Topley’s Top Ten – February 13, 2019

1.Dollar Back to Even for the Year….Recouped All Early Year Losses.

“The dollar’s not weakening, and the reason for that is that the Fed is just the beginning, in the sense that all other central banks are most likely going to become dovish,” said Momtchil Pojarliev, head of the currencies group.

The greenback climbed 0.5 percent Monday to recoup its year-to-date losses, and is enjoying its longest winning streak since January 2016. The currency’s surprising strength has upended forecasts across Wall Street, with firms such as Morgan Stanley and Nomura having called for dollar losses. It’s also put a chill on U.S. corporate earnings.

While the Fed’s about-face would typically vindicate those calls, the darkening outlook for the dollar’s peers should support it in the days ahead, according to Kit Juckes, a Societe Generale SA global fixed-income strategist. The euro is a case in point: A lurch lower in German yields and sputtering European growth saw the common currency touch its lowest level since November on Monday.

“The problem for dollar bears is that there is a chronic shortage of currencies to like,” Juckes said. “Lower bund yields, not to mention weak growth, political uncertainty and Brexit, make a good set of reasons to hate the euro as much as you hate the dollar.”

2.Contra-Indicator—1 in 3 Fund Managers Think S&P Peaked for the Year.

3.Dollar Strengthens…Fund Managers Loaded Up On Emerging Markets.

Exposure to emerging-market stocks kept rising to a 37 percent overweight – The most crowded trades are being long emerging markets, long U.S. dollar and long FAANG + BAT stocks

4.VIX Not Breaking to Decisive New Lows…Still In Oct. 18-Feb 19 Range.

5.Homebuilders Up Big Yesterday….+62% From Dec. 18 Lows.

6.Netflix Call Video Game Fortnite a Bigger Competitor Than HBO.

Video Game Stocks Get Clobbered, and Fortnite Is to Blame

By Stephen Grocer

Shares of video game makers slid on Wednesday after Electronic Arts and Take-Two Interactive Software delivered disappointing results. Those two stocks, as well as shares of rival Activision Blizzard, were down more than 10 percent.

One reason for the disappointing performance? Competition from Epic Games’ Fortnite.

Fortnite has become a sensation around the world since it was released in late 2017. The game, which features an online battle royale in which hundreds of players fight for survival, is free to play. Players make in-game purchases to upgrade their characters. By late last year, Fortnite said it had 200 million registered users, up from 125 million in June.

In fact, Fortnite has become so popular that Netflix said last month that it considered the game more of a competitor than HBO.

7.Next Round of Unicorns…50 New Startups Heading to $1B Valuation.

50 Future Unicorns

CB Insights and the NYT teamed up to predict the 50 startups that will eventually be valued at $1 billion. And we’re reading the list very closely…

Here’s why: 48% of startups they identified in a similar analysis in 2015 became unicorns. If that hit rate’s good enough for Cooperstown, it’s good enough for us.

Straight to the main takeaway: This roster of wannabe unicorns is not like the previous cohort (Uber, Airbnb, etc.), per the NYT’s Erin Griffith.

  • The old “benefited from the spread of smartphones and cheap cloud computing. Many of these companies built global empires by simply taking existing businesses…and making them mobile.”
  • The new “largely focus on software for specific industries like farms, banks and life sciences companies.”

Maybe you think the new class isn’t as sexy. But there’s nothing sexier to a farmer with a lot of data than a company that can analyze that information and give insights. Which is why Farmers Business Network has raised almost $200 million and has 7,700 farms as customers.

Notable snub:

8.Most Households 4-6 Credit Cards.

There are about 370mn credit card accounts in the United States, see chart below. With some households unable to get credit that means that many households have 4, 5, or 6 credit cards.


Let us know if you would like to add a colleague to this distribution list.

Torsten Sløk, Ph.D.
Chief International Economist
Managing Director
Deutsche Bank Securities
60 Wall Street
New York, New York 10005
Tel: 212 250 2155

9.US Job Opening Soar To All Time High: 800K More Than Unemployed Workers

by Tyler Durden

The Fed’s dovish U-turn appears in jeopardy again.

After a modest slowdown in job openings which started in September and continued through November, today’s November JOLTS report – Janet Yellen’s favorite labor market indicator – for the month of December showed an unprecedented surge in job openings across most categories as the year wound down, with the total number soaring from an upward revised 7.166 million (from 6.888 million), to an all time high 7.335 million, smashing expectations of a 6.846 million print.

And thanks to the surge in job openings, this will be the 10th consecutive month in which there were more job openings then unemployed workers: considering that according to the payrolls report there were 6,535MM unemployed workers, there is now exactly 800K more job openings than unemployed workers currently, (how accurate, or politically-biased the BLS data is, is another matter entirely).

In other words, in an economy in which there was a perfect match between worker skills and employer needs, there would be zero unemployed people at this moment (of course, that is not the case.)


10.Bill and Melinda Gates revealed their 9 biggest surprises from 2018 in a letter dedicated to Microsoft’s late cofounder

Isobel Asher Hamilton

  • Bill and Melinda Gates published their annual letter for 2019.
  • The Gateses listed their nine biggest surprises of 2018, which include home DNA tests catching serial killers, sexist data, and the fact that toilets remain largely unchanged.
  • They dedicated the letter to Bill Gates’ Microsoft cofounder Paul Allen, who died in October.

Bill and Melinda Gates have released their 2019 annual letter, and its theme is “surprises.”

“How would you describe 2018? Was it what you expected? We’d probably say no,” the letter begins. “From especially devastating natural disasters on the one hand to record numbers of women campaigning for office on the other, 2018 felt to us like a series of surprises.”

The Gateses go on to say that while some events have been welcome, others have been less pleasant. Here are the nine things that surprised Bill and Melinda Gates this year:

1 . Africa is the youngest continent, with a median age of 18

Bill points out that everywhere else in the world the average age is going up. “This can be either an asset or a source of instability. Melinda and I believe that the right investments will unlock the continent’s enormous potential. Young Africans will shape the future of not only their own communities but the entire world,” writes Bill.

  1. At-home DNA tests can find serial killers — and could also help prevent premature birth

Bill referred in particular to the 2018 capture of the Golden State Killer, 33 years after his crimes. The suspected killer was arrested by investigators after a distant relative of his uploaded their DNA to an open-source DNA-sharing website called GEDmatch.

Read more: The suspected Golden State Killer was finally caught because his relative’s DNA was available on a genealogy website

Gates also writes that a large sample provided by 23andMe users gave scientists a clue as to which genes can cause premature labour.

  1. We will build an entire New York City every month until 2060.

Gates warns against climate change being exacerbated by electricity usage, manufacturing, and agriculture.

Read more: Bill Gates warns of the dangers of cow farts — and the world should take his words seriously

“It’s not realistic to think that people will simply stop using fertilizer, running cargo ships, building offices, or flying airplanes. Nor is it fair to ask developing countries to curtail their growth for the sake of everyone else,” writes Gates.

“Part of the solution is to invest in innovation in all five sectors so we can do these things without destroying the climate. We need breakthrough inventions in each of the grand challenges.”

  1. Data can be sexist

The Gates’ expressed concern about the reams of missing data about women, particularly in developing countries. Not only is missing data a worry, but Melinda writes that the way data is collected about women can stack the odds against them.

Read more: Why it’s totally unsurprising that Amazon’s recruitment AI was biased against women

“We like to think of data as being objective, but the answers we get are often shaped by the questions we ask. When those questions are biased, the data is too,” she writes.

  1. You can learn a lot about processing your anger from teenage boys

The Gates’ talked in-depth about attending a meeting of high-school boys talking about how they deal with their anger. Bill said he learned a lot from watching those boys — some of whom had lived through tragedy — find ways of handling their anger.

Read more: After talking to teens about anger management, Bill Gates admits that some of his Microsoft meltdowns were over the top

  1. There’s a nationalist case for globalism

In a more political section, Bill and Melinda argued that nationalism doesn’t necessarily exclude international cooperation.

“There is nothing about putting your country first that requires turning your back on the rest of the world. If anything, the opposite is true,” Melinda writes.

Read more: Bill and Melinda Gates say that the best way to put ‘America first’ is to invest in foreign aid — a not-so-subtle nudge at Trump

Bill specifically appealed for international cooperation when it comes to the treatment of diseases.

  1. Toilets haven’t changed in a century

The Gates’ described a “toilet fair” which they organised in Beijing last year — looking for a new design to oust the flush toilet.

“Several companies are business-ready. Their inventions check almost all the boxes: They kill pathogens, can keep pace with the needs of fast-growing urban areas, and don’t require sewer infrastructure, external water sources, or continuous electricity to operate,” writes Bill.

He added the only problem at the moment is affordability, to which end the Gates Foundation will be investing in more R&D.

  1. Textbooks are becoming obsolete

Bill said that the thing killing off the textbook is very same invention which helped make his fortune: Software.

“When I told you about this type of software in previous letters, it was mostly speculative. But now I can report that these tools have been adopted in thousands of U.S. classrooms from kindergarten through high school. Zearn, i-Ready, and LearnZillion are examples of digital curricula used by students and teachers throughout the US,” he writes.

  1. Mobile phones are most powerful in the hands of the poorest women

“For the world’s most marginalized women, a mobile phone doesn’t just make their old life more convenient; it can help them build an entirely new life,” writes Melinda. However, she pointed to a gender gap in phone ownership in poorer countries.

Finally: The letter is dedicated to Bill’s Microsoft cofounder

As a signoff, Bill and Melinda dedicated this year’s letter to Paul Allen, who died in October 2018 at the age of 65. They said:

“Paul was a brilliant man with a wide-ranging mind and a special talent for explaining complicated subjects in a simple way. He loved to share his passion for music, science, the arts, sports, philanthropy, and so much more.

“He supported homeless shelters, brain research, and arts education. He helped us see how much good innovation could do in the world. He deserved more time in life, and his passing left a big hole in our hearts. We’ll think of him every time we hear Jimi Hendrix.”

Paul Allen’s love for Jimi Hendrix was well documented, and he even built a museum devoted to the rock legend.