London Calling, and I was there too,
You know what they said, well some of it was true,
London Calling at the top of the dial,
And after all this, won’t you give me a smile?
— Joe Strummer
Can y’all give it up with me one time for the Clash? Perhaps the most underappreciated band of all time? You could at least try. And, for the under-initiated, I urgently encourage you to give them a careful listen.
Start with their Magnum Opus: a double album entitled (you guessed it) “London Calling”, which dropped on December 14, 1979, precisely four decades prior to my writing this tribute. It opens with the apocalyptic title track whose last verse I have purloined above. Fun fact: this Armageddon-themed masterpiece opens with a Mick Jones guitar riff that actually is the Morse Code sequence for S-O-S.
But I have a few thoughts to share about the LP itself. It was sufficiently off-the-hook to cause (its 1979 release notwithstanding) Rolling Stone Magazine to name it the best album of the Eighties. On a more personal note, it has a permanent spot on my Mount Rushmore of records. Because: a) I’m your friend; and b) you’re dying to know, I’ll share the other three. In no particular, order they are: The Doors’ LA Woman (I can’t bear to part with a single note on that Jim Morrison swansong), Bob Dylan’s Blonde on Blonde (I could write a tome about this one but let’s just say that: 1) released in 1966, it set the standard for albums that others – including the Beatles – couldn’t reach until 1969/70; and 2) it is the greatest album title of all time); and Elton John’s Tumbleweed Connection (trust me on this one).
But among other matters, The Clash’s Call from London sounded a menacing alarm to my generation: the latter day Baby Boomers, born after, say, 1955, who hadn’t at that point accomplished much. Not like their decade-older brother and sisters (who gave us Rock and Roll), and certainly less that our parents and grandparents – The Greatest Generation, who shepherded us through the Depression and WWII.
London Calling was in other words a scream at us to get our heads out of our collective @sses. And I think, writ small, we accomplished this. But our track record is mixed. Our music, by and large and by comparison, sucked. We fought no great wars. We did an unimpressive job of improving the world’s ethos. But we did deliver the Internet, so there’s that. And whatever else on might think of Michael Jackson, he was a stone cold musical genius.
But we are probably the most well-born generation since the Roman Empire. We have enjoyed, for our entire lives, an unprecedented interlude of relative peace and prosperity. One could state fairly that measured against this benign backdrop, we kind of squandered our associated opportunities. Maybe, though, that’s not fair, because, maybe, a generation needs more hardships to really squeeze out the juice of transgenerational greatness. Our parents and grandparents did what they did because they had to. Their worlds were imploding. Our older brothers and sisters at minimum faced the real threat of being shipped over to Saigon (now Ho Chi Minh City), and, more vaguely, of their entire universe being blown to bits by the Soviets or the Chinese.
One of my greatest fears is that the good times will not, cannot last. Check all of recorded history and let me know if you can find a similar era of 70 years without plague, famine or militarized global strife. Didn’t think so. Part of me thinks that it’s only a matter of time until the sushi hits the proverbial fan.
But from my vantage-point, the party does not appear to my winding down anytime soon. And, as has been pointed out elsewhere, this past week was a particularly encouraging one from an investor-oriented perspective.
Yes, London was calling. With some accretive news. Breathless (non-exit) polls to the contrary notwithstanding, Capitalist/Tory/Trump Clone Boris Johnson scored a whuppin’ on his Labor Party opposite numbers, and this has several implications for us, my loves. First off, it assures some clarity on Brexit. The Limeys are indeed taking their clotted cream, warm bitters, and splitting the scene. How that works out for them remains to be seen, but at least now we know. Perhaps more pertinently, the result offers an eerie verisimilitude to the electoral tidings of 2016. Recall, if you can, that the first indication that the unwashed populous was mad as hell and weren’t going to take it anymore arrived with the Brexit referendum that June. All of the elites, all of the pundits, all of me, were sure that the Brits would vote to remain in the EU. And we were all wrong.
In retrospect, this surprise outcome was a clear foreshadowing of November 8th, when, even after all three networks had projected a Trump victory, I thought Madame Clinton would have the opportunity to install those Oval Office drapes that she had (prematurely) selected after all. And we were wrong. Again. And I don’t think it’s too much of a stretch to suggest that a similar sequence might be in play, as we are impelled to consider the possible outcomes for the next presidential election cycle. If so, it will certainly redound to the benefit of security valuations.
Certainly markets have embraced this mindset, because, as valuations stretch from one zenith to the next, one has to assume that the heavenward ascent is, at minimum, abetted by the winds of certainty that good Ole 45 is likely to win again. Because, as I’ve pointed out before, any other outcome would rationally induce a wave of selling rather than buying. And one cannot blame investors (much) for so believing. Because here, I must (reluctantly) mention something about this whole Impeachment escapade.
It’s not going well for its sponsors. I won’t delve too deeply, so relax. Just a couple of observations is all. First, after perpetual, wild-eyed determination to deliver two to the head to Big Orange, the vague charges of Abuse of Power and Obstruction of Justice (the latter being the last refuge of (prosecutorial) scoundrels) are laughably thin gruel. And they won’t stick. And one day of official House testimony, mostly delivered by agenda-slathered law professors, wasn’t a very good setup. It will be interesting to see, next week, when the pre-holiday, fix-is-in vote takes place, how the numbers stack up. I truly feel sorry for Pelosi and those Congress members in Trump districts. I don’t think they want this, but are being forced to play along. And this will cost them seats come November. Lastly, and as perhaps the clearest indication that this here project is bombing like that unfortunate post-Mick Jones Clash album, is the reality that the Squad is laying back. Were this not a complete sh!t show, them ladies would be clawing each other to grab the spotlight. But smart women that they are, they know it’s a loser.
As mentioned during last week’s baseball note, Trump also looks like at least a political genius by timing an introductory deal with China contemporaneous to these futile attempts to remove him from office. If, as I suspect will be the case, he papers something that looks bigger this Spring, well, as a political operative, I yet again tip my (Met) cap to him. As a further show of the leverage he is accumulating, he also came to terms with his would-be electoral assassins on that NAFTA replacement deal. A review of the charts suggests that at least the Mexicans and (to a lesser extent) the Canadians loved it.
The major occidental CBs also weighed in this past week, with both Powell and LaGarde (the latter in her ECB Chair debut) laying down a vibe that can only be described as way chill. None of these tidings, it is true, catapulted the Gallant 500 and its domestic peers to material new heights, but hey, we’re already up 30% this year, and, with only 10 legit trading days left, I seriously doubt we’re gonna blow 2019.
Looking past the holidays, I’m nominally optimistic. First, a >20% gain in a given year is almost always followed by a double digit redux.
Mostly though, I think that with laughably cheap financing almost certain to prevail, it may very well be capital markets activity that fires the 2020 engines. It will be a very good time for corporations to acquire market share. The currency of their equity valuations has never been worth more. They can borrow for a song. And even if the acquisition-based objects of their desire are signally overvalued, well, what’s the point of being rich if you can’t buy nice stuff at ridiculous prices? This is true even for us proles. In fact, I’ll meet you at the Apple store. And when you walk out with not only a new Mac Book but also an 11+, I’ll give you a joyful hug. Somewhere down the road, I may have to reign you in, but not during this holiday season, after such a year of magical adventure between us.
Yes, someday this party will end, and if we’re looking for warning signs, they’re not hard to find. The world, as I and others continue to point out, is on an irrational borrowing binge. And it’s lasted 10 years. Since the sheriff last removed the padlocks from the houses we couldn’t afford but bought anyway.
Please bear in mind that in an unprecedented move on my part, I’ve reused a graph from an earlier episode of this series. But I think the content, being unprecedented itself, merits the repeat.
More importantly, I am convinced that there’s no way that this money can ever be paid back – other than through the shameful process of monetization. Ultimately, these trends scream of whirring monetary printing presses, full on government bail outs, and other stunts about which we used to laugh at Banana Republics for even considering.
But that’s a problem for another day; for now, the binge continues. And I think it implies higher valuations, more wealth concentration, and a greater scarcity of investible securities, ere we come pleading to the custodians of taxpayer dollars for forgiveness, and, more importantly, release of obligations we can’t hope to honor.
In closing, I encourage you to celebrate what has been, by most measures, a magical year. Yes, I’ll be writing next week, but you won’t be reading, because it’ll be Christmas Eve Eve Eve. As a twist of the calendar, the date will mark the 17th anniversary of the death of the one and only Joe Strummer, who keeled over at age 50 from a congenital heart condition that he didn’t even know he had. I’m using the occasion to write a song – not dedicated to him, but channeling his genius as inspiration. I may also buy a few books, and pull a couple of other surprises as well.
It crushed me when he died, and I still miss him. We all should. But let’s face it, there’s innumerable spirit destroying realities we dwell on if we so choose. I won’t go into them. Instead, I’ll ask you for one small, pre-holiday accommodation:
After all this, won’t you give me a smile?
Thanks; I needed it more than you know.
TIMSHEL