Topley’s Top Ten – September 11, 2017

1.Tipping Point for Fed Funds Rate???

 Wells Fargo comments in Barrons

Looking back over six decades, the Wells Fargo team found that the tipping point came when the fed-funds rate exceeded the 10-year Treasury yield’s cyclical low. This has predicted every recession since 1955, with an average lead time of 17 months—producing a significantly earlier warning signal than waiting for the yield curve actually to invert.

What about the current cycle? The 10-year Treasury’s low yield was 1.36%, touched on July 5, 2016. An increase in the fed-funds rate to 1.5%, which the Wells Fargo economists expect at the December FOMC meeting, would trigger the recession early-warning signal. Specifically, their research puts a 69.2% probability of a downturn within 17 months after that.


2.4th-Longest S&P 500 Streak of Days Without A 5% Drawdown Continues

Sep 8, 2017

While the S&P 500 is a bit less than 1% from all-time highs and hasn’t made a new high in a month, the current drawdown is extremely small by historical standards. In the chart below, we show streaks of days where the benchmark index has avoided a decline from all-time highs of at least 5%. Each streak starts the day the index gets back within 5% of all-time highs after declining from them. During the current bull market, there have been a number of such declines, most recently around the Brexit vote in June of last year. Since then, however, the index hasn’t moved down more than 5% from record highs. That streak of 303 trading days and counting is the 4th-longest on record, matched only by streaks ending in 1965, 1994, and 1996. It’s worth noting that long streaks without large declines don’t necessarily result in huge gains; for instance, the 1994 streak saw a 14.2% gain. The 1965 streak lasted 4 months longer than the current one but only resulted in gains slightly better than the current streak’s 23.1% move higher.

3.Home Depot Benefitting from Housing/Apartment Upgrade Wave…Now Hurricane?

 1987-2000 homeowners stayed in house on average six years now it’s 15 years…Home Depot up over 100% since 2014


4.Stocks and Falling Inflation.

However, BAML analysts see no disconnect between bonds and stocks.

“The best explanation for low yields and high stock [prices] is $1.96 [trillion] of central bank purchases of financial assets in 2017 alone (central bank balance sheets up $11.26tn since Lehman [Brothers] to $15.6tn),” they wrote.

“Second best [explanation] is bonds are pricing in low inflation (increasingly a new structurally low level of inflation due to tech disruption of labor force) while equities are pricing in high earnings growth (with little on horizon to meaningfully reverse trend).” Inflation has tended to hang below most central bankers’s roughly 2% target, seen as indicative of a healthy economy.

BAML analysts said stocks have a history of good returns in times of falling inflation.

5.Chart o’ the Day: The World is Cheap

Posted September 7, 2017 by Joshua M Brown

I love this chart from Chris Konstantinos at RiverFront Investment Group. He’s showing us a record spread between what investors are willing to pay for US stocks vs International stocks on forward price-earnings ratio…

Looking a 12-month forward P/E ratio at the MSCI All-Country World Ex-US index, we are currently at the largest valuation gap between US and non-US markets in the 15+ years of data to which we have access.

Josh here – We remain unapologetically overweight anything but the S&P 500. It’s not a market prediction, it’s an awareness of expected returns. When the US stock market sells at a 30 CAPE and yields just 2%, you can’t expect home run performance going forward over any meaningful time frame. It forces you to be open-minded about other asset classes, if you’re a serious investor.

Now go read the rest of what Chris has to say about this year’s synchronous recovery across earnings and economies around the world:

6.For Decades, Investors have Complained About the Chinese Yuan’s Peg to the U.S. Dollar.

 2017 has seen a huge divergence in currencies between Yuan and Dollar. Yuan +12% vs. Dollar -10%

7.Wind is Responsible for 46% of Iowa’s Energy??

 Dated grid but you get the idea.


8.Technology Creates More Jobs Than It Destroys

9.Stock Ownership by State.

In Vermont almost 50% of households that make between $100,000 and $200,000 own stocks. For similar households in Louisiana, Mississippi, Nevada, Utah, and West Virginia the stock ownership percentage is closer to 30%, see chart below.


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

10.The 3 Things You Need to Be Happy at Work

What I have discovered in my work with leaders around the world is both simple and profound: happiness matters at work as much as it does in our personal lives.

Annie McKee

Life is too short to be unhappy at work.

Yet far too many of us aren’t even close to being content—much less delighted—with our work or our workplaces. Instead, we are stressed and exhausted. We can’t remember what we used to love about our jobs. Colleagues we trust and respect are few and far between, and half the time it doesn’t even feel safe to be ourselves. All of this is spilling over into our personal lives. We’re having a hard time sleeping or have given up on exercise. Relationships are suffering, too. We feel trapped and struggle to see how things will get better.

No one wants to live like this. Still, a lot of us give up and settle for less-than-fulfilling jobs. We tell ourselves that we’re not supposed to be happy at work; that’s for other parts of life. We try to cope by avoiding that bad manager or getting that stubborn, annoying person off the team. We shut down, give less, and fantasize about telling someone off. Sometimes we run away from the job, the company, even our careers. But running away isn’t going to make things better. To be happy, I’ve discovered, you’ve got to run toward something: meaningful work; a hopeful, inspiring vision of your future; and good relationships with the people you work with every day.

Happiness at Work: Purpose, Hope, and Friendships

I’ve always been fascinated to find that rare and special company where people are happy at work. In these companies, people are profoundly engaged, motivated, and committed. In these companies, individuals and the enterprise thrive.

Over the years, though, I’ve been puzzled and dismayed at the sheer number of people who are deeply unhappy at work and how hard it is to reach them. I myself have had periods when I was truly happy and thriving at work and times when I was miserable. What, I wondered, makes the difference? What leads to long-lasting fulfillment at work? What leads to happiness? And can we even expect to be happy at work? Does it really matter?

What I have discovered in my work with leaders around the world is both simple and profound: happiness matters at work as much as it does in our personal lives. And when we are happy, we are more successful.

This flies in the face of the myth that we don’t have to be happy at work and we shouldn’t even expect to be. Luckily, though, we live in a time when organizations and academia are taking happiness seriously. My studies of organizational culture and leadership practices in South Africa, Cambodia, Italy, France, Germany, and the United States show the same thing: when we feel deep, abiding enjoyment in what we do, we learn more, see more, and do more.

So, happiness matters. And to be truly happy at work, we need purpose, hope, and friendships.

Happiness Begins with Purpose and Meaningful Work

We are wired to seek meaning in everything we do. It’s what makes us human. In some cases, it’s what keeps us alive.

In his classic book, Man’s Search for Meaning, Austrian psychiatrist and holocaust survivor Victor Frankl shows that even in the worst of circumstances, purpose, hope, and connection are what keep us going. True, his story of finding good in evil and pursuing a noble purpose in spite of the horrors of life in concentration camps is nothing short of heroic. Yet, as Frankl so eloquently shows us, we strive to find meaning in our day-to-day lives no matter where we are or what conditions we’re subjected to.

As you have probably discovered, you can easily lose sight of what you value and ignore the aspects of yourself that matter most to you, especially when you’re struggling with dysfunctional organizations, bad bosses, and stress. You’re then likely to put meaning and purpose on the back burner or wait for someone else to give you a compelling reason to love your job. Couple all this with the outdated but pervasive notions that personal values don’t belong in the workplace, and you have a recipe for disengagement and unhappiness.

You need conviction to insist on living your purpose at work. As you will see in How to Be Happy at Work, the effort is worthwhile. Having a sound, clear, and compelling purpose helps you to be stronger, more resilient, and able to tap into your knowledge and talents. As you discover which aspects of your job are truly fulfilling—and which are soul destroying—you will be in a better position to make good choices about how you spend your time and what you pursue in your career.

Hope’s Contribution to Happiness

Like meaning, hope is an essential part of our human experience. This is as true at work as in any corner of our lives. Hope, optimism, and a vision of a future that is better than today help us rise above trials and deal with setbacks. Hope fuels energy, creativity, and resilience. Hope makes it possible to navigate complexity, deal with pressure, prioritize, and make sense of our crazy organizations and work lives. And hope inspires us to reach our potential—something virtually everyone wants for themselves.

Unfortunately, we often assume that our organization’s vision is enough to keep us hopeful and focused on the future. I’ve rarely seen this to be the case. An organization’s vision, however inspiring, is for the organization—not you. Even the most noble organizational vision seldom speaks to our most cherished, personal hopes and dreams.

To be truly happy at work, we need to see how our workplace responsibilities and opportunities fit with a personal vision of our future. This kind of vision emerges from hope and optimism, which we can, with focus and hard work, cultivate even in difficult jobs and toxic workplaces. When we see our jobs through a positive lens, and when a personal vision is front and center in our minds, we are more likely to learn from challenges and even failures, rather than be destroyed by them. With hope, optimism, and a personal vision, we can actively choose a path toward happiness—a path away from disengagement, cynicism and despair.

Friendships and Happiness at Work
Resonant relationships are at the heart of collective success in our companies. That’s because strong, trusting, authentic relationships form the basis for great collaboration and collective success.

But, I’ve found, we need more than this to get us through good times and bad. We need to feel that people care about us and we want to care for them in return. This, too, is part of our human makeup. We also want to feel as if we are accepted for who we are, and that we work in a group, team, or organization that makes us feel proud and inspires us to give our best effort.

Adding it all up, the kind of relationships we want and need look a lot like friendships. Yet, one of the most pernicious myths in today’s organizations is that you don’t have to be friends with your coworkers. Common sense and my decades of work with people and companies show the exact opposite. Love and a sense of belonging at work are as necessary as the air we breathe.

Purpose, hope, and friendships don’t just appear magically. You need to work for them. You need to engage in mindful self-reflection and be truthful about what you discover. Then you need to act.

Reprinted by permission of Harvard Business Review Press. Excerpted from How to Be Happy at Work. Copyright 2017 Annie McKee. All rights reserved.