2009.10.09 19:33 Share, Compare & Improve Long-Term Investment Portfolio Strategies
2023.06.10 18:42 someguy3 Introducing Middlemak-NH. A variant that puts all vowels on one hand to maximize alternating hands.
QWLDG JFOU: NSRTP YHEIA ZXCVB KM,./Colored changes from Qwerty
Keyboard | Vowel Hand | Dominant Hand | Hand Balance ratio based on Frequency | Hand Balance ratio based on Distance | Hand Balance ratio based on Frequency and Distance | Corrected comparison number for left hand dominant |
---|---|---|---|---|---|---|
QWERTY | n/a | Left | 0.77 | 1.06 | 0.82 | 1.22 |
Norman | n/a | Right | 0.93 | 1.27 | 1.19 | |
Beakl-15 | Left | Right | 1.07 | 1.48 | 1.59 | |
Workman | Right | Left | 0.97 | 0.82 | 0.80 | 1.26 |
Dvorak | Left | Right | 1.23 | 1.86 | 2.30 | |
Middlemak | Right | Right | 1.05 | 1.06 | 1.11 | |
Colemak | Right | Right | 1.14 | 1.15 | 1.32 | |
MiddlemakNH | Right | Right | 1.11 | 1.04 | 1.15 | |
MTGAP | Left | Right | 1.00 | 1.43 | 1.43 | |
Nerps(ansi) | Right | Right | 1.06 | 0.98 | 1.04 | |
Engram | Left | Right | 1.09 | 1.43 | 1.56 | |
CTGAP(final/5) | Right | Right | 1.16 | 1.23 | 1.43 | |
APTv3 | Right | Right | 1.11 | 1.01 | 1.12 | |
Canary(ansi) | Right | Right | 1.30 | 1.29 | 1.68 |
Keyboard | Total SFB | Left hand SFB | Right hand SFB | L Pinky | L Ring | L Middle | L Index | R Index | R Middle | R Ring | R Pinky |
---|---|---|---|---|---|---|---|---|---|---|---|
QWERTY | 185,270 | 125,920 | 59,350 | 1,105 | 1,661 | 54,502 | 68,651 | 34,166 | 3,970 | 21,214 | 0 |
Beakl-15 | 85,917 | 33,527 | 52,390 | 2 | 21,580 | 3,134 | 8,812 | 18,927 | 31,183 | 2,157 | 123 |
Workman | 78,147 | 29,268 | 48,878 | 1,105 | 3,712 | 2,806 | 21,645 | 27,338 | 5,037 | 16,503 | 0 |
Dvorak | 70,570 | 28,306 | 42,264 | 0 | 31 | 0 | 28,275 | 12,142 | 16,265 | 8,229 | 5,629 |
Middlemak | 44,698 | 25,806 | 18,892 | 1,105 | 1,661 | 2,716 | 20,323 | 12,415 | 3,134 | 3,343 | 0 |
Colemak | 39,023 | 23,336 | 15,687 | 1,105 | 1,267 | 639 | 20,323 | 9,831 | 5,037 | 819 | 0 |
MiddlemakNH | 36,570 | 24,999 | 11,571 | 298 | 1,661 | 2,716 | 20,323 | 5,094 | 3,134 | 3,343 | 0 |
MTGAP | 34,151 | 14,550 | 19,601 | 1,147 | 339 | 3,134 | 9,931 | 4,629 | 8,633 | 5,071 | 1,267 |
Nerps(ansi) | 34,056 | 20,038 | 14,018 | 76 | 2,745 | 1,435 | 15,783 | 7,541 | 3,134 | 3,343 | 0 |
Engram | 31,167 | 19,467 | 11,700 | 124 | 2,628 | 3,134 | 13,581 | 5,922 | 1,435 | 2,344 | 1,999 |
CTGAP(final/5) | 30,915 | 20,125 | 10,790 | 54 | 437 | 6,262 | 13,371 | 4,314 | 3,134 | 3,343 | 0 |
APTv3(ansi) | 24,947 | 14,697 | 10,251 | 1,227 | 6,551 | 1,435 | 5,484 | 2,643 | 5,037 | 1,751 | 819 |
Canary(ansi) | 24,537 | 13,103 | 11,434 | 23 | 2,745 | 4,528 | 5,808 | 4,957 | 3,134 | 3,343 | 0 |
Layout | SFB % |
---|---|
Qwerty | 6.264% |
Beakl-15 | 3.575% |
Workman | 3.053% |
Dvorak | 2.639% |
Middlemak | 2.078% |
Engram | 1.863% |
Colemak | 1.815% |
Middlemak-NH | 1.784% |
Middlemak(rotate punctuation) | 1.614% |
APTv3 | 1.420% |
MTGAP | 1.247% |
Middlemak-NH(rotate punctuation) | 1.272% |
Nerps(ansi) | 1.207% |
CTGAP(final/5) | 1.142% |
Canary(ansi) | 1.062% |
Keyboard | Total SFB | Left hand SFB | Right hand SFB | L Pinky | L Ring | L Middle | L Index | R Index | R Middle | R Ring | R Pinky |
---|---|---|---|---|---|---|---|---|---|---|---|
QWERTY | 195,687 | 136,337 | 59,350 | 1,105 | 1,661 | 86,462 | 47,108 | 34,166 | 3,970 | 21,214 | 0 |
Beakl-15 | 85,917 | 33,527 | 52,390 | 2 | 21,580 | 3,134 | 8,812 | 18,927 | 31,183 | 2,157 | 123 |
Workman | 79,561 | 30,682 | 48,878 | 1,105 | 3,712 | 8,206 | 17,659 | 27,338 | 5,037 | 16,503 | 0 |
Dvorak | 70,365 | 28,101 | 42,264 | 0 | 31 | 1,591 | 26,480 | 12,142 | 16,265 | 8,229 | 5,629 |
Middlemak | 42,816 | 23,924 | 18,892 | 1,105 | 1,661 | 14,888 | 6,270 | 12,415 | 3,134 | 3,343 | 0 |
MiddlemakNH | 34,687 | 23,117 | 11,571 | 298 | 1,661 | 14,888 | 6,270 | 5,094 | 3,134 | 3,343 | 0 |
MTGAP | 34,151 | 14,550 | 19,601 | 1,147 | 339 | 3,134 | 9,931 | 4,629 | 8,633 | 5,071 | 1,267 |
Nerps(ortho) | 33,861 | 19,843 | 14,018 | 254 | 2,745 | 1,435 | 15,410 | 7,541 | 3,134 | 3,343 | 0 |
Canary(ortho) | 31,034 | 19,600 | 11,434 | 179 | 2,745 | 10,897 | 5,780 | 4,957 | 3,134 | 3,343 | 0 |
Engram | 30,848 | 20,036 | 10,812 | 124 | 2,628 | 6,438 | 10,846 | 9,010 | 1,802 | 0 | 0 |
Colemak | 30,032 | 14,345 | 15,687 | 1,105 | 1,267 | 5,702 | 6,270 | 9,831 | 5,037 | 819 | 0 |
Hands Down Nue | 28,429 | 17,012 | 11,416 | 1,267 | 5,702 | 3,773 | 6,270 | 10,334 | 126 | 819 | 138 |
CTGAP(final/5) | 27,449 | 16,659 | 10,790 | 54 | 437 | 7,826 | 8,341 | 4,314 | 3,134 | 3,343 | 0 |
APTv3(ortho) | 22,871 | 12,620 | 10,251 | 1,267 | 6,551 | 1,435 | 3,366 | 2,643 | 5,037 | 1,751 | 819 |
Layout | SFB % |
---|---|
Qwerty | 6.575% |
Beakl-15 | 3.823% |
Workman | 3.147% |
Dvorak | 2.625% |
Middlemak | 2.160% |
Middlemak-NH | 1.866% |
Engram | 1.845% |
Colemak | 1.669% |
Middlemak(rotate punctuation) | 1.696% |
Middlemak-NH(rotate punctuation) | 1.354% |
APTv3 | 1.375% |
MTGAP | 1.281% |
Nerps(ortho) | 1.203% |
Canary(ortho) | 1.070% |
CTGAP(final/5) | 1.069% |
Hands Down Nue | 0.949% |
Keyboard | Vowel % | Consonant % | Consonant % minus home row |
---|---|---|---|
Beakl-15 | 100% | HKQJX 7.3% | HKQJX 7.3% |
Canary(ansi) | 95% | NHMFXZ 29.5% | HMFXZ 18.3% |
Dvorak | 100% | YPKJXQ 8% | YPKJXQ 8.5% |
Middlemak | 80% | NMFKJ 20.5% | MFKJ 11.9% |
Middlemak-NH | 100% | HMFKJ 19.4% | MFKJ 9.3% |
CTGAP(final/5) | 100% | HDFYKX 25.8 | DFYKX 15.6% |
APTv3 | 100% | NLQJZ 18.5% | LQJZ 7.3% |
Nerps(ansi) | 100% | HFBKZ 17.8% | FBKZ 7.6% |
Colemak | 80% | NHLMKJ 33.7% | HLMKJ 22.4% |
Workman | 80% | NLFPKJ 26.5% | LFPKJ 15.2% |
MTGAP | 100% | NPJQZ 15.0% | PJQZ 3.8% |
2023.06.10 18:23 FelicitySmoak_ On This Day In Michael Jackson HIStory - June 10th
![]() | 1970 - The Jackson 5 perform "The Love You Save" & "ABC" on the Groovy Show TV program in Los Angeles. submitted by FelicitySmoak_ to MichaelJackson [link] [comments] 1972 - Michael third solo single, "I Wanna be Where You Are", on Motown enters the Billboard US Top 40 singles chart at #38. It will peak at #16 during a 9 week run. 1972 - Lookin' Through the Windows by The Jackson 5 on Motown Records enters the Billboard US Black Albums Chart where it will peak at #3 during a 29 week run 1975 - “Forever Came Today” is the last official single of the Jackson 5 released by Motown 1979 - Last concert of the first US leg of the Destiny World Tour at the War Memorial Auditorium (now Greensboro Coliseum) in Greensboro, North Carolina. Tour resumes in October 1993 - Michael makes an appearance at an afternoon rally at a middle school in Los Angeles to launch a new DARE programme called DAREPLUS (‘Play and Learn Under Supervision’) program for the school, an initiative educating children on the perils of substance abuse and gang membership Jackson was a member of the Board of Directors of DARE (‘Drug Abuse Resistance Education’) and he was presented with a t-shirt for which he said: “Thank you very much. I love you all. Thank you.”All members of the 'Challengers Boys & Girls Club' were invited to Neverland 1993 - Michael announces that "HTW"s total earnings of $1.25 million, along with his entire Super Bowl XXVII proceeds from that year will be funneled to "Heal L.A.", for the children having suffered from the Los Angeles’ riots at the time. The Big Brothers of Los Angeles give Jackson a rocking chair made by a woman who made them for President Kennedy and the Pope. Another group of children visiting the ranch get a sneak peak preview of Tom & Jerry: The Movie. The film wasn't scheduled to begin running in theaters until July 30th, but Michael received an advance copy from Joseph Barbera. 1997 - Michael plays the second of two nights at the Amsterdam Arena (now Johan Cruyff Arena) in Amsterdam,Netherlands , to an audience of 50.000. 1999 - Michael is in Paris, France. He stayed one day at Le Crillon hotel as he shopped around the town on his brief stop there for business related meetings 1999 - It is reported that the opening of the first 'Michael Jackson Dance Studio' (formerly announced as the 'Michael Jackson Entertainment School') happened in Tokyo. Michael couldn't attend the inauguration of the school but planned on going soon. 2002 - Michael Jackson arrives in London and checks in the Marriott Renaissance Hotel. 2003 - Michael finally gives his deposition in Indianapolis before going to Merville, Indiana Last month, Jackson he fell ill and was hospitalized before he could be deposed in a lawsuit filed by Gordon Keith (who signed the Jackson 5 to his Gary, Indiana-based Steeltown Records in 1967) and musician Elvy Woodard. The men claim that the Jackson 5 used the name of another Gary band and two of their songs without license. Jackson’s attorney, Bob Meyer, says the suit has no merit, noting that Michael was only 9 years old at the time. The deposition took place at a hotel from 11:21 a.m. to 5:10 p.m “Michael was extremely comfortable today,” he said. “He really surprised me.” Meanwhile, an attorney for the plaintiffs, Norman Reed, described Jackson’s deportment as “jovial,” though he went on to say that Jackson couldn’t answer every question because certain events in question occurred more than three decades ago Later in the evening, Michael was the main attraction at the Circle Center Mall in Indianapolis, as he tried to make his way through the crowds with his entourage to get a little personal shopping done at Brookstone, while also being followed by a mob of fans. https://preview.redd.it/sp4svpszu75b1.jpg?width=592&format=pjpg&auto=webp&s=d1b1056d939e4aa7bf9e3024ce83f8f231301dcb https://preview.redd.it/serywml0v75b1.jpg?width=592&format=pjpg&auto=webp&s=c53017f317ede1af988bb0d1d9749de552c1bdd6 https://preview.redd.it/1ndy87z2v75b1.jpg?width=592&format=pjpg&auto=webp&s=66a48a5731167222b122a03a92b27b1b933ed1de Michael hires Charles Koppleman as his new business adviser. 2004 - Ray Charles passes away and Michael issues a statement: "I am saddened to hear of the death of my friend, Ray Charles. He was a true legend...an American Treasure. His music is timeless; his contributions to the music industry...unequaled; and his influence, unparalleled. His caring and humility spoke volumes. He paved the way for so many of us, and I will forever remember him in my heart."2005 - Jury Deliberations Day 6 Jurors in the trial will be back again on Monday after ending their first full week of deliberations without reaching a verdict The jurors asked a number of questions today and also requested to have some testimony read back to them. Judge Melville held at least three meetings with attorneys from each side Legal experts say the lengthy and complex instructions issued by the Judge may be responsible for the extended deliberations. "This is a huge, huge celebrity trial, so you can bet that they're going to want to read those jury instructions pretty carefully," said Donna Shestowsky, a law professor at the University of California. Shari Seidman Diamond, a law professor at Northwestern University, agreed: "Running through these instructions is the use of words that are real words in everyday life that have different legal meanings." She said that terms such as "attempt," "reasonable" and "conspiracy" have specific meaning in criminal law and "we know that makes instructions harder to deal with." Diamond said that judges could make jury instructions more palatable but rarely did so as they were more concerned with making sure the instructions were unflawed and would not lead to a reversal on appeal. Peter Tiersma, a member of the California Judicial Council's task force on criminal jury instructions, said it was easier for a judge to simply copy the text of a legal opinion or of a statute in the instructions. He said that no matter how dense or incomprehensible the instructions were, "if you changed it, you risked getting it wrong." As an example, Diamond pointed out that the explanation of 'reasonable doubt' was buried on page 45 of the instructions, which offered little explanation of why jurors should ignore certain pieces of evidence. https://preview.redd.it/g4pfd1hyu75b1.jpg?width=612&format=pjpg&auto=webp&s=6a542f1df50e258fd78dde3779f904c1b4941bbb About 2,200 journalists received press credentials to cover the Michael Jackson trial, more than the O.J. Simpson and Scott Peterson trials combined. Major TV networks have committed dozens of staff members and some news organizations have even installed land lines, fearing that the explosion of phone calls following a verdict could jam the region's cell phone networks. Reporters from every continent except Antarctica are covering the story, a reminder that Michael's popularity remains intense outside the US. News organizations from more than 30 countries were represented "The appetite for Michael Jackson is insatiable," said Graeme Massie, who has covered the trial for Splash, a British news agency. "In the U.S., people may believe that Jackson's star has fallen, but in Europe it still shines brightly." The case is being closely watched in Japan where they are thinking of moving to a jury system. "People in Japan are interested in the King of Pop, but they also want to know how the jury will treat celebrities," said Wataru Ezaki, who works for a Japanese news organization in Southern California. "They want to see if jurors can be fair. It's a very unique case." Deliberations will resume Monday morning at 8:30 a.m. 2009 - AllGood Entertainment Inc. filed a $40 million lawsuit against Michael claiming breach of contract and fraud in an attempt to stop Jackson from performing in London. The New Jersey-based company filed the suit in federal court in New York stating that it signed a deal with Jackson's manager, Frank DiLeo for a pay per view reunion concert with the other Jackson siblings 2013 - Jackson v AEG Trial Day 26 Katherine Jackson was at court for the morning session Randy Phillips Testimony Jackson direct Panish showed a June 20th email from Tim Leiweke (CEO of AEG) to Dan Beckerman (CFO/COO of AEG) in which Beckerman described Phillips as jittery: "Trouble with Michael. Big trouble."Beckerman responded: "I figured something might be wrong given how jittery Randy has been this week. Is it "pre-show nerves" bad or "get a straight jacket/call our insurance carrier" bad?"Phillips said he was not jittery, but concerned with the show. Jittery meaning shaking and he said he doesn't think that's how he was. Phillips said Dr. Murray receiving $150k per month being the cause of Michael's sickness in June of 2009 never crossed his mind Phillips said he did not recall what was discussed in a phone conversation with Murray. In his video deposition that was shown to the jury, Phillips first said the conversation lasted three minutes. He was shown phone records that showed it lasted 25 minutes. Phone records show Phillips had a 25 minute phone call with Conrad Murray after Kenny Ortega's emails on June 20, 2009. Phillips said he didn't think the call lasted that long, doesn't recall what they talked about. "It's very possible I might have even read him these emails," Phillips testified, referring to the "Trouble at the Front" chain. "I would not have discussed his health other than what it was in the content of the emails" Phillips said everyone in the This Is It production got a list with everyone's phone numbers. He doesn't know how Dr. Murray got the list. Phillips was asking about how Conrad Murray got his home phone number. He initially said it might have been on a list given to tour personnel. Phillips then said that Murray may have gotten it from Jackson's former manager, Frank Dileo. Phillips testified that Dr. Murray called his home number. Panish showed picture of the business card Phillips gave Dr. Murray with his cell number on the back. The card was found in the doctor's car. Panish then asked Phillips about an email he sent director Kenny Ortega, telling him Murray was "unbiased and ethical", the email serves as Phillips' best recollection of his conversation with Dr. Murray. This morning, Panish frequently asked Randy Phillips whether he was truthful with Ortega. Panish: "Did you make that up and lie to Mr. Ortega?"Panish talked about email Phillips wrote to Ortega on Jun 20: "Kenny, it's critical that neither you, me or anyone else around this show become amateur psychiatrist or physicians. I had a lengthy conversation with Dr. Murray, who I'm gaining immense respect for as I get to deal with him more. He said that Michael is not only physically equipped to perform and, that discouraging him to, will hasten his decline instead of stopping it. Dr. Murray also reiterated that he's mentally able to and was speaking to me from the house where he has spent the morning with Michael. This doctor is extremely successful (we check everyone out) and does not need this gig so he is totally unbiased and ethical. It is critical we surround Michael with love and support and listen to how he wants to get ready for July 13th... You cannot imagine the harm and ramifications of stopping this show now. It would far outweigh "calling this game in the 7th inning". I'm not just talking about AEG's interests here, but the myriad of stuff/lawsuits swirling around Michael that I crisis manage every day and also his well-being. I am meeting with him today at 4p at the Forum. Please stay steady. Enough alarms have sounded. It is time to out out the fire, not burning the building down. Sorry for all the analogies. Randy"Phillips said he thought Dr. Murray was extremely successful based on the clinics he had and business he would've to close to go on tour. Phillips: "It was an assumption I made"As to the "we check everyone out" reference in the email, Panish asked if that was a true statement or untrue. Phillips: "It's not, it's hard to say yes or no on that. It is not true because everyone would imply everyone"Panish asked about the reference "he doesn't need the gig". "I made another assumption based on the information I had," Phillips explained, "I didn't have any basis to say he was unbiased and ethical" Panish used the email to try to show that 3 people _ Ortega, Murray and John Hougdahl _ were warning Phillips about Jackson's health. Phillips said Murray didn't agree with the assessments of Michael's health by Ortega and Hougdahl (the tour production manager). After multiple questions, Phillips said many of the statements in the email about Murray weren't true. Those statements included that AEG Live checked everyone out, and that Murray was an accomplished doctor who was unbiased and ethical. "At the time, I thought it was the truth", Phillips said of the above statements Phillips testified he wrote email to Sony exec asking her to remind him to tell her where Dr Murray was the night he was to be caring for Michael. Judge only allowed plaintiffs' attorney to say it was a social establishment, but the place was a strip club Panish then asked Phillips about the suggestion that Jackson needed a psychiatrist. Phillips confirmed what he said last week -- he never consulted a psychiatrist. He said today it wouldn't have been appropriate. As to having a mental health professional, "no one brought a psychiatrist," Phillips said, "because Michael didn't need one" Phillips testified he had conflicting information coming from Dr. Murray and Kenny Ortega regarding Michael. Panish pressed Phillips about the fact that he sent completely opposite emails to Ortega and AEG high ups. "It was because they were sent for different purposes," Phillips explained. Of the statements to Ortega, Phillips told the jury: "I just wanted to calm things down until we had this meeting"Before the morning break, Panish showed some of the emails he showed Phillips last week. Panish only had his copy, which had notes on it. Panish gave Phillips his annotated version of the email, but Phillips refused to look at them. Flipped them over so he couldn't see them. "I don't want to help you with your case", Phillips said of reviewing Panish's annotated copies of the emails. That brought some laughter. Phillips was ultimately given a clean copy of the emails, provided by his defense lawyers. Phillips said he remembers the meeting on June 20th lasted at least an hour. Dr. Murray and Phillips were sitting on one couch, Michael was on a bench and Ortega on another couch. In his deposition, Phillips said Ortega talked about Michael's physical and mental status. On the stand today, Phillips explained Ortega did very little talking in the meeting. "He addressed Michael coming to rehearsals. I do not believe he talked about Michael's physical condition and mental state. Dr. Murray did most of the talking," Phillips testified. Panish pressured Phillips about him changing the testimony. "My memory is getting better about the events of four years ago," Phillips said. "The purpose of the meeting was to find out what was happening with Michael because of the events on the 19th" Panish: "Did Mr. Ortega say he was concerned Michael was not getting enough sleep?"Without getting into details, Phillips said Ortega and Murray "were a little combative" at the meeting. Phillips said Murray reassured everyone that Jackson's health was fine. He said Jackson also assured them nothing was wrong with him. He said Murray told the group that Jackson may have had the flu, or some similar ailment. He said Jackson's health was discussed. Phillips said he couldn't recall whether Jackson's sleep issues were discussed. A portion of Randy Phillips' deposition was played in which he said sleep issues were discussed at the June 20, 2009 meeting The meeting happened in the afternoon, Phillips said. Panish asked if Michael was shaking in that meeting. Phillips said "No, not at all" A vase was broken in one of the production meetings, Phillips explained. He said Frank Dileo, Paul Gongaware & himself were present. Phillips said he doesn't know who broke the vase, but he thinks it may have been Frank DiLeo. Phillips denied a vase was broken during the June 20th meeting at Michael's house. Panish: "Did you have a meeting with Michael where you threatened to pull the plug and take everything he had?"Phillips said Michael was a phenomenal father & denied ever saying to anyone at the meeting that Michael was on skid row or going to become homeless. Panish: "Did you ever tell Michael you were paying for his toilet paper?"Phillips denied that Murray said during the June 20th meeting that he "couldn't take it anymore." Phillips denied that Murray's contract was discussed at the meeting, saying that would have been inappropriate. Phillips was also again asked about emails a couple of AEG executives (former CEO Tim Leiweke and Dan Beckerman) traded about him. The email described Randy Phillips as jittery, and alluded to either him or Jackson having a "mental breakdown." Phillips denied he was having a mental breakdown, and said he didn't want to put words in the other executives' mouths. In the deposition played to the jury, Tim Leiweke said the reference to "mental breakdown" in the email could've been to Randy Phillips not Michael. Panish played depo of Dan Beckerman, in which he said he didn't recall what prompted him to say Phillips was jittery. Panish: "Did you think that Michael needed a straight jacket?"Phillips said it was a question of "stage fright and the show will go on" or "I can't do this let's cancel" scenario. Panish: "Do you think Michael needed a straight jacket?"Regarding the straight jacket email, Phillips said the way he read it he can't tell if it was referring to him or Michael. Panish pointed out that insurance was only if Michael had a break down, not Phillips. Thus, the email must've referred to Michael Questioning then moved back to the June 20th meeting, with Phillips describing Murray as "demonstrative" toward director Kenny Ortega. Phillips said Murray's message to Ortega was essentially "stay in your lane" and not to interfere with medical issues. "The meeting got a little bit heated when Dr. Murray was admonishing Kenny," Phillips recalled, but said hostile is too harsh of a word. Phillips said lack of sleep was discussed in the June 20th meeting, but wasn't the main focus. Phillips said the reason of the meeting was to find out what happened in the night before, what was the issue and also Michael missing rehearsals. Phillips said Michael had the best two rehearsals after the June 20th meeting. "Kenny told Michael to take the next two days off, spend some time with the kids," Phillips testified. Phillips was then asked about emails he sent to Leiweke, others, about the results of the June 20th meeting at Jackson's house. This was after Jackson's attorney, John Branca, earlier in the day had suggested a counselor to work with Jackson. Phillips email: "Anyway, things are not as bleak as Kenny's emails. John, now is not the right time to introduce a new person into his life"After this email is when Phillips made the "badgering" comment to Panish that prompted Judge Palazuelos' admonition to him. Suddenly, judge decides to take a break at 2:24 pm and sends the jury out of the courtroom. Outside the presence of the jurors, judge admonished Phillips for not answering the questions asked. "Mr. Phillips you need to answer questions," said Judge Yvette Palazuelos, frustrated. "Lawyers are trying to getting the answers." Judge told Phillips that arguing with the lawyers isn't really going to help his case, it will just lengthen his testimony. She noted his testimony is taking much longer than expected, and at this pace he will be here for another week. Phillips told the judge he's just trying not to say the wrong things or be caught in tricky questions. Judge: "It seems like they are pretty straight forward questions, but when you offer info, it may not be good for you" AEG's attorney Jessica Bina defends Phillips saying the questions are compound, but that she believes he's trying to answer the questions. Panish said he wants to finish today, that he hasn't argued with the witness or judge. "I really tried hard, for me, it's hard!" Panish said. Phillips said he understood and wants to go back to work as well. Promised to be better. Phillips said the email he wrote saying "this guy is trying to concern me" was referring to Kenny Ortega. "I had two concerns: wanted Kenny to be open minded until the meeting and I didn't want Kenny to quit," Phillips explained. At this point they were about $30 million plus in advance, Panish said. Phillips said it was about $28 million, which was a lot of money. Email on 3/13/09 from Leiweke to Phillips: "Phil (Anschutz) can be such a paranoid scrooge. He thinks he's smarter than everyone"After a break and admonition, Phillips testified about some of his concerns surrounding the show.He said he was concerned about Ortega. Phillips said he was concerned that Ortega as getting into an "entrenched position" regarding Jackson's health and rehearsals. Phillips: "I was also quite concerned that Kenny would throw up his hands in the air and quit."The CEO was talking directly to the jury. Phillips said again that his concern with Ortega was that he wasn't going into the meeting with an open mind and that he was going to quit. Panish played Phillips deposition where he said he didn't remember what he was concerned about regarding Ortega. "I think my answer today is clarification," Phillips said, adding he did not change his testimony. Panish questioned whether his description was something he "just remembered right now." Phillips responded, "I'm remembering a lot of things now." Panish shot back that Phillips hadn't remembered many things during his deposition. In his depo, played to the jury, Phillips said there were no discussions on June 20th about Michael taking a couple of days off. However, in court today, Phillips testified Ortega suggested that he take two days off After the June 20th meeting, Jackson took two days off and resumed rehearsals. At that point, Phillips began working out of Staples Center. Phillips said one of the changes to come out of the June 20th meeting was that he would be at Staples, looking in on rehearsals. Phillips was also shown an email from his assistant, looking for a physical therapist for Jackson on June 22, 2009 At this point, Phillips was asked about Arnold Klein. He was shown a June 23rd email from Jackson's business manager Michael Kane. Kane: "On the list of doctors that will help get (us) from today to the opening night, where does Arnold Klein stand on the list?"Phillips responded about Klein: "He scares us to death because he is shooting him up with something"Kane responded: "Well since we owe him $48k and he wants payment maybe I should stop paying him and he'll stop shooting him up. I have the details of what he is doing"Phillips told jurors the email was a response to a $48,000 bill that Jackson's manager received for the treatments by Dr. Arnold Klein. The treatments included numerous shots of cosmetic drugs such as Restalyne and botox, as well as other unidentified intramuscular shots, Phillips said, citing the bill. Phillips said he maintains his position that he didn't know what, if anything, any doctor was giving Michael. Phillips was asked about Jackson's rehearsals on June 23 and 24. He said he couldn't remember which songs were performed which day. Phillips said he watched them in its entirety, which lasted about 3 hours. He said Michael was engaged about an hour and a half to two hours. Panish: "Michael never did the whole show, did he, sir?"On 6/25/09 the insurance broker wrote to Dr. Murray at 12:54:15 pm, probably London time (approximately 5am LA time): " We are dealing with a matter of great importance and your urgent attention would be greatly appreciated"The email talked about getting Michael's medical records. Phillips said he learned from the media that Dr. Murray had been treating Michael since 2006. Panish: "This is Dr. Murray doing something to help AEG get insurance, fair enough?"On 8/18/09 Phillips wrote email to Michael Roth: "I think I know what Michael died of and this would exonerate Conrad"Lionel Richie's ex-wife Brenda called Philips and said Michael died of a combination of other drugs and Propofol. Phillips said he never told police, the DA or Dr. Murray's attorneys about it because he thought the info was not reliable. Panish: "Did you want Dr. Murray to get exonerated?"Panish played video of Phillips' deposition where he said he didn't remember what the information was but his memory has been refreshed Judge then adjourned session for the day. Trial resumes tomorrow morning. Panish said he has one more hour of questioning. The attorneys estimated Phillips will be done testifying by Wednesday afternoon Court Transcript |
2023.06.10 09:51 The1stCitizenOfTheIn Twitter Files Extra: How the World's "No-Kidding Decision Makers" Got Organized
In honor of this week’s RightsCon and 360/OS Summit, we dug into the #TwitterFiles to revisit the integration of the Atlantic Council’s anti-disinformation arm, the Digital Forensic Research Labs (DFRLabs), while also highlighting its relationship with weapons manufacturers, Big Oil, Big Tech, and others who fund the NATO-aligned think tank.
The Atlantic Council is unique among “non-governmental” organizations thanks to its lavish support from governments and the energy, finance, and weapons sectors. It’s been a key player in the development of the “anti-disinformation” sector from the beginning.
It wasn’t an accident when its DFRLabs was chosen in 2018 to help Facebook “monitor for misinformation and foreign interference,” after the platform came under intense congressional scrutiny as a supposed unwitting participant in a Russian influence campaign.
Press uniformly described DFRLabs as an independent actor that would merely “improve security,” and it was left to media watchdog FAIR to point out that the Council was and is “dead center in what former President Obama’s deputy national security advisor Ben Rhodes called ‘the blob.’”
What’s “the blob”? FAIR described it as “Washington’s bipartisan foreign-policy consensus,” but thanks to the Twitter Files, we can give a more comprehensive portrait.
In the runup to the 360/OS event in that same year, 2018, Graham Brookie of the Atlantic Council boasted to Twitter executives that the attendees would include the crème de la crème of international influence, people he explained resided at the “no-kidding decision-maker level”
Similar correspondence to and from DFRLabs and Twitter outlined early efforts to bring together as partners groups that traditionally served as watchdogs of one another.
Perhaps more even than the World Economic Forum meetings at Davos or gatherings of the Aspen Institute in the US, the Atlantic Council 360/OS confabs are as expansive a portrait of the Censorship-Industrial Complex as we’ve found collected in one place.
In October 2018, DFRLab was instrumental in helping Facebook identify accounts for what became known as “the purge,” a first set of deletions of sites accused of “coordinated inauthentic behavior.”
Facebook in its announcement of these removals said it was taking steps against accounts created to “stir up political debate,” and the October 2018 “purge” indeed included the likes of Punk Rock Libertarians, Cop Block, and Right Wing News, among others. Even the progressive Reverb Press, founded by a relatively mainstream progressive named James Reader, found his site zapped after years of pouring thousands of dollars a month into Facebook marketing tools.
In the years since, DFRLab has become the central coordination node in the Censorship Industrial Complex as well as a key protagonist in the Election Integrity Partnership and the Virality Project.
Its high-profile role at RightsCon, the biggest civil society digital rights event on the calendar, should concern human rights and free expression activists.
According to their London 2019 event “360/OS brings together journalists, activists, innovators, and leaders from around the world as part of our grassroots digital solidarity movement fighting for objective truth as a foundation of democracy.”
Their Digital Sherlocks program aims to “identify, expose, and explain disinformation.”
The Twitter Files reveal DFRLabs labeled as “disinformation” content that often turned out to be correct, that they participated in disinformation campaigns and the suppression of “true” information, and that they lead the coordination of a host of actors who do the same.
Twitter Files #17 showed how DFRLabs sent Twitter more than 40,000 names of alleged BJP (India’s ruling nationalist party) accounts that they suggested be taken down.
DFRLab said it suspected these were “paid employees or possibly volunteers.” However as Racket’s Matt Taibbi noted, “the list was full of ordinary Americans, many with no connection to India and no clue about Indian politics.”
Twitter recognized there was little illegitimate about them, resulting in DFRLabs pulling the project and cutting ties with the researcher.
Twitter Files #19 further revealed DFRLab was a core partner in the Election Integrity Partnership (EIP), which “came together in June of 2020 at the encouragement of the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, or CISA” in order to “fill the gaps legally” that government couldn’t.
As a result, there are serious questions as to whether the EIP violated the US First Amendment.
DFRLabs was also a core partner on the Virality Project, which pushed its seven Big Tech partners to censor “stories of true vaccine side-effects.”
The Stanford Internet Observatory, which led the project, is now being sued by the New Civil Liberties Alliance for its censorship of “online support groups catering to those injured by Covid vaccines.”
Debate as to the frequency of serious adverse events is ongoing, however. The German health minister put it at 1 in 10,000, while others claim it is higher.
The Virality Project sought to suppress any public safety signals at all. The Stanford Internet Observatory is also at the moment reportedly resisting a House Judiciary Committee subpoena into its activities.
TwitterFiles #20 revealed some of the Digital Forensic Lab’s 2018 360/0S events, which brought together military leaders, human rights organizations, the Huffington Post, Facebook and Twitter, Edelman (the world’s biggest PR firm), the head of the Munich Security Conference, the head of the World Economic Forum (Borge Brende) a former President, Prime Minister and CIA head, intel front BellingCat and future Nobel Peace Prize winner Maria Ressa, all to combat “disinformation.” We can now reveal more.
The Atlantic Council is a NATO-aligned think tank established in 1961. Its board of directors and advisory board are a Who’s Who of corporate, intelligence and military power, including:
- James Clapper – former Director of National Intelligence whose tenure included overseeing the NSA during the time of the Snowden leaks. Asked whether intelligence officials collect data on Americans Clapper responded “No, sir,” and, “Not wittingly.” Clapper also coordinated intelligence community activity through the early stages of Russiagate, and his office authored a key January 2017 report concluding that Russians interfered in 2016 to help Donald Trump. Clapper has been a 360/OS attendee.
- Stephen Hadley, United States National Security Advisor from 2005 to 2009 (also a 360/OS attendee)
- Henry Kissinger, former US Secretary of State who oversaw the carpet bombing of Vietnam, among other crimes against humanity
- Pfizer CEO Anthony Bourla
- Stephen A. Schwarzman, Chairman, CEO, and Co-Founder, The Blackstone Group
- Meta’s President for Global Affairs, Nick Clegg
- Richard Edelman, CEO of the world’s largest PR firm (and 360/OS attendee)
- The Rt. Hon. Lord Robertson of Port Ellen, Former Secretary General of NATO
- Ambassador Robert B. Zoellick, Former President of the World Bank
- Leon Panetta, former US Secretary of Defense & CIA Director. Panetta oversaw the US’s massive growth in drone strikes.
- John F. W. Rogers. Goldman Sachs Secretary of the Board
Chuck Hagel, chairman of the Council, sits on the board of Chevron and is also a former US Secretary of Defence.
The Atlantic Council raised $70 million in 2022, $25 million of which came from corporate interests.
Among the biggest donors were: the US Departments of Defense State, Goldman Sachs, the Rockefeller Foundation, Craigslist founder Craig Newmark, Google, Crescent Petroleum, Chevron, Lockheed Martin, General Atomics, Meta, Blackstone, Apple, BP, eBay founder Pierre Omidyar, Raytheon, ExxonMobil, Shell, Twitter, and many more.
Ukraine’s scandal-ridden energy company, Burisma, whose links to Hunter Biden were suppressed by the August 2020 table-top exercise coordinated by the Aspen Institute, also made a contribution.
You can view the full 2022 “honor roll” by clicking here.
The Atlantic Council and DFRLabs don’t hide their militarist affiliations.
This week’s OS/360 event at RightsCon Costa Rica runs together with a 360/OS at NATO’s Riga StratCom Dialogue, which DFRLab note they have “worked closely with” “since 2016.”
DFRLabs was founded in 2016, and has been a major catalyst in expanding the “anti-disinformation” industry.
Among non-governmental entities, perhaps only the Aspen Institute comes close to matching the scope, scale and funding power of DFRLabs.
DFRLabs claims to chart “the evolution of disinformation and other online and technological harms, especially as they relate to the DFRLab’s leadership role in establishing shared definitions, frameworks, and mitigation practices.”
Almost $7 million of the Atlantic Council’s $61 million spent last year went to the DRFLabs, according to their 2022 annual financial report.
Through its fellowship program, it has incubated leading figures in the “disinformation” field.
Richard Stengel, the first director of the Global Engagement Center (GEC), was a fellow.
GEC is an interagency group “within” the State Department (also a funder of the Atlantic Council), whose initial partners included the FBI, DHS, NSA, CIA, DARPA, Special Operations Command (SOCOM), and others.
GEC is now a major funder of DFRLabs and a frequent partner
In this video, Stengel says, “I’m not against propaganda. Every country does it, they have to do it to their own population, and I don’t think it’s that awful.”
Stengel was true to his word, and apart from DFRLab, the GEC funded the Global Disinformation Index, which set out to demonetize conservative media outlets it claimed were “disinformation.” (See 37. in the censorship list)
He thought the now-disgraced Hamilton68 was “fantastic.” In total, GEC funded 39 organizations in 2017.
Despite Freedom of Information requests, only 3 have been made public to date.
Roughly $78 million of GEC’s initial $100 million budget outlay for fiscal year 2017 came from the Pentagon, though the budgetary burden has shifted more toward the State Department in the years since.
The Global Engagement Center was established in the last year of Barack Obama’s presidency, via a combination of an executive order and a bipartisan congressional appropriation, led by Ohio Republican Rob Portman and Connecticut Democrat Chris Murphy.
The GEC was and remains virtually unknown, but reporting in the Twitter Files and by outlets like the Washington Examiner have revealed it to be a significant financial and logistical supporter of “anti-disinformation” causes.
Though tasked by Obama with countering “foreign state and non-state propaganda and disinformation efforts aimed at undermining United States national security interests,” its money has repeatedly worked its way back in the direction of policing domestic content, with Gabe Kaminsky’s Examiner reports on the GDI providing the most graphic example.
GEC frequently sent lists of “disinformation agents to Twitter.” Yoel Roth, former head of Trust and Safety referred to one list as a “total crock.” Roth is now a member of DFRLab’s Task Force for a Trustworthy Future Web. Let’s hope he brings more trust than Stengel. You can read more on GEC’s funding here.
Other DFRLab luminaries include Simon Clark, Chairman of the Center for Countering Digital Hate (a UK “anti-disinformation” outfit that aggressively deplatforms dissidents), Ben Nimmo (previously a NATO press officer, then of Graphika (EIP and the Virality Project partners) and now Facebook’s Global Threat Intelligence Lead), and Eliot Higgins of Bellingcat.
Bellingcat has an ominous reputation, which it’s earned in numerous ways, including its funding by the National Endowment for Democracy...
Most recently, Bellingcat assisted in the arrest of the 21-year-old Pentagon leaker, further speeding up the abandonment of the Pentagon Papers Principal where the media protected, rather than persecuted, leakers.
Bellingcat was part of 360/OS backroom meetings with former intel chiefs, the head of Davos and the Munich security conference among many others, as we will see soon.
The Virality Project built on the EIP and had partnerships with Twitter, Facebook, Instagram, Youtube, Google, TikTok and more to combat vaccine “misinformation.”
Stanford and DFRLab partnered with the University of Washington’s Center for an Informed Public, Graphika, NYU Tandon School of Engineering and Center for Social Media and Politics, and the National Congress on Citizenship.
Through a shared Jira ticketing system they connected these Big Tech platforms together, with Graphika using sophisticated AI to surveil the online conversation at scale in order to catch “misinformation” troublemakers.
VP went far beyond any kind of misinformation remit, most infamously recommending to their Big Tech partners that they consider “true stories of vaccine side effects” as “standard misinformation on your platform.”
A Virality Project partner called the Algorithmic Transparency Initiative (a project of the National Congress on Citizenship) went further.
Their Junkipedia initiative sought to address “problematic content” via the “automated collection of data” from “closed messaging apps,” and by building a Stasi-like “civic listening corps,” which in recent years has taken on a truly sinister-sounding mission.
The current incarnation might as well be called “SnitchCorps,” as “volunteers have an opportunity to join a guided monitoring shift to actively participate in monitoring topics that disrupt communities”
Garret Graff, who oversaw the Aspen Hunter Biden table-top exercise, was chairman of that same National Congress on Citizenship when they collaborated on the Virality Project.
Both EIP and VP were led by Renee DiResta of the Stanford Internet Observatory, a former CIA fellow who engineered the now disgraced New Knowledge initiative, which developed fake Russian bots to discredit a 2017 Alabama senate race candidate, as acknowledged by the Washington Post.
DFRLab are the elite of the “anti-disinformation” elite.
They work closely with a wide range of actors who have participated in actual disinformation initiatives.
Here they’re invited to an elite Twitter group set up by Nick Pickles of “anti-disinformation” luminaries First Draft, also participants in the Hunter Biden laptop tabletop, and the Alliance for Security Democracy, part of the RussiaGate Hamilton68 disinformation operation.
The 360/OS event marries this tarnished record with the financial, political, military, NGO, academic and intelligence elite. Some of this is visible through publicly available materials.
Twitter Files however reveal the behind the scenes, including closed door, off-the-record meetings.
“I’ve just arrived in Kyiv” Brookie notes in 2017, as he seeks to line up a meeting with Public Policy Director Nick Pickles as they discuss Twitter providing a USD $150K contribution to OS/360 (seemingly secured), and to garner high level Twitter participation.
Pickles is visiting DC and Brookie suggests he also meet with the GEC and former FBI agent Clint Watts of Hamilton 68 renown. “Happy to make those connections,” he chimes.
360/OS events are elite and expensive — $1 million according to Brookie — so closer collaboration with Twitter, especially in the form of funding, is a high priority.
Twitter offers $150,000
When Brookie mentions the attendees at the “no-kidding decision maker level” he isn’t kidding.
Parallel to the 360/OS public program is the much more important off-the-record meeting of “decision makers ranging from the C-Suite to the Situation Room.”
Here, he is explicit about a convening of military and financial power.
Vanguard 25 is presented as a way to “create a discreet and honest way to close the information gap on challenges like disinformation between key decision makers from government, tech, and media.”
The document boasts of its high-level participants
More are revealed in email exchanges, including Madeleine Albright and the head of the WEF
They go on to list a bizarre mishmash of media leaders, intelligence officials, and current or former heads of state
...Germany’s Angela Merkel was out of reach in the end, but many of the others attended this behind the scenes meeting on “disinformation.” Who are they?
- Matthias Dopfner – CEO and 22% owner of German media empire Axel Springer SE, the biggest media publishing firm in Europe
- Borge Brende – head of the World Economic Forum and former Norwegian foreign minister
- Toomas Hendrick Ilves – former President of Estonia who co-chairs the World Economic Forum’s Global Futures Council on Blockchain Technology. Hendrick is also a fellow at the Freeman Spogli Institute for International Studies (where the Stanford Internet Observatory is housed) and is on the advisory council of the Alliance for Securing Democracy, of Hamilton 68 renown.
- Chris Sacca – billionaire venture capitalist
- Mounir Mahjoubi – previously Digital Manager for President Macron’s presidential campaign, and former Chairman of the French Digital Council
- Reid Hoffman – billionaire and Linkedin co-founder
- Ev Williams – Former CEO of Twitter and on the Twitter board at the time
- Kara Swisher – New York Times opinion writer, who founded Vox Media Recode
- Wolfgang Ischinger - Head of the Munich Security Conference
- Aleksander Kwasniewski – Former President of Poland. Led Poland into NATO and the EU.
- Richard Edelman – CEO of the largest PR company in the world
- Elliot Shrage – previously Vice-President of Public Policy at Facebook (DFRLab had election integrity projects with Facebook)
- Lydia Polgreen – Huffington Post Editor in Chief
- Jim Clapper –former US Director of National Intelligence
- Maria Ressa – co-founder of Rappler and soon to be winner of the Nobel Peace Prize
Why would such a group all gather specifically around the question of “disinformation”?
Is disinformation truly at such a level that it requires bringing together the world’s most popular author with military and intelligence leaders, the world’s biggest PR company, journalists, billionaires, Big Tech and more?
Or is this work to build the case that there is a disinformation crisis, to then justify the creation of a massive infrastructure for censorship? A glimpse of the agenda offers clues
Here the head of the most important military and intelligence conference in the world (Munich) sits down in a closed door meeting with a former Secretary of State and the Executive Vice-Chair of the Atlantic Council.
Which is followed by a closed door session with the Editor-in Chief of the ...Huffington Post and peace-maker Maria Ressa who presented to the same group of military, intelligence, corporate and other elites.
Is the role of a journalist and Nobel laureate to work behind closed doors with militarists and billionaires, or to hold them to account?
At 2022’s OS/360 at RightsCon Ressa conducted a softball interview on disinformation with current US Secretary of State Anthony Blinken.
In testimony last April 2023, former CIA deputy director Michael Morrell stated that Blinken “set in motion the events that led to the issuance of the public statement” by more than 50 former intelligence officials that the Hunter Biden laptop had “all the classic earmarks of a Russia information operation.”
The Twitter Files also revealed that in August 2020 the Aspen Institute organized a table-top exercise to practice how best to respond to a “hack and leak” of a Hunter Biden laptop.
The laptop only came to light however two months later.
In attendance was First Draft (now the Information Futures Lab), the New York Times, Washington Post, Rolling Stone, CNN, Yahoo! News, Facebook, Twitter and more.
Here, DFRLab head Graham Brookie speaks with the Aspen Institute’s Garret Graff, who coordinated the Hunter Biden tabletop exercise.
After it turned out the Hunter Biden laptop was real, and the disinformation operation was more appropriately described as having been led by the likes of Blinken and the Aspen Institute.https://www.youtube.com/watch?v=E8YTPuTC9xs
The appropriate response is apparently for RightsCon, DFRLab, Blinken and Ressa to put on a nice forum to promote these figures as “anti-disinformation” leaders.
Former DFRLab fellow and intel front Bellingcat founder Eliot Higgins is also invited to the closed door sessions with a former head of the CIA, a former Prime Minister and a President.
How do you keep power accountable when you are in the same cozy club? This theme runs throughout.
Bellingcat is featured heavily at the public sessions also
On the public side, we see Amnesty International participating to further collapse the distinction between those who are meant to hold power to account, and the powerful themselves.
The Iraq war gave us embedded journalists, and the “anti-disinformation” field gives us embedded digital rights activists.
The Department of Homeland Security’s Chris Krebs also joined the closed door session.
Krebs was Co-Chair of the Aspen Institute’s Commission on Information Disorder.
Other members included Prince Harry, the Virality Project’s Alex Stamos (Stanford Internet Observatory) and Kate Starbird (University of Washington and previous 360/OS participant), Katie Couric, and more. Craig Newmark attended as an observer.
Meanwhile Renee DiResta, former CIA fellow and Stanford Internet Observatory Research Director, presented with the former Prime Minister of Sweden.
This was years before she would launch the Virality Project, and take on the bugbear of “true stories of vaccine side effects.”
The President of the Atlantic Council participated in an “off-the-record, “ behind closed doors conversation on “trust” with the CEO of the world’s biggest PR firm, Edelman.
“Public relations” and “trust” may well be opposites, and trust is being destroyed not by the disinformation street crime that these groups claim to target, but by the disinformation corporate crime protected by, or in some cases created by these same people.
Disinformation is real, but its biggest purveyors are governments and powerful corporate interests.
DFRLab and RightsCon show just how far the capture of civil society by elite interests has come. Again, I made a mistake helping to co-organize RightsCon in 2015.
The jumping in bed with the government and Big Tech was arguably there in 2015, though to a much lesser degree.
It now partners with militarists in the form of the Atlantic Council and is an enabler of the “disinformation” grift that is so deeply impacting freedom of speech and expression.
The air-gaps that should separate civil society, media, military, billionaires, intelligence and government have collapsed, and many of these actors have formed a new alliance to advance their shared interests.
If weapons manufacturers funding human rights is considered legitimate then where is the red line? Effectively, there is none.
This collapse however has also been pushed by funders, who have been proactive in asking NGOs to collaborate more with Big Tech and government - something I successfully resisted for my almost 18 years at EngageMedia, critically RightsCon was the only time I let my guard down.
The RightsCon sponsor matrix wouldn’t be out of place at NASCAR
This is the equivalent of hosting a Climate Change conference sponsored by Shell, BP, Chevron, and ExxonMobil.
How do you keep power accountable when Big Tech pays your wage? The “let’s all work together” approach has failed.https://www.racket.news/p/twitter-files-extra-how-the-worlds
The weakest partner, civil society, got captured and we lost.
Many more lost their way and have acquiesced to and often enabled much of the new censorship regime.
2023.06.10 09:37 gigachad_here "LeArN DSA, GrInD LeEtCoDe, GoOgLe 50 LPA sEt"
2023.06.10 08:28 Orixa1 Learning Japanese with VNs - A 2 Year Summary
![]() | TL;DR: Your favorite untranslated VN is probably a lot more accessible than you think unless it'sK3 like meprovided you're willing to put in the effort to get over that initial hurdle (learning the basics and your first VN). submitted by Orixa1 to visualnovels [link] [comments] Introduction It was exactly two years ago today when I first started learning Japanese, inspired by this amazing post which was linked by someone here. To whoever did that, thank you. That post, along with the discovery of the idea of CI around the same time, changed my idea of language learning forever. I had an incredibly negative experience with second language classes previously, having been mandated to take years of instruction in a second language for school (and learned nothing from it). As a result of this, I thought of language study as a stuffy academic subject similar to math in which adults could achieve some semblance of communication by memorizing grammatical formulas (but never actually get any good, as only children could learn languages). It turns out that this method of teaching is exactly why the vast majority of students fail to learn anything (or if they do, only reach a very low level of proficiency). For me, the idea of learning a language mostly just by doing what I was already doing (reading VNs) was incredibly appealing, and it still drives me to this day. So why post here instead of on LearnJapanese? The reason is because there has already been a series of similar posts there in addition to the one that inspired me. These posts have received increasingly negative reception, with the second one even getting removed by the mods. As far as I'm concerned the truth about how to get good at Japanese is already out over there, whether the majority of the users want to accept it or not. In particular, I've noticed that many of them seem terrified of leaving the safety of their textbooks and consuming actual Japanese content intended for native speakers, which explains the general low proficiency of many of the users and abundance of terrible advice. Leaving another post over there would just be redundant at this point, running the risk of becoming stale. On the other hand, I've noticed a dramatic increase in interest in learning Japanese on this sub recently, with many of the responders giving really good advice (hinting at their proficiency). In fact, it wouldn't surprise me if this sub had the greatest number of proficient L2 Japanese speakers on this website. Similarly, the people asking for advice have been open to the suggestions offered here (hinting that more of them will eventually succeed in their goals). Perhaps there's even someone who will read this post that is unknowingly waiting for a spark of inspiration just like I was back then. If that's the case for even one person, writing this post will be well worth my time. Background Before starting to learn Japanese I was just an L1 English speaker, this should afford me no particular advantage in Japanese, which is about as distant from English as can be imagined. If you know any languages other than English, you already have a distinct advantage over me (just by being more open to different sounds and grammatical structures, even if they are not related to Japanese). I did have two advantages which may or may not have helped to varying degrees. First, I do have an above average memory (particularly long-term memory), which could have possibly helped me to learn words faster than I would have otherwise. Second, I also consumed many hours of Japanese audio over the years (at least 1400 hours of anime audio, not counting VN audio and various YouTube videos). I didn't know any phrases or words beyond the standard cliches, but it probably did help considerably in distinguishing the Japanese phonemes from each other. As a result, I didn't really need to do that much listening practice early on once I learned the meaning of the words in text form. However, I'm not sure this would afford me a particular advantage over anyone else here, as I imagine many of you have also consumed a large amount of Japanese audio (with English subtitles) over the years. In conclusion, I don't think I held an advantage over anyone else at the start, and I'm sure most people could achieve similar (or better) results with the same dedication. Foundations (June 9, 2021 - Oct 27, 2021) To start out, I learned Hiragana and Katakana, through which every Japanese sound can be expressed. There wasn't any special tricks required for this really, I mostly just used this website to memorize them through brute force. Additionally, writing out each character with the proper stroke order also helped solidify the shape in my mind. Around this time I made a Japanese YouTube account (by searching up things using Japanese IME on a fresh account and clicking "Not Interested" on every English video title. Although I couldn't read/understand the vast majority of video titles or comments, I focused on trying to read the Hiragana/Katakana that I could, and I think it helped to get me familiar with how they are used in a natural setting. Overall, this didn't take too long, maybe 4-5 days at most. There's no reason to get hung up on not reading very fast, true mastery of Hiragana/Katakana in terms of speed will only come from seeing and reading them millions of times. It's fine to move on once you stop making mistakes (and everything afterwards reinforces Hiragana/Katakana anyway). It was at this point that I began tackling Kanji by following the standard advice of installing Anki (a spaced repetition flashcard software program that allows you to memorize a huge amount of information in exchange for a small amount of your time each day) and starting Core2k. However, this was where the first real roadblock came up. For some reason, I simply could not memorize more than about 200 words using Core without my reviews piling up and me forgetting everything again. Looking back, I think there were 2 reasons for this. First, words out of context are extremely hard to memorize for a beginner. Second, I had something I'll call "Kanji Blindness", which I'll define as the inability to distinguish Kanji from each other (I saw all but the most simple Kanji as a vague squiggle). Of course, it is impossible to learn a word if you can't tell it apart from every other word. This was the first real point where I considered giving up, since Core2k seemed to work for everyone else without a problem (I still advocate using Core2k if you can, since most other people don't seem to have this "Kanji Blindness" issue). I ended up solving the problem by using KKLC and its accompanying Anki deck. This book essentially teaches you to distinguish Kanji from each other using mnemonics like this one, I also wrote out each character 10 times with the proper stroke order to solidify its form in my mind. Note that I only needed to finish around half the deck ~1100 Kanji before I could distinguish even similar looking Kanji from each other (and by extension gained the ability to memorize an arbitrary number of words). I supplemented this by learning vocabulary using TheMoeWay's Tango N5 Anki deck. IMO, this is an amazing deck for beginners, which has the user memorize the meaning of sentences (which gradually build on each other and increase in complexity) rather than individual words out of context. This has the welcome side effect of implicitly teaching basic grammar as well. At the same time, I also learned some grammar explicitly by using Tae Kim and Cure Dolly, but I won't pretend that I did all that much of it. I think I finished half of Tae Kim and up to around Lesson 30 of Cure Dolly. In general, I hated studying grammar back then and still do. It doesn't help that most of the English language resources for Japanese grammar are quite poor, and fail to accurately convey the nuance of what is being said. Fortunately, it's also the least important part of learning a language, as I've found that when you increase the vocabulary and learn most or all of the words in a sentence, your brain will naturally pick up on how sentences are structured and what sounds "natural" and "unnatural". In general, a grammar guide should be brief, and mostly used to notify you of patterns you should look out for in your immersion. I also started consuming a large amount of "manga" on a particular website famous for its "numbers". You know what it is. Don't lie.Of course, this was done purely as an academic exercise to further my Japanese ability. It's amazing how much you can comprehend on this website with only a few hundred words and the most basic grammar. It's unironically the best source of early reading immersion there is.After all, it doesn't take a genius to figure out what's going on in a given "scene". Secret tip: If you see something you like, click on the author's name, you can nearly always find the chapter in Japanese either on its own or as part of an anthology. The First VN (Oct 28, 2021 - Jan 29, 2022) Around this point the novelty of the active studying had worn off, and I was itching to start trying some VNs for real. With my "Kanji Blindness" gone and some basic vocabulary/grammar, I was ready to challenge the easiest VN I could find. It turned out to be 彼女のセイイキ, which I found with the help of this website that ranks the rough difficulty of a wide selection of VNs. After finishing the setup for mining my own personal deck, I finally started reading. It immediately became apparent that I had vastly overrated my own ability. Because, as it turns out, the jump between "manga" and the "easiest VN" is huge. Although I was adding hundreds of cards to my personal deck, my reading pace was absolutely glacial, with it sometimes taking hours of reading and editing cards just to make 0 progress in the story. This was not helped by the fact that I used monolingual dictionaries from the very beginning. It was a very beneficial decision in the long run (Japanese-Japanese dictionaries better teach the relations between words and proper contexts in which they are used) but harsh on the time needed to create cards in the short run because I needed to confirm each time whether I understood the Japanese definition or not (Of course, at the start I nearly always ended up using the English definition). I started getting anxious, and switched VNs a few times (this only made things worse) because I was fed up with making no progress on 彼女のセイイキ before eventually switching back to it. It was a terrible experience, and for the second time I was on the verge of giving up. But then, something amazing started to happen... Never Give Up For seemingly no reason at all (although I guess looking at it now maybe those cards from the other VNs helped), my progress on 彼女のセイイキ (depicted by the alpha parameter above) began to increase exponentially around the 1200 card mark. This is probably due to the statistics of autholanguage word selection. To put it simply, you need to know a relatively small number of words to understand a large percentage of a given story. I was so excited by this at the time that I read through the rest of the VN like a man possessed despite how bad the story was, eventually finishing it about 3 months after I started. Looking back now, it seems insane that it took so long to read through a <10 hour VN, or that I was so excited about alpha parameters of under 200, but I still consider it my finest achievement in terms of learning Japanese. It probably represents the single biggest leap in terms of my ability (I probably reached the N3 level just by reading this one VN). Its impact can still be seen in the fact that out of all the VNs I've read to this day, 彼女のセイイキ still has the most cards out of any VN in my deck. Subsequent Developments (Jan 30, 2022 - Present) After finishing my first VN, I never experienced anything like the pain of that first read. I've completed four longer VNs since then (フレラバ, 恋と選挙とチョコレート, 月の彼方で逢いましょう, and 千恋*万花 in that order) and two nukiges. As I did so, I gradually expanded the range of words I'm willing to add to my deck in terms of word frequency first from under 10000, to under 20000, and now under 30000. In general, due to the statistics of language word selection, I think it is more beneficial as a beginner to learn the most common words first, then slowly expand your horizons as you improve. For what it's worth, here's what the above graph looks like today: Progress up to Today The alpha parameter has ceased to be a useful measurement of my ability in recent times, because it now depends almost entirely on the scope of words I'm willing to add to my deck rather than words I'm unable to read. It now fluctuates wildly, but nearly always stays over 1000 except for the very beginning of a new VN. Just for fun, if you take it as a measurement of ability and compare it to the very first day I tried to read a VN (alpha ≈ 10), I'm at least 100 times better at reading now. Other than that, there's not much to say. I cleaned up some of my grammar using Bunpo (not recommended for beginners) and had a really easy time with it after having internalized how sentences are supposed to be structured by reading a lot of VNs. I also studied some Pitch Accent using this website (it's easy to make an account) having been inspired by this post. I can confirm that working your way up through the tests works well and I can consistently hear changes in pitch now. I also started listening to some Japanese ASMR YouTubers every night before I go to bed, and it has definitely helped me sleep better (and improved my listening considerably at the same time). In the last month or so I've gotten a bit more serious about listening and dabbled in some anime with Japanese subtitles. For a long time I didn't really care about listening, as I only wanted to read VNs, but recently it's gotten increasingly irritating only being able to "almost" understand more complex sentences when I listen. Benchmarking Progress As a fun experiment, I recently took a mock N1 test from this website to see if I would pass, and I did, but it definitely wasn't the cleanest pass in the world. I could probably improve the score by a decent margin if I studied towards the test (and got better at staying focused during the extremely boring reading and listening sections). I've thought about taking the real one, but decided against it when I saw how expensive it would be to travel to where it's being held (and I don't have much interest in living in Japan anytime soon anyway). My total time spent is listed below (it should be taken as a minimum as a decent bit of time spent at the beginning was not tracked): Reading Time: 519 hours Anki Time: 451 hours Listening Time: 7 hours Total Time: 977 hours Average Time Spent Per Day ~ 45 minutes Conclusion Regardless of your starting point or background, you are overwhelmingly likely to succeed in whatever your goals are with the Japanese language if you manage to read through a single VN. It will probably take less time than you think too. |
2023.06.09 23:31 bigbear0083 Wall Street Week Ahead for the trading week beginning June 12th, 2023
The S&P 500 rose slightly Friday, touching the 4,300 level for the first time since August 2022 as investors looked ahead to upcoming inflation data and the Federal Reserve’s latest policy announcement.
The broad-market index gained 0.11%, closing at 4,298.86. The Nasdaq Composite rose 0.16% to end at 13,259.14. The Dow Jones Industrial Average traded up 43.17 points, or 0.13%, closing at 33,876.78. It was the 30-stock Dow’s fourth consecutive positive day.
For the week, the S&P 500 was up 0.39%. This was the broad-market index’s fourth straight winning week — a feat it last accomplished in August. The Nasdaq was up about 0.14%, posting its seventh straight winning week — its first streak of that length since November 2019. The Dow advanced 0.34%.
Investors were encouraged by signs that a broader swath of stocks, including small-cap equities, was participating in the recent rally. The Russell 2000 was down slightly on the day, but notched a weekly gain of 1.9%.
“It’s the first time in a while where investors seem to be feeling a greater sense of certainty. And we think that’s been a turning point from what had been more of a bearish cautious sentiment,” said Greg Bassuk, CEO at AXS Investments.
“We think that as we walk through these next few weeks, that will be increasingly clear that the economy is more resilient than folks have given it credit for the last six months,” said Scott Ladner, chief investment officer at Horizon Investments. “That will sort of dawn on people that small-caps and cyclicals probably have a reasonable shot to play catch up.”
The market is also looking toward next week’s consumer price index numbers and the Federal Open Market Committee meeting. Markets are currently anticipating a more than 71% probability the central bank will pause on rate hikes at the June meeting, according to the CME FedWatch Tool.
June’s Quad Witching Options Expiration Riddled With Volatility
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The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, S&P 500 has been up 12 of the last 20 years, but down 6 of the last 8.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after June’s Triple-Witching Day is horrendous. This week has experienced DJIA losses in 27 of the last 33 years with an average performance of –0.81%. S&P 500 and NASDAQ have fared better during the week after over the same 33-year span. S&P 500’s averaged –0.46%. NASDAQ has averaged +0.03%. 2022’s sizable gains during the week after improve historical average performance notably.
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A New Bull Market: What’s Driving It?
The S&P 500 finally closed 20% above its October 12th (2022) closing low. This puts the index in “official” bull market territory.
Of course, if you had been reading or listening to Ryan on our Facts vs Feelings podcast, you’d have heard him say that October 12th was the low. He actually wrote a piece titled “Why Stocks Likely Just Bottomed” on October 19th!
The S&P 500 Index fell 25% from its peak on January 3rd, 2022 through October 12th. The subsequent 20% gain still puts it 10% below the prior peak. This does get to “math of volatility”. The index would need to gain 33% from its low to regain that level. This is a reason why it’s always better to lose less, is because you need to gain less to get back to even.
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So, what’s next? The good news is that future returns are strong. In his latest piece, Ryan wrote that out of 13 times when stocks rose 20% off a 52-week low, 10 of those times the lows were not violated. The average return 12 months later was close to 18%. The only time we didn’t see a gain was in the 2001-2002 bear market.
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** Digging into the return drivers**
It’s interesting to look at what’s been driving returns over the past year. This can help us think about what may lie ahead. The question was prompted by our friend, Sam Ro’s latest piece on the bull market breakout. He wrote that earnings haven’t been as bad as expected. More importantly, prospects have actually been improving.
The chart below shows earnings expectations for the S&P 500 over the next 12 months. You can see how it rose in the first half of 2022, before collapsing over the second half of the year. The collapse continued into January of this year. But since then, earnings expectations have steadily risen. In fact, they’ve accelerated higher since mid-April, after the last earnings season started. Currently, they’re higher than where we started the year.
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Backing up a bit: we can break apart the price return of a stock (or index) into two components:
I decomposed annual S&P 500 returns from 2020 – 2023 (through June 8th) into these two components. The chart below shows how these added up to the total return for each year. It also includes:
- Earnings growth
- Valuation multiple growth
- The bear market pullback from January 3rd, 2022, through October 12th, 2022
- And the 20% rally from the low through June 8th, 2023
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You can see how multiple changes have dominated the swing in returns.
The notable exception is 2021, when the S&P 500 return was propelled by earnings growth. In contrast, the 2022 pullback was entirely attributed to multiple contraction. Earnings made a positive contribution in 2022.
Now, multiple contraction is not surprising given the rapid change in rates, as the Federal Reserve (Fed) looked to get on top of inflation. However, they are close to the end of rate hikes, and so that’s no longer a big drag on multiples.
Consequently, multiple growth has pulled the index higher this year. You can see how multiple contraction basically drove the pullback in the Index during the bear market, through the low. But since then, multiples have expanded, pretty much driving the 20% gain.
Here’s a more dynamic picture of the S&P 500’s cumulative price return action from January 3rd, 2022, through June 8th, 2023. The chart also shows the contribution from earnings and multiple growth. As you can see, earnings have been fairly steady, rising 4% over the entire period. However, the swing in multiples is what drove the price return volatility.
Multiples contracted by 14%, and when combined with 4% earnings growth, you experienced the index return of -10%.
What next?
As I pointed out above, the problem for stocks last year was multiple contraction, which was driven by a rapid surge in interest rates.
The good news is that we’re probably close to end of rate hikes. The Fed may go ahead with just one more rate hike (in July), which is not much within the context of the 5%-point increase in rates that they implemented over the past year.
Our view is that rates are likely to remain where they are for a while. But rates are unlikely to rise from 5% to 10%, or even 7%, unless we get another major inflation shock.
This means a major obstacle that hindered stocks last year is dissipating. The removal of this headwind is yet another positive factor for stocks as we look ahead into the second half of the year.
Why Low Volatility Isn’t Bearish
“There is no such thing as average when it comes to the stock market or investing.” -Ryan Detrick
You might have heard by now, but the CBOE Volatility Index (better known as the VIX) made a new 52-week low earlier this week and closed beneath 14 for the first time in more than three years. This has many in the financial media clamoring that ‘the VIX is low and this is bearish’.
They have been telling us (incorrectly) that only five stocks have been going up and this was bearish, that a recession was right around the corner, that the yield curve being inverted was bearish, that M2 money supply YoY tanking was bearish, and now we have the VIX being low is bearish. We’ve disagreed with all of these worries and now we take issue with a low VIX as being bearish.
What exactly is the VIX you ask? I’d suggest reading this summary from Investopedia for a full explanation, but it is simply how much option players are willing to pay up for potential volatility over the coming 30 days. If they sense volatility, they will pay up for insurance. What you might know is that when the VIX is high (say above 30), that means the market tends to be more volatile and likely in a bearish phase. Versus a low VIX (say sub 15) historically has lead to some really nice bull markets and small amounts of volatility.
Back to your regularly scheduled blog now.
The last time the VIX went this long above 14 was for more than five years, ending in August 2012. You know what happened next that time? The S&P 500 added more than 18% the following 12 months. Yes, this is a sample size of one, but I think it shows that a VIX sub 14 by itself isn’t the end of the world.
One of the key concepts around volatility is trends can last for years. What I mean by this is for years the VIX can be high and for years it can be low. Since 1990, the average VIX was 19.7, but it rarely trades around that average. Take another look at the quote I’ve used many times above, as averages aren’t so average. This chart is one I’ve used for years now and I think we could be on the cusp of another low volatility regime. The red areas are times the VIX was consistently above 20, while the yellow were beneath 20. What you also need to know is those red periods usually took place during bear markets and very volatile markets, while the yellow periods were hallmarked by low volatility and higher equity prices. Are we about to enter a new period of lower volatility? No one of course knows, but if this is about to happen (which is my vote), it is another reason to think that higher equity prices (our base case as we remain overweight equities in our Carson House Views) will be coming.
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Lastly, I’ll leave you on this potentially bullish point. We like to use relative ratios to get a feel for how one asset is going versus to another. We always want to be in assets or sectors that are showing relative strength, while avoiding areas that are weak.
Well, stocks just broke out to new highs relative to bonds once again. After a period of consolidation during the bear market last year, now we have stocks firmly in the driver seat relative to bonds. This is another reason we remain overweight stocks currently and continue to expect stocks to do better than bonds going forward.
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Our Leading Economic Index Says the Economy is Not in a Recession
We’ve been writing since the end of last year about how we believe the economy can avoid a recession in 2023, including in our 2023 outlook. This has run contrary to most other economists’ predictions. Interestingly, the tide has been shifting recently, as we’ve gotten a string of relatively stronger economic data. More so after the latest payrolls data, which surprised again.
One challenge with economic data is that we get so many of them, and a lot of times they can send conflicting signals. It can be hard to parse through all of it and come up with an updated view of the economy after every data release.
One approach is to combine these into a single indicator, i.e. a “leading economic index” (LEI). It’s “leading” because the idea is to give you an early warning signal about economic turning points.
Simply put, it tells you what the economy is doing today and what it is likely to do in the near future.
The most popular LEI points to recession
One of the most widely used LEI’s is released by the Conference Board, and it currently points to recession. As you can see in the chart below, the Conference Board’s LEI is highly correlated with GDP growth – the chart shows year-over-year change in both.
You can see how the index started to fall ahead of the 2001 and 2008 recession (shaded areas). The 2020 pandemic recession was an anomaly since it hit so suddenly. In any case, using an LEI means we didn’t have to wait for GDP data (which are released well after a quarter ends) to tell us whether the economy was close to, or in a recession.
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As you probably noticed above, the LEI is down 8% year-over-year, signaling a recession over the next 12 months. It’s been pointing to a recession since last fall, with the index declining for 13 straight months through April.
Quoting the Conference Board:
“The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023.”
Safe to say, we’re close to mid-2023 and there’s no sign of a recession yet.
What’s inside the LEI
The Conference Board’s LEI has 10 components of which,
You can see how these indicators have pulled the index down by 4.4% over the past 6 months, and by -0.6% in April alone.
- 3 are financial market indicators, including the S&P 500, and make up 22% of the index
- 4 measure business and manufacturing activity (44%)
- 1 measures housing activity (3%)
- 2 are related to the consumer, including the labor market (31%)
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Here’s the thing. This popular LEI is premised on the fact that the manufacturing sector, and business activity/sentiment, is a leading indicator of the economy. This worked well in the past but is probably not indicative of what’s happening in the economy right now. For one thing, the manufacturing sector makes up just about 11% of GDP.
Consumption makes up 68% of the economy, and we believe it’s important to capture that.
In fact, consumption was strong in Q1 and even at the start of Q2, thanks to rising real incomes. Housing is also making a turnaround and should no longer be a drag on the economy going forward (as it has been over the past 8 quarters). The Federal Reserve (Fed) is also close to being done with rate hikes. Plus, as my colleague, Ryan Detrick pointed out, the stock market’s turned around and is close to entering a new bull market.
Obviously, there are a lot of data points that we look at and one way we parse through all of it is by constructing our own leading economic index.
An LEI that better reflects the US economy
We believe our proprietary LEI better captures the dynamics of the US economy. It was developed a decade ago and is a key input into our asset allocation decisions.
In contrast to the Conference Board’s measure, it includes 20+ components, including,
Just as an example, the consumer-related data includes unemployment benefit claims, weekly hours worked, and vehicle sales. Housing includes indicators like building permits and new home sales.
- Consumer-related indicators (make up 50% of the index)
- Housing activity (18%)
- Business and manufacturing activity (23%)
- Financial markets (9%)
The chart below shows how our LEI has moved through time – capturing whether the economy is growing below trend, on-trend (a value close to zero), or above trend. Like the Conference Board’s measure, it is able to capture major turning points in the business cycle. It declined ahead of the actual start of the 2011 and 2008 recessions.
As of April, our index is indicating that the economy is growing right along trend.
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Last year, the index signaled that the economy was growing below trend, and that the risk of a recession was high.
Note that it didn’t point to an actual recession. Just that “risk” of one was higher than normal. In fact, our LEI held close to the lows we saw over the last decade, especially in 2011 and 2016 (after which the economy, and even the stock market, recovered).
The following chart captures a close-up view of the last 3 and half years, which includes the Covid pullback and subsequent recovery. The contribution from the 4 major categories is also shown. You can see how the consumer has remained strong over the past year – in fact, consumer indicators have been stronger this year than in late 2022.
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The main risk of a recession last year was due to the Fed raising rates as fast as they did, which adversely impacted housing, financial markets, and business activity.
The good news is that these sectors are improving even as consumer strength continues. The improvement in housing is notable. Additionally, the drag from financial conditions is beginning to ease as we think that the Federal Reserve gets closer to the end of rate hikes, and markets rally.
Putting the Puzzle Together
Another novel part of our approach is that we have an LEI like the one for the US for more than 25 other countries. Each one is custom built to capture the dynamics of those economies. The individual country LEIs are also subsequently rolled up to a global index to give us a picture of the global economy, as shown below.
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I want to emphasize that we do not rely solely on this as the one and only input into our asset allocation, portfolio and risk management decisions. While it is an important component that encapsulates a lot of significant information, it is just one piece of the puzzle. Our process also has other pillars such as policy (both monetary and fiscal), technical factors, and valuations.
We believe it’s important to put all these pieces together, kind of like putting together a puzzle, to understand what’s happening in the economy and markets, and position portfolios accordingly.
Putting together a puzzle is both a mechanistic and artistic process. The mechanistic aspect involves sorting the pieces, finding edges, and matching colors, etc. It requires a logical and methodical approach, and in our process the LEI is key to that.
However, there is an artistic element as well. As we assemble the pieces together, a larger picture gradually emerges. You can make creative decisions about how each piece fits within the overall picture. Within the context of portfolio management, that takes a diverse range of experience. Which is the core strength of our Investment Research Team.
Welcome to the New Bull Market
“If you torture numbers enough, they will tell you anything.” -Yogi Berra, Yankee great and Hall of Fame catcher
Don’t shoot the messenger, but historically, it is widely considered a new bull market once stocks are more than 20% off their bear market lows. This is similar to when stocks are down 20% they are in a bear market. Well, the S&P 500 is less than one percent away from this 20% threshold, so get ready to hear a lot about it when it eventually happens.
I’m not crazy about this concept, as we’ve been in the camp that the bear market ended in October for months now (we started to say it in late October, getting some really odd looks I might add), meaning a new bull market has been here for a while. Take another look at the great Yogi quote above, as someone can get whatever they want probably when talking about bear and bull markets.
None the less, what exactly does a 20% move higher off a bear market low really mean? The good news is future returns are quite strong.
We found 13 times that stocks soared at least 20% off a 52-week low and 10 times the lows were indeed in and not violated. The only times it didn’t work? Twice during the tech bubble implosion and once during the Financial Crisis. In other words, some of the truly worst times to be invested in stocks. But the other 10 times, once there was a 20% gain, the lows were in and in most cases, higher prices were soon coming. This chart does a nice job of showing this concept, with the red dots the times new lows were still yet to come after a 20% bounce.
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Here’s a table with all the breakdowns. A year later stocks were down only once and that was during the 2001/2002 bear market, with the average gain a year after a 20% bounce at a very impressive 17.7%. It is worth noting that the one- and three-month returns aren’t anything special, probably because some type of consolidation would be expected after surges higher, but six months and a year later are quite strong.
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As we’ve been saying this full year, we continue to expect stocks to do well this year and the upward move is firmly in place and studies like this do little to change our opinion.
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2023.06.09 23:31 bigbear0083 Wall Street Week Ahead for the trading week beginning June 12th, 2023
The S&P 500 rose slightly Friday, touching the 4,300 level for the first time since August 2022 as investors looked ahead to upcoming inflation data and the Federal Reserve’s latest policy announcement.
The broad-market index gained 0.11%, closing at 4,298.86. The Nasdaq Composite rose 0.16% to end at 13,259.14. The Dow Jones Industrial Average traded up 43.17 points, or 0.13%, closing at 33,876.78. It was the 30-stock Dow’s fourth consecutive positive day.
For the week, the S&P 500 was up 0.39%. This was the broad-market index’s fourth straight winning week — a feat it last accomplished in August. The Nasdaq was up about 0.14%, posting its seventh straight winning week — its first streak of that length since November 2019. The Dow advanced 0.34%.
Investors were encouraged by signs that a broader swath of stocks, including small-cap equities, was participating in the recent rally. The Russell 2000 was down slightly on the day, but notched a weekly gain of 1.9%.
“It’s the first time in a while where investors seem to be feeling a greater sense of certainty. And we think that’s been a turning point from what had been more of a bearish cautious sentiment,” said Greg Bassuk, CEO at AXS Investments.
“We think that as we walk through these next few weeks, that will be increasingly clear that the economy is more resilient than folks have given it credit for the last six months,” said Scott Ladner, chief investment officer at Horizon Investments. “That will sort of dawn on people that small-caps and cyclicals probably have a reasonable shot to play catch up.”
The market is also looking toward next week’s consumer price index numbers and the Federal Open Market Committee meeting. Markets are currently anticipating a more than 71% probability the central bank will pause on rate hikes at the June meeting, according to the CME FedWatch Tool.
June’s Quad Witching Options Expiration Riddled With Volatility
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The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, S&P 500 has been up 12 of the last 20 years, but down 6 of the last 8.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after June’s Triple-Witching Day is horrendous. This week has experienced DJIA losses in 27 of the last 33 years with an average performance of –0.81%. S&P 500 and NASDAQ have fared better during the week after over the same 33-year span. S&P 500’s averaged –0.46%. NASDAQ has averaged +0.03%. 2022’s sizable gains during the week after improve historical average performance notably.
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A New Bull Market: What’s Driving It?
The S&P 500 finally closed 20% above its October 12th (2022) closing low. This puts the index in “official” bull market territory.
Of course, if you had been reading or listening to Ryan on our Facts vs Feelings podcast, you’d have heard him say that October 12th was the low. He actually wrote a piece titled “Why Stocks Likely Just Bottomed” on October 19th!
The S&P 500 Index fell 25% from its peak on January 3rd, 2022 through October 12th. The subsequent 20% gain still puts it 10% below the prior peak. This does get to “math of volatility”. The index would need to gain 33% from its low to regain that level. This is a reason why it’s always better to lose less, is because you need to gain less to get back to even.
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So, what’s next? The good news is that future returns are strong. In his latest piece, Ryan wrote that out of 13 times when stocks rose 20% off a 52-week low, 10 of those times the lows were not violated. The average return 12 months later was close to 18%. The only time we didn’t see a gain was in the 2001-2002 bear market.
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** Digging into the return drivers**
It’s interesting to look at what’s been driving returns over the past year. This can help us think about what may lie ahead. The question was prompted by our friend, Sam Ro’s latest piece on the bull market breakout. He wrote that earnings haven’t been as bad as expected. More importantly, prospects have actually been improving.
The chart below shows earnings expectations for the S&P 500 over the next 12 months. You can see how it rose in the first half of 2022, before collapsing over the second half of the year. The collapse continued into January of this year. But since then, earnings expectations have steadily risen. In fact, they’ve accelerated higher since mid-April, after the last earnings season started. Currently, they’re higher than where we started the year.
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Backing up a bit: we can break apart the price return of a stock (or index) into two components:
I decomposed annual S&P 500 returns from 2020 – 2023 (through June 8th) into these two components. The chart below shows how these added up to the total return for each year. It also includes:
- Earnings growth
- Valuation multiple growth
- The bear market pullback from January 3rd, 2022, through October 12th, 2022
- And the 20% rally from the low through June 8th, 2023
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You can see how multiple changes have dominated the swing in returns.
The notable exception is 2021, when the S&P 500 return was propelled by earnings growth. In contrast, the 2022 pullback was entirely attributed to multiple contraction. Earnings made a positive contribution in 2022.
Now, multiple contraction is not surprising given the rapid change in rates, as the Federal Reserve (Fed) looked to get on top of inflation. However, they are close to the end of rate hikes, and so that’s no longer a big drag on multiples.
Consequently, multiple growth has pulled the index higher this year. You can see how multiple contraction basically drove the pullback in the Index during the bear market, through the low. But since then, multiples have expanded, pretty much driving the 20% gain.
Here’s a more dynamic picture of the S&P 500’s cumulative price return action from January 3rd, 2022, through June 8th, 2023. The chart also shows the contribution from earnings and multiple growth. As you can see, earnings have been fairly steady, rising 4% over the entire period. However, the swing in multiples is what drove the price return volatility.
Multiples contracted by 14%, and when combined with 4% earnings growth, you experienced the index return of -10%.
What next?
As I pointed out above, the problem for stocks last year was multiple contraction, which was driven by a rapid surge in interest rates.
The good news is that we’re probably close to end of rate hikes. The Fed may go ahead with just one more rate hike (in July), which is not much within the context of the 5%-point increase in rates that they implemented over the past year.
Our view is that rates are likely to remain where they are for a while. But rates are unlikely to rise from 5% to 10%, or even 7%, unless we get another major inflation shock.
This means a major obstacle that hindered stocks last year is dissipating. The removal of this headwind is yet another positive factor for stocks as we look ahead into the second half of the year.
Why Low Volatility Isn’t Bearish
“There is no such thing as average when it comes to the stock market or investing.” -Ryan Detrick
You might have heard by now, but the CBOE Volatility Index (better known as the VIX) made a new 52-week low earlier this week and closed beneath 14 for the first time in more than three years. This has many in the financial media clamoring that ‘the VIX is low and this is bearish’.
They have been telling us (incorrectly) that only five stocks have been going up and this was bearish, that a recession was right around the corner, that the yield curve being inverted was bearish, that M2 money supply YoY tanking was bearish, and now we have the VIX being low is bearish. We’ve disagreed with all of these worries and now we take issue with a low VIX as being bearish.
What exactly is the VIX you ask? I’d suggest reading this summary from Investopedia for a full explanation, but it is simply how much option players are willing to pay up for potential volatility over the coming 30 days. If they sense volatility, they will pay up for insurance. What you might know is that when the VIX is high (say above 30), that means the market tends to be more volatile and likely in a bearish phase. Versus a low VIX (say sub 15) historically has lead to some really nice bull markets and small amounts of volatility.
Back to your regularly scheduled blog now.
The last time the VIX went this long above 14 was for more than five years, ending in August 2012. You know what happened next that time? The S&P 500 added more than 18% the following 12 months. Yes, this is a sample size of one, but I think it shows that a VIX sub 14 by itself isn’t the end of the world.
One of the key concepts around volatility is trends can last for years. What I mean by this is for years the VIX can be high and for years it can be low. Since 1990, the average VIX was 19.7, but it rarely trades around that average. Take another look at the quote I’ve used many times above, as averages aren’t so average. This chart is one I’ve used for years now and I think we could be on the cusp of another low volatility regime. The red areas are times the VIX was consistently above 20, while the yellow were beneath 20. What you also need to know is those red periods usually took place during bear markets and very volatile markets, while the yellow periods were hallmarked by low volatility and higher equity prices. Are we about to enter a new period of lower volatility? No one of course knows, but if this is about to happen (which is my vote), it is another reason to think that higher equity prices (our base case as we remain overweight equities in our Carson House Views) will be coming.
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Lastly, I’ll leave you on this potentially bullish point. We like to use relative ratios to get a feel for how one asset is going versus to another. We always want to be in assets or sectors that are showing relative strength, while avoiding areas that are weak.
Well, stocks just broke out to new highs relative to bonds once again. After a period of consolidation during the bear market last year, now we have stocks firmly in the driver seat relative to bonds. This is another reason we remain overweight stocks currently and continue to expect stocks to do better than bonds going forward.
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Our Leading Economic Index Says the Economy is Not in a Recession
We’ve been writing since the end of last year about how we believe the economy can avoid a recession in 2023, including in our 2023 outlook. This has run contrary to most other economists’ predictions. Interestingly, the tide has been shifting recently, as we’ve gotten a string of relatively stronger economic data. More so after the latest payrolls data, which surprised again.
One challenge with economic data is that we get so many of them, and a lot of times they can send conflicting signals. It can be hard to parse through all of it and come up with an updated view of the economy after every data release.
One approach is to combine these into a single indicator, i.e. a “leading economic index” (LEI). It’s “leading” because the idea is to give you an early warning signal about economic turning points.
Simply put, it tells you what the economy is doing today and what it is likely to do in the near future.
The most popular LEI points to recession
One of the most widely used LEI’s is released by the Conference Board, and it currently points to recession. As you can see in the chart below, the Conference Board’s LEI is highly correlated with GDP growth – the chart shows year-over-year change in both.
You can see how the index started to fall ahead of the 2001 and 2008 recession (shaded areas). The 2020 pandemic recession was an anomaly since it hit so suddenly. In any case, using an LEI means we didn’t have to wait for GDP data (which are released well after a quarter ends) to tell us whether the economy was close to, or in a recession.
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As you probably noticed above, the LEI is down 8% year-over-year, signaling a recession over the next 12 months. It’s been pointing to a recession since last fall, with the index declining for 13 straight months through April.
Quoting the Conference Board:
“The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023.”
Safe to say, we’re close to mid-2023 and there’s no sign of a recession yet.
What’s inside the LEI
The Conference Board’s LEI has 10 components of which,
You can see how these indicators have pulled the index down by 4.4% over the past 6 months, and by -0.6% in April alone.
- 3 are financial market indicators, including the S&P 500, and make up 22% of the index
- 4 measure business and manufacturing activity (44%)
- 1 measures housing activity (3%)
- 2 are related to the consumer, including the labor market (31%)
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Here’s the thing. This popular LEI is premised on the fact that the manufacturing sector, and business activity/sentiment, is a leading indicator of the economy. This worked well in the past but is probably not indicative of what’s happening in the economy right now. For one thing, the manufacturing sector makes up just about 11% of GDP.
Consumption makes up 68% of the economy, and we believe it’s important to capture that.
In fact, consumption was strong in Q1 and even at the start of Q2, thanks to rising real incomes. Housing is also making a turnaround and should no longer be a drag on the economy going forward (as it has been over the past 8 quarters). The Federal Reserve (Fed) is also close to being done with rate hikes. Plus, as my colleague, Ryan Detrick pointed out, the stock market’s turned around and is close to entering a new bull market.
Obviously, there are a lot of data points that we look at and one way we parse through all of it is by constructing our own leading economic index.
An LEI that better reflects the US economy
We believe our proprietary LEI better captures the dynamics of the US economy. It was developed a decade ago and is a key input into our asset allocation decisions.
In contrast to the Conference Board’s measure, it includes 20+ components, including,
Just as an example, the consumer-related data includes unemployment benefit claims, weekly hours worked, and vehicle sales. Housing includes indicators like building permits and new home sales.
- Consumer-related indicators (make up 50% of the index)
- Housing activity (18%)
- Business and manufacturing activity (23%)
- Financial markets (9%)
The chart below shows how our LEI has moved through time – capturing whether the economy is growing below trend, on-trend (a value close to zero), or above trend. Like the Conference Board’s measure, it is able to capture major turning points in the business cycle. It declined ahead of the actual start of the 2011 and 2008 recessions.
As of April, our index is indicating that the economy is growing right along trend.
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Last year, the index signaled that the economy was growing below trend, and that the risk of a recession was high.
Note that it didn’t point to an actual recession. Just that “risk” of one was higher than normal. In fact, our LEI held close to the lows we saw over the last decade, especially in 2011 and 2016 (after which the economy, and even the stock market, recovered).
The following chart captures a close-up view of the last 3 and half years, which includes the Covid pullback and subsequent recovery. The contribution from the 4 major categories is also shown. You can see how the consumer has remained strong over the past year – in fact, consumer indicators have been stronger this year than in late 2022.
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The main risk of a recession last year was due to the Fed raising rates as fast as they did, which adversely impacted housing, financial markets, and business activity.
The good news is that these sectors are improving even as consumer strength continues. The improvement in housing is notable. Additionally, the drag from financial conditions is beginning to ease as we think that the Federal Reserve gets closer to the end of rate hikes, and markets rally.
Putting the Puzzle Together
Another novel part of our approach is that we have an LEI like the one for the US for more than 25 other countries. Each one is custom built to capture the dynamics of those economies. The individual country LEIs are also subsequently rolled up to a global index to give us a picture of the global economy, as shown below.
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I want to emphasize that we do not rely solely on this as the one and only input into our asset allocation, portfolio and risk management decisions. While it is an important component that encapsulates a lot of significant information, it is just one piece of the puzzle. Our process also has other pillars such as policy (both monetary and fiscal), technical factors, and valuations.
We believe it’s important to put all these pieces together, kind of like putting together a puzzle, to understand what’s happening in the economy and markets, and position portfolios accordingly.
Putting together a puzzle is both a mechanistic and artistic process. The mechanistic aspect involves sorting the pieces, finding edges, and matching colors, etc. It requires a logical and methodical approach, and in our process the LEI is key to that.
However, there is an artistic element as well. As we assemble the pieces together, a larger picture gradually emerges. You can make creative decisions about how each piece fits within the overall picture. Within the context of portfolio management, that takes a diverse range of experience. Which is the core strength of our Investment Research Team.
Welcome to the New Bull Market
“If you torture numbers enough, they will tell you anything.” -Yogi Berra, Yankee great and Hall of Fame catcher
Don’t shoot the messenger, but historically, it is widely considered a new bull market once stocks are more than 20% off their bear market lows. This is similar to when stocks are down 20% they are in a bear market. Well, the S&P 500 is less than one percent away from this 20% threshold, so get ready to hear a lot about it when it eventually happens.
I’m not crazy about this concept, as we’ve been in the camp that the bear market ended in October for months now (we started to say it in late October, getting some really odd looks I might add), meaning a new bull market has been here for a while. Take another look at the great Yogi quote above, as someone can get whatever they want probably when talking about bear and bull markets.
None the less, what exactly does a 20% move higher off a bear market low really mean? The good news is future returns are quite strong.
We found 13 times that stocks soared at least 20% off a 52-week low and 10 times the lows were indeed in and not violated. The only times it didn’t work? Twice during the tech bubble implosion and once during the Financial Crisis. In other words, some of the truly worst times to be invested in stocks. But the other 10 times, once there was a 20% gain, the lows were in and in most cases, higher prices were soon coming. This chart does a nice job of showing this concept, with the red dots the times new lows were still yet to come after a 20% bounce.
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Here’s a table with all the breakdowns. A year later stocks were down only once and that was during the 2001/2002 bear market, with the average gain a year after a 20% bounce at a very impressive 17.7%. It is worth noting that the one- and three-month returns aren’t anything special, probably because some type of consolidation would be expected after surges higher, but six months and a year later are quite strong.
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As we’ve been saying this full year, we continue to expect stocks to do well this year and the upward move is firmly in place and studies like this do little to change our opinion.
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2023.06.09 23:30 bigbear0083 Wall Street Week Ahead for the trading week beginning June 12th, 2023
The S&P 500 rose slightly Friday, touching the 4,300 level for the first time since August 2022 as investors looked ahead to upcoming inflation data and the Federal Reserve’s latest policy announcement.
The broad-market index gained 0.11%, closing at 4,298.86. The Nasdaq Composite rose 0.16% to end at 13,259.14. The Dow Jones Industrial Average traded up 43.17 points, or 0.13%, closing at 33,876.78. It was the 30-stock Dow’s fourth consecutive positive day.
For the week, the S&P 500 was up 0.39%. This was the broad-market index’s fourth straight winning week — a feat it last accomplished in August. The Nasdaq was up about 0.14%, posting its seventh straight winning week — its first streak of that length since November 2019. The Dow advanced 0.34%.
Investors were encouraged by signs that a broader swath of stocks, including small-cap equities, was participating in the recent rally. The Russell 2000 was down slightly on the day, but notched a weekly gain of 1.9%.
“It’s the first time in a while where investors seem to be feeling a greater sense of certainty. And we think that’s been a turning point from what had been more of a bearish cautious sentiment,” said Greg Bassuk, CEO at AXS Investments.
“We think that as we walk through these next few weeks, that will be increasingly clear that the economy is more resilient than folks have given it credit for the last six months,” said Scott Ladner, chief investment officer at Horizon Investments. “That will sort of dawn on people that small-caps and cyclicals probably have a reasonable shot to play catch up.”
The market is also looking toward next week’s consumer price index numbers and the Federal Open Market Committee meeting. Markets are currently anticipating a more than 71% probability the central bank will pause on rate hikes at the June meeting, according to the CME FedWatch Tool.
June’s Quad Witching Options Expiration Riddled With Volatility
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The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, S&P 500 has been up 12 of the last 20 years, but down 6 of the last 8.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after June’s Triple-Witching Day is horrendous. This week has experienced DJIA losses in 27 of the last 33 years with an average performance of –0.81%. S&P 500 and NASDAQ have fared better during the week after over the same 33-year span. S&P 500’s averaged –0.46%. NASDAQ has averaged +0.03%. 2022’s sizable gains during the week after improve historical average performance notably.
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A New Bull Market: What’s Driving It?
The S&P 500 finally closed 20% above its October 12th (2022) closing low. This puts the index in “official” bull market territory.
Of course, if you had been reading or listening to Ryan on our Facts vs Feelings podcast, you’d have heard him say that October 12th was the low. He actually wrote a piece titled “Why Stocks Likely Just Bottomed” on October 19th!
The S&P 500 Index fell 25% from its peak on January 3rd, 2022 through October 12th. The subsequent 20% gain still puts it 10% below the prior peak. This does get to “math of volatility”. The index would need to gain 33% from its low to regain that level. This is a reason why it’s always better to lose less, is because you need to gain less to get back to even.
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So, what’s next? The good news is that future returns are strong. In his latest piece, Ryan wrote that out of 13 times when stocks rose 20% off a 52-week low, 10 of those times the lows were not violated. The average return 12 months later was close to 18%. The only time we didn’t see a gain was in the 2001-2002 bear market.
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** Digging into the return drivers**
It’s interesting to look at what’s been driving returns over the past year. This can help us think about what may lie ahead. The question was prompted by our friend, Sam Ro’s latest piece on the bull market breakout. He wrote that earnings haven’t been as bad as expected. More importantly, prospects have actually been improving.
The chart below shows earnings expectations for the S&P 500 over the next 12 months. You can see how it rose in the first half of 2022, before collapsing over the second half of the year. The collapse continued into January of this year. But since then, earnings expectations have steadily risen. In fact, they’ve accelerated higher since mid-April, after the last earnings season started. Currently, they’re higher than where we started the year.
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Backing up a bit: we can break apart the price return of a stock (or index) into two components:
I decomposed annual S&P 500 returns from 2020 – 2023 (through June 8th) into these two components. The chart below shows how these added up to the total return for each year. It also includes:
- Earnings growth
- Valuation multiple growth
- The bear market pullback from January 3rd, 2022, through October 12th, 2022
- And the 20% rally from the low through June 8th, 2023
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You can see how multiple changes have dominated the swing in returns.
The notable exception is 2021, when the S&P 500 return was propelled by earnings growth. In contrast, the 2022 pullback was entirely attributed to multiple contraction. Earnings made a positive contribution in 2022.
Now, multiple contraction is not surprising given the rapid change in rates, as the Federal Reserve (Fed) looked to get on top of inflation. However, they are close to the end of rate hikes, and so that’s no longer a big drag on multiples.
Consequently, multiple growth has pulled the index higher this year. You can see how multiple contraction basically drove the pullback in the Index during the bear market, through the low. But since then, multiples have expanded, pretty much driving the 20% gain.
Here’s a more dynamic picture of the S&P 500’s cumulative price return action from January 3rd, 2022, through June 8th, 2023. The chart also shows the contribution from earnings and multiple growth. As you can see, earnings have been fairly steady, rising 4% over the entire period. However, the swing in multiples is what drove the price return volatility.
Multiples contracted by 14%, and when combined with 4% earnings growth, you experienced the index return of -10%.
What next?
As I pointed out above, the problem for stocks last year was multiple contraction, which was driven by a rapid surge in interest rates.
The good news is that we’re probably close to end of rate hikes. The Fed may go ahead with just one more rate hike (in July), which is not much within the context of the 5%-point increase in rates that they implemented over the past year.
Our view is that rates are likely to remain where they are for a while. But rates are unlikely to rise from 5% to 10%, or even 7%, unless we get another major inflation shock.
This means a major obstacle that hindered stocks last year is dissipating. The removal of this headwind is yet another positive factor for stocks as we look ahead into the second half of the year.
Why Low Volatility Isn’t Bearish
“There is no such thing as average when it comes to the stock market or investing.” -Ryan Detrick
You might have heard by now, but the CBOE Volatility Index (better known as the VIX) made a new 52-week low earlier this week and closed beneath 14 for the first time in more than three years. This has many in the financial media clamoring that ‘the VIX is low and this is bearish’.
They have been telling us (incorrectly) that only five stocks have been going up and this was bearish, that a recession was right around the corner, that the yield curve being inverted was bearish, that M2 money supply YoY tanking was bearish, and now we have the VIX being low is bearish. We’ve disagreed with all of these worries and now we take issue with a low VIX as being bearish.
What exactly is the VIX you ask? I’d suggest reading this summary from Investopedia for a full explanation, but it is simply how much option players are willing to pay up for potential volatility over the coming 30 days. If they sense volatility, they will pay up for insurance. What you might know is that when the VIX is high (say above 30), that means the market tends to be more volatile and likely in a bearish phase. Versus a low VIX (say sub 15) historically has lead to some really nice bull markets and small amounts of volatility.
Back to your regularly scheduled blog now.
The last time the VIX went this long above 14 was for more than five years, ending in August 2012. You know what happened next that time? The S&P 500 added more than 18% the following 12 months. Yes, this is a sample size of one, but I think it shows that a VIX sub 14 by itself isn’t the end of the world.
One of the key concepts around volatility is trends can last for years. What I mean by this is for years the VIX can be high and for years it can be low. Since 1990, the average VIX was 19.7, but it rarely trades around that average. Take another look at the quote I’ve used many times above, as averages aren’t so average. This chart is one I’ve used for years now and I think we could be on the cusp of another low volatility regime. The red areas are times the VIX was consistently above 20, while the yellow were beneath 20. What you also need to know is those red periods usually took place during bear markets and very volatile markets, while the yellow periods were hallmarked by low volatility and higher equity prices. Are we about to enter a new period of lower volatility? No one of course knows, but if this is about to happen (which is my vote), it is another reason to think that higher equity prices (our base case as we remain overweight equities in our Carson House Views) will be coming.
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Lastly, I’ll leave you on this potentially bullish point. We like to use relative ratios to get a feel for how one asset is going versus to another. We always want to be in assets or sectors that are showing relative strength, while avoiding areas that are weak.
Well, stocks just broke out to new highs relative to bonds once again. After a period of consolidation during the bear market last year, now we have stocks firmly in the driver seat relative to bonds. This is another reason we remain overweight stocks currently and continue to expect stocks to do better than bonds going forward.
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Our Leading Economic Index Says the Economy is Not in a Recession
We’ve been writing since the end of last year about how we believe the economy can avoid a recession in 2023, including in our 2023 outlook. This has run contrary to most other economists’ predictions. Interestingly, the tide has been shifting recently, as we’ve gotten a string of relatively stronger economic data. More so after the latest payrolls data, which surprised again.
One challenge with economic data is that we get so many of them, and a lot of times they can send conflicting signals. It can be hard to parse through all of it and come up with an updated view of the economy after every data release.
One approach is to combine these into a single indicator, i.e. a “leading economic index” (LEI). It’s “leading” because the idea is to give you an early warning signal about economic turning points.
Simply put, it tells you what the economy is doing today and what it is likely to do in the near future.
The most popular LEI points to recession
One of the most widely used LEI’s is released by the Conference Board, and it currently points to recession. As you can see in the chart below, the Conference Board’s LEI is highly correlated with GDP growth – the chart shows year-over-year change in both.
You can see how the index started to fall ahead of the 2001 and 2008 recession (shaded areas). The 2020 pandemic recession was an anomaly since it hit so suddenly. In any case, using an LEI means we didn’t have to wait for GDP data (which are released well after a quarter ends) to tell us whether the economy was close to, or in a recession.
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As you probably noticed above, the LEI is down 8% year-over-year, signaling a recession over the next 12 months. It’s been pointing to a recession since last fall, with the index declining for 13 straight months through April.
Quoting the Conference Board:
“The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023.”
Safe to say, we’re close to mid-2023 and there’s no sign of a recession yet.
What’s inside the LEI
The Conference Board’s LEI has 10 components of which,
You can see how these indicators have pulled the index down by 4.4% over the past 6 months, and by -0.6% in April alone.
- 3 are financial market indicators, including the S&P 500, and make up 22% of the index
- 4 measure business and manufacturing activity (44%)
- 1 measures housing activity (3%)
- 2 are related to the consumer, including the labor market (31%)
(CLICK HERE FOR THE CHART!)
Here’s the thing. This popular LEI is premised on the fact that the manufacturing sector, and business activity/sentiment, is a leading indicator of the economy. This worked well in the past but is probably not indicative of what’s happening in the economy right now. For one thing, the manufacturing sector makes up just about 11% of GDP.
Consumption makes up 68% of the economy, and we believe it’s important to capture that.
In fact, consumption was strong in Q1 and even at the start of Q2, thanks to rising real incomes. Housing is also making a turnaround and should no longer be a drag on the economy going forward (as it has been over the past 8 quarters). The Federal Reserve (Fed) is also close to being done with rate hikes. Plus, as my colleague, Ryan Detrick pointed out, the stock market’s turned around and is close to entering a new bull market.
Obviously, there are a lot of data points that we look at and one way we parse through all of it is by constructing our own leading economic index.
An LEI that better reflects the US economy
We believe our proprietary LEI better captures the dynamics of the US economy. It was developed a decade ago and is a key input into our asset allocation decisions.
In contrast to the Conference Board’s measure, it includes 20+ components, including,
Just as an example, the consumer-related data includes unemployment benefit claims, weekly hours worked, and vehicle sales. Housing includes indicators like building permits and new home sales.
- Consumer-related indicators (make up 50% of the index)
- Housing activity (18%)
- Business and manufacturing activity (23%)
- Financial markets (9%)
The chart below shows how our LEI has moved through time – capturing whether the economy is growing below trend, on-trend (a value close to zero), or above trend. Like the Conference Board’s measure, it is able to capture major turning points in the business cycle. It declined ahead of the actual start of the 2011 and 2008 recessions.
As of April, our index is indicating that the economy is growing right along trend.
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Last year, the index signaled that the economy was growing below trend, and that the risk of a recession was high.
Note that it didn’t point to an actual recession. Just that “risk” of one was higher than normal. In fact, our LEI held close to the lows we saw over the last decade, especially in 2011 and 2016 (after which the economy, and even the stock market, recovered).
The following chart captures a close-up view of the last 3 and half years, which includes the Covid pullback and subsequent recovery. The contribution from the 4 major categories is also shown. You can see how the consumer has remained strong over the past year – in fact, consumer indicators have been stronger this year than in late 2022.
(CLICK HERE FOR THE CHART!)
The main risk of a recession last year was due to the Fed raising rates as fast as they did, which adversely impacted housing, financial markets, and business activity.
The good news is that these sectors are improving even as consumer strength continues. The improvement in housing is notable. Additionally, the drag from financial conditions is beginning to ease as we think that the Federal Reserve gets closer to the end of rate hikes, and markets rally.
Putting the Puzzle Together
Another novel part of our approach is that we have an LEI like the one for the US for more than 25 other countries. Each one is custom built to capture the dynamics of those economies. The individual country LEIs are also subsequently rolled up to a global index to give us a picture of the global economy, as shown below.
(CLICK HERE FOR THE CHART!)
I want to emphasize that we do not rely solely on this as the one and only input into our asset allocation, portfolio and risk management decisions. While it is an important component that encapsulates a lot of significant information, it is just one piece of the puzzle. Our process also has other pillars such as policy (both monetary and fiscal), technical factors, and valuations.
We believe it’s important to put all these pieces together, kind of like putting together a puzzle, to understand what’s happening in the economy and markets, and position portfolios accordingly.
Putting together a puzzle is both a mechanistic and artistic process. The mechanistic aspect involves sorting the pieces, finding edges, and matching colors, etc. It requires a logical and methodical approach, and in our process the LEI is key to that.
However, there is an artistic element as well. As we assemble the pieces together, a larger picture gradually emerges. You can make creative decisions about how each piece fits within the overall picture. Within the context of portfolio management, that takes a diverse range of experience. Which is the core strength of our Investment Research Team.
Welcome to the New Bull Market
“If you torture numbers enough, they will tell you anything.” -Yogi Berra, Yankee great and Hall of Fame catcher
Don’t shoot the messenger, but historically, it is widely considered a new bull market once stocks are more than 20% off their bear market lows. This is similar to when stocks are down 20% they are in a bear market. Well, the S&P 500 is less than one percent away from this 20% threshold, so get ready to hear a lot about it when it eventually happens.
I’m not crazy about this concept, as we’ve been in the camp that the bear market ended in October for months now (we started to say it in late October, getting some really odd looks I might add), meaning a new bull market has been here for a while. Take another look at the great Yogi quote above, as someone can get whatever they want probably when talking about bear and bull markets.
None the less, what exactly does a 20% move higher off a bear market low really mean? The good news is future returns are quite strong.
We found 13 times that stocks soared at least 20% off a 52-week low and 10 times the lows were indeed in and not violated. The only times it didn’t work? Twice during the tech bubble implosion and once during the Financial Crisis. In other words, some of the truly worst times to be invested in stocks. But the other 10 times, once there was a 20% gain, the lows were in and in most cases, higher prices were soon coming. This chart does a nice job of showing this concept, with the red dots the times new lows were still yet to come after a 20% bounce.
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Here’s a table with all the breakdowns. A year later stocks were down only once and that was during the 2001/2002 bear market, with the average gain a year after a 20% bounce at a very impressive 17.7%. It is worth noting that the one- and three-month returns aren’t anything special, probably because some type of consolidation would be expected after surges higher, but six months and a year later are quite strong.
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As we’ve been saying this full year, we continue to expect stocks to do well this year and the upward move is firmly in place and studies like this do little to change our opinion.
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(T.B.A. THIS WEEKEND.) (T.B.A. THIS WEEKEND.).
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2023.06.09 23:29 bigbear0083 Wall Street Week Ahead for the trading week beginning June 12th, 2023
The S&P 500 rose slightly Friday, touching the 4,300 level for the first time since August 2022 as investors looked ahead to upcoming inflation data and the Federal Reserve’s latest policy announcement.
The broad-market index gained 0.11%, closing at 4,298.86. The Nasdaq Composite rose 0.16% to end at 13,259.14. The Dow Jones Industrial Average traded up 43.17 points, or 0.13%, closing at 33,876.78. It was the 30-stock Dow’s fourth consecutive positive day.
For the week, the S&P 500 was up 0.39%. This was the broad-market index’s fourth straight winning week — a feat it last accomplished in August. The Nasdaq was up about 0.14%, posting its seventh straight winning week — its first streak of that length since November 2019. The Dow advanced 0.34%.
Investors were encouraged by signs that a broader swath of stocks, including small-cap equities, was participating in the recent rally. The Russell 2000 was down slightly on the day, but notched a weekly gain of 1.9%.
“It’s the first time in a while where investors seem to be feeling a greater sense of certainty. And we think that’s been a turning point from what had been more of a bearish cautious sentiment,” said Greg Bassuk, CEO at AXS Investments.
“We think that as we walk through these next few weeks, that will be increasingly clear that the economy is more resilient than folks have given it credit for the last six months,” said Scott Ladner, chief investment officer at Horizon Investments. “That will sort of dawn on people that small-caps and cyclicals probably have a reasonable shot to play catch up.”
The market is also looking toward next week’s consumer price index numbers and the Federal Open Market Committee meeting. Markets are currently anticipating a more than 71% probability the central bank will pause on rate hikes at the June meeting, according to the CME FedWatch Tool.
June’s Quad Witching Options Expiration Riddled With Volatility
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The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, S&P 500 has been up 12 of the last 20 years, but down 6 of the last 8.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after June’s Triple-Witching Day is horrendous. This week has experienced DJIA losses in 27 of the last 33 years with an average performance of –0.81%. S&P 500 and NASDAQ have fared better during the week after over the same 33-year span. S&P 500’s averaged –0.46%. NASDAQ has averaged +0.03%. 2022’s sizable gains during the week after improve historical average performance notably.
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A New Bull Market: What’s Driving It?
The S&P 500 finally closed 20% above its October 12th (2022) closing low. This puts the index in “official” bull market territory.
Of course, if you had been reading or listening to Ryan on our Facts vs Feelings podcast, you’d have heard him say that October 12th was the low. He actually wrote a piece titled “Why Stocks Likely Just Bottomed” on October 19th!
The S&P 500 Index fell 25% from its peak on January 3rd, 2022 through October 12th. The subsequent 20% gain still puts it 10% below the prior peak. This does get to “math of volatility”. The index would need to gain 33% from its low to regain that level. This is a reason why it’s always better to lose less, is because you need to gain less to get back to even.
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So, what’s next? The good news is that future returns are strong. In his latest piece, Ryan wrote that out of 13 times when stocks rose 20% off a 52-week low, 10 of those times the lows were not violated. The average return 12 months later was close to 18%. The only time we didn’t see a gain was in the 2001-2002 bear market.
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** Digging into the return drivers**
It’s interesting to look at what’s been driving returns over the past year. This can help us think about what may lie ahead. The question was prompted by our friend, Sam Ro’s latest piece on the bull market breakout. He wrote that earnings haven’t been as bad as expected. More importantly, prospects have actually been improving.
The chart below shows earnings expectations for the S&P 500 over the next 12 months. You can see how it rose in the first half of 2022, before collapsing over the second half of the year. The collapse continued into January of this year. But since then, earnings expectations have steadily risen. In fact, they’ve accelerated higher since mid-April, after the last earnings season started. Currently, they’re higher than where we started the year.
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Backing up a bit: we can break apart the price return of a stock (or index) into two components:
I decomposed annual S&P 500 returns from 2020 – 2023 (through June 8th) into these two components. The chart below shows how these added up to the total return for each year. It also includes:
- Earnings growth
- Valuation multiple growth
- The bear market pullback from January 3rd, 2022, through October 12th, 2022
- And the 20% rally from the low through June 8th, 2023
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You can see how multiple changes have dominated the swing in returns.
The notable exception is 2021, when the S&P 500 return was propelled by earnings growth. In contrast, the 2022 pullback was entirely attributed to multiple contraction. Earnings made a positive contribution in 2022.
Now, multiple contraction is not surprising given the rapid change in rates, as the Federal Reserve (Fed) looked to get on top of inflation. However, they are close to the end of rate hikes, and so that’s no longer a big drag on multiples.
Consequently, multiple growth has pulled the index higher this year. You can see how multiple contraction basically drove the pullback in the Index during the bear market, through the low. But since then, multiples have expanded, pretty much driving the 20% gain.
Here’s a more dynamic picture of the S&P 500’s cumulative price return action from January 3rd, 2022, through June 8th, 2023. The chart also shows the contribution from earnings and multiple growth. As you can see, earnings have been fairly steady, rising 4% over the entire period. However, the swing in multiples is what drove the price return volatility.
Multiples contracted by 14%, and when combined with 4% earnings growth, you experienced the index return of -10%.
What next?
As I pointed out above, the problem for stocks last year was multiple contraction, which was driven by a rapid surge in interest rates.
The good news is that we’re probably close to end of rate hikes. The Fed may go ahead with just one more rate hike (in July), which is not much within the context of the 5%-point increase in rates that they implemented over the past year.
Our view is that rates are likely to remain where they are for a while. But rates are unlikely to rise from 5% to 10%, or even 7%, unless we get another major inflation shock.
This means a major obstacle that hindered stocks last year is dissipating. The removal of this headwind is yet another positive factor for stocks as we look ahead into the second half of the year.
Why Low Volatility Isn’t Bearish
“There is no such thing as average when it comes to the stock market or investing.” -Ryan Detrick
You might have heard by now, but the CBOE Volatility Index (better known as the VIX) made a new 52-week low earlier this week and closed beneath 14 for the first time in more than three years. This has many in the financial media clamoring that ‘the VIX is low and this is bearish’.
They have been telling us (incorrectly) that only five stocks have been going up and this was bearish, that a recession was right around the corner, that the yield curve being inverted was bearish, that M2 money supply YoY tanking was bearish, and now we have the VIX being low is bearish. We’ve disagreed with all of these worries and now we take issue with a low VIX as being bearish.
What exactly is the VIX you ask? I’d suggest reading this summary from Investopedia for a full explanation, but it is simply how much option players are willing to pay up for potential volatility over the coming 30 days. If they sense volatility, they will pay up for insurance. What you might know is that when the VIX is high (say above 30), that means the market tends to be more volatile and likely in a bearish phase. Versus a low VIX (say sub 15) historically has lead to some really nice bull markets and small amounts of volatility.
Back to your regularly scheduled blog now.
The last time the VIX went this long above 14 was for more than five years, ending in August 2012. You know what happened next that time? The S&P 500 added more than 18% the following 12 months. Yes, this is a sample size of one, but I think it shows that a VIX sub 14 by itself isn’t the end of the world.
One of the key concepts around volatility is trends can last for years. What I mean by this is for years the VIX can be high and for years it can be low. Since 1990, the average VIX was 19.7, but it rarely trades around that average. Take another look at the quote I’ve used many times above, as averages aren’t so average. This chart is one I’ve used for years now and I think we could be on the cusp of another low volatility regime. The red areas are times the VIX was consistently above 20, while the yellow were beneath 20. What you also need to know is those red periods usually took place during bear markets and very volatile markets, while the yellow periods were hallmarked by low volatility and higher equity prices. Are we about to enter a new period of lower volatility? No one of course knows, but if this is about to happen (which is my vote), it is another reason to think that higher equity prices (our base case as we remain overweight equities in our Carson House Views) will be coming.
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Lastly, I’ll leave you on this potentially bullish point. We like to use relative ratios to get a feel for how one asset is going versus to another. We always want to be in assets or sectors that are showing relative strength, while avoiding areas that are weak.
Well, stocks just broke out to new highs relative to bonds once again. After a period of consolidation during the bear market last year, now we have stocks firmly in the driver seat relative to bonds. This is another reason we remain overweight stocks currently and continue to expect stocks to do better than bonds going forward.
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Our Leading Economic Index Says the Economy is Not in a Recession
We’ve been writing since the end of last year about how we believe the economy can avoid a recession in 2023, including in our 2023 outlook. This has run contrary to most other economists’ predictions. Interestingly, the tide has been shifting recently, as we’ve gotten a string of relatively stronger economic data. More so after the latest payrolls data, which surprised again.
One challenge with economic data is that we get so many of them, and a lot of times they can send conflicting signals. It can be hard to parse through all of it and come up with an updated view of the economy after every data release.
One approach is to combine these into a single indicator, i.e. a “leading economic index” (LEI). It’s “leading” because the idea is to give you an early warning signal about economic turning points.
Simply put, it tells you what the economy is doing today and what it is likely to do in the near future.
The most popular LEI points to recession
One of the most widely used LEI’s is released by the Conference Board, and it currently points to recession. As you can see in the chart below, the Conference Board’s LEI is highly correlated with GDP growth – the chart shows year-over-year change in both.
You can see how the index started to fall ahead of the 2001 and 2008 recession (shaded areas). The 2020 pandemic recession was an anomaly since it hit so suddenly. In any case, using an LEI means we didn’t have to wait for GDP data (which are released well after a quarter ends) to tell us whether the economy was close to, or in a recession.
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As you probably noticed above, the LEI is down 8% year-over-year, signaling a recession over the next 12 months. It’s been pointing to a recession since last fall, with the index declining for 13 straight months through April.
Quoting the Conference Board:
“The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023.”
Safe to say, we’re close to mid-2023 and there’s no sign of a recession yet.
What’s inside the LEI
The Conference Board’s LEI has 10 components of which,
You can see how these indicators have pulled the index down by 4.4% over the past 6 months, and by -0.6% in April alone.
- 3 are financial market indicators, including the S&P 500, and make up 22% of the index
- 4 measure business and manufacturing activity (44%)
- 1 measures housing activity (3%)
- 2 are related to the consumer, including the labor market (31%)
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Here’s the thing. This popular LEI is premised on the fact that the manufacturing sector, and business activity/sentiment, is a leading indicator of the economy. This worked well in the past but is probably not indicative of what’s happening in the economy right now. For one thing, the manufacturing sector makes up just about 11% of GDP.
Consumption makes up 68% of the economy, and we believe it’s important to capture that.
In fact, consumption was strong in Q1 and even at the start of Q2, thanks to rising real incomes. Housing is also making a turnaround and should no longer be a drag on the economy going forward (as it has been over the past 8 quarters). The Federal Reserve (Fed) is also close to being done with rate hikes. Plus, as my colleague, Ryan Detrick pointed out, the stock market’s turned around and is close to entering a new bull market.
Obviously, there are a lot of data points that we look at and one way we parse through all of it is by constructing our own leading economic index.
An LEI that better reflects the US economy
We believe our proprietary LEI better captures the dynamics of the US economy. It was developed a decade ago and is a key input into our asset allocation decisions.
In contrast to the Conference Board’s measure, it includes 20+ components, including,
Just as an example, the consumer-related data includes unemployment benefit claims, weekly hours worked, and vehicle sales. Housing includes indicators like building permits and new home sales.
- Consumer-related indicators (make up 50% of the index)
- Housing activity (18%)
- Business and manufacturing activity (23%)
- Financial markets (9%)
The chart below shows how our LEI has moved through time – capturing whether the economy is growing below trend, on-trend (a value close to zero), or above trend. Like the Conference Board’s measure, it is able to capture major turning points in the business cycle. It declined ahead of the actual start of the 2011 and 2008 recessions.
As of April, our index is indicating that the economy is growing right along trend.
(CLICK HERE FOR THE CHART!)
Last year, the index signaled that the economy was growing below trend, and that the risk of a recession was high.
Note that it didn’t point to an actual recession. Just that “risk” of one was higher than normal. In fact, our LEI held close to the lows we saw over the last decade, especially in 2011 and 2016 (after which the economy, and even the stock market, recovered).
The following chart captures a close-up view of the last 3 and half years, which includes the Covid pullback and subsequent recovery. The contribution from the 4 major categories is also shown. You can see how the consumer has remained strong over the past year – in fact, consumer indicators have been stronger this year than in late 2022.
(CLICK HERE FOR THE CHART!)
The main risk of a recession last year was due to the Fed raising rates as fast as they did, which adversely impacted housing, financial markets, and business activity.
The good news is that these sectors are improving even as consumer strength continues. The improvement in housing is notable. Additionally, the drag from financial conditions is beginning to ease as we think that the Federal Reserve gets closer to the end of rate hikes, and markets rally.
Putting the Puzzle Together
Another novel part of our approach is that we have an LEI like the one for the US for more than 25 other countries. Each one is custom built to capture the dynamics of those economies. The individual country LEIs are also subsequently rolled up to a global index to give us a picture of the global economy, as shown below.
(CLICK HERE FOR THE CHART!)
I want to emphasize that we do not rely solely on this as the one and only input into our asset allocation, portfolio and risk management decisions. While it is an important component that encapsulates a lot of significant information, it is just one piece of the puzzle. Our process also has other pillars such as policy (both monetary and fiscal), technical factors, and valuations.
We believe it’s important to put all these pieces together, kind of like putting together a puzzle, to understand what’s happening in the economy and markets, and position portfolios accordingly.
Putting together a puzzle is both a mechanistic and artistic process. The mechanistic aspect involves sorting the pieces, finding edges, and matching colors, etc. It requires a logical and methodical approach, and in our process the LEI is key to that.
However, there is an artistic element as well. As we assemble the pieces together, a larger picture gradually emerges. You can make creative decisions about how each piece fits within the overall picture. Within the context of portfolio management, that takes a diverse range of experience. Which is the core strength of our Investment Research Team.
Welcome to the New Bull Market
“If you torture numbers enough, they will tell you anything.” -Yogi Berra, Yankee great and Hall of Fame catcher
Don’t shoot the messenger, but historically, it is widely considered a new bull market once stocks are more than 20% off their bear market lows. This is similar to when stocks are down 20% they are in a bear market. Well, the S&P 500 is less than one percent away from this 20% threshold, so get ready to hear a lot about it when it eventually happens.
I’m not crazy about this concept, as we’ve been in the camp that the bear market ended in October for months now (we started to say it in late October, getting some really odd looks I might add), meaning a new bull market has been here for a while. Take another look at the great Yogi quote above, as someone can get whatever they want probably when talking about bear and bull markets.
None the less, what exactly does a 20% move higher off a bear market low really mean? The good news is future returns are quite strong.
We found 13 times that stocks soared at least 20% off a 52-week low and 10 times the lows were indeed in and not violated. The only times it didn’t work? Twice during the tech bubble implosion and once during the Financial Crisis. In other words, some of the truly worst times to be invested in stocks. But the other 10 times, once there was a 20% gain, the lows were in and in most cases, higher prices were soon coming. This chart does a nice job of showing this concept, with the red dots the times new lows were still yet to come after a 20% bounce.
(CLICK HERE FOR THE CHART!)
Here’s a table with all the breakdowns. A year later stocks were down only once and that was during the 2001/2002 bear market, with the average gain a year after a 20% bounce at a very impressive 17.7%. It is worth noting that the one- and three-month returns aren’t anything special, probably because some type of consolidation would be expected after surges higher, but six months and a year later are quite strong.
(CLICK HERE FOR THE CHART!)
As we’ve been saying this full year, we continue to expect stocks to do well this year and the upward move is firmly in place and studies like this do little to change our opinion.
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2023.06.09 23:29 bigbear0083 Wall Street Week Ahead for the trading week beginning June 12th, 2023
The S&P 500 rose slightly Friday, touching the 4,300 level for the first time since August 2022 as investors looked ahead to upcoming inflation data and the Federal Reserve’s latest policy announcement.
The broad-market index gained 0.11%, closing at 4,298.86. The Nasdaq Composite rose 0.16% to end at 13,259.14. The Dow Jones Industrial Average traded up 43.17 points, or 0.13%, closing at 33,876.78. It was the 30-stock Dow’s fourth consecutive positive day.
For the week, the S&P 500 was up 0.39%. This was the broad-market index’s fourth straight winning week — a feat it last accomplished in August. The Nasdaq was up about 0.14%, posting its seventh straight winning week — its first streak of that length since November 2019. The Dow advanced 0.34%.
Investors were encouraged by signs that a broader swath of stocks, including small-cap equities, was participating in the recent rally. The Russell 2000 was down slightly on the day, but notched a weekly gain of 1.9%.
“It’s the first time in a while where investors seem to be feeling a greater sense of certainty. And we think that’s been a turning point from what had been more of a bearish cautious sentiment,” said Greg Bassuk, CEO at AXS Investments.
“We think that as we walk through these next few weeks, that will be increasingly clear that the economy is more resilient than folks have given it credit for the last six months,” said Scott Ladner, chief investment officer at Horizon Investments. “That will sort of dawn on people that small-caps and cyclicals probably have a reasonable shot to play catch up.”
The market is also looking toward next week’s consumer price index numbers and the Federal Open Market Committee meeting. Markets are currently anticipating a more than 71% probability the central bank will pause on rate hikes at the June meeting, according to the CME FedWatch Tool.
June’s Quad Witching Options Expiration Riddled With Volatility
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The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, S&P 500 has been up 12 of the last 20 years, but down 6 of the last 8.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after June’s Triple-Witching Day is horrendous. This week has experienced DJIA losses in 27 of the last 33 years with an average performance of –0.81%. S&P 500 and NASDAQ have fared better during the week after over the same 33-year span. S&P 500’s averaged –0.46%. NASDAQ has averaged +0.03%. 2022’s sizable gains during the week after improve historical average performance notably.
(CLICK HERE FOR THE CHART!)
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A New Bull Market: What’s Driving It?
The S&P 500 finally closed 20% above its October 12th (2022) closing low. This puts the index in “official” bull market territory.
Of course, if you had been reading or listening to Ryan on our Facts vs Feelings podcast, you’d have heard him say that October 12th was the low. He actually wrote a piece titled “Why Stocks Likely Just Bottomed” on October 19th!
The S&P 500 Index fell 25% from its peak on January 3rd, 2022 through October 12th. The subsequent 20% gain still puts it 10% below the prior peak. This does get to “math of volatility”. The index would need to gain 33% from its low to regain that level. This is a reason why it’s always better to lose less, is because you need to gain less to get back to even.
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So, what’s next? The good news is that future returns are strong. In his latest piece, Ryan wrote that out of 13 times when stocks rose 20% off a 52-week low, 10 of those times the lows were not violated. The average return 12 months later was close to 18%. The only time we didn’t see a gain was in the 2001-2002 bear market.
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** Digging into the return drivers**
It’s interesting to look at what’s been driving returns over the past year. This can help us think about what may lie ahead. The question was prompted by our friend, Sam Ro’s latest piece on the bull market breakout. He wrote that earnings haven’t been as bad as expected. More importantly, prospects have actually been improving.
The chart below shows earnings expectations for the S&P 500 over the next 12 months. You can see how it rose in the first half of 2022, before collapsing over the second half of the year. The collapse continued into January of this year. But since then, earnings expectations have steadily risen. In fact, they’ve accelerated higher since mid-April, after the last earnings season started. Currently, they’re higher than where we started the year.
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Backing up a bit: we can break apart the price return of a stock (or index) into two components:
I decomposed annual S&P 500 returns from 2020 – 2023 (through June 8th) into these two components. The chart below shows how these added up to the total return for each year. It also includes:
- Earnings growth
- Valuation multiple growth
- The bear market pullback from January 3rd, 2022, through October 12th, 2022
- And the 20% rally from the low through June 8th, 2023
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You can see how multiple changes have dominated the swing in returns.
The notable exception is 2021, when the S&P 500 return was propelled by earnings growth. In contrast, the 2022 pullback was entirely attributed to multiple contraction. Earnings made a positive contribution in 2022.
Now, multiple contraction is not surprising given the rapid change in rates, as the Federal Reserve (Fed) looked to get on top of inflation. However, they are close to the end of rate hikes, and so that’s no longer a big drag on multiples.
Consequently, multiple growth has pulled the index higher this year. You can see how multiple contraction basically drove the pullback in the Index during the bear market, through the low. But since then, multiples have expanded, pretty much driving the 20% gain.
Here’s a more dynamic picture of the S&P 500’s cumulative price return action from January 3rd, 2022, through June 8th, 2023. The chart also shows the contribution from earnings and multiple growth. As you can see, earnings have been fairly steady, rising 4% over the entire period. However, the swing in multiples is what drove the price return volatility.
Multiples contracted by 14%, and when combined with 4% earnings growth, you experienced the index return of -10%.
What next?
As I pointed out above, the problem for stocks last year was multiple contraction, which was driven by a rapid surge in interest rates.
The good news is that we’re probably close to end of rate hikes. The Fed may go ahead with just one more rate hike (in July), which is not much within the context of the 5%-point increase in rates that they implemented over the past year.
Our view is that rates are likely to remain where they are for a while. But rates are unlikely to rise from 5% to 10%, or even 7%, unless we get another major inflation shock.
This means a major obstacle that hindered stocks last year is dissipating. The removal of this headwind is yet another positive factor for stocks as we look ahead into the second half of the year.
Why Low Volatility Isn’t Bearish
“There is no such thing as average when it comes to the stock market or investing.” -Ryan Detrick
You might have heard by now, but the CBOE Volatility Index (better known as the VIX) made a new 52-week low earlier this week and closed beneath 14 for the first time in more than three years. This has many in the financial media clamoring that ‘the VIX is low and this is bearish’.
They have been telling us (incorrectly) that only five stocks have been going up and this was bearish, that a recession was right around the corner, that the yield curve being inverted was bearish, that M2 money supply YoY tanking was bearish, and now we have the VIX being low is bearish. We’ve disagreed with all of these worries and now we take issue with a low VIX as being bearish.
What exactly is the VIX you ask? I’d suggest reading this summary from Investopedia for a full explanation, but it is simply how much option players are willing to pay up for potential volatility over the coming 30 days. If they sense volatility, they will pay up for insurance. What you might know is that when the VIX is high (say above 30), that means the market tends to be more volatile and likely in a bearish phase. Versus a low VIX (say sub 15) historically has lead to some really nice bull markets and small amounts of volatility.
Back to your regularly scheduled blog now.
The last time the VIX went this long above 14 was for more than five years, ending in August 2012. You know what happened next that time? The S&P 500 added more than 18% the following 12 months. Yes, this is a sample size of one, but I think it shows that a VIX sub 14 by itself isn’t the end of the world.
One of the key concepts around volatility is trends can last for years. What I mean by this is for years the VIX can be high and for years it can be low. Since 1990, the average VIX was 19.7, but it rarely trades around that average. Take another look at the quote I’ve used many times above, as averages aren’t so average. This chart is one I’ve used for years now and I think we could be on the cusp of another low volatility regime. The red areas are times the VIX was consistently above 20, while the yellow were beneath 20. What you also need to know is those red periods usually took place during bear markets and very volatile markets, while the yellow periods were hallmarked by low volatility and higher equity prices. Are we about to enter a new period of lower volatility? No one of course knows, but if this is about to happen (which is my vote), it is another reason to think that higher equity prices (our base case as we remain overweight equities in our Carson House Views) will be coming.
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Lastly, I’ll leave you on this potentially bullish point. We like to use relative ratios to get a feel for how one asset is going versus to another. We always want to be in assets or sectors that are showing relative strength, while avoiding areas that are weak.
Well, stocks just broke out to new highs relative to bonds once again. After a period of consolidation during the bear market last year, now we have stocks firmly in the driver seat relative to bonds. This is another reason we remain overweight stocks currently and continue to expect stocks to do better than bonds going forward.
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Our Leading Economic Index Says the Economy is Not in a Recession
We’ve been writing since the end of last year about how we believe the economy can avoid a recession in 2023, including in our 2023 outlook. This has run contrary to most other economists’ predictions. Interestingly, the tide has been shifting recently, as we’ve gotten a string of relatively stronger economic data. More so after the latest payrolls data, which surprised again.
One challenge with economic data is that we get so many of them, and a lot of times they can send conflicting signals. It can be hard to parse through all of it and come up with an updated view of the economy after every data release.
One approach is to combine these into a single indicator, i.e. a “leading economic index” (LEI). It’s “leading” because the idea is to give you an early warning signal about economic turning points.
Simply put, it tells you what the economy is doing today and what it is likely to do in the near future.
The most popular LEI points to recession
One of the most widely used LEI’s is released by the Conference Board, and it currently points to recession. As you can see in the chart below, the Conference Board’s LEI is highly correlated with GDP growth – the chart shows year-over-year change in both.
You can see how the index started to fall ahead of the 2001 and 2008 recession (shaded areas). The 2020 pandemic recession was an anomaly since it hit so suddenly. In any case, using an LEI means we didn’t have to wait for GDP data (which are released well after a quarter ends) to tell us whether the economy was close to, or in a recession.
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As you probably noticed above, the LEI is down 8% year-over-year, signaling a recession over the next 12 months. It’s been pointing to a recession since last fall, with the index declining for 13 straight months through April.
Quoting the Conference Board:
“The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023.”
Safe to say, we’re close to mid-2023 and there’s no sign of a recession yet.
What’s inside the LEI
The Conference Board’s LEI has 10 components of which,
You can see how these indicators have pulled the index down by 4.4% over the past 6 months, and by -0.6% in April alone.
- 3 are financial market indicators, including the S&P 500, and make up 22% of the index
- 4 measure business and manufacturing activity (44%)
- 1 measures housing activity (3%)
- 2 are related to the consumer, including the labor market (31%)
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Here’s the thing. This popular LEI is premised on the fact that the manufacturing sector, and business activity/sentiment, is a leading indicator of the economy. This worked well in the past but is probably not indicative of what’s happening in the economy right now. For one thing, the manufacturing sector makes up just about 11% of GDP.
Consumption makes up 68% of the economy, and we believe it’s important to capture that.
In fact, consumption was strong in Q1 and even at the start of Q2, thanks to rising real incomes. Housing is also making a turnaround and should no longer be a drag on the economy going forward (as it has been over the past 8 quarters). The Federal Reserve (Fed) is also close to being done with rate hikes. Plus, as my colleague, Ryan Detrick pointed out, the stock market’s turned around and is close to entering a new bull market.
Obviously, there are a lot of data points that we look at and one way we parse through all of it is by constructing our own leading economic index.
An LEI that better reflects the US economy
We believe our proprietary LEI better captures the dynamics of the US economy. It was developed a decade ago and is a key input into our asset allocation decisions.
In contrast to the Conference Board’s measure, it includes 20+ components, including,
Just as an example, the consumer-related data includes unemployment benefit claims, weekly hours worked, and vehicle sales. Housing includes indicators like building permits and new home sales.
- Consumer-related indicators (make up 50% of the index)
- Housing activity (18%)
- Business and manufacturing activity (23%)
- Financial markets (9%)
The chart below shows how our LEI has moved through time – capturing whether the economy is growing below trend, on-trend (a value close to zero), or above trend. Like the Conference Board’s measure, it is able to capture major turning points in the business cycle. It declined ahead of the actual start of the 2011 and 2008 recessions.
As of April, our index is indicating that the economy is growing right along trend.
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Last year, the index signaled that the economy was growing below trend, and that the risk of a recession was high.
Note that it didn’t point to an actual recession. Just that “risk” of one was higher than normal. In fact, our LEI held close to the lows we saw over the last decade, especially in 2011 and 2016 (after which the economy, and even the stock market, recovered).
The following chart captures a close-up view of the last 3 and half years, which includes the Covid pullback and subsequent recovery. The contribution from the 4 major categories is also shown. You can see how the consumer has remained strong over the past year – in fact, consumer indicators have been stronger this year than in late 2022.
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The main risk of a recession last year was due to the Fed raising rates as fast as they did, which adversely impacted housing, financial markets, and business activity.
The good news is that these sectors are improving even as consumer strength continues. The improvement in housing is notable. Additionally, the drag from financial conditions is beginning to ease as we think that the Federal Reserve gets closer to the end of rate hikes, and markets rally.
Putting the Puzzle Together
Another novel part of our approach is that we have an LEI like the one for the US for more than 25 other countries. Each one is custom built to capture the dynamics of those economies. The individual country LEIs are also subsequently rolled up to a global index to give us a picture of the global economy, as shown below.
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I want to emphasize that we do not rely solely on this as the one and only input into our asset allocation, portfolio and risk management decisions. While it is an important component that encapsulates a lot of significant information, it is just one piece of the puzzle. Our process also has other pillars such as policy (both monetary and fiscal), technical factors, and valuations.
We believe it’s important to put all these pieces together, kind of like putting together a puzzle, to understand what’s happening in the economy and markets, and position portfolios accordingly.
Putting together a puzzle is both a mechanistic and artistic process. The mechanistic aspect involves sorting the pieces, finding edges, and matching colors, etc. It requires a logical and methodical approach, and in our process the LEI is key to that.
However, there is an artistic element as well. As we assemble the pieces together, a larger picture gradually emerges. You can make creative decisions about how each piece fits within the overall picture. Within the context of portfolio management, that takes a diverse range of experience. Which is the core strength of our Investment Research Team.
Welcome to the New Bull Market
“If you torture numbers enough, they will tell you anything.” -Yogi Berra, Yankee great and Hall of Fame catcher
Don’t shoot the messenger, but historically, it is widely considered a new bull market once stocks are more than 20% off their bear market lows. This is similar to when stocks are down 20% they are in a bear market. Well, the S&P 500 is less than one percent away from this 20% threshold, so get ready to hear a lot about it when it eventually happens.
I’m not crazy about this concept, as we’ve been in the camp that the bear market ended in October for months now (we started to say it in late October, getting some really odd looks I might add), meaning a new bull market has been here for a while. Take another look at the great Yogi quote above, as someone can get whatever they want probably when talking about bear and bull markets.
None the less, what exactly does a 20% move higher off a bear market low really mean? The good news is future returns are quite strong.
We found 13 times that stocks soared at least 20% off a 52-week low and 10 times the lows were indeed in and not violated. The only times it didn’t work? Twice during the tech bubble implosion and once during the Financial Crisis. In other words, some of the truly worst times to be invested in stocks. But the other 10 times, once there was a 20% gain, the lows were in and in most cases, higher prices were soon coming. This chart does a nice job of showing this concept, with the red dots the times new lows were still yet to come after a 20% bounce.
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Here’s a table with all the breakdowns. A year later stocks were down only once and that was during the 2001/2002 bear market, with the average gain a year after a 20% bounce at a very impressive 17.7%. It is worth noting that the one- and three-month returns aren’t anything special, probably because some type of consolidation would be expected after surges higher, but six months and a year later are quite strong.
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As we’ve been saying this full year, we continue to expect stocks to do well this year and the upward move is firmly in place and studies like this do little to change our opinion.
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2023.06.09 23:28 bigbear0083 Wall Street Week Ahead for the trading week beginning June 12th, 2023
The S&P 500 rose slightly Friday, touching the 4,300 level for the first time since August 2022 as investors looked ahead to upcoming inflation data and the Federal Reserve’s latest policy announcement.
The broad-market index gained 0.11%, closing at 4,298.86. The Nasdaq Composite rose 0.16% to end at 13,259.14. The Dow Jones Industrial Average traded up 43.17 points, or 0.13%, closing at 33,876.78. It was the 30-stock Dow’s fourth consecutive positive day.
For the week, the S&P 500 was up 0.39%. This was the broad-market index’s fourth straight winning week — a feat it last accomplished in August. The Nasdaq was up about 0.14%, posting its seventh straight winning week — its first streak of that length since November 2019. The Dow advanced 0.34%.
Investors were encouraged by signs that a broader swath of stocks, including small-cap equities, was participating in the recent rally. The Russell 2000 was down slightly on the day, but notched a weekly gain of 1.9%.
“It’s the first time in a while where investors seem to be feeling a greater sense of certainty. And we think that’s been a turning point from what had been more of a bearish cautious sentiment,” said Greg Bassuk, CEO at AXS Investments.
“We think that as we walk through these next few weeks, that will be increasingly clear that the economy is more resilient than folks have given it credit for the last six months,” said Scott Ladner, chief investment officer at Horizon Investments. “That will sort of dawn on people that small-caps and cyclicals probably have a reasonable shot to play catch up.”
The market is also looking toward next week’s consumer price index numbers and the Federal Open Market Committee meeting. Markets are currently anticipating a more than 71% probability the central bank will pause on rate hikes at the June meeting, according to the CME FedWatch Tool.
June’s Quad Witching Options Expiration Riddled With Volatility
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The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, S&P 500 has been up 12 of the last 20 years, but down 6 of the last 8.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after June’s Triple-Witching Day is horrendous. This week has experienced DJIA losses in 27 of the last 33 years with an average performance of –0.81%. S&P 500 and NASDAQ have fared better during the week after over the same 33-year span. S&P 500’s averaged –0.46%. NASDAQ has averaged +0.03%. 2022’s sizable gains during the week after improve historical average performance notably.
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A New Bull Market: What’s Driving It?
The S&P 500 finally closed 20% above its October 12th (2022) closing low. This puts the index in “official” bull market territory.
Of course, if you had been reading or listening to Ryan on our Facts vs Feelings podcast, you’d have heard him say that October 12th was the low. He actually wrote a piece titled “Why Stocks Likely Just Bottomed” on October 19th!
The S&P 500 Index fell 25% from its peak on January 3rd, 2022 through October 12th. The subsequent 20% gain still puts it 10% below the prior peak. This does get to “math of volatility”. The index would need to gain 33% from its low to regain that level. This is a reason why it’s always better to lose less, is because you need to gain less to get back to even.
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So, what’s next? The good news is that future returns are strong. In his latest piece, Ryan wrote that out of 13 times when stocks rose 20% off a 52-week low, 10 of those times the lows were not violated. The average return 12 months later was close to 18%. The only time we didn’t see a gain was in the 2001-2002 bear market.
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** Digging into the return drivers**
It’s interesting to look at what’s been driving returns over the past year. This can help us think about what may lie ahead. The question was prompted by our friend, Sam Ro’s latest piece on the bull market breakout. He wrote that earnings haven’t been as bad as expected. More importantly, prospects have actually been improving.
The chart below shows earnings expectations for the S&P 500 over the next 12 months. You can see how it rose in the first half of 2022, before collapsing over the second half of the year. The collapse continued into January of this year. But since then, earnings expectations have steadily risen. In fact, they’ve accelerated higher since mid-April, after the last earnings season started. Currently, they’re higher than where we started the year.
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Backing up a bit: we can break apart the price return of a stock (or index) into two components:
I decomposed annual S&P 500 returns from 2020 – 2023 (through June 8th) into these two components. The chart below shows how these added up to the total return for each year. It also includes:
- Earnings growth
- Valuation multiple growth
- The bear market pullback from January 3rd, 2022, through October 12th, 2022
- And the 20% rally from the low through June 8th, 2023
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You can see how multiple changes have dominated the swing in returns.
The notable exception is 2021, when the S&P 500 return was propelled by earnings growth. In contrast, the 2022 pullback was entirely attributed to multiple contraction. Earnings made a positive contribution in 2022.
Now, multiple contraction is not surprising given the rapid change in rates, as the Federal Reserve (Fed) looked to get on top of inflation. However, they are close to the end of rate hikes, and so that’s no longer a big drag on multiples.
Consequently, multiple growth has pulled the index higher this year. You can see how multiple contraction basically drove the pullback in the Index during the bear market, through the low. But since then, multiples have expanded, pretty much driving the 20% gain.
Here’s a more dynamic picture of the S&P 500’s cumulative price return action from January 3rd, 2022, through June 8th, 2023. The chart also shows the contribution from earnings and multiple growth. As you can see, earnings have been fairly steady, rising 4% over the entire period. However, the swing in multiples is what drove the price return volatility.
Multiples contracted by 14%, and when combined with 4% earnings growth, you experienced the index return of -10%.
What next?
As I pointed out above, the problem for stocks last year was multiple contraction, which was driven by a rapid surge in interest rates.
The good news is that we’re probably close to end of rate hikes. The Fed may go ahead with just one more rate hike (in July), which is not much within the context of the 5%-point increase in rates that they implemented over the past year.
Our view is that rates are likely to remain where they are for a while. But rates are unlikely to rise from 5% to 10%, or even 7%, unless we get another major inflation shock.
This means a major obstacle that hindered stocks last year is dissipating. The removal of this headwind is yet another positive factor for stocks as we look ahead into the second half of the year.
Why Low Volatility Isn’t Bearish
“There is no such thing as average when it comes to the stock market or investing.” -Ryan Detrick
You might have heard by now, but the CBOE Volatility Index (better known as the VIX) made a new 52-week low earlier this week and closed beneath 14 for the first time in more than three years. This has many in the financial media clamoring that ‘the VIX is low and this is bearish’.
They have been telling us (incorrectly) that only five stocks have been going up and this was bearish, that a recession was right around the corner, that the yield curve being inverted was bearish, that M2 money supply YoY tanking was bearish, and now we have the VIX being low is bearish. We’ve disagreed with all of these worries and now we take issue with a low VIX as being bearish.
What exactly is the VIX you ask? I’d suggest reading this summary from Investopedia for a full explanation, but it is simply how much option players are willing to pay up for potential volatility over the coming 30 days. If they sense volatility, they will pay up for insurance. What you might know is that when the VIX is high (say above 30), that means the market tends to be more volatile and likely in a bearish phase. Versus a low VIX (say sub 15) historically has lead to some really nice bull markets and small amounts of volatility.
Back to your regularly scheduled blog now.
The last time the VIX went this long above 14 was for more than five years, ending in August 2012. You know what happened next that time? The S&P 500 added more than 18% the following 12 months. Yes, this is a sample size of one, but I think it shows that a VIX sub 14 by itself isn’t the end of the world.
One of the key concepts around volatility is trends can last for years. What I mean by this is for years the VIX can be high and for years it can be low. Since 1990, the average VIX was 19.7, but it rarely trades around that average. Take another look at the quote I’ve used many times above, as averages aren’t so average. This chart is one I’ve used for years now and I think we could be on the cusp of another low volatility regime. The red areas are times the VIX was consistently above 20, while the yellow were beneath 20. What you also need to know is those red periods usually took place during bear markets and very volatile markets, while the yellow periods were hallmarked by low volatility and higher equity prices. Are we about to enter a new period of lower volatility? No one of course knows, but if this is about to happen (which is my vote), it is another reason to think that higher equity prices (our base case as we remain overweight equities in our Carson House Views) will be coming.
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Lastly, I’ll leave you on this potentially bullish point. We like to use relative ratios to get a feel for how one asset is going versus to another. We always want to be in assets or sectors that are showing relative strength, while avoiding areas that are weak.
Well, stocks just broke out to new highs relative to bonds once again. After a period of consolidation during the bear market last year, now we have stocks firmly in the driver seat relative to bonds. This is another reason we remain overweight stocks currently and continue to expect stocks to do better than bonds going forward.
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Our Leading Economic Index Says the Economy is Not in a Recession
We’ve been writing since the end of last year about how we believe the economy can avoid a recession in 2023, including in our 2023 outlook. This has run contrary to most other economists’ predictions. Interestingly, the tide has been shifting recently, as we’ve gotten a string of relatively stronger economic data. More so after the latest payrolls data, which surprised again.
One challenge with economic data is that we get so many of them, and a lot of times they can send conflicting signals. It can be hard to parse through all of it and come up with an updated view of the economy after every data release.
One approach is to combine these into a single indicator, i.e. a “leading economic index” (LEI). It’s “leading” because the idea is to give you an early warning signal about economic turning points.
Simply put, it tells you what the economy is doing today and what it is likely to do in the near future.
The most popular LEI points to recession
One of the most widely used LEI’s is released by the Conference Board, and it currently points to recession. As you can see in the chart below, the Conference Board’s LEI is highly correlated with GDP growth – the chart shows year-over-year change in both.
You can see how the index started to fall ahead of the 2001 and 2008 recession (shaded areas). The 2020 pandemic recession was an anomaly since it hit so suddenly. In any case, using an LEI means we didn’t have to wait for GDP data (which are released well after a quarter ends) to tell us whether the economy was close to, or in a recession.
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As you probably noticed above, the LEI is down 8% year-over-year, signaling a recession over the next 12 months. It’s been pointing to a recession since last fall, with the index declining for 13 straight months through April.
Quoting the Conference Board:
“The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023.”
Safe to say, we’re close to mid-2023 and there’s no sign of a recession yet.
What’s inside the LEI
The Conference Board’s LEI has 10 components of which,
You can see how these indicators have pulled the index down by 4.4% over the past 6 months, and by -0.6% in April alone.
- 3 are financial market indicators, including the S&P 500, and make up 22% of the index
- 4 measure business and manufacturing activity (44%)
- 1 measures housing activity (3%)
- 2 are related to the consumer, including the labor market (31%)
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Here’s the thing. This popular LEI is premised on the fact that the manufacturing sector, and business activity/sentiment, is a leading indicator of the economy. This worked well in the past but is probably not indicative of what’s happening in the economy right now. For one thing, the manufacturing sector makes up just about 11% of GDP.
Consumption makes up 68% of the economy, and we believe it’s important to capture that.
In fact, consumption was strong in Q1 and even at the start of Q2, thanks to rising real incomes. Housing is also making a turnaround and should no longer be a drag on the economy going forward (as it has been over the past 8 quarters). The Federal Reserve (Fed) is also close to being done with rate hikes. Plus, as my colleague, Ryan Detrick pointed out, the stock market’s turned around and is close to entering a new bull market.
Obviously, there are a lot of data points that we look at and one way we parse through all of it is by constructing our own leading economic index.
An LEI that better reflects the US economy
We believe our proprietary LEI better captures the dynamics of the US economy. It was developed a decade ago and is a key input into our asset allocation decisions.
In contrast to the Conference Board’s measure, it includes 20+ components, including,
Just as an example, the consumer-related data includes unemployment benefit claims, weekly hours worked, and vehicle sales. Housing includes indicators like building permits and new home sales.
- Consumer-related indicators (make up 50% of the index)
- Housing activity (18%)
- Business and manufacturing activity (23%)
- Financial markets (9%)
The chart below shows how our LEI has moved through time – capturing whether the economy is growing below trend, on-trend (a value close to zero), or above trend. Like the Conference Board’s measure, it is able to capture major turning points in the business cycle. It declined ahead of the actual start of the 2011 and 2008 recessions.
As of April, our index is indicating that the economy is growing right along trend.
(CLICK HERE FOR THE CHART!)
Last year, the index signaled that the economy was growing below trend, and that the risk of a recession was high.
Note that it didn’t point to an actual recession. Just that “risk” of one was higher than normal. In fact, our LEI held close to the lows we saw over the last decade, especially in 2011 and 2016 (after which the economy, and even the stock market, recovered).
The following chart captures a close-up view of the last 3 and half years, which includes the Covid pullback and subsequent recovery. The contribution from the 4 major categories is also shown. You can see how the consumer has remained strong over the past year – in fact, consumer indicators have been stronger this year than in late 2022.
(CLICK HERE FOR THE CHART!)
The main risk of a recession last year was due to the Fed raising rates as fast as they did, which adversely impacted housing, financial markets, and business activity.
The good news is that these sectors are improving even as consumer strength continues. The improvement in housing is notable. Additionally, the drag from financial conditions is beginning to ease as we think that the Federal Reserve gets closer to the end of rate hikes, and markets rally.
Putting the Puzzle Together
Another novel part of our approach is that we have an LEI like the one for the US for more than 25 other countries. Each one is custom built to capture the dynamics of those economies. The individual country LEIs are also subsequently rolled up to a global index to give us a picture of the global economy, as shown below.
(CLICK HERE FOR THE CHART!)
I want to emphasize that we do not rely solely on this as the one and only input into our asset allocation, portfolio and risk management decisions. While it is an important component that encapsulates a lot of significant information, it is just one piece of the puzzle. Our process also has other pillars such as policy (both monetary and fiscal), technical factors, and valuations.
We believe it’s important to put all these pieces together, kind of like putting together a puzzle, to understand what’s happening in the economy and markets, and position portfolios accordingly.
Putting together a puzzle is both a mechanistic and artistic process. The mechanistic aspect involves sorting the pieces, finding edges, and matching colors, etc. It requires a logical and methodical approach, and in our process the LEI is key to that.
However, there is an artistic element as well. As we assemble the pieces together, a larger picture gradually emerges. You can make creative decisions about how each piece fits within the overall picture. Within the context of portfolio management, that takes a diverse range of experience. Which is the core strength of our Investment Research Team.
Welcome to the New Bull Market
“If you torture numbers enough, they will tell you anything.” -Yogi Berra, Yankee great and Hall of Fame catcher
Don’t shoot the messenger, but historically, it is widely considered a new bull market once stocks are more than 20% off their bear market lows. This is similar to when stocks are down 20% they are in a bear market. Well, the S&P 500 is less than one percent away from this 20% threshold, so get ready to hear a lot about it when it eventually happens.
I’m not crazy about this concept, as we’ve been in the camp that the bear market ended in October for months now (we started to say it in late October, getting some really odd looks I might add), meaning a new bull market has been here for a while. Take another look at the great Yogi quote above, as someone can get whatever they want probably when talking about bear and bull markets.
None the less, what exactly does a 20% move higher off a bear market low really mean? The good news is future returns are quite strong.
We found 13 times that stocks soared at least 20% off a 52-week low and 10 times the lows were indeed in and not violated. The only times it didn’t work? Twice during the tech bubble implosion and once during the Financial Crisis. In other words, some of the truly worst times to be invested in stocks. But the other 10 times, once there was a 20% gain, the lows were in and in most cases, higher prices were soon coming. This chart does a nice job of showing this concept, with the red dots the times new lows were still yet to come after a 20% bounce.
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Here’s a table with all the breakdowns. A year later stocks were down only once and that was during the 2001/2002 bear market, with the average gain a year after a 20% bounce at a very impressive 17.7%. It is worth noting that the one- and three-month returns aren’t anything special, probably because some type of consolidation would be expected after surges higher, but six months and a year later are quite strong.
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As we’ve been saying this full year, we continue to expect stocks to do well this year and the upward move is firmly in place and studies like this do little to change our opinion.
($ADBE $ORCL $KR $ACB $ATEX $ITI $LEN $MPAA $JBL $ECX $POWW $HITI $MMMB $CGNT $WLY $RFIL)
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2023.06.09 23:27 bigbear0083 Wall Street Week Ahead for the trading week beginning June 12th, 2023
The S&P 500 rose slightly Friday, touching the 4,300 level for the first time since August 2022 as investors looked ahead to upcoming inflation data and the Federal Reserve’s latest policy announcement.
The broad-market index gained 0.11%, closing at 4,298.86. The Nasdaq Composite rose 0.16% to end at 13,259.14. The Dow Jones Industrial Average traded up 43.17 points, or 0.13%, closing at 33,876.78. It was the 30-stock Dow’s fourth consecutive positive day.
For the week, the S&P 500 was up 0.39%. This was the broad-market index’s fourth straight winning week — a feat it last accomplished in August. The Nasdaq was up about 0.14%, posting its seventh straight winning week — its first streak of that length since November 2019. The Dow advanced 0.34%.
Investors were encouraged by signs that a broader swath of stocks, including small-cap equities, was participating in the recent rally. The Russell 2000 was down slightly on the day, but notched a weekly gain of 1.9%.
“It’s the first time in a while where investors seem to be feeling a greater sense of certainty. And we think that’s been a turning point from what had been more of a bearish cautious sentiment,” said Greg Bassuk, CEO at AXS Investments.
“We think that as we walk through these next few weeks, that will be increasingly clear that the economy is more resilient than folks have given it credit for the last six months,” said Scott Ladner, chief investment officer at Horizon Investments. “That will sort of dawn on people that small-caps and cyclicals probably have a reasonable shot to play catch up.”
The market is also looking toward next week’s consumer price index numbers and the Federal Open Market Committee meeting. Markets are currently anticipating a more than 71% probability the central bank will pause on rate hikes at the June meeting, according to the CME FedWatch Tool.
June’s Quad Witching Options Expiration Riddled With Volatility
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The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, S&P 500 has been up 12 of the last 20 years, but down 6 of the last 8.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after June’s Triple-Witching Day is horrendous. This week has experienced DJIA losses in 27 of the last 33 years with an average performance of –0.81%. S&P 500 and NASDAQ have fared better during the week after over the same 33-year span. S&P 500’s averaged –0.46%. NASDAQ has averaged +0.03%. 2022’s sizable gains during the week after improve historical average performance notably.
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A New Bull Market: What’s Driving It?
The S&P 500 finally closed 20% above its October 12th (2022) closing low. This puts the index in “official” bull market territory.
Of course, if you had been reading or listening to Ryan on our Facts vs Feelings podcast, you’d have heard him say that October 12th was the low. He actually wrote a piece titled “Why Stocks Likely Just Bottomed” on October 19th!
The S&P 500 Index fell 25% from its peak on January 3rd, 2022 through October 12th. The subsequent 20% gain still puts it 10% below the prior peak. This does get to “math of volatility”. The index would need to gain 33% from its low to regain that level. This is a reason why it’s always better to lose less, is because you need to gain less to get back to even.
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So, what’s next? The good news is that future returns are strong. In his latest piece, Ryan wrote that out of 13 times when stocks rose 20% off a 52-week low, 10 of those times the lows were not violated. The average return 12 months later was close to 18%. The only time we didn’t see a gain was in the 2001-2002 bear market.
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** Digging into the return drivers**
It’s interesting to look at what’s been driving returns over the past year. This can help us think about what may lie ahead. The question was prompted by our friend, Sam Ro’s latest piece on the bull market breakout. He wrote that earnings haven’t been as bad as expected. More importantly, prospects have actually been improving.
The chart below shows earnings expectations for the S&P 500 over the next 12 months. You can see how it rose in the first half of 2022, before collapsing over the second half of the year. The collapse continued into January of this year. But since then, earnings expectations have steadily risen. In fact, they’ve accelerated higher since mid-April, after the last earnings season started. Currently, they’re higher than where we started the year.
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Backing up a bit: we can break apart the price return of a stock (or index) into two components:
I decomposed annual S&P 500 returns from 2020 – 2023 (through June 8th) into these two components. The chart below shows how these added up to the total return for each year. It also includes:
- Earnings growth
- Valuation multiple growth
- The bear market pullback from January 3rd, 2022, through October 12th, 2022
- And the 20% rally from the low through June 8th, 2023
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You can see how multiple changes have dominated the swing in returns.
The notable exception is 2021, when the S&P 500 return was propelled by earnings growth. In contrast, the 2022 pullback was entirely attributed to multiple contraction. Earnings made a positive contribution in 2022.
Now, multiple contraction is not surprising given the rapid change in rates, as the Federal Reserve (Fed) looked to get on top of inflation. However, they are close to the end of rate hikes, and so that’s no longer a big drag on multiples.
Consequently, multiple growth has pulled the index higher this year. You can see how multiple contraction basically drove the pullback in the Index during the bear market, through the low. But since then, multiples have expanded, pretty much driving the 20% gain.
Here’s a more dynamic picture of the S&P 500’s cumulative price return action from January 3rd, 2022, through June 8th, 2023. The chart also shows the contribution from earnings and multiple growth. As you can see, earnings have been fairly steady, rising 4% over the entire period. However, the swing in multiples is what drove the price return volatility.
Multiples contracted by 14%, and when combined with 4% earnings growth, you experienced the index return of -10%.
What next?
As I pointed out above, the problem for stocks last year was multiple contraction, which was driven by a rapid surge in interest rates.
The good news is that we’re probably close to end of rate hikes. The Fed may go ahead with just one more rate hike (in July), which is not much within the context of the 5%-point increase in rates that they implemented over the past year.
Our view is that rates are likely to remain where they are for a while. But rates are unlikely to rise from 5% to 10%, or even 7%, unless we get another major inflation shock.
This means a major obstacle that hindered stocks last year is dissipating. The removal of this headwind is yet another positive factor for stocks as we look ahead into the second half of the year.
Why Low Volatility Isn’t Bearish
“There is no such thing as average when it comes to the stock market or investing.” -Ryan Detrick
You might have heard by now, but the CBOE Volatility Index (better known as the VIX) made a new 52-week low earlier this week and closed beneath 14 for the first time in more than three years. This has many in the financial media clamoring that ‘the VIX is low and this is bearish’.
They have been telling us (incorrectly) that only five stocks have been going up and this was bearish, that a recession was right around the corner, that the yield curve being inverted was bearish, that M2 money supply YoY tanking was bearish, and now we have the VIX being low is bearish. We’ve disagreed with all of these worries and now we take issue with a low VIX as being bearish.
What exactly is the VIX you ask? I’d suggest reading this summary from Investopedia for a full explanation, but it is simply how much option players are willing to pay up for potential volatility over the coming 30 days. If they sense volatility, they will pay up for insurance. What you might know is that when the VIX is high (say above 30), that means the market tends to be more volatile and likely in a bearish phase. Versus a low VIX (say sub 15) historically has lead to some really nice bull markets and small amounts of volatility.
Back to your regularly scheduled blog now.
The last time the VIX went this long above 14 was for more than five years, ending in August 2012. You know what happened next that time? The S&P 500 added more than 18% the following 12 months. Yes, this is a sample size of one, but I think it shows that a VIX sub 14 by itself isn’t the end of the world.
One of the key concepts around volatility is trends can last for years. What I mean by this is for years the VIX can be high and for years it can be low. Since 1990, the average VIX was 19.7, but it rarely trades around that average. Take another look at the quote I’ve used many times above, as averages aren’t so average. This chart is one I’ve used for years now and I think we could be on the cusp of another low volatility regime. The red areas are times the VIX was consistently above 20, while the yellow were beneath 20. What you also need to know is those red periods usually took place during bear markets and very volatile markets, while the yellow periods were hallmarked by low volatility and higher equity prices. Are we about to enter a new period of lower volatility? No one of course knows, but if this is about to happen (which is my vote), it is another reason to think that higher equity prices (our base case as we remain overweight equities in our Carson House Views) will be coming.
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Lastly, I’ll leave you on this potentially bullish point. We like to use relative ratios to get a feel for how one asset is going versus to another. We always want to be in assets or sectors that are showing relative strength, while avoiding areas that are weak.
Well, stocks just broke out to new highs relative to bonds once again. After a period of consolidation during the bear market last year, now we have stocks firmly in the driver seat relative to bonds. This is another reason we remain overweight stocks currently and continue to expect stocks to do better than bonds going forward.
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Our Leading Economic Index Says the Economy is Not in a Recession
We’ve been writing since the end of last year about how we believe the economy can avoid a recession in 2023, including in our 2023 outlook. This has run contrary to most other economists’ predictions. Interestingly, the tide has been shifting recently, as we’ve gotten a string of relatively stronger economic data. More so after the latest payrolls data, which surprised again.
One challenge with economic data is that we get so many of them, and a lot of times they can send conflicting signals. It can be hard to parse through all of it and come up with an updated view of the economy after every data release.
One approach is to combine these into a single indicator, i.e. a “leading economic index” (LEI). It’s “leading” because the idea is to give you an early warning signal about economic turning points.
Simply put, it tells you what the economy is doing today and what it is likely to do in the near future.
The most popular LEI points to recession
One of the most widely used LEI’s is released by the Conference Board, and it currently points to recession. As you can see in the chart below, the Conference Board’s LEI is highly correlated with GDP growth – the chart shows year-over-year change in both.
You can see how the index started to fall ahead of the 2001 and 2008 recession (shaded areas). The 2020 pandemic recession was an anomaly since it hit so suddenly. In any case, using an LEI means we didn’t have to wait for GDP data (which are released well after a quarter ends) to tell us whether the economy was close to, or in a recession.
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As you probably noticed above, the LEI is down 8% year-over-year, signaling a recession over the next 12 months. It’s been pointing to a recession since last fall, with the index declining for 13 straight months through April.
Quoting the Conference Board:
“The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023.”
Safe to say, we’re close to mid-2023 and there’s no sign of a recession yet.
What’s inside the LEI
The Conference Board’s LEI has 10 components of which,
You can see how these indicators have pulled the index down by 4.4% over the past 6 months, and by -0.6% in April alone.
- 3 are financial market indicators, including the S&P 500, and make up 22% of the index
- 4 measure business and manufacturing activity (44%)
- 1 measures housing activity (3%)
- 2 are related to the consumer, including the labor market (31%)
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Here’s the thing. This popular LEI is premised on the fact that the manufacturing sector, and business activity/sentiment, is a leading indicator of the economy. This worked well in the past but is probably not indicative of what’s happening in the economy right now. For one thing, the manufacturing sector makes up just about 11% of GDP.
Consumption makes up 68% of the economy, and we believe it’s important to capture that.
In fact, consumption was strong in Q1 and even at the start of Q2, thanks to rising real incomes. Housing is also making a turnaround and should no longer be a drag on the economy going forward (as it has been over the past 8 quarters). The Federal Reserve (Fed) is also close to being done with rate hikes. Plus, as my colleague, Ryan Detrick pointed out, the stock market’s turned around and is close to entering a new bull market.
Obviously, there are a lot of data points that we look at and one way we parse through all of it is by constructing our own leading economic index.
An LEI that better reflects the US economy
We believe our proprietary LEI better captures the dynamics of the US economy. It was developed a decade ago and is a key input into our asset allocation decisions.
In contrast to the Conference Board’s measure, it includes 20+ components, including,
Just as an example, the consumer-related data includes unemployment benefit claims, weekly hours worked, and vehicle sales. Housing includes indicators like building permits and new home sales.
- Consumer-related indicators (make up 50% of the index)
- Housing activity (18%)
- Business and manufacturing activity (23%)
- Financial markets (9%)
The chart below shows how our LEI has moved through time – capturing whether the economy is growing below trend, on-trend (a value close to zero), or above trend. Like the Conference Board’s measure, it is able to capture major turning points in the business cycle. It declined ahead of the actual start of the 2011 and 2008 recessions.
As of April, our index is indicating that the economy is growing right along trend.
(CLICK HERE FOR THE CHART!)
Last year, the index signaled that the economy was growing below trend, and that the risk of a recession was high.
Note that it didn’t point to an actual recession. Just that “risk” of one was higher than normal. In fact, our LEI held close to the lows we saw over the last decade, especially in 2011 and 2016 (after which the economy, and even the stock market, recovered).
The following chart captures a close-up view of the last 3 and half years, which includes the Covid pullback and subsequent recovery. The contribution from the 4 major categories is also shown. You can see how the consumer has remained strong over the past year – in fact, consumer indicators have been stronger this year than in late 2022.
(CLICK HERE FOR THE CHART!)
The main risk of a recession last year was due to the Fed raising rates as fast as they did, which adversely impacted housing, financial markets, and business activity.
The good news is that these sectors are improving even as consumer strength continues. The improvement in housing is notable. Additionally, the drag from financial conditions is beginning to ease as we think that the Federal Reserve gets closer to the end of rate hikes, and markets rally.
Putting the Puzzle Together
Another novel part of our approach is that we have an LEI like the one for the US for more than 25 other countries. Each one is custom built to capture the dynamics of those economies. The individual country LEIs are also subsequently rolled up to a global index to give us a picture of the global economy, as shown below.
(CLICK HERE FOR THE CHART!)
I want to emphasize that we do not rely solely on this as the one and only input into our asset allocation, portfolio and risk management decisions. While it is an important component that encapsulates a lot of significant information, it is just one piece of the puzzle. Our process also has other pillars such as policy (both monetary and fiscal), technical factors, and valuations.
We believe it’s important to put all these pieces together, kind of like putting together a puzzle, to understand what’s happening in the economy and markets, and position portfolios accordingly.
Putting together a puzzle is both a mechanistic and artistic process. The mechanistic aspect involves sorting the pieces, finding edges, and matching colors, etc. It requires a logical and methodical approach, and in our process the LEI is key to that.
However, there is an artistic element as well. As we assemble the pieces together, a larger picture gradually emerges. You can make creative decisions about how each piece fits within the overall picture. Within the context of portfolio management, that takes a diverse range of experience. Which is the core strength of our Investment Research Team.
Welcome to the New Bull Market
“If you torture numbers enough, they will tell you anything.” -Yogi Berra, Yankee great and Hall of Fame catcher
Don’t shoot the messenger, but historically, it is widely considered a new bull market once stocks are more than 20% off their bear market lows. This is similar to when stocks are down 20% they are in a bear market. Well, the S&P 500 is less than one percent away from this 20% threshold, so get ready to hear a lot about it when it eventually happens.
I’m not crazy about this concept, as we’ve been in the camp that the bear market ended in October for months now (we started to say it in late October, getting some really odd looks I might add), meaning a new bull market has been here for a while. Take another look at the great Yogi quote above, as someone can get whatever they want probably when talking about bear and bull markets.
None the less, what exactly does a 20% move higher off a bear market low really mean? The good news is future returns are quite strong.
We found 13 times that stocks soared at least 20% off a 52-week low and 10 times the lows were indeed in and not violated. The only times it didn’t work? Twice during the tech bubble implosion and once during the Financial Crisis. In other words, some of the truly worst times to be invested in stocks. But the other 10 times, once there was a 20% gain, the lows were in and in most cases, higher prices were soon coming. This chart does a nice job of showing this concept, with the red dots the times new lows were still yet to come after a 20% bounce.
(CLICK HERE FOR THE CHART!)
Here’s a table with all the breakdowns. A year later stocks were down only once and that was during the 2001/2002 bear market, with the average gain a year after a 20% bounce at a very impressive 17.7%. It is worth noting that the one- and three-month returns aren’t anything special, probably because some type of consolidation would be expected after surges higher, but six months and a year later are quite strong.
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As we’ve been saying this full year, we continue to expect stocks to do well this year and the upward move is firmly in place and studies like this do little to change our opinion.
(T.B.A. THIS WEEKEND.)
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2023.06.09 23:25 bigbear0083 Wall Street Week Ahead for the trading week beginning June 12th, 2023
The S&P 500 rose slightly Friday, touching the 4,300 level for the first time since August 2022 as investors looked ahead to upcoming inflation data and the Federal Reserve’s latest policy announcement.
The broad-market index gained 0.11%, closing at 4,298.86. The Nasdaq Composite rose 0.16% to end at 13,259.14. The Dow Jones Industrial Average traded up 43.17 points, or 0.13%, closing at 33,876.78. It was the 30-stock Dow’s fourth consecutive positive day.
For the week, the S&P 500 was up 0.39%. This was the broad-market index’s fourth straight winning week — a feat it last accomplished in August. The Nasdaq was up about 0.14%, posting its seventh straight winning week — its first streak of that length since November 2019. The Dow advanced 0.34%.
Investors were encouraged by signs that a broader swath of stocks, including small-cap equities, was participating in the recent rally. The Russell 2000 was down slightly on the day, but notched a weekly gain of 1.9%.
“It’s the first time in a while where investors seem to be feeling a greater sense of certainty. And we think that’s been a turning point from what had been more of a bearish cautious sentiment,” said Greg Bassuk, CEO at AXS Investments.
“We think that as we walk through these next few weeks, that will be increasingly clear that the economy is more resilient than folks have given it credit for the last six months,” said Scott Ladner, chief investment officer at Horizon Investments. “That will sort of dawn on people that small-caps and cyclicals probably have a reasonable shot to play catch up.”
The market is also looking toward next week’s consumer price index numbers and the Federal Open Market Committee meeting. Markets are currently anticipating a more than 71% probability the central bank will pause on rate hikes at the June meeting, according to the CME FedWatch Tool.
June’s Quad Witching Options Expiration Riddled With Volatility
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The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, S&P 500 has been up 12 of the last 20 years, but down 6 of the last 8.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after June’s Triple-Witching Day is horrendous. This week has experienced DJIA losses in 27 of the last 33 years with an average performance of –0.81%. S&P 500 and NASDAQ have fared better during the week after over the same 33-year span. S&P 500’s averaged –0.46%. NASDAQ has averaged +0.03%. 2022’s sizable gains during the week after improve historical average performance notably.
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A New Bull Market: What’s Driving It?
The S&P 500 finally closed 20% above its October 12th (2022) closing low. This puts the index in “official” bull market territory.
Of course, if you had been reading or listening to Ryan on our Facts vs Feelings podcast, you’d have heard him say that October 12th was the low. He actually wrote a piece titled “Why Stocks Likely Just Bottomed” on October 19th!
The S&P 500 Index fell 25% from its peak on January 3rd, 2022 through October 12th. The subsequent 20% gain still puts it 10% below the prior peak. This does get to “math of volatility”. The index would need to gain 33% from its low to regain that level. This is a reason why it’s always better to lose less, is because you need to gain less to get back to even.
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So, what’s next? The good news is that future returns are strong. In his latest piece, Ryan wrote that out of 13 times when stocks rose 20% off a 52-week low, 10 of those times the lows were not violated. The average return 12 months later was close to 18%. The only time we didn’t see a gain was in the 2001-2002 bear market.
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** Digging into the return drivers**
It’s interesting to look at what’s been driving returns over the past year. This can help us think about what may lie ahead. The question was prompted by our friend, Sam Ro’s latest piece on the bull market breakout. He wrote that earnings haven’t been as bad as expected. More importantly, prospects have actually been improving.
The chart below shows earnings expectations for the S&P 500 over the next 12 months. You can see how it rose in the first half of 2022, before collapsing over the second half of the year. The collapse continued into January of this year. But since then, earnings expectations have steadily risen. In fact, they’ve accelerated higher since mid-April, after the last earnings season started. Currently, they’re higher than where we started the year.
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Backing up a bit: we can break apart the price return of a stock (or index) into two components:
I decomposed annual S&P 500 returns from 2020 – 2023 (through June 8th) into these two components. The chart below shows how these added up to the total return for each year. It also includes:
- Earnings growth
- Valuation multiple growth
- The bear market pullback from January 3rd, 2022, through October 12th, 2022
- And the 20% rally from the low through June 8th, 2023
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You can see how multiple changes have dominated the swing in returns.
The notable exception is 2021, when the S&P 500 return was propelled by earnings growth. In contrast, the 2022 pullback was entirely attributed to multiple contraction. Earnings made a positive contribution in 2022.
Now, multiple contraction is not surprising given the rapid change in rates, as the Federal Reserve (Fed) looked to get on top of inflation. However, they are close to the end of rate hikes, and so that’s no longer a big drag on multiples.
Consequently, multiple growth has pulled the index higher this year. You can see how multiple contraction basically drove the pullback in the Index during the bear market, through the low. But since then, multiples have expanded, pretty much driving the 20% gain.
Here’s a more dynamic picture of the S&P 500’s cumulative price return action from January 3rd, 2022, through June 8th, 2023. The chart also shows the contribution from earnings and multiple growth. As you can see, earnings have been fairly steady, rising 4% over the entire period. However, the swing in multiples is what drove the price return volatility.
Multiples contracted by 14%, and when combined with 4% earnings growth, you experienced the index return of -10%.
What next?
As I pointed out above, the problem for stocks last year was multiple contraction, which was driven by a rapid surge in interest rates.
The good news is that we’re probably close to end of rate hikes. The Fed may go ahead with just one more rate hike (in July), which is not much within the context of the 5%-point increase in rates that they implemented over the past year.
Our view is that rates are likely to remain where they are for a while. But rates are unlikely to rise from 5% to 10%, or even 7%, unless we get another major inflation shock.
This means a major obstacle that hindered stocks last year is dissipating. The removal of this headwind is yet another positive factor for stocks as we look ahead into the second half of the year.
Why Low Volatility Isn’t Bearish
“There is no such thing as average when it comes to the stock market or investing.” -Ryan Detrick
You might have heard by now, but the CBOE Volatility Index (better known as the VIX) made a new 52-week low earlier this week and closed beneath 14 for the first time in more than three years. This has many in the financial media clamoring that ‘the VIX is low and this is bearish’.
They have been telling us (incorrectly) that only five stocks have been going up and this was bearish, that a recession was right around the corner, that the yield curve being inverted was bearish, that M2 money supply YoY tanking was bearish, and now we have the VIX being low is bearish. We’ve disagreed with all of these worries and now we take issue with a low VIX as being bearish.
What exactly is the VIX you ask? I’d suggest reading this summary from Investopedia for a full explanation, but it is simply how much option players are willing to pay up for potential volatility over the coming 30 days. If they sense volatility, they will pay up for insurance. What you might know is that when the VIX is high (say above 30), that means the market tends to be more volatile and likely in a bearish phase. Versus a low VIX (say sub 15) historically has lead to some really nice bull markets and small amounts of volatility.
Back to your regularly scheduled blog now.
The last time the VIX went this long above 14 was for more than five years, ending in August 2012. You know what happened next that time? The S&P 500 added more than 18% the following 12 months. Yes, this is a sample size of one, but I think it shows that a VIX sub 14 by itself isn’t the end of the world.
One of the key concepts around volatility is trends can last for years. What I mean by this is for years the VIX can be high and for years it can be low. Since 1990, the average VIX was 19.7, but it rarely trades around that average. Take another look at the quote I’ve used many times above, as averages aren’t so average. This chart is one I’ve used for years now and I think we could be on the cusp of another low volatility regime. The red areas are times the VIX was consistently above 20, while the yellow were beneath 20. What you also need to know is those red periods usually took place during bear markets and very volatile markets, while the yellow periods were hallmarked by low volatility and higher equity prices. Are we about to enter a new period of lower volatility? No one of course knows, but if this is about to happen (which is my vote), it is another reason to think that higher equity prices (our base case as we remain overweight equities in our Carson House Views) will be coming.
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Lastly, I’ll leave you on this potentially bullish point. We like to use relative ratios to get a feel for how one asset is going versus to another. We always want to be in assets or sectors that are showing relative strength, while avoiding areas that are weak.
Well, stocks just broke out to new highs relative to bonds once again. After a period of consolidation during the bear market last year, now we have stocks firmly in the driver seat relative to bonds. This is another reason we remain overweight stocks currently and continue to expect stocks to do better than bonds going forward.
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Our Leading Economic Index Says the Economy is Not in a Recession
We’ve been writing since the end of last year about how we believe the economy can avoid a recession in 2023, including in our 2023 outlook. This has run contrary to most other economists’ predictions. Interestingly, the tide has been shifting recently, as we’ve gotten a string of relatively stronger economic data. More so after the latest payrolls data, which surprised again.
One challenge with economic data is that we get so many of them, and a lot of times they can send conflicting signals. It can be hard to parse through all of it and come up with an updated view of the economy after every data release.
One approach is to combine these into a single indicator, i.e. a “leading economic index” (LEI). It’s “leading” because the idea is to give you an early warning signal about economic turning points.
Simply put, it tells you what the economy is doing today and what it is likely to do in the near future.
The most popular LEI points to recession
One of the most widely used LEI’s is released by the Conference Board, and it currently points to recession. As you can see in the chart below, the Conference Board’s LEI is highly correlated with GDP growth – the chart shows year-over-year change in both.
You can see how the index started to fall ahead of the 2001 and 2008 recession (shaded areas). The 2020 pandemic recession was an anomaly since it hit so suddenly. In any case, using an LEI means we didn’t have to wait for GDP data (which are released well after a quarter ends) to tell us whether the economy was close to, or in a recession.
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As you probably noticed above, the LEI is down 8% year-over-year, signaling a recession over the next 12 months. It’s been pointing to a recession since last fall, with the index declining for 13 straight months through April.
Quoting the Conference Board:
“The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023.”
Safe to say, we’re close to mid-2023 and there’s no sign of a recession yet.
What’s inside the LEI
The Conference Board’s LEI has 10 components of which,
You can see how these indicators have pulled the index down by 4.4% over the past 6 months, and by -0.6% in April alone.
- 3 are financial market indicators, including the S&P 500, and make up 22% of the index
- 4 measure business and manufacturing activity (44%)
- 1 measures housing activity (3%)
- 2 are related to the consumer, including the labor market (31%)
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Here’s the thing. This popular LEI is premised on the fact that the manufacturing sector, and business activity/sentiment, is a leading indicator of the economy. This worked well in the past but is probably not indicative of what’s happening in the economy right now. For one thing, the manufacturing sector makes up just about 11% of GDP.
Consumption makes up 68% of the economy, and we believe it’s important to capture that.
In fact, consumption was strong in Q1 and even at the start of Q2, thanks to rising real incomes. Housing is also making a turnaround and should no longer be a drag on the economy going forward (as it has been over the past 8 quarters). The Federal Reserve (Fed) is also close to being done with rate hikes. Plus, as my colleague, Ryan Detrick pointed out, the stock market’s turned around and is close to entering a new bull market.
Obviously, there are a lot of data points that we look at and one way we parse through all of it is by constructing our own leading economic index.
An LEI that better reflects the US economy
We believe our proprietary LEI better captures the dynamics of the US economy. It was developed a decade ago and is a key input into our asset allocation decisions.
In contrast to the Conference Board’s measure, it includes 20+ components, including,
Just as an example, the consumer-related data includes unemployment benefit claims, weekly hours worked, and vehicle sales. Housing includes indicators like building permits and new home sales.
- Consumer-related indicators (make up 50% of the index)
- Housing activity (18%)
- Business and manufacturing activity (23%)
- Financial markets (9%)
The chart below shows how our LEI has moved through time – capturing whether the economy is growing below trend, on-trend (a value close to zero), or above trend. Like the Conference Board’s measure, it is able to capture major turning points in the business cycle. It declined ahead of the actual start of the 2011 and 2008 recessions.
As of April, our index is indicating that the economy is growing right along trend.
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Last year, the index signaled that the economy was growing below trend, and that the risk of a recession was high.
Note that it didn’t point to an actual recession. Just that “risk” of one was higher than normal. In fact, our LEI held close to the lows we saw over the last decade, especially in 2011 and 2016 (after which the economy, and even the stock market, recovered).
The following chart captures a close-up view of the last 3 and half years, which includes the Covid pullback and subsequent recovery. The contribution from the 4 major categories is also shown. You can see how the consumer has remained strong over the past year – in fact, consumer indicators have been stronger this year than in late 2022.
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The main risk of a recession last year was due to the Fed raising rates as fast as they did, which adversely impacted housing, financial markets, and business activity.
The good news is that these sectors are improving even as consumer strength continues. The improvement in housing is notable. Additionally, the drag from financial conditions is beginning to ease as we think that the Federal Reserve gets closer to the end of rate hikes, and markets rally.
Putting the Puzzle Together
Another novel part of our approach is that we have an LEI like the one for the US for more than 25 other countries. Each one is custom built to capture the dynamics of those economies. The individual country LEIs are also subsequently rolled up to a global index to give us a picture of the global economy, as shown below.
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I want to emphasize that we do not rely solely on this as the one and only input into our asset allocation, portfolio and risk management decisions. While it is an important component that encapsulates a lot of significant information, it is just one piece of the puzzle. Our process also has other pillars such as policy (both monetary and fiscal), technical factors, and valuations.
We believe it’s important to put all these pieces together, kind of like putting together a puzzle, to understand what’s happening in the economy and markets, and position portfolios accordingly.
Putting together a puzzle is both a mechanistic and artistic process. The mechanistic aspect involves sorting the pieces, finding edges, and matching colors, etc. It requires a logical and methodical approach, and in our process the LEI is key to that.
However, there is an artistic element as well. As we assemble the pieces together, a larger picture gradually emerges. You can make creative decisions about how each piece fits within the overall picture. Within the context of portfolio management, that takes a diverse range of experience. Which is the core strength of our Investment Research Team.
Welcome to the New Bull Market
“If you torture numbers enough, they will tell you anything.” -Yogi Berra, Yankee great and Hall of Fame catcher
Don’t shoot the messenger, but historically, it is widely considered a new bull market once stocks are more than 20% off their bear market lows. This is similar to when stocks are down 20% they are in a bear market. Well, the S&P 500 is less than one percent away from this 20% threshold, so get ready to hear a lot about it when it eventually happens.
I’m not crazy about this concept, as we’ve been in the camp that the bear market ended in October for months now (we started to say it in late October, getting some really odd looks I might add), meaning a new bull market has been here for a while. Take another look at the great Yogi quote above, as someone can get whatever they want probably when talking about bear and bull markets.
None the less, what exactly does a 20% move higher off a bear market low really mean? The good news is future returns are quite strong.
We found 13 times that stocks soared at least 20% off a 52-week low and 10 times the lows were indeed in and not violated. The only times it didn’t work? Twice during the tech bubble implosion and once during the Financial Crisis. In other words, some of the truly worst times to be invested in stocks. But the other 10 times, once there was a 20% gain, the lows were in and in most cases, higher prices were soon coming. This chart does a nice job of showing this concept, with the red dots the times new lows were still yet to come after a 20% bounce.
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Here’s a table with all the breakdowns. A year later stocks were down only once and that was during the 2001/2002 bear market, with the average gain a year after a 20% bounce at a very impressive 17.7%. It is worth noting that the one- and three-month returns aren’t anything special, probably because some type of consolidation would be expected after surges higher, but six months and a year later are quite strong.
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As we’ve been saying this full year, we continue to expect stocks to do well this year and the upward move is firmly in place and studies like this do little to change our opinion.
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2023.06.09 22:35 Sufficient_Career713 You never think it will happen to you: A Labor Story
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2023.06.09 19:43 stefanks92 Seeking Advice: Stomach Issues, Back Pain
2023.06.09 16:34 artisanrox 6/9--VOCs and lots of Editorials.
However, patients who recover from the acute phase of the infection can still suffer long-term effects (8). Post-acute sequelae of COVID-19 (PASC), commonly referred to as “long COVID,” refers to the long-term symptoms, signs, and complications experienced by some patients who have recovered from the acute phase of COVID-19 (8–10). Emerging evidence suggests that severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), the virus that causes COVID-19, can have lasting effects on nearly every organ and organ system of the body weeks, months, and potentially years after infection (11,12). Documented serious post-COVID-19 conditions include cardiovascular, pulmonary, neurological, renal, endocrine, hematological, and gastrointestinal complications (8), as well as death (13).It's under "Certifying deaths due to post-acute sequelae of COVID-19".
2023.06.09 16:25 DoABarrowRoll Defending the Draft: New York Giants Edition (2023)
Seems like maybe Schoen agreed with me!
It was a lot harder to try to predict what the Giants would do this year, just by virtue of having a later pick. But the general consensus among the beat seemed to be that the team wanted to get a CB or an offensive playmaker with that first pick. I was a little skeptical of CB being an option, seeing how many mocks had all 5 of the top CBs off the board, but that often left WRs available.
So right after the Jets took Will McDonald at 15, if you looked at the board, only 1 CB had been taken and no WRs had been taken. That felt pretty good for the Giants.
Then Forbes and Gonzalez come off the board, and the top 4 WRs come off the board from 20-23.
That left the Giants feeling a little antsy. They had one guy they really wanted left, and negotiated a trade up one spot with the Jaguars to secure their guy: Deonte Banks.
This pick is perfect for what the Giants want to do on defense. Wink Martindale's reaction should say it all, if you go watch the Giants' behind the scenes videos on the draft process.
Banks is a tall, long, and athletic corner, which are all important traits for Wink's press man heavy defense. He's super fluid and smooth in his hips. He tested absolutely crazy. He also plays with a swag that I think Wink and Giants fans will come to really appreciate. He plays confident, he plays fast in terms of processing, and he plays physical.
He still has some development to go, I'm not saying he's going to be a top CB in the league from day 1. He wasn't a super ball productive corner, but that's not something Wink necessarily needs. It will take some time for him to get comfortable with the complexity of route runners in the NFL. But the tools are all there, and the Giants get a perfect scheme fit.
Banks will come in and immediately be the starter at CB across from Adoree' Jackson, and the trickle down effect that will have on the Giants depth chart at CB will be tangible.
As this pick was coming up, Schoen and Daboll were discussing who to pick, and basically said "okay we're either going with Schmitz or(we'll get to that later ;) )".
Then the Bears traded up to the pick before the Giants pick. And Joe Schoen said "oh fuck." Daboll tried to calm him down and said "well I guess we're getting."
Then the Bears took Tyrique Stevenson (good pick!), leaving the Giants the choice between the two players. And the Giants went with Schmitz.
Full disclosure: I was not a huge JMS fan in the draft process. I thought he was super solid all around, but he wasn't really impressive to me, there weren't a lot of overwhelmingly positive reps or traits in my eyes. I thought he was maybe a little heavy footed, especially in pass pro, and his testing kind of backed that up, and I didn't really see full unlocked power either.
I was probably a bit harsh on him in terms of the grade though. Like I said, he's a super solid player. There's relatively little to really complain about. He's smart, he's experienced, and he made few mental mistakes. His snaps were consistent. He is pretty strong though not crazy so. His anchor is really good, and he plays nasty and competitive, which is something the Giants are definitely looking for. It helps he had a really good Senior Bowl week too.
Was Schmitz my favorite center in this class? No. But he was for many people, and for some good reasons. Schmitz will come in and immediately start at center for the Giants, bringing the dead snap with him. If he can be the 3rd best player on this unit (behind Andrew Thomas and hopefully Evan Neal taking a step forward this year and being healthy), it'll be an immensely calming and steadying presence that should raise the OL play of the whole unit.
So you may be wondering: Who was Player X?So the Giants come out of the first 3 rounds with 3 players who were commonly mocked to them at 25. Pretty good business! But let's get into day 3:
Well immediately after drafting Schmitz, Schoen looked around the room and pretty much said "what if we can still get?" He decided that the price he was willing to pay was the Giants 4th round pick. And he and everybody else in the room started calling.
That included Brian Daboll, who leaned over and said "hey should I text [Rams HC Sean] McVay?" Schoen said "yeah sure go for it." And Daboll officially negotiated the Giants trading up from 89 to 73 to select Player X: Tennessee WR Jalin Hyatt
Hyatt is a really fun player to watch. The speed blows you away on tape. It's the kind of speed that even if you're not throwing it to him all the time, defenses have to take note when he comes on the field and play him differently. He's not necessarily slippery or elusive after the catch but (and I'm scared to frame it this way but I'm doing it anyway) the speed and acceleration gives him credibility there, the way that Odell was such a YAC threat on slants just getting to full speed and outrunning everyone.
He's a little high cut I think, and that leads to a little bit of trouble with crisper routes. He wasn't asked to run a very complex route tree at Tennessee, though I do think he has the skills to improve in that sense. The biggest concern for me is just how quickly we can get him up to speed beating press and playing through physicality. When he has room to work, he can beat CBs in a few ways, but NFL DBs will knock even very good WRs off their routes at times. And that follows through to contested catches.
The Giants' WR room is so crowded it's hard for me to say exactly what Hyatt's role will be starting out. The Giants started last year trying to use different WRs in different ways on a game to game basis. Then the wheels fell off obviously, with Shep, Wan'Dale, and Toney being hurt and Golladay stinking and all that. So I wonder if we see a return to that.
Hyatt can be a threat in a lot of ways, end arounds, screens, etc in addition to the obvious "go long" situations. Just how many reps he can carve out will be fun to track in training camp.
The Giants traded away their 4th round pick to get Hyatt so they went 99 picks without making a selection.
Like I said earlier, the team has been looking for a compliment to Saquon Barkley for a long time, and they find it here with Eric Gray.
Schoen said he sees Eric Gray as a 3 down back. And you can definitely see why. He caught 88 passes over the last 3 years at Oklahoma and only dropped 2. He's also strong and physical, willing to pass protect. That physicality carries over into his running style, he runs hard and is willing to run through guys. He's bursty in short areas and has pretty solid vision in my opinion.
He's a compact guy, just 5'9 207. He's not super slippery or elusive, and he's not really a home run hitter. But in terms of finding a backup RB on day 3 to feed some of those tough yardage carries to and keep Saquon fresh, you could do worse than Eric Gray for sure.
The Giants ran a fair bit of "Pony" type formations in 2022, using 2 or even 3 RBs at times. The competition between Gray and Matt Breida for the true RB2 spot will be fun to see. Breida brings a little more explosiveness to the table, but Gray will certainly give him a run for his money. And depending on what happens with Saquon Barkley's contract situation, we may see even more of Gray down the line.
When asked about what is different this year from last year, what improvements or what has gotten easier now that he's been in the chair for a full year, Joe Schoen talked a lot about really getting a good handle on what his coaches look for in players. And he singled out Wink in that respect because him and Daboll have worked together so much.
The Giants selection of Tre Hawkins really highlights that. Like with Deonte Banks, Hawkins brings a ton of physical traits. He tested through the roof. He has the length that the Giants look for. He's also super physical in both phases, run and pass, which Wink loves. ODU let him just play press man, so he's comfortable doing that.
He's a little slim still, so his frame needs some reworking, but that's common with CBs and especially ones from outside the P5 schools. He also has a lot of technique and FBIQ stuff to clean up. His footwork is messy, he's not always patient enough with his punch. His ball skills still leave something to be desired. He's still learning to read routes and manage space both in man and zone.
I figure Hawkins will come in and be a depth player and core STer for the Giants. If his play strength holds up against NFL scrutiny, he can definitely be a day 1 punt gunner. Wink has started calling Jerome Henderson the best DB coach in the league, so it'll be fun to see what Henderson can do with a ball of clay like Hawkins. Even if he ends up just being a STer and CB5 type guy, that's still a pretty good pick in the 6th round like this.
Also, sorry Patriots writer :)
Beating a dead horse at this point, but this is another pick Schoen highlighted as an example of his understanding of what Wink is looking for.
Obviously Riley is a flawed prospect, it's the 7th round. He was a 6th year senior who spent time at 4 different schools, starting at UNC, then going to JUCO for a year, then Nebraska for 2 years where he barely played, and finishing his college career at Oregon. PFF lists him as having just 534 career snaps in college despite the 5 years he spent at the P5 level. He wasn't very productive, partly because he barely played and partly because he's just not very good. He's not a good athlete.
What Riley does have, though, is size, strength, and knockback power. And that's what Wink is looking for in a depth NT. He eats blocks, stuffs up lanes, and just is hard to move.
Schoen put it this way:
"It’s hard to find these guys. When you get into the seventh round, you are looking for guys that maybe it will be hard to get at different areas. And another guy we spent time with, big run stopper in there, 6-foot-5, 330.
You walk out to practice, and there’s this 6-5, 330-pound guy, who piques your interest right there. Again, some of these guys in different schemes may not have the production, the tackles, the sacks. But for what Wink looks for in terms of size, length, knock-back — he possesses those traits.”
Last pick in the draft and the Giants go back to the DB room. They took two CBs already, but some depth/developmental guys at safety would help. Enter: Gervarrius Owens.
Owens is a former CB turned S from Houston. The CB in him flashes to me on tape, I thought his ball skills as a safety were good. He's athletic enough to play pretty much any safety spot, including that single high spot that teams find difficult to fill. He's super physical and willing to play downhill and tackle. He's super experienced, he was a team captain and 4 year starter for Houston.
He makes a lot of mistakes, however. The angles he takes to the ball in both phases are super inconsistent. He missed a ton of tackles in college, so that technique needs to be worked on. The ball skills turned into PBUs rather than INTs; Wink won't mind that but some of them were like "he really should have just caught that."
Owens is another guy like Hawkins who looks primed to earn his roster spot on special teams and provide solid depth for the team's DB room. Wink likes to play 3+ safety sets, especially when he feels like he has a good group there. And the Giants' S room right now is basically Xavier McKinney and a bunch of question marks, so it's entirely feasible that Owens can come in and beat Dane Belton, Jason Pinnock, and Bobby McCain to earn playing time early on.
2023.06.09 14:45 GoStockGo Cutting-Edge AI for Mining Explorations: Windfall Geotek (TSXV: WIN, OTC: WINKF)
2023.06.09 14:45 GoStockGo Cutting-Edge AI for Mining Explorations: Windfall Geotek (TSXV: WIN, OTC: WINKF)
![]() | Windfall Geotek (TSXV: WIN, OTC: WINKF) uses AI for mining explorations. Doing this has several advantages, as it notably reduces costs and increases efficiency, and ultimately raises the company exploration success rate. Windfall also improved its financial statements by reducing expenses and augmenting its revenue. submitted by GoStockGo to SmallCapStocks [link] [comments] https://preview.redd.it/45y8wdr3nz4b1.png?width=258&format=png&auto=webp&s=1787758f56ba4ecc3f3cc8ed84507bf699900b80 WIN is not a mining company. It is a cutting-edge AI mining service that identifies drill targets, saving time and money and vastly reducing exploratory drilling. It was established in 2005. https://preview.redd.it/bekxxuz6nz4b1.png?width=1677&format=png&auto=webp&s=5f49311db4c7cf41a47554ac7c08d4e2e24dbe1d Windfall Geotek’s AI technology analyzes geological data from various target sources to generate the highest probable drill targets. Its technology works for all metals. The company takes geological data from multiple sources, including drill holes and rock samples, publicly available sources, and others, to build models that can accurately predict where a particular metal or group of metals is likely to be found. WIN’s value proposition? Instead of mining companies and engineers ‘guessing’ where to drill, Windfall’s AI technology uses machine learning to process large quantities of data to predict zones with the desired mineralization. The benefits are apparent, and the Company has put it in a very strong financial position.
https://preview.redd.it/sithenvbnz4b1.jpg?width=640&format=pjpg&auto=webp&s=fab6c3ff35fc4fdd43ae8747219df25d2711f9fd https://preview.redd.it/5l15ufhcnz4b1.png?width=1500&format=png&auto=webp&s=7ba2e0a8a7c01e753dc7a7ad9920b683b65cc7c1 WIN’s formative technology can be illustrated by delving into the Chapais area in Quebec. Dinesh Kandanchatha, Chairman of Windfall Geotek, commented: “We are excited to partner with the team at Quebec Copper & Gold. Windfall Geotek intends to play a key part through our AI to help the project succeed.” Highlights of the Chapais Property: Large property with 36 claims and 1,560 hectares located 490 km northwest of Montreal. Road accessible with power grid access.” Windfall Geotek AI system has generated significant gold, copper, and zinc targets across the entire land package. The Chapais property was sold to Quebec Copper and Gold for 500,000 shares & issuing a 2% NSR subject to a 1% buyback. Windfall Geotek will take all available data and conduct a large-scale AI targeting project over both Opemiska & Chapais Project, which will then be owned by Quebec Copper & Gold. Nathan Tribble P.Geo, WIN Director, commented: “The Chapais Property is well situated in a prolific region that has produced over 1 billion pounds of copper and 1 million ounces of gold. It’s exciting to see the large AI-generated targets within favorable rock types that were host to the historic Perry and Springer mines adjacent to our land package. During this new supercycle of electrification metals this is a fabulous project that should gain a lot of attention here in short order.”
This story has legs. The ability to save money, time, and resources makes mineral exploration exceptionally cost-effective, raising profits while cutting costs. Logic dictates areas that might have been too expensive to do traditional discovery tests and processes are open. It doesn’t get much more complicated. The advantage comes as Windfall Geotek advances its scope of business and leverages the ongoing development of its technology. |
2023.06.09 14:27 chaotic-_-neutral desperately need help interpreting pattern instructions for the back panel of a front-open vest Paton's Country Gentleman knit flat
![]() | vest pattern submitted by chaotic-_-neutral to casualknitting [link] [comments] im knitting the large size (middle # in the brackets) for my grandfather. i try to read ahead and envision how id go about the steps before i actually get down to doing it, and im so confused about the armhole and shoulder shaping. i'll make this post about only the armhole shaping. ______________________________ I have knit up the first part of the instructions for the back panel - ive done the 1.5" long 2x2 ribbing (110 sts) plus the 1 st increase (111 sts), and then 14" of stockinette current dimensions : 111 sts across and 15.5" long https://preview.redd.it/5c2vsyvvay4b1.png?width=460&format=png&auto=webp&s=b5850d8de5592a410e3bbc845900a0724ffb3a3f https://preview.redd.it/58jiigvxby4b1.jpg?width=1793&format=pjpg&auto=webp&s=aba89437bf00079e9528c59db160dca55c051b4a so now i have 111 sts on my needle and when i start to work them off the resting needle, i'll be making knit stitches. i need to get started with the armhole shaping. ______________________________ the next set of instructions for shaping the armhole arent intuitive to me. this is my understanding of it: https://preview.redd.it/mynrpk9ecy4b1.png?width=456&format=png&auto=webp&s=97f55d08211ce065a987a4fba6c3e3be199040e7 Step 1 [ 111 sts on the needle start work on RS ]
now after having cast off [ 8 + 8 = 16 sts ] from the [ 111 st total ], im left with [ 111 - 16 = 95 sts ] Step 2 [ 95 sts on the needle start work on the RS ]
95 sts - 81 sts = 14 decreases
Step 3 [ 81 sts on the needle start work on WS ]st #7 of Step 2 would land me on the WS of the work.
______________________________ back panel schematic:relevant measurements for the size im knitting (L), clockwise from the top:
______________________________ self drafted pattern charts: Chart 1:https://preview.redd.it/171wfyydjz4b1.png?width=2706&format=png&auto=webp&s=081ea125316077c50203cdde3f9ab52c4d6f551dive used the greyed out squares to help cross the long horizontal space
Chart 2:https://preview.redd.it/a55r5r36kz4b1.png?width=2486&format=png&auto=webp&s=9089f1445975b49c1f61247c2fbaa2e84e06cd3d
8 (R C.Off) + 8 (L C.Off) + 7 (R-Leaning dec) + 7 (L-Leaning dec) = 30 sts decreased |
2023.06.09 14:11 LinguoBuxo 🥂 Celebrating 8000 audiobooks 🎉 - 🎊 Reaching officially v. 1.0 - and some collection trivia