And not in a particularly good way. Those among my readership with groupie-like traits (and/or in groupie-like states) are aware that I am something of a shredder myself. Well, at least I try. Which is more than can be said for most of y’all. And, given my efforts, I grant myself license: a) to know shredding when I see (hear) it; and b) to opine upon its quality/authenticity.
From my remote perch in the Greater NYC area, I’m here to tell you that this past week, there was a whole lot of shedding (or efforts at same) going on.
Let’s begin with the Ag markets, from which issues, across those windy fields, my tortured titular mash up theme. It hasn’t been a great year for Wheat investors, but I will allow my readers to make their own determination as to whether the price action rises to the dignity of the Shredded Wheat allegory which, in a state approaching desperation, I have tried to gin up:
Shredded Wheat? You Decide
I have very little to say about this chart, and really don’t care if you look at it or not. Let’s just say that this commodity has gone through periods of greater hardship without disrupting the business flows of those evil food conglomerates (Nabisco, Kellogg’s, and its current corporate paymaster: Kraft) that grind out those fibrous square nuggets and ship them to our groceries and shelves. This tells us something, I think, because Shredded Wheat is exactly as advertised: Wheat that is Shredded. It contains no other ingredients or byproducts. So I reckon the Corona-induced ~$0.40 price drop, is, on balance, an entirely survivable event.
So let’s move on, shall we? Last week, there were a couple of deals that were torn to shreds, in ways that (I’m not gonna lie) broke my heart. First, I regret to inform you that just as the rest of the squad is joining the Pitchers and Catchers at the Mets’ Spring Training HQ in Port St. Lucie, FL, my plans for playing 2nd base, have been, well, shredded. My old chieftain, Steve Cohen, apparently will not be acquiring the team after all. Published reports indicate that his purchase plans went awry when he realized that the terms of the arrangement did not contemplate him actually running the club’s operation; instead, he was called upon to allow the misanthropic Jeff Wilpon to continue calling the shots for the next five years. Had they asked me, I could’ve saved everybody a great deal of time and aggravation, because letting someone else call the shots is just not how Stevie rolls.
But it’s a helluva shame. Because I’d been practicing my double play pivot, and it was reaching levels of fluidity and grace not seen in those realms since Rogers Hornsby hung up his cleats.
I was also disappointed to learn of the torn-to-shreds breakdown in negotiations between the Intercontinental Exchange (ICE) and on-line auction platform eBay. Though I have a multi-decade affiliation with the (ICE nemesis) Chicago Mercantile Exchange, I really liked this trade. ICE is a gargantuan derivatives marketplace; eBay deals in actual physical products. I felt, perhaps, that it was time for the twain to meet. The general rap out there is that eBay mostly exists for Beanie Baby enthusiasts to swap inventories, but the record shows otherwise. Most of its top selling items have a technology motif: the transacting of used (and presumably wax bereft) ear buds, lithium batteries and such. And why not trade these on a proper exchange, maybe even in derivative form, for future delivery?
Besides, what under heaven is wrong with the concept of Beanie Baby futures? Or, for that matter, options (as long as they are not purchased in their last week and held all the way till expiration)? Well, we may never know, because the folks at eBay gave a one-finger salute to the ICE overtures.
And now we must turn, wearily and regrettably, to the topic of politics, where the shredding action was fast and furious. I’ll try to be brief and gentle here. That the Iowa Caucuses were an exercise in the ghastliest political shredding spectacle since the Federales sent the army into three southern states to reverse their electoral college results, and steal the 1876 election from Samuel Tilden in favor of the glitzy Rutherford B. Hayes. Everyone is blaming the app. Yup, it was the app’s fault. That’s what they are saying, and how could it possibly be anything other than the full truth? The Iowa Dems are said to be considering going back to (shreddable) paper, and it’s hard to fault them for these musings.
But depending upon how the next few weeks play out, under certain scenarios, the Bernie Bros may be compelled, for the second time in a quadrennial, to take out their long knives and shredding a few party regulars. I wouldn’t, and won’t, be surprised if this happens. Because if there was purposeful shredding in the Hawk-cauc, Bernie was most certainly the target. Extrapolating out, if Bloomy (or a proxy thereof) manages to pull a fast one here and buy his way in, the fur is really gonna fly. And he’s a tricky son of a gun. He’s already hoovered up a galactic proportion of the available media time, goosing the costs of advertising for his competitors (who are running out of money no matter how much they raise) to the tune of >100%. If this string plays out, and he cuts a deal with the party elders to lead the ticket, well, what then? The Bernie Bros are gonna go ape sh!t is what. They will ram the red agenda down his throat. And (this notwithstanding) they will stay at home in November. Hell will freeze over before they move their skinny asses to pull the lever for a septuagenarian white billionaire that thieved the prize from their boy.
It’s all a Gordian Knot through which the sharpest knife (Excalibur?) cannot cut. What is needed is a baller shedder of the proportions not witnessed since the days of the (British) Camelot.
All of which brings us to The Big Shred. You know the one I’m talking about. Nancy ostentatiously ripping up not one, but four separate copies of the State of the Union Address, in front of a worldwide audience, and while the Big Guy was still laying his magic verbiage on the masses. I have very little to say about this, but I did like the part where they caught her on camera making dainty little prelude rips into each of these documents, to ensure the fluidity of her shred. I reckon how anyone felt about this is tied to their predisposition concerning the current political calculus, and will leave off from there.
So what under heaven does any of this have to do with market risk conditions? Wish I knew. Nominally, investors have shrugged off the various above-mentioned shredding episodes – across the Kansas Wheat Fields, in the Manhattan Offices of MLB Central, in the back rooms of ICE and eBay, over the vast expanse of the Iowa Corn Fields, and on Capitol Hill – all with great equanimity. About the only thing that put a speed bump into the equity juggernaut was a blowout Jobs Report, featuring a gratifying number of new gigs, relatively robust wage gains and a significant uptick in the Labor Participation Rate.
Go Figure.
But it’s hard to quibble with the overall consensus. While the rest of us were busy observing the b!tching up of caucus reporting apps, not removing the President from office, nervously monitoring the Corona, or walking away from deals for which I personally was rooting, the rapidly-lurching-to-wind-down earnings season manifested a reversal of fortunes that was Lazarus-like in its unfolding:
Yes, my friends, I suggest you look at this one. In two short weeks, the trends are such that instead of yet another quarter of income contraction, we are, 2/3rd of the way through, actually looking at a positive interval of earnings growth.
It’s only one reporting cycle, it’s not in the bag yet, and the pundits inform us that it was, if not empowered, then at least enabled, but an unseasonably warm winter which had folks out shopping, dining and even building, sewing and hoeing. You are of course free to form your own judgments, but as for me, I’ll grant myself liberty to feel encouraged by these tidings.
And, in general, I think that this here market probably has some additional shredding to lay on us, of the Hendrix/Page vintage, ere it lays down its axe for the last time. No, it won’t last forever, and I don’t know how much higher our indices will climb, but my advice remains what it has been: a) don’t get too cute on the short side; and b) you have my permission to buy any dips that may ensue, in drive-by fashion, over the near term. But if you’re going to consider b) you must be prepared to act fast.
As a case and point, in late January, and as the Corona was germinating, one had the opportunity to purchase such fabulous names as Amazon, Apple and Microsoft at an approximate 10% discount to prevailing valuations. Next time such a prospect presents itself, you have my permission to lay in.
These trades will not be riskless, but if they were, where on earth would I be? There are tradeoffs involved, and at times, we must be prepared to be wrong. Even about something important. We’ve got to think a little longer term here if we are to realize our dreams. But God willing, we’ll get there. The Dem nomination is still anyone’s game. Though their saying otherwise, Stevie may yet cop the Wilponless Mets. There’s another State of the Union Address scheduled to take place in ~360 days, and the possibility exists that all official copies of this speech may remain intact and preserved for posterity.
So let’s keep at it, shall we? It may very well be the little things that matter here. If your furnace needs inspecting or refilling, don’t put this off, because: a) it’s still winter; and b) I don’t want you or your loved ones to freeze.
And I reckon that’s about it. For now. It was a tough week. A shredded week. I’m pretty worn down by all the action, and not entirely convicted about my mash up theme for this here note. What would probably be best for me is a bowl of Shredded Wheat, but with respect to that product, the cupboard is unfortunately bare. However, I do have a half-full (and thus optimistic) box of Wheaties staring at me, and a paper shredder stationed immediately to my left.
I will, therefore and as always, improvise with the materials at my disposal, and hope for the best. But here’s the thing: I don’t even like cereal. Of any kind. I won’t eat it except under the direst of circumstances. So please understand that my closing comments are entirely allegorical.
And if all of this is beyond your scope of understanding, well, then, my best advice is that you just forget the whole thing.
TIMSHEL