Another week; another confession. On Wednesday night, I succumbed to the illusive allure of my local Chinese Takeout joint. One of them, anyway. Fact is, as my apartment is located between Amsterdam and Indigenous Peoples’ (formerly Columbus) Avenues on the Upper West Side, I have an embarrassment of rich choices in this regard.
Usually, I resist this temptation, and even on Wednesday, my spirit had the will to win, but oh, the flesh was weak. So I rocked out on General Chao’s Chicken, some brown rice and (as is de rigueur on these occasions) an egg roll.
Looking back, it all seems like a daydream that I was already in, but, as is so often the case when spending a portion of one’s evening General Chao and his subordinate side orders and condiments (particularly the hot mustard), it didn’t take long for me to be overcome with shame. And heartburn.
I have been encouraged by those who love me (after, of course, a well-deserved scolding), to embrace this transgression, and I know of no better way of doing so than baring my sins in this forum.
So let’s talk a little bit more about Chinese Take-Out, shall we? First, I’m happy to report that the whole saga set me back little more than $20 (including a generous tip), so I’m pretty sure that whatever tariffs that may have previously been levied on these sorts of transactions, they had been lifted in the intervening years between my preceding visit to the joint on Amsterdam, and the one that I am (with shame) describing in these pages. I checked the newswires just to make sure, and it appears that there is indeed progress on the U.S.-Sino trade front.
From that perspective, perhaps my timing was impeccable. And so, for that matter, might be Trump’s, but we’ll get to that below.
Certainly investors seem to be of that mindset, as they chose, all week long, to consume risky delectables, at levels sufficient to take our indices into record territory. All week. All over the world. Much to my chagrin, they appear to have financed much of this shopping spree through the sale of global bonds, which (my aggressive embracing of the latter notwithstanding) had about their worst week in quite a spell. The U.S. 10-Year Note is knocking on the door of 2%, and the poor Swiss are now forced into the indignity of accepting an annual rate of less that 50 bp for their borrowings. It could be worse, though. The Swiss could be the Germans (probably they ARE the Germans), who only collect a beggarly 26.5 bp/year from their borrowers. The USD shot up like a rocket. As did a number of commodities.
But that critical ingredient to the purveyors of my culinary odyssey: soy beans, did not participate:
Soy It Ain’t So: Beans Flat for November:
The good news here, I suppose, is that the soy sauce all up and down Amsterdam Avenue can still be had free of charges, and, therefore, of tariffs.
On the other hand, I don’t use soy sauce on my General Chao’s Chicken. Or my egg roll. And I hope that you don’t either. Because I feel that to do so in either case would be something of a crime against humanity. Hot Mustard? Yes. Soy sauce? A Hard No.
I spent the rest of Wednesday evening (as I had most of the week), trying to figure out what on earth has investors so gosh darn giddy — on a tape that looks to me to be somewhat toppy. It could be the case that Trump’s trade strategy is working like Elway against the Browns in the ’98 AFC Final. Interim deal during Impeachment; final one, say, right before Super Tuesday. I’m not saying that this is how it will play out, but if it does, you’d have to give the Big Guy mad props for political timing, right?
I do think that (yawn) presidential politics are driving some perverse valuation dynamics.. Perhaps the best news of the week, at least from an investor perspective, was the release of the financial details of Warren-Care. The plan cost $20T over the next decade (approximately one year’s GDP), but hey, that number is probably overstated, because Senator Warren, like all other politicians, always injects a dose of conservatism into these types of projections, just so she doesn’t give anyone sticker shock down the road. Private Insurance disappears. Doctors and hospitals are to be given fixed revenue rations, calculated at levels of precision that only Harvard-educated social engineers can muster. Corporations are to be taxed at higher levels. Wealth is to be taxed. Businesses are to be taxed. Best of all (if inevitable), Wall Street is to be taxed.
For everyone else? Free Fortune Cookies.
One cannot help but wonder, on balance, though, how well this will all work out in real life. Pondering these matters (as I always like to do while digesting the ornithological culinary delights of General Chao), it looks like the release of this plan could be the biggest political blunder of a generation. This, too, is no certainty, but it sure seems like a possibility. And, stone-cold feminist that I am, the timing seems like kind of a shame to me. The plan was announced on the proximate date of the 100-year anniversary of the passage of the 19th Amendment, which bestowed the suffrage on women that our Founding Fathers somehow, in their zeal to create a free and equal society, neglected, when forming the nation, to include.
But the program itself does not look politically appealing to me, and neither Senator Warren nor her party will be able to walk it back. About their only alternative is to go bigger and embrace Bernie’s plan, which will cost twice as much. And anyone who the Dems nominate will have to go out on the road next summer and sell this pile of bird feathers to an electorate that: a) is doing pretty well right now; b) worries about higher taxes; and c) probably has a tough time envisioning better health care outcomes when all associated decisions are made not by individuals, but rather by the government.
Of course, with Impeachment (which now makes better sense given the wretched policy/candidate choice offered up by the Dems in what should be for them the most winnable election since, well, since 2016), trade uncertainty, an upward trajectory for interest rates, and myriad other problems that plague us, pretty much anything could happen. But under certain scenarios, I see the whole Warren-care thing not only giftwrapping 2020 to Trump, but toe-tagging the Democrats for at least another couple of election cycles.
What is visible to me, in the meanwhile, is as follows. The Dems need some new blood, and, while I hate to do this sort of thing, I need to remind everyone that I’ve been writing about Mayor Mike laying in the weeds for several months. Welcome in MM; and know I’ll be rooting for you. At least in the Primary Election. I’ll happily accept your rather school-marmish attitudes about super-sized sodas and the like, if you’ll simply let me keep some of my hard earned pay, and allow me to manage my own health decisions – up to a point where my fast-approaching dotage renders me non-decisional.
The other trend that I believe I can observe is some glee among the investor class at how thoroughly the progressives are b!tching things up. I would go so far as to hypothesize that the Warren-care finance plan was sufficiently outlandish and nonsensical to gin up some buying just in its own right.
So here we are, less than seven improbable weeks before the conclusion of this most improbable year. Our equity markets are sitting at records, trade wars, tepid economic conditions and the like notwithstanding. Q3 Earnings are now in the bag, and, while (as was always likely) better than expected, they still aggregate to a third consecutive quarter of negative growth. At 12.07, the VIX is residing at about an 18-month low.
Given all of this, and in light of the saga described immediately above, I feel it entirely fitting and proper to issue an MSG warning. Now, here, I beg you to consider the source. Chinese food is slathered in Monosodium Glutamate, and no dish has a bigger dose of MSG than does General Chao Chicken. But there are other forms of MSG that worry me more — ones that apply to the financial markets. The more benign of these is something I call Mostly Speculative Guesses, which, when taken to the extreme, adopt their more wretched construct: Massively Stupid (Portfolio) Gyrations. Let’s avoid both forms, shall we?
Because, believe it or not, there are less than 35 trading days left in the year, and we can throw out about a quarter of them due to holiday distraction and associated lack of liquidity. Most every known bit of data is already in the books, and most of what’s unknown shades to the negative. It reminds me a little bit of what Woody Hayes used to say about passing the football: there are 3 outcomes, and 2 of them are bad.
A lot of good stuff, one would have to argue, is already priced into current valuations, and, on balance, I think that this looks like a Woody Hayes passing market. Could we continue our current improbable rocket ride? Of course we could. On the other hand, Trump and Xi could say mean things, hurtful things, to one another. The drip-drip-drip of impeachment could finally cause the ceiling of the political economy to cave in. Those crazy, nutty, zany Ayatollahs could decide to lob one over to Tel Aviv.
The world as you see it could turn out to be a very different place from the world as you find it.
And, particularly at these valuations, how much more good news can you, or for that matter, anyone around you, stand?
So, because I see very little edge out there for the remainder of the year. I’m inclined to suggest we all play a little D here, and this particularly applies to those who, thus far in 2019, have enjoyed a good run. Yes, you owe one to the Fed, but our gains are hard-won, nonetheless, my darlings, and I’d hate to see you blow them in the few short weeks left to us before the ball drops.
No, I’m not suggesting that you shut it down completely on this here Veterans Day; just that you, at least for the rest of the month and next, avoid Speculative Guesses, and even more so, Stupid Gyrations.
And remember, you are not alone. I am here in every way that I can be for you. And the more joy you can take out of each moment, the happier I myself will be.
But right now, I must take my leave. I hear the doorbell ringing, and most of you know who it is. Yes, I have fully succumbed to the force of will exerted on me by one General Chao. And if there’s any endeavor that puts one in greater MSG danger than Chinese Take Out, it’s Chinese Delivery.
But for me, the ship has sailed; the bell has rung. And all I can do is offer my full support to you in your efforts to avoid the kind of mistakes that have driven me to this humiliating pass.
What, they forgot the hot mustard? Must be a message from above. So I’ll just send the guy packing, fry me up some kale, and try, in the future, to set a better example for my minions.
TIMSHEL