Topley’s Top Ten – July 15th, 2019

1.PIMCO Chart Breaking Down Leadership into 3 Year Periods.

Large Cap Growth Leading for 6 ½ Years.

2. Why Gold is Rallying?  Negative Yielding Debt Plus High Probability of More Rate Cuts from Developed World

State Street SPDR Blog

3. 2 Year Treasury Yields Well Above 2018 Lows.

These charts show how yield curve is inverted..short-term yields above 2018 lows but 30 year yields break lower.

2 Year Treasury

30 Year Rates Break Below 2018

4.Not Sure if This is a First Ever….Junk Bonds with Negative Yields in Europe.

“Look at what’s happening in Europe — they’re talking about going more negative, more negative interest rates — and yet we have a system of corporate finance where there’s many fragile companies that should be gone. But they’re being kept going as zombie companies because of the interest rate situation that we’re in … . So yes, I was very concerned about the housing market in late 2006, but I’m much more worried today about the corporate bond market than I am about things like housing in the financial system.”

Jeff Gundlach on Europe and U.S. Corp Debt

Sub-Zero Yields Start Taking Hold in Europe’s Junk-Bond Market

Laura Benitez and Tasos Vossos
July 9, 2019, 4:24 AM EDT

Number of negative-yielding euro junk bonds rises to 14 from 0

Expectations of further monetary stimulus depress yields

Central bankers hinting at more monetary stimulus have depressed yields so much that even some European junk bonds trade at levels where investors have to pay for the privilege of holding them.

The number of euro-denominated junk bonds trading with a negative yield — a status until recently associated with ultra-safe sovereign borrowers — now stands at 14, according to data compiled by Bloomberg. At the start of the year there were none.

Cheap money policies since the financial crisis have kept interest rates at, or near, all-time lows for the last decade. That’s prompted many investors to buy riskier assets that yield enough for them to meet their liabilities, driving bond markets higher and yields lower. The European Central Bank said on Monday it’s ready to add more stimulus to the euro zone, indicating that an end to the age of ultra-low borrowing costs is far from over.

The European trend follows a global pattern that’s seen the volume of securities yielding less than zero hovering just above $12.8 trillion, according to Bank of America Merrill Lynch.

High yield borrowers with bonds denominated in euros trading with a negative yield include:

  • Ardagh Packaging Finance plc /Ardagh Holdings USA Inc.
  • Altice Luxembourg SA
  • Altice France SA
  • Axalta Coating Systems LLC
  • Constellium NV
  • Arena Luxembourg Finance Sarl
  • EC Finance Plc
  • Nexi Capital SpA
  • Nokia Corp.
  • LSF10 Wolverine Investments SCA
  • Smurfit Kappa Acquisitions ULC
  • OI European Group BV
  • Becton Dickinson Euro Finance Sarl
  • WMG Acquisition Corp.

5.One Country Not Participating in Bond Rally…China’s Investable Bond Market Up 5x in 10 Years

Global Bond Party Bypasses China–By Shen Hong

China’s growth back to 1992 levels

China Growth at Its Slowest Since 1992 as Beijing Struggles to Juice Economy-By Chao Deng

6.SPACS Are Back in 2017-2019

7.What Are SPACs, and Why Are They Back?

These once-shunned investment vehicles have made a big comeback.

Dan Caplinger
Apr 12, 2019 at 8:03AM

Initial public offerings are hot right now, with many high-profile companies choosing to go public by making their shares available to ordinary investors. The IPO process, however, can be long and difficult to navigate, with potential traps for companies that aren’t as successful as others in handling things like road shows and drumming up investor interest.

But there’s an interesting alternative that some companies use to get their shares traded on public exchanges. Rather than filing all the paperwork associated with the required registration statement with the U.S. Securities and Exchange Commission, a company can instead merge with another company that’s already public. To take advantage of that rule, some investors turn to special purpose acquisition companies, also known as SPACs, whose sole purpose is to raise capital from investors and then look to acquire an operating business — often one that’s privately held.

After a long hiatus, SPACs are once again becoming more popular. Most recently, the announcement that the parent company of Chuck E. Cheese will merge with SPAC Leo Holdings (NYSE: LHC) and return to the public markets has turned attention back to these investment vehicles. Before you invest in one, it’s important to know what SPACs are and why you’re seeing more of them.

The basics of SPACs

A SPAC is essentially a shell company that doesn’t have any operations of its own. The stated purpose of the company is to identify and purchase a business that’s consistent with the investment objectives of the SPAC. Some special purpose acquisition companies limit themselves to particular industries, while others have free rein to make acquisitions in whatever type of company they wish.

SPACs begin by going through the IPO process, offering shares to investors. Typically, the proceeds from the IPO are held in trust while the SPAC seeks a takeover candidate. The terms of the SPAC specify a given time frame in which a merger must be completed. If that time period expires without an acquisition, then SPACs will typically return their capital to their investors.

If the SPAC finds a suitable company, then the two will merge. The combined entity then typically takes the name of the operating business, often changing its ticker symbol to reflect the new name.

The most important benefit of a SPAC is that the IPO process for a special purpose acquisition company is almost always a lot simpler than it would be for an operating business. Because the business purpose is so straightforward, the SEC rarely has extensive issues or questions up front. Moreover, once the SPAC is in place, the process for doing the subsequent merger is simpler than it would be to file a full set of registration paperwork with the SEC.

Why SPACs are making a comeback

We’ve seen periods before when SPACs were popular, especially before the financial crisis. But use of SPACs declined precipitously following the market meltdown. Greater regulatory attention played a role in that downturn, but there were also fewer privately held businesses seeking to go public at the time, and so the list of takeover candidates for SPACs was short. Many SPACs ended up failing to find companies to take over before their specified time limits ran out.

Recently, though, an excess of capital has led investors to seek out merger and acquisition opportunities more aggressively, and that’s led to the return of SPACs. More SPACs went public in 2018 than in any year since 2007, raising more than $10 billion in capital for use in searching for investment opportunities. In particular, private equity funds have become key users of SPACs, as in the Chuck E. Cheese transaction.

Far from a sure thing

Individual investors should understand that investing in a SPAC isn’t a guarantee of success. When The Wall Street Journal looked at SPACs from three or four years ago, it found that more than half of them traded below their initial offering price. Given the huge bull market that investors have enjoyed, that track record is worrisome.

As long as the IPO market produces victories for companies going public, then you’ll see many businesses opting to go through that process to generate buzz. But SPACs will also remain a way for investors to bet on a leadership team’s ability to find a smart acquisition. And despite the potential pitfalls, SPACs will generate interest from those who hope to find the right acquisition at the right price.

8.Northern Triangle Countries…El Salvador, Guatemala, and Honduros…2/3 of citizens did not graduate High School and 2/3 of economy is un-taxed.

9.Streaming Consumption Stats

From Barry Ritholtz Blog

10.7 Simple Tactics to Increase Your Focus and Productivity 52% or More (By Tomorrow)

by Austin Gillis | Mar 13, 2019 | Self-Improvement

We live in a world that seems bound and determined to sabotage our goals.

Everyday, the average American is exposed to more than 5,000 advertisements, a barrage of click bait and irresistible social media platforms, never ending streams of high-quality television and innumerable other distractions. 

We live in a world that is working against us. It doesn’t want you to stay focused. It doesn’t want you to do great work. It doesn’t want you to succeed.

But I do.

And today, I’ve compiled a list of 7 simple but wildly effective tactics that will help you improve your productivity and focus by 50% (or more) as soon as tomorrow morning.

1. Know Your Body Clock (And Find Your Magic Time)

Despite what you’ve been told by mainstream media and many popular “gurus,” there are, in fact, a number of elite performers who wake up after the sun rises. 

Although there is undeniable merit to the concept of “The 5 a.m. Club,” it should not be seen as a panacea to your personal or professional challenges, nor should it be seen as a mass prescription for success. 

Because it’s not.

Different individuals function on different chronotypes–or biological “clocks”–and as such, you must learn to tailor your life and schedule to your natural biological processes. Some people effortlessly rise at 5 o’clock every morning and immediately posses the mental faculties to dive into their most important work with vim and vigor. 

Others (like me), are incapable of forming complete sentences before the hour of 7 a.m. (and at least 2 cups of coffee). 

And it’s important to note, that according to Dr. David Breuss, one of the foremost sleep scientists in the U.S., your chronotype is biological. Being a night owl or early riser doesn’t make you better or worse than anyone else. It’s simply a part of your unique biology. 

Much like your height or the size of your ears, your chronotype may shift or change over time, but there is very little you can do to consciously influence it. 

You are simply left with the choice to fight with it or against it. And if you want to maximize your focus and increase your productivity, I encourage you to fight with it. 

When you work in accordance with your biology, everything becomes easier. You work when your brain is most capable of producing great work and you rest when your brain needs rest. 

As simple as this tactic may sound, if applied correctly, it can be an absolute game changer. 

This week, I want you to take Dr. Breuss’s sleep chronotype quiz (you can get it for free here) and keep an hourly log of your subjective energy levels so you can find those 2-3 peak hours during which you should schedule your most important work. Go to sleep when you feel tired and wake up when your body tells you to wake up to ensure your sleep cycle works for you. 

And then let me know what you discovered down in the comments below! I’d love to hear if you found anything surprising or counterintuitive.

2. Create Location Based Anchors

One of the most powerful yet least utilized productivity and focus hacks is the intentional creation of location based anchors. 

An anchor is simply an external stimuli that triggers your brain to go into a particular state. 

For example, if you’ve ever been to a Tony Robbins’ event, you’ll know that one of his favorite exercises is to get the entire crowd AMPED up and then instruct them to make a specific physical gesture to anchor the emotional state into their body. Then, when the power within has fallen back asleep and destiny is flaking on its date, attendees can bring themselves back into that motivated and energetic “Seminar State” with the clench of a fist or clap of the hands.  

To increase your productivity and control your focus, you’re going to take this tactic a step further. Instead of one simple gesture or movement, you are going to create an entire series of anchors to help you get into your most productive state each week. 

And you’re going to do it by following a very specific routine, to the letter. 

First, you need to pick an inspiring location in which you will work every day. It could be a co-working space, home office, coffee shop, whatever. It doesn’t matter so long as you can commit to working there every day.  In that location, pick a particular desk or chair at which you will work. Again, it doesn’t matter where it is, so long as you can work there every day. If you’re at a restaurant or coffee shop, order the same thing every day. If you’re at an office, bring the same food or beverages with you. 

When you sit down to work, play the same song–mine is Bach’s Cello Suite in G–through a set of noise cancelling headphones (these are a game changer) and plug in a binaural beat track like this one.

Then, and most importantly, do NOT allow yourself to do ANYTHING except work from this location. This isn’t where you read your favorite blog, take calls from your spouse, or watch cat videos on YouTube. It’s where you work. Period. 

After a couple weeks of this, your brain will begin to catch on and you’ll notice a slight bump in your productivity. After a month, the improvements will be even more marked. And after 6-12? This simple habit will make you unstoppable. 

3. Use these Supplements

Before I dive into the secrets of “Better focus through chemistry,” I must preface this section with a simple caveat. 

Smart drugs and nootropics work. 

But they work best when coupled with a healthy lifestyle. When you are active throughout the day, engaged in strength training throughout the week, sleeping 8-9 hours a night, eating a clean diet, and spending time relaxing with friends and family. 

They aren’t a cure all and, despite what you might have read in the dark recesses of the internet, there is no “Limitless Pill” (trust me, I’ve spent more than $3,000 testing this stuff). 

BUT. If you already live a healthy lifestyle and are simply looking for an added edge to your performance… 

… Here’s a list of 5 supplements that will improve your focus and productivity (and the respective studies behind them). 

  1. L-Tyrosine (source)
  2. Bacopa Monnieri (source)
  3. Creatine (not just good for muscle growth, source)
  4. CDP-Choline (source)
  5. Caffeine (source)

If you’re looking for an “all-in-one” nootropic to enhance focus, creativity, and motivation I’d also encourage you to check out Qualia from Neurohacker Collective (no affiliation). It’s a bit on the expensive end but it is far and away my favorite “smart drug” and it saves you the time and hassle of creating customized supplement stacks to optimize your brain. 

As with any advice you receive on the internet that encourages you to tamper with your bio and neurochemistry, be sure to do the research for yourself and talk to a knowledgeable health care practitioner before embarking down the dangerous road of smart drugs and biohacking.

4. Read More…Slowly

With of tablets, smart phones, and other e-readers, the consumption of written online content has gone up a staggering 40% in recent years. Amazing, right? 

Except…it isn’t. 

Because, according to a study conducted by Slate and website analytics company Chartbeat, fewer than 5% of readers finish the articles and blog posts on which they click.

We’re no longer reading online. We’re skimming. Right before we hop over to yet another piece of content that we will leave half-read and unfinished. 

To improve your focus and increase your productivity, you must first increase your attention span. You must have the capacity to focus all of your attention on one thing without interruption or distraction for a prolonged period of time. 

Yet modern TL;DR culture makes it difficult for you to accomplish this aim. Each and every day you’re bombarded with advertisements, click bait, and a sea of content in which you can lose yourself. But you struggle to fully consume or internalize any of it. 

To remedy this situation I have a simple challenge for you. Read more…slowly. Don’t just skim through content, read it through until the very end. Instead of speed reading 100 business books every morning, take half an hour to read a classic work of fiction or an inspiring biography. 

Train yourself to regain control of your attention and channel your focus where you–not some advertiser or marketer–want it to go. 

And start by picking up a copy of War and Peace and reading that sucker through until the very end (hate me now, thank me later).

5. Take More Breaks

Counterintuitive though it might be, recent studies have shown one of the fastest ways to improve your focus and productivity is to actually work less and take more breaks. And, when you think about things, this actually makes a lot of sense. 

Your brain, like the muscles in your body, becomes fatigued after prolonged periods of use. In fact, because of the energy required to sustain long periods of intense focus (your brain does consume 20% of your body’s calories), long hours behind your desk can physically exhaust you too. Yet most of us try to push through them, erroneously believing that taking an hour long lunch or dipping away for a quick cat nap makes us “weak” or “lazy.” 

The truth is, frequent breaks and at least one 60-90 minute break can increase your productivity upwards of 20%. This means if you adhere to the standard 8-hour work day, you will actually earn back 1.6 hours of productive time while only “losing” 1-1.5. 

Furthermore, breaks give you separation from your work and the ability to re-examine big projects with a more objective eye. That one sentence you can’t seem to write? That one sales proposal you just can’t finish? That one sales campaign where you can’t seem to optimize the sales video? Take 90-minutes to eat lunch, take a nap, and talk with someone you love and I promise you’ll solve your problem during your next block of work. 

Frequent breaks, although counter to everything you’ve ever been taught about success and work ethic, allow you to work better, focus deeper, and create like a true Empire Builder. 

6. Monotask

Although you might have written “A great multitasker” as a ‘strength’ on your resume 20-years ago, you wouldn’t want to do it now. The reason is simple, according to every cognitive science study conducted over the last 50+ years (at least all the good ones), your brain is incapable of multitasking. 

Not inefficient. Incapable. 

According to the Harvard Business Review:

“It takes time (an average of 15 minutes) to re-orient to a primary task after a distraction such as an email. Efficiency can drop by as much as 40%. Long-term memory suffers and creativity […] is reduced.”

Forty percent! 

You cannot multitask, so stop trying now. Quit answering emails while writing blog posts or checking social media while talking to a client or trying to play a game on your phone while working on your sales funnel. 

Play when you play. Work when you work. And when you work, only work on ONE thing at a time. Period.   

7. Destroy Distractions (Or They Will Destroy You)

Finally, to boost your focus and become more productive so you can achieve those big goals and dreams you’ve set for yourself, you must destroy the distractions in your life or they will destroy you. 

When you’re distracted by shiny objects, well-intentioned co-workers, family members, and a constant stream of notifications and updates you are incapable of tapping into flow and engaging in true deep work. Instead your work will be shallow, dull, and incomplete. A mere skeleton of what you could achieve in a state of unadulterated focus. 

Distraction is a death sentence for your dreams. 

It neuters your ability to do great work, holds you back from enjoying the balance you desire, and stunts your growth personally and professionally. 

So eradicate it

Guard your attention with your life. Cut out all distractions and ruthlessly eliminate anything or anyone (in the metaphorical sense…and do it politely please) standing in between you and your goals. 

Turn off your notifications. Tell your family not to call you unless there is a true emergency. Inform your co-workers that you will be unavailable for any of their requests until a set time (and ask them to email you first). Create an environment and professional ecosystem conducive to intense focus and your productivity will skyrocket overnight. 

In a world that seems hell-bent on distracting and derailing you, this will not be an easy task. 

But I can promise you, it will be worth it.

Austin Gillis