“Goo goo ga joob”
— The Egg Man (Walrus)
To the best of my recollection, we left off last week determined to hatch plans for that epic Dog Ride, and God bless you for agreeing to grace me with your company — on what promises to be magnificent journey.
In contemplating the myriad delights that await us, it occurred to me that we should bring some provisions. So, what would do you think we should pack? Yes, we want to travel light, but I don’t believe including a (moderately sized) cooler would be inappropriate. Kindly tell me what would please you to submit into this vessel, because, as you know, your wish is my command.
As for me, I ask, humbly, if we might not choose, even feature, eggs as part of the culinary entourage?
Like everything else these days, eggs are more expensive than they used to be, but prices, appear, at any rate, to have stabilized – at least in China:
Egg Prices on Some Rando Chinese Futures Exchange:
I will cop to being a little bit distraught that I had to go all the way to the land of Genghis Khan (and his brother Don) – home of those infamous wet markets — to obtain a proper futures market quote. Especially seeing as how it was eggs that launched operations for my old employer – the world’s largest futures exchange. It is now known as the CME Group, but its original handle was the Chicago Butter and Egg Exchange (Trip Note: let’s pack us some butter too).
I had great uncles or some sh!t that used to stand, freezing their asses off trading Egg Futures in the outdoor markets on the corner of Wacker and Van Buren. But that was a long time ago. Them uncles is all dead. And, in one of the more dubious acts of an organization that makes few mistakes, the CME delisted the egg contract in, like, 2010, leaving us to fend for ourselves.
So off we go to China, but not literally (and certainly not riding the dog). Only to get a sense of what that divine element of our mobile larder will set us back.
And, as long as we are on the topic, it strikes me that if we’re gonna lug eggs around, particularly given the vibe of our mode of conveyance (The Dog) we might do worse than selecting them in their demonic rendering.
I don’t insist. As we discussed the other night, Deviled Eggs struggle to find their place in my Edible Ova Top 10, falling, as they do, below Hard Boiled, Soft Boiled, Poached, Scrambled, Fried, Over-Easy, Raw (yes, Raw) and a couple of other concoctions that have little in common other than their primary ingredient.
However, as Dog Riders are aware, you need more than just eggs to make a Deviled Egg. Also essential, if an unhatched baby chick hopes to rise to the dignity of the latter, are mayonnaise, mustard, vinegar, pickle relish, salt and (of course) and paprika. From there, the sky’s the limit. One can, for instance, also include such dainties as bacon bits, cheese (preferably gouda), and, for the truly Continental, Worcestershire Sauce.
At any rate, whatever recipe is involved, it is beyond dispute that from an edibility perspective, Deviled Egg output has exceedingly wide error bars. Moreover, the Deviled Egg Edibility Quotient (DEEQ) nearly always exhibits perfect correlation to the character, reliability and skill of the culinary artiste that prepares them.
One might, for instance, confidently consume any Deviled Egg that Martha Stewart or Master Chef Charlie Trotter put in front of them. Emeril Lagasse? Hit or miss. But would any rational human ever consider choking down one of those bad boys offered up by a Street Meat vendor in Midtown? Didn’t think so.
However, given that this is a market commentary publication, I’ll let you in on a couple of little secrets: 1) Deviled Eggs are an essential at any meeting of the Federal Open Market Committee (FOMC), and 2) the preparation of same falls exclusively into the portfolio of the Fed Chair. This tradition goes back all the way to the 1791 founding of the First Bank of the United States, by Alexander Hamilton, who certainly did credit to himself at the refreshment table – particularly considering that he was born in the British West Indies.
Clearly, he set the bar high for his successors, with mixed results. Some dude named Lennox did such a bad job, disgusted then-President Andrew Jackson so thoroughly, that he went and revoked the organization’s charter (Jackson was notoriously fastidious about the preparation of his Deviled Eggs). The whole concept of a U.S. Central Bank was thus rendered unstable for the subsequent five generations, and was only resurrected permanently, in 1913, right before the War to End All Wars. When we really needed the money. Among the subsequent Baller Fed Chairs/Deviled Egg Preparation Overseers were Marriner S. Eccles (who financed WWII and generated such a fabulous DEQQ that, inside the Fed, he was referred to as Chairman Eggles), William McChesney Martin (who a really cool name and is the consensus GOAT), G. William Miller (who also served as Treasury Secretary) and (tall) Paul Volcker (who specialized in the critical element of DE presentation, and who also rescued us from that nasty bout of early-80s hyper-inflation).
Since then, it’s been a mixed bag. Greenspan had his triumphs, but also his tragedies. Then came Bernanke, The Innovative One, most famous for inventing Quantitative Easing (QE) – a device that enables the Fed to print new money out of thin air and use it to buy marketable securities.
What is less widely known, however, is the other form of QE he conjured up – Quantitative Egging, under which the main ingredient in our side table concoction is not the issuance of hens impregnated by roosters, but rather, facsimiles thereof — mass produced by the same computer algorithms that spin up the new money.
These went down pretty easy across Big Ben’s tenure, and the process was successfully continued, with feminine flourish, by the fetching Janet Yellen. Who recently (following daintily in the footsteps of G. William Miller) has now bounced across town to head up the Treasury Department.
Her successor – current Fed Chai Jerome Powell is now The Egg Man. The Algo is running hot, perhaps too hot (especially if inflation trends sustain themselves), and investors are currently suspended in breathless wonder as to how long, and at what amplitude, the Machine will be allowed to sputter on.
We got a hint of an answer at last Wednesday’s FOMC Presser, during which Chair Pow suggested that for now, he has no plans to power down the device. However, in a nod to investor worry warts, still ravenous to consume those restuffed paprika-sprinkled yokes (but somehow retaining a concern as to the longer-term impacts of excessive monetary/egg output), he literally said that the time has come to “talk about talking about tapering” the whole operation.
The risk markets did not like this, and the Gallant 500 and other indices clocking in with their worst weekly performance since October. When we all was locked down. When that Big Orange Guy was running the show at the White House and still stood a sportsman’s chance of being re-elected.
And as The Fates ordained, just as Powell stepped up to the podium on Wed, the Fed Balance Sheet crossed the significant threshold of $8,000,000,000,000.00. Which (any way you prepare them) is a lot of eggs.
My own take on the sequence is as follows. I can’t imagine a more dovish statement issuing forth, at the moment, from the Fed. Outside of Egg World, inflation is starting to run rampant (May PPI dropped on Tuesday at an astonishing, above expectation 6.6%), and the citizenry (i.e. the electorate) is feeling the pinch. Prices at the pump, for instance, hit a 13-year high this week. Powell was unable to ignore this, particularly with his former boss (still presumably barking orders at him) working the monetary side of the ledger for the current administration, and not wishing to be blamed, politically, for runaway price increases.
So, what does he do? He keeps the machine running full tilt, maintains current short-term rates at the functional equivalent of zero, but sternly warns us that they may begin to discuss turning down the dials of the former at some point, and that the latter may inch up in 2.5 years. If this is what passes for hawkish monetary rhetoric, it is the limpest such expression that I, personally, can envision him making.
We will get our next indication of his thinking at that horrid annual wingding known as the Jackson Hole Economic Symposium. The good news is that should we wish to attend, The Dog can take us there. There’s Greyhound Bus Terminal is at 105 Buffalo Way, in Jackson, WY, and from there, we can probably hitch a ride to the highbrow conference center where the big action will be going down. Don’t worry, though, even if our supply of Deviled Eggs has dwindled by then, there’s sure to be plenty on hand at the event itself.
Because the Fed will not, cannot raise rates here. There’s too much debt out there, held by too many important institutions (enterprises like insurance companies – who – trust me, we do not want to see bleeding P/L). He can smack talk all he wants, but at the end of the day, the money/eggs, will keep coming down the shoot.
The markets seem to understand this, maintaining Chinese Egg Price Stability (see above), and, perhaps more importantly, buying up Treasury Paper in sufficient quantities to beat the band. In consequence, Madame X and her Aging Aunt: The Flirty Thirty (30-year Bond) are at their lowest yields in months.
Thus, over the last week, we saw a rather bizarre coupling of Treasury Yields and equity valuations. I don’t believe that this love match will sustain itself; the Gallant 500 and Madame X simply have more that divides them than that which brings them together for them to canoodle into eternity.
As such, I gotta think that last week’s equity selloff offers nothing more than a compelling entry point for my crew of intrepid risk takers. There’s no rush here. Valuations could drift down a titch more, and if (when) they rise, it is likely to take us for a long, superficially pleasant, ride. We alight, if we wish, later on.
Kind of like what I anticipate when you and me hop on The Dog, with our cooler full of Deviled Eggs at our immediate disposal. We don’t need to start at the Port Authority; the station in the Delaware Gap will do.
Please clear your mind, mi amiga. And think about our upcoming trip. We should have a lovely time of it, and, as for rising gas prices, well, that’s The Dog’s problem; not ours.
Before we go, I can let you in one other secret, which should put your soul further at ease: Chairman Powell, indisputably the Egg Man, is also the Walrus.
And, therefore, in closing, I can only take my leave where I began — with an enthusiastic “goo goo ga joob”.
TIMSHEL