1. VIX Volatility Index Technical Signal
Jessica MentonThe VIX, dubbed Wall Street’s fear gauge, measures market expectations of 30-day volatility and can serve as an important indicator of how investors are feeling. The so-called death cross pattern appears when the VIX’s short-term 50-day moving average slides below its 200-day moving average.
For individual stocks or indexes, a death cross is often considered bearish. But when it happens to the VIX it can be a hopeful sign for equities, according to Jeffrey Hirsch, editor of the Stock Trader’s Almanac, and Christopher Mistal, research director at the publication.
“Since the VIX is designed to measure near-term market volatility the lower it goes the better the S&P 500 usually performs,” Hirsch and Mistal wrote in a research note to clients. “Thus, a VIX death cross can be a bullish indication.”
Since 1990, there have been 35 death crosses for the VIX prior to the current one, according to the Stock Trader’s Almanac. On average, the S&P 500 has climbed 0.5% and 0.6% respectively one and two weeks following the formation.
With all that being said, equity traders are only confident in one thing over the next week: more turbulence.
Volatility has eased significantly, with the VIX falling below 20 at the beginning of this month after spiking as high as 34.53 intraday on Oct. 12. On Monday, however, it rose above 24 as investors brace for an important measure of consumer inflation on Tuesday, followed by the Fed’s rate decision a day later. Those key events will likely shape what’s ahead for a beaten-down stock market in 2023.
“This would suggest that the current VIX death cross is likely bullish in the near-term, but not a great indication much beyond two weeks,” Hirsch and Mistal wrote.
2. Earnings Growth Lagged the Bottom of S&P by 6 Months.
Barry Ritholtz The Big Picture Blog Since 1950, we’ve found the trough in earnings growth lagged the bottom in the S&P 500 by about 6 months — earnings failed to lead the market 75% of the time
3. ETFS Now Surpassing Fixed Income Mutual Funds
Dave Lutz Jones Trading SWAPPING OUT– Worn down from record losses, investors have fled bond mutual funds en masse. But many aren’t quitting on bonds—they are just turning to exchange-traded funds – One main reason: taxes. Some investors sell beaten-down positions in bond funds to harvest tax losses. In many cases this year, investors have opted to put cash into similar ETFs to maintain bond exposure in their portfolios.
As long as the securities within the ETF aren’t nearly identical to those in the mutual fund, swapping the so-called wrapper around the holdings allows investors to stay invested, while capitalizing on tax benefits – “More sophisticated investors are employing tax strategies, as well as trading up in credit quality,” said WSJ
4. Muni Yields the Highest in 10 Years
Advisor Perspectives Muni yields are near the highest level in over a decade
Muni Outlook: Back in Vogueby Cooper Howard of Charles Schwab, https://www.advisorperspectives.com/commentaries/2022/12/11/muni-outlook-back-in-vogue
5. Technology Capital Expenditures vs. Energy
6. NY Fed 1-Year Inflation Expectations Plunge At Fastest Pace On Record To Lowest Since 2021
BY TYLER DURDEN Zero Hegde With long-term inflation expectations (those 3-Years ahead or more) peaking more than a year ago, and even shorter inflation expectations – at least according to the NY Fed Survey of consumers – now sliding after hitting a record high 6.8% in June and dropping alongside 2Y breakevens which recently hit the lowest level in 2 years…
7. Gas Cheaper than One-Year Ago
The United States: A gallon of unleaded gasoline is now cheaper than it was 12 months ago.
Source: Daily Shot https://dailyshotbrief.com/
8. 1.7M Job Openings Per Unemployed Persons
Irrelevant Investor Blog
9. Eating 400 calories a day from these foods could raise your dementia risk by over 20%
More than half of the calories consumed by Americans come from this high-risk food group, which is associated with cognitive decline, cancer and heart disease
A growing body of research suggests that ultraprocessed foods like frozen pizzas and breakfast cereals high in sugars, fats and empty calories are bad for your health. Now, a new large-scale study presented at the 2022 Alzheimer’s Association International Conference in San Diego this week offers more evidence that people who get a high percentage of their daily calories from ultraprocessed foods are also at a higher risk of cognitive decline.
A team of researchers from the University of São Paulo Medical School in Brazil followed a diverse sample of more than 10,000 Brazilians for up to 10 years. The subjects filled out food frequency questionnaires to note how often they were eating foods including: unprocessed or minimally processed ingredients (e.g., whole foods like fresh, dry or frozen fruits, vegetables, whole grains, meat, fish and milk that underwent minimal processing, like pasteurization); processed foods (canned fruits, artisanal bread and cheese, and salted, smoked or cured meat or fish); and ultraprocessed foods (industrial formulations of processed food substances like oils, fats, sugars, starch, artificial flavors and colorings, but containing little or no whole foods).
The subjects also took cognitive tests up to three times a year, including memory tests and word-recognition tests, to monitor their cognitive functioning — mental abilities such as learning, thinking, reasoning, remembering, problem solving, decision making and attention. They also took regular verbal fluency tests to track their executive functioning — the mental skills that help an individual plan, monitor and successfully meet their goals.
The findings? Those who got 20% or more of their daily calories from ultraprocessed foods had a 28% faster rate of cognitive decline, and a 25% faster rate of executive-function decline, compared with the subjects in the study who ate the least processed foods. In other words, someone following a 2,000-calorie-a-day diet who consumed 400 of their daily calories from ready-to-eat frozen meals, processed meats, breakfast cereals and sugar-sweetened beverages each day saw a faster rate of cognitive decline.
Sometimes the most impactful daily routines are also easy and pleasant.
Just about everyone agrees that how you start and end your days has an outsize impact on your mindset and productivity. Which is why the internet is jammed packed with complex morning routine prescriptions and tales of A-listers’ superhuman start-of-day rituals.
Far be it from me to criticize Tony Robbins’s morning ice baths or Tim Cook’s 3:45 a.m. wake-up time if these extreme routines work for them, but wouldn’t it be nice if there was an impactful routine out there that was also both easy and pleasant?
According to one Harvard-trained neuroscientist, there is, and it’s already in serious contention to be my New Year’s resolution this year. If you’re looking for more peaceful and productive days without any additional dawn hours discomfort, maybe you should consider adopting it too.
The most pleasant daily routine I’ve read about in a while
What’s this miracle tweak? Nothing more complicated than starting and ending your days reading a well-chosen book. On Ezra Klein’s podcast recently, Maryanne Wolf, a UCLA professor who specializes in how our brains learn to process written language, shared her simple morning and evening routine for a clear mind all day long (hat tip to Austin Kleon).
“I begin my day with meditation. And then reading at least 20 minutes a philosophical or theological or spiritual or sometimes political — something that will absolutely take me out of myself and center me, completely center my thinking. Slow it down. It prepares me for, if you will, clearing the deck of whatever detritus from the night or even the day before. And readying myself with a particular mindset for whatever the day brings,” she shares.
She begins the day with a book but she closes the day with one too, usually a classic essay by Montaigne or Marcus Aurelius. “They give me a kind of peace that I find in very few places,” she explains. “So I end and I begin each day with books.”
Why you should bookend your days with books
Counteracting the franticness of most of everyday life with the slower, deeper pleasures of reading something excellent has intuitive appeal. But there are plenty of more scientific reasons to think Wolfe might be on to something.
First among them is Wolfe’s own expertise. As a leading researcher into how reading affects our brains, she has written before about the way deep, focused reading trains us to be able to focus longer, wrestle with complexity, empathize with others, and appreciate subtle beauty. All of which are skills that can feel in danger of atrophying amid the hustle and bustle of daily life and our very online world.
But other experts have also noted how reading can reshape your days. Bill Gates, for one, claims to always read before bed. A variety of studies suggest this habit helps reduce stress and improve sleep.
Other recent research showed that people who take just a few minutes to reflect on their goals at the start of the day experience “a cascade of positive experiences during the day.” By choosing to read something that focuses her mind on larger questions of spirituality and meaning, that’s just what Wolfe’s morning reading does.
You might not have much appetite for Montaigne (though I personally found this book on his writings surprisingly compelling and readable, so don’t let the fact that he was a 16th-century philosopher scare you off). But just about everyone can find some sort of book to pick up in the morning and the evening that helps remind them of what they think life is truly about.
Not only will devoting 15 or 20 minutes to reading those books at the start and end of each day feed your mind and give you joy, but all the evidence suggests bookending your days with reading in this way will help you feel calmer, more rooted, and more genuinely productive all day long.