TOPLEY’S TOP 10 March 28 2024

1. Market Returns Around End of Fed Rate Hiking Cycle

JP Morgan Guide to Markets

2. Record High Liquidity

Torsten Slok, Ph.D.Chief Economist, Partner  One way to measure liquidity is to add bank reserves and money market assets, see chart below, which shows that there is record-high liquidity to push stock prices higher and credit spreads tighter. In particular, once the Fed starts lowering interest rates, some of the $6trn in money market funds is likely to find its way into stocks and credit.

3. Small Cap Stocks Not Joining Rally Yet.

Micro Cap Stocks +2% 2024

Small Cap Stocks that make money IJS-S&P small cap 600 -1.5% 2024

4. Apple Biggest Underperformance vs. S&P Since 2013

5. Tesla vs. S&P Chart

6. S&P Global downgrades outlooks on five regional US banks to ‘negative’

By Reuters
The S&P Global logo is displayed on its offices in the financial district in New York City, U.S., December 13, 2018. REUTERS/Brendan McDermid/File Photo Purchase Licensing Rights, opens new tab
March 26 (Reuters) – Ratings agency S&P Global on Tuesday downgraded five regional U.S. banks to due to their commercial real estate (CRE) exposures, in a move likely to reignite investor concerns about the health of the sector.
The ratings agency downgraded First Commonwealth Financial (FCF.N), opens new tab, M&T Bank (MTB.N), opens new tab, Synovus Financial (SNV.N), opens new tab, Trustmark (TRMK.O), opens new tab and Valley National Bancorp (VLY.O), opens new tab to “negative” from “stable,” it said.
“The negative outlook revisions reflect the possibility that stress in CRE markets may hurt the asset quality and performance of the five banks, which have some of the highest exposures to CRE loans among banks we rate,” S&P said.
Representatives for the banks did not immediately respond to request for comments outside business hours.
As of Tuesday, S&P had negative outlooks on nine U.S. banks, or 18% of those it rates, it said, adding most of those ratings “relate, at least in part to sizable CRE exposures.” The company rates a range of banks of varying sizes.
S&P Global downgrades outlooks on five regional US banks to ‘negative’ | Reuters

KRE Regional Bank ETF vs. S&P sideways along lows.

7. Year Over Year Home Prices Dip to Negative

Wolf Street Blog by Wolf Richter

But starting in mid-January, the year-over-year increases of the listing price shrank and then started hobbling along the 0% line, and in the most recent week, the listing price was below a year ago (-0.6%), as sellers face more competition from other sellers and fewer buyers. This year-over-year weakness in the listing price is an indicator that the median sold price through the spring selling season will also see year-over-year weakness.
In its note sent out two days ago, explained:  “It marks the first week of year-over-year price declines since July 2023, attributed to mortgage rates hovering around 7% and an ongoing increase in available for-sale homes, notably an upsurge in affordable listings spotlighted in the February Housing Trends Report. With mortgage rates nearly returning to 7% in February, many potential buyers are postponing their purchasing plans in hopes of securing lower rates. Consequently, lower buyer competitions exerted downward pressure on prices.”

Prices were below their 2022 peaks in 9 metros of the 20 metros in the Case-Shiller index (% from their respective peak in 2022, month of peak):

  1. San Francisco Bay Area: -13.4% (May 2022)
  2. Seattle: -12.6% (May 2022)
  3. Portland:  -7.9% (May 2022)
  4. Denver:  -7.1% (May 2022)
  5. Phoenix:  -6.5% (June 2022)
  6. Dallas: -5.8% (June 2022)
  7. Las Vegas: -5.1% (July 2022)
  8. San Diego: -1.5% (May 2022)
  9. Los Angeles: -0.3% (May 2022)

8. Mag 7 Insider Selling

Jack Ablin Cresset
Magnificent Seven insiders have unloaded nearly $13 billion of stock over the last six months, the most selling in over a year. Michael Dell unloaded nearly $340 million of his eponymous stock earlier this month. This marked increase in insider selling may be an indication that the recent tech stock rally, fueled by excitement over generative AI, might face headwinds.

9. Daniel Kahneman Father of Behavioral Economics Dies


Daniel Kahneman, the father of behavioral economics, died yesterday at 90 years old. He’s best known for applying psychology to economics and uncovering biases and mental shortcuts that make people act irrationally, as he chronicled in his best-selling book Thinking, Fast and Slow.
Kahneman, along with his long-time collaborator and friend Amos Tversky, developed “prospect theory,” or loss-aversion theory, which earned him the Nobel Prize in Economics in 2002 (which he shared with fellow economist Vernon Smith). The idea is that people value losses and gains differently, so we feel more bad about losing $100 than we feel good about making the same amount.
He applied this theory to investors, who had previously been considered rational decision-makers. It shows up elsewhere, too—for example, golfers putt better when they’re facing the loss of a stroke than when they might gain one.
A few other biases he identified that are probably buried in your brain (whether or not you learned them in Psych 101):

  • The “peak-end rule” that people remember an experience primarily based on how they felt at its most intense moment and the final part of it. It’s why you consider a whole vacation good if the last day was good—or the opposite.
  • The conjunction fallacy where people erroneously think the probability of two things being true is more likely than just one thing, which the famous “Linda the Bank Teller” problem illustrates.

For further reading: Kahneman and Tversky were the center of Michael Lewis’s 2016 book, The Undoing Project.—MM

10. 4 Ways to Find Greater Fulfillment in Life

Psychology TodayBlake Griffin Edwards LMFT

Kierkegaard’s rules for a more authentic, meaningful life.

Søren Kierkegaard, a Danish philosopher, theologian, and poet is considered by many to be the father of existentialism. His work focuses on individual experience and the importance of personal choice and commitment, and his philosophy offers insights into living authentically and finding fulfillment amidst the distractions and pressures of the modern world.

In the course of Kierkegaard’s writings, instructive themes emerge for how to navigate life’s complexities with integrity and purpose. Here are four:

1. Cultivate Self-Awareness and Introspection

Kierkegaard emphasized the importance of self-awareness and introspection as foundational to understanding one’s own existence and making authentic choices. He argued that true self-knowledge requires a deep and honest examination of one’s thoughts, feelings, and motivations, involving questioning assumptions and beliefs inherited from culture and upbringing, a theme echoed in his fascination with Socratic self-knowledge. 

In early autobiographical reflections, Kierkegaard acknowledged an enjoyment of attention and recognition as a personal weakness, exemplifying the kind of self-scrutiny he advocated. In The Sickness Unto Death, he explored despair as arising from a lack of self-awareness and the failure to live up to one’s own ideals. Kierkegaard’s struggle with melancholy and sharp self-critique is evident in his journals and correspondences, where he often reflected on his own shortcomings and the nature of existence. Introspection following his broken engagement with Regine Olsen contributed to many of his profound insights about the self and its complexities. Elsewhere, he examined the role of self-awareness in authenticity.

2. Embrace Uncertainty and Ambiguity

Kierkegaard’s philosophy also challenges us to embrace uncertainty and ambiguity. He contended that life’s complexities cannot be reduced to simple answers or solutions. Instead, we should be willing to live with paradox and contradiction, remaining open to new ideas and perspectives. This openness requires a willingness to change our minds in the face of new information, a stance that stands in contrast to the search for absolute certainty. Kierkegaard critiqued a purely aesthetic or contemplative conception of self-knowledge and emphasized the importance of engaging with life’s uncertainties actively and responsibly.

Kierkegaard employed a writing technique he called “indirect communication” to illustrate the complexity of existence and the limitations of direct knowledge. He did so in several ways, especially by publishing writings in which fictitious authors engaged in dialectical dialogue, each representing distinct perspectives and worldviews. He also used irony and paradox to provoke readers to think beyond surface-level understanding. And he used a technique he called “double reflection” in which he presented ideas in a way that required readers to reflect not only on the content of the text but also on their own existence and relationship to the ideas presented.

Kierkegaard often refused to conform to societal expectations, as seen in his critique of the established church and resistance to an academic career. He challenged prevailing views of his time, advocating for a personal leap of faith rather than adherence to systematic or institutionalized belief systems.

3. Take Responsibility for Your Life and Choices

A central tenet of Kierkegaard’s philosophy is the imperative to take responsibility for one’s own life and choices. He argued that individuals cannot blame their circumstances or external factors for their problems. Instead, they must own their thoughts and actions, acknowledging their weaknesses and flaws. This process of self-improvement and growth is essential for overcoming despair and achieving a state of self-acceptance. Kierkegaard’s emphasis on the teleological view of the self and the quest for narrative unity highlights the ongoing nature of this responsibility.

Kierkegaard’s insistence on personal responsibility was a recurring theme in his work. He believed that individuals must take responsibility for their own existence, choices, and the meaning they ascribe to their lives. One might contend that his decision to pursue a writing career over a more conventional path was a kind of existential reflection of this theme. His works, including Either/Or and The Concept of Anxiety, explore the necessity of making choices and the ethical implications of those choices.

4. Accept Your Own Mortality

Finally, Kierkegaard urges us to embrace our own mortality, recognizing that life is fleeting and impermanent. Accepting the uncertainty of life and the inevitability of death can lead to a sense of peace and contentment that transcends fears and anxieties. This acceptance encourages living in the present moment, fully engaging with the richness of life’s experiences. Kierkegaard’s perspective on faith and the presence of God deeply shaped his conception of acceptance, as he suggested that a deeper sense of purpose and meaning can be found in our utter dependence upon God.

Kierkegaard’s reflections on the finite nature of existence are central to his thought. In Concluding Unscientific Postscript, he discussed the significance of an individual’s subjective relationship to truth, including an awareness of mortality. Kierkegaard’s health issues and early deaths in his family, including of his father and several siblings, influenced his preoccupation with mortality and the urgency of living authentically. Kierkegaard’s personal experiences with loss and contemplations of death are reflected in his philosophical works, where he emphasized the importance of living in the present and making meaningful choices in the face of life’s transience.

Kierkegaard’s philosophy remains profoundly relevant, providing valuable insights into the human condition.