Ride, I’d like to ride again someday, I think I still know how to play,
I play games now, but it’s not fun, a cowboy’s work is never done
— Sonny Bono
Permit me, if you will, to present a modest proposal. Let’s ride the dog (again).
Among teaming hoards that follow this publication, many probably don’t have any clue as to what I refer. If you count yourself among these numbers, please know that I won’t hold this against you. However, I salute the rest – those who comprehend what riding the dog is, and more so, those who have actually ridden the dog, because (as I hardly need to inform you) riding the dog is more than an action, more than a transitory choice. It is, in fact, an Ethos. The Ethos of The Dog – aka – The Greyhound Bus Line.
I’d call it an alternative lifestyle, but I don’t want to insult anyone.
I myself have ridden the dog — to the tune of several thousand miles. From San Bernardino to San Diego. From Madison to Chicago. And back. So often, in fact, that I consider myself fully credentialed to write about it – from both a practical and aesthetic perspective.
Know also that those of you that believe this mode of transportation to be beneath your dignity are objects — more of our pity than of our derision. That we wear our dog riding chops as badges of honor. As we roll down the Interstate in our air-conditioned custom seats, we are almost giddy in the knowledge that if nature calls, relief is right down the aisle (we will allow, however, that you’re on your own in terms of what you encounter when you enter that private inner sanctum). And we can’t help but scoffing at you down there in your Benz, hauling ass to get to the nearest roadside consumer center and its adjacent rest rooms.
Truth, though, is that our dogs have seen better days. Oh, you can still cop a ride on them — from the Port Authority Bus Terminal on 8th Avenue, for instance — to pretty much anywhere in the Lower 48. But the busses themselves could use some polish, the number of routes is diminishing, and yes, even the built-in privy facilities are becoming, quite literally, more of a “hit or miss” affair with each passing day.
Them big dogs gotta eat, though, and the economics around this challenge are, by appearance, quite vexing. This young century alone, Greyhound ownership has changed hands numerous times. A Canadian private equity firm paid, like, $4B for it a few years back, and has been trying to dump it ever since. During the pandemic, they suspended service across their native Canada, and then (in an act I consider to be high treason) abandoned their home country altogether.
I’m pretty sure they unloaded their U.S. unit – busses, routes and bathrooms, for, like 100M quid (~$140M), and, if so, it implies that those latter-day rovers took a Lhasa Apso clipping on their investment.
But all is not lost. Could there possibly be a better time to reinvigorate this divine corner of private, mobile enterprise? The country is reopening, the planet is on the verge of boiling over (or so I’m told), the price of petrol is through the roof (and going higher), and the highways are jammed up. If we all just committed to riding the dog, we’d be saving money, energy, the environment, and, perhaps most importantly, our precious time. It’s all so 2021. So, if you will, woke.
So, waddya say? Should we book reservations on the dog? Just you and me?
What’s that you ask? No, we can’t get directly to Paris that way — unless you’d settle for Paris, TX, with its glorious bus terminal that puts Versailles (and The Port Authority Building) to shame, an image of which I present (along with that of the town’s principal visual attraction), for your particular enticement, below:
Fear not. I promise to take you to the City of Light — home of Baudelaire. Final resting place of Chopin, Wilde, Bernhardt and (of course) Morrison. Stomping grounds of Hemingway, Miller and Parker — and soon.
Meantime, if you accept my interim suggestion, we can meet at the Port Authority, book our tickets, and arrive at our Lone Star destination in little more than 36 hours. It is the Seat of Lamar County, after all, and, once having registered with the local authorities there, we can check out that tower with the derby on top. Yes, we will ride again, someday, baby, to see that Frenchified cowboy, whose work is never done.
And nothing for nothing, but what currently passes for trading and investment strikes me as being the capital markets equivalent of riding the dog anyway. Illustrations and empirical support for this statement abound in abundance, and I’ll start (naturally) with the Treasury Market, which, tepid yields and inflation threats notwithstanding, is en fuego. Madam X sold off $38B of her favors at auction on Wednesday, and her admirers couldn’t get enough of them. So frenzied was the bidding that it took her yields to < 1.5%. Her younger sisters (2, 3 and 5-Year Notes) were objects of similar rapture during their own auctions, and even our past-her-prime 30-Year Bond drew excessive, passionate attention from her suitors (as of now, anyway, the old gal has still got it).
Then, on Thursday, the big Consumer Price Index figures dropped, at a terrifying 5.0%. The Treasury Market’s response? Bid ‘em up!
As such, and by all appearance, investors appear eager to ride these flea-ridden mutts, greedily gobbling up any tidbits they are inclined to yield. Readers who have sufficient devotion to recall my crudely formed real interest rate calculation should be aware, though, that according to the formula, real rates are now at -3.5% (10-year rate of 1.5% less 5% inflation). To me, this doesn’t even rise to the dignity of giving a dog a bone.
But investment dog-riding is not limited to the Treasury Complex; plenty of this sort of thing going on in other asset classes as well. To wit, over the past month, the best performing instruments in equity-land are those short interest indices and baskets. And nothing says “downward dog market” more than generating your alpha by owning bundles of securities that everyone else is short.
One can, of course, eliminate the middleman and invest directly in these names on one’s own. Kennels full of Redditors, as is well known, are doing this very thing. While still not done with their Affaires du Coeur with sellers of obsolete gaming cartridges (GME), they’ve nonetheless expanded their infatuation to include the owners of movie theater complexes (AMC), along with a company that provides – get this – a novel concept called e-commerce services (WISH).
No judgment here, and I’m not saying that any of these companies – per se — are dogs. But whatever species to which they belong, we are unquestionably riding them.
I don’t have much to add to the socialized wisdom on these topics, and, meanwhile, me and my buddies find it more compelling to try to figure out which name is next. Best suggestion I’ve heard thus far is Tootsie Roll Industries (TR), a company whose exclusive mission is the production of, well, Tootsie Rolls.
Toot Toot Tootsie – Hello!!
I really like Tootsie Rolls – who doesn’t? Plus, they have the added appeal for me of being manufactured on the banks of the Chicago River. And, in consequence, for the six warm months of the year, the late afternoon West Loop is filled with the delicious aroma of chocolate.
But more importantly, the stock looks ripe for meme-ing. Tootsie features a healthy 20% short interest, a spiffy P.E. of > 40, declining cash flows, etc. All the trimmings necessary for a canine joy ride. But these things take on a life, vibe of their own. I don’t know what drives the selection process, and, for the most part, I don’t care.
Meantime, for actual and aspiring market dog riders, I think it’s a fine time to either climb or stay on board. The Washingtonian cupboards are full of kibbles and their custodians will dole them out without expecting us to either beg or roll over. Prices in the real economy are rising, and neither policy makers nor investors are showing particular concern. We’ll get a measure of corroboration of this dynamic next week, with Tuesday’s Producer Price Index Report (projected at a petrifying 6.2%), and Wednesday’s FOMC meeting, where (shock) the Committee is expected to let the Inflation Dogs ride. So much so, in fact, that its latest Dot Plot looks like nothing so much as the trail left behind a pooch that has been ridden too hard, for too long, and is destined to be put away wet.
Not much, therefore, is being asked of the investor class; only that they keep quiet and enjoy the ride. We are likely to hit additional potholes on this stretch of road, which (not gonna lie) has offered anything a smooth sojourn lately. But I believe we’re certain, ultimately, to reach our intended destination of higher valuations.
And as for the physical ritual of boarding and occupying a Greyhound Bus, I’m ready if you are. And I don’t particularly care about the destination. The Westminster Dog Show started this weekend, but they’re holding it in Tarrytown, NY rather than at the Garden. So what better time to hop on our silver, motorized canine and speed away.
So yeah, let’s do it. The Tootsie Rolls are on me.
TIMSHEL