Topley’s Top Ten – September 6, 2018

1.It’s An All U.S. Growth Year.

Global Developments: This chart shows the equity market performance for select economies.

Source: Fitch Solutions

2.Incredible…World Earnings Less Tech at Pre-Crisis Levels.

David Schawel‏ @DavidSchawel

Incredible, world earnings ex-tech are roughly at pre-crisis levels. Tech on the other hand…

5:02 AM – 5 Sep 2018

3.Emerging Markets Technicals.

EEM Watch to see if it makes new low for the year here or holds.

Weekly Chart still above 200day.

4.Bull/Bear History…Average Bull 9.1 Years vs. Average Bear 1.4 Years.

5.ISM Manufacturing Showing No Signs of Recession.

“The Institute for Supply Management showed that the manufacturing sector remains on very solid ground,” he said in a report. “History shows that since 1950, the ISM typically peaks well before the economy enters recession or the S&P 500 hits the cycle high, especially over the past three levered economic periods.”

The ISM reported its manufacturing index jumped to a 14-year high of 61.3% in August from 58.1% in July, far exceeding the 57.9% forecast by analysts in a MarketWatch survey. A reading of more than 50% indicates an expansion in activity.

Dwyer noted that the manufacturing indicator peaked a median 31.5 months before the start of a recession and the S&P 500 usually gained about 35.4% in the subsequent 2 years after the ISM peaked.


6. China spends more on R&D than Europe and Japan

by Barry Ritholtz

Source: Deutsche Bank Research

From Barry Ritholtz Big Picture Blog.

7.Luxury Brands Rolling Out Tesla Competition.


Among graduate students, law and medical students typically borrow in the greatest percentages and largest sums. They owed an average cumulative debt of $143,000 and $242,000 in 2016, respectively, while M.B.A. students with loans took out an average of $65,000, according to the latest Education Department data. Yet business programs are much more popular. More than 187,000 master’s degrees in business were awarded in 2016, compared with 55,000 law- and medical-school diplomas combined, federal data show.

The U.S. Department of Education proposed new rules last month that would require universities to disclose average salaries and debt for every program they offer, both at the undergraduate and graduate levels. Only for-profit institutions are now required to collect and share that level of detail.


 Temple Rankings Scandal Spotlights M.B.A. Grads’ Swelling Debt

With little other official data on hand, students rely on school rankings to calculate payoff, or financial risk, of a business degree

 Kelsey Gee

 9. How Wall Street Abetted an Opioid Disaster

Four years before he was arrested, John Kapoor became a billionaire.

It was October 2013 and stock in Insys Therapeutics, the painkiller company of which Kapoor was CEO, had risen 360 percent since going public. After an uneven career in the generic drug business, Kapoor, then 70, was a comeback kid on Wall Street. He wore his white hair like Beethoven and was effusive with the press; his success, he told a journalist, was possible “nowhere else” but America.

In America in 2013 there was steady demand for new and more powerful opioids. Laypeople knew of Vicodin, which equals the strength of morphine, and Oxycontin, which exceeds it very slightly, but fentanyl — a simplification of the morphine molecule that can be synthesized to 100 times morphine’s strength — was still obscure. Fentanyl made Oxycontin look like aspirin. In one study funded by the U.S. government, rhesus monkeys given fentanyl-laced sugar cubes passed out cold in a matter of minutes, and could be intubated without anesthetic.

Where Insys saw an advantage was within that matter of minutes, in the lag between ingestion and onset. Its competitors’ products, mostly fentanyl in the form of lozenges or lollipops, took 15 minutes to act. Insys’s product, a fentanyl mist sprayed beneath the tongue, took five. Because rapid-onset opioids are intended for cancer patients suffering from breakthrough pain — pain that “breaks through” a regimen of round-the-clock opioids — the difference between five and 15 minutes really matters. To Insys’s target customer, ten minutes could be excruciating, a fact that Insys played up in marketing materials. “When breakthrough cancer pain strikes, strike fast.”

Simple, catchy, and clear, the fast-onset message appealed to Wall Street analysts, who started urging Insys stock on their clients. The importance of analysts is easy to underestimate. Their job is telling hedge funds and investment banks what to buy, but they are totally invisible outside the world of finance, and many people on Wall Street insist they never use them. (If your hedge fund is sitting around all day reading analyst reports that are widely available, what are your clients paying for?)

But analysts’ reports are crucial in granting legitimacy to new stocks. In a research note from October 2014, analyst David Amsellem of brokerage house Piper Jaffray & Co. wrote approvingly of Insys: “the name of the game . . . is speed.” He recommended that his clients buy shares. Analyst Rohit Vanjani, then with  brokerage house Oppenheimer & Co., praised Insys for its “faster onset of action.” He too recommended buying shares.

Buying at first seemed like a really great idea. Revenues were going crazy: up 196 percent in the second quarter of 2014, then 99.5 percent in the third, then 65 percent, then 70 percent. By the summer of 2015, a tiny company from Chandler, Arizona, which practically no one had ever heard of, was suddenly worth $3 billion, hauling in $90 million a quarter, the vast majority from Subsys, as Insys’ fentanyl spray was called.    

In the middle of that miraculous quarter with 196 percent growth, a neurologist named Gavin Awerbuch was arrested near his pain clinic in Saginaw, Michigan. Analysts, as well as those with long positions in the stock, saw a dismissible local news event. Others saw the hint of a coordinated crime.

Full Read



10.The Most Important Leadership Competencies, According to Sunnie Giles

What makes an effective leader? This question is a focus of my research as an organizational scientist, executive coach, and leadership development consultant. Looking for answers, I recently completed the first round of a study of 195 leaders in 15 countries over 30 global organizations. Participants were asked to choose the 15 most important leadership competencies from a list of 74. I’ve grouped the top ones into five major themes that suggest a set of priorities for leaders and leadership development programs. While some may not surprise you, they’re all difficult to master, in part because improving them requires acting against our nature.

Demonstrates strong ethics and provides a sense of safety.

This theme combines two of the three most highly rated attributes: “high ethical and moral standards” (67% selected it as one of the most important) and “communicating clear expectations” (56%).

Taken together, these attributes are all about creating a safe and trusting environment. A leader with high ethical standards conveys a commitment to fairness, instilling confidence that both they and their employees will honor the rules of the game. Similarly, when leaders clearly communicate their expectations, they avoid blindsiding people and ensure that everyone is on the same page. In a safe environment employees can relax, invoking the brain’s higher capacity for social engagement, innovation, creativity, and ambition.

Neuroscience corroborates this point. When the amygdala registers a threat to our safety, arteries harden and thicken to handle an increased blood flow to our limbs in preparation for a fight-or-flight response. In this state, we lose access to the social engagement system of the limbic brain and the executive function of the prefrontal cortex, inhibiting creativity and the drive for excellence. From a neuroscience perspective, making sure that people feel safe on a deep level should be job #1 for leaders.

But how? This competency is all about behaving in a way that is consistent with your values. If you find yourself making decisions that feel at odds with your principles or justifying actions in spite of a nagging sense of discomfort, you probably need to reconnect with your core values. I facilitate a simple exercise with my clients called “Deep Fast Forwarding” to help with this. Envision your funeral and what people say about you in a eulogy. Is it what you want to hear? This exercise will give you a clearer sense of what’s important to you, which will then help guide daily decision making.

To increase feelings of safety, work on communicating with the specific intent of making people feel safe. One way to accomplish this is to acknowledge and neutralize feared results or consequences from the outset. I call this “clearing the air.” For example, you might approach a conversation about a project gone wrong by saying, “I’m not trying to blame you. I just want to understand what happened.”

Empowers others to self-organize.

Providing clear direction while allowing employees to organize their own time and work was identified as the next most important leadership competency.

No leader can do everything themselves. Therefore, it’s critical to distribute power throughout the organization and to rely on decision making from those who are closest to the action.

Research has repeatedly shown that empowered teams are more productive and proactive, provide better customer service, and show higher levels of job satisfaction and commitment to their team and organization. And yet many leaders struggle to let people self-organize. They resist because they believe that power is a zero-sum game, they are reluctant to allow others to make mistakes, and they fear facing negative consequences from subordinates’ decisions.

To overcome the fear of relinquishing power, start by increasing awareness of physical tension that arises when you feel your position is being challenged. As discussed above, perceived threats activate a fight, flight, or freeze response in the amygdala. The good news is that we can train our bodies to experience relaxation instead of defensiveness when stress runs high. Try to separate the current situation from the past, share the outcome you fear most with others instead of trying to hold on to control, and remember that giving power up is a great way to increase influence — which builds power over time.

Fosters a sense of connection and belonging.

Leaders who “communicate often and openly” (competency #6) and “create a feeling of succeeding and failing together as a pack” (#8) build a strong foundation for connection.

We are a social species — we want to connect and feel a sense of belonging. From an evolutionary perspective, attachment is important because it improves our chances of survival in a world full of predators. Research suggests that a sense of connection could also impact productivity and emotional well-being. For example, scientists have found that emotions are contagious in the workplace: Employees feel emotionally depleted just by watching unpleasant interactions between coworkers.

From a neuroscience perspective, creating connection is a leader’s second most important job. Once we feel safe (a sensation that is registered in the reptilian brain), we also have to feel cared for (which activates the limbic brain) in order to unleash the full potential of our higher functioning prefrontal cortex.

There are some simple ways to promote belonging among employees: Smile at people, call them by name, and remember their interests and family members’ names. Pay focused attention when speaking to them, and clearly set the tone of the members of your team having each other’s backs. Using a song, motto, symbol, chant, or ritual that uniquely identifies your team can also strengthen this sense of connection.

Shows openness to new ideas and fosters organizational learning.

What do “flexibility to change opinions” (competency #4), “being open to new ideas and approaches” (#7), and “provides safety for trial and error” (#10) have in common? If a leader has these strengths, they encourage learning; if they don’t, they risk stifling it.

Admitting we’re wrong isn’t easy. Once again, the negative effects of stress on brain function are partly to blame — in this case they impede learning. Researchers have found that reduced blood flow to our brains under threat reduces peripheral vision, ostensibly so we can deal with the immediate danger. For instance, they have observed a significant reduction in athletes’ peripheral vision before competition. While tunnel vision helps athletes focus, it closes the rest of us off to new ideas and approaches. Our opinions are more inflexible even when we’re presented with contradicting evidence, which makes learning almost impossible.

To encourage learning among employees, leaders must first ensure that they are open to learning (and changing course) themselves. Try to approach problem-solving discussions without a specific agenda or outcome. Withhold judgment until everyone has spoken, and let people know that all ideas will be considered. A greater diversity of ideas will emerge.

Failure is required for learning, but our relentless pursuit of results can also discourage employees from taking chances. To resolve this conflict, leaders must create a culture that supports risk-taking. One way of doing this is to use controlled experiments — think A/B testing — that allow for small failures and require rapid feedback and correction. This provides a platform for building collective intelligence so that employees learn from each other’s mistakes, too.

Nurtures growth.

“Being committed to my ongoing training” (competency #5) and “helping me grow into a next-generation leader” (#9) make up the final category.

All living organisms have an innate need to leave copies of their genes. They maximize their offspring’s chances of success by nurturing and teaching them. In turn, those on the receiving end feel a sense of gratitude and loyalty. Think of the people to whom you’re most grateful — parents, teachers, friends, mentors. Chances are, they’ve cared for you or taught you something important.

When leaders show a commitment to our growth, the same primal emotions are tapped. Employees are motivated to reciprocate, expressing their gratitude or loyalty by going the extra mile. While managing through fear generates stress, which impairs higher brain function, the quality of work is vastly different when we are compelled by appreciation. If you want to inspire the best from your team, advocate for them, support their training and promotion, and go to bat to sponsor their important projects.

These five areas present significant challenges to leaders due to the natural responses that are hardwired into us. But with deep self-reflection and a shift in perspective (perhaps aided by a coach), there are also enormous opportunities for improving everyone’s performance by focusing on our own.