Our titular theme is so intuitively delicious that it surprised when an internet search of the phrase came up pretty much empty. There is a band out there called the Ice Cream Socialists, but even they only have like 267 Facebook followers, dating back to 2017.
Back before one of our two warring governance factions, in Caesar-like fashion captured a 5- seat majority in the House, a (Vernal?) Equinox in the Senate, and of course, the Presidency. Whereupon, subsequently, and armed with this resounding mandate, they urgently determined to change this nation’s evil ways, to cure 4 centuries of geo-cultural evils, to save the smoldering planet from heatstroke, and, most importantly, to instruct us as to how best to think/comport ourselves.
Carpe (as Caesar might say and probably did) Diem!
It was also before the virus, before the lockdowns, before that cockroach pressed his knee on Floyd’s carotid artery. Before the cities burned. And the Capitol was stormed.
And before that magic moment last April, when, as the rest of the country was choking on covid cells, Speaker Pelosi — Commander of that Majestic House Majority, decided to cheer us up with a high production video of her designer ice cream stash, elegantly ensconced in her even-more-designer matrix of customized freezers.
Now, I like ice cream. As much as the next guy. But not as much as I like Big Bird.
It’s the socialism part that frustrates and annoys me.
However, even as custard and gelato remain in frosty repose in the Pelosian cold storage units, the road towards socialism rises up to meet our feet. I really hate writing this, because, quite frankly, the implied ad homonym name-calling bores me.
But sometimes a man is just called to state what it is that he sees.
Most of our citizenry declares itself against socialism. Our politicians are aware of this and know that they must mix this medicine with an appropriate dose of sweet delight — if they are to impel us to choke it down at all. It may now be in the hands of God to determine whether or not a spoonful of sherbet helps the socialism go down.
To be fair, our first delicious tastes of it all came, in gulping heaps, from the most unlikely corners of the Washingtonian ice box: The United States Federal Reserve – an outfit clearly branded as being aligned with Free Enterprise. More than a decade ago, they got the clever idea that rather than managing the money supply (as their charter instructs them to do), they should manufacture their own galactic stash of it, and dish it out to the boys and girls of the investor class. Maybe it was needed at the time, to stave off depression — in the wake of what was, after all, a pretty nasty collapse of the financial system.
But no one can accuse them of launching into this enterprise with anything other than unmixed enthusiasm, as their balance sheet grew from what entering 2008 was the mini-cup sampler size of $800B to a double serving/waffle cone magnitude of ~$4.5T by 2014.
All things considered it went down pretty well. During this period, the Gallant 500 emerged from the critical care unit, put up a contemporaneous three-bagger, and one could certainly argue that the key contributing factor was that magnificent experiment in Quantitative Easing.
Allow me, now, for the purposes of this report, to fast forward to the fateful month of March 2020, when everything came apart. The Fed revved up its Frosty Freeze machine again, this time to full throttle, and topped us off with another few tril – all in the space of a few short weeks last Spring. Thus, as I bang this out, its inventory of cash and marketable securities is approaching (and will quickly exceed) $8T. Meanwhile, the Gallant 500 has rather gallantly kept pace, having also nearly doubled in the last year. Still and all, across the entire QE sequence, while assets at the Fed are up more than eight-fold, the G5 put up only about 600%, but Captain Naz posted a full 10x.
It is thus difficult to objectively view their activity over past 13 years, and particularly the most recent 12 months, as anything other than a takeover of the equity markets by the United Socialist Federal Reserve. And if my razor-sharp rhetoric doesn’t convince you, perhaps a look at the associated time series will:
ENTIRE QE ERA:
OUR LOCKDOWN YEAR:
It certainly looks to me like our intrepid equity indices are marching in lock step with their leaders: The Peoples’ Monetary Army at the Fed. Oh sure, we had some productivity gains for all of the above, got hooked on Uber, that sort of thing. But I say none of it happens without the Big Ice Cream Money Manufacturer leading the charge.
And what does it amount to? A transfer of resources – from one group (say, savers who don’t earn squat on the money they stow away) to another (investors), courtesy of the Fed, and based upon little else other than governmental agendas.
But if you gonna do the whole socialism thing, to do it right, it’s best to spread the love around – particularly to the unwashed masses. Who might otherwise get cranky. Which we can’t have. So, we start with the fiscal giveaways. $1.9T being spun up on spoons as I type these words. Likely another $2T (er, Infrastructure) about to be taken out of the freezer and delivered on our plates. The mouth waters at the very contemplation of these dainties.
Oh, by the way, though, our hosts hate to mention it, but this sweet, cold stuff is expensive, and must, after all, be paid for. So, ever so gently, they suggest that it’s time to turn up the tax collection apparatus. Nothing dramatic; perhaps a little extra extracted from those fat cats making over $400K. Or let’s make it $200K. Just a trifle; you understand.
Any way you spin it, it’s another version of the same game. Elected/appointed officials taking from one group and handing out to another, based upon their rules, their agendas. Marx, wherever he is, must be smiling.
I reckon I could live with all of the above if the sponsors weren’t so sanctimoniously mean about the whole thing. I’m probably not gonna get a hand-out, and will almost certainly, one way or another, get handed in. But it’s all so humorless, so joyless.
On the other hand, I’m not terribly sure where humor intersects with the road to socialism. I do know that paths of capitalism are chockful of jocularity, as, along these thoroughfares, if one looks, it is not difficult to encounter the likes of, say, Jerry Lewis.
However, to my way of thinking, all available roads — Avenue S and Avenue C, lead back to the Fed, which (as becomes clearer with each passing moment), no matter what else happens, will need to step up its paltry $120B-$150B money printing program. This is true if they don’t raise taxes and even more so if they do. The yield curve is steepening, and the riot squad of the investment community is restless. Every time that fickle Madam X (10 Year Note) lifts her yield skirt another notch, the market sells off.
This much is nearly certain: the pattern will continue.
It all, once again, brings to mind that unfortunate selloff at the end of ’18, driven (as it was) entirely by mere threats of higher rates. In that episode, the markets quickly brought the commissars at the Fed to heel and will do so again.
Meantime, the clearest call I can muster is that we’re entering an extremely volatile market interval. Particularly when March melts into April, everything will be in play: Earnings, Factor Rotations. Fiscal Policy. Monetary Policy. Macro Statistics. The emerging 17-year locust cycle. Not much visibility into any of the above.
I’d travel light here, folks. Because you never know what could get ya.
But I reckon it doesn’t matter what road you take, as long as you look fabulous along the way. And you do. Look fabulous, that is. I know this because I’ve seen the pictures.
We’re all headed somewhere these days, and it makes me hungry just thinking about it. Yes, I think I’ll have some ice cream. Maybe the kind with marshmallows and nuts buried in the chocolate.
But if it’s all the same to you, I’ll hold off on the socialism, which, in my view, destroys the vibe pretty much entirely.
So, in the unlikely event that Speaker Pelosi invites me over for some Rocky Road, I think I’ll pass and just head to the local Dairy Queen instead.
There’s a rumor going around that the Ice Cream Socialists are playing a gig there. But even if they don’t, I’ll take my chances.
Pelosi and her cronies are already dishing up enough Rocky Road to last a lifetime.
TIMSHEL