Topley’s Top Ten – June 16, 2017

1.Oil Price Volatility Flat in 2017….Are we in for long-term sideways market?


Oil Volatility Index

Crude 2015-2017 Sideways.


2.Yield Curve Flattening but not Inverted Yet…Recession Watch Indicator.


Is A Tightening Yield Spread Still A Warning Sign For The Economy?

The Federal Reserve is expected to raise interest rates today – at a time when the Treasury yield spread has become relatively compressed. That’s a warning sign, according to the historical record. The question is whether the shelf life for this analysis has expired?

Tim Duy, a professor at the University of Oregon, reminds that “recent history suggests that the greatest risk of recession occurs if the Fed continues to tighten after the initial inversion of the yield curve, which happened prior to the last two recessions.” The curve isn’t inverted, but it’s getting close. Meantime, the Fed is widely expected to lift interest rates again today, laying the groundwork for squeezing the curve a bit more.

Consider the 10-year/2-year Treasury yield spread, which fell to 83 basis points yesterday (June 13), based on daily data via That’s the smallest spread since last October and slightly below the long-term average of 93 basis points over the past four decades.

found at



3.Rates Have Given Back 2/3 of Gains Since Election.


After last November’s election, bond yields, the U.S. dollar, and the stock market exploded higher as investors anticipated an economic surge. Yields have now given back most of their gains, and the greenback is actually in worse shape than it was last year.

This is probably not good news for the economy. Such moves in bond yields and the dollar should send investors heading for the hills, but the stock market is still doing well.

Keep in mind that the dollar was supposed to collapse years ago under the weight of the liquidity pumped out by the Federal Reserve—and gold was supposed to skyrocket in its wake. Neither happened, as trends convinced investors to ignore conventional wisdom.

The 10-year Treasury yield started to head lower in March of this year, with a technical breakdown in April (see Chart 1). Measured from their 2016 low, 10-year yields have given back more than one-third of their gains. More importantly, measured from Election Day, rates have now given back two-thirds of their gains.


4.As the Bond Market Goes Passive….AGG Becomes More Risky?


Lower return, but higher risk: A one-sided trade if there ever was one

While Treasuries and related government debt have low credit risk by nature, the Agg’s high concentration of government holdings greatly increases its interest rate risk. As the Agg’s duration has spiked—recently surpassing six years for the first time in history—its yield has plummeted. Given that yield has historically translated into returns, this means Agg investors are accepting less return for a higher amount of risk—quite an asymmetrical risk/return profile, in a time where macro forces have raised uncertainty and caused spikes in bond market volatility.

Source: Bloomberg Finance L.P., as of 4/28/2017


5.Why Rates Can’t Get Going?  Inflation Can’t Get Going


Inflation remains stubbornly below the Fed’s target. And economic data has been disappointing, with the most unpleasant surprises compared with forecasts in more than two years, according to a Citigroup index.


10 Year Break Even Inflation Rate Rolling Over.


U.S. Economic Surprise Index Negative.



6.It’s A Netflix Nation.


7.High School Cigarette Smoking Down 72% Since 1999.


Youth tobacco use in the U.S. fell to historic lows in 2016, leading public health experts to speculate that a smoke-free generation may be within reach. According to the CDC, the number of middle and high school students who used any tobacco product fell to 3.9M last year from 4.7M in 2015. The decline in e-cigarette use was also notable, falling to 11.3% of high schoolers in 2016 from 16% in 2015. Related tickers: LO, PM, MO, VGR, RAI, BTI, VPCO


8.100 Studies Show This Simple Technique Doubles Productivity

Asking just two simple questions can profoundly improve goal achievement.

Posted Jun 15, 2017

In 1997, a German social psychologist named Peter Gollwitzer conducted a study to test the effectiveness of a very simple productivity technique. The results were so good that you would swear it was a mistake. It wasn’t.

The study went like this: Gollwitzer recruited students on his university’s campus and asked them to write an essay while on Christmas break, detailing their holiday experience. They were to mail the essay back to him within 48 hours of Christmas.

But before they headed home for the holidays, Gollwitzer asked half the students to do one more thing: write down when and where they planned to work on the essay.

Shortly after Christmas, when Gollwitzer tabulated the results, he learned that of the students who didn’t write down when and where, only 32% successfully delivered their essay. The success rate of students who did write it down? A whopping 71%.

Answering two mundane questions more than doubled students’ chances of achieving their goal. How did such a simple exercise, one that took mere minutes, make such a dramatic difference?

Intentions are Not Enough

Whether it’s writing a screenplay, running a marathon, or delivering a client brief on time — we all have goals that seem to elude us no matter how desperately we want to achieve them. That’s because a strong desire, while necessary for goal achievement, is nowhere near sufficient.

In fact, as social psychologist Heidi Grant Halvorson explains in her wonderful book Succeed, according to numerous studies “about 70 to 80 percent of the time we have plenty of commitment, but we screw it up along the way.”

When it comes to reaching our goals, relying on intentions is like bringing a knife to a gun fight. Our conscious will to succeed is no match for the potent distractions, temptations, and negative emotions that inevitably arise. [1]

On the other hand, asking when and where is, because it taps into the power of the unconscious.

Deciding when and where we’ll complete a task is an example of what psychologists call an implementation intention, a sort of mental programming whereby our brain links up a situational cue — in this case a particular time and location — with the behavior we want to perform. When the time and location arrives, the behavior is automatically triggered. [2]

So, for example, if one of the students in Gollwitzer’s study had decided he would work on his essay in his bedroom on Friday at 3pm, when the clock struck three, he might have found himself unconsciously compelled to start walking up to his room to begin his work, even if, at the time, he was preoccupied with other tasks or nagging negative emotions.

Of course, implementation intentions provide no guarantee we’ll reach our goals — after all, there were students in the when and where condition who failed to deliver the essay — but there are now close to 100 studies that show it dramatically improves our chances of succeeding at a wide range of goals, from eating healthier, to finding a job, to taking tests.

And while the benefits of implementation intentions are extraordinary, let’s not forget about its most remarkable feature: cost. Implementation intentions require no investment of money, no herculean effort, just a few minutes of time to think and write.

Think, what if this simple technique gave you the edge you needed to finally learn Spanish, or champion that new human resources initiative, or finish that standup comedy routine? It can and I challenge you to try it.

But don’t just casually accept my challenge. If you’ve learned one thing from this essay, simply intending to do anything — and implementation intentions are no exception — is just not enough. No matter how impressed you are with their utility, it’s easy to forget to use them in the busyness of our frenetic daily lives.

But what if there was a specific time and place each week where you could, together with others, in real-time, perform implementation intentions without ever leaving your computer? Fortunately, there is.

Introducing Pareto’s Place

Every Monday at 2PM EST I’m holding a free webinar via Facebook Live, available to anyone and everyone, where I’ll lead you through the process of forming implementation intentions. In each brief 10-minute session, you’ll get clear on what goal you’re committed to achieving, identify tasks you’ve been putting off, and decide when and where you’ll complete them.

Each subsequent week, we’ll celebrate our successes and learn from our failures. It promises to be the most rewarding ten minutes you spend each week.

So head on over to the Pareto’s Place Facebook Page at 2PM EST this Monday, where we’ll walk the walk, and make our goals a reality, one implementation intention at a time.

Al Pittampalli is the author of Persuadable: How Great Leaders Change Their Minds to Change the World (Harper Collins)