1.Earnings..Highest Beat Rate and Lowest Miss Rate in 5 Years.
Meanwhile, U.S. based investors continue to benefit from rising corporate earnings. As of August 16th, 469 of the S&P 500 Index companies have reported Q2 earnings, of which 370 have beaten earnings (78.89%) and only 73 have missed (15.57%) earnings estimates. In fact, this would be the highest beat rate and lowest miss rate in the past 5 years and well above the averages over the past five years (69.25% Beat rate and 21.51% Miss Rate). Also, there are five sectors in which at least 80% of companies has beaten EPS estimates thus far.
Rich Farr, Chief Market Strategist
2.Here’s who owns a record $21.21 trillion of U.S. debt
Americans own 70% of U.S. debt, but China, Japan loom large
Who owns the huge and growing U.S. national debt? By and large, Americans.
Some 70% of the national debt is owned by domestic government, institutions investors and the Federal Reserve. A shade under 30% is owned by foreign entities, according to the latest information from the U.S. Treasury.
The nation’s debt climbed to a record $21.21 trillion at the end of June, a 6.9% increase from a year earlier.
American institutions such as private and state pension funds as well as individual investors were the biggest holders. They owned $6.89 trillion in debt and absorbed about four-fifths of the increase over the past year.
Foreigners, led by the Chinese and Japanese, owned $6.21 trillion. Those two countries have cut their stakes since 2015, but each country still owns more than $1 trillion worth of Treasury bonds and notes.
The Chinese government or Chinese investors likely own even more U.S. debt purchased through entities in other countries such as Hong Kong, Luxembourg or the Cayman Islands, all of which are havens for tax shelters.
Notably, Russia has slashed its Treasury holdings to a mere $15 billion from a peak of $153 billion in mid-2013 amid worsening tensions with the U.S.
So far there’s little evidence that other countries will follow suit to strike back at the U.S. amid ongoing trade disputes. Many need or want Treasury bonds and notes as a safe place to park their savings.
The U.S. government, for its part, owned $5.73 trillion in debt, mostly via Social Security and federal pension funds.
The Federal Reserve owned $2.38 trillion in debt, but it trimmed its holdings by $85 billion since June 2017. The Fed last year began to partly sell off the vast hoard of Treasurys it snapped up to lower interest rates and flood the economy with cash during and immediately after the Great Recession.
3.Shortage of U.S. Dollars.
Since March – the dollar’s rallied over 7%. And it’s caused the Emerging Markets to implode.
But the bigger problem is what lies ahead.
And that’s a global dollar shortage – which the mainstream continues to ignore. . .
I’ve touched on this a couple months back. Wondering when the mainstream would start to realize that the stronger the dollar gets – the more pressure global economies will feel.
I wrote. . . “This is going to cause an evaporation of dollar liquidity – making the markets extremely fragile. Putting it simply – the soaring U.S. deficit requires an even greater amount dollars from foreigners to fund the U.S. Treasury. But if the Fed is shrinking their balance sheet, that means the bonds they’re selling to banks are sucking dollars out of the economy (the reverse of Quantitative Easing which was injecting dollars into the economy). This is creating a shortage of U.S. dollars – the world’s reserve currency – therefore affecting every global economy.”
Since then, things have only gotten worse. . .
First: Jerome Powell – the Fed Chairman – issued a statement at the end of June that they would actually increase the amount of rate hikes over the next two years. This means they’re tightening even faster.
Second: the U.S. Treasury increased their debt-borrowing needs to the highest since the financial crisis – which was over a decade ago. Therefore, they will need even more dollars to fund their spending.
“The department expects to issue $329 billion in net marketable debt from July through September, the fourth-largest total for that quarter on record and higher than the $273 billion estimated in April [a 17% increase], the Treasury said in a report Monday. The department’s forecast for the October-December quarter is $440 billion, bringing the second-half borrowing estimate to $769 billion, the highest since $1.1 trillion in July-December 2008…”
And third: China’s growth is slowing down. Meanwhile the Emerging Markets are draining their U.S. dollar reserves even faster because of the strengthening dollar.
So, in summary: as global dollar liquidity continues drying up, there will be a wave of ‘risky’ positions being dumped and ‘dollar disease’ (selling assets to raise dollars to pay back debts) worldwide. . .
What we know is true from Economics-101 is that the lower the supply and the greater the demand equals a higher price.
4.CAPE Ratio Spreads.
5.China Responsible for 31% of Projected Growth 2018
6.U.S. Households Holding on to their Vehicles Longer.
7.Housing Rental Boom Since 2007
Freddie Mac Joins Rental-Home Boom
The mortgage-finance firm is backing loans used to buy single-family rental houses
Housing Is Back, But the American Dream Isn’t
Surging prices, tight lending standards and Nimbyism keep the young and poor out of the market.
Do you have enough for a down payment?
The housing market has made a remarkable — if partial — recovery since the disaster that befell it 10 years ago. In the years since the crisis, the market has recouped about two-thirds of the value it lost in the crash:
But unlike in the early 2000s, when housing became a vehicle for broad-based middle-class wealth, today’s bull market is shutting out many lower-earning and younger Americans. This is partly because of policy choices. But it also illustrates some of the pitfalls of relying on housing as the pillar supporting a country’s middle class.
We’ll give you 30 seconds to think. DON’T scroll down.
It’s the Eagles album “Their Greatest Hits 1971-1975,” per the Recording Industry Association of America (RIAA). Sales and streams hit 38 million copies, which is considered 38x platinum by the RIAA (the organization hadn’t measured sales for the album since 2006).
So who’s left with the silver medal? Michael Jackson’s “Thriller,” at 33x platinum.
Zoom out: The way the RIAA measures album sales offers a window into the evolving music industry.
- Per the AP: “RIAA’s platinum status was once equivalent to selling one million albums or songs, but in 2013 the company began incorporating streaming from YouTube, Spotify and other digital music services to determine certification for albums and songs.”
- Last year, streaming platforms accounted for almost two-thirds of U.S. music industry revenues…and virtually all the growth.
+ More trivia…because this is the Brew, after all: Can you name five tracks on the best-selling Eagles album? (Answer located at bottom of newsletter.)
9-10.17 Note-Taking Tips That Will Transform How You Retain Info
How many times have you listened to a presenter and forgotten what they said moments after the presentation?
Learning is important for our growth. We should take advantage of the opportunities we have to hear from experts. If you can’t remember what they say afterwards, then it’s time to start improving your note taking.
Note taking is an art that takes practice and discipline. It certainly isn’t easy when a flood of information is coming towards you and you have to decipher what’s important to write down and what’s not.
This list of 17 note taking tips will help you in any class, presentation, or meeting:
- Determine important content
Note taking should never be a transcript of every word said, but rather a summary of important information and questions.
If you’re going into a history class, you’ll want to remember names and dates especially. If a coworker is doing a training on SEO, you’ll want to pay more attention to terminology and recommended practices.
Anticipate before any presentation, meeting, or class what kind of content will be important to remember later.
- Eliminate distractions
Remember when your teacher turned off your phone in class? That might still be a good idea.
Whatever you find unnecessarily steals your attention during presentations needs to be eliminated as a distraction.
If you are taking notes on a digital device, close any unrelated applications or resources. If you know that Hank from accounting is going to talk to you a lot, maybe you sit next to someone else.
The point is to keep all of your attention focused on the subject material and note taking.
- Keep calm
If you’re too nervous about note taking, you’ll probably make mistakes. Understand that your notes probably won’t be perfect every time, but you can always get help and clarification later.
Note taking is difficult, so acknowledge your mistakes and improve on them.
- Go digital
Use an app, online tool, or software. Note taking apps are available for your laptop, tablet, or phone. They make it easy to take fast notes and add things such as photos, links, checklists, and locations.
If you feel like your handwriting is hard to read later, typing your notes will fix that. If you find yourself madly erasing after not organizing your notes correctly, than being able to copy-paste or hit control-Z can save you lots of valuable time.
- Start sketching
They say a picture is worth a thousand words. Many people understand concepts better in a visual context.
Try sketching some drawings to go around the notes you write. It can quickly jog your memory about what you were thinking and makes your notes more entertaining to go through later.
Just don’t get carried away and miss the important stuff. You will still want to combine drawings with plenty of actual words.
- Make something visual
Take your notes and organize them visually. If drawing isn’t your thing, you can still add some flair to your notes. Use something like microsoft publisher to inject some creativity into your notes.
Imagine your flyer is going to be used to teach someone else as you create it. This method forces you to spend more time with the content and can help organize it in such a way that makes more sense to you.
- Mapping method
The mapping method of note taking is based on diagramming your notes. It looks like a flowchart or a spider’s web between topics and subtopics. It’s a nice way to visually organize your notes that may be interconnected.
Here’s a more detailed guide on how to do mind mapping:
- Cornell note taking method
The Cornell method is a great approach for organizing your notes into easily reviewable sections.
You draw a line a couple inches from the bottom and then another line a couple inches from the left side, to create three boxes. The largest section you use to take notes however you’d like. The smaller left portion is for short cues to remind you what to specifically study later. The bottom section is where you write a summary of what you learned.
- Outline method
The outline method turns your notes into easily digestible bullet points.
Write them like you’re outlining a story. You’ll have main points from individual topics or subjects, then write bullet points underneath each one with the supporting information.
- Charting method
With the charting method, you will make a table with categories to be filled out. This is fantastic for organizing material that you know will follow a particular outline.
For example, if you are learning about different types of animals, you can make columns about where each animal lives, what does it eat, and how long it typically lives. Each row would have a different animal and you simply go across your columns and answer each question.
- Sentence method
Write down important points from the lecture in a basic sentence structure. You can add headers and separate your sentences into their own lines to help keep organization.
This works especially well for writing down useful quotes or statistics.
- Record it
If you worry about missing important details or find yourself a better studier by listening, then you should record the presentation or class.
Use your phone’s recording system or get software that automatically transcribes what’s being said. There are technical limitations with transcription software, so you may need to watch it carefully to correct any mistakes.
- Ask for clarification
Your notes are close to worthless if you don’t understand them while writing them. Make sure to ask the teacher or presenter any questions you may have. Chances are someone else will be grateful that you asked about the same thing they were confused about.
Take courage and work hard to understand the concepts the first time around so that you’re not even more confused later on.
- Summarize afterwards
After a class, presentation or meeting, write down a summary of what the key points were. This is important for memory retention of the subject material and to see if you have any lingering questions to be addressed.
Good summaries should include not only the key points, but also further applications to the subject material, questions to be researched, and a list of tasks to be completed.
- Continue the discussion
Once you’re done with listening and note taking, turn to someone nearby and talk with them about what you learned.
You can ask them questions about what stood out to them or what changes they would like to make based on the material. You can ask questions about things you perhaps misunderstood or did not receive a clear answer to.
Continuing the discussion with someone else is an excellent way of applying the material and cementing it in your memory.
If you have a meaningful conversation about it, that information has a much greater likelihood of being retained.
- Review your notes
What you retain from the first time you take notes will quickly fade if you do not review them later. Hopefully, you have used one of the above methods to make your notes easy to go through and perhaps even entertaining.
The important thing is that you take the time to go over your notes later so that you can remember what you learned and further reflect upon the points made.
- Share what you learned
Even better than reviewing your notes is reviewing them with someone else. This gives you the opportunity to teach what you’ve learned.
Use a flyer creator to creatively showcase what you’ve learned. Doing so will help you realize points you did not fully understand or need to better review.
Your review partner may even come up with valuable questions for you to reflect upon and apply to your notes.
Don’t be afraid to mix up some of these note taking methods together. You may find that a portion of your notes is better organizing in an outline format, but then decide that you need to make a chart for another portion.
The point is to be organized and do what makes the most sense for you. Even if the person next to you is clearly organizing their notes according to the Cornell method, perhaps a different strategy will appeal to you more. Note taking is meant for yourself, so do it in whatever way is best for you.
Now you have the chance to use what you have learned. Note taking is only valuable when it serves a purpose later.
If you learn something interesting, come up with ways to apply it at work or in your home. Review your notes often to find different applications. Use the knowledge you have gained to make a difference in your life or the lives of others.
Featured photo credit: Unsplash via unsplash.com