I’m going down. Down, down, down, down, down.
Don Nix (via Jeff Beck)
As those of us who toil in the markets are all too aware, we inevitably, from time to time, come upon instances where we lose that which we cannot afford to part.
Last week, we came to such a pass.
Of course, here, I speak of the demise of Jeff Beck, who bounced after a brief bout with bacterial meningitis this past Tuesday.
Much has been written about Beck; much has been said, and there’s more to come. But I zero in on a moment from his uber-varied career as being most exemplary. At the end of the last show of the Ziggy Stardust Tour (London’s Hammersmith Odeon/July 1973), when Bowie shocked everyone in the room (including, unfortunately, the entire Spiders from Mars ensemble) by announcing his intention to “break up the band”, he invited one guest to accompany him for the finale/encore.
Jeff Beck.
To my way of thinking, that event alone was enough to crown a career, any career. But to understand what we lost, we must back up a bit. Beck began his recording career as lead guitarist for the Yardbirds – sandwiched, somehow, in between Eric Clapton and Jimmy Page (think about that for a moment). And held his own – arguably, at the time, outdid them both.
The Y-Birds kicked him out after about 15 months; Page slid from bass to lead. But not much was heard from them subsequently. Pagey got bored, formed the New Yardbirds which morphed into an outfit called Led Zeppelin. Clapton did Cream, Blind Faith, Delaney and Bonnie, Derek and the Dominos, and, well, Clapton. Singer Keith Relf planted the seeds of Renaissance, and then, a couple of years later, electrocuted himself by plugging an unground patch cord into a live amp.
Beck, as always, went his own way. Formed an eponymous group which catapulted two thenunknowns – Rod Steward and Ron Wood – into the permanent public (rock) eye.
Continuing with his journey, he turned down the Stones offer to take the Brian Jones spot ultimately claimed by the above-mentioned Woody. Instead, he went solo. Co-wrote (though uncredited) Stevie Wonder’s sublime song “Superstition”. Put out the album containing our title quote, and then, a couple of years later, recorded two of the most astonishing instrumental records of all time – “Blow by Blow” and “Wired”.
His prolific endeavors as a working musician continued unabated, always lifting others along the way. He brought visibility to the criminally underrated Vanilla Fudge rhythm section (Tim Bogert and Carmine Appice). Did the same for virtuoso keyboardist (Mahavishnu Orchestra) Jan Hammer. Recorded with Ozzy, Joni, Stanley Clarke, Roger Waters, others – claiming little credit each time.
And yes, most recently, toted Johnny Depp along with him on tour. First principals, I have no problems with this. Depp is a fine actor whose rep at the time badly needed rehab. Beck elevated his own visibility and ticket sales in what proved, sadly, to be his last shows. My only problem is this – Depp can barely play and had no business up on stage with the magnificent Mr. Beck.
I had already forgiven him for this.
Suffice to say, whatever one’s affinity for what is broadly called rock, there’s some Beck stuff, which, if not in your cannon, ought to be. He never wrote a widely played tune, his singing voice never reached our ears. But he was everywhere.
Given this remarkable resume, one finds it difficult to find brief ways to honor him. By virtue of our titular theme, I have made my own selection. I must, though, admit here that “Going Down” (chord progression: G-F-C-Bb-G), in addition to being a sublime Beck riff, offers a handy transition to this week’s market commentary.
Because, sometimes, markets do indeed go down, down, down, down, down. And sometimes they do not. For long periods, they do quite the opposite. And it is our challenge, as investors, to determine both the timing and magnitude of this directionality.
There are those among my crew that believe we are on the verge of our titular redux, that we are indeed about to go down, down, down, down, down. And perhaps they’re right.
Certainly, in the hedge fund universe, there’s a bit of this sort of thing going on. Take, for instance, the macro-critical Natural Gas Market, which has miraculously sold off — throughout the emergence and arrival of the cold weather interval. Tellingly, it is only recently, as the days begin to get longer and warmer weather is on the intellectual horizon, that fund managers have decided, in aggregate, to assume a net short position:
Not gonna lie: it all makes me nostalgic for twenty years ago, when the industry’s most respected stock analysts – Jack Grubman comes to mind – clung desperately to their “buy” recommendations on names like Enron and WorldCom – only to flip to “sell” when bankruptcy was imminent.
But it is this very trend, among other matters, that leads me to believe that risk assets are likely, over the near term, to go up, up, up, up, up.
As ’22 wound down, I felt that an upward reversal of energy prices was a major risk factor – one that not only did not materialize, but which manifested in the opposite direction. And now, given the relatively mild weather (thus far), the temporal proximity of a spring thaw, and storage tanks more than adequately stocked, these economic risks have dissipated.
Not by mere coincidence alone have Inflation numbers declined in gratifying fashion, with nearly every reliable indicator suggesting more of the same on the horizon. All of which has brought a bid to Interest Rate Markets, and, presumably, brightened the mood of the FOMC, which (according to CME FedWatch) is now > 90% certain to hike only 25 bp at its next meeting (early Feb).
Contemporaneously, and though Gloomy Gus banking execs and highly trained economists still predict Recession, the economy can hardly be said to be rolling over. To wit, the unfailingly clairvoyant Atlanta Fed GDP Now meter currently projects >4% growth in Q4.
Market technicals are also showing more vigor, with equities, bonds and the like having risen, at long last, above key (50, 100, 200-day) Moving Averages.
Corporate Earnings/guidance are another matter, though. Lots of mellow harshing in those realms. But one must assume that at least some of this is baked into current valuations.
I could, if I so chose, go further down the dark hole, pointing out that this week brings one of the most depressing events on the economic calendar: that annual Gathering of Old Hypocrites on the slopes of Davos. We’re also staring down the well of yet another of our endless stream of overwrought, wearying debt ceiling expansion political debates.
But I think we have it in us to rise above these latter-mentioned challenges. And I think we will. And that the rally, which more or less began in October, will continue.
I doubt, though, that it will sustain itself for very long. Too much out there that can go wrong and almost certainly will. I’m only informing you that, for now, risks tilt to the up, up, up, up, upside.
Here’s hoping that if I’m right, you make a little coin on the move. If you do, I’d advise you to save some for some stormy days likely to descend upon us as the year unfolds.
Because nothing lasts forever. Or even for very long. And we must attend as best we can to the next chapter. Bowie did indeed bust up the Spiders, but then re-invented himself dozens of times before finally checking out for good a few years ago. Rod the Mod is a modern-day Tony Bennet, and Woody takes his orders, albeit in very lucrative fashion, from Keith.
While I have spent decades anticipating the death of Clapton and Pagey, I thought that Jeff would live forever. Last week, I found out I was wrong.
We will, as ever, carry on. A little heavier, a little sadder. Others will emerge, but probably not soon. No matter, we have had what we have had, and will make of what we get what we make of it.
It would be well to remember this as we navigate the challenges and opportunities that await us. In the meantime, I will go down, down, down, down, but not down.
TIMSHEL