Topley’s Top Ten – April 1, 2020

1.Total Contribution of Global Tourism to World Economy–$9 Trillion.

Travel and tourism: direct contribution to GDP worldwide 2019, by country

2.Dow is on track for its worst quarterly performance since 1987 — here’s how the stock market tends to perform after damaging quarters

Mark DeCambre

The S&P 500 hasn’t been down in these three successive months since 2008

How bad has it been for the U.S. stock market in the first three months of 2020?

In a word, historic, but returns are almost certain to improve over the longer term despite the current pain, if history is any guide.

Indeed, it has been punishing for investors, as the market went into a coronavirus-sparked free fall that so far has the 124-year-old Dow Jones Industrial Average on pace to register its worst quarterly loss since the fourth quarter of 1987. The three-month skid also would represent the steepest first-quarter drop, from January through the end of March, in the index’s history, according to Dow Jones Market Data.

The dizzying equity meltdown has amounted to a more than 21% quarterly skid thus far for the Dow industrials DJIA, -0.802%, while the S&P 500 SPX, -0.858% has declined more than 18% over the quarter, which would mark the broad-market index’s sharpest such decline since the 2008 financial crisis.

Check out the table below, as of late morning on Tuesday:

Dow-21.5%Q4 1987
S&P 500-18.4%Q4 2008
Nasdaq Composite Index-12.6%Q4 2018
Source: Dow Jones Market Data

On top of that, this would be the first time in well over a decade that the S&P benchmark has ended each of the first three months of a calendar year in negative territory, as it did in January, off 0.2%; February, falling 8.41%; and March, where it’s on pace to suffer a loss of at least 10%.

The S&P 500 hasn’t been down in those three months successively since 2008, and a January-to-March stretch of losses has only occurred seven other times in the history of the 63-year-old stock index.

Meanwhile, the Nasdaq Composite Index COMP, -0.351% has declined more than 12.5%, which would represent the worst quarterly decline since the last three months of 2018 for the technology-heavy benchmark.

The market’s bearish downtrend, despite glimmers of hope for the S&P 500 and Dow over the past several sessions, is underpinned by the spread of the COVID-19, the most severe pandemic in generations.

After the Dow has produced a quarter as ugly as this one, the blue-chip index returns 11.88% and 8.49% in the following two quarters, according to Dow Jones Market Data. In such a year, the Dow returns 22.75% on average. There are similar positive trends for the other two main benchmarks.

Here’s how the stock benchmarks perform after a quarter as bad as the one Wall Street is experiencing now:

S&P 50012%15.38%27.79%
Source: Dow Jones Market Data

Here’s how the indexes fare after a month as bad as the one in March, on average, with the Dow down 12.5% in March so far, the S&P 500 off more than 11% and the Nasdaq down 9.5%, representing the worst monthly drops for the benchmarks since 2008:

S&P 500-0.15%2.14%8.72%
Source: Dow Jones Market Data

3.Sustainable Investing ETFs Attracting More Inflows Than Traditional ETFs in 2020.


Source: BlackRock Investment Institute, as of March 25, 2020. Notes: Global sustainable ETFs as any exchange-traded funds that pursue a dedicated sustainable objective, whether using a broad ESG, thematic, impact, or exclusionary strategy. Traditional ETFs are any other ETFs that are not directly focused on sustainability.

We see a sustainable investing wave playing out in financial markets over the coming decades, remaking economies and industries as capital is reallocated to sustainable assets. This year’s fund flows may offer a miniature version of this shift. Sustainable exchange-traded funds (ETFs) have kept attracting assets this year, while traditional ETFs have seen heavy outflows in the market selloff. See the chart above. Net inflows into sustainable ETFs totaled $14 billion as of March 24, already more than half of 2019’s full-year figure, our data showed. To be sure: The total assets under management of sustainable ETFs are just 1% of that of total ETFs, and flows to sustainable funds are still very small compared with those to traditional funds. Yet the growing interest offers a glimpse of what may lie ahead: a significant structural shift toward sustainable investing, driven by broad societal preferences. As a result, we see portfolio rebalancing in the current environment as an opportunity to substitute some traditional assets with sustainable ones, with an eye on potential long-term benefits.!430!3!358044498375!e!!g!!what%20is%20sustainable%20investing

4.Global Equity Markets and Viral Outbreaks

Capital Group

4 ways to stay calm when markets stumble

5.Will Big Box Department Stores Survive Corona?

The chart depicts the brick-and-mortar business that Macy’s, Nordstrom, Kohl’s, JCPenney, Neiman Marcus, Sears, Bon-Ton Stores, Barney’s and others are in – or were in. Over the past 20 years, department store revenues declined by 43%. And now they’re getting whacked for good by the lockdowns. That declining line of revenues is going to make a 90-degree downward kink in Q1, Q2 and Q3, to violate the WOLF STREET beer-bug dictum that “Nothing Goes to Heck in a Straight Line”:

Retail-exposed CMBS have already been defaulting across the country. Now, this is likely to happen on a large scale. Which is one of the reasons the CMBS market is in such turmoil, and why S&P began slashing the credit ratings of many CMBS with retail exposure, some of them by multiple notches, including one deal by nine notches. And this is why the Fed and the Treasury and the Primary Dealers are now conspiring to bail out the CMBS market.

Post-Lockdown New Normal: Many Brick & Mortar Stores Will Not Reopen, CMBS will Default, Mess to Ensue by Wolf Richter • Mar 30, 2020 

6.Concentration of World Manufacturing…U.S. and China Almost Half

7.Dallas Fed Record Weakness for New Orders.


 Delving deeper into regional Fed data, we show the results of the various supplemental questions related to COVID-19 that the Dallas Fed asked in this month’s survey.

8.March Record Stock Market Volatility

Investors can do some buying as markets are ‘a lot cheaper,’ but key is moderation, says billionaire investor Howard Marks

9.Bill Gates outlines 3 steps US government needs to take ‘to save lives and get the country back to work’

BY TAYLOR SOPER on March 31, 2020 at 7:43 pm

Ongoing coverage of the novel coronavirus, and its impact on Seattle and the technology industry. 

(GeekWire Photo / Todd Bishop)

Shut down the country. Step up testing. Develop treatments and a vaccine using data.

Bill Gates laid out a 3-step process the U.S. government must take to help curb the COVID-19 outbreak that could kill between 100,000 and 240,000 Americans, based on government estimates shared Tuesday.

The Microsoft co-founder and global health expert published his proposed plan in a Washington Post column Tuesday afternoon. Gates has been increasingly outspoken in recent days about the need to take more aggressive action in the fight against the novel coronavirus.

“There’s no question the United States missed the opportunity to get ahead of the novel coronavirus,” he wrote. “But the window for making important decisions hasn’t closed.”

Here’s a recap of his plan:

·       Shutdown: Allowing states to enact their own social distancing mandates is a “recipe for disaster” because people can travel across state lines and spread the virus, Gates wrote. “Until the case numbers start to go down across America — which could take 10 weeks or more — no one can continue business as usual or relax the shutdown,” he said. “Any confusion about this point will only extend the economic pain, raise the odds that the virus will return, and cause more deaths.”

·       Testing: Gates said more tests need to be made available and the resulting data should be aggregated “so we can quickly identify potential volunteers for clinical trials and know with confidence when it’s time to return to normal.” He said there should also be clear priorities for who gets tested, given the lack of test-kits. He also called out the self-swab developed by the Gates-backed Seattle Coronavirus Assessment Network as an example of an efficient testing method.

·       Vaccine: Gates said a vaccine can be created in less than 18 months with a data-based approach and rapid trials. The federal government should help build facilities where the vaccines will be made, he said.

In the column, Gates also cited his 2015 Ted Talk in which he warned the world of a COVID-19-like pandemic.

“In 2015, I urged world leaders in a TED talk to prepare for a pandemic the same way they prepare for war — by running simulations to find the cracks in the system,” Gates wrote. “As we’ve seen this year, we have a long way to go. But I still believe that if we make the right decisions now, informed by science, data and the experience of medical professionals, we can save lives and get the country back to work.”

There are now nearly 200,000 confirmed cases of COVID-19 in the U.S., more than any country in the world. More than 3,600 have died in America from the virus, a number that has tripled since Thursday morning, The New York Times reported.

10.How Stress Hormones Work–and How to Harness Them

Star athletes and military service members use these strategies to turn stress into productive energy. You can, too.

By Cameron Albert-DeitchReporter, Inc.@c_albertdeitch

A little bit of stress can push you to perform at your best. Let it get out of control, and you’re at risk of burnout and serious health issues. While it’s a simple enough concept to understand, effectively managing stress is much harder in practice. Case in point: 30 percent of Americans that visited a doctor between mid-2017 and mid-2018 went for stress-related issues, according to a survey conducted by media company Everyday Health.

Finding that Goldilocks-esque middle state–enough pressure to encourage mental sharpness, not enough to wear out the body and mind–is where most leaders want to be most of the time. Fortunately, psychologists and performance coaches say you can train your brain to get there–and even leverage stress in high-stakes situations.

It starts with understanding the roles that two hormones, adrenaline and cortisol, play in stress. Here’s what you need to know:

Adrenaline and Cortisol

Whenever your body perceives a threat, like receiving an angry email or one more assignment on top of an overwhelming workload, it releases a surge of adrenaline and cortisol into your system. A March 2019 article published by the Mayo Clinic effectively sums up each hormone’s function:

·       Adrenaline increases your heart rate, elevates your blood pressure, and gives you an energy boost.

·       Cortisol suppresses functions that are unhelpful in fight-or-flight situations, like the digestive and reproductive systems, and sends signals to the parts of your brain that control mood, motivation, and fear.

Together, they can be a game-changer in high-stakes situations, says Jarrod Spencer, a sports psychologist and author who has worked with college athletes at the University of Maryland and Princeton University, among others. Stress, he says, can sharpen your focus to an extreme degree. That’s why deadlines and time pressure can be so effective for performance: Cortisol enables above-average productivity, while adrenaline gives you energy to push your physical and mental capabilities.

A Double-Edged Sword

At the same time, staying levelheaded while stressed can be a challenge–and the same two hormones are to blame. “Your body is kicking into survival mode, and 99.9 percent of the time, you’re not actually in a life-or-death situation,” explains Graham Betchart, a mental skills coach who has worked with basketball stars like Ben Simmons and Karl-Anthony Towns, as well as staffers at venture capital firm True Ventures and Silicon Valley Bank. “You might just be having a talk with someone you work with, and all of a sudden, bang, you’re in this very limited, primal state of thinking. You’re basically dealing with old, hardwired instincts.”

If you don’t find ways to recover from stressful situations, you’re subjecting your body to overexposure to adrenaline and cortisol, according to the Mayo Clinic. Over the long term, chronic stress increases your risk of anxiety, depression, digestive problems, headaches, heart disease, sleep issues, memory and concentration impairment, and other conditions.

Strategies for Stress

Humans have a built-in mechanism for managing stress as it’s happening: The ability to breathe deeply. It’s a short term, temporary fix–but a powerful one, says Louisa Sylvia, a staff psychologist at Massachusetts General Hospital and Harvard Medical School professor who often works with military veterans and service members. Sylvia explains that taking “big, deep belly breaths” helps with cardiorespiratory coupling–the synching of your heart rate, blood pressure, and breathing–which, in turn, helps you stay clearheaded under pressure.

Long term, Betchart adds, you can train your brain to take advantage of stress’s positives while ignoring its negatives. He refers to his favorite method as the MVP technique:

·       Meditation, which trains your breathing and ability to stay mentally grounded in tough situations.

·       Visualizing yourself overcoming obstacles, which gives you the perspective you need to consistently realize that your stressors aren’t life-or-death situations.

·       Positive self-talk, which motivates you to work hard at regularly managing your stress.

Practicing all three daily, Betchart says, can help you reframe the very nature of stress. “Stress is just energy, right? It’s stress when you don’t want the energy there, or you can’t handle it,” he says. “The person who understands how to reframe it into energy and opportunity already has a massive advantage–but you need that training on how to harness it. If you don’t, it can overwhelm you.”