Topley’s Top Ten – October 8, 2018

1.Is the 30 Year Bond Bull Over?

30 Year downward rate trend in 10yr. broken?

From Dave Lutz at Jones.

2.Break-Down in High Yield Bonds Signaled 2000 and 2008 Crisis…

JNK Junk ETF rolls over as rates rise.

Yes, Junk Bonds Are Pricey. But a Bear Market Isn’t Near

Alexandra Scaggs

3.LQD Investment Grade Corporate -6% vs. JNK -3%….Investment grade down double junk on rate spike.

4.Earnings Guidance Moving Down After 20+ Year Over Year Growth.

5.Sept. and Oct. Earnings Reactions Negative.

Weak Earnings Reactions

Oct 5, 2018

Most people are probably familiar with the Green Day song, “Wake Me When September Ends,” but in this case a more appropriate term may be “Wake Me When Earnings Season Ends.” While this past September was positive for the S&P 500, companies reporting earnings faced pretty brutal initial reactions.  Of the 109 companies reporting earnings in September, the average one-day reaction to their earnings reports was a decline of 1.2%, and in the second half of the month, things were even worse.  Of the 43 companies that reported in the second half of September, the average one-day reaction to earnings was a decline of 3.5% with only eight having positive initial reactions.  While October has only just begun, things don’t look to be coming in much better as stocks like Stitch Fix (SFIX), Acuity Brands (AYI), and Cal-Maine (CALM) have all declined more than 5% in reaction to earnings, while only two stocks traded up (LW and PAYX).

Using our Earnings Report Screener, which is available to all Institutional clients, we ran a screen of how stocks reporting earnings in September have historically reacted to earnings going back to 2002.  This is just one of the many useful screens clients can run using this invaluable tool.

As shown in the chart, the average one-day decline of 1.2% for companies reporting earnings in September wasn’t the worst of any year in our database, but it was the fourth weakest.  The only other Septembers where stocks saw weaker one-day reactions to earnings were in 2015 (-2.49%), 2008 (-1.45%), and 2016 (-1.37%).  The key question now is whether the weakness we have seen in reaction to earnings so far is a preview of what’s to come during the actual earnings season that runs from 10/10 through mid-November.

In a just-published B.I.G. Tips report, we did an extensive analysis of this topic which highlighted actionable trends. To see it, sign up for a monthly Bespoke Premium membership now!

6.Interesting Look at Non-Dividend Payers Market Leadership

Looking at the returns to the S&P 500 over the last 12 years by dividend yield quintiles reveals the following:

S&P 500 Index Non-Dividend Stocks Beat Highest-Yield Segment Last 12 Years


Where to Focus in the Dividend Market

Jeremy Schwartz, CFA, Director of Research

7.Chinese Reliance on Exports Plunges from 35% to 18% Since 2007

 The result is that the importance of exports has collapsed. Goods exports have plunged from about 35% of China’s gross domestic product in 2006-07 to just 18% today.

Why China Is Growing More Belligerent
Matthew C. Klein

8.This is how the boomer generation will influence retirement homes

Published: Oct 8, 2018 5:02 a.m. ET

Challenges and changes ahead

AFP/Getty Images

A residential retirement community in California serves actors and other members of the entertainment industry. The retirement housing industry likely faces unique challenges.


This article is reprinted by permission from It is part of the Political Issues And Policies Special Report.

For a glimpse into the future of retirement communities and — pardon the odious term — “senior housing,” you couldn’t do much better than to ask Robert Kramer. He and several partners got together in 1991 to launch what has become the leading trade group for this industry, the National Investment Center for Seniors Housing and Care (NIC), based in Annapolis, Md. And he has been a revered authority on this subject ever since.

Kramer, who first got involved in this field in the early 1980s, turned over the CEO post at NIC to a younger colleague last July. Now that he’s “unretired” and a NIC adviser, I spoke with Kramer about what he sees ahead for retirement housing and the challenges developers face to make their communities and facilities more inviting to older Americans.

Boomers will change retirement housing

In short, Kramer believes boomers, some of whom are now in their early 70s, will transform the industry, which now includes more than 23,000 professionally-managed senior housing and nursing care communities.

“We’re entering a time of disruptive innovation. The basic business model and system will be radically disrupted,” he told me. “My job is figuring out the people and the idea trends that will disrupt the sector in a positive way.” Now that’s a cool job!

Probably the first thing the boomers will do will be to force the industry to abandon the word “senior.” The term is an anathema to this generation.

Don’t missWhat elderly inmates — like Bill Cosby — have to look forward to in prison

More important, retirement housing developers will need to adopt to their new customers’ changing expectations about the good life in retirement.

Traditionally, the language of retirement is “I’m done,” says Kramer. “You disengage from society.” But the language of boomers entering their retirement years is very different. “It’s ‘What do I want to do next?” says Kramer. He expects 40% to 50% of residents in retirement housing complexes in the future will be working, launching their second and third careers.

“Boomers won’t retire,” Kramer says. “They will transition.”

Boomers believe the elder years should be a time of the 4 E’s: engagement, enrichment, experience and enjoyment. “It’s the purposeful years,” says Kramer. “Boomers won’t want to be in an age ghetto.”

Kramer’s two predictions for retirement housing

That’s a nice segue to Kramer’s first prediction about the future of retirement living: It’ll be intergenerational.

The silos of segregated retirement communities will come down, Kramer believes. It’s not that he expects the young and the old to live on the same floor or even in the same building, by and large, though.

He uses the example of Merrill Gardens at the University in Seattle. There, the retired residents live in a building occupying one side of a triangle near the University of Washington. Another side of the triangle is an apartment complex catering to grad students and young faculty. Retail shops are on the third side. But here’s the interesting part: Merrill Gardens opened its dining room to residents of the apartment complex. Now, both generations enjoy each other’s company over meals. When the dining room closes, the younger generation heads home and the older one starts winding down.

The second big change Kramer sees coming: With increased longevity, medical care will increasingly come to where the frail elderly live. The reason: advances in information technology.

Read: This is the reality of being in a nursing home

Adult children, Kramer maintains, will expect the facilities housing older Americans to take charge when health difficulties emerge, rather than relying on the places to call residents’ family members at 3 a.m. For this to happen, the focus of health providers will shift from medical interventions to maintaining quality of life.

Two challenges the industry faces

But Kramer also sees two challenges for his industry.

For one thing, he says, its customers will demand more, and better services. That will mean attracting qualified labor and talented people. Traditionally, his business has mostly relied on lower-skill, lower-wage workers. Higher wages, however, are critical. So is leadership and good management.

“Ultimately, this is about culture,” he says. “Ultimately it has to be a good job.”

The other major challenge: addressing the needs of the middle-income, middle-market segment. The private sector favors building communities for the well-off aging population; foundations focus on serving low-income elders. Very little attention has been paid, however, to older middle-class people who want good services but aren’t flush with money.

Also see: The case for moving to a retirement community

“If the only option is to for people to spend down their money so they can qualify for Medicaid [the federal/state program for low-income older Americans], then Medicaid is in for a really tough time,” Kramer says. “We need the private sector at the table. We need the public sector at the table. We need both.”

The scale and scope of potential change for housing an aging population is breathtaking. The capital needs to overhaul the business are enormous. But the alternative is not an option.

Chris Farrell is senior economics contributor for American Public Media’s Marketplace. An award-winning journalist, he is author of “Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and The Good Life.” @cfarrellecon

This article is reprinted by permission from, © 2018 Twin Cities Public Television, Inc. All rights reserved.

9.Square Footage of Millennials Homes…2000 sq ft.

Food for Thought: The square footage of Millennials’ homes:

Source: Meyers Research

10.It’s not fear that gets in the way of daring leadership. It’s our armor.

  • Published on October 5, 2018

Brené Brown Influencer

Research Professor | University of Houston | Huffington – Brené Brown Endowed Chair7 articles

I’ve spent twenty years studying courage, vulnerability, shame, and empathy, and I recently completed a seven-year study on brave leadership that was built around the following driving question:

What, if anything, about the way people are leading today needs to change in order for leaders to be successful in a complex, rapidly changing environment where we’re faced with seemingly intractable challenges and an insatiable demand for innovation?


There was one answer across interviews with 150 global C-level leaders: We need braver leaders and more courageous cultures.

To answer the question of how we develop daring leaders and cultures, we examined existing research along with new data collected during a three-year instrument development study on daring leadership, which included surveying MBA and EMBA students enrolled at the Jones Graduate School of Business at Rice University, the Kellogg School of Management at Northwestern University, and the Wharton School at University of Pennsylvania. We also used evaluation data from our own leadership work with more than 50 organiza­tions, representing approximately 10,000 individuals working alone or in teams.

Here’s the great news from our findings: Daring leadership is a collection of four skill sets that are 100% teachable, observable, and measurable. These skill sets are:

Rumbling with Vulnerability;

Living into our Values;

Braving Trust; and

Learning to Rise

The hard news: You can’t get to courage without rumbling with vulnerability, so time to embrace the suck. Without question, “rumbling with vulnerability” emerged as the foundational skill set of courage-building and the prerequisite to the other three skill sets. We must be able to manage the emotions we experience during times of uncertainty, risk, and emotional exposure if we want to be daring leaders.

Here’s what surprised me the most: The greatest barrier to courageous leadership is not fear. In fact, some of the bravest leaders we interviewed told us that they experience fear every day. The biggest barrier to daring leadership is how we respond to our fear — it’s our armor that gets in the way.

The thoughts, emotions, and behaviors that we use to protect ourselves when we aren’t willing and able to rumble with vulnerability move us out of alignment with our values, corrode trust with our colleagues and teams, and prevent us from being our most courageous selves.

Sixteen specific examples of armored leadership emerged from the data, along with a daring leader­ship alternative to every one of those behaviors. Below are two examples of armored versus daring leadership that completely changed the way I show up as a leader.

Armored Leadership: Being a Knower and Being Right


Daring Leadership: Being a Learner and Getting It Right

Being a Knower and Being Right: Having to be the “knower” or always being right is heavy armor. It’s defensiveness, it’s posturing, and, worst of all, it’s a huge driver of bullshit. It’s also very common — most of us have some degree of knower in us. Too often we stereotype the knower as the irritating but lovable Cliff Clavin from the TV show “Cheers.” Unfortunately, needing to know everything is pretty miserable for the knowers and for everyone around them. It leads to distrust, bad decisions, unnecessary rumbles, and unproductive conflict.

It sounds pretty easy to replace the armor of knowing with becoming a curious learner, but for many people the need to be a knower is driven by shame, and, for some, even trauma. Being the knower can save people in hard situations, and it’s easy to buy into the belief that being a knower is the only value we bring to relationships and work.

Knowing can also become a culture problem when only some people are valued as knowers. Others don’t speak up because they’re not “senior enough” or it’s “not their place.” One leader shared that he had been with his new company for six months and had never contributed in a meeting. He was brought in because of his twenty-plus years of experience, yet he was expected to be quiet in the meetings because of cultural norms that valued only the contributions of tenured leaders.

Being a Learner and Getting It Right: There are three strategies that I’ve seen work to transform always knowing into always learning.

First, name the issue. It’s a tough conversation, but clear is kind: “I’d like for you to work on your curiosity and critical thinking skills. You’re often quick with answers, which can be helpful, but not as helpful as taking the time to make sure we are asking and answering the right questions, which is how you’ll grow as a leader. We can work together on this.”

Second, make learning curiosity skills a priority. Knowers often have a lot of people talking behind their backs, and that corrodes trust.

Third, acknowledge and reward great questions and instances of “I don’t know, but I’d like to find out” as daring leadership behaviors.

The big shift here is from wanting to “be right” to wanting to “get it right.”

Armored Leadership: Leading for Compliance and Control


Daring Leadership: Cultivating Commitment and Shared Purpose

Note: The compliance we’re talking about is not legal, safety, or privacy compliance or organizational compliance (e.g., vetting partners, wearing a hairnet, setting the alarm code on your way out, or putting in a vacation request with two weeks’ advance notice).

Leading for Compliance and Control: The armor of compliance and control is normally about fear and power. When we come from this place, we often engage in two armored behaviors: We reduce work to tasks and to-dos, then spend our time ensuring that people are doing exactly what we want, how we want it — and then constantly calling them out when they’re doing it wrong.

The armor of compliance and control leads us to strip work of its nuance, context, and larger purpose, then push it down for task completion, all while using the fear of “getting caught doing it wrong” as motivation. Not only is this ineffective, it shuts down creative problem solving, the sharing of ideas, and kills trust. It also leaves people miserable, questioning their abilities, and even desperate to leave.

The less people understand how their hard work adds value to bigger goals, the less engaged they are. It becomes a self-fulfilling prophecy of failure and frustration.

When we operate from compliance and control, we have a tendency to hold on to power and authority and push responsibility down. This leads to huge alignment issues for people. They’ve been asked to do something that they don’t actually have the authority to accomplish. They’re not set up for success, so they fail.

This just reinforces our power and resentment loop: “I knew I should have done it myself. I’ll be responsible for this, you just do these small tasks that you can handle,” versus “Let’s dig into how we could have set you up for success. I know I have a part.”

Cultivating Commitment and Shared Purpose: Daring leaders — even in compliance-driven and highly structured industries like banking, healthcare, and the food industry — create and share context and color.

They take the time to explain the “why” behind strategies, and how tasks link to ongoing priorities and mission work. Rather than handing down black-and-white mandates stripped of story, they hold themselves responsible for adding texture and meaning to work and tying smaller tasks to the larger purpose.

My team used to utilize the Apple DRI model, appointing someone as the “directly responsible individual” for a specific task and recording their duty in the meeting minutes. But what we learned is that despite the team member’s willingness to own it and be held accountable for executing, they didn’t always have the authority to be successful.

We’ve now switched to a TASC approach, which stands for “The Accountability and Success Checklist”:

  1. T—Who owns the task?
  2. A—Do they have the authority to be held accountable?
  3. S—Do we agree that they are set up for success (time, resources, clarity)?
  4. C—Do we have a checklist of what needs to happen to accomplish the task?

We also borrowed the Scrum technique of “What does ‘done’ look like?” when we assigned tasks, responsibilities, and deliverables. It was a huge improvement for us, but we needed to tweak it because it didn’t address the need for tying deliverables to our purpose.

For example, I’m out of town with my colleagues Murdoch and Barrett facilitating a daring leadership workshop. I ask them to collect one role-play scenario from everyone participating in our two-day training while I’m meeting with the CEO. I want to use these scenarios the next day.

Later that evening, they slide a folder stuffed with handwritten scenarios under my hotel door. I wake up the next morning and panic. Now I have to sort through them and type them up. I’m frustrated with Murdoch and Barrett, and they have no idea why.

The next time, I ask for the same thing, but Murdoch replies with, “Sure. What does ‘done’ look like?”

I say, “Please type them up, and you and Barrett should pick three that are specific enough to be meaningful but general enough to apply across the group. It would be helpful if I could get them before 8 p.m. so I can review them tonight.”

Huge improvement. But wait . . .

Same scenario, but instead of saying “Sure. What does ‘done’ look like?” Murdoch says “Sure. Let’s ‘paint’ done.”

Rather than slinging directives “West Wing” walk-and-talk style, we find Barrett and talk for five minutes.

I say, “Here’s my plan. I want to collect scenarios from the participants today so we have new role-plays for the group tomorrow. I don’t want to reuse the ones we brought and used today. They’re really struggling with these hard conversations, and the more specific the scenarios are to their issues and culture, the more helpful the role-playing will be. My plan is to have you collect them and sort through them tonight, looking for ones that are specific but have broad appeal. I’d like y’all to type up three of them and make copies. Instead of breaking the group into pairs, I want to do triads with one person observing and supporting. So, if we have three role-plays for each group, they can each take a turn.”

Murdoch and Barrett think about it for a minute, then Barrett says, “One issue is that everyone here today is from operations. Tomorrow is the marketing team. Will that affect the relatability of the role-plays?”

Me: “Dammit. It totally changes what I’m thinking. Thank you.” Paint done.

For us, it’s significantly more helpful than, “What does done look like?” because it unearths stealth expectations and unsaid intentions, and it gives the people who are charged with the task tons of color and context. It fosters curiosity, learning, collaboration, reality-checking, and ultimately success.

Leaders who work from compliance constantly feel disappointed and resentful, and their teams feel scrutinized. Compliance leadership also kills trust, and, ironically, it can increase people’s tendency to test what they can get away with.

We want people to share our commitment to purpose and mission, not to comply because they’re afraid not to. That’s exhausting and unsustainable for everyone.

Courage is Contagious

If you’re ready to dig in to Dare to Lead, join us for a global read-along on LinkedIn. Get your book and get ready – we’re starting on October 12 and finishing on November 19. Every week, I’ll take questions from readers and share my answers via videos posted on LinkedIn. You can do the read-along alone, with a partner, or with your team. We even have entire organizations joining us.

However you choose to engage, remember that courage is contagious. When we’re brave with our lives, we make everyone around us a little more daring and the world a more courageous place.

Brené Brown is the author of Dare to Lead: Brave Work. Tough Conversations. Whole Hearts., from which this article is excerpted.