By: Ken(neth Louis) Grant
Like the pine trees linin’ the windin’ road, I’ve got a name, I’ve got a name
Like the singin’ bird and the croakin’ toad, I’ve got a name, I’ve got a name
And I carry it with me like my daddy did, But I’m living the dream, that he kept hid,
Movin’ me down the highway….
— Jim Croce
I figure that the time has come for me to formally introduce myself. I’ve been posting these here notes on a number of forums without a byline for quite a while. But that’s over. At least for now.
So, like lining pine trees and singing birds, I got a name. It’s Ken. Ken Grant. KG. Kenny G if you must. My given name is Kenneth; my middle name is Louis. After my great grandfather Louis (Louie) Goldstein, born in the UK to Lithuanian immigrants. Genetically, he was 100% Litvak, but actually spent the first few years London. Eventually, he and his family bounced to Chicago. Made some dough, though (alas) in magnitudes generationally in sufficient to pass to me.
But Litvak Louie never forgot is British roots, and is not remembered, over the last forty years of his life, to have been ever seen without his top-hat, spats and cane.
Crazy motherf^cker, that Louie Goldstein. I wish I had actually had the chance to meet him.
But he was my mama’s mama’s daddy, so I’ll carry my name like my great granddaddy did. More than this, I can honor him by channeling him. And I do. So much so that I have recently contemplated my own pretentious affectation. Specifically, rather than calling myself Ken, or KG or Ken Grant or even Kenny G, I’ve been thinking of embracing my full-on handle of Kenneth Louis Grant.
Kind of trips off the tongue elegantly, right? Has a certain savior faire, no? Plus, I’d be following in a proud tradition of tri-nomenclature guys. Think John Maynard Keynes. Or Edgar Alan Poe (disregard Lee Harvey Oswald and Kim Jung Un). Or maybe even David Lee Roth, who (I recall reading and for reasons that I hardly need to explain) has recently felt compelled to drop the Lee.
I am able to offset Diamond Dave by featuring my own middle name, but I can’t do this alone, so I put it to you, my readership, as to whether I can pull it off. Fair warning, though: I’m not sure that even if I receive overwhelming support for the concept, that I make this move. Because. (maybe). I. Just. Can’t.
I will, however, carry forward with my manic market commentary, come what may. It was a modestly but pleasingly “up” week for the Gallant 500, but you know who’s really balling out? Captain Naz, gaining another 4% to yet another (yawn) all-time record.
Other than this, markets are by and large quiet; (everybody say it with me) too quiet.
But if you’re looking for some action (and let’s face it, who isn’t?) it may be worth examining a couple of linked financial instruments, because they be ballin’ too:
Copper and Tesla: Can’t Have One without the Other:
I’m gonna do y’all a favor and skate by the assertion that the rusty colored commodity, up nearly 50% since the covid invasion, is having a MUCH better year than the beleaguered public servants that share its appellation. But even the stuff that they use to stamp out those economically obsolete coins that feature the image of that once-in-a-century hero who, in the current cycle of madness, has somehow been demonized as a racist/war criminal, is sucking wind in a comparative sense. Particularly relative to that ubiquitous electronic vehicle company, which has registered more than a three bagger in this funky year.
You probably know this, but it actually takes a massive amount of copper to roll out a Tesla – approximately 20 kilograms (had to go metric here, because the shorthand for kilos is – KG). Clearly, Team Musk is on the bid side, but who in heaven’s name is buying the rest of the stuff?
And, for that matter, who is buying anything these days, particularly for risk assumption purposes? Because this KG says that there is a galactic amount of risk in the market at the present moment.
I’m not trying to argue that we’re about to crash, because I don’t think we are. But the world, our lives, do not seem to reflect the arguably grim. realities of the economies we face. And I am pretty certain that it’s all gonna change fairly dramatically, and soon. I hope for the better. But getting there will take some work on our part. In all likelihood, we gonna have to suck it up for a spell.
And I look around in disbelief at the calm before the impending storm. Hundreds of thousands of businesses are functionally insolvent with little or no remedy in sight. Millions of jobs have been lost and many more millions more are at risk. 25% of NYC renters have been squatting since March. Brooks Brothers just filed. The latest trends suggest, at best, a Mexican Standoff with Corona Corona. If schools don’t open this fall (and they may not), my God; I don’t even want to think about it.
Alas, I fear I must go on. This past week the frigging Supreme Court effectively handed half of the State of Oklahoma (including the great city of Tulsa) to the descendants of a slave-owning, Confederacyaligned tribe of Native Americans. Ought to be interesting to see what they do with that gift. My guess is that they will expand their reach and go after the Hamptons, upon which the tribes have an arguably stronger claim. I suspect, though, that the woke and powerful will exert greater and more effective pushback on that landgrab. Because, let’s face it: who that matters really cares about Oklahoma? But the East End of Long Island? Jurisdictions such as Sagaponack? That, my darlings, is sacred ground.
And though lord knows I hate to point this out, sh!t is getting more real by the day in the realm of political risk. Biden put out his economic platform this past week, and, while there were few surprises, its content nonetheless bears reviewing through a market lens. Of course, he plans to top off taxes, restore the corporate income rate back to 28%, and capital gains to a big fat 40. If you’re me (Kenneth Louis Grant), you wonder how this will play out in restoring an economy that’s looking at extended period double-digit employment. As well as massive insolvencies, which won’t shrink with higher taxation.
The ratio of American debt (public and private) to GDP is currently on pace to top 350% in 2020. And the Feds (who can print their own money) are only about a third of this. The rest is owed by states, cities, corporations and individuals. Even now, there’s no bread to pay more than a small portion of it, and, if the election goes the way of the blaring consensus, government entities will grab a much greater share of it: as much, in fact, as they can. They will justify doing so, in purely rhetorical fashion, as a means of exerting fiscal responsibility, and of course, of helping the less fortunate. But if history is any guide, these funds will most likely disappear into a black hole. Then they will ask for more.
Of course, Biden’s program goes on from there. This week, in an interview with Yahoo News, he made the following observation: “It’s way past time we put an end to the era of shareholder capitalism”. He’s now formally endorsing Universal Health Care and the Green New Deal. Combined price tag should run to about five years of current GDP or more. But that’s current GDP; before the dilutive impacts of Biden’s restrictive, redistributionist policy. So, if he wins, GDP drops. Hard. Case and Point: the two sectors ear-marked for political obsolescence (Health Care and Energy) account for more than 20% of it.
With the guy now being a nearly 2:1 betting favorite to take the prize, one wonders, as an investor, what could possibly go wrong? At least he has not (yet) pledged in writing to dismantle the western notion of the nuclear family. But interest group that holds the greatest sway in this fair land, whose logo the Mayor of New York took time out of his impossibly busy schedule to paint onto the street below the President’s primary urban residence, has identified this as a core objective of theirs. It makes me scared. And sad.
And a bit crazy. So much so that in the last week, I actually broke the stems off of two pair of glasses that I actually use to see where I’m going. There are those that prefer me without them, and god bless them for the sentiment. But I promise you that as a risk manager, the world is a safer place when I am able to wear them. Let’s not add my bumping in to walls and running over pedestrians to our list of worries; OK?
Meantime, a brighter light on the investment horizon (at least insofar as I can make it out in the distance) is the continued (so far effective) cycle of monetization of all risk instruments by Central Banks. Yes, my loves, the cash from the magic money printing machines continues to flow serenely across the globe. And a lot of it has yet to be deployed. And I see no other feasible outcome than a continued bloating of fiat currency, with proceeds applied to burnish the investment viability of financial instruments
Thus, the Irresistible Force of infinite borrowing will at some point, maybe soon, meet the Immovable Object of equally unlimited money supply. It will be like nothing that has transpired in about three thousand years of money-based economics. And we don’t know how it will play out. Not in the least.
And all we can do is move ourselves down the highway. Carrying our names, like our daddies did, like Jim Croce did till his plane went down. Like my great grand-daddy, Louie Goldstein did, with spats and cane. So, I reckon it’s time for me to roll (my spat-less, hat-less, cane-less) carcass down the road.
What name I carry with me is, again, for you to decide.
TIMSHEL