“Going where the wind don’t blow so strange,
Maybe off on some high cool mountain chain,
Lost one round but the price wasn’t anything,
A knife in the back and more of the same….”
— “He’s Gone” by Garcia/Hunter
I can confirm the above. He is indeed gone. In a fact all them guys are gone. I watched them leave. I can’t say nothing’s gonna bring them back, but that, my friends, is beside the point.
I won’t be naming names on this board. Some of them I’d rather keep to myself. But the public domain is littered of late with purportedly permanent departures, which, by contrast, merit discussion in this publication.
I reckon we can begin with Teddy, who, along with his faithful (and ethnically diverse) companions, is gone – or as good as so – from his post on Central Park West. Some official sounding committee voted formally to bounce him on Monday.
Where’s he going? To the final home of all Metallicized Rough Riders: (Undisclosed Location). Maybe they’ll bring him back some day, but I ain’t holding my breath.
For reasons illustrated in the following chart, I’m hoping that they aren’t taking him too far:
To wit: the cost of containers has gone through the roof. Perhaps this is transitory, but it is worrisome, nonetheless. And before you score me on the topic, I AM aware that the graph describes the price path of shipping a large box from Shanghai to Rotterdam. Moreover, I’m quite clear that T.R. is neither in the former megalopolis of the Far East, nor, presumably, bound for the latter/second largest city in the Netherlands.
But from what I hear tell, beyond rising shipping costs, it’s the scarcity of boxes themselves that is sending these prices heavenward, and, if so, it’s likely a worldwide problem. They could always put wheels on Teddy’s horse and tow him to (Undisclosed Location), but doesn’t he deserve at least the dignity of a container? Which we afford even Skid Row corpses (to say nothing of owners of Mt. Rushmore visages)? Forgive me for hoping so.
More gone than Teddy is John McAfee. Who ran for President. Twice. And lost. Twice. Unlike Teddy. Who also ran. Twice. And won. Once. On the other hand, Teddy never invented a paradigm-shifting software security program. So, there’s that.
Both were crazy mofos, and, for my money, their existences net out on the plus side, having periodically enjoyed themselves, and adding, if nothing else, some much-needed color to the landscapes of our daily lives, which can often only be described as drab.
Gone, also, but perhaps not forever, is that cockroach Chauvin, who got a pissant 22.5. However, the less said about that the better.
Lee is also out of here – faded quietly away on Friday, but nonetheless drawing the attentive condolences of the fabulous Phil Lesh – bass player for our theme song. I never met him but will miss him anyway.
Meanwhile, this past week, the markets managed to resume their “nine-mile-skid-on-a-ten-mile-ride” rally, with the Gallant 500 closing out at its all-time high, and Captain Naz, General Dow and Ensign Russ all perched at proximate thresholds.
And why not? If nothing else, I am grateful to these financial armies for bailing me out on my stubborn, bullmoose, bullish attitude. And I’m not gonna stop here.
Because this hot-as-a-pistol market still feels cool inside. Bids abound everywhere one casts one’s eye. Last week, in auction land, the Treasury hit a rough patch on the two and three-year maturities but was able to magnificently scratch its issuance itch on the seven-year note. Some of this, apparently is owing to an improbable slowing in the supply of newly minted Treasury securities, which, as illustrated below, has devolved to such paltry sums as are matched by the Fed’s monthly purchases of this paper:
I believe this is a temporary phenomenon, as: a) I have a sneaking suspicion that the Treasury Department is gathering itself for some renewed, heavy auction action; and b) a handful of Fed Branch Presidents are going decidedly off script and suggesting that maybe the dreaded taper could materialize sooner than what was officially proclaimed at last week’s FOMC presser.
A pox on these turncoats! What are they trying to do? Kill the party just when it’s starting to shake and sizzle? If they’re not careful, they themselves might end up, like Teddy and McAfee: on our list of the newly/dearly departed.
One way or another, their shenanigans caused some minor liquidations of the favors of Madame X, whose rates rose to a positively usurious 1.524% by Friday’s close. Not time to worry. Yet. But if her real rates (nominal yield less inflation) rise much above their current levels of negative > 2.5%, we might actually need to pay attention, or, worse yet, devote more care, to our capital allocation operations.
But let’s not panic for the moment. Better news takes the form of some Health Care company issuing junk bonds, of seven-year duration, at a record low yield of 2.45% this past week. The issue, of course, was oversubscribed, proving that now is as good a time as any to create and sell new securities, and, for that matter, to buy them. I expect that this process will continue – unabated and successfully – until it doesn’t.
And, in terms of risks, it is my sad duty to report that no, they haven’t managed an exit, stage left. The big news out of Washington this past week was the announcement of an, er, bi-partisan infrastructure bill, and its accompanying Biden Victory Lap. However, it took no less than three hours for Little Joe to let us in on a little secret: the real play is to entice this ~$1T into passage, claim bi-partisanship, and then dump several trillion more into the budget (along with whopping tax increases) through reconciliation.
“Rat in a drain ditch, caught on a limb. You know better but I know him”. If the Republicans fall for this one, then they certainly deserve the fait that awaits them.
But the real losers will be the rest of us, who I don’t think deserve to have our faces stolen right off our heads.
I’m relatively optimistic that it won’t go down this way. It was a dubious strategy to begin with, and it’s off to a flawed beginning. If you want to catch a rat in a drain ditch, you’re probably well-advised against pointing out the drain ditch to the rat just as your plans are being hatched.
The whole saga was so absurd that by Saturday, Biden was in full back-pedal. Said he would never even consider going back on his promise to play it straight with the budget. Of course he’s gonna sign the bill he claims to have crafted! No strings attached!
I hate to press the point, but it appears to me that Little Joe is both shrinking and disappearing in real time. If I’m correct, and current trends continue, there won’t be much left of him by Christmas. He will, for all intents and purposes, be gone. Perhaps, then, we can ship him to (Undisclosed Location), and may not even need a container to do so, because there will be so little of him left to transport.
Meantime, we’ll see if the nine-mile-skid rally has another mile to go over the next few weeks. Next Friday’s Jobs Report, after two disappointments in a row, will be instructive. Then there’s the holiday. And then, in July, we see where we truly stand.
Meantime, we’re still here. A place we’ve never been before, and where we’re not going to stay for long. Wherever we’re headed, it’s somewhere else. Call it (Undisclosed Location).
It’s to a spot, together, where maybe what’s good gets a little bit better, and maybe what’s bad gets gone.
Where (maybe) the wind don’t blow so strange.
There’s a high cold mountain chain not far north of here, where land is cheap and where we might find those who are gone may have went.
Who knows? We may find T.R. up there.
I feel I’m rambling, though. Worse, I’m mixing musical metaphors.
Which means it’s time to take my leave. Yes, he’s gone, and I’ll miss him more than I can say. I want to take a moment to acknowledge and honor those feelings.
And after that?
Well, nothing left to do but smile, smile smile.
TIMSHEL