It’s one of my favorite words in the English Language. And it’s not even English.
It’s Arabic. And it looks really cool using Arabic script. So much so that I feel compelled to share it:
It sounds cool too. And I think that we should all say it together. On three: INSHALLAH.
It translates into our native tongue as follows: “If God wills it”. Muslims everywhere use it at the end of statements of hope. And so, too, should the rest of us. I think.
It offers no assurance of outcomes; only a hope for same. Every language and culture features something of this nature, and often the way it is worded says a lot about those that speak in that particular tongue. In Spanish, the term “que sera, sera” comes to mind: “what will be, will be”. On these shores, we tend towards “it is what it is”.
Like I said, it tells you something. Because I’ve been thinking about this, and what I’ve determined is that America is like humanity on steroids. The good, the bad, you know, everything. So, when we say: “it IS what IS”, we really mean it. We live in the present and act accordingly.
Spain? Mexico? The French-speaking French or the Italian-speaking Italians? Not so much; prefer, in general to just roll with it. They kind of figure, well, “what will be, will be”.
But Muslims say “Inshallah” – if God wills it, which also reflects the life protocols of that religion. And the phrase, it strikes me, is particularly apt at the moment for all of us, because whatever happens next – good, bad or horrible, no one would be faulted for ascribing it to God’s Will.
At times in these pages, I have shared the sentiment that the period from the end of WWII to the present day, has, for the Western World, been one of unprecedented peace and prosperity. 75 years without a major war, famine, plague or depression. Yes, there have been hard times. I, for instance, in the 70s, myself suffered through the unspeakable indignities of wearing largely unbuttoned silk shirts and hitting the discos – because that’s where the girls were. But in general, we’ve had a pretty good run of it over the last 7.5 decades. An unprecedented one. Consider, for instance, the preceding three generations (1870 through 1945), or the three before that (1795 through 1870). I hope you get my point.
And my fear has always been that it’s unsustainable. And maybe, just maybe, now is the time that our magnificent innings in the sun have come to a close. The truth is, I just don’t know.
At the moment, we arguably face a stone-cold Hobson’s Choice. Shut down an entire economy to stop a virus or let both of them ride and hope for the best.
The answer, of course, lies somewhere in between. And the outcome, under any strategy, is anything but assured. Maybe we thread the needle. If not, well, I don’t even want to think about that.
As of now, all concerns in my mind are dwarfed by the need for clarity as to how broad, deep and menacing a path the virus itself blazes. I just can’t get a clear picture. And we need to know, because it is this reality that will determine how much damage awaits us. not only medically, but in the markets.
Can anyone enlighten me here? The news flow of course shades to the negative. But I will confess to feeling last weekend that the final days of March would tell an important tale. I couldn’t shake the fear that this past week and next, the numbers could go truly parabolic. So far, they haven’t, and I’m gonna choose to view this through a positive frame.
I’ve also, albeit with a jaundiced eye, been looking to the markets for clues, and have found this to be a mixed blessing at best. Presumably, the investment world is modelling the path of the disease in real-time and allocating its capital accordingly. Could these sage custodians of assets dare to load the boat without fairly strong conviction that this whole CV thing was contained, or, at minimum containable?
Well, we have our answer, now, don’t we? Our resilient indices registered their best week since 1931, one that featured the greatest single day rise in market history. But think about that. Nineteen friggin’-Thirty-One. The dawn of the Great Depression – one that would last, several false bottoms notwithstanding, until the, er, miracle of WWII snapped us out of our fog and set the stage for that magnificent 75-year run referenced above. Things could’ve turned out differently, you know. What if Hitler hadn’t invaded Russia, adding maybe the most badass army in the world to his foes and forcing him to fight on 2 fronts?
But I reckon that this ain’t 1931. Yet. The markets don’t think it is and have reacted with unilateral glee to the latest set of baller moves out of Washington. The Fed’s all in – INSHALLAH. The >$2T stimulus bill was certainly needed. I doubt it is sufficiently large to plug the economic Corona Corn Hole.
Meanwhile, we move along in our eerily and terrifyingly altered lives as best we can. I haven’t seen you in what seems like a lifetime and I doubt if I can carry on like that much longer.
Bob Dylan released his first original recording in eight years – a >17-minute dirge about the capping of JFK. It’s melody-light, but of course the lyrics cut deep. Fair warning: it won’t improve your mood much. But I’m certainly glad to get some new material out of my favorite artist of all time.
And as for the markets, I consider them a hot mess, and my best advice remains to give them a fairly wide berth at the moment. I was glad to see Friday’s selloff, if for no other reason than to bring some sobriety into the proceedings. In general, I think, and almost hope, that the next leg is down. Gun to my head, however, I wouldn’t mind if the descent was deferred until Wednesday, after the close of what was certainly an historic quarter. This would be beneficial from a couple of perspectives. First, at least this time ‘round, I am all for tape-painting of quarterly performance over a three-month span that is unlikely to gladden the hearts of even the most forgiving of capital allocators.
I also feel that a non-disastrous print on 3/31 will go a long way towards staving off a wave of default triggers. You’d think we would’ve learned something from that whole Enron fiasco, but it looks to me like a significant amount of corporate obligations are tied to the retention of certain equity valuations. And trust me on this – we do not want these levels to be triggered, because even worse financial disaster ensues in the wake of them.
All of which brings to mind images of what is likely to be one of the most surreal earnings reporting cycles of all time, set to commence in a handful of days. The numbers for Q1 won’t be the feature act; now more than ever, forward guidance will tell the tale. I see two perverse and diametrically opposed incentives coming into play. For companies sufficiently insolated from the carnage, there will be great temptation to “kitchen sink” the quarter, emphasizing all of the negative contingencies that loom for them, in the confident hope of looking like heroes when worst-case scenarios fail to materialize. Conversely, and particularly for highly levered enterprises, the incentives may involve some gilding of the lily, so as to avoid scaring off their creditors and bearing witness to the full-scale evaporation of their liquidity and funding sources.
All of this reduces the valuation-based signal to noise ratio to levels of statistical insignificance. And in the meantime, we don’t know what damage the virus will have caused. But we do know this: the galactic policy response is insufficient to counter the economic carnage it has created, even if it withers and dies right now (it won’t).
So, I ask: why by ‘em here? I do take some comfort in the fact that no fewer than two dozen of my investing-savvy comrades are begging me for the moral sanction to load up. Moreover, this is the attitude of most of my clients. I have shared my views with them. And the substance of them are that there is no edge at the moment, that risk levels remain beyond elevated, and that anyone inclined to step in there should, at minimum, do so with the full expectation that it is likely to be a bumpy ride.
Oh, and then there’s this. Yields on the long end of the U.S. Treasury Curve still must continue to plunge into the netherworld. I won’t rehash my arguments again, but will gently ask my readers, when the 10-year yield does go negative, to remember that I told them this would happen.
“They also serve, who only stand and wait”. So once wrote English poet John Milton. He was right, you know. I’ve used this before and I’m using it again now. The present moment is hardly the time to make any bold investment moves in any direction.
So that’s where I’ll leave matters off for now. I think investors best serve, on balance, by standing and waiting.
So much uncertainty; so much idle time to fret about it. So little time, on the other hand, to make important decisions regarding our future. It’s not what we envisioned or hoped for now is it, my love(s)?
But it is what it is, and what will be will be. Some of it is indeed only as God will’s it. That’s what the Muslims are conveying when they utter the phrase Inshallah. But I’m not Muslim; I’m a Jew, and we’ve been quarreling with them about trivial issues for many centuries. Maybe this is a good opportunity to set some of these squabbles aside.
Moreover, with the holy season just around the corner, it may bear mention that the Jewish religion takes a starker view of these weighty matters. We have our version of our titular theme – embodied the following phrase: TIMSHEL, which translates into “Thou Mayest”.
It’s the blessing that God gave to Cain after putting His mark on him. Like Inshallah, it offers no promises; only chances. As a gift from above, it is decidedly finite, but, in my judgment, no less divine.
For what seems like ages, I’ve used TIMSHEL as my tagline. And I have my reasons for doing so. But as I dwell in my own quarantine, hoping and praying for good outcomes, and wondering when oh when we can be together again, I think it shades a little too negative for our purposes.
So, I close with best wishes for health, safety and whatever, in these troubled times, passes for a little peace of mind. Plus, at least for this week, a heartfelt…
INSHALLAH