What went down is this:16 years into running the show; 3 in its current commercial configuration, this past Thursday, and met without me. I might also add that the sit-down transpired in our sparkling new corporate offices that I, at their request, shelled out for. Yes, they were kind enough to inform me, but only after the fact.
I’m trying to place the most positive framing I can on the episode, but of course there are red flags everywhere. The misanthropic New York Knicks, for example, hold several of these a year, as they burn, season after season, through coaching changes and into lottery eligibility. And they’re not alone. These sorts of things happen all the time, in every sport. And usually they don’t bode well for those in management that are explicitly uninvited to the proceedings. True, they fall short of the dreaded “vote of confidence” issuing down from the fat cat owner, but more often than not, within a short time after, it becomes apparent that it’s time for the old coach to get ready to pack his bags.
But from everything I can determine, my company is not a cellar dweller. Business (touch wood) has actually been pretty good lately (I won’t say more). As the leader of the enterprise, I am unaware of any internal communications issues. But maybe that’s just because nobody bothered to tell me they existed.
I am happy to report that the meeting was said to be a productive one (aren’t they all described as such?), covering the full range of challenges and opportunities that we, as a commercial concern, are confronting. But I can only take the word of my staff on this. Because I was not present for the session.
Don’t get me wrong; I’m glad that they took the initiative. But I’m sort of supposed to say that. Aren’t I?
And while we’re on the subject of Playas Only Meetings, the big one in Davos just wound up, and (though we won’t know for sure for a few weeks) we seemed to have survived that one. Everyone knows, meanwhile, that only stone cold playas make it to the Davos roster, and one of them, whose playa credentials cannot for a microsecond be questioned, was my old boss Paul Tudor Jones. The only matter of surprise is that he actually allotted any of his precious bandwidth to the festivities. Because let me assure you that if he spends even 15 minutes talking to you, you must be pretty fabulous. And you are.
When I worked for him, we had many meetings without him (mostly because he never had those precious 15 to spare), but none are ones I would describe as a Players Only Meeting. About all I paid attention to from Davos was a written summary of an interview he granted, in which he suggested that this here rally (as driven in large part by monetary policy), and improbable though it may be, has yet to run its course.
I am on record as agreeing with him.
So maybe this whole Players Only Meeting concept is a good thing after all.
I’d even go so far as to suggest that the team in Washington get one of these together. They sure look like they could use one – without the President, Speaker of the House, Senate Majority Leader, and for that matter, every member of both Houses of Congress, the Cabinet, the Supreme Court and even new Washington Redskins coach Ron (Chico) Rivera.
Of course, such a concept begs the following question: who in the entire District would be left to attend? The lobbyists? Please. Perhaps the Jesuits Priests that run Georgetown University? Well, maybe.
Meantime, the market juggernaut took a pause from its heavenward ascent as the week wore down, and everyone knows the reason why. At the point of this correspondence, the dreaded Coronavirus appears to be gathering steam, and whether it becomes a pandemic or not remains to be seen.
I have no informed opinion about this, so I won’t share one.
However, as our business here pertains exclusively to market commentary, I will say that the germ’s path is a risk worth monitoring. Unless this thing is contained, it could wreak enormous damage on the capital markets. We. Just. Don’t. Know. Yet. Here’s hoping it is the bio equivalent of what I like to describe as Storm Porn. You know, when a Nor’easter of any material force causes cable channels to send some poor schlub to the Carolina Outer Banks, crank up the wind machines, and film him clinging for dear life to a strategically placed telephone pole, while reporting breathlessly about mass evacuations.
We usually survive these episodes, and here’s hoping that the same is true for the salty but lime-less Corona menace. But in the meantime, the markets reacted in Pavlovian fashion. As mentioned above, the Equity Complex sold off. In addition, the USD rallied, and the long forsaken VIX perked up to the tune of >20%.
But there are a couple of other market moves upon which I believe it is important to fix our eyes. Let’s first take a gander at Crude Oil:
I’m gonna break protocol here and actually encourage readers to look at this chart, a careful inspection of which reveals a market under pressure even before there was a run on face masks in the Far East. It is now testing lows that run in high correlation with escalations of the Trade War. Almost indisputably, the acceleration of the selloff was catalyzed by Corona, and if we can somehow contain the virus, the bubbling crude will in all likelihood bounce back.
But as I’ve stated many times before, the purveyors of this still-vital commodity are deep in hock, will need to refinance, and may have trouble doing so if a pandemic shuts down the ports of tankard ingress across the planet.
More significant, at least with respect to my (agenda-driven) agenda, was the reaction of the bond markets to the latest dire bio-tidings. Witness, most importantly, the yield-crushing bid on the 10-year note:
Note, also, that the most recent drop in rates transpired in contemporaneous time with an actual (albeit modest) decrease in the Fed Balance Sheet:
So investors were buying bonds (and not just in the U.S.) in droves at the first signs of turmoil, in sufficient quantity to offset downward price pressure that one might otherwise expect from Fed selling. This, my friends, increases my confidence that any headwinds in the global capital economy will be met with waves of fixed income buying, in the process reducing interest rates to increasingly microscopic (if not negative) levels, and, ultimately, catalyzing the further concentration of investment flows into equity markets. If, for instance, the Corona takes a dire turn, it wouldn’t surprise me if the U.S. 10 year goes negative. At that point, unless we are all quarantined, there’ll be nothing to do but buy stocks.
Similarly, if the Dems somehow rally around Bernie, as they currently appear to be doing, and he (unthinkably) convinces a plurality of the electorate to support his tearing down of the mechanisms and institutions that have provided everyone with the time and luxury to get their b!tch on about how evil we are and how radical the changes must be, well, I see a similar dynamic emerging.
It’s clear, by all indication, that the party with which he caucuses (he is actually an Independent) is holding round the clock Playas Only Meetings to try to stem this tide. We don’t know how this will play out, but there’s a couple of points to consider as I wind towards my circular close.
First, with respect to our thematic thrust, there’s a big distinction between Players Only Meetings and Playas Only Meetings, and, to borrow from an old poker adage, if you’re sitting around a conference table and don’t know which type applies, well, you can draw your conclusions from that.
More importantly, whatever happens with this current Corona episode, and come what may, we can expect some trying times in the coming months. I will need you to be at your best. So please take care of yourself. If you’re sick, get some rest. If that doesn’t work, try some Theraflu. Or go see the doctor. Because the truth is I can’t do this without you. We will be tested, perhaps acutely, and can only power through together. So do it for me.
And as for my krew. Good on you for your proactivity. I mean that. Sincerely. Only good things can come from this.
And I’m not gonna fret too much about that ownership “vote of confidence” thing either, because, after all, I’m the principal owner.
However, if, in this space, you see me offering a vote of confidence to my own contributions to my Company’s success, well, then, it may indeed be time for all of us to really worry.
TIMSHEL