Topley’s Top Ten – January 19, 2018

Reminder I will be on “Behind the Markets” Wharton Business Radio Sirius Satellite station 111– 1pm today.


1.Momentum Investing Maintaining Strength.

The power of momentum

The February 2016 kickoff rally continued to build momentum. One way to quantify momentum was shown in the Nov. 19, 2017, Profit Radar Report:

“The S&P 500 was higher 8 of the first 9 months of 2017. This has only happened 8 other times (1936, 1950, 1954, 1958, 1964, 1995, 1996, 2006). 2, 3, 6, and 12 months later, the S&P was higher every time but one (0.7% loss 2 month later in 1964).

Such strong momentum readings (and they are seen across all time frames) are extremely rare. As mentioned in December 2016 and March 2017, stocks rarely top out at peak momentum. We have to go back to 1995/1996 to find similarly strong and persistent upside momentum.”

Simon Maierhofer is the founder of iSPYETF and publisher of the Profit Radar Report. He has appeared on CNBC and FOX News, and has been published in the Wall Street Journal, Barron’s, Forbes, Investors Business Daily and USA Today.

MTUM Momentum ETF Gap Up on Big Volume.

2.One Reason Momentum Winning is Because Earnings are Still Good.

6 Reasons to Expect a Good Earnings Season

Posted by lplresearch

As fourth quarter earnings season kicks into high gear, we’ve put together a list of six reasons why we expect it to be a good one:

  1. Economic surprises:The U.S. Citi Economic Surprise Index, a measure of economic data relative to expectations, is near record highs, and economic momentum points to good upcoming results.
  2. Strong manufacturing activity:Manufacturing surveys (ISM and PMI indexes) have been among the strongest in a dozen years and are historically well correlated with earnings growth.
  3. Weak U.S. dollar:Dollar weakness (-6.0% in the fourth quarter) props up overseas earnings for U.S.-based multinationals and may present a tailwind for fourth quarter earnings.
  4. Pre-announcements:The trend for fewer negative profit warnings tend to lead to better-than-expected earnings results.
  5. Stable estimate revisions:Analysts’ estimates for the fourth quarter have remained largely unchanged—resilient estimates are typically a positive sign for final results.
  6. Higher energy prices:Higher oil prices mean more profits for energy companies (6% of the S&P 500 Index weighting) and also more investment in energy infrastructure via the industrial sector.

3.Paying Down Debt is #1 Use for Cash Stashed Overseas?

Forget factories, most companies plan to use their overseas cash to pay down debts

In pushing for the tax law Congress passed last year, President Trump and other supporters argued it would encourage companies to take the cash they’d stashed overseas and use it to open factories and hire workers in the US. While some may end up doing that — Apple suggested Wednesday, for example, it would use some of its foreign stash to expand its data centers and open a new campus — most expect to do something a little less exciting with their overseas money, most notably, pay down debts.

As illustrated by this chart from Statista — which is based on data from Bank of America Merrill Lynch — when it comes to how the biggest corporations plan to spend their overseas cash, capital expenditures, which represent investments in things like new equipment and new buildings, are a distant fourth on their priority lists, trailing not only debt repayment, but buying back their own shares and purchasing other companies.

It’s unclear where Apple stands on the issue. Since 2012, the iPhone maker has accrued $97 billion in debt, which represents nearly half of the amount of overseas cash it will have left after it pays taxes on its stash. But the company notably omitted debt repayment when talking Wednesday about how it might use its foreign funds.


4.Unreal Picture…Volatility Implosion Across All Asset Classes….

No Wonder Bitcoin is a Craze…There is no volatility to trade

Low Spreads + Low Inflation = Low Volatility
Written by Russ Koesterich, CFA Portfolio Manager for BlackRock’s Global Allocation Team

5.Energy ETF Rallies Back to 2015 Levels….Next Highs Go Back to 2014

XLE-energy select SPDR etf.

6.The Reason the Saudi’s are Taking Aramco Public??…U.S. Production Hits 10M Barrels Per Day.

U.S. Oil Output Expected to Surpass Saudi Arabia, Rivaling Russia for Top Spot

IEA in its monthly report says U.S. output will likely top an all-time high

Christopher Alessi

LONDON—Surging U.S. crude oil production this year is expected to surpass output in Saudi Arabia and rival that of Russia, the world’s two largest oil producers, the International Energy Agency said Friday.

Boosted by a resurgent shale industry, U.S. crude production will likely climb above 10 million barrels a day in 2018, an all-time high not seen since 1970, the agency said in its closely watched monthly oil market report. The IEA raised its outlook for U.S. crude supply this year by 260,000 barrels a day, to a record 10.4 million barrels a day, largely a result of the recent rally in crude prices.

“The stage was set for a strong expansion last year when non-OPEC supply, led by the U.S…pushed up world production,” offsetting output cuts by the Organization of the Petroleum Exporting Countries and other producers, the agency wrote.


7.More on Electric Cars…Cobalt is Key for Lithium Batteries..+230% in One Year.

The first true crisis in the electric vehicles market has begun to alarm both consumers and manufacturers alike—the cobalt supply.

With 65% of the world’s cobalt coming from the Democratic Republic of Congo (DRC), stability and ethics in the cobalt market is always going to be in question. [1]

In just one year, the price of cobalt has increased nearly 230%.Currently, one metric ton of cobalt has recently hit as high as US$68,000, whereas this time last year, cobalt was only going for $29,7500. [2]

8.Death by Amazon Hot Big Box Retail First….Now Warehouse Clubs and Grocery Stores Feeling the Pinch.

By Andrew Van Dam

After having the highest average growth (in thousands of jobs a month) for the entire recovery, Sam’s Club and its ilk saw a drop similar to their losses during and after the Great Recession.

Liquor, home, hobbies and cars — an obsessively detailed look at sectors that are surviving the retail apocalypse

Found at Barry Ritholtz Big Picture Blog…

9.This is the Year for Philly….Eagles Super Bowl and Amazon HQ2

Why These 5 Cities Are Mostly Likely to Host Amazon’s Second Headquarters

On Thursday, the e-commerce giant published a list of 20 finalist cities for its second headquarters. Here’s what you need to know.

By Zoë Henry

 Some lucky cities drew one step closer to hosting Amazon on Thursday, when the e-commerce giant published a list of 20 finalists for its second headquarters. The company announced last September that it would invest as much as $5 billion in the project, which it calls “HQ2,” and potentially create 50,000 high-paying tech jobs.

For obvious reasons, cities have been clamoring to get Jeff Bezos’s attention, with some going so far as to leave self-promotional reviews on products (Kansas City)and others sending 20-foot gifts of greenery (Tucson). Neither of those two cities made the cut.

Today’s list contains a few surprises, such as Los Angeles and New York, where the cost of living is far higher than it would be in, say, Pittsburgh. That may be intentional, says Jeremy Bodenhamer, founder of logistics firm ShipHawk in Santa Barbara, California, who has been following the HQ2 project closely. The way he sees it, by appearing to consider big metropolitan areas, Amazon could possibly score even more concessions (like tax breaks) from likelier candidates, including Atlanta and Austin.

“Half of this list is completely reasonable, and the other half is absurd,” Bodenhamer says. “All that matters to Amazon is the cost of housing and the availability of the workforce. It’s a negotiation.”

Inc. parsed the publicly available data and spoke with analysts, investors, and entrepreneurs to compile a list of top 5 picks–in order of likelihood–from the list of 20 finalists:

  1.  Atlanta

The independent prediction markets, where a number of analysts are looking for guidance on the topic, place the city’s odds of being chosen at 3:1–and it’s not hard to see why. The Georgia capital is a veritable logistics hub (UPS is already headquartered there) that could help the company as it continues to build out its wildly popular Prime service. Matt McIlwain, the managing director at the Seattle venture capital firm Madrona Venture Group, further suggests that the network of universities, including Emory and Georgia Tech, promises a steady stream of technical talent. “Atlanta has a very can-do, growth-oriented attitude, which aligns with the Amazon culture,” he says.

Atlanta is also home to Delta Air Lines, which has been making a major push into the Seattle market, where Amazon is based. That translates to several daily flights between the two cities.

  1.  Philadelphia

It’s not surprising that the City of Brotherly Love made the list. In a report released last year, Moody’s Analytics ranked Philadelphia as the third-most ideal location for Amazon, given its proximity to Eastern hubs (including New York and Washington, D.C.) as well as an in-built network of talent flowing from schools such as the University of Pennsylvania and Drexel. “The Pennsylvania cities are still realistic,” suggests ShipHawk’s Bodenhamer, referring to Philadelphia and Pittsburgh, which also made the cut.

Still, investors note that Philadelphia–which has billed itself as a “Goldilocks zone” for Amazon–needs to up the ante, besides the considerable tax breaks it has already offered. “The key for the next round is to present something new and unexpected,” says Bradley Tusk, a New York City venture capitalist and the founder of Tusk Ventures. “Everyone has put their best foot forward in traditional ways, with tax credits and real estate subsidies. Now it’s time for cities to think really big.” Tusk nods to how Boston, in particular, has recently invested in becoming a biotech center. Philly, with its proximity to Carnegie Mellon and Uber’s Advanced Technologies autonomous vehicle operations in Pittsburgh, could be a hub for artificial intelligence and self-driving cars.

  1. Washington, D.C.

Amazon founder Jeff Bezos owns a huge house in the Washington area, as well as a little newspaper called The Washington Post. Meanwhile, Amazon has several cloud and government services operations in nearby Northern Virginia, including a new East Coast campus for Amazon Web Services–its most profitable branch of business by far. “The greater D.C. area looks really good as one of the contenders,” McIlwain notes.

There are other reasons that analysts are bullish on the nation’s capital, and why Inc. included D.C. as a top candidate for HQ2 last year. It has a young, eager, and highly educated workforce–with talent stemming from schools including Howard University and Georgetown. Plus, it could behoove the company, which has run afoul of regulation in the past, to be nearer to congressional lawmakers. Although Amazon may not decide to go with D.C. proper, somewhere in the greater Washington area is a likely bet, given that Northern Virginia and Montgomery County, Maryland, were also included in the top 20.

  1. Austin

If, as Bodenhamer has argued, the most important factors to Amazon are housing and talent, Austin would be an ideal pick. Texas in general has ample space for building new warehouses and logistics centers, and the ever-hip Austin enclave is likely to be attractive to young, talented engineering graduates. Plus, the city is home to businesses including Whole Foods, which Amazon last year acquired for a stunning $13.7 billion. “Austin is phenomenal because of all the tech that is springing up in the area,” suggests Jeff Holzmann, the managing director at iintoo, a New York City-based real estate investment company.

A smaller city is also more appealing than New York or Los Angeles, whichHolzmann refers to as “alpha bravo airspaces,” where airline traffic is generally high, leading to flight cancellations and delays. On the other hand, he adds, “Amazon would never go where there is no basic infrastructure, with at least a regional airport.”

  1.  Nowhere and everywhere

Madrona Ventures’ McIlwain says his most provocative opinion is that Amazon doesn’t just choose one location but spreads its bets across multiple new campuses in areas including some of the above, as well as larger metropolises such as New York. “It’s a hypothesis based on knowing executives at Amazon, and how the company thinks and works,” McIlwain says, teasing that he often talks shop–albeit informally–with Amazon staffers at Seattle school plays and sporting events.

Generally speaking, he sees the entire HQ2 project as partially a way of improving relationships with city governments across the country. For many areas, he adds, “There’s a lot more hope that there could be a better long-term relationship with Amazon.”

To be sure, the company still needs to bet on infrastructure, logistics, and top talent to continue growing across the dozens of businesses it has launched over the past two decades. But if drumming up economic support and attention was indeed the goal to begin with, Amazon has already succeeded.

10.Bring Purpose & Mindfulness to Your Work


Our work lives are filled with busyness, distraction, procrastination, responding to messages, checking on messages, and getting lost down rabbit holes.

We struggle to be mindful and to focus on our meaningful work.

And yet, many of us want to create a life of meaning, focus, and mindfulness.

We know this, and yet we struggle. Why? What keeps us from this life of mindful focus and meaningful work?

In this guide, I’ll talk about why we get pulled away, and then how to bring mindfulness to the process to find focus and create an impact with your work.

Why We Can’t Focus

If you think about how you spent your last few days, most of us would say we’re more distracted than we like. We procrastinate more. Or we’re super busy, responding to a thousand things, making lots of decisions, and not very mindful during this chaotic work day.

What’s going on? A number of things:

  1. We’re actually afraid to focus. The work we want to focus on is hard, full of uncertainty, uncomfortable. We want to do it, but we’re putting off the moment we have to enter into this uncertain space. We’re going to the “comfort food” of our distractions instead of the discomfort of the focus.
  2. We’re afraid to simplify. To focus, we have to clear away all our distractions, say no to social media, our phones, our messages, our email. We have to say no to the easier tasks that we’re really good at. This kind of simplicity is uncomfortable for many people, and again, we go to “comfort food” distractions and easy tasks instead.
  3. We’re constantly pulled away. You might put yourself in a space of simplicity and focus … but then your attention gets pulled away. We have so many notifications, so many messages, so many shiny distractions … and our attention is like a little monkey jumping from tree to tree. In some ways, this is because technology is designed to grab our attention. But we allow this to happen.
  4. We’re unsure about what path to take. We know we should focus, but shouldn’t we also be doing this other important task? Or those three pretty important tasks? Or checking for an important message/email that might come in? We have fear of missing something important, fear of choosing the wrong thing, fear of taking the wrong path when there are many available. This uncertainty can freeze us, or cause us to constantly switch.

OK, so it’s fear, uncertainty, discomfort, and pulled attention. How can we bring mindfulness to bear on these four horsepersons of distraction?

Bring Mindfulness Into the Arena

Armed with the knowledge of why we’re not able to focus, we’re going to further arm ourselves with mindfulness and walk confidently into the arena of meaningful work.

The first thing to acknowledge is that it’s OK to be afraid, OK to want to comfort yourself with easy tasks and distractions, OK to feel uncertainty. We’re not horrible people for being this way … we’re human. So we can look at our habits and smile on them with unconditional friendliness.

Let’s practice mindfulness in our workday with a series of questions.

QUESTION 1: What’s the best way to structure my day?

In this inquiry, we’re wondering if it’s best to constantly switch from messaging app to messaging app, from email to social media, from news sites to blogs, from small admin tasks to other quick tasks … filling up our day and not focusing on our most meaningful work.

In my own inquiry, it brings mindfulness to how I spend my time, how fragmented I allow my attention to be … and then it brings me to an intention to simplify and focus. I still need to check email and messages and do the smaller tasks … but I can lump them together at certain times of the day, and clear space for big chunks of focus and meaningful work. This intention isn’t always met, but the inquiry brings me closer to it.

QUESTION 2: What do I want to focus on?

This isn’t a question many people ask themselves each day. Ideally, you’d ask it at the beginning of each day, but also at various points throughout the day. It shifts you: you go from, “What should I check right now” or “What can I quickly do right now?” to “What is the meaningful work I want to do now and give my full focus to?”

In other words, what do I care deeply about? What kind of dent do I want to make in the world, and how can I start to make that dent right now?

It shifts from saying yes to your million things and messages, to saying no to those million things … so you can say yes to your meaningful work. So you can say yes to complete focus and mindfulness.

QUESTION 3: Why am I not focusing on it?

If you picked something to focus on and you’re working on it, great! But if you’re not … why not? What’s getting in your way? What are you afraid of? What are you comforting yourself with?

If you can identify the fear, instead of allowing yourself to habitually run from this fear … lean into it. Go towards it. Allow yourself to feel the fear, and stay in it, befriend it. Then go into your focus zone, in the middle of the fear, and let the fear be your guide and your friend. It means you are alive, that you are pushing yourself into discomfort for the sake of what you care deeply about, that you are creating meaningful work instead of running. Beautiful!

QUESTION 5: What is my intention as I focus?

As you get started with a focused session, even if it’s only for 10-20 minutes … it helps to ritualize it. Have a clear beginning, and even a clear end. What will you do to mark the beginning? Maybe stretch, smile at your work, and set an intention. An intention isn’t a goal, but how you want to go about doing the task … for example, I might say, “I want to stay focused on this task, put myself into this uncertainty for the sake of the people I care about and serve, and stay present in the middle of it.”

Keep this intention in your heart as you put yourself into this focus session.

QUESTION 6: What is this moment like, as I work in stillness?

Now you’re in the middle of the focus session … bring mindfulness to that task. That’s simply a matter of awareness and curiosity.

Bring awareness by asking: what is it like right now? What sensations can I notice? How does my heart feel as I take this gorgeous action, filled with uncertainty?

Bring curiosity when you feel like switching tasks and running … by asking, “I want to run from uncertainty, but what would it be like to stay?” The truth is, we don’t know. We think we know that we won’t like it, but actually we don’t really know until it happens. So take the curiosity stance: seek to find out. Come to this task with an open mind, and you might find a gentle wonder that you didn’t expect, in the middle of your meaningful work.

Now, you can do this for your meaningful work, but you can also do this for any task — responding to an email, answering a text message, reading an article online, contemplating a decision with care.

Bringing purpose and mindfulness to your work can be a place filled with joy, if you allow yourself to move into that space with intention and curiosity, inquiry and love.