“Well, it’s sugar for sugar and it’s salt for salt, If you go down in the flood, it’s gonna be your fault,
But, Oh, Mama, ain’t you gonna miss your best friend now?
You’re gonna have to find yourself another best friend somehow”
Bob
I ain’t sayin’ you ARE going down in the flood, or that if you do, it will necessarily be your fault.
But oh, mama, ain’t you gonna miss your best friend now?
It’s a valid question, but I nonetheless adopted a more hopeful title. There has been a flood, a flood of data, and now, at least temporarily, it has subsided. We’re still here, so “After” seemed like a more appropriate modifier of the recent deluge than “Down in”.
There are a couple of songs that share this week’s header – one of them by a once-promising but now largely forgotten outfit called Lone Justice, who I had the pleasure of seeing at Farm Aid 1.
All of which is, of course, beside the point. More pertinently, we entered October with a gully-wash of pending information, and in this pre-holiday interval, I thought it might be worth reviewing: a) what tidings the tide delivered, and b) where it leaves us as we dry off the drench.
Let’s start with the macro data, shall we?
The first half of Q4 featured two strong jobs reports, a recovering GDP, and, more recently, a dip in Inflation and a surge in Retail Sales.
On virtually every level, it coulda been waaay worse.
The Fed, nonetheless, increased rates to the upper end of the consensus, which now, after resting for most of Q1 at 0.0%, be knocking on the door of 4%. The curmudgeonly President of the St. Louis Branch, James Bullard, is calling for a continuation of this rising rate tide – all the way up to, or above, 5% (the crusty old dog even threatened an eventual 7 handle, FFS!).
Moving along, Q3 earnings appear to net out at < 2%, which ain’t good. And most of my krew believes that the true profits plunge will transpire in the first half of ’23.
We also endured a soggy election cycle, the outcome of which, while surprising some and disappointing others, probably reflected the will of the electorate. We now have a divided government and can rejoice in this optically minor but (I believe) substantively significant blessing.
Then, seeming outta nowhere, came the sinking of that Titanic Crypto Ship – FTX. To suggest, metaphorically, that it hit an iceberg would be to understate the case. By all appearance, the vessel was built of duct tape and balsa wood, cannot be salvaged, and lacks sufficient lifeboats to rescue the millions of its passengers stranded on its deck.
All of which brings us to our present state — wondering what on earth to make of it all. With five trading weeks remaining to this frustrating year, the Gallant 500 has retreated by magnitudes in the high teens. Captain Naz – stalwart that he is, is going down with his ship at a nearly 30% loss. Madame X (U.S. 10-Year) has dropped an un-demure 10%, which doesn’t sound like much but is an historic retreat for this dainty, delicate debt doyenne.
On a more positive note, alternative dating site Grindr (ticker symbol: GRND) launched an IPO on Friday – inevitably, as a SPAC — and shot out a 4 bagger on its first day of trading.
But perhaps, my friends, my best friends, the less said about this the better.
Whither does all this lead? Not gonna lie; for me it’s a head scratcher. It does indeed appear to me that for now at any rate, we’ve managed to dunk the Inflation Monster under the drink, and here, I look no further than the Energy Complex, which features a Crude Oil and Nat Gas market trading below all important Moving Averages:
But prognosticating whether it pops back up in the next few months is above my paygrade.
There’s a good deal riding on whether the P wave waxes or crests, because, among other matters, it will inform the future trajectory of the public vig. The Fed is on record as reiterating its 2% target, and it’s hard to imagine success without even higher rates an accompanying recession.
Lower energy prices for longer would cure a multitude of ills, so let’s keep our eyes peeled there.
There’s probably some yet-to-be revealed, incremental fallout from the capsizing of FTX, but that debacle will most probably run its course rather benignly. Unless, of course, if you’re one of the > 1 million poor schlubs trying to recover a portion of your capital from the shipwreck. I wish you the best of fortune in these efforts. Meantime, we know two things: 1) the lawyers are poised for a massive payday; and 2) as mentioned in this space last week, Wall Street carnivores are already bidding between 5 and 8 cents on the dollar for your claims. If the script holds, significant amounts of heretofore untraceable collateral will materialize immediately after you take your nickels and dimes.
Meantime, I’m also a bit worried about what the lame duck 117th Congress will do in the six weeks that remain to their term. And this on both sides of the aisle. Expect some brinksmanship on debt ceilings and some weird legislation to be ascendant — none of which will be uplifting, or, for that matter, accretive to investment returns.
’23 is, improbably, just around the corner, and it does not from this vista appear to portend much positivity. But hey, you never know, and, as attributed to legendary but controversial Kentucky basketball coach Adolph Rupp: “that’s why they play the game”.
I hope you do indeed suit up in ’23, but that’s still a few weeks away.
Meantime, whatcha gonna do?
Well, unfortunately, you cannot train on down, to Williams Point, because the only such-named location of which I am aware is on the northern tip of Livingston Island, just northwest of fabulous (frozen) Antarctica.
And there ain’t no train from here to there.
Apparently, though, you can drive there. Or at least drive once you have disembarked. More than this, personalized license plates are seemingly available:
And, once there, you certainly can bust your feet/rock this joint, and if you do, you will not be alone.
Because your best friend will be there with you, all bundled up and sporting a life vest — in anticipation of the floods that, our best precautions notwithstanding, are sure to come our way.
TIMSHEL