Topley’s Top Ten – August 29, 2019

Author

Matt Topley
August 29, 2019

1.Stock dividends offer more yield than 30-year Treasury bond for first time since 2009

Published: Aug 28, 2019 1:41 p.m. ET Occurred only once before in last 40-plus years: Bespoke 

 By William Watts

Here’s another consequence of the rally in government bondsthat’s sent yields crashing around the globe — U.S. stocks now offer more yieldthan the 30-year U.S. Treasury bond.

As thechart below, going back to 1977, from Bespoke Investment Group highlights, theTuesday move marked the first time since the financial crisis that the dividendyield on S&P 500 index companies SPX, +0.57%  hastopped the yield on the long bond TMUBMUSD30Y, -1.14%.

“The only other time in the last 40+ years where we have seen asimilar inversion was for a few months in late 2008 through March 2009 (the lowpoint of the Financial Crisis),“ Bespoke analysts wrote. “In July 2016 rightafter the Brexit vote, the S&P 500 dividend yield came within 0.01% of the 30-year’syield, but it couldn’t quite make it higher.”

All in all, the higher dividend yield should make stocks moreattractive.

Bespoke said it was “pretty amazing” to see how many stocks inthe S&P 500 now yield more than the 5-, 10- and 30-year Treasurys. As ofTuesday, 333 stocks were yielding more than the 5-year at 1.38%; 313 more thanthe 10-year at 1.48%; and 256 more than the 30-year at 1.97%.

But for now, falling yields for Treasurys seems to be a negativefor stocks as the yield on the 10-year note falls further below the 2-yearyield, after slipping below the yield on the 3-month bill earlier this year.

Investors appear to be piling into government bonds, pushingyields down, in part out of fears of a global economic slowdown and thepotential for recession as worries over an intensifying U.S.-China trade warmount. An inverted yield curve in particular is seen as a warning signal for apotential U.S. recession, albeit with a lag. Meanwhile, the yield on the30-year bond has fallen to an all-time low below 2%, while the yield on the10-year note ended Tuesday at its lowest since 2016, and is within hailingdistance of its all-time low below 1.4%.

TheS&P 500 and the Dow Jones Industrial Average DJIA, +0.83%  haveboth pulled back more than 3% in August.

2. Initial Jobless Claims – Nowhere near a recession reading, would need to double to confirm recession

From The King Report

3.50% Of the World’s Bonds are Yielding Negative to 1%

How do negative-yielding bonds work?

Negative yields may sound counter-intuitive, since bondstypically pay a coupon (a set interest rate) on the principal investment. Infact, in uncertain markets, investors in government bonds may be willing toaccept lower proceeds in exchange for a sense of safety compared with riskiersecurities.

Investors don’t physically pay the issuer when yields arenegative. Instead, the bond’s new issue price trades at a high premium to par,which results in a negative yield. For example, in May, the German governmentissued a 2-year bond with a 0% coupon and an issue price of €101.33. Over thecourse of the bond’s life it will not distribute any coupons payments but willpayout a final maturity of €100. Consequently, this bond has a yield of -0.65%at issuance because an investor paid €101.33 to receive €100 two years later.

It is also possible for corporate bonds to have negative yieldsbecause they are issued with a “spread” over similar-maturity government bonds. In a simplified example, if a corporate bond has a spread of 0.5% over asimilar maturity government bond that yields 1.5%, then the corporate bond’stotal yield will be about 2.0%. That means if the yield of a government bond ismore negative than the corporate bond’s positive spread, it could drag thecorporate bond’s yield below zero as well.

Should you care about negative bond yields?

WrittenbyKaren Schenone, CFAFixedIncome Product Strategist

In some parts of the world, bonds are yielding less than zero. Karen explains how that can happen, what it means for your portfolio and moves to consider.

4.Last 30 Days of Stock Market Volatility-Growth Continues to Trump Value.

Nasdaq Dorsey Wright  www.dorseywright.com

5.Global Equities: Capital Markets Assumptions

From Top Down Charts

6.Chart on Tariffs Going Back to 1800 Just Reversed.

The current level of UStariffs is not high by historical standards, but it is the highest level sincethe 1960s, and it is a major break with the globalization trend which startedtwo hundred years ago, see chart below and here.

———————————————–

Let us know if you would liketo add a colleague to this distribution list.

Torsten Sløk, Ph.D.

Chief Economist

7.Pelaton IPO $500m

Peloton reported $915 million in total revenue for theyear ending June 30, 2019, an increase of 110% from $435 million in fiscal 2018and $218.6 million in 2017. Its losses, meanwhile, hit $245.7 million in 2019,up significantly from a reported net loss of $47.9 million last year.

The company has reached 1.4 million total communitymembers, defined as any individual who has a Peloton account.

Peloton customers subscribe to the company’s digitallibrary of fitness content, streamed live and on-demand, for $39 per month, inaddition to purchasing its hardware, which costs $2,200 to $4,295 apiece. Thecompany says 58 million workouts were completed by Peloton users in fiscal2019, while its paying subscriber base reached an all-time high of 511,202.

As for subscription revenue, Peloton reports $181 millionfor fiscal 2019, up from $80 million last year.

Kate Clark-Tech Crunch

Peloton has raised nearly $1 billion during its time as aprivate company. Most recently, the company raised $550 million in August 2018from investors including Technology Crossover Ventures, NBCUniversal, KleinerPerkins, and Tiger Global Management – valuing the company at over $4 billion.

8.Report: 60% of US construction activity concentrated in 10 states

If it seems that certain areas of the United States arebenefiting more than others from the country’s current construction boom, it’sbecause they are, according to a new report fromresearch firm GlobalData.

In fact, of the more than 11,200 U.S. projects the company istracking — public and private, in development and under construction— 10 states have captured about 60% of the $3.7 trillion those projectsrepresent.  

By far, California has the largest share of the pie, with themost projects in number — 1,302 — and value — $524.6billion. California also has more megaprojects than any other state, withthe top 10 worth $139.5 billion.  

There is one caveat, however. Included in California’s totalproject value, and No. 1 on the list of its megaprojects, is the $79 billionCalifornia High-Speed Rail Authority’s bullet train project,most of which was put on ice earlier this year by California Gov. Gavin Newsombecause of cost overruns and schedule delays. As it currently stands, only a$20 billion, 119-mile segment between Merced and Bakersfield is moving forward.

But even when deducting the inactive portion of the bullet trainfrom the value of work in the pipeline in California, it would still be theleader with $465 billion worth of projects. 

Texas has the most energy and utility projects at almost $153billion and those sectors have driven the state’s construction pipeline to morethan $425 billion, an amount which also includes mixed-used developments(roughly $68 billion) and infrastructure projects (around $67 billion). Thesetwo states are followed by New York, which has $409 billion worth ofconstruction projects in the works, then Florida, Washington and Illinois. Thefull list is as follows:

  1. California

  2. Texas

  3. New York

  4. Florida

  5. Washington

  6. Illinois

  7. Pennsylvania 

  8. Georgia

  9. Ohio

  10. North Carolina

The report is a reminder of exactly how robust the U.S.construction industry is, even as it faces challenges like a persistentshortage of skilled labor and rising material costs. In fact, according toGlobalData, the approximately $1.4 trillion spent on U.S. construction everyyear makes the industry one of the world’s largest. Domestically, the constructionsector contributes more than 4% to annual GDP and provides jobs for more than5% of the country’s workforce. 

It is likely this strength that has given contractors theconfidence to predict positive things for their businesses in the next year. Inits second-quarterCommercialConstruction Index (CCI), USG Corp. and the U.S. Chamber of Commerce reportedthat contractors responding to their survey were predicting they would be ableto secure even more work in the next 12 months. The Associated Builders andContractors trade group backed up thatsentiment, reporting that contractor confidence was holding steady as of April,even though work backlogs had decreased slightly.​

9.Is there a relationship between sleep and Alzheimer’s?

The Wealth AdvisorContributor August 28, 2019

(The Herald Bulletin) The quality of sleep, already so mysterious, and how a poor night ofsnoozing is treated now might be linked to Alzheimer’s disease.

Research by Hoosier Kathleen Vernon that she presented ata July 15 Alzheimer’s Association International Conference in Los Angeles haslanded in The London Times, a medical journal for Asian physicians and AARP.

When the 2007 Batesville High School graduate completed amaster’s degree in 2018 at Utah State University, Logan, her thesis focused onexamining sleep disturbances and long-term sleep medication use in males andfemales with regards to the risk for developing Alzheimer’s disease. A group of3,656 adults 65 and older participated in the study that she authored.

The results varied by gender. Men who used sleeping aidswere 3.6 times more likely to develop Alzheimer’s disease.

Women’s risk for the illness depended on whether theyreported having a history of insomnia. When women did have that problem, takinga sleeping medication was associated with a 35 percent reduced risk ofAlzheimer’s disease. But Alzheimer’s risk was nearly four times higher amongwomen who didn’t report having sleep disturbances and who took sleeping pillsto, say, counter sleep loss associated with chronic pain or another condition.

Vernon, who is known professionally by her first name,Elizabeth, doesn’t want people to leap to conclusions. She points out thesevarying statistics may stem from underlying health challenges, the type ofsleeping aid used, hormonal differences, or variations in the sleep patterns ofmen and women.

The student was surprised females with sleep issues, likeinsomnia, and taking sleeping aids had a reduced risk. “These medicationsoften have several negative side effects, especially among adults 65 and older,and I had anticipated that the results would have been similar to the findingsin males.”

More questions need to be answered. She advises, “Futureresearch should examine the underlying mechanisms that may be associated withthe differences in males and female’s risk of Alzheimer’s disease with sleepmedication use. We have some research to suggest females tend to have moresleep complaints than men and that men and women appear to have differences inprescription rates of these classes of medications (benzodiazepines andantidepressants). It would be interesting to examine how these differences mayimpact risk as well as the underlying cause of the sleep disturbance. Forexample, pain might be associated with the cause of the sleep disturbance andthose individuals may be taking a nonsteroidal anti-inflammatory drug, which inour Cache County sample has been associated with reduced risk for Alzheimer’sdisease.

“In addition, it would be interesting to examine thespecific medication class (i.e. benzodiazepine, antidepressant andantihistamines) and risk for Alzheimer’s disease. We were unable to examinethis in our sample.”

“The final product took approximately three years tocomplete. One of the reasons for this was I was taking a full courseload aswell as doing clinical work. The other reason was needing to take statisticalanalysis courses that would allow me to understand and conduct my own analyses.”

After graduating from Indiana University with a Bachelorof Arts degree, Vernon was employed at the Knight Alzheimer’s Disease ResearchCenter at Washington University School of Medicine in St. Louis, where sheworked as a psychometrist (a person who administers tests looking at memory andthinking abilities). “This experience started my career in the clinicalfield and allowed me to gain research experience. It was here that I started toenjoy clinical work.”

One mentor discussed the versatility of a clinicalpsychology degree. She recalls, “I decided that this would be a good fitfor me. It wasn’t until after my second year in the program at Utah StateUniversity that I realized how much I enjoyed clinical work and wanted topursue a career primarily focused on clinical work rather than research.”

She remains at the USU Psychology Department as adoctoral student in the combined clinical/counseling Ph.D. program and has beenworking in the Alzheimer’s Disease and Cognitive Disorders Lab. The student hascompleted practicums at the Student Health Center and a psychology communityclinic at the university.

She explains, “My main area of interest and mycurrent clinical experiences have focused on neuropsychology. This looks at thebrain, how it relates to behavior and focuses on cognitive functioning,emotional functioning and personality and how this is informed by environmentalfactors within the history of an individual. I work primarily with adults,older adults and adolescents and I tailor a battery of tests to examine theirpresenting concerns, such as anxiety, depression, ADHD, learning disabilities,cognitive decline, dementia and TBI (traumatic brain injury) with the help ofmy supervisor. I then make recommendations and next steps to help adjust orhandle these difficulties or concerns.

Of earning a Ph.D., Vernon observes, “The beauty ofthis degree is the flexibility it allows me. I would be able to work in aresearch, clinical or private practice. I ideally would like to be able to do alittle bit of everything. I would like to work in the field of neuropsychologyeither in a medical setting or private practice and conduct some research onthe side.”

10.11 Things You Need To Give Up If You Really Want To Be Happy

What problem are you waitingto pass before you can feel better? What are you waiting for to make you feelbetter?

Whatproblem are you waiting to pass before you can feel better? What are youwaiting for to make you feel better? What dream are you fantasizing about thatyou’re not actively working toward today? These things aren’t problems inthemselves, they’re symptoms.

Most people exist in amindset that tells you happiness is a matter of acquiring more. The opposite istrue. Happiness has much more to do with what’s standing in your way thanwhat’s not in front of you yet. Here, 10 specific things that you need to giveup if you want to get there:

Saying“I’m going to…”

Kyle Cease says: Achievers alwayslook at victims and say: your limiting belief is “I can’t.” But the achievers’limiting belief is: “I’m going to.”

When you talk about whatyou’re going to do, what you want to be, you are creating the reality of nothaving and not being that thing. If you continue to do that every single day,you live your entire life not becoming that thing.

It’s why people often adviseto show your work, not talk about your work. Get affirmed for doing, not talking about doing.

The most powerful prayer inthe Universe is “I am,” and second to it is “Thank you” Say “I am” [the thingyou want to be]. Say “thank you” for [the thing you want to have]. That’s whatputs you in the place of being it and having it; you need to think that you areto act like you do.

Worryingas a defense mechanism.

The world is not withholdinghappiness from you until you “figure it all out” and fix every problem and dashevery possibility of anything going wrong. You are withholding happiness fromyourself because you aren’t letting your guard down. What you don’t realize isthat you are creating what’s wrong in your life because you’re not engagingwith it. You’re not actually living. You’reexisting to solve problems that aren’t even real in the first place.

Stealing other people’sreputations.

The opposite of this iscalled Astaya, or the practice of not stealing people’sreputations. In other words: stop creating impressions of people for them. Letthem show the world who they are, and let each individual they encounter respondto them how they feel they should. Stop being a driving force of other people’sreputations, especially if it’s negative. Stop perpetuating rumors andjudgments. The karma is only yours.

Not takingcare of yourself.

Take your vitamins. Drinkwater. Sleep. Sweat. Cry. Try to eat a vegetable. These things aren’t bonusesthat you should do when you feel like it, these things are integral parts ofyour health and mental/emotional well-being.

Fearingthe jump rather than the fall.

To quote Kyle again, peoplewho are going skydiving are always most afraid when they’re standing on theedge of the airplane, when they are actually safe. Once they’ve jumped, they’rein euphoria, despite the fact that that is the moment that they are actually indanger.

Once you jump off theairplane, you let go. You aren’t trying to gauge potential danger becauseyou’re too busy navigating your way down.

An abundance of anxiety andworry is almost never proportional to how many problems you have in your life,and almost always proportional to how little you’re actually living, andhow much you’re thinking about living instead.

Visualizing“having” rather than “doing.”

The next time you sit down tovisualize having what you want to manifest, imagine yourself waking up withoutanxiety, doing your work effortlessly, feeling happy to see people you love orenjoying your morning coffee rather than having a new car or imagining howother people will see your life once it’s “complete,” once you’ve reached onemore milestone.

Not only is this easierbecause the only variable to control here is you, you’re creating what youreally want, which is to feel good. Feeling good each day is what you should befunneling your power toward, not trying to get more things that will induce thegood feelings.

Believingeverything you feel.

I know the world hasinstructed you so far to “trust your gut” and “follow your heart” but perhapsthat’s exactly your problem. You should not always trust your feelings. Yourfeelings are not always right. It’s giving your anxiety, your-self hate, yourfeelings of worthlessness all of your trust that are preventing you from seeingyourself, and your life, rationally. Ironically, you’ll feel happier if youtrust your feelings less, and question them more. Things are not usually as bador as wrong as your feelings make them seem.

Beingcynical.

If you find something wrongwith everything and everyone, the common denominator is you. Being cynicaldoesn’t make you look cool or smart, it makes you look weak and insecure. Italso makes you a hard person to be around. Nobody enjoys spending time withsomeone who has something negative to say about everyone and everything.

Seeingcritics as “haters.”

Sometimes your critics aretrying to tell you something important. Perhaps some of the most important things thatyou will ever hear in your life: ways you need to improve,dreams that are leading you down a dead-end road, poor choices in romanticpartners. Just because you don’t like what someone tells you doesn’t meanthey’re wrong.

Confusinga lack of interest for laziness.

If you aren’t magically motivatedeach day to get up and start [doing the thing you say that you really want todo] perhaps the problem isn’t that you’re lazy and underachieving, but thatthere’s something else you should be doing.

Look, you do need to trainyour brain to be prolific, and to consistently perform at any given task orcraft you choose. But there has to be momentum at the starting point. There hasto be a natural inclination, a passion, an inherent talent.

If none of those things arepresent, and yet you think you want this thing, but can’t seem to actually takeaction, the problem is that you’re in love with an idea, specifically, the ideaof what that thing makes you.

Failure is not a moraljudgment on your character, it is the Universe responding to your actions,saying: there is another way. Change route. Think again. Try again. Your job isnot to sit and bemoan the fact that you feel unworthy, it is to recognize thatthe things you lose are not losses, they are entryways to the path you werestruggling to find in the first place.

Thinkingtoo much of yourself.

Maybe you aren’t going to endup on the Forbes’ 30 Under 30, or pay off all of your debt by 25, or even doanything much out of the ordinary? Who cares? Millions and millions of peoplehave done the same thing and have still managed to lead meaningful, happylives.

The question isn’t: “Will yoube successful?” The question is: “What will your life amount to if you’re not?”

Originally published at theleading.co

—Published on March 16, 2018

From Thrive Global