Topley’s Top Ten – February 3, 2020

Author

Matt Topley
February 03, 2020

1.The 10 Largest Companies in the S&P Have a Combined Market Cap of More Than 3x the Entire Russell 2000 Index.

The march higher took on a familiar feel aslarger names continued to outpace smaller. The pull of large companies hasbecome so strong that, as shown [below] [to the right], the 10 largestcompanies in the S&P 500 have a combined market cap of MORE THAN 3XTHE ENTIRE RUSSELL 2000® INDEX of small companies.This type of stampede into pricey mega-caps has historically ended poorly forthose who followed the crowd.

2.Overnight Crude Oil Down 22% from Jan. 8th Peak.

Predictably,the plunge in Chinese oil demand is already reverberate across the globalenergy market, with sales of some crudes slowing to a crawl, tanker rates crashing and benchmark prices infree-fall, with Friday closing price about 14% lower since Jan 20 when theworld first started focusing on the China pandemic… a free fall which onlyaccelerated after the Bloomberg report which sent Brent tumbling on Sundaynight, and which has just entered bear market territory, plunging over22% since its January 8 peak.

3.Yield Curve Re-Inverts.

A key slice of the U.S. yield curve inverted onThursday for the first time since October, reviving memories of growth fearsthat plagued investors last year and signaling doubts that the Federal Reservewill succeed in reviving inflation.

The inverting yield curve isabout more than recession this time

4.When Does the Federal Deficit Matter?

Posted February 2, 2020 by Ben Carlson

This week the Congressional BudgetOffice put out a forecast that the federal budget deficit will hit more than $1trillion.

Accordingto the U.S. Treasury, federaldebt levels are already more than $22 trillion.

Atrillion here or there and the CBO is expecting more than $31 trillion in debtby the end of the decade.

Peopleare worried about this situation but people have been worried about thissituation for decades.

Thequestion is when does this matter? When will this situation ever become toounsustainable? Are we really screwing over the grandkids with all this debt?

Well,it depends.

Thefirst thing to understand about the deficit is the U.S. government is nothinglike a household. They don’t need to pay off all this debt down to a zerobalance as you do with your mortgage.

TheU.S. government has the ability to tax the largest, most dynamic economy in theworld along with the world’s reserve currency.

Andas long as the economic pie continues to grow we should expect the debt to growas well.

Here’syour crazy but true stat of the day: Since 1947, U.S. government debt has grownat an average annual rate of roughly 6.3%. And nominal GDP in American has alsogrown at an annual rate of roughly 6.3%.

Youcan see the growth of both here:

Government debt is just over$22 trillion while GDP is just under $21 trillion. These variables don’tnecessarily make for an apples-to-apples comparison but they at least belong inthe same fruit basket.

Nowhere’s debt as a percentage of GDP which is one of the things that worries manyeconomic thinkers:

The reason this number was sohigh at the outset of this chart is because of WWII. We’re not exactly in asituation like that today where it’s completely necessary to borrow and spend asmuch as possible.

FULL READ

5.80% Of Peloton Shares Sold Short.

Recently, 80% of the Peloton shares available for trading were sold short,meaning investors sold borrowed shares to bet on a drop in the stock price.Only two companies in the Russell3000 index had higher short-selling interest: GameStop (GME) and Health Insurance Innovation (HIIQ),according to Bloomberg research.

Peloton’s Earnings Could Settle theDebate: Keep Buying the Stock, or Sell ShortBy Connor Smith

6.PWC CEO SURVEY

7.High-Income Households Drove More Than Three-Quarters of Growth in Renters 2010-2018

What’s more, an influx of high-income renters –-mainly young, married, white, and college-educated –- are increasingly delayinghome ownership either out of choice or necessity, driving up rents by fuelingcompetition for existing units and spurring new construction designed primarilyfor the upper end of the market.

High-incomehouseholds drove more than three-quarters of growth in renters from 2010 to2018, bringing the share of people earning at least $75,000 to a record, theresearchers’ analysis of inflation-adjusted Census data show. The share oflow-cost units in the national rental stock shrank to 25% in 2017 from 33% in2012 — with the biggest declines in Iowa, Montana, Nebraska, North Dakota,Oklah

The U.S. HousingCrisis Is Making Its Way to the Heartland Jordan Yadoo Noah BuhayarRead more at: https://www.bloombergquint.com/business/the-u-s-housing-crisis-is-making-its-way-to-the-heartlandCopyright © BloombergQuint

8.Bloomberg campaign spent more than $188 million in one quarter

MichaelBloomberg’s 2020 campaign spent more than $188 million in just the last quarterof 2019, according to newFEC data.

Why itmatters: Bloomberg didn’tofficially announce his presidential bid until late November. But inone quarter, his campaign spent more than twice as much as Sen. Bernie Sanders’campaign spent in all of 2019 — $89.9 million.

The bigpicture: Bloomberg’s spending has the potential to shift the dynamics ofthe race. While other candidates worry about fundraising enough to stay afloat,the multi-billionaire will be able to fund his campaign almost indefinitely.

  • “Our first month’s filing represents a down payment and commitment in all 50 states to defeat Donald Trump, and it shows we have the resources and plan necessary to take him on,” Bloomberg campaign manager Kevin Sheekey said in a statement.

By thenumbers: Of the $188 million dollars spent, $132.2 million was spent onTV advertising, according to a campaign aide.

  • $8.19M was spent on digital advertising

  • $3.3M on polling

  • $1.5M on rent

  • $757K on airfare including $646K in private plane use

  • $161K on hotels

9.Sleeping on your stomach: Is it bad for you?

Updated: December 20, 2019 –8:00 AM

Stomachsleepers often insist that they are unable to sleep in any other position. But,changing your sleeping position is essential, as sleeping on your stomach canbe the cause of neck, back, hip and shoulder pain and even headaches.

Inorder to sleep on your stomach, you must turn your head in one direction to beable to breathe, leaving your neck in constant rotation throughout the night.This causes diminished blood flow to the head and neck, which can causeheadaches and other pain.

If youmust sleep on your stomach, there are pillows with holes in the middle thatwill allow your neck to stay straight while you sleep.

Anotherproblem with stomach sleeping: In order to raise your head and shoulders enoughto breath you need to have an arch in your lower back. This causes compressionin the spine and does not allow for proper alignment of ligaments, muscles,bones and joints. If you wake up with a stiff back or sharp pain in your backor numbness and tingling in your legs or feet, stomach sleeping may be toblame.

Youcan alleviate these aches by placing a pillow under your stomach. Just makesure the pillow is thick enough so that you have a neutral spine. (This mayrequire more than one pillow.)

Sometimespeople will sleep with a leg up to the side — what I call a “three-quarterposition” — and not really consider it stomach sleeping. Although this positionis better than stomach sleeping because it does take pressure off the lower back,it can instead put extra pressure on the hip. To sleep in that positioncorrectly you want to put several pillows under your stomach so that you arealmost sleeping on your side.

Stomachsleeping and the three-quarter sleeping position also encourage you to haveyour arms overhead when sleeping. This puts tremendous pressure on yourshoulders and the surrounding nerves. Waking up with hands that are asleep orshoulders that are in pain is a very big sign that you are causing injury toyourself. Even if you can shake off the pain quickly in the morning, overtimeit can become a greater issue.

Thenhow should you sleep?

Lyingon your back is the best position to sleep, followed by lying on your side. Buteven in those positions, there are steps you need to take to set yourself upwith correct posture.

Whenlying on your back, you don’t want to be completely flat, as that will cause aslight arch in your back. Place two or three pillows underneath your legs toput your spine in a neutral position. You also want to make sure that yourpillow allows your head to lie flat.

Whenlying on your side, consider a side sleeper pillow that will fill the size ofyour shoulder to ensure that your neck is in a neutral position. You do notwant to use two pillows, as they can slide and cause you to shrug yourshoulders in order to keep them in place, ending in neck and shoulder pain.Also, put a pillow between your knees to ensure a neutral spine. And if youhave shoulder soreness or pain, hugging a pillow will help by allowingincreased blood flow to the shoulder.

Althoughit is very hard to change how you sleep, it is important to start trying. Evenjust falling asleep in the proper position, but shifting throughout the night,can save you and your body some unwanted aches and pain.

HeatherMoore is the owner of TotalPerformance Physical Therapy in North Wales, Norristownand Hatfield, Pa.

10.What Brings Meaning and Purpose in Life?

Ongoingresearch helps uncover clues as to what shapes meaning in life.

WhatBrings Meaning and Purpose in Life?

Happy NewYear from the Human Flourishing Program! One of the ongoingresearch projects of the Human Flourishing Program at Harvard is to understandbetter what gives rise to a sense of meaning and purpose in life. With the newyear dawning, and New Year’s resolutions in place, or perhaps still beingformed, it seemed a good time to have an update on our research on this topic. There has been recent increased interest in meaning and purpose. For example, agroup of researchers at the University of Michigan published a paper last year thatindicated there were considerable longevity benefits to having a sense ofpurpose in life for adults above age 50, and this study created a substantialmedia buzz. 

Ourown research on the topicwas published last year in the American Journal of Epidemiology.We examined the role that having a sense of purpose played among 6,000young adults in the Growing Up Today Study (GUTS) by investigating those whoaffirmed having experienced a sense of mission in life. The participants wereassessed in adolescence and followed up for six years intoearly adulthood. We wondered whether and how having such a sense of missionwould affect other aspects of health and well-being.

What wediscovered about purpose

As inprevious analyses, our study controlled for a rich set of other potentially confoundingfactors, including numerous social, demographic, and economic characteristics,parental variables, including maternal attachment, participation in religious services, andalso prior values of the outcome variables whenever available. Even after suchcontrol, there was evidence that, over time, a sense of mission subsequentlyimproved flourishing in numerous domains, including happiness and psychological well-being (e.g., lifesatisfaction, positive affect, self-esteem, emotional processing, and emotionalexpression), promotion of physical health (greater use of preventive healthcare), possibly mental health (fewer depressive symptoms), and character (morevolunteering). 

Althoughwe did not find associations with specific physical health outcomes in ourstudy, it must be remembered that this was a relatively young group ofparticipants (essentially in their 20s during the study follow-up), and majorhealth problems usually begin later in life. And again, prior research from thegroup at the University of Michigan indicated substantial health benefits(greater longevity) among older adults. Clearly, having a sense of purposematters. It matters for its own sake, and it matters for affecting otheraspects of health and well-being.

Whatgives rise to a sense of meaning and purpose?

Remarkablylittle longitudinal research over time has been carried out on this question ofwhat actually shapes meaning and purpose in life. Our program is trying toremedy that. In our analyses with the Growing Up Today Study, we found thatreligious service attendance, maternal attachment, and volunteering duringlate childhood were among the strongest predictors ofsubsequently having a higher sense of purpose during adolescence; marijuana use and depression tended to lead subsequently to lowerlevels of purpose.

Althoughthere is certainly a need for replication in other settings, these initialanalyses may help provide guidance for parents trying to shape a sense ofmission and purpose for their children. At the policy level, many of thedebates around marijuana legalization have focused on questions of healtheffects, but perhaps issues concerning the formation of purpose in life shouldcome into play as well.

Some ofour current research is also examining similar associations concerning thedeterminants of purpose among older adults. What we have found thus far is thatpurpose in life seems to be somewhat less malleable later in lifethan it is in adolescence and young adulthood. Although we will report morefully when our research papers are out, it seems that volunteering, inparticular, has one of the largest effects on increasing purpose in life amongmiddle-aged and older adults. But we still have more work to do.

It isclear that more research needs to be done on this important topic. Almosteveryone desires to have a sense of meaning and purpose in life. The fact thatwe know so little, at least empirically, about what gives rise to such meaningand purpose is truly remarkable.

A NewMeasurement Tool

Tofacilitate a more careful study of the determinants of meaning and purpose, werecently introduced a new measurement tool: the Comprehensive Measure of Meaning. This measure isintended to incorporate important philosophical insights into existingpsychological approaches that suggest meaning is experienced alongthree dimensions: cognitive coherence (having a sense of the “meaning oflife”), affective significance (having a sense of “meaning in life” in one’sactivities), and motivational direction or purpose (having important goals and pursuits). The Comprehensive Measureof Meaning makes use of a variety of items from previous scales, but itcategorizes these in ways that are consistent with important distinctions inthe philosophical literature.

We havecollected data concerning the measure on a sample of over 4,000 undergraduatesat the University of British Columbia and are beginning to assess itspsychometric properties and to incorporate it into other datasets as well. Itsuse by other researchers is also most welcome. We hope that by building thesenew data resources, we will, over time, come to a more comprehensiveunderstanding of what gives rise to a sense of meaning and purpose in life. Wewill keep you updated!