Topley’s Top Ten – December 5, 2019

Author

Matt Topley
December 05, 2019

1.Goldman Recession Indicator.

After delivering three interest-rate cuts thisyear, the Federal Reserve seemed to indicate that it “would need to see areally significant move up in inflation that’s persistent before we evenconsider raising rates to address inflation concerns.” As a result ofthis, the bank expects fund rates to remain unchanged in 2020.

Earlier this year, the bank’s economists put the risk of a USrecession within the next 12 months at one in three. Now it’s cut the chancesto one in five.

“Thecurrent expansion is now the longest in US business cycle records dating to the1850s, and some recession fears may simply reflect an instinctive sense thatits time is nearly up,” the economists said.

“Thishas not been an unreasonable thought historically, as the two usual late-cyclerisks-inflationary overheating and financial imbalances-often did grow overtime. But so far both risks look limited,” they added.

Low recession risk, faster growth, andunemployment at a 70-year low — here are Goldman Sachs’ predictions for the USeconomy in 2020–Yusuf Khan

2.MLP’s Worst Performing Group YTD …..-7% in November.

MLPs break to new lows even with interest rates lower

3.Where the Equity Money Flowed in the Last Month…..Withdrawls from Popular S&P Dividend and Low Volatility.

4.Never Saw This Indicator But Another Example Showing “Lack of Euphoria” in Speculation.

5.The Huge Short I Have Been Showing in VIX Last Couple Weeks…First Down Days in Market Saw 51% VIX Spike.

Shorts will get hammered in next 5-10% pullback.

Charlie Biello Twitter

Found at Abnormal Returns  www.abnormalreturns.com

6.Huge Wealth Gap Between When Boomers Were 35 in 1990 and Millennials Today.

While manyare cognizant of the existence of the wealth gap between baby boomers andmillennials, it can be hard to picture its size. However, a macroeconomist hasillustrated the extremity of the problem: To match boomers’ percentage ofwealth held when they were 35, millennials would need to multiply thepercentage they hold sevenfold.

Gray Kimbrough, a senioreconomist with the Federal Housing Finance Agency and an adjunct lecturer atAmerican University, created a chart using data from the FederalReserve to track the share of national wealth held by each generation accordingto their median cohort age; Kimbrough’s findings were featured in a Washington Post op-ed.

According to Kimbrough, by the timethe median baby boomer was 35 in 1990, they collectively owned 21% of thenation’s wealth. Generation X (defined as those born between 1965 and 1980)collectively owned only 9% in 2008, the year in which the median member of thatgeneration turned 35. It will still be several years before the medianmillennial reaches 35, but currently millennials hold only 3.2% of the nation’swealth.

Inthe Post article, Christopher Ingraham notes several significant caveats toconsider; for example, in 1990, boomers were about 31% of the country’spopulation, while in 2008, members of the Gen X generation accounted for only22% of the nation’s population, concluding that boomers and Gen Xers had a 0.68and 0.41 wealth-to-population ratio, respectively. Ingraham also acknowledgesthat the greatest gaps in wealth disparity exist within generations, withwealth being “highly concentrated among the richest members of eachcohort.” 

Illustrating the Wealth GapBetween Boomers and Millennials

Economist Gray Kimbrough found thatbaby boomers collectively owned 21% of the nation’s wealth in 1990, when themedian boomer was 35 years old.

Patrick Donachie | Dec 04, 2019

7. The Median Age of US Homebuyers in 1981 was 31. Today it is 47

The median age of UShomebuyers in 1981 was 31. Today it is 47, see chart below and here.The rise since the financial crisis is particularly noteworthy. This is drivenby an aging population, affordability, higher student debt levels, and tightermortgage lending standards for young people and individuals with lower creditscores. All these forces have also contributed to lower levels of residentialmobility, see also our chart from last week.

———————————————–

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

Torsten Sløk, Ph.D.Chief Economist

8.Small Business Hiring Slows…..Service Sector Adding Jobs…Goods Producing Sector Losing Jobs.

Here is the ADP summary showing goods-producing industriesshedding jobs.

Source:ADP; Read full article

THE DAILY SHOT

9.Content Wars Continued…APPLE TV Paying $25 Million for Documentary.

Billie EilishLands Massive Payday for Apple TV+ Documentary

Billie Eilish

Multiplesources say Apple is paying $25 million for the project about the 17-year-oldmusician.

Billie Eilish’s big2019 is culminating as she nears a deal with Apple TV+ for a documentary thatcomes with a $25 million price tag, according to multiple sources.

The film, which hasalready been shot, was directed by R.J. Cutler and produced in collaborationwith Eilish’s label, Interscope Records, for a budget that one source pegs asbeing between $1 million and $2 million. It is expected to follow the 17-year-oldsinger-songwriter in the wake of the release of her debut album, When We All Fall Asleep, Where Do We Go?, in March ofthis year. Cutler was granted deep access to Eilish’s private moments withfamily and behind-the-scenes of her public appearances. 

The doc, which wasshopped to multiple distributors, comes as Eilish, who was named Apple Music’sartist of the year, is set to headline the streaming service’s first-ever AppleMusic Awards on Wednesday at the Steve Jobs Theater in Cupertino, California.The project will be available through entertainment platform Apple TV+ insteadof Apple Music, which has previously released documentary projects like TaylorSwift’s The 1989 World Tour (Live) and Ed Sheeran’s Songwriter. It signals a blurring of the lines betweenthe $10-per-month music streaming service and the $5-per-month film and TVoffering.

Eilish, who previouslyhad developed a cult following online, broke out this year with the release ofher first full-length album. Written with her brother, Finneas, When We All Fall, Where Do We Go? was themost-played album on both Apple Music and Spotify in 2019 and earned two Grammy nominations.

The documentary, whichis expected to premiere in 2020, will join a small but growing roster ofunscripted films from Apple TV+, including The Elephant Queen,which is currently streaming, and upcoming projects from Oprah Winfreyincluding Toxic Labor and an unnamed project about sexual misconduct in the musicindustry.

An Apple spokeswomandeclined to comment. 

Dec. 4, 6:28 p.m. Updated withadditional information about the project.

10.LinkedInFounder Reid Hoffman Says Leaders Must Set a Drumbeat for Their Organizations.Here’s How to Do Just That

These are the fivecadences leaders should set for their organization.

By Scott MautzKeynotespeaker and author, ‘Find the Fire’ and ‘Make It Matter’@scott_mautz

Oneof the most important jobs of a leader is to set the vision and strategy, and toprovide a path for others to follow. But there’s a not-so-obvious role theleader plays thereafter. Once these things are set, people don’t just followblindly. It requires a pulse, or an ethos that keeps things moving, one thatthe leader sets, according to LinkedIn founder Reid Hoffman.

AsHoffman said on a recent episode of his Masters of Scale podcast,“Every leader has to create a drumbeat for their company.” It drivesthe rhythm of the company and helps define how employees should follow and actin the day-to-day business.

Ithink Hoffman is exactly right, and it got me thinking. Leaders set the rhythmfor others to follow in multiple ways, whether they realize it or not. With overthree decades of successful leadership experience, I can tell you these are thefive most important cadences that leaders set–pick up on these tempos andyou’ll be a better leader in no time.  

1. The interpersonal rhythm.

Theleader sets the rhythm and tone for how people in the organization interactwith one another. Temperamental leaders who explode in meetings and beratepeople on a regular basis or leaders who treat their group as a silo and won’tcooperate with other parts of the organization will produce employees who thinkit’s okay to do the same.

Leaderswho listen intently, show respect, openly collaborate, and operate withunswerving integrity will also produce copycat behaviors of a much better kind.One of the best leaders I ever worked for heavily influenced the positive tonewith which everyone treated one another. When you’re a leader, how you interactwith others matters as you operate in a fish bowl, where your moves are watchedand magnified. 

2. The decision-making rhythm.

Ifyou’re an indecisive leader who changes his or her mind, waits to collect dataon everything, and regularly undoes past decisions, your people will suffer andwill likely be just as indecisive.

Withouta tempo of fast, yet appropriately informed decision-making, including awillingness to take risks and move forward at times without all theinformation, an organization will plod along far too slowly. Productivity willsputter and employees will grow increasingly frustrated and likely burn out.

3. The recognition rhythm.

Bythis I mean how often, in what scenarios, and with what magnitude does theleader recognize and reward employees for their efforts and outcomes? I’vebeen in organizations where the rhythm of rewarding was steady, producing apositive undertone that good work gets recognized and providing motivationalfuel to spur the expenditure of discretionary energy. I’ve also been in theopposite situation, in organizations where recognition was rare and muted whenit occurred.

Leaderswho recognize and reward yield organizations that recognize and reward. Theopposite, even more so, as it creates an unfortunate “one less thing toworry about” mindset.

4. The workflow rhythm.

Theleader sets the rhythm for how work gets done in the workplace. Does he or shecall a lot of meetings, require a lot of updates, and set a “commandand control” tone? Is empowerment modeled or missing? Remote work embracedor face time forced? Is there a lot of rework and wasted effort spurred on bythe leader, or not?

Ialways tried to set a rhythm of just getting things done, letting the peopleflow to the work and vice versa, enabling people to do what they were hired todo. It’s important to be mindful of the workflow rhythm you’re setting becauseso much of success (or failure) depends on it. You can have the greatest visionand strategies in the world, but if your organization doesn’t flow well to whatneeds to be done to achieve it all, you’ll fail.

5. The reactive rhythm.

Idon’t mean this in the bad sense of the term to be reactive (versus proactive).You can’t be proactive about or predict everything; an organization must beable to react quickly to changes in the industry, competitive environment, oroverall landscape. And no one sets the pace of the reactionary time more thanthe leader.

Beingcomplacent and slow to react in the face of environmental shifts can doom acompany. When the leader reacts with urgency (to the right things), it sets animportant pulse throughout the company that urgency must follow urgency.

SoReid Hoffman is right, the leader must set the drumbeat for the organization.Pick up on these cadences and you’ll set a tempo of triumph.

PUBLISHED ON: DEC 4,2019

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