I had not wished to be forced into this but given a) there’s a new viral menace hanging out ‘round, which b) has been given a name (B.1.1529) so obtuse, that: c) despite my pressing insistence to the contrary notwithstanding, it is being redesignated as my beloved Omicron, I feel compelled to bust out the heaviest weapon in my mathematical arsenal.
Yup, gotta lay some e on you.
I don’t take this step lightly because e is not a plaything. For the mathematically immature (my math professors were always harping on about mathematical maturity, but never defining it a to the point where I could discern where I stood on the spectrum), e, π, is one of those mathematical constants that have properties which defy human understanding — and can only be rendered by God himself.
A slight confession is in order here (I told you I lacked full mathematical maturity): π — the universal scale-up from a line to a circle, is the only other magic number in my field of awareness. And even to the mathematically immature π is pretty cool.
But not as cool as e. Because you need a certain level of mathematical maturity to even understand why e matters at all. Having come this far, though, there’s no turning back, so… e, an irrational number that rounds to 2.71828, is the singular answer to the following ethereal equation:
Given that the sequence extends into infinity, I would’ve expected an entirely more impressive figure.
But it only adds up to 2.7 and change. But before you yawn and blow me off, consider the following:e (to whatever power it is raised) is its own derivative. That’s right y’all:
If you don’t believe me, there are any number of mathematical publications that will back me up.
And, having just concluded our annual Feast of the Flightless Bird, it seems to me that we have fully entered the e parallel universe.
Nothing perhaps captures this as clearly as the emergence of B.1.1529, the numerical implications of which, with its two decimals and all, is mathematically nonsensical. And even if you remove the second decimal point, the number is still less than half of our >2.7 target.
B.1.1529 is said to feature as many as fifty variants, but this still doesn’t get us in material proximity to e.
Maybe next time; next variant.
But B.1.1529 was still threatening enough to catalyze the worst day for equities this year, and this in a holiday-truncated half-session. It also collapsed the crude oil markets and sent Madame X into such a frightened tizzy that she dropped her yield skirts to 1.4731%. Her sassy (younger) sister, though, Vixen VIX, when the opposite path – hiking her frock up by > 50%, to 28.62.
In all, made for a must-watch Friday morning. My personal theory is that investors, always seeking to remain ahead of actual events, have made the leap from B.1.1529… to e.
If so, they come to this honestly. Because the current market is nothing if not a derivative of itself. It is driven instantaneously created money, backed by nothing but government promises, and used by governments to purchase dubious debt – including their own sovereign obligations. New forms of digital assets emerge at a rate impossible to track, collateralized by such hard assets as restrictedin- number-Rembrandt reproductions, Rhino Horns, and God knows what else.
If one wishes to better understand the implications of this, head out to Los Angeles (if you’re not already there) and check out a Laker’s game. The naming rights for their home arena, which had long been held by Staples – purveyor of such real-world products as desk chairs, vacuum cleaners, and (yes) staples, have now been usurped by an outfit called crypto.com – purveyors of nothing but derivatives on derivatives.
Crypto.com, however, is repped by our betters, including Matt Damon and (the frustratingly magnificent) Tom Brady. So, there’s that.
Meanwhile, companies borrow stock, issue stock, buy back stock, offer stock awards, grant stock options, engineer stock splits…
And so on and so on and shoobie doobie doo.
For those who had barely digested their turkey and awoke Friday morning to an all-out rout, know that I feel for you. For reasons I don’t choose to redocument, Friday was a difficult day for me as well.
But if you buy into my whole e hypothesis and recognize that the capital markets are nothing more than derivatives of themselves, there’s cause for hope. My guess is that investors will gather themselves this week, shrug off Friday’s carnage, and drag valuations up to their previous, rightful (if improbable) levels. And if they don’t, well, then, there’s new room to roam for traders and investors of every stripe. At prevailing thresholds, one might even do some rational securities shopping.
And maybe there would be a speedbump on those burning inflation locomotive rails.
But that would be too easy, to sensible. And, as such, I simply don’t expect it.
Because in e-land, circumlocution is the solemn protocol to which we all must adhere. I was trained to believe that the capital markets were, first and last, a mechanism for funding of the real economy. And, joyfully, there’s some evidence that this concept has not died out altogether. Last week, the Administration opened the spigot, ever so slightly, on the Strategic Petroleum Reserve (SPR), a move that only triggered further upward pricing pressure – until the dreaded 1,1529 popped into the scene, leaving one to wonder if they wouldn’t wish a do-over on the whole SPR thing.
However, the SPR move was only the beginning. In under-reported but nonetheless astonishing parallel, our Neighbors to the North — Canada, America’s Hat, took the extreme step of unleashing 50 million pounds of sweet, sticky stuff from their Strategic Maple Syrup Reserve (SMSR).
In case you were wondering, Canada produces > 70% of the world’s maple syrup supply, and their processes were stretched. I give them a shout out for bailing us out here. But, as depicted in the graph below, the economic results of the move will not be known for some time, because they only report figures monthly, and this on a lag:
And wherever else we may differ – philosophically, culturally and in matters off taste, whether you eat the stuff or not – perhaps we can all celebrate the divine blessings of Canadian Maple Syrup. And the Canadian custodianship of same. All of which reside outside the e-verse. You gotta grow them trees, care for them, water them, tap their sap, process the syrup, and ship it out.
This, my friends, is the antithesis of e; definitively NOT a derivative unto itself.
But the world doesn’t turn exclusively on syrup. Or staples.
So, now, with the holiday behind us, we’ve all got a month left of immersive, self-deriving, ere the calendar turns.
And we begin the process all over again. Unless I miss my guess, it will be e2, e3, e4… … all leading back to ex.
And so on and so on and shoobie doobie doo.
TIMSHEL