Summer Scaries

I've recently been dealing with something I like to call the 'summer scaries'-- and I've found out I'm not the only one! This is the time of year when my world is surrounded by anxious people. Anxious due to a wide variety of reasons but I believe it can be summed up in one word: “confidence”.

The confident people are anxious because down deep they know their confidence is BS.

The non-confident people are anxious because their confidence rely on individuals or factors beyond their control.

These “summer scaries” are compounded by working throughout the summer while watching so many people I know excel in various summer adventures and jobs--and constantly seeing it all over social media. SO: if you're dealing with the same issues (summer work, anxious people and their confidence), I've developed a simple system that alleviates some of that stress that may be helpful to you. Honestly, a daily glass of wine or vodka can do the trick just as well.

1.      Disconnect - Disconnect, disconnect, disconnect. Make an active effort to put down your phone and just spend time with yourself. Try not to let social media be the way you start and end your day, especially if it's part of what's causing your anxieties.

2.      Recharge - Force yourself to get 8 hours of sleep: even if it means earlier nights during the summer. Your body will thank you and your mind will too. You're not 'wasting' a summer by just being at home; you're prepping yourself for the coming Fall.

3.      Focus - In everything you do. Multi-tasking has its benefits, but so does focus. When you eat meals, for example, JUST eat meals. When you have a conversation with someone, really listen. Be. Fully. There.

4.      Take advantage of your mornings - Part of the benefit of getting enough rest is being able to get up earlier. I LOVE my mornings. I don't like to feel rushed: I like to be able to sit down, drink my caffeine, eat my breakfast, and read the newspaper. Starting your day off relaxed and in control will improve the rest of your day, too.

5.      Spend time outside - Even if it's just a walk around the block or sitting out in the sun! Breathe in that fresh air and let yourself feel refreshed.

6.      Me Time - Me time' can mean whatever you want it to: if you love reading, set aside time at night to get in a chapter. If you're really into art, carve out an hour or two to work on a new project. Give yourself the space to do the stuff you love.

7.      Make Lists – Not one of my personal favorites, but when you are feeling overwhelmed by something, I find that the best way to deal is by visualizing it. If necessary, write down what's causing you stress and what you need to do to overcome it. Do this daily: by putting a number to what you need to accomplish in the day, it makes it seem a lot more doable.

8.      Be forgiving to yourself - The most important step on this list is simple: don't be too hard on yourself. Will these things be helpful? Yes. Will they always alleviate those feelings of worry and stress? Probably not. It's okay to feel those things: just remember that they don't control your life; you do.

COLLEGE CHRONICLES – Gov. Jerry Brown of California has big plans for the state's new, completely virtual community college. The recently approved college was crafted to serve under- or unemployed adults who want additional skills for a job or a promotion, or who want skills for the changing workplace. But the new college also poses questions, like: Is there really an audience for the college, and will the adults who enroll end up succeeding? Studies have found that students, especially low-income and first-generation students, do better in physical classrooms or in hybrid courses, with virtual and face-to-face components.

Vocational training is making a comeback. Ties between companies and local high schools are increasing across the country as some students seek to avoid college debt and some businesses look to high schools where students are trained for free.

POLITICS 101 - Days until the 2018 election: 78

Upcoming election dates — Aug. 21: Alaska, Wyoming primaries. — Aug. 28: Arizona, Florida primaries and Oklahoma primary runoffs. — Sept. 4: Massachusetts primaries. — Sept. 6: Delaware primaries. — Sept. 11: New Hampshire primaries. — Sept. 12: Rhode Island primaries. — Sept. 13: New York (state-level) primaries.

There are now at least 172 women nominees for U.S. House and 11 women nominees for governor — the highest in history, per the Center for American Women and Politics.

RISK FREE INTEREST RATE - U.S. Treasury yields have stalled out just below 3% even as the U.S. economy posted its best quarter of economic growth in years.

The yield on the 10-year Treasury note ended Friday at 2.860% after rising as high as 2.871% earlier in the day. The pullback came after data showed the U.S. economy grew 4.1% in the second quarter, the strongest rate in around four years.

The reaction is counterintuitive. Such a strong growth reading ostensibly should have helped support expectations for long-term economic growth and, in turn, supported long-term yields, analysts say.

Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, said the decline illustrates how many investors believe growth will slow throughout the second half of the year as the effects of last year's U.S. tax overhaul fade.

The 10-year Treasury yield rallied for much of this year—in May it breached 3.1% for the first time since 2011--on economic optimism. The upward move faltered in May as investors flocked to the safety of government bonds, pushing up prices and so yields down.

Since then, yields have stagnated as investors weigh economic data against widening trade spats that could hurt growth.

Expectations that inflation will remain subdued are also weighing on long-term yields. The Federal Reserve’s preferred inflation gauge--the personal consumption expenditures index excluding food and energy--rose 2% in the second quarter. That was down from 2.2% in the first quarter.

Higher inflation would likely encourage investors to dump Treasury bonds--driving up yields--by eroding the value of their fixed payments. But that isn’t a big worry at the moment.

Whether that continues to be the case will depend on several events this week that could cause investors to reassess expectations for growth and inflation. On Wednesday, the Federal Reserve releases its latest policy statement and the Treasury will announce plans for issuing new debt. On Friday, the Labor Department releases its monthly jobs data that will include a closely watched measure of wage inflation.

Barring some big surprises, investors aren’t preparing for a sharp move in Treasuries that would send yields on an upward trajectory.

“If GDP north of 4% doesn’t get us above 3%, any time spent above there will be short-lived,” Mr. Lyngen said.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to Erica Arias ….famous women entrepreneur; Sean Connery (88) Glaskow, Scotland; Hoang Dinh …aka Def Leppard; Brett Hull (54) Scottsdale, AZ.;  Madonna (60) Miami, FL.; Alexis Schiff …famous Leo ’17; Sarah Spain (38) Chicago, IL.

NOW HIRING - Americans looking to land a first job or break into a dream career are facing better odds. Across incomes and industries, a lower bar to getting hired is helping people get jobs. In the first half of 2018, the share of job postings requesting a college degree fell to 30% from 32% in 2017, according to an analysis by labor-market research firm Burning Glass Technologies.

ALL MY TESLA - Shares in the embattled electric carmaker jumped this past week after the FT reported that Saudi Arabia had bought a stake. Then Elon Musk dropped a bombshell on Twitter: He was considering taking the business private at $420 a share, and funding was “secured.” That would be the biggest ever leveraged buyout, and at a 20 percent premium on where Tesla’s trading.

The audacity of the plan dumbfounded traders and reporters — as did the casual way Mr. Musk announced it.

It makes sense for him. Investors have battered Tesla for missing production targets and failing to turn a profit in the eight years since it went public. One precedent Mr. Musk endorsed was Michael Dell, who revived his computer company after taking it private.

Huge questions remain, though. Does Mr. Musk really have that financing? (CNBC couldn’t find any banks aware of it.) How could Tesla afford the debt payments without free cash flow? Was Mr. Musk just trying to squeeze short sellers? And did his tweet violate securities rules?

THANKS, ELON - Lost in the hullabaloo of Elon Musk floating the idea of taking Tesla private — investors would take a pretty big tax hit on their capital gains. Musk has said that he expects most current Tesla shareholders to keep investing if the car company goes private. But if that's done through a special fund, then that would likely mean investors needing to sell their Tesla shares. What's the cost of that? A lot. Tesla stock first went on sale for $19 a share eight years ago, and now costs $340 a share.

In other words: "$10,000 invested in Tesla when it went public eight years ago would be worth close to $179,000 today. That gain of $169,000, taxed at the top rate of 20 percent, would generate a tax bill of $33,800. And depending on the investor's total adjusted income, an additional 3.8 percent tax could be due.

CHEECH & CHONG - 1 in 5 Californians have purchased cannabis from the illicit market in the past three months.

-- 84 percent of those are highly likely to repeat that behavior in the future due to the illicit market having cheaper products and no tax.

-- 9 in 10 California consumers (90 percent) have some medical use for cannabis, indicating cannabis' strong position as a wellness product.

-- Southern California consumers are more likely to purchase from an unlicensed source than Northern California consumers (21 percent vs. 16 percent, respectively).

BUFFETTOLOGY - Warren Buffett's conglomerate this past week reported quarterly earnings.

Buffett's empire touches, well, just about every aspect of the U.S. business landscape (okay, maybe not esports...yet), checking out Berkshire's quarterly reports gives us a window into the health of the economy.

Quick timeout: If you've never been to Berkshire's website before...here's a taste of what you can expect. Web developers, you might want to submit a résumé.

So...how'd it do?

At a high level—really darn well. Net income almost tripled, but per Buffett, chalk that up to a new accounting rule that requires you to include unrealized investment gains/losses in net income. Because Berkshire has so many investments, that number can fluctuate wildly.

Where you should be looking, he says, is operating income, which jumped 67% (topping expectations).

Let's dive a little deeper:

Its freight rail business (BNSF Railway) surged due to "general economic growth" generating higher demand for consumer and industrial goods (sand, fertilizer, grain).

Insurance (GEICO and others) also rebounded. Underwriting profit came in at $943 million, up from a loss of $22 million last year.

One catalyst for all this growth was the corporate tax cut. In Q2, Berkshire paid an effective income tax rate of 20%, down from 28.9% last year.

And then there's tech: Tech? Buffett? You bet. Buffett has been steadily increasing his position in Apple. Which, you may have heard, hit $1 trillion in market cap last week. Now, $47.2 billion of Berkshire's ~$180 billion stock portfolio is invested in Apple.

Berkshire's other top holdings? American Express, Bank of America, Coca-Cola, and Wells Fargo.

Bottom line, courtesy of one analyst: "Strength in Berkshire's portfolio of energy, transportation, service, retailing, and manufacturing businesses...reflect(s) broad U.S. economic strength."

These 10 skills require ZERO talent per Warren Buffett:

- Being on time                       - Being teachable

- Work ethic                             - Being prepared

- Putting in effort                    - Doing extra

- Being optimistic                   - Being encouraging

- Being passionate                 - Taking responsibility of ones’ own life and everything in it

GOOD READ – “HOW COLLEGE SPORTS KILLED SUMMER VACATION”, New York Times: As expenses for college sports have risen in recent decades, so has summer practice time. College athletes are increasingly spending their summers on campus training for their sport or taking courses to strategically prepare for a practice-filled semester.

The New York Times has more on how college athletes are sometimes forgoing internships and vacations to train. Link: https://nyti.ms/2OwhiDt

MARKET WEEK – Inflation: The annual increase in inflation as measured by the core consumer price index for July was 2.4%, the largest increase since September 2008.

The S&P 500 is up more than 4% so far this year. Meantime, the MSCI World Index excluding the U.S. is down by more than 4%. It's the first time that divergence has happened this late in the year since at least 1970, according to Sundial Capital Research.

The U.S. dollar is soaring against global currencies. The WSJ Dollar Index is now at its highest since May 2017, including a rise of more than 9% since mid-February.

COLLEGE FOOTBALL - The college football season is coming right up, and beginning August 31 The Swami will be making his weekly Swami picks. But at the moment, the focus is on another major college football program that is in turmoil before the season even begins. The University of Maryland this week apologized to the parents of a football player who died in June after overheating in a workout. In an unusually frank admission, Maryland said that the team's training staff didn't take adequate measures after the player exhibited trauma. Maryland's head coach, DJ Durkin, has been put on administrative leave, and the school has parted ways with its strength and conditioning coach, Rick Court.

The tragedy brings scrutiny to one of the most powerful, but lesser known, authority figures in college sports these days: the strength coach. That's the coach who oversees the weight room and builds players into behemoths. NCAA rules limit the amount of time players can practice with regular coaches--but exempt the strength coach, who has become a kind of "head coach of the offseason." They're also richly remunerated; one college strength coach earns $725,000 a year.

“Collegiate football’s dirty little secret is that we are killing our players,” wrote Scott Anderson, head trainer at Oklahoma, in a recent paper that looked at 33 training-related college football deaths between 2000 and 2016.

VEGAS SWAMI – Bet on these two teams to MAKE the NFL Playoffs:

TITANS ➞ Odds: +185 (implied probability: 35%) / Wagering on the Titans to make a second consecutive playoff appearance is betting on a Marcus Mariota bounceback, and there are reasons to believe it can happen. Chief among them: new offensive coordinator Matt LaFleur is expected to use run-pass options (RPOs) to maximize Mariota's dual-threat capabilities.

CHIEFS ➞ Odds: +130 (44%) / Getting a well-balanced team with Super Bowl upside at plus-money to reach the postseason seems too good to be true. This could be one of the easiest future bets you place all season."

Bet on these two teams to MISS the playoffs:

COWBOYS ➞ Odds: -170 (63%) / The biggest reason to be down on Dallas is their schedule, which is one of the hardest in the league. Plus, while they can clearly run the ball, this is a passing league — and they have question marks in that phase.

RAIDERS ➞ Odds: -190 (66%) / Jon Gruden has the 44th-most regular season wins by a coach in NFL history. Problem is, he hasn't been on a sideline in nearly a decade — and history tells us that coaching retreads rarely succeed.

SWAMI’S WEEK TOP PICKS –

NCAA Football Preseason Rink Rats Top Ten:

1). Alabama Crimson Tide            2). Clemson Tigers

3). Georgia Bulldogs                           4). Washington Huskies

5). Wisconsin Badgers                       6). Oklahoma Sooners

7). Ohio State Criminals                     8). Auburn Tigers

9). Notre Dame Fighting Irish         10). Michigan State Spartans

SCIAC Football Preseason Rink Rats Top Five:

1). Redland Bulldogs                        2). Chapman Panthers

3). California Lutheran Kingsmen   4). La Verne Leopards

5). Pomona-Pitzer Endowments

Liberty League Football Preseason Rink Rats Top Five:

1). Ithaca College Bombers           2). RPI Engineers

3). St. Lawrence Saints                       4). Union Dutchmen

5). Hobart Statesmen

NFL Football Preseason Rink Rats Picks:

AFC East - New England Patriots                 AFC North – Pittsburgh Steelers

AFC South – Houston Texans                        AFC West – Kansas City Chiefs

AFC Wildcards – Tennessee Titans, Los Angeles Chargers

AFC Champs – New England Patriots

NFC East – Philadelphia Eagles                     NFC North – Green Bay Packers

NFC South – New Orleans Saints                  NFC West – Los Angeles Rams

NFC Wildcards – Atlanta Falcons, Minnesota Vikings

NFC Champs – Green Bay Packers

Super Bowl Champs – Green Bay Packers

MLB Game of the Week – Saturday August 25; St. Louis Cardinals (68-57) at Colorado Rockies (68-56), The Rockies have the worst television announcing crew, this is reason enough to pick the Cardinals in this one: 6 – 4.

Season to Date (31 -20)

ON THIS DATE – August 14, 1935; the Social Security Act was signed into law, ensuring some retirement income for all working Americans. Payroll taxes were set at 1%, for both workers and employers, on the first $3,000 of earnings.

ON THIS DATE PART DEUX – August 16, 1969

Woodstock, day 2 - Sat 16th Aug:

1:00 pm Country Joe

2:00 Santana

3:30 John Sebastian

4:45 Keef Hartley

6:00 Incredible String Band

7:30 Canned Heat

9:00 Mountain

10:30 Grateful Dead

12:30am Creedence Clearwater Revival

2:00 Janis Joplin

3:30 Sly Stone

5:00 The Who

8:00 Jefferson Airplane

DRIVING THE WEEK - If your calendar's looking a little bare, don't worry—everyone's is. Welcome to the August slump.

Monday: Earnings (Estee Lauder); World Mosquito Day, Chocolate Pecan Pie Day (you win some, you lose some)

Tuesday: Earnings (TJX Cos., Urban Outfitters, Kohl's, J.M. Smucker)

Wednesday: Existing home sales, FOMC minutes; Earnings (Target, Lowe's); Pecan Torte Day (big week for pecans, huh?)

Thursday: New home sales, Jackson Hole Economic Policy Symposium begins; U.S. tariffs on $16 billion of Chinese goods goes into effect; Earnings (HP, Gap, Intuit)

Friday: Durable goods orders, Fed Chair Jerome Powell is set to speak as the Jackson Hole Symposium continues, Pluto Demoted Day

Next Blog:  August 27: Thirty-Six, Jack Ass of the Month, Word of the Month

Until next time, Adios

Claremont, California

August 20, 2018

#IX-8-376

CARTOON OF THE WEEK – The New Yorker, Alex Gregory