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- Topley’s Top Ten – September 19, 2019
Topley’s Top Ten – September 19, 2019
Matt Topley
September 19, 2019
1.Oil’s Economic Impact Waning.
Barrons
Is the market too complacent about the risk of higher oilprices?
After all, rising prices can limit consumers’ ability to spendon everything other than gasoline, natural gas, and heating fuel. All thoseproducts become more expensive as oil prices rise. That can be bad for theeconomy.
Rising oil prices can also increase headline inflation numbers.And higher inflation makes it harder for the Federal Reserve to cut interestrates to keep the economy chugging ahead. That also sounds bad.
Still, crude’s impact on the economy is far less than it used tobe.
Why Oil Prices Don’t Matter for Stocks Anymore-By Al Root
2.SPY and QQQ Right at Previous Highs.
Markets looking for new highs.
QQQ
3.History of S&P After Two 25bps. Rate Cuts.
LPL BLOG
As shown in the LPL Chart of the Day, Stocks Have Historically DoneWell If The First Two Fed Rate Cuts Are 25 Basis Points, theS&P 500 was up an average of 9.7% six months after the second of two 25basis point cuts to kick off a new cycle of rate cuts. Going out a year, theS&P 500 had gained a very impressive average of 16.7%.
4.Fedex Miss and the New Supply Chain Around E-Commerce.
FedEx’s results arealso being hampered by the growth of e-commerce. That trend provides amplevolume to fill planes and trucks but comes with additional costs, like thoseassociated with a looming rollout of Sunday delivery year round. Online packagesalso are generally lighter weight and move shorter distances, so the revenueper shipment is lower than other shipments that move through the company’snetwork.
“Thisis a structural issue, not a cyclical issue,” said Satish Jindel, presidentof SJ Consulting Inc., a parcel-industry research firm. “The supply chain ischanging.”
FedEx Shares Plummet Following Dismal Results–Deliverygiant’s stock on track for largest decline since 2008
1 year returns….UPS +2% vs. Fedex -38%
5.Summary of Gundlach’s Presentation This Week.
Zero Hedge
And since his view on theeconomy is that it is anything buy the “Greatest ever”, pointing outthe sharp slump in 2019 global GDP projections…
…Gundlach put the odds of a recession before the 2020 election at 75%,predicting that once the recession hits, there will be an explosion in thenational debt.
Additionally,as noted above, the fund manager has turned far less positive on gold in theshort-term, although he did say that for a permanent portfolio position, goldshould be held, even if “now is the time to be looking for a better buyingopportunity in gold.”
Gundlachwas far more pessimistic of corporate debt, which he once again said was themost vulnerable asset class, highlighting BBB-rated corporate bonds, i.e. soon to be fallen angels, asthe most at risk (see Ford’s recent downgrade to junk), while adding thatshort-term sovereign debt is likely the least vulnerable
“The Greatest Economy(N)Ever”: Gundlach’s Full Webcast Slides by Tyler Durden
6.BlackRock head says $70 trillion in cash sitting idle as opportunities dry up
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Rob Kapito, the head of the world’s largestmoney manager BlackRock, says there is more than $US50 trillion ($73trillion) in cash sitting idle in portfolios around the world due to a lack ofinvestment opportunities and weak returns.
He also believes sharemarkets will keepmoving higher as the number of shares shrinks due to buy-backs and fewerfloats, and that low interest rates are limiting consumption because savers donot want to eat into their capital. Traditionally, low interest rates have spurred consumptionthrough cheaper credit.
In an interview with The Age and TheSydney Morning Herald, Mr Kapito, whose New York firm manages about $US6.8trillion on behalf of individuals and institutional investors around the globe,said the world “is flush with cash and there is under-investment”.
Rob Kapito says a global shortage of assetswill help keep sharemarkets moving higher.
“So what’s happening is a situation wherethe equity markets continue to rise over time [while] interest rates stay lowerfor longer. Over $US50 trillion of cash is sitting in client’s accounts, thelargest percentage of cash that they have ever had,” he said.
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“We are now in a very difficult situationof a shortage of assets with lots of cash looking for opportunities.
7.Nearly half of the U.S.’s homeless people live in one state: California
By Jacob PassyF Published: Sept 19, 2019 6:15 a.m. ET
Four of the five American cities with the greatest incidences of unsheltered homelessness are in the Golden State
Getty Images
The homeless population has grownin Los Angeles and other cities, according to a new White House report.
More thanhalf a million people are homeless each night in the United States, a new WhiteHouse report has found. And nearly half of them are concentrated in one state:California.
All told, 47% of all unshelteredhomeless people nationwide — meaning those who sleep in areas not meant forhabitation, such as sidewalks, parks, cars and abandoned buildings, rather thanin shelters — live in the Golden State, according to a new report on homelessness fromthe White House Council of Economic Advisers. Unsheltered homeless peoplerepresent just over a third (35%) of the overall homeless populationnationwide.
At thecity level, four of the five cities with the highest rate of unshelteredhomelessness are in California: San Francisco, Los Angeles, Santa Rosa and SanJose. Seattle joins the California municipalities in the top five.
In recent weeks, reports havesuggested that the Trump administration may stage a federal intervention inCalifornia to address homelessness in the state.
As forstate homelessness rates, the District of Columbia has the highest in thecountry, at 5.8 times the U.S. rate. New York is next, followed by Hawaii,Oregon and California. These five states together comprise 20% of the overallU.S. population but 45% of the country’s homeless population.
8.How To Recruit Your Dream Team
Hiring Greatness is the bookby David E. Perry and Mark J. Haluska, whocombined have closed more than 1,800 hiring search projects.
In their book, the authors share their guidefor how to attract, recruit and retain star executives.
They advise that it is far more importantthat a leadership candidate possess specific intangible core attributes, thanjust decades of industry experience. And, these core attributes go far beyondmere technical skills. For Perry and Haluska, there are 28 coreattributes they always look for in a candidate.
Those 28 fit within five pillars ofsuccess:
Character
Intellect
Business Intelligence
Leadership
Emotional Intelligence
They also recommend that when interviewing acandidate you particularly like that you take a healthy step back to figure outwhy you feel so strongly about that person. So, that you ensure you are notbeing biased by the following prejudices:
Charm – Outward personality is never anaccurate predictor of success in any role.
Industry Experience – Make your decision on thebasis of a broad range of factors, not only on industry experience.
Pedigree – Keep the candidate’s credentials inproper context.
“Golden Boy” – Discount references frompeople who have worked indirectly or consulted for a candidate but didn’tdirectly work for or with them.
Additionally, when seeking a leader, lookfor these key leadership attributes say Perry and Haluska:
Leaders who are adept at creating a deep level of trust with employees and stakeholders at all levels.
Leaders who can use their intellectual capacity to make quick, solid business decisions in tough competitive environments often without having all the details, so intuition is important.
Leaders whose perception of the opportunity evolves over the course of the interviews, because you’ll pick up clues about what’s important to them.
Leaders who have the ability to create excitement as well as enthusiasm and engage employees and stakeholders.
Finally, after talking to a candidate’sreferences you should have information on:
The candidate’s significant accomplishments.
The depth of others’ feelings, positive or negative, about the candidate.
What management guidance or further professional development is required.
Leadership and personal style.
Relationships – internal and external.
Depth of technical and professional skills.
Career progression and career interests.
Reasons for changing jobs.
Predominant leadership style.
Strengths and weaknesses.
Tips, techniques for leaders and managers.
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