that level.  Click here to view Bespoke’s premium membership options for our best research available.

Below we compare the NYSE FANG+ index since its inception in 2014 to the S&P 500.  The performance disparity continues to get wider and wider with the FANG+ index up 455% and SPY up 74% over the same time frame.

3. S&P 500 Profit Margins Covid A Blip Compared to Previous Recessions

Luthold Group’s Jim Paulsen shows the apparent low point in S&P 500 profit margins this year is vastly higher than the troughs of prior recessions.

4. Excess Household Savings $11 Trillion at the End of June…Pent Up Demand

Tim Duy at Bloomberg broke down the numbers on this and they are staggering:

The Case For a Post-Covid Spending Boomby Ben Carlson

Abnormal Returns Blog

5. CITI Economic Surprise Index Hitting Record High

Found at Barry Ritholtz The Big Picture.

6. The FED Now Owns 22,000 Different Securities.


The Fed now owns a total of 22,913 different securities according to Bloomberg. It is the world’s biggest investor


Say a little more about your savings goals.

7. Average Age of Office Building in NYC 2x Other Major Metros

Old Town-Barrons

Capital and renovation costs are high for office buildings. That is a particular problem in New York, where the average age of office buildings is 65 years. Here’s how that compares with other big cities:

City Avg. Age of Office Buildings (Years)
New York 65
Los Angeles38
Washington D.C.35
Tokyo 24
Hong Kong20

Source: Green Street Advisors

New York City’s Offices Are Empty. How to Gamble on a Recovery. 

Andrew Bary

8. More than 50% of the US population is now under the age of 40

By Lauren M. Johnson, CNN

Updated 7:07 PM ET, Tue August 4, 2020

Millennials and those in the younger generations now make up more than half of the US population.

(CNN)It’s official: millennials and those in the younger generations now make up more than half of the US population.

The data, which was released by the Census Bureau last month and analyzed by the Brookings Institution, reveals the 166 million Americans under the age of 40 — millennials, Gen Z and younger generations — make up 50.7% of the population, as of July 2019. There are 162 million Americans in the combined Gen X, baby boomer, and older cohorts.

Another stark difference comes in the diversity of the group. Over half of millennials and younger generations classify themselves as a racial or ethnic minority, compared to less than 30% of Baby Boomers.

It’s no secret that the divide between the older and younger generations has played out on a global stage. Trends such as the phrase “Ok, Boomer” emerged after a long history of negative ideology about age from older generations concerning social justice or climate change.

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“It is likely that the pandemic and recent activism will further galvanize this generation to promote an array of progressive causes,” analysis author William Fey wrote.

The Brookings analysis found other surveys that show these generations differ in other ways too, such as with topics concerning immigration reform, criminal justice, environmental protection, the role of government, and the importance of diversity.

“If the nation’s most racially diverse generations—which now comprise more than half of the population—can spearhead a movement that engages their older peers and parents, it would send a strong signal that the country is changing in important ways,” Fey continued.

Projections show that by 2030, millennials and younger will not only be the dominate generations, but they will also make up more than half of all of eligible voters.

9. Humans Take a Step Closer to ‘Flying Cars’

Humans Take a Step Closer to ‘Flying Cars’

In the 1880s, the first automobile was developed and about two decades later, the Wright brothers in North Carolina invented the first successful airplane. Today, the world is closer to combining those two concepts as a Japanese tech company said it completed a manned test flight of a “flying car.”

The company, SkyDrive, said in a news release on Friday that it had completed a flight test using “the world’s first manned testing machine,” its SD-03 model, an electrical vertical takeoff and landing (eVTOL) vehicle. The flight time was four minutes, the company said.

The aircraft has one seat and operates with eight motors and two propellers on each corner. It lifted about 3 meters (or about 10 feet) into the air and was operated by a pilot, the company said.

Tomohiro Fukuzawa, SkyDrive’s chief executive, said on Saturday that five years ago there were various prototypes of flying cars, usually with fixed wings. SkyDrive’s product, he said, was one of the most compact in size and was lighter compared with other designs.

SkyDrive was started in 2012 by members of a volunteer organization called Cartivator, and the company began developing a “flying car” in 2014, according to its website.

This year, SkyDrive received funding from the Development Bank of Japan and other investors, the company said.

There are several companies developing similar technology, including Boeing and Airbus, as well as automakers Toyota and Porsche. In January, Hyundai and Uber announced they were collaborating on an all-electric air taxi.

Analysts with Morgan Stanley have said they expect urban air taxis to be common by 2040, with the global market projected to be $1.4 trillion to $2.9 trillion by then.

Safety is one of two challenges preventing the technology from becoming widely used, said Derya Aksaray, an assistant professor of aerospace engineering and mechanics at the University of Minnesota. Safe autonomous technology for eVTOL aircrafts is still being developed, Professor Aksaray said.

“These vehicles need to look at their environment, assess the situation and act accordingly,” she said. “They cannot wait for a pilot or an operator to say, ‘Now do this, now do that.’ We cannot wait for that kind of micromanagement of the vehicle.”

The other challenge is design: The vehicles should be powerful enough to carry any necessary weight, yet quiet enough to fly at undetermined low altitudes, she said.

Ella Atkins, a professor of aerospace engineering at the University of Michigan, expressed mixed views on the practicality of eVTOL machines.

“They are going to be more energy efficient than helicopters that use a lot of fuel but they will be less energy efficient than cars because they have to lift themselves,” she said. “From a cost perspective, they won’t be practical to go to the grocery store.”

Professor Atkins said these machines may be better suited for satellite communities of cities or countries with difficult terrain.

“These vehicles can provide transportation,” Professor Atkins said, adding that “these communities might skip right over having roads” and use the aircraft as their main form of transportation.

Mr. Fukuzawa said SkyDrive plans to begin selling a two-seat version of its eVTOL by 2023 for about $300,000 to $500,000. He projected the price will decrease by 2030.

“With any new technology, it will be very expensive in the beginning,” Professor Aksaray said.

Professor Atkins echoed that observation and said it’s unlikely that private citizens with a modest income would be able to afford one in the next 20 years.

“We’re at the entrant phase,” she said. “We don’t have the mass production we would need to buy down the costs of all the development, research, deployment and manufacturing at a small scale.”

Professor Aksaray said humans are on the verge of a new mobility revolution, reminiscent of the ones created by the invention of the automobile and the plane.

“If this becomes successful,” she said, “I think that would definitely create a different means of transportation. We are going to benefit a lot by reducing congestion and overcoming the geographical constraints of ground mobility.”

The post Humans Take a Step Closer to ‘Flying Cars’ appeared first on New York Times.

10. The Chemistry of Great Leadership-Kevin Murray—Sense of Purpose Changes Your Brain Chemistry.

When people find a sense of purpose, and begin to dream and chase positive goals, the benefits are limitless. They change themselves, they better their families, they improve their communities, they help their organizations and companies to perform better, they help to create wealth and prosperity, and they contribute to society in a wide range of ways.

What is it about having a purpose that has such a positive effect on these individuals? How does it affect how we feel? How does it affect our physiology? And what does all of that mean for how we choose to lead? These were the questions that led me to write my new book, People with Purpose.

The answer, of course, is supplied by neuroscientists – the people who study the nervous system and the brain, especially in relation to behaviour and learning. Why? Because global research being done in neuroscience is beginning to piece together connections between the brain and behaviour, especially at work.  

This research is providing valuable insights into how to be a more effective leader. It turns out that understanding how our brains function, and the chemicals they release, is vital to delivering our strategies successfully. 

So, what do scientists know about our brains and giving people a sense of purpose? Do they have insights that we can take into our own organizations and the teams we lead?

Dr Duncan Banks, a lifetime honorary member of the British Neuroscience Association, director of work-based learning at the Open University in Milton Keynes, and one of Britain’s leading neuroscientists, says: “Purpose is most often derived from a willingness to take part in activities for the greater good of the community. It is all a matter of whether you feel worthy or worthless.  Make them feel worthy and they will try harder. 

‘We know that enrichment has a big part to play in brain development from an early stage, even for babies. Give them a rich environment in which they develop and you’ll find they develop into better individuals. If you put someone into an un-rich, worthless environment, they are very likely to go downhill and not be able to contribute, whether this is in a business or in a community.’  

Purpose changes your brain chemistry 

‘When you have a sense of purpose, especially a sense of common purpose, your brain chemistry changes. These chemicals change everything – from your perception of pain, your ability to handle difficult and challenging environments, and even your health and well-being’, says Dr Banks.  

 ‘For all these reasons, leaders need to think about whether they make their employees feel worthless or worthy’, says Dr Banks. Do they make their employees feel a sense of common purpose, and part of a community? Do leaders communicate in the right way, involving people and listening to them, as well as persuading and encouraging them? Only by communicating effectively, can leaders make their employees feel worthy and respected. 

The positive side effect will always be an increase in performance, because people who feel worthy are much more likely to give of their discretionary effort when called on to work harder. 

Another key factor in neuroscience is whether people feel they are moving towards a reward, or away from danger. In the modern context, danger is anything people perceive as a threat – being sacked, being bullied, or being overwhelmed. Reward is not just about money, it is also about personal growth, satisfaction, or helping others. 

In either case, neurochemicals are pumped into the brain which have an effect on our physiology and our behaviours – and we have little control over these. The long-term effects of the neurochemicals that are induced when we are under threat or feeling unworthy can be extremely harmful to our health. Conversely, the neurochemicals of feeling worthy and moving to a reward a really good for our health, our mental state and our wellbeing.

As a manager, you should always think about how you are making their people feel – are you making your people feel worthy, and that they are moving towards reward? Or are you making them feel unworthy/in danger?  

The answer to that question will determine the chemistry of your employees’ brains, and therefore their behaviours. And all of that will make a massive difference to their performance, and therefore to your performance, as a manager.


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