He did NOT want to return to Memphis. On this the record is pretty clear. The City was a powder keg, and it wasn’t clear whether his re-emergence would be a calming or disturbing force. In addition, he was, at the time, pursuing a bigger dream: a massive poverty march on Washington, organized through the Southern Christian Leadership Council. But he knew he had to defer this, and head back to Elvis-land.
The backdrop was as follows. In February 1968, the City’s sanitation workers, in the wake of years of racial discrimination and after the trash compactor-crushing of two of their own, called a general strike. Cretin Mayor Henry Loeb declared the action illegal, refused to meet with the labor representatives, and called in the National Guard. The image of hundreds of a forlorn but determined and almost entirely black work force — carrying signs that said nothing more than “I AM A MAN”, while the US Military was drawing beads on them, is so powerful that I feel compelled to share it with you.
Mayor Loeb’s approach didn’t work out so well for anyone; tensions did nothing but escalate. In late March, Dr. King paid a visit to the Mississippi River town, doing his level best to bring the mantra of non-violent protest into the proceedings. But the situation only worsened.
There were riots and lootings. Most of you are too young to remember this, but King, at the time, was more reviled than loved (the same can be said about Lincoln, who I didn’t know, but still love and weep for). The Johnson Administration, The Press and Hoover’s rogue FBI all used the episode reinforce their narrative that King was nothing but a dangerous agitator.
So, against his better judgment, he went back, intending to show a better way. On April 3rd, at the Mason Temple, he delivered his “I’ve been to the mountaintop” speech. By the next twilight, he was gone.
And he thus passed into history as perhaps one of the nation’s five greatest heroes, and perhaps the finest of the Twentieth Century. And tomorrow, we celebrate his life and works with a National Holiday. I will cop to some ambivalence about the whole “day off” thing. I count myself among King’s greatest admirers, but I think there are better ways to honor him than the sop of a 3-day weekend. Yes, Jesus gets a National Holiday, but Washington and Lincoln split one. I have a few of further points to make in this regard. First, it seems like the kind of dry bone we always throw to ameliorate our collective guilt about matters such as racism, which, if you listen to the press, only rises with the passage of time. But old gangsters such as myself, if we’re honest, must admit that race relations, in terms of anything but rhetorical flourish, are actually much better than they were in 1968. So, to honor King, wouldn’t it be better to do something productive, like authentically contribute, say, the entire day’s national value-add, to the causes for which he lived and died? By my math, that would amount to >$50B. Every year. Think (absent those pesky middlemen) what good that would do. I’d sign up. Right away.
Plus, if we really wanted to honor the Good Doctor, we’d be celebrating on his actual birthday. Which is January 15th. I don’t know about you, but that’s my day – to live up to every aspiration I have, and every expectation that is placed upon me. I’ll leave the rest in the hands of the Good Lord.
But after 4/4/68, the world kept spinning and turning, and, now, more than 91 years after MLK began his brief but magnificent walk on this earth, we find ourselves at an interesting pass. The rhetoric around racial issues is as heated as it’s been since that horrible Spring, 52 years ago. Matters that are clearly troubling (wage/opportunity/housing disparity, gang violence, the shocking proliferation of unwed mothers, the opioid crisis, etc.) are given short shrift, while virtue signaling becomes a weak sister proxy for problem resolution. At this point, the only possible occupants of the Oval Office in 2021 are all white, mostly male, (except for Mayor Pete) mostly straight and (except for Mayor Pete) unilaterally old.
The markets, however, chug along in untroubled unawareness, or, at any rate, indifference. More than that, they are in full bovine crescendo. Last week, our gallant indices lurched to record levels pretty much every day. All of them are (as was the case last year at this time) annualizing at near 100% or greater.
Alphabet has crossed into the $1T valuation club. JP Morgan recorded an astounding, record-setting >$30B Q4 revenue number. My friends on the Street inform me that last week also manifested an unprecedented level of call options buying – particularly for tech names and broad-based indices.
32 members of Congress – all from the left side of the aisle – received brand new souvenir pens, and then let the selfies fly, putting an acute exclamation point on the solemnity of the exercise they were enacting.
What could possibly go wrong at this juncture?
I’m not gonna lie; I struggle to find an answer. I do think that the construct falls short in terms of holiness of, say, MLK’s “I have a dream” speech, but rising to those heights routinely is not something to which it is in our particular interest to aspire. Because that would be too much for us all. By any historical measure, global stock valuations are frothy, but, as I’m advising my clients, I think we must throw out the history books, or at minimum, put them in long-term storage facilities. There may be a time when it will make sense to bust them out, dust them off, and see what they have to say. But that time isn’t now. Because our equity complex is entirely indifferent to such quaint metrics as P/E ratios:
Please, I’m begging you, don’t look at this chart. I know I certainly won’t. It tells a tale of 10-year highs in the cost of buying a dollar of earnings in the form of stock investment.
I don’t however, see any reason that the squiggly line (I knew you’d look) cannot continue its heavenward ascent. We’re still looking at a 4th consecutive quarter of negative earnings growth. But the buyers keep buying them – with the top six dogs on the roster now boasting a greater market cap than the entire German equity complex.
To hell with Germany, though, I say. Didn’t we show them who was boss 75 years ago?
To reiterate my broken record message, the Fed is still printing money and using it to buy IOUs from its besties in the Treasury Department. Most of these are at the short maturity end of the curve, but there’s good news also for those who focus upon longer dated instruments of debenture. With barely concealed glee, Treasury just announced that by the second half of this year, it will begin issuing 20-year notes, bringing a much needed symmetry to the on-the-run government yield curve. We’ve got overnights, monthlies, quarterlies, one-year, two-year, five-year, ten-year and thirty-year bonds by the bushel basket, but I’ve often looked wistfully at that gap between Uncle Sam’s IOUs that now mature between 2030 and 2050. And, when the new 20s arrive, I expect to feel better.
As I type these words, I can envision many a Gulfstream Jet going wheels up for some gasbagging and shushing at the World Economic Forum in Davos. Long-time (and careful short-time) readers are aware that I will avoid paying much attention to these proceedings. If something interesting happens, perhaps one or more of you can inform me of the details. But, like Archie Bunker told Edith when she felt compelled to let him in on Mike and Gloria’s Dead Bedroom problem, I ask you to: “Go slow. Don’t put in nothing extra. And stop when I tell ya”.
Those eyes that are not on the Swiss fabulousness may be affixed to earnings, which should be interesting, but which may not move the needle much. Early returns suggest that there is indeed some price sensitivity in reporting land:
However, on balance, I think we’re still in Beta configuration, with the whole complex going either up or down based upon the whims of the algos and the sheep that follow them.
More specifically, I am convinced that credit for this impossibly extended rally belongs entirely to the Fed. And if I’m right on that score, then there’s no reason to think it is going to abate, much less reverse itself, any time within the foreseeable future.
It’s just human nature, kids. Approximately 11 years ago, everyone (including me) believed we were witnessing Armageddon emerging before our eyes. But the Fed printed money and bought bonds. Since that time, stocks are a five bagger. We have full employment, sustained GDP growth and no material inflation. Moreover, late 2019, when Chair Pow and his minions thought that the time might be right for some tough love, the results were little better than achieved by Mayor Loeb when he called in the National Guard. So they reversed course. Hard. And as of now, it’s working like a charm. Who on earth possesses the foresight and discipline to introduce a measure of maturity/prudence into the mix?
Perhaps Dr. King might have. But he was done in on a Memphis hotel balcony, some 52 years ago. Recently, his rep faced some tarnishing, based upon widely published reports of serial womanizing. But by and large, we have chosen to overlook these failings, and concentrate instead on his miraculous good works. And I am delighted we have done so. And I wish we would show more of this type of forbearance – for All God’s Children.
It’s just not that hard, whatever your failings, to make someone smile, even if just a little bit. Maybe they’re having a bad morning. On their special day. Show them some love, and it will come back to you a hundred fold. It may just be a moment that you will never forget. And it may help secure what is now a highly uncertain future — for you, and for all of us, come what may.
This is how I chose and choose to celebrate Dr. King’s birthday. I’d go so far as to encourage you to do the same. But, as the saying goes: your mileage may vary.
TIMSHEL