By: K(en(neth Louis) G(rant)
DATELINE: (CONNECTICUT) PANHANDLE. Yes, I’m coming at you, as is often the case, from the wilds of the Connecticut Panhandle.
Of course, no such place officially exists. And I’ve had a longstanding, stated beef, with whoever decides these things, that the portion of Constitution State in which I dwell has never achieved the panhandle status it so richly deserves. I figure it’s time for me to bust out my bitch again, because: a) maps don’t lie; and b) you can decide for yourself:
Do mine eyes deceive, me or does the southwest corner of this layout indeed constitute a panhandle? It sure seems like it does, but the Panhandle Commission continues to show us no love.
It may in be that they are busy the with more important, panhandle-related matters (such as the racism embedded in the panhandle concept itself). Meanwhile, us CT Panhandlers languish, forsaken. I suspect, however, that the Panhandle Commission is chock-full of political appointees, and maybe, if the vote goes our way, we can sneak one or two rabbis into the ranks. Hope, if nothing else, springs eternal.
Now, please don’t misapprehend me. I am not suggesting that our little strip of partially contiguous real estate rises to the panhandle glory of, say, the three states whose PH status is not only acknowledged, but, indeed, celebrated (Oklahoma, Texas and Florida):
And while we’re on the subject, let’s take this opportunity to give a shout out to the OK Panhandle, shall we? Because that is a panhandle to which all other states should aspire. A panhandle for the ages. Pleasingly long. Divinely rectangular. Barren. By contrast, the Texas Panhandle is just too stubby for my tastes. I mean, it’s too wide to grip, and there’s not enough length there to lift the rest of the state’s (largest in the Lower 48) pan. Florida doesn’t suffer from the last of these problems, but I think we can all agree that its handle is just too lumpy to offer much comfort or utility to the holder (and that’s even without all of those oranges, flags and other stuff contained in the image).
But one way or another, there’s a whole lot of panhandling going on at the moment. It’s bad. It’s nationwide. And I suspect it will get worse before it improves.
What, after all, are the markets in recent times but one giant financial panhandle?
Investment panhandling had been a unilaterally joyous exercise — for months – until, that is, last Thursday, when all of the gold diggers turned ignominious tail and started to sell off shares like the Joads in “The Grapes of Wrath”. The puke continued through much of Friday (as spaced between a couple of heroic but largely futile attempts to stem/reverse the carnage), all of which put a big buzz kill on the already historically depressing interval of Labor Day Weekend. Probably, this is a good thing, because the odds on probability is that sh!t gets real this coming Tuesday. Why not get a head start on the drama?
And, notably, the declines came on the heels of weekly and monthly jobs numbers that one had to believe were objectively encouraging. From the Payrolls, Base Rate and Labor Participation metrics, it would appear that the month of August featured an encouraging number of eligible souls who had discarded their pans and successfully re-entered the workforce.
Maybe, investors just like panhandlers more than they should.
Leading into the selloff, the scene was bizarre beyond easy description. I read last week that Apple sported a higher market cap than the entire FTSE 100. I had to check this, and it was true; still is. Now, please understand: I’m typing this here note on an Mac-book, never go anywhere without my I-Pad, and yes, I’m rocking an I-11 phone. Plus, I love the ear buds. But in general, I don’t even like Apple that much. They just sort of suck you in is all.
So, good on them, but as a purely hypothetical, would I trade full ownership of the company for the same status with the 100 biggest corporations in the UK? Which include a couple of baller pharmaceuticals, some important energy names, and Lloyd’s of London? I would not. And neither should you.
The abrupt, (I’ll say it) indecorous selloff got everyone analyzing catalysts, and, in order to do so, one must examine root causes of what took us to those improbable highs we so recently achieved. The wires suggest that a great deal of the last leg up is owing to some aggressive technology stock options buying on the part of both whales and guppies.
The data indeed indicate that weekly equity options purchases are surging. And don’t even get me started here (too late). This. Is. A. Bad. Idea. My risk reports are slathered with a never-ending stream of losses on these quickie options. Please, don’t even think about making decisions of this nature, week-to-week. Given all of the complexities, it’s simply not enough time to accomplish much of anything. Dream big, by all means, but know that it is likely going to take a month or more to turn these dreams into realities. This is as heartbreaking to me, as I know it is to you (maybe more so to me; I’m getting to be a real old bastard after all), but it is true nonetheless. So, let’s look out a little further, and save ourselves both the annoyance and (yes) the heartbreak of living week to week.
Let’s call this Plan A.
Because what weekly options giveth, they also take away, and I do suspect that some of this played into both the long rally and the end-of-week, tragic selloff. Big dogs are said to have made a killing on the quickies, but let’s face facts: none of us are big dogs, now, are we?
But here’s the good news, brothers and sisters: I don’t think the rally is over. The game is indeed on come Tuesday, but what really causes investors to reverse course, and decide that all that buying over the spring and summer was the stuff of irrational dreams? Nothing at the moment that I can think of. Yes, there are enormous risks out there, but they are trending better than they were, say, six weeks ago. With notable exceptions, schools are actually opening and staying open around the country. The political rhetoric seems to be a tad less oriented towards destroying our evil capitalist empire. They ran the Kentucky Derby on Saturday, and on the same day, a passel of brave institutions of higher learning actually sent their football teams onto the field.
Absent unthinkable disaster, the NFL kicks off this Thursday, and that, my friends, may be the most bullish news of all.
But perhaps most importantly, we got the Fed in our hip pockets. Willing to let inflation (that is, if any actually materializes) run a little wild. They’re begging us to stay invested, nay, to increase our investments, and acting in accordance with this desperate desire. One of my wiser compatriots (who is not happy about the development) pointed out to me recently that while he understood the need to support impaired credits during those dark days of April, the Fed Balance Sheet now proudly features debt holdings in Microsoft, Goldman Sachs, and (yes) Apple.
Why are they doing this? Because they are hell-bent on keeping impossibly elevated valuations in the stratosphere. Why? Because otherwise the credit bubble might immediately explode in our faces, and that, my loves, would be a disaster for all of us.
This is their party, and it’s clear to me that they intend to keep it going – even if it means driving a couple of counties over to the single gas station/stop and go market willing to sell kegs at this late hour.
So, unless Public Health takes a turn for the worse (it might) and/or the political forces who want to dismantle what has been a pretty good gig for nine-plus generations score an unambiguous win, I think risk assets do nothing but get scarcer – even beyond the November election. Speaking of the latter, I will again state that I am terrified that the voting itself will be a disaster, with many important races too close to call, an unprecedented level of contested outcomes, and other overwrought sagas which, on the lonely, last weekend of this strange summer, I just don’t wish to contemplate.
But it is indeed time to get focused and stay that way. I’m ready (I hope). Are you? Great hazard but also great opportunity beckons in this last trimester of ’20, now just barely begun.
And, in fairness on the whole panhandle thing, it just may be the case that other states have an equal claim to the status as does CT. Mississippi, Alabama, New Mexico, Massachusetts (if you disregard the Cape) and even New York (if you count Long Island). But with the last two of these, you have to cross a body of water to enter the handle, and as for the first three, well, they can fight their own battles.
And I’ll fight mine, from the Connecticut Panhandle, and other points where my journey might well take me.
With that, I’ll sign off, hoping you enjoy your holiday, and urging you to get ready for the rocky ride to come. I’ll always remember this summer, though, with photographs on dashboards, taken years ago, turned around backwards so the windshield showed every streetlight in reverse. Remember the night. And the things that go away. Replaced by every day.
TIMSHEL