Topley’s Top Ten – December 20, 2019

Author

Matt Topley
December 20, 2019

1.Share Buybacks Keep Humming….$770B Q3

Four Banks & Three Tech Companies Blow $56 Billion in Q3 toProp up Their Own Shares

byWolf Richter • Dec 18, 2019 • 109 Comments

2.Venture Capital Stats.

3.Developing Nations Sell a Record Number of High Yield Bonds….Double 5 Years Ago

WSJ

Companies in developing nations solda record $118 billion of high-yield dollar bonds this year, and are likely tokeep up a fast pace in 2020.

The total has more than doubled from five years earlier,according to Dealogic data. The figures cover debt in dollars withsubinvestment grade credit ratings, or no rating, and run to Dec. 18. Theydon’t include bonds sold by governments.

Emerging-Market Junk Bonds Sell at Record Pace

Investorsgobble up dollar debt sold by companies in developing nations

4.An 2019 IPO Pricing Retrospective

It isestimated that nearly 200 companies will go public this year, an increase ofabout 5% over last year’s 190 IPOs, but still well below the 547 companies thatwent public in 1999. The first half of the year was a good one for investors inthese IPOs, but investors have soured on these companies in the last fewmonths. One way to measure the performance of these young companies in theafter market is to look at how the Renaissance IPO ETF, a fund that trackslarger initial public offerings and weights them based upon free float, hasdone over the course of the year:

Since thefund tracks IPOs for 500 trading days after the listing date, it is not quite aclean measure of this year’s IPOs, but it is a good proxy. Notwithstanding allof the negative press you may have read about IPOs in the last few weeks, andthird quarter damage, the Renaissance ETF IPO has outperformed the market overthe course of this year.To take a closer look at a subset of these IPOs, I focused on seven of theofferings this year – Uber, Lyft, Pinterest, Slack, Levi Strauss, Peloton andBeyond Meat – and looked the performance of each of these stocks since theopening trade on the offering date:

Tocompare the performance of these offerings, I standardized performance bylooking at how much $100 invested in each stock at the open price on the firsttrading day would have done, in periods ranging from a day to the year to date:

Musings on the Market

5.Inflation Expectations Still Nowhere.

6.Home Buyers Lower Credit Scores and FHA Borrowers Younger Age Group….Millennials Entering Housing Market.

Ned Davis Research

7.More Home Buying Data From Torsten Slok

8.The 2010s changed how you shop for homes. Will the 2020s change the way you buy them?

Realestate portals like Zillow and Redfin transformed the role of the realtor

By JeffAndrews  Dec 9, 2019, 8:00am EST

Thisstory is part of a group of stories called

A look at the best (and worst) of the 2010s.

If you were shoppingfor a home at the beginning of the 2010s, the experience most likely revolvedaround one person: the realtor.

The realtor is whoyou contacted to initiate the process. They informed you of current marketconditions and gave you a sampling of what’s available on the local multiplelisting service. They also likely referred you to a mortgage broker and titleinsurer.

But if you’reshopping for a home today, your relationship with the realtor is dramaticallydifferent. Instead of going to them first, you’ll browse listings on Zillow,Redfin, or any number of real estate web portals. The realtor you chose willlikely have a formal relationship with one of those portals instead of with astandalone real estate brokerage firm,and that realtor will walkyou through the process as curated by the portal.

In short, therealtor’s role in the 2010s changed from gatekeeper of the experience totrusted adviser who can guide buyers throughthe glut ofinformation that’s now moved online.

“There is too muchinformation and a lot of information is out of context,” says Jonathan Millerof Miller Samuel, an appraisal and real estate consulting firm. “[Therealtor’s] role has morphed from ‘Here’s the information’ to ‘Here’s the rightinformation.’ First of all, that’s just a basic shift, but it’s also a bigshift. Their role is really as a curator now.”

While every decadesees advances in technology that change the way people live, the 2010s saw morethan their fair share of the proverbial tech disruption. Smartphones were onlya few years old in 2010, and the depression that followed the financial crisisin 2008 slowed the pace at which they saturated the market.

Over the course ofthe 2010s, smartphones and mobile apps transformed a number of industries intoon-demand services. Uber and Lyft bring cabs to people where and when they wantthem. Seamless does the same with food. Streaming services do the same withmovies and TV shows. Amazon delivers virtually anything to your door in aslittle time as a day.

But advances intechnology have been slow to change the real estate transaction, and thechanges that have occurred have been incremental instead of transformative.Zillow, Redfin, and Trulia launched in the mid-2000s, but were essentially realestate search engines going into the 2010s.

Fast-forward totoday, and those companies have becomefully formed listingsplatforms with a number of other related services. Big data and machinelearning eventually led Zillow to launch the Zestimate, which allows people tohave an idea of what their homes are worth with the click of a button. Mobileapps give you a map of available homes for sale in a neighborhood. Internet ofthings (IoT) technology gives people access to a home on the market withoutneeding a realtor or homeowner to let you in, and virtual reality lets you toura home from the comfort of your couch.

“Think about theverbs—I want to search, I want to find, I want to browse—that has dramaticallychanged [over the last 10 years],” said Zillow president Jeremy Wacksman. “Iwant to buy, I want to sell, I want to finance—that’s really not much differentfrom what it was 20 years ago.”

Today, the realestate transaction after the shopping stage is still largely done throughpaperwork offline and often requires resubmission of the same information tomultiple parties: mortgage lender, appraiser, home insurer, title insurer. It’salso still a huge headache for both the buyer and the seller, as they have toline up move-in and move-out dates, preferably in a way that doesn’t requiretemporary housing. And the transaction can fall apart at any moment if oneparty backs out or is denied financing.

But there’s littlechance this process will be the same in 2030 as it is today. Venture capitalfunding has poured into the real estate technology space hoping to solve theseemingly endless pain points in the process of buying and selling homes, andthat funding has launched numerous startups.

The most high-profile startups are the so-called “iBuyers.” Pioneeredby Opendoor, iBuyers buy your house for an algorithmically determined “fairmarket price.” The concept caught on enough that existing real estate companieslike Zillow, Redfin, Keller Williams, and othersfelt enoughpressure to launch their own iBuyer programs, with Zillow plunging mostaggressively into the space.

Selling to an iBuyersolves a few different pain points. First, it allows the seller to access theequity built up in their current house so they can use it to buy their nexthouse. Second, you can choose your move-out date to align with your move-indate without worrying about the move-out date changing because the buyer isbacking out. Third, you don’t have to show the house to potential buyers orclean the place after moving out; the iBuyer does that for you after you leave,in addition to making basic repairs before selling the house on the openmarket.

The price of thisconvenience is a slightly higher transaction fee—roughly 7.5 percent, dependingon the iBuyer, compared to 6 percent for a traditional broker—and it’s possibleyou’d get less for the house than you would if you sold it on the open market,although a recent independent study concluded thatthe differences between selling to an iBuyer and selling through a broker areminor.

While the iBuyingconcept can make things easier, it’s likely a means to end, not the end itself.Zillow and Redfin have both said they are working toward the goal of being aone-stop shop for buying and selling homes, where you sell your house to one ofthem and are then referred to their housing stock for sale, mortgage division,and title insurance. This has prompted both companies to add a mortgagedivision, title insurance, and other related ancillary services to theirbusinesses. Opendoor has also taken steps in that direction.

“I just think thatthe days of the standalone real estate brokerage are over,” said Redfin CEOGlenn Kelman. “There’s no way that over the next 18 months there won’t beconsolidation in the industry. Every player has a winner-take-all thesis, wheretwo companies enter and one company leaves.”

It’s less clear whatexactly the process will look like after the industry is done tinkering withdifferent ideas.

It’s also an openquestion whether these companies can create a sustainable business model aroundthese services. IBuying is a business that requires a lot of capital upfrontbut thus far produces razor thin margins. Zillow revealed on an earnings callthis year that it was making just 0.6 percent per house flip.

Given the businesshas so little room for error and is not yet profitable, the operations of someiBuyers are being subsidized by venture capital. If access to venture capitalfunds dries up, will these companies even be able to exist?

And it’s also anopen question how much demand there really is for these services. While nobodywould say they prefer filing the same paperwork multiple times over astreamlined digital submission process, many in the industry believe iBuyinghas earned more headlines than it really deserves. In Phoenix, where iBuyinglaunched in the middle of the decade, iBuyer transactions account for just 6percent of the market.

Predictions thatrealtors would become obsolete have permeated the industry for some time, buttheir continued existence suggests that buyers and sellers like having someonewho can take the time to help them make what may be the most importantfinancial decision of their lives. Do people really want to make this decisionby clicking a few buttons on the internet?

“It’s like if you gointo a really nice five-star restaurant and order a meal and it comes out ofthe kitchen instantly,” said real estate technology consultant Mike DelPrete. “You’regoing to have some questions. I think people want it to be hard because itshould be. It’s a big transaction. It takes time.”

Found at Abnormal ReturnsBlog  www.abnormalreturns.com

9. Angry French Pensioners Offer the World a Warning

Andreas Kluth–Bloomberg•December 20,2019

(Bloomberg Opinion) — When it comes to retirement, France islike other countries, only more so: Everything about its system isuntenable. It’s untenable that it has 42 separate public pension schemes —one for train drivers, another for opera singers, and so on. It’s untenablethat the French think they have a God-given right to retire at 62 or evenearlier. And it’s untenable that they tend to riot in thestreets every time the government tries to confront these realities.

Ifthey chose a slightly different perspective, the French might actuallyhave reason to celebrate. After all, like people across almost the wholeworld, they can expect to live longer. The only problem is that unlessthey also work longer, this means they’ll need to draw their pensions formore years. Moreover, because of lower fertility in recent generations, feweryoung people will be financing these pensions.

Thisglobal retirement crisis is a slow-ticking time bomb, not as dangerous asclimate change but almost as consequential for financial markets, livingstandards and much else. This year, almost one in 10 people in the worldwill retire, according to the United Nations; by 2070, it’ll be about one infive.

Thecrisis isn’t evenly distributed. Africa, for once, has less of a problem,because of its relative youth. In North America, the problem is big. InAsia and Europe, it’s huge. The world’s “oldest” country (demographically) isJapan, and one of the fastest-aging is South Korea. The oldest continent isEurope, and countries such as Greece, Poland, Portugal, Slovakia, Sloveniaand Spain are among those aging fastest.

10.5 Ways to Maximize Your Time, Every Single Day

When you woke up today,how did you feel today was going to go?By Benjamin Hardy, Ph.D.Contributor, Inc.com@BenjaminPHardy

GETTY IMAGES

Today canbe as great as you want it to be.

Your fate isn’t set. You get to decidehow much of yourself you’re going to put into today.

Ratherthan saying, “Well, we’ll see what happens,” you must powerfullystate, “Today, I’m going to make it happen!”

Whenyou go into the gym, you get to decide how hard you’re going to workout. But one thing is for certain, you’ll feel far better ifyou walk out 30-60 minutes later having given it everythingyou’ve got.

The same goesfor your day.

It’sactually far more exhausting to not work thanit is to work. It takes far more energy sitting with internalconflict and justification than it does to just get towork. Said Steven Pressfield, “Most of us have twolives: the life we live and the un-lived life within us. Between thetwo stands resistance.”

Ifyour life feels out-of-whack or out-of-balance, you’re likelyavoiding the very thing you should be doing. It’s only in doing thatthing that you’ll regain balance and peace. Avoidance leads tobusyness and distraction.

The Invisible Difference When You Fully Live

WhenI give everything I’ve got at work, I’m a different person. I’m happier.The world is a more beautiful and abundant place. Other peoplesmile at me as I walk past them and I have no idea why.

Seriously.

Ondays I’ve actually done what I intended to do, it seems like more people lookme in the eyes and smile at me as I walk past them. And I’m certain I’mnot initiating those smiles. Yet when I receive one of thosesmiles, I look at that person for a few moments after they’ve looked awayfrom me. I feel love toward them and wish them happiness in their lives.

Moreover, ondays I’ve actually lived my purpose, I leave mywork more energized than before I started. When I walkthrough my front door, my kids often run up and hug me, and ask me to play withthem. As I look at them in such moments, I see only perfection. Love fillsmy heart and I feel an overwhelming sense of gratitude and humility for mylife. To adapt a quote from Goethe, “The way yousee [a child] is the way you treat them and the way you treat them is [who]they [will] become.”

Conversely, ondays I’ve spent my working time in distraction andself-sabotage, I come home feeling like a fraud. My family stillloves me all the same. Yet, it’s so much harder for me togive them the attention and love they deserve and need. On wasted andun-lived days, I end up sucking more energy from those around me than Iemit. I see only the problems in my children and am highly irritable.

Youcan’t see the energy field around you, but it’s there.

You Can Make the Shift

Iknow what it feels like being stuck and without momentum.

Youcan feel absolutely powerless to change your life and circumstances.

Butthat’s a complete lie.

It’s garbage.

Iknow it feels more real than anything else.

Butit’s not.

Feelingguilty about all the time you’ve wasted won’t help.

If youmake a few tweaks to your approach, you’ll be surprised at how quickly yourperception of the world and yourself will change. As your perceptionchanges, everything around you will change.

Startsmall.

Giveone or two of these a try and watch what happens:

1. Have a weekly reflection and planning session

“The game is won or lost before itbegins.” — John Wooden

Oneday per week (my preference is Sunday), take 10-30 minutes reflecting onyour past six days. How did they go?

Tryasking yourself the following questions:

  • Who did I not meet this week that I should have?

  • What did I not do?

  • What did I miss?

  • What should I tighten up?

Gettingdown on yourself isn’t the purpose. Rather, being aware of how you’redoing is the purpose. Awareness facilitates empowerment to change.

Afterassessing your previous week, make better plans for the nextsix days. Then, in six more days, do it again.

Thisneed not take long, but it can dramatically improve the quality of your weeksand the days within those weeks.

2. At the end of each day, make your game plan for tomorrow

“Never begin the day until it is finished onpaper.” — Jim Rohn

Havinga plan eliminates the burden of choice.

Ifyou wake up without a plan, you will undoubtedly bounce from thing-to-thingwithout really doing anything. You won’t be focused or purposeful.

It’sso much more powerful to wake up with a purpose. To get up and go. Tobe intrinsically pulled out of your bed rather than clingingdesperately to your tired body, without a clear reason to get up.

Takingjust a minute or two at the end of your day to make a game plan for the nextday will provide you the needed structure to purposefully move.

Thesame is true of any creative task. Taking just 5 minutes to create anoutline for a book, and article, and agenda, or whatever the task is can saveyou hours.

3. Focus on today, not tomorrow

“Take therefore no thought for the morrow: for themorrow shall take thought for the things of itself.” — Matthew 6:34

Duringyour day, don’t worry about anything else. Follow your plan. Crushit. Live today to the fullest and be the person you intendto be. After your day is complete, take a minute or two tooutline your next day. Then, forgot about it until tomorrow morning.

4. Three month energy cycles

Whenit comes to your future, you have three vantage points.

  • Your vision (your WHY) = 10-25 years’ out

  • Your long-term goals (AKA your wild guess) = 36 months’ out

  • Your actual goals (AKA your realistic game plan) = the next 90days

In the20th century, it was a solid practice to have five year goals. Things were morestable back then. Today, things are changing too abruptly to realisticallydetermine where you’ll be in five years.

Framingyour goals in three month increments gives you a clear and realisticfutureto sprint toward. Of course, these goals are based on yourlonger-term goals. However, your 3-month goal cycles are your mainfocus.

Justlike your weekly planning sessions, every three months spend a fewhours or even a full day reflecting on your previous threemonths. Make any adjustments you need and make better plans for the nextthree months.

5. Organize yourself

“Happiness lies in the cultivation of the garden.” — Voltaire

Yourlife is a garden, cultivate it.

Organizeyourself. Clean out the weeds. It doesn’t matter how long ittakes.The very act of cultivating your garden will enlivenyou. You’ll never be finished. But every day, week, andyear, you can make your garden a little more beautiful and fruitful.

Cleanup your finances.

Clean up howyou use your time.

Cleanup your relationships.

Cultivate.

Justa little bit every day. Once you start to get things organized, the soilof your life will be better suited for what you plant in it.

Conclusion

Whenyou woke up today, how did you feel today was going to go?

Ichallenge you to wake up tomorrow with this feeling, “Today can beas great as I want it to be.”

Havingthat feeling won’t come out of nowhere. You’ll need to set yourself up tohave that feeling. However, setting yourself up isn’t all thathard. Itmay be as simple as spending 2 minutes the night beforewriting a plan. It may be spending 15 minutes theSunday before making a plan.

Whateverit is, you have a reason to live your life to the fullest. You maynot know exactly what that reason is, but you’ll find it once youget moving. More than likely, you’ll realize that everythingin your life is actually far more beautiful that you could previously perceive.

Fromthis level of joy and purpose, you’ll be empowered to consciously create afuture you are worthy of.

PUBLISHED ON: JUL30, 2019

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