I am indeed a little ashamed of this week’s mash up theme. Truth is, well into the weekend, I was drawing a blank as to what (borderline unhinged) spin I would put on this note, particularly against the current/pending mad rush of data flows and attendant (potential) market impacts. Some weeks the thematic riff jumps out at me, and my madness leaps, of its own accord, off the keyboard. Others it’s a desperate struggle against the glib, the trite, and the flat out boring.
I am typically easy on myself when the latter construct is ascendant. I’ve been pumping out this tripe – week in and week out – for more than 16 years. Some notes were always destined to be better than others.
And so it goes this week. I’ll cut myself some slack and proceed accordingly. So here goes.
I am a child of FM Radio: a forum consigned during my early youth to the audio backwaters but which emerged as a commercial and cultural force some time in the early/mid 1970s. My own associated experiences emanate from the sonic streams over Chicago, which I like to believe was a pioneering jurisdiction. First, there was Triad Radio – almost too weird for even those of us determined to seek out the strange. Then came WXRT – a magnificent outlet which at the outset only broadcast for six hours a night, whose disc jockeys would often fill the dead air with internal silences, but which could be counted on to unearth untrammeled, unexpected delights – from Ornette Coleman to out-takes from the Abbey Road sessions. Such fare is now widely available, but – trust me here kids – back in the deuce, it was rare and magnificent. It made us feel like radio listening gods.
Inevitably, though, FM Radio expanded and commercialized. Cars (most of which, I kid you not, were typically limited to AM mono functionality) began to blare out deafening stereophonic acid rock. Advertisers soon caught on and the whole venue turned to algorithmic, commercialized garbage.
The shark-jumping moments were manifold, but my mind fixes on the programming gimmicks that emerged. Pretty soon, every station was featuring such programs as a Sunday Morning “Breakfast with the Beatles”. One October day, I knew it was over. It was a Tuesday, and I was driving my kids to school. The local FM station was in the midst of its “Rocktober” schtick, and it was a Two-Fer Tuesday (back-to-back songs by a single artist) to boot. Topping it all off was the scheduled, contemporaneous, smarmy, obligatory, Zep-inspired “Get the Led Out”. So, of course, we were treated to a sequence of “Whole Lotta Love” followed by “The Immigrant Song”.
Rocktober/Two-fer Tuesday/Get the Led Out – a triple whammy of the blindingly unsubtle. I pondered whether the moment to shoot myself hadn’t truly come
As should be apparent, I resisted the temptation, found Napster, then Sirius, then Spotify. I rocked steady with each; meanwhile, Standard FM Radio continued its downward spiral.
But it is now October, and, for investors, the month promises to be rocky. So, while the pokey Rocktober Radio orgy continues unimpeded,10/22 indeed looks to me, from a market perspective, like (R)Oc(ky)tober. The sequence began with the biggest rally/subsequent selloff since the onset of the lockdowns – much of it centered around anticipation and reaction to Friday’s Job’s Report.
The consensus in its aftermath was that it was good – perhaps too good – at least for those hoping to see a cooling of the Fed’s rate-raising jets, and everyone bailed. Except the Fed, which, its if published statements can be believed, has no intention of changing, slowing or reversing course.
But I personally didn’t see too much here to cause a pre-Halloween yield-boosting fright. The base rate dropped a titch, mostly owing to a reduction in Labor Force Participation. A few tens of thousands of folks voluntarily bounced from the workforce, and this, combined with a somewhat surprising > 1 Million reduction in Job Openings revealed on Tuesday, suggests to me some economic deceleration. But what do I know?
And this coming week, as almost pre-ordained by the Gods, we have an approximate Two-fer Tuesday, with a critical PPI release coming on the appropriate day, followed by CPI on Wednesday. Projections are sort of flattish, and, simply from a blood pressure management perspective, let’s hope that they come true. A surprise in either direction, but of course, particularly to the upside, is likely to cause a serious case of volatility overload.
We also must anticipate the formal commencement of the Q3 earnings season, the previews of which have been less than encouraging. Gallant 500 profit growth currently projects out to a meager 2.4%, lowest since the ’20 lockdowns. But there’s probably not much to fret about on that score. These numbers tend to drift up across the reporting sequence and will almost surely do so in this instance. I am more concerned about forward guidance, as there is always a seasonal Q3 incentive for Management to dump all bad news and dampen expectations in “3”, so as to engineer a “beat” in “4”, and, in the process, dazzle and delight their Compensation Committees.
More narrowly, it probably pays to be mindful of recent dreadful announcements issuing from key chip manufacturers Advanced Micro and Samsung. These entities are experiencing menacing decreases in orders for their silicon output, portending of weak demand for PCs, smart phones, cars, refrigerators and nearly every other product we actually use out here “in the field”.
It ought, one way or another, to be a high-drama, volatility inducing cycle, which won’t end until R)Oc(ky)tober winds down, and the fat part of the earnings season fades to blue.
As all the above unfolds, we also face a renewed, overwrought focus on Energy Prices, and rightfully so. As is widely known, OPEC delivered a major one finger salute – to the West in general and, maybe, to Biden in particular, by cutting production by 2 million bbl/day. The timing, from a political perspective, is unfortunate, but the Saudis probably understand this. In fact, they may still remember being called criminals by the occupant of the White House in the 2020 election, and, beyond this, may take a dim view of its “Green Energy” policy that features the crippling of domestic production, while cajoling, exhorting and begging foreign producers to pump away with abandon. They may wonder, as I do, how the planet is benefitted by simply shifting production to different portions of the globe.
My own view is that for political reasons, the Administration is desperate to keep a lid on energy prices – particularly during (R)Oc(ky)tober, as it justifiably perceives that it may impact their fortunes in the coming election. So, we toy with other imponderables: the full depletion of our Strategic Petroleum Reserve, cutting deals with bad actors in jurisdictions such as Iran and Venezuela, imposing export bans, raising taxes on energy companies, exhorting gas stations to patriotically cut prices. And so on and so on and scoobie doobie do.
I am especially concerned about “Hail Marys” here, and, while laying aside my frustration at the stupidity of it all, am fairly convinced that any aggressive move to create better energy optics in (R)Oc(ky)tober will only lead to Newtonian reactions of opposite impact once the month is behind us.
And this is to say nothing of what awaits us should the dreadful situation in Eastern Europe take a turn for the worse.
Thus, with huge interest rate agita, currency markets in disarray, never-ending Fed hand wringing, electoral outcome concerns reaching crescendo, menacing increases in Energy prices, and myriad geopolitical problems we have not even covered, it’s no wonder that cross-asset correlation financial market stress indicators (which I don’t even begin to understand) have surged to multi-year highs:
Not Sure What This Means But Most Likely It Ain’t Good News:
Whether or not all of this ends in a market tragedy of Hamlet-like proportions is in the hands of fate. But it certainly reinforces my assertion that this particular October stands to be one mother of a (R)Oc(ky)tober. And I suggest you gird yourselves for a continued wild ride. The current paradigm (hardly encouraging) could turn on a dime – for better or for worse. Portfolio flexibility, liquidity and fluidity, eternal heavenly virtues, will be of heightened importance.
It will, like all intervals, pass quickly, and we’ll be on to the next. Meanwhile, we’ll have to endure another 3+ weeks of Rocktober/Twofer Tuesday/Get the Led Out. All across the country.
I am happy to report, though, that ‘XRT – Chicago’s Fine Rock Station – still abides at 93.1 on your FM dial. It now features a 24-hour broadcasting cycle, and, while some of the original DJs remain on the air, the silent intervals are now gone, replaced by annoying, chirping, excess energy. They don’t (at least I don’t think) do Two Fer Tuesday. Or Get the Led Out. But they do have a nicely understated Breakfast with the Beatles. They retain a quirky playlist, which, if it’s not my particular jam, it will occasionally surprise. And delight.
It’s worth a listen. And if it helps you survive the recently commenced (R)Oc(ky)tober, well, all I can say is so much the better.
TIMSHEL