@ssholes give the order, @ssholes row the boat,
@ssholes get elected, cause @ssholes get to vote,
@ssholes in the morning, @ssholes every night,
@ssholes to the left of me, @ssholes to the right,
As twenty thousand @ssholes do the @sshole promenade,
Step aside good people, it’s the @ssholes on parade
– Pat MacDonald
Here’s a little riff brought to you, courtesy of Pat MacDonald, who hung around Madison during my years there, and then went on to modest fame on the grander stage of Austin, TX, with his fleetingly chart-registering band: Timbuk 3. I actually jammed with Pat a couple of times. At least I done that. Hendrix? No. Page? Please. Keith? I wish. But Pat MacDonald? Check.
At least I done that.
He wrote this particular tune in, er, celebration of the first Reagan Inaugural, and, one must admit, it’s a pretty good hook. Even if he was wrong about Reagan. Which, at the time, we all were. I can at least admit it; I doubt Pat has done the same.
But it’s not, per se, @ssholes on parade upon which I wish to focus this week’s attention, but rather parades in general. Because, you see, I love parades, any parades, all parades. So much so that I have been known to travel up to 1,000 kilometers to attend a processional that might not run more than a couple of blocks through a quaint small town.
And it should come as a surprise to no one when I reveal myself to be something of a parade snob.
A brief summary of my quality criteria follows. Bands are essential, particularly high school marching bands. As are floats. I am also quite partial to the baton twirlers, especially if their mothers are trailing after them carrying their coats. Balloons are pretty cool, but not essential (more about this below). And the Grand Marshall must completely own his or her role. I’m talking full conviction, full commitment, starched uniforms, and, of course, immaculately shined buttons.
In my vast but (alas) finite parade experience, I know of nothing that compares to the Mardi Gras cycle. Particularly the Rex Parade. I love the Rex Parade. But if you’re at any MG procession and don’t find your pulse a’racing and your blood a’flowing, well, maybe you actually died a few years ago, because there are no @ssholes on parade at Mardi Gras. They are not allowed. I am also quite partial to the Tournament of Roses, held each New Year’s Day in Pasadena, CA, and, each autum, there’s a Pumpkin March in Sycamore, IL that goes on for six hours, and which, to mine eyes, is a great delight.
As a long-time New York resident, I’d say my favorite local marching festival is the one celebrating that imperialistic, racist scoundrel: Christopher Columbus. I never miss that one, and wait in breathless anticipation for each of the many floats that feature a Long Island Car Dealership owner singing “That’s Amore”, in karaoke fashion, to the adoring 5th Avenue crowds. St. Patrick’s is pretty cool, but has one glaring flaw: no floats. You just gotta have floats. But in NY, all St. Paddy’s participants are on foot.
This leaves something to be desired, no? The Puerto Rican Day parade is wild, but entirely too crowded for my tastes. I could say the same thing about the Halloween affair in Greenwich Village.
All of which brings us to this coming week’s most ubiquitous attraction: that marching equivalent of the Granddaddy of ‘em All: the Macy’s Thanksgiving Day Parade. Never miss it. On television, that is. Went in person a couple of times, but it’s kind of a crush. The first time was around 1996, on a windy day, with my then-six-year-old son (he would’ve turned 28 this Tuesday) accompanying me — in abject terror of being crushed by one of the balloons. Heaven forgive me, but I teased him about this. And he got his karmic revenge, as, the very next year, a woman did indeed expire from injuries suffered at the hand of the inflated, aerial version of Sonic Hedge Hog. He never let me forget it. And I didn’t. Ever.
And all of this got me to wondering: what are the most menacing of those big, bobbly, capital markets balloons that are even now bounding their way down Central Park West and other thoroughfares? Elevated valuations, across virtually all asset classes (except, of course, commodities), are certainly on the list. The tragic and still-unfolding events in Hong Kong also come to mind. As does the windy bloviations of the domestic and global leaders of the free world. Bibi, that big Israeli (non-Led) zeppelin, got indicted this week. And nobody noticed. Our ubiquitous, orange, helium-filled chieftain faces a functionally similar fate. The markets, for the moment, if they pay attention at all, don’t seem to care.
I deem it worthy stating a word or two about what over the past few days has passed for breaking market news. It’s was a data-bereft week that marked the beginning of an inexorable grinding down of the action to a pre-holiday halt, but still the presses must roll. So here goes. Stone cold baller Louis Moore Bacon decided to return all outside capital from his once-high-flying, eponymous hedge fund, and I have a couple of thoughts here. Though he kept a somewhat low profile, for a generation, there was no one better than Louis. You just didn’t want to be on the other side of his trades. And he’s not going anywhere. I figure he’ll still have about $7B or $8B of spare change to play around with, and will be able to do so without having to deal with pain in the @sshole investors, and even greater pain in the @sshole regulators. And I reckon he’ll do just fine.
But about a decade ago, guys like him were eclipsed by the lofty elevations of Ray Dalio, who breathlessly made the headlines when his Bridge (over troubled) Water investment platform was reported to have established a $1.5B short position against the global equity complex. Shall we infer from this that the great, decade long, bovine promenade has run its course, finishing, as it must, in front of Macy’s flagship store on 34th Street, with those wretched dancers assaulting our sensibilities?
Well, I say no, not yet. And this for a number of reasons. First, and though I’m skeptical about the reported numbers, at last count, Big Ray had a cool $150B (that’s B with a B) under management, so the size of the position, even if correct, barely rises to the dignity of 1% of Bridgewater’s AUM. For OGs like me and Ray, this is a small change short. But I do have to acknowledge that: a) the rest of y’all don’t necessarily have a yard and a half (us playas have long referred to a billion dollars as a yard) to throw against the stock market juggernaut; and b) one way or another it’s a significant market position.
But I think this might be a case not so much of Ray being wrong, but rather that of him being early. Though the details of his nefarious speculation have not been disclosed, references to a time window that ends in March suggest that they take the form of derivatives; probably options.
So is the market gonna crack by March? I kind of doubt it. Mostly because the rationale he offers (accompanied by denials that he put the trade on in the first instance) include the perverse persistence of ridiculously cheap financing, the likelihood of expanded government deficits, and the runaway trends of asset inflation.
Except Commodities. Which continue to suck wind.
And just as we prepare to honor the original, if temporary, era of peace between European settlers of these shores and their Native American adversaries, it might be worth giving thanks that the maize (corn) that was (along with peace pipes) the ingestible centerpiece of the celebration, continues to be available at lower and lower prices.
Corn Being, Er, Corn-Holed:
I really don’t have that much to say about corn. After all, who does? I will admit that I enjoy it in virtually all of its derivative forms – even when it comes out of a can — in dubiously rendered liquids. I am hearing talk of supply disruptions from the heartland to the East Coast, due – get this – to international trade worries. But I won’t let this ruin my Thanksgiving and you shouldn’t either.
But back to Ray for a minute. Yes, there’s asset inflation, yes, financing is problematically cheap and yes, deficits are growing at an alarming rate. But RD: these things end in a bang not a whimper, right? Do you really expect the Big Bang to transpire in the next 4.5 months?
Well, maybe, but I probably take the other side of that trade (albeit, tragically, in smaller sizes). I think that absent some retrospectively unpredictable disasters, money remains cheap, deficits continue to grow, and assets continue to inflate and concentrate into the hands and pockets of fewer enterprises (including yours). I have also taken some renewed comfort in the re-emergence of the negative correlations between stocks and government bonds, and believe this trend will forcefully accelerate under any buzz-killing constructs that may materialize in the capital economy. The 2s/10s Treasury spread has already collapsed towards zero again, and is sure to migrate to material negative territory if the economy continues to slow and/or the equity markets feel the pull of acceleration due to gravity. All of this will be both enabled and empowered by political forces in a critical election year.
So money will be stay cheap, and those who are able to borrow will simply lever up further, with the intent of owning an even greater share of the world’s increasingly scarce pool of financial assets.
In short, at least for a spell longer, the bands will play, the baton twirlers will twirl, the coat-carrying mothers will trail behind, and the @ssholes on parade will continue to march, in trademark, preening fashion, until the music stops.
It will, eventually. Just not yet. In the meantime, I’d encourage everyone to enjoy the spectacal (sorry for the spelling error, but spelling isn’t my strong suit). Twenty thousand @ssholes, to the left and to the right, are truly a sight to behold, and I think, as these days of goodwill and better eating approach, we should just learn to love them.
Step aside good people, and let them take their stroll. However, as we watch the procession, each of us will face temptation to join in on the march. Please don’t do it. 20,000 @ssholes marching down the avenue is quite sufficient I think.
If I see the number has expanded to 20,001, I will (fair warning) be coming to you looking for answers.
Happy Thanksgiving, y’all. And of course…
TIMSHEL