I’m an Ape Man, I’m an Ape Ape Man, Oh I’m an Ape Man,
I’m a King Kong Man, I’m a Voodoo Man, Oh I’m an Ape Man,
I don’t feel safe in this world no more, I don’t want to die in a nuclear war,
I wanna sail away to a distant shore,
And make like an Ape Man
– Ray Davies
To AMG: 11 years gone, with all my love…
As I am in the habit of sharing private (often disturbing) sentiments — and given the odd pass at which we find ourselves, I thought I’d lay one outlier on y’all.
Every now and then, I feel the presence of invisible, opposable thumb toes — extending out from both of my feet.
Perhaps this is a latent solidarity with our long-departed forbears, who, once, long ago, could grab items with their lower-most extremities. But whether through divine purpose or Darwinian dynamics, we can no longer do so. And part of me – id, ego, and other cranial components – is clearly jealous of that long-gone era.
This much is, at any rate, clear: I am envious of the Apes. Because Apes are cool. They’re stronger than us; faster too. They appear to have a better time. They lack the useless, unsightly tails that are prominent in most primates, but retain those magnificent opposable thumb toes, which ease their path as they swing from tree to tree.
Their diet staple is bananas, which are more expensive than in days gone by, but not alarmingly so:
I’m not over-fond of bananas, and instead subsist on a wider array of human fare, including, perhaps, more than my share of bread. Which I may be forced to do without considering the alarming increase in the cost of its core ingredient:
Not on Wheat Alone, but FFS….
The Bible (Deuteronomy 8:3) must be on to something (see modified chart caption) here, because I’ve never, my friends, seen anything like this. And I been around the grain markets my entire life.
If there’s any good news, it’s that this latest round of Ursine monkey shine has taken a bite out of what has been a raging rally in meat products. Bovine Live Cattle markets have backed off, as have\ porcine Lean Hogs. But that benefit only applies to us carnivores, which, as a matter of biological construction, excludes my Apes. My hunch is that they don’t really care.
Meanwhile pricing pressure for those of us who cannot drag our knuckles across the terra firma is acute wherever on cares to cast an eye. Hard assets of every variety have been en vogue, and this was before the dude in Moscow decided to ruin the winter of everyone in the Northern Hemisphere. Corn, Copper, Soy Beans, Fossil Fuels, Microchips, heck, even Macrochips are vexingly dear and getting dearer.
Aside from wheat and other edible commodities, our main problems center, of course, in the Energy Sector. But here our policy makers are working hard to deliver relief. They are on the verge of striking a deal with the oil rich Iranian Ayatollahs. Who have called our country The Great Satan. Who openly and proudly use their export revenues to fund terrorist organizations. The deal is being brokered by the Russians. Who we are seeking to freeze out of the global economy. Except for their oil exports, amounting to 200M barrels a year of our energy supply.
And all of this to secure incremental supply of a product which many folks believe is rapidly heating the earth into a piece of charred, crumbling dust. To which I (and the Kinks) reply:
In man’s evolution, he created the city and the traffic rumble,
But give me half a chance, I’ll be taking off my clothes and living in the jungle,
‘Cos the only time, that I feel at ease, is swinging from the top of a coconut tree,
Oh, what life of luxury, to make like an Ape Man
But that, my friends, is, for the moment, just a dream. And, since I must, I will weigh in on the big, buzz-killing force that is driving all this misery.
A few observations come to mind. First, Putin will take Ukraine. ALL of it. Why? Well, for one thing, he can. I mean, we’re only two weeks into this sad monkey circus. It took Hitler 35 days to subdue Poland – with tanks locking horns against cavalry, and no international coalition to assist the poor Poles. So, anyone who thinks that the Uke resistance is sustainable long term should think again.
Beyond this, the strong global response tilts Putin’s incentives toward finishing the job.
The rhetoric is currently quite nasty. But even if they come together in Kumbaya chorus on the shores of the Black Sea, the world will want to extract retribution for what he’s already done — on a scale not much diminished from what he will face if he just grabs the whole thing. So, why not just take it all?
Finally, if he backs down, he will think of himself as a loser. And this, my friends, he cannot abide. So, most of what we are observing is, in my judgment, a morality tale that won’t have a happy ending.
Come what may, what has already transpired is likely to have two sustained impacts: 1) it will add force to the inflation punch; and 2) it will further impair commercial and capital economy activity.
Oh yeah, and one more thing: it implies the near certainty of higher interest rates, coming, to a lending institution near you, and quicker than you may currently imagine.
In result, I envision portfolio managers facing a “triple whammy” of acute inflationary pressure, rising interest rates – all against the backdrop of an increasingly impaired global economy.
I don’t necessarily believe this necessarily sounds the death knell for risk assets. There’s still a bid out there, waiting to pounce. One sees it particularly in the frenzied grab for Treasuries, some of which is a flight to safety, but which is also an outgrowth of the galactic amount of cash looking for an investment tree to grab onto – for our purposes this week, with clutching feet.
I think the safest market havens reside in the realms of long commodities (though the grains may be due for a pullback), and, at some point, short positions across the Treasury Curve. I’m not sure of the timing or ideal entry points respecting the latter. But interest rates MUST rise. And if (when) they do, it will transpire at a point when your portfolio of stocks, bonds and crypto is under extreme pressure. Thus, among other matters, short Treasuries is a great hedge.
But one way another, we managed to survive a very difficult January and February. Spring is nearly here. The politicians are finally unmasking us. Rumors continue to circle respecting a Kinks reunion, which we all sorely need. The Faces are in the studio as I type this, and planning summer tour dates, which is even better news.
All of which brings out my inner primate. And, even as I type these final words, my feet are reaching out for that big, fat, yellow banana sitting on my kitchen table.
I’ll be your Tarzan; you’ll be my Jane. I’ll keep you warm and you’ll keep me sane.
Yes, we’ll do this. As soon as we are able. Until then, let’s keep it tight. The fruit will soon be ripening on the trees. Juicy, and waiting to be plucked by our opposable toes.
Which we no long possess. Instead, we have generational global conflict, bi-generational domestic conflict, scarcity, diminished affordability of the things upon which we rely, worldwide viral viruses, and myriad other annoyances. Thus, if we don’t feel safe in this world no more, and we don’t want to die in a nuclear war, and we want to sail away to a distant shore, and make like Ape Men, we come by these feelings honestly.
Let’s hope that Vlad the Invader channels similar sentiments, some of these days, and soon.
TIMSHEL