Topley’s Top 10 – July 12, 2018

1.The Ultimate Question-Can Earnings Keep Rising?

Can Companies Keep Up Strong Beat Rates in Q2 Earnings Season?
Jul 11, 2018

One thing we’ll be watching closely this earnings season is whether companies can keep up the extraordinarily high beat rates seen over the past two quarters.

Over the past two earnings seasons, even though analysts had to up their estimates quite a bit due to the Trump corporate tax cuts, companies were easily able to beat expectations.  Since 1999, 62.1% of earnings reports have reported EPS that were greater than consensus expectations.  As shown below, though, the last two quarters saw much higher than average beat rates.

Not only have bottom line EPS beat rates been strong, but top-line revenue beat rates have been strong as well.  Revenue beat rates over the last two earnings seasons were higher than any quarter since Q4 2004.

The chart below takes the average of each quarter’s earnings and revenue beat rate.  When looking at the strength of both the top and bottom line beat rate each earnings season, the only other two-quarter period that showed stronger beat rates than the last two quarters was back in Q4 2003 and Q1 2004.

Needless to say, investors have gotten used to stronger than expected earnings reports over the last six months.  If companies aren’t able to keep up the pace this season, we think the market will struggle.

 2.I Have Written in Multiple Blog Pieces About Tech Looking Nothing Like 1999.

Russ Koesterich, CFA

The technology sector trades at an 11% premium to the broader market. While this is up from a couple of years ago when the sector traded at a small discount, the current premium appears very reasonable in light of recent history. Again, excluding the bubble years, the current relative valuation is actually a bit below the 15-year average (see Chart 1). Using cash-flow rather than earnings provides a similar picture: On a P/CF basis the sector is trading at about an 18% premium to the market, below the historical median of 30%.

Technology “bubble” fears don’t hold up

3.Gas Hits $3 Bucks in Middle of Summer Driving Season.

Average Gas Price Nears $3 a Gallon, Raising Worries for U.S. Economy

Drivers across the U.S. in May paid as much as $2.96 a gallon on average, the most since 2014


4.Increasing Gas Prices Plus Wage Pressures…Inflation?

 With this Inflation, What Will the Fed Do?
by Wolf Richter • Jul 11, 2018 • 32 Comments

Even the last doves are coming around to more rate hikes.

“In June, most of the rise in the index for final demand is attributable to a 0.4-percent advance in prices for final demand services,” said the Bureau of Labor Statistics in the release of its Producer Price Index data. The PPI and its numerous sub-indices measure inflation further up in the pipeline before it filters through to consumer prices.

Services account for 65.3% (“relative importance”) of the PPI. Energy prices soared, but they account for only 5.6% of the PPI. In the overall picture, services matter the most.

The PPI for “final demand” (as opposed to “intermediate demand,” which is further up the pipeline) jumped 3.4% in June compared to a year ago, the largest year-over-year increase since November 2011. This measure includes goods and services:

The PPI for final demand energy jumped 17.2% in June compared to a year ago. Note the deep plunge of the index during the Oil Bust. But for consumers, this was a “transitory” relief, to rephrase Yellen:


5.Yield Curve Inversion Does Not Mean Automatic Sell Off.

 What Does an Inverted Yield Curve Mean?

 But what happens when the yield curve inverts? As our LPL Chart of the Day shows, even inverted yield curves don’t always equal near-term trouble for equities.

According to LPL Research Senior Market Strategist, Ryan Detrick, “Here’s what you need to know: an inverted yield curve isn’t this end-all sell signal that many make it out to be. In fact, looking at the past five recessions, economic growth continued to accelerate for an average of 21 months after the yield curve inverted, and the S&P 500 Index added nearly 13% on average—rising in every instance—before a recession officially started. We aren’t ignoring this potentially troublesome sign, but it doesn’t appear to be the major warning many make it out to be.”


6.Good To Remember This Bull Came After Worst Decade Ever.


7.State by State Weed Map.

State by State, Markets are OPENING UP — Revenues Projected for BIG GAINS


8.Market Cap Per Vehicle Produced.


9.Where Do You Store Stress in Your Body? Top 10 Secret Areas

Stiff neck or bad back? It means more than you think.

Our language is filled with negative psychosomatic references to stress:

“My boss is a pain in the neck.”

“My co-worker gives me a headache.”

“My ex-boyfriend makes me sick to my stomach.”

Often we attempt to push unwanted feelings — such as irritation, fear, sadness — out of our awareness. We associate such feelings with hopelessness or powerlessness. So, in an effort to blot them, we forcefully engage in denial or repression. We drive them out of our consciousness and deny our emotions. Instead of acknowledging, processing and releasing these unwanted feelings, we bottle them up.

Nathaniel Branden, the founder of the psychology of self-esteem, insists that we must accept all our feelings without censorship; we should never disown, deny or repress any part of our experience. He points out that to deny our feelings is to keep ourselves in a perpetual state of internal conflict. The more you distance yourself from your feelings, the more disempowered and out of touch with your true self.

But where do these unwanted feelings go?

Mysterious Aches and Pains

For years, I’ve made a study of where people tend to store their unwanted emotions. Certainly, not all body aches or illnesses are psychosomatic. However, as I studied people’s bodily reactions to stress, recurring patterns emerged.

Healthy vs. Unhealthy Repression

Fear is the driving force behind repression, and is frequently rooted in your past. Repression is often necessary, particularly when you feel overwhelmed or experience trauma. But an overdependence on repression fuels psychosomatic symptoms and self-destructive patterns. As a therapist, I challenge my clients to come up with new responses to fear instead of repeating old behaviors.

I’ve made a list of these patterns below. You may recognize some of them. I personally can identify with all of them. Keep in mind, psychosomatic reactions are not neatly organized; some overlap, some converge. It all depends on your character and interpersonal style. The list below is best used as a general introduction to psychosomatic symptoms, a jumping off point for personal exploration.

As you review the list, ask yourself: Do any of these symptoms sound familiar?

Top 10 Tension Areas for Unwanted Feelings

1. Lower Back: ANGER
If you sit on frustration, the lower back is a common place for storing repressed anger. For relief, learn to constructively articulate frustration and address conflicts with others in the moment. Sounds simple? Believe me, it’s not. Learning to harness the power of anger and turn it into a creative force is key to living a dynamic and rewarding life. Strive to convert anger into assertion, express it constructively, not destructively. You’ll be rewarded with a surge in confidence, energy and healthier relationships. (See “How Group Therapy Empowers You In Relationships.”)

2.Stomach & Intestines: FEAR
When you’re afraid, you tend to tense your stomach and intestines. Sayings such things as, “I’m sick to my stomach” is usually bodily responses to conflict. The more you deny or repress fears, the more physical reactions you’re likely to manifest. Begin by acknowledging your trepidation and talking it through with someone you trust. Consider all your choices and outcomes. The more you can express the fear in words, the less of a hold it will have on your body. (See “How Avoiding Conflict Hurts Your Relationships.”)

3. Heart & Chest: HURT
I recently worked with a woman who was complaining of chest pains. A series of medical work-ups found no psychical cause for her symptoms. Was she supposed to live with chronic discomfort? Reluctantly she turned to therapy. When I asked her if someone she loved had hurt her, she guffawed and brushed my question off as psychobabble. A few sessions later, as she spoke about the demise of her last relationship, she began to cry uncontrollably. For too long she ignored her broken heart. She needed to mourn the relationship and honor her sadness. After this release, the tension in her chest finally lifted. (See “Healing Emotional Pain”)

4. Headache: LOSS OF CONTROL
If you’re a major or minor control freak, you’re in for a real challenge. No matter how strong-willed you might be, an emphasis on control will eventually lead to burnout – and splitting headaches. Not all difficulties in life can be solved by intellect or trying to control everything. In fact, many problems are exacerbated by controlling tendencies. Letting go, accepting what you can and can’t control, and developing a mindfulness practice are the steps you need to take to cure your headache habit. (See: “Do You Have a Controlling Personality?”)

5. Neck /Shoulder Tension: BURDENS & RESPONSIBILITIES
Shouldering too many responsibilities is a pain in the neck. If you suffer from neck and shoulder tension, it’s likely that your overly burdened. Rather than ask for help from others, you’re likely to do everything yourself. This most often leads to neck and shoulder tightness. Learn to delegate, ask for support, decide what is really worth taking on, and for goodness sake, share responsibilities with others.

Resentment stresses your entire body and does more damage to you than the people you resent. Blaming others, playing the victim, reliving the events — these are the empty calories of self-expression. Resentments keep you from living in the moment and experiencing the benefits of being present. When you focus on those who wronged you, you are giving in them free real estate in your head. Instead, try to focus on forgiveness, or at the very least, moving on. Strive for more fulfilling relationships, add a healthy dose of self-care, and you’ll feel years younger in no time. (See “How Wanting to be Liked Gets You Rejected.”)

7. Numbness: TRAUMA
When we’re overwhelmed by an event, we tend to numb our feelings. This is our psyche’s way to disassociate from overpowering pain or danger. Traumatic events are not always life-threatening —they can result from a brush with real or imagined danger or a history of childhood abuse or neglect. Over time, if you don’t process the trauma, the memory of it gets lodged in your body. As a result, you deaden your feelings when vulnerable; trusting others is impossible; and true intimacy is lost. Any situation that makes you feel unsafe causes you great confusion; you freeze up or go blank. The first step toward freeing yourself from trauma is recognizing the power it has over you and asking for help.

8. Breathing Difficulties: ANXIETY
Breathing difficulties, a panic attack that leaves you gasping for air, a suffocating feeling when anxious. These are the symptoms I’ve noticed in folks who are repressing great sadness. They don’t want to cry and avoid mourning heartbreaking events. Instead, they choose to repress sadness, move on and focus on something else. But restricting tears is a lot like holding your breath. When you finally cry, it comes gushing out; equal parts pain and relief. Freeing bottled-up sadness is like sucking in a dose of fresh oxygen. It’s refreshing and liberating!

9. Voice & Throat Problems: OPPRESSION
Oppressed people are not allowed to have a voice. If you grew up in an oppressive atmosphere, speaking your mind or expressing your needs was dangerous. You also carry around a harsh inner critic. As a result, as an adult you tend to withhold feelings. When you have the impulse to speak up, you resort to your childhood tendency to silence yourself and repress your voice. This clash between the impulse to speak and the impulse to withhold causes much tension and often manifests in throat and voice problems. In therapy, I’ve found that journal writing is a great way to expose your inner critic and start talking back to it. Also reading poetry out loud (poetry has a profound connection to the unconscious) is a way of gaining confidence in your voice. Hopefully, you will soon realize you have the right to be heard.

10. Insomnia: LOSS OF SELF
When you go through life-changing events – good bad – people tend to lose sleep. You experience anxiety when your life circumstances are in flux. This can happen during times of stress or times of great personal growth. For me, sleeplessness is most often associated with the fear of the unknown. Write down your fears or, better yet, talk them out with a close friend. Learn to work with change, rather than repress your fear of it. When you work with it, you’ll be able to hit the pillow and have sweet dreams.

Toward a More Rewarding Way of Being

Releasing bottled up feelings is fundamental to psychotherapy; it offers you respite from the psychic stress of repression. People always feel relieved when the weight of repression lifts. Soon after, they report a surge of confidence, a product of a stronger emotional core. Group therapy is also an excellent tool in building stronger and healthier relationships. (See “See Adult Group Therapy.“)

When you take better care of your feelings, you take better care of yourself and those you love. You come to appreciate and value your relationships more. Take the time to consider how you manage your feelings and what your psychosomatic pain is trying to tell you. Not only will you feel happier, many studies show you might even live longer.

For videos and articles, or to book a workshop or therapy group,


10.The 4 Biggest Lies We Learn as Children—and How to Unlearn Them

by Dan Elias | Jul 12, 2018 | ArticlesFamilyLifestyleWork

Happiness is a tricky thing. We chase things, ideas, and people we think will get us closer to happiness, but they never truly do.

Every time we reach a milestone, hundreds more appear before us. Before we know it, we are on the road to happiness once again—wandering travelers with no home in sight.

Happiness is not a destination, but a state of mind composed of all the beliefs we have about ourselves and the world around us. Some of these beliefs empower us, while others keep us restrained. If we are to be truly happy, we must deactivate the beliefs that hold us down—especially those that were programmed into our minds during our youth.

Here are 4 beliefs most of us learned as kids that hold us back:

  1. RetirementWill Make You Happy

Retirement was a concept invented in Germany in 1889. It allowed the younger generation to join the workforce and more senior people to enjoy their last few years on this earth. However,  life expectancy has increased significantly since then. Thus, retirement morphed into a queue for death filled with television and midday naps. What’s more, health seems to rapidly deteriorate.

With no purpose in this state of “quasi-happy limbo,” our brains begin to atrophy. Why? Well, the reasons we have to get out of bed in the morning no longer exist. Researchers at the Tohoku University conducted a seven year study on 43,391 people in Okinawa, an island in East China with the highest life expectancy on Earth. At the end of the seven years, a little over 3,000 people had died. What they found was that the risk of mortality was significantly higher among the subjects who did not find (or already have) a sense of “ikigai” (purpose).

Pay close attention the next time a news stories about a person that’s a hundred plus years old comes on the news. No matter their race, gender, or history, there’s always one thing that they all have in common: All of these people still work or volunteer in some way. They don’t need to do it for survival or money, but for purpose. Even though their bodies are old, it’s clear their minds are sharp and spirits are light.

Purpose is something that we need until our very last breath. No amount of money will ever change that.

  1. How Much You’re Getting Paid for Your Time Is More Important Than Who You Spend It With

Consider these two people:

Person A: An investment manager in New York with a salary of $250,000 a year. He has a gorgeous apartment on 5th Avenue with incredible views of the entire city. Too bad he never sees it. He works roughly 80 hours a week and hates half his office. He has a 5-year-old son and a wife that he does not see much. His time is caught up in the political game of getting to the top of the firm ladder. In the short amount of the time he does spend with his family, his mind is never really there. He thought about quitting a few times, but between his apartment, expenses, and attachment to his title, what is he going to do? He has gone too far to look back now and start over. He looks perfect from the outside, but feels like a slave on the inside.

Person B: Makes $75,000 a year, working 30 hours a week. He usually picks his kids up from school because he can. He is always exploring new ventures and interests. He indulges his curiosity and when he is doing something, he is fully present. His life is filled with people whom he relishes being around, and practices self-care that keeps him balanced. He sometimes has to deal with people he doesn’t like, but never gets too caught up in the weeds. He uses empathy to diffuse situations.

Who is richer?

According to the Glueck Study, person B. The Glueck study was an 80-year behavioral study of 268 Harvard sophomores that started in 1938, eventually expanding to over 1,300 people. This was the longest social study ever conducted in human history, which included a diverse set of people, including (among others) President John F. Kennedy.

What it found was that quality of relationships matter the most to human happiness. Being in a place where we are constantly sacrificing good relationships for money may put us in a golden palace, but without anyone there, it’s more like a golden prison. Finding balance is easier said than done, but the longer we prioritize the wrong things, the harder it is to turn back.

  1. More Options Are Always Better

There are many examples of tech billionaires, such as Mark Zuckerberg or the late Steve Jobs, always wearing the same hoodie or turtleneck. They could clearly afford clothing, so why did they dress like their closets were almost bare?

Every decision we make requires mental energy. By eliminating choices, we reduce the stress on your prefrontal cortex. Most decisions we make during the day are small, irrelevant decisions that can be streamlined. Does it really matter whether you wear blue jeans or black ones?

The more decisions we have to make, the less likely we are to make the right ones.

At one point or another, we all have spent more time choosing a movie than watching it, or picking a restaurant than eating there. We spend so much time deciding only to find that we have no energy to enjoy the movie or meal.

When making big decisions, eliminating smaller ones and not looking back after a plan of action is chosen makes a big difference.

So simplify your decision-making so you can really focus on what matters. Just wear the blue jeans already.

  1. Never Seek Discomfort

If you ask most people what they want in life, they’ll say they want to be happy.

Ironically, if you ask the same people when they felt happiest, it’s usually after going through a tremendously challenging experience. We are in awe of people who overcome great tribulations, yet we shy away from the same experiences in our own lives. Our brains are wired to keep us safe and do so by creating dissembling lies. These lies create self-imposed barriers stemming from either “Can’t Do” beliefs of “Don’t Want To” beliefs.

Can’t Do Beliefs: These usually manifest in some form of the question, “Why bother trying if we’ll never make it?” However, our perception of “never” is usually grounded in fear—the same fear that dissipates as soon as we take the first step. After all, how do we know we can’t if we haven’t even tried?

Don’t Want To Beliefs: These are lies we tell ourselves—and everyone around us—that explain why we do not want something, even though we secretly crave it. By convincing ourselves that we don’t want something that requires courage, strength, effort, and vulnerability, we preclude the need for working hard. And with that laziness comes a lack of true happiness.

Becoming aware of our unhealthy beliefs and seeking even the smallest self-improving discomforts can take our lives to the next level. Seeking discomfort does not have to be quitting a job or jumping out of plane; it could be as simple as making eye contact with a stranger or saying YES to something completely random.

Say YES to life and no to any belief that binds you. Awareness is the first step towards freedom and happiness.

Little surprise that our upbringing is founded on some egregious lies. They weren’t told maliciously; either beliefs were different when we were born, or our parents genuinely wanted to protect us and ensure our ultimate success in life.

But adulthood requires taking a hard look at the “truths” and rules we often take for granted. How many of them are keeping us from being fulfilled, happy, and successful?