Topley’s Top 10 – August 31, 2022

1. Shipping Rates Collapse Back to Summer 2020 Levels 

Dave Lutz at Jones Trading-Sharp declines in container shipping rates are a reflection of easing supply-chain woes – Baltic Exchange Dry Index continues to collapse and is now back to summer 2020 levels

2. Lumber Prices Back to Summer 2020

Lumber Futures $1700 to $476

3. 200 Day Correlation Between Stocks and Bonds .87….Last Time This High was 2009

Bespoke Investment Group-High Correlation Between Stocks and Bonds So far in 2022, stocks and bonds have both sold off, leading investors with a balanced portfolio to experience historically painful drawdowns. Rates have risen, and partially because of this fact, equities have had a tough year. The S&P 500 ETF (SPY) is down 16.0% on a YTD basis, while the iShares Core US Aggregate Bond ETF (AGG) has shed 11.3% of its value. Typically, rates fall alongside equities, as investors shift their capital allocations to safer assets. 2022 has been different, though, and has seen selling in both bonds and equities.  This has resulted in a historic level of positive correlation between the ETFs SPY and AGG going back to 2004 when AGG first started trading
Although the 200-day correlation between stocks (SPY) and bonds (AGG) has been higher once before (in late 2009), the current level remains particularly elevated. The current 200-day correlation sits at 0.87, which signifies a strong positive relationship. In the last 200 days, stocks have moved in the opposite direction of rates on most days, as the market is incredibly focused on the bond market as the Fed transitions from an accommodative to a restrictive stance in the face of higher inflation. Interestingly, the correlation coefficient does appear to be rolling over, moving lower in each of the last 15 trading sessions. Historically speaking, the correlation coefficient has tended to turn negative not long after rolling over, as illustrated by the chart below.

4.China Seeing New Covid Cases..

Dave Lutz Not Helping Commodities – China is battling Covid in every province despite strict measures to control the virus. All 31 mainland provinces recorded at least one local case over the past 10 days, the broadest exposure to the virus since at least February 2021

5. S&P Seeing Longest Stretch Below 200 Day Moving Average Since 2008

Michael Batnick Irrelevant Investor Blog-In fact, the S&P 500 has been below its 200 day for 99 days, the longest stretch since the GFC.

Source Y Charts

6. Leveraged Loan Market Possibly Most Effected by Consistent Rising Rates but very few Maturing in 2022-2023

Marketwatch- only 9% of outstanding LL loans will come due between now and the end of next year. By 

Joseph Adinolfi

7. U.S. Cropland Values Hit Record Highs

From Barry Ritholtz The Big Picture

Source: AgWeb

8. Axios-The space race for our cellphone

Young satellite companies say they’re on the precipice of blanketing the planet with cellphone service. 

Why it matters:If they succeed, their technology could eliminate dead zones and provide more reliable coverage to millions of people.

Driving the news:SpaceX CEO Elon Musk and T-Mobile CEO Mike Sievert late last week announced plans to start delivering service through SpaceX’s Starlink by the end of next year in the United States. 

  • Only text and certain messaging capabilities will be available in the beginning, with the goal of adding voice and data down the line.
  • We’ve all read about someone who was hiking, got lost, or died of thirst or exposure,” Musk said during the announcement event, adding that this service will help in those types of situations. 

How it works:New satellites equipped with larger and more powerful antennas will pick up signals from cellphones directly, rather than relying on cell towers.

  • Sievert described the vision as putting cell towers in the sky, but “a lot harder.”
  • The partnership would effectively enable cellphones to do what satellite phones can do, Jon Peha, former FCC chief technologist and professor of engineering and public policy at Carnegie Mellon University, tells Axios.
  • “They’re no longer separate devices. It’s one device that does both,” he said.

State of play:AST SpaceMobile and Lynk are other major competitors working to make cell coverage direct from space a reality.

  • Project Kuiper, from Amazon, is working with Verizon on an effort to provide rural communities with wireless coverage via thousands of satellites.
  • Rumors are also swirling that Apple might be set to announce its own direct-to-satellite iPhone partnership with Globalstar next week.

What they’re saying:“The human race is becoming less and less tolerant of being disconnected,” AT&T CEO John Stankey told Axios in an interview. “There’s a market out there to keep people connected all the time.”

  • Stankey declined to share details about any plans from AT&T, but added, “I think we’ll see the market develop where there’s a variety of different alternatives and solutions.”

The ultimate goalis to offer high-speed mobile internet access via satellite.

  • “No one company or even a number of these companies [will] be able to meet all the needs,” Peha said.

The intrigue:With SpaceX dominating the rocket launch industry right now, “co-opetition” could drive success for all players.

  • “We’re glad that they [SpaceX and T-Mobile] have shown attention to this, but we always thought this was going to be a multiple party market,” AST chief strategy officer Scott Wisniewski tells Axios. “This is not a winner take all market given how big it is.”

What’s next:SpaceX and T-Mobile will need regulatory approval from the Federal Communications Commission for their plans.

Editor’s note: This article has been corrected to reflect that Musk is CEO of SpaceX, not a co-founder.

9. $1B in Crypto Lost to Fraud Since 2021…Congress Cracking Down

Coinbase, FTX, Binance get inquiries as Congress looks to crack down on $1 billion

crypto fraud



·         The House Committee on Oversight and Reform is dialing up the pressure on federal agencies and crypto exchanges to protect Americans from fraudsters.

·         In a series of letters sent Tuesday morning, the committee asked four agencies, as well as five digital asset exchanges — Coinbase, FTX, Binance.US, Kraken, and KuCoin — for information and documents about what they are doing to safeguard consumers against scams and combat cryptocurrency-related fraud.

In its first foray into the crypto sector, the House Committee on Oversight and Reform is dialing up the pressure on federal agencies and crypto exchanges to protect Americans from fraudsters.

In a series of letters sent Tuesday morning, the committee asked four agencies, including the Department of the Treasurythe Federal Trade Commission, the Commodity Futures Trading Commission, and the Securities and Exchange Commission, as well as five digital asset exchanges — CoinbaseFTXBinance.USKraken, and KuCoin — for information and documents about what they are doing, if anything, to safeguard consumers against scams and combat cryptocurrency-related fraud.

More than $1 billion in crypto has been lost to fraud since the start of 2021, according to research from the FTC.

“As stories of skyrocketing prices and overnight riches have attracted both professional and amateur investors to cryptocurrencies, scammers have cashed in,” wrote Rep. Raja Krishnamoorthi, D.-Ill., Chair of the Subcommittee on Economic and Consumer Policy. “The lack of a central authority to flag suspicious transactions in many situations, the irreversibility of transactions, and the limited understanding many consumers and investors have of the underlying technology make cryptocurrency a preferred transaction method for scammers.”

The letters ask that the federal agencies and crypto exchanges respond by Sept. 12 with information about what they are doing to protect consumers. The committee says that these responses could be used to craft legislative solutions.

10. Discipline is Destiny-Ryan Holiday

It’s next to impossible to know what kind of adversity or what sort of good luck will fall in someone’s lap.

Will they be able to handle it, whatever it is? Will they rise to the occasion or be corrupted or destroyed by it?

As it happens, this part is easy to predict.

Look at Marcus Aurelius. He was gifted all sorts of incredible things—power, money, great teachers. How did he manage to remain good when so many others, from Nero to Tiberius, had been broken by those exact same gifts? The same way that he managed to not be broken by the incredible adversity of the Antonine Plague. It was his discipline—his temperance, moderation, self-awareness, balance, and self-mastery.

When we say that, “discipline is destiny,” this is what we mean—that discipline is both predictive and deterministic. It predetermined that Marcus would not only be a great emperor, but a great man too. Just as it assured that the final chapters for the cautionary tales of history—Napoleon, Alexander the Great, Julius Caesar, King George IV, and sadly even Marcus’s own undisciplined son, Commodus—would be marked by self-inflicted destruction.

So it goes for all of us. If you want to know why things are the way they are in your life right now…look to your level of discipline. It got you here, for better or worse. If you want to know how things are going to go for you in the future…your discipline will take you there.

It’s not merely that disciplined people do well and undisciplined people fail—we know life is more complicated than that. The maxim means that traits of discipline predict the kind of actions we will see.

The undisciplined person may succeed…but it will be an unstable, chaotic success. The unrestrained will end up unraveling the institutions around them. The lazy will end up missing some critical piece of information that costs them. The overly passionate will take it too far and pay for it. The arrogant will ignore the people and the warnings that could have saved them.

Who we are, the standards we hold ourselves to, the things we do regularly, our personality traits—in the end, these are all better predictors of the trajectory of our lives than talent, resources, or privilege. These tell us how we will respond to the future swings of Fortune, which, ultimately, is all we need to know.

“Most powerful is he,” as Seneca tried to instill in the rulers he advised, “who has himself in his own power.” Most powerful is he who is disciplined because…

Discipline is destiny.