Topley’s Top Ten – October 21, 2019

Author

Matt Topley
October 21, 2019

by Calculated Risk on 10/15/201911:32:00 AM

Now that newhome sales have reached a new cycle high (in June), I’d like to update a coupleof graphs in a previous post (most of this from an earlier post).For the economy, what we should be focused on are single family startsand new home sales. As I noted in Investment and Recessions “New HomeSales appears to be an excellent leading indicator, and currently new homesales (and housing starts) are up solidly year-over-year, and this suggeststhere is no recession in sight.”For the bottoms and troughs for key housing activity, here is a graph of Singlefamily housing starts, New Home Sales, and Residential Investment (RI) as apercent of GDP.

2.The End of Mutual Funds Put On Hold….More Mutual Funds Launched Last Year Than ETFs.

Not so fast. Mutual funds in theU.S. remain a monolithic presence: They had $19.93 trillion in assets undermanagement as of Aug. 31, versus $19.49 trillion a year earlier, suggestingthat any shrinkage will come glacially.

In fact, more mutual funds were launched last year (345) thanETFs (247), according to the Investment Company Institute, a fund-advocacygroup. And mutual-fund cash flows were a positive $10.4 billion through thefirst half of this year, versus a negative $30.1 billion in the 2018 firsthalf, though the market’s tumult in August turned that flow negative.

ETFs Get All the Buzz, but Mutual Funds Still Dominate. There’s aReason.- By 

Nick Ravo

With$19.87 trillion in assets under management as of June 30, mutual funds areexpected to remain a force despite the surging popularity of ETFs

3.Yield Curve Un-Inverted.

Butan un-inverted yield curve isn’t necessarily a reason to celebrate, either,Martin Enlund and Andreas Larsen of Nordea Markets told clients in a notepublished Friday.

“Whilea steeper curve may be regarded as reflationary (growth returning, inflationpicking up etc), steepening can also be a worrisome sign,” the two strategistswrote. “Looking at the inversions of the US curve since 1978, a re-steepening(un-inverting) of the curve seems to occur during (1980, 1981) or preceding USrecessions (1990, 2001, 2007).”

“Indeed,over the past 40 years, only during the successful precautionary rate cuts in 1998did a re-steepened yield curve not constitute a worrisome sign,” Enlund andLarsen wrote in their Friday note.

Tobe sure, while recessions are almost always preceded by a steepening of theyield curve, not every instance of yield curve steepening leads to an economicdownturn.

Therecent rise in the 10-year Treasury yield could also be explained by animproved outlook in real GDP, Leslie Falconio, UBS Global Wealth Managementsenior strategist, said in a note earlier this week.

“Itmay be too soon to make the call that the yield curve is now on a path towardsteepening. However, there is no question that the recent progress in theUS/China trade talks have pushed US 10-year yields higher,” she wrote.

Othereconomists have suggested that the possibility of a Brexit deal between theUnited Kingdom and the European Union has bolstered the global GDP outlook.

Still,while Falconio conceded that the Fed’s recent purchases of U.S. bills hassteepened the curve, she did not go so far as to tie its buying to a belief ina forthcoming recession.

“Theshape of the curve continues to remain on the radar of the Fed,” she wrote.“One reason for them to buy short end Treasuries versus an even dispersionalong the maturity spectrum, is to influence the shape of the curve.”

Butwhether the Fed’s recent cuts and bond purchases reflect mere tweaks to anotherwise healthier economy as Falconio might suggest or a safeguard fromsomething more sinister as described by Gundlach remains to be seen.

The yield curve recession indicator is righting itself, but thatdoesn’t mean we’re in the clear

4.FED Boosted Balance Sheet by $200B in One Month.

It is this same “not QE” that hasboosted the Fed’s balance sheet by $200BN in one month, thefastest rate of increase since the financial crisis.

Here Is The Real Reason The FedRestarted QE

5.Stocks Are At A Key Point Measuring The Success of Rate Cuts.

Guggenheim

6.Private Equity on Track for Record “Add Ons”

Key Highlights:

• Nearly 30% of PE-backed companiesnow undertake at least one add-on acquisition, compared to less than 20% thatdid so in the early 2000s.• Heightened add-on activity in recent years is largely being driven byprolific buyers that pursue numerous add-ons per platform. More than 25% ofadd-ons are now being acquired by platforms with at least five total add-ondeals.• It takes time to execute deals and integrate businesses; as such, the mediantime to exit tends to be about a year longer for companies that undergo atleast one add-on.

7.States With Highest and Lowest Salaries.

A new study, from Comparisun, has analysed the latest Bureau of Labor Statistics data, to reveal thestates with the highest, and lowest, average salaries. Along with the averagesalary increase in the last 10 years (2008 – 2018), state by state.

North Dakota, Washington, South Dakota,California and Oregon are the five states with the largest salary increasesover the last decade.

  1. North Dakota – 49.27%

  2. Washington – 41.98%

  3. South Dakota – 33.12%

  4. California – 33.00%

  5. Oregon – 31.00%

In Wyoming, Connecticut, Nevada,Mississippi and New Jersey,increases haven’t peaked over 19%.

  1. New Jersey – 18.90%

  2. Mississippi – 18.66%

  3. Nevada – 16.42%

  4. Connecticut – 16.01%

  5. Wyoming – 15.84%

TheUS Earnings Index 2019 – Which State’s Salary Increases The Most? POSTED BY: JACOB WOLINSKY 3 DAYS AGO

8.Almost 2000 Satellites are Orbiting Earth with Plenty More Coming.

More than 1,950 activesatellites are currently orbiting Earth, and plenty more could soon be joiningthem.Reduced costs and growing competition has seen an increasing number ofcommercial satellites reaching Earth’s orbit, which – unlike national spaceprogrammes – don’t recognize national boundaries.While some countries continue to view space through a military lens,collaborations such as the International Space Station have brought nationstogether to push the boundaries of knowledge about the universe.

This spiritof cooperation is also giving rise to a new breed of entrepreneur keen toexploit the untapped potential of the burgeoning space sector.

The newspace race

Ambitiousprivate endeavours in development include space mining operations, andprogrammes allowing fee-paying tourists to experience going beyond Earth’satmosphere.Business is also booming for the growing number of private firms offeringsatellite launch capabilities to private clients and national governments. Thishas helped the spread of satellite technology to less wealthy countries withoutspace programmes of their own.The UCS Satellite Database,compiled by the Union of Concerned Scientists, a nonprofit science advocacygroup, shows that the United States, as of November 2018, had 830 registeredunits in orbit. That number almost exceeds the combined total of the rest ofthe top ten. China follows with 280, and Russia is third with 147.

9.Scientists fuse brains with AI implants to ‘give people superhuman intelligence’

Brain-boostingelectrodes will soon become “like plastic surgery” as all we race to getcybernetic enhancements

Humans will beturned into cyborgs — with scientists sticking AI implants deep into theirbrains.

Brain-zappingelectrodes have treated seizure patients with promising results, and bizarreand unexpected side-effects of calmness and positivity means they are now beingprobed as a radical treatment for depression.

It’s eventheorised that the electric implants can be manipulated to make users max outtheir brain power — similarly to how amphetamines like Adderall are abusedtoday.

Science power couple Kelly and ZachWeinersmith explored the exciting advancements in their brand new book “Soonish– Ten Emerging Technologies That’ll Improve And/Or Ruin Everything”.

The pair reckon that brain-boostingelectrodes will soon become “like plastic surgery” — with people spendingshedloads in order to become smarter and stay ahead of the pack.

READ MORE

Humans might even sharethoughts in a giant AI hive mind (Image: Getty Images)

One in four topacademics currently abuses amphetamines, according to the Weinersmiths.

“Asbrain-computer interface technology becomes more reliable, it may haveimplications in many industries,” they wrote.

“An idealbrain-computer interface can make you smarter, better at remembering things,more focused, and perhaps even more creative.

“You can’t thinkabout the possibilities without the possibilities without picturing some sortof cyborg diaspora and yet given the opportunity to suddenly have a bettermemory, we’d probably all take it.”

Even weirder isthe possibility of a human hive mind — we will be able to share each other’sthoughts like an army of ants working in unison.

Lab rats hadtheir brains linked via a brain-computer interface in one set of experiments.

“The results doappear to be a sort of brain-to-brain connection,” the Weinersmiths said.

“We don’t knowwhether these lab rats were literally sharing thoughts, but their connectedbrains seem to get together and work together more efficiently.

“At some pointin the future, it may become possible to literally combine minds with otherpeople, either for recreational or business purposes.

10.7 Traits of A Leader Worth Following

They give others the space tofail forward and grow into their potential

Michael ThompsonfFollowSep 16 · 4 min readPhoto by Markus Spiske on Unsplash

When I started my first jobmy dad gave me an extremely valuable gift: the leadership notes he had loggedover the course of his 50-year military career, during which time he managedorganizations and trained today’s leaders. These notes served him and hisstudents well. Years later, they’ve done the same for me and my clients.

The circumstances differfrom my dad’s. However, the leadership lessons laid out in his notes transcendthe military and are just as relevant to entrepreneurs, and anyone who leads,as to military personnel.

His notes run deep. However,over the years I’ve studied them in order to find consistencies. Below are 7 ofthe traits that show up time and time again when it comes to being a leaderworth following.

1. Beprecise in all forms of communication

The best leaders are oftengreat simplifiers. They’ve learned that people have far more to do, read,and listen to, than time in the day. As a result, they’ve taken great stridesto learn how to take complex ideas and arguments and distill them down intosimple language.

One way to practice this isby reducing a full-page memo to half a page and then getting the message downto the size of a notecard. When it comes to communication one hundredwell-focused words beat a thousand every time.

2. Giveothers room to grow into their potential

Collaboration, innovation,and creative thinking all hinge on one word: trust. Great leaders embrace thelogic of General George Patton: “Never tell people how to do things. Tell themwhat to do and let them surprise you with their ingenuity.”

Stepping aside oncedirections are given and providing team members with space to explore isn’teasy. However, empowering others is always the right thing to do. It not onlycreates growth opportunities for individuals and builds confidence as a team.It also ensures the leader’s legacy is preserved because their team will bemore motivated than ever to finish what was started, with or without them.

3. Own upto your mistakes and move forward

We all make mistakes.However, upon making one, a leader worth following accepts the blame,apologizes, buries the worry, and then they put all of their energy into theirnext objective.

They do this becauseexperience has taught them that the biggest impediment to progress is allowingthemselves to get stuck in the past. For this reason, the best leaders onlyfocus on the present facts and refrain from getting caught up in finishedactions that lay outside of their control.

4.Ruthlessly seek out blindspots

Leadership is a constantwork in progress. One of the ways strong leaders continually push forward is byopening themselves up to criticism and surrounding themselves with others whochallenge their way of thinking.

What do you think? Where didI go wrong? How can we get it right the next time? Great leaders ask thesequestions and listen attentively to a variety of opinions in order to learnabout different perspectives and better identify things they may have missed.

5.Reprimand in private and praise in public

No one is immune to failure,and great leaders know that publicly shaming a fellow team member when thingsgo south, serves no one. In fact, experience has taught them that oftentimes itcan do more damage than the initial misstep.

On the flipside when thingsare going well, great leaders recognize that personal gain and attentionjeopardizes not only trust but also bigger picture goals. So instead of seekingthe spotlight, they cast the light onto team members who could use the boost.

6. Containyour fears and learn from them

Like most people, greatleaders are not immune to fears of the unknown. The difference is that theyconsciously and consistently work towards controlling and learning from them.

Changing the world isn’teasy. It takes guts. Great leaders, despite being scared like the rest of us,embrace the importance of Andrew Jackson’s words: “One man with courage makes amajority.” As a result, instead of succumbing to their environment, greatleaders take the reigns and proactively create the change they seek to make.

7. Reservetime for self-reflection

You cannot be an effectiveleader is you aren’t taking the daily steps to become more self-aware. When itcomes to improving in this area one exercise shows up repeatedly when studyinghistory’s greatest leaders: journaling.

What went well today? Whatdidn’t? What did I learn? How can I improve? On a daily basis, great leadersask themselves these questions and put their thoughts down on paper to ensuretheir mistakes today are not repeated tomorrow.

Every time I read back overmy dad’s notes I feel an extreme sense of pride. He not only had the disciplineto take notes on how to become a better leader, but he also embodies theprinciples above.

He reserves time forself-reflection and learns from not only his mistakes but also from those whocame before him. He forgives himself and others easily while treating each dayas a learning opportunity.

But most of all, my dad istrustworthy. There have been times when our relationship has been difficult.But no matter our disagreements I never once doubted that he didn’t have myback.

In the process, he taught methe true definition of leadership: Taking care of your own and giving them thepower to one day take care of others.

WRITTEN BYMichael ThompsonFollow

Co-creator of 2 little boys withmy dream girl -career/communication coach seen in Fast Co. INC, BusinessInsider — say hi @ https://mikethompsonblog.com/