90% of S&P 500 stocks are higher this year, closing in on the 2003 record

The number of winning stocks this year is approaching a 10-year peak, writes Howard Silverblatt, senior analyst at S&P Dow Jones Indices. You’d have to go back to 1980 for the previous record. Here’s what Howard is sending to his email subscribers:

You Take My Breadth Away

           …  Year-to-date 451 of the S&P 500 issues are up (47 down), which on an annual basis is the best since 458 issues increased in 2003.  The 2003 number is also a record high from 1980, when my data series starts.  The number is significant since it shows the depth of the recovery.  In the late 1990s, the market aggregates became dominated by technology, which grew on ‘faith’ and ‘hits’, as compared to sales and cash-flow.  In 1998, the market returned 26.67%, yet only 57.8% of the issues were up, and in 1999, the market grew 19.53%, but less than half, 48.2% of the issues, were up.  For the 2013 year-to-date, 90.2% of the issues are higher, with the market aggregate up 23.39%; 270 issues are above that aggregate, with 140 issues up at least 40%.  Surely a significant number of people are seeing large gains, and surely many are not, since they remain out of the market.

            … Chasing returns is not a good reason to invest, but when enough do it the short-term impact is more buying and higher prices. Which we may be getting close to if the market stays anywhere near its current level.

(fyi – Friday set two new official highs, intraday of 1759.82, and a close of 1759.77)


Pay to Play: Pros who pay for advanced peek on data are cheating and the sellers know it

Traders are paying up big money to get an early look at market-moving data provided by non-governmental groups. This is pay-to-play, pure and simple.

This is way different from data that the government releases. The rules are very strict; if anyone break s an embargo they get the boot. But according to the Wall Street Journal, private companies don’t have to follow that protocol. In the case of the University of Michigan Consumer Sentiment Survey, Thomson Reuters charges a premium to traders who want a two-second head start on the news. In computer-driven trading, that’s a lifetime. Thomson Reuters and its clients defend the practice, saying it’s no different from paying for a premium subscription to the Wall Street Journal or one of its feeds.

Not exactly. I am a WSJ subscriber and I am constantly bombarded with opportunities to pay up for special subscriptions. Ditto for premium subscriptions from Politico. And so forth. It’s quite public. Bloomberg news agrees, and PRIVATELY  complained to the University of Michigan about the deal it struck with Thomson Reuters.

The advance-data-peek world is submerged — a backroom club.  Even if traders believe the practice is wrong, they don’t dare buck the trend. Try and spot the irony in this explanation, by one “event-jumper” who sounds like a brainwashed  kidnapping victim:

“It’s not an exclusive club,” said Infinium’s chief operating officer, Gregory Eickbush. He said his firm needs to have an advance look at the consumer-sentiment survey to keep from getting “flattened” by other futures traders.

Mr. Eickbush said Infinium attributes around 10% of its annual revenue, or close to $18 million in recent years, to using high-speed news and economic-data feeds, in a strategy he called “event jumping.”

Trading on such reports, called the “news-feed trade,” is emblematic of an era in financial markets dominated by hair-trigger trading measured in fractions of seconds.

At its speediest, this means trading by algorithms based on what is known as “machine-readable news.” Paul Rowady of research firm Tabb Group, who studies the economics of trading, estimates the delivery of machine-readable news will generate $75 million in revenue for financial-news providers this year, up almost 50% in five years.

Sharad Kumar, a veteran of several high-speed trading firms, said the availability of early access to nongovernmental data creates an arms race in which firms pay for it to avoid being at a “huge disadvantage.” At the same time, its cost can be “a barrier to entry” for smaller traders, he said.

So Mr. and Mrs. Saver, if you want to  protect your nest egg, be sure to ask your advisor if their traders are members of the Event Jumping Club. Otherwise, they will be losing out.

ADP may foreshadow disappointing May jobs number on Friday; growth slowing

This morning, the stock market took a beating after ADP reported a weak 135,000 gain in private payrolls last month. April’s numbers were also revised lowerto a gain of 113,000 from 119,000.

That doesn’t bode well for the Labor Department report on jobs, due this Friday, writes Jack Ablin, chief investment officer, BMO Private Bank. In an email, Ablin elaborates:

Economists are forecasting an expansion of 178,000 net new private payroll positions in May.  Based on a cozy historical relationship between ADP and the Bureau of Labor Statistics’ private payrolls, a simple regression would imply a disappointing net gain of only 139,000 jobs.

Here’s a graph showing the relationship between the two numbers. Doesn’t look good:


Overall, job growth appears to be slowing (graphic via MarketWatch)

Job growth slowing in 2013.

Job growth slowing in 2013.

10-year Treasury edges past S&P500 yield for first time in year

Investors, betting on a recovery, push bond yields higher, stock dividend yields lower.

Investors, betting on a recovery, push bond yields higher, stock dividend yields lower. (Click to enlarge.)

The recovery story is gaining the upper hand in the markets today, with stocks posting rallying hard in response to strong news on housing prices and big rallies overnight in global markets. Treasurys are taking it on the chin. As a result, for the first time in a year, the yield on the S&P500 has dipped below the yield on the 10-year Treasury.

The Case-Shiller index reported today that home prices jumped 10.9% in March, the biggest gain in seven years. Double-digit gains in hard-hit areas like Phoenix, Las Vegas, San Francisco and Detroit helped to propel stock prices

Time to pop the bubbly? You’re behind the game. On the Hampton’s, Long Island’s tony seaside getaway (think Great Gatsby), the $25,000 stuff has already been drained. You’ll have to wait for the next sky diving waiter to find another magnum.

Bloomberg screenshot via David Lutz of Stifel Nicolaus

The best place to find out what is really happening in jobs

The core of the labor force is weakening; baby boomers are working longer – via Calculated Risk

Whenever I want the inside skinny on the jobs numbers, I turn to the Calculated Risk blog. No one can beat Bill McBride for his clear, steady tone (even when it felt as if the world was ending) or for his command of the numbers.  And the charts are to die for.

The labor force numbers released last Friday for March were surprisingly weak — only 88,000 new jobs were added to the nonfarm payrolls, less than half the number predicted. The unemployment number edged down to 7.6%, but only because so many people gave up looking for work.

The participation rate in the labor force has been a major topic of debate over the past few years. Baby boomers are retiring, which would naturally reduce what is known as the participation rate in the labor force. There are other factors of well — both bad and not so bad.

Let me share with you what Bill McBride sees:

  • Fewer 16- to 24-year-olds are in the labor force because they are going to school more. That’ should be a plus for the economy.
  • The number of 25- to 54-year-olds is declining — a negative. Those are the prime working and saving years. The downtrend is a function of the recession and structural changes in the economy. (See chart on left; click on the graphic to enlarge.)
  • More oldsters are working longer (some say so they can keep their health benefits). But there aren’t enough of this cohort hanging in to boost the overall participation rate.

For more details, go read the Calculated Rate blog post here. Eye opening.

Steubenville women, Princeton women

steubenville_princetonSteubenville sits 375 miles west of Princeton University, and in many ways, worlds apart.  But when it comes to boys being boys and girls blaming one another — and themselves — for male animal spirits, the two are not nearly as far apart as the gallons of ink spilled on the sordid Steubenville rape story would imply.

Steubenville, of course, is the down-in-the-mouth Ohio town where football was the only ray of light. No wonder the local town heroes were allowed to spin out of control. The subtext: If you’re prosperous or largely employed, things like this can’t happen.

If only. I confess to reading rather obsessively about the Steubenville rapists. In my search for insights, I stumbled onto a trio of troubling stories at my alma mater — Princeton University. It was not what I was expecting.

#1: Old Nassau is just like everyone else, at least when it comes to sexual assault — it gets swept under the covers

In 2008, Princeton conducted a survey on sexual “experiences” on campus, but never published the results. The campus paper recently got hold of the poll and discovered that sexual assault was alive and well. Why hadn’t the university released the data? No one else does, a spokesman told The Daily Princetonian. Anyway, they were well within the national average. Why draw attention to something that makes an institution of superior higher learning pretty darned average when it comes to everyday human contact? What really matters here?

According to the Sexual Experience Survey about 15% of women were sexually humiliated and attacked. Only a fraction reported it to the administration or the police — perhaps because they are ashamed or because they blame themselves.  See stories No 2 and 3, below.

#2 Jocks might not be the only untouchables

According to a 2010 story in Gawker, a Princeton coed did in fact work up the nerve to accuse another student of rape. But only to university authorities, not the local police. That was in 2006. The name of the accused: Griffith Rutherford Harsh V, the son of billionaire, one-time gubernatorial candidate, and major Princeton donor Meg Whitman. Why didn’t the accuser go to the police? Gawker reports:

The girl consulted her friends, some of whom worried about the “social repercussions” of accusing such a high-profile student of rape. She was “terrified,” according to her friend. “She didn’t want to press charges because it’s Meg Whitman’s son. She didn’t want to go through that. She didn’t go to the police. She didn’t get a rape kit.”

Her support network said No! don’t go there. In the end, the university didn’t take action because it didn’t feel it had sufficient evidence to do so, the story says. Perhaps a police investigation would have uncovered the necessary evidence to incriminate or exculpate the accused. But we’ll never know.

#3 Steubenville women, Princeton women

Every time I read about the Steubenville victim’s former best girlfriends, I cringe. They live in an overtly vulgar culture where women are basically sex objects, to put it politely.  But there’s a code of silence. The females have agreed to pretend they are slightly more than sexual objects. Rather than galvanizing them to assert their self-worth, the Steubenville attack entrenched them in their status because the code had been broken most spectacularly on Twitter and YouTube. This was no time for mercy. The BFFs became worst enemies as they demoted the victim to drunken slut who got what she deserved.

Shockingly, educated women appear to shrink from asserting their sexual integrity as well. Read on.

Let’s return to Princeton. 2011. A gathering of super-successful alumnae entitled “She Roars.” The dramatis personae include:  Justice Sonia Sotomayor, Teach for America founder Wendy Kopp, and waddyaknow — Meg Whitman.

Tina de Varon, a successful singer who graduated in the 1970s, was also there. In a story for the Christian Monitor, she says the Tigerlillies, a women-only a cappella group, performed for the crowd. After they finished their set, a male group, the Tigertones, came on stage; but one “lost” Tigerlilly remained. The men surrounded her, pretended to unzip their flies and then suggestively moved their hips as they sang.

Gang Bang, the musical.

Not a single one of Princeton’s shining alumnae had the presence of mind to stand up and say the gig is up, boys. You’re not dealing with some backward, uninformed, low-level girls. We are Princeton women. We’ve been leaning in and pushing back for years. About time you got the message.

Instead, de Varon left the conference quite shaken. Because on a rainy night in 1973, a Princeton rugby player raped her in her own dormitory room. She had never reported it.


From the Village Voice:

It was the audience that was shocked at a Michelle Shocked concert last night when the born-again alt-folk singer went on a rant about how “God hates fags” and how she lives in fear of gay marriage.

I’ll give this to the audience, though:

They cleared out in horror.

h/t @ledbetreuters

Why we need Rhett Butler as a hiring authority


Image by Khinson

Hiring authorities are taking longer than ever to fill vacancies, the New York Times recently reported.  Candidates interview five or six times and leave empty-handed. Sometimes the jobs never seem to get filled. I know that on LinkedIn I have seen a number of  ads for the same journalism jobs  pop up again and again — for more than year. In case you haven’t heard, there are plenty of unemployed journos dying for full-time work. What’s up with that?

Blame it on the glut of candidates. The more choices we have in life, the harder it is to choose. “We don’t know our preferences that well, says behavioral economist Dan Ariely in a TED Talk back in 2009. This is why we need Rhett Butler. He’s a guy who finally figures out what he wants and acts  on it. Ariely explains:

We have an irrational compulsion to keep doors open. It’s just the way we’re wired. But that doesn’t mean we shouldn’t try to close them. Think about a fictional episode: Rhett Butler leaving Scarlett O’Hara in Gone with the Wind, in the scene when Scarlett clings to him and begs him, “Where shall I go? What shall I do?” Rhett, after enduring too much from Scarlett, and finally having his fill of it, says, “Frankly, my dear, I don’t give a damn.” It’s not by chance that this line has been voted the most memorable in cinematographic history. It’s the emphatic closing of a door that gives it widespread appeal. And it should be a reminder to all of us that we have doors—little and big ones—which we ought to shut.

Dan Ariely, Predictably Irrational

So, dear, Hiring Authorities, choose a candidate. Close the door on the others.

Just for fun, here’s Ariel’s hilarious TED talk on how we let outside forces control our decision-making, largely because we just don’t know what we want or we get too vermischt when presented with more than two choices. Word to the wise: Before agreeing to surgery, demand your doctor present all the other choices he is rejecting!