Topley’s Top 10 – December 12, 2023

1. Presidential Election S&P Cycle Chart

Bespoke Investments Blog

2. What Happens After S&P 20% Up Year.

Ben Carlson A Wealth of Common Sense What happens after a 20% gain?Here are all of the 20% up years along with the following year returns:

Not too bad. More green than red for sure. Here are the summary statistics:

  • The stock market was up 22 out of the 34 years following a 20% gain (65% of the time).
  • The stock market was down 12 out of the 34 years following a 20% gain (35% of the time).
  • The average return following a 20% up year was 8.9%.
  • The average gain was +18.8% in up years.
  • The average loss was -9.1% in down years.
  • There were 19 double-digit up years.
  • There were just two double-digit down years (1936 and 2022).

3. Expecting Stock Earnings Growth 2024

Capital Group

4. Bloomberg Financial Conditions Index.

Source: @Callum_Thomas using Market Charts  Financial Conditions Breakout:  One positive is that the Bloomberg Financial Conditions Index has broken out to the highest (most easy/stimulative) point since early-2022. And it has been this sharp turnaround in financial conditions that has fueled the rally in stocks (falling bond yields, weaker USD, tighter credit spreads, lower oil price).

…but. The Fed has its final meeting of 2023 next week, and while the market has already made up its mind that the Fed is done with rate hikes, it will be interesting to see if the Fed gives the OK to this easing — there is the potential they may see it as too much too quick, and seek to talk back some of the easing in financial conditions.

Source:  @CameronDawson – Enjoy the Silence: The Fed Next Week and Beyond

5. Russell 1000 Growth (IWF) P/E 32 vs. Russell 1000 Value (IWN) P/E 14

IWF vs. IWN 2023..Growth straight up in face of rising rates

6. Grayscale Ethereum Almost a Double Since October 1

7. Institutional Investors Pull $31B from China Stocks and Bonds

WSJ The amount of money that institutional investors have in Chinese stocks and bonds has declined by more than $31 billion this year, through October, the biggest net outflow since China joined the World Trade Organization in 2001, official Chinese data show. By Lingling Wei

8. India building world’s largest renewable energy project in salt deserts bordering Pakistan-AP Press

The solar and wind energy project will be so big that it will be visible from space, according to developers of what is called the Khavda renewable energy park

Workers tighten screws on the support structure for solar panel installation at the construction site of Adani Green Energy Ltd’s renewable energy park in the salt desert of Karim Shahi village, near Khavda, Bhuj in Gujarat. (AP)

Rising from the bare expanse of the large salt desert that separates India from Pakistan is what will likely be the world’s largest renewable energy project when completed three years from now.

The solar and wind energy project will be so big that it will be visible from space, according to developers of what is called the Khavda renewable energy park, named after the village nearest to the project site.

At the site, thousands of laborers install pillars on which solar panels will be mounted. The pillars rise like perfectly aligned concrete cactuses that stretch as far as the eye can see. Other workers are building foundations for enormous wind turbines to be installed; they also are transporting construction material, building substations and laying wires for miles.

When completed, the project will be about as large as Singapore, spreading out over 726 square kilometers (280 square miles). The Indian government estimates it will cost at least $2.26 billion.

Shifting to renewable energy is a key issue at the ongoing COP28 climate summit. Some leaders have voiced support for a target of tripling renewable energy worldwide in any final agreement while curbing use of coal, oil and natural gas, which spew planet-warming gases into the atmosphere.

What makes this heavy industrial activity peculiar is that it’s taking place in the middle of the Rann of Kutch in western India’s Gujarat state. The Rann is an unforgiving salt desert and marshland at least 70 kilometers (43.5 miles) from the nearest human habitation but just a short army truck ride away from one of the world’s most tense international borders separating the two South Asian nations.


9. City of Philadelphia Gun Permits +600%

Philadelphia Inquirer by Nate File and Massarah Mikati  Since the pandemic began, gun sales and permit issuances have risen sharply in Philadelphia and Pennsylvania, matching nationwide trends. In 2021, the city issued 52,230 new license-to-carry-permits, an increase of more than 600% from the year prior. In both 2020 and 2021, there were more than a million gun sales or transfers across Pennsylvania.

But a significant group within this class of new gun owners are people who are not excited to carry such powerful weapons. They are not gun enthusiasts or Second Amendment hard-liners, and many of them don’t fit Pew’s demographic profile for the typical American gun owner. Over and over, this group articulated their growing fear for their safety in Philadelphia, and how they felt like buying a gun was the only way left to protect themselves.

by Rodrigo Torrejón Philadelphia Inquirer,to%20Philadelphia%20Police%20Department%20data.

10. Farnam Street-Mastery vs. Ego

The kids and I listened to the first 25 minutes of this episode on ego versus mastery orientation in the car, and it sparked a great conversation.

“Why do kids love to learn? Because learning is fun. Why do kids go out on the golf course [and] want to play until the sun is set and they’re out there all night? Because it’s an amazing sport. It’s super fun. It’s just a fascinating…, get lost in the game. So, at what point in educational development do kids start to dislike school? Happens around third grade. What happens in third grade? We start giving kids grades.

So what happens is there’s a shift from a mastery orientation to what’s called an “ego orientation.” … When you ask people with an ego orientation, “Hey, why do you do what you do?” what you’ll often see is, “Well, I like to beat other people” or “I want to prove something. I need to prove myself to other people.” Or it’s some version of image management — like you’re trying to show off and prove yourself to others.”

— Dr. Gio Valiante