1. AMAZON Capital Expenditures History….Set to Double Year Over Year.
2. Amazon Employment Worldwide Almost a Double Year Over Year
3. Margin Debt Hits Record.
WSJ By Michael Wursthorn
4. Traders Boost Bets Against Dollar to Highest in Almost a Decade
Cormac Mullen and Ruth Carson
Traders Boost Bets Against Dollar to Highest in Almost a Decade
5. The chart that explains 2020’s crazy stock market: Morning Brief
Myles Udland It’s all about earnings expectations.-Yahoo Finance
2020 has been an interesting year in the stock market.
And as we wrap up the year, there is one simple question that lingers over the story of 2020: “Why have stocks gone up so much?”
Through Tuesday’s close, the S&P 500 (^GSPC) is up 15% this year and more than 60% from the March 23 lows. The Nasdaq (^IXIC) has done quite a bit better, rising 42% since January 1 and more than 85% since March 23.
There are, of course, many ways to answer this question.
Some of which are complicated and all of which are contested.
Each pocket of the market — be it a “stay at home” play like Zoom (ZM) or Peloton (PTON) or a “re-opening play” like airlines or Airbnb (ABNB) — might have a story that coheres on its own. But seeing Congress pass its second emergency stimulus package of the year and debate whether to send out $600 or $2,000 checks to most Americans doesn’t exactly scream “record high stock prices.”
Here at the Morning Brief we like to keep things simple.
And the simplest explanation for why stocks went up is that expectations for 2021 kept getting better.
As we see in the chart below, the market’s bottom coincides with a turnaround in earnings expectations for 2021. A turnaround that has not yet leveled out.
The rally in stocks this year might seem inexplicable, but the surge in earnings expectations for next year is the simplest explanation for what’s been driving the markets this year. (Source: FactSet)
Stock prices can be driven by many factors — expectations for an acquisition, the involvement of an activist investor, a post on r/wallstreetbets, and so on — but each of these drivers are, in the end, a function of a company’s profits and what investors are willing to pay for them.
As we can see from FactSet’s chart, stocks and earnings expectations fell off a cliff in the spring. And then as forecasts for next year bottomed and then started turning around so too did the market itself.
In contrast, the 29% rise in the S&P 500 seen in 2019 was largely a function of multiple expansion. Valuations rose as interest rates fell last year, pushing up stock prices even in the absence of any earnings growth.
And so while the market’s current valuation may give some investors pause, the market’s rally this year has been in response to an improved outlook in corporate fundamentals.
All of which have a place in helping build a complete picture of what’s driving markets. As do animal spirits, the surge in retail traders, and the aforementioned fiscal stimulus.
But the one story that backs up all other efforts to explain the market’s behavior in 2020 is that investors see brighter days ahead for corporate profits. Everything else is a complement.
6. After recent price spike, bitcoin requires enough power for a country of more than 200 million people
As bitcoin marches to new records, it’s also gobbling up the energy of a country of more than 200 million people.
The University of Cambridge’s Centre for Alternative Finance attempts to keep track of bitcoin energy consumption. While the exact consumption can never be known, a guess can be produced by tracking the total number of hashes produced by miners and looking at the efficiency of bitcoin mining equipment. The hash rate is the measuring unit of the processing power of the bitcoin network.
The recent increase in price — bitcoin BTCUSD, 3.73% has jumped 276% this year, trading around $27,000 on Tuesday — has made it more profitable to use less-efficient equipment
At 92.8 terawatt hours annualized, bitcoin’s power consumption is slightly ahead of Pakistan’s consumption in 2016, and not wildly away from the Netherlands’ consumption that year. Put a different way, the electricity consumed by minting bitcoin could power all the tea kettles in Britain for 21 years.
Two-thirds of bitcoin production is done out of China. More than half of China’s energy output comes from coal, so the bitcoin production is likely to be particularly dirty.
The U.S. is in second place in terms of bitcoin production, with an estimated 7% of all bitcoin production, which puts it slightly ahead of Russia and Kazakhstan.
7. NFL’s Russell Okung to Get 50% of His $13 Million Salary in Bitcoin
Russell Okung has long been a proponent of the cryptocurrency. Photographer: Jacob Kupferman/Getty Images North AmericAAMore than a year later, Okung let the world know that he’s become the first National Football League player to collect a portion of his check in the cryptocurrency.
Here’s how it works: The Panthers will continue to pay the tackle in dollars, but Okung will convert 50% of his $13 million salary to Bitcoin using Zap’s Strike product, according to a report from CoinDesk, a crypto and blockchain news site. Strike facilitates payments that are translated into Bitcoin from ordinary currency.“NFL players are paid in U.S. dollars,” a league spokesman said. “He is then converting that to Bitcoin.”
Okung has long been a proponent of the cryptocurrency. His Twitter bio reads “life, liberty and #bitcoin,” and he’s written about his talks with teammates about its virtues.
The largest cryptocurrency is on track for its longest monthly winning streak and is setting all-time highs during a rally that has seen it gain more than 270% this year.
8. Aging World
With every successive year, our global population is skewing older.
Since 1970, our worldwide median age has grown by almost a decade. By 2100, it’s projected to increase by another 10 years.
Of course, not all countries are aging at the same rate.
Using data from the UN, the graph below covers the old-age dependency ratios (OADR) of different regions, showing the proportion of working-age citizens versus the percentage of older people, who are less likely to remain in the workforce.
What’s the economic impact of an aging population? Some potential risks include rising healthcare costs, a shrinking workforce, and even economic slowdowns.
To mitigate some of these risks, it’s crucial that countries build solid pension systems to support their aging citizens. Other potential solutions include increasing the age of retirement, enforcing mandatory retirement plans, and limiting early access to benefits.
Aging populations are also influencing the make-up of households in many countries. In the U.S., the share of multigenerational family households has been rising steadily since the 1970s.
At a societal level, people in the oldest age groups often play a different role in society than working age people. Many seniors engage in volunteerism and play a pivotal role in childcare for their families–activities that fall outside traditional measures of economic activity.
5 Undeniable Long-Term Trends Shaping Society’s Future Carmen Ang
Found at Abnormal Returns blog www.abnormalreturns.com
9. These are the 20 worst-performing S&P 500 stocks of 2020 — analysts see double-digit rebounds for 6 of them in 2021
10. 5 Smart Ways to Increase Your IQ (Because It’s Not Set in Genetic Stone)
I only recently discovered there is a secret society for people with high IQs. It’s called Mensa—aka The Nerd Herd. It’s actually not a secret, but I consider anything no one has told me about in the 39 years I’ve been on planet Earth to be a conspiracy. So it’s a secret as far as I’m concerned.
To get in, you have to take a test and score in the top 2 percent of all IQs in the universe, aliens included. (I’m assuming these people know about the aliens and aren’t telling us.) After that, your nerdship is official. You no longer have to wonder.
That is the stupidest thing I could ever possibly even imagine imagining, was the first thought that came to me when I learned about this. I want in, was the second.
So I set a goal to get into Mensa within 90 days, and I posted this highly questionable aspiration on Facebook so I could add “suffer public humiliation” to my list of motivators for making it happen. Then I went to work on boosting my nerdability. I wasn’t even sure if that was possible since some scientists say IQ is genetic, but I’ve never listened to science before. Why start now?
I downloaded the Mensa app to my iPhone, took a practice test—and failed miserably. They were all trick questions apparently. The words “You’re average” started flashing on the screen as my first urge to smash a $700 phone on the ground came over me.
Then I did some things (that I’ll tell you in a second) and started scoring at a genius level. I’ll be taking the official test later this month and will soon be able to put an end to all future arguments with my wife by simply pulling out my Mensa card. I can’t wait.
Here’s why I’m telling you this…
There’s this unspoken but subtly implied belief in the personal development world that intelligence doesn’t really matter. We delight in hearing the story about how Henry Ford was so stupid that he had to call people into his office to answer questions for him. Having a high IQ is almost something we scoff at. I know I used to before I became a genius [insert my smirking emoji face here].
But IQ is in large part a measure of your ability to recognize patterns. And as Ray Kurzweil famously says, “Pattern recognition is the essence of all human thought.” Intelligence is not the same as being book or trivia smart (although those are helpful, too). It’s your ability to manage and manipulate life with your mind. It’s the closest thing to a superhero power you’re going to get in this world.
Studies have shown that there is a direct correlation between high levels of intelligence and success in life. It’s actually one of the biggest predictors of success—I call it the Nerd Effect. Read about Terman’s Study—they tracked genius-IQ level kids for their entire lives. They ended up richer, healthier, taller, stronger and even more able to dunk a basketball than kids with lower IQs. I made the basketball thing up, but the rest are true.
Now the really interesting thing about Terman’s Study is that not all the high-IQ kids were successful. Some turned out average and had higher rates of alcoholism and divorce. What made the difference? The difference was the successful kids had cultivated desire, prudence, willpower, goal-orientation, self-confidence and perseverance—all the stuff you’re probably doing right now.
So it’s true that intelligence alone won’t get you the success you’re after. But neither will your typical self-help strategies, unless accompanied by a reasonably high level of intelligence (the higher the better). So why not add, “increase my IQ” to your list of goals?
If I had to guess, intelligence accounts for about 50 percent of your success, and all the other typical self-improvement stuff—positive thinking, goal-setting, time management, character development, etc.—gets the other 50 percent. And my reasoning for that is simple. Intelligence is your ability to think at a high level. Think of your favorite billionaire; I guarantee you they are thinking at an extremely high level.
You know what… I just realized you may be reading this assuming you’re already really intelligent. You may be right. But take this test real quick to be sure: Mensa Workout
So how can you increase your IQ? Here are five ways, but it really all boils down to stretching your brain by learning new things:
1. Become a renaissance man. Or woman.
Be a student of life—not just wealth, health and happiness. Study history, science, psychology, art, languages, math, music, etc. Learn how this world works. Add depth to your mind and character. Read at least one book a week. Start to notice the patterns. Intelligence all boils down to pattern recognition.
One of my mentors said something interesting last week. He said, “I’ve noticed something. All my super rich friends are good at math.” And I realized that’s true of mine as well. Are you good at math? When you watch Shark Tank, can you calculate the valuations of the businesses in your head like the sharks do? If not, why not get good? Add it to your arsenal. You need a big arsenal to succeed in life. Mindset and success techniques are just a small fraction of what’s required.
2. Play the brain game Dual N-Back.
Do this 20 minutes a day. It will improve your working memory, and one study showed it increased IQ drastically. Other studies showed it didn’t. Screw those studies. I’ve been doing this for a while, and it is definitely doing something amazing to my brain.
3. Do regular high cardio exercise.
The version of Dual N-Back I use tracks my progress. Well one day I went to the gym and played the game right when I got home (I use the word “game” lightly—it’s mild torture). My scores went through the friggin roof. There is something about the release of endorphins that sends your brain into overdrive. Get as many of those endorphins as possible.
4. Learn an instrument.
Learning to play music is the equivalent of giving your brain a full body workout. This has been proven in studies using FMRI scans. Simply put, playing an instrument lights your entire brain on intellectual fire and has lasting impact on math and spatial reasoning skills. It’s not for no reason the wealthy almost universally require their children to learn a classical instrument whether they like it or not. Carve out 30 minutes a week to take a lesson and release your inner rock star.
5. Buy the book Boost Your IQ by Carolyn Skitt, and play all the games.
This book was written by Mensa nerds, so you can be guaranteed they know what they’re talking about.
Bottom line: your intelligence is not set in genetic stone. You can increase it. And as you do, all the other things you’re trying to succeed at will become amazingly easier. I did it. You can do it.
“You have to be smart. The easy days are over.” –Robert Kiyosaki
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