So, we lost Bernie – an octogenarian/co-religionist of mine, famous moving other people’s money around (mostly funds residing only in his imagination) — and pissing a lot of people off.
But no, I’m not speaking of Bernie Sanders, who, to the best of my knowledge, is still with us. Rather, this week’s Bernie is Bernard L. Madoff, who departed to the hereafter on Wednesday, from his most recent living quarters in the Butner, NC Federal Prison.
Readers can hardly expect me to allow his final egress to pass, unremarked.
But I was thinking along the lines of our titular themes even before Bernie bounced. It’s a variant of a universal phrase, which reminds us that if certain of our antecedents had been born with a different anatomy, those predecessors’ positioning in our lineage would assume an altered form. The point being that retrospective, hypotheticals (“ifs”) notwithstanding, reality is what it is.
“If your grandma had balls, she’d be your grandpa”. This is the saying’s straight up vernacular. The way an Irishman, for instance, might say it. It’s elegant in its simplicity, no?
But to my ears, it falls, in terms of panache, well short of the modified Yiddish version: “”If your bubbe had beytsim, she’d be your zaidah.”
Which is positively Shakespearean.
It’s not clear to me that in our current, modified social configuration, the phrase even still applies, as the presence (or absence) of beytsim is no longer, it seems, a relevant consideration for our conditional hypothesis. Nowadays, whether one has beytsim or not, it is one’s prerogative to declare themselves a Bubbe, a Zaidah, something in between, or (if one dares to dream) a category beyond this spectrum.
But for all of that, Bernie still died, and it thus devolved to me to shift the phraseology to acknowledge his passing. Let’s start with this. Bernie was not a bubbe, but rather a zaidah. Twice over (had two biological grandchildren). Self-identified as such. He therefore presumably had beytsim, both biologically and certainly in his business dealings.
In any event, he’s gone, and not terribly much lamented. And we won’t bother much more about him.
Forever and ever, though, the “ifs” that plague our retrospective hypotheticals will avail us of very little.
I’d like to be able to conjecture that Bernie (yes, we’re back to Bernie for a minute, but – I promise – not for long) would’ve appreciated the current trajectory of the tape, which, for days and days, has registered nary a downtick. But as we all know, he never really traded in the first place.
Neither did I. Which sucks for me. If only I would’ve bought ‘em a year ago. Or five, ten, twenty, fifty years ago.
But then again, if my bubbe had beytsim….
Anyway, the markets don’t need me to buy ‘em. There are, by all accounts, buyers aplenty out there. They appear, in fact, to be multiplying like hobgoblins.
And why not? It’s like June is busting out all over – only a couple of months ahead of schedule. And I, for one, am happy to forgive it for its excess of punctuality.
Earnings season began last week with banks and other financial institutions putting up blowout numbers, but here I will cop to feeling a little nervous. These institutions are notorious for journaling their books around to achieve various reporting objectives. And I feel if there was ever a time for Jamie, James, DJ DSol and the rest of the crew to hold back a little (maybe goose some loss reserve charges or something) Q1 21 might have been a tempting moment. What with all of this glorious virtue signaling and whatnot, from a PR perspective at any rate, the broadcasting of record, financially driven profits (Goldman’s yearover- year 5-bagger, for instance), might at minimum, be deemed to be poor taste.
None of them guys will ever be considered turnip truck casualties (they’re really smart) and are thus presumably well aware of this dilemma. Which makes me think that even the numbers they did clock reflected something of an understating on their part.
If so, that GOAT of return-journaling: Bernie (there he is again; sorry) would be proud.
But it’s not just Wall Street riding the cha-ching train. Blowouts are transpiring everywhere one cares to cast one’s glance. Retail Sales? A boffo 9.8% in March – driven, gloriously if you ask me, by an unambiguous explosion in consumer spending. One of such great force that Ima gonna share the following chart with y’all, the reality that it graced the top headings of the WSJ Economics Section notwithstanding:
Just a glance at this graph is making me hungry; I’m dying to visit the Colonel. And then visit him again.
And all of the good news just keeps exploding from every quarter. There’s a housing shortage estimated to the tune of 4 million units, which can only boost home values. Crain’s New York recently reported that home sales in Greenwich, CT, that Everytown, USA, which has endured nuclear real estate winter since the 2008 crash, have nearly doubled this year, with median prices up 31% — albeit to a still (for most of us) affordable $2.25M.
It also looks like folks is also getting back to work, as, on Thursday, Weekly Jobless Claims plunged.
The price of a bushel of corn, now nearing six big ones, is the highest in eight years.
If all of this sounds a bit inflationary to you, well, you’re not alone. And the statistics bear this out. Prices for just about everything are on the rise.
If this was a normal market environment, the organic economic response would be a rise in interest rates. But that ain’t happening – at least for the moment. Madame X, who began the month at an (approaching) saucy yield of 1.75% (and expected to go higher), has backed off, rather demurely in my judgment, to a much more docile 1.58%.
I feel certain that our above-mentioned, beytsim-bereft 10 Year Note, remains the belle of this here cow ball. If she stays where she is, very little on the visible horizon is likely to stem the tide of rising valuations for risk assets.
But if that bubbe grows beytsim and becomes a zaidah, it could signal the beginning of the end of the party.
So, I’m watching Madame X, to the point where some might call it stalking. I suggest you do the same. If she behaves herself, we’re headed to much higher elevations than even those breathtaking thresholds that have manifested in recent days.
But even if, on the other hand, we observe her dropping her price panties and lifting her yield skirt, I’m pretty sure that the capital markets overseers will make the appropriate policy adjustments to keep the romance of this rally alive. Powell and Yellen (both of whom may reside somewhere in the middle of the beytsim-possessing spectrum) will not be in a position to allow rates to sustain at elevated levels.
Because both are accountable to the uber-beytsim powers that are pulling the strings. I’ll save my diatribe about who they are, what they want and how I think they’re setting about to get it, for another time. For now, I simply encourage you to connect the following dots.
Capitalism, Corporatism and Private Enterprise are under perhaps the biggest form of rhetorical assault since the Great Depression. Political forces are driving energetically to either destroy, or, at minimum, socialize key sectors of the economy. The swells of a great wave of punitive taxation, regulation and redistribution are forming before our eyes. Corporate leaders, even as they post record profits, are paying obeisance to these tides, in a manner reminiscent of 18th Century French Nobility sidling up to those young bloods who captured the Bastille and removed the head of Louis XVI.
The economy is awash in debt.
Yet the markets keep rising, to the disproportionate benefit of the few. Does this indicate anything to you about who’s calling the shots and the nature of the ultimate outcomes they seek to engineer?
It will take Bernie-like beytsim to pull it off, and I don’t think that, in the end, they can be successful. Any more than Bernie was. Any more than those French Counts were — back in my childhood days of 1789. That episode ended with them all sending each other to the guillotine.
They got their heads chopped off but retained their beytsim. However, without the former, the latter were likely to be of little use to them. From this perspective, it may be fair to state that beytsim are not unilaterally essential. For example, I am delighted that you do not have them. Because I wouldn’t change anything about you. Not. One. Thing.
But while not always indispensable, beytsim do have their utility. I’d like to grow some more for myself, but the good lord only blessed me with what I got.
I will strive to move forward accordingly, and suggest, as your risk manager, that you do the same.
TIMSHEL