Roses are red, violets are blue, I am a schizophrenic, and so am I
Oscar Levant
And so am I. But I reckon you knew that.
The source of our title quote is Oscar Levant – virtuoso pianist, clever comedian, Renaissance Man.
Its subject is the iconic Doris Day. Bubbling 20th Century actress, whose most pertinent (at any rate, for our purposes) achievement may have been to have believably played Rock Hudson’s Love Interest in the 1959 film Pillow Talk. Levant claims to have known, oxymoronically, before she attained the status of being biblically untouched, and, as he died 50 years ago, we can only take his word for it.
She had four husbands, and, for what it’s worth, she was an activist Republican.
Her persona, of course, was that of a wholesome siren. The type who wore coverups into the shower, and who would never allow wandering hands or other appendages to desecrate her lovely temple.
The truth, as implied by Levant, is, apparently a bit more complicated. But then again, it often is.
And that, at least for now, is all I have to say about that.
However, as we enter this last, bittersweet, portion of Summer, it does seem to me that once the sucky holiday of Labor Day is behind us, investors may yet again be entering virgin territory.
With General Dow roughly flat. With Col. Naz up nearly 30%. With Treasury Yields surging. With mortgage rates reaching, each day, alarming, generational highs:
Beyond the elevated levels, however, I think we must attend to the associated rate of change. Those with the foresight to have financed (or re-financed) a home in late ‘20/early ’21 could do so at the modest vig of +/- 3%. Lotsa houses got themselves sold at those rates. And, in result, prices went. So, now, purchasers are looking at not only higher listing values, but also at the prospect of paying > 2.5x in interest expense.
Outcome? Fewer trades. And fewer Ms. Days being carried across virginal thresholds into introductory, connubial, wedded bliss.
Those looking for relief in these realms were met with disappointment, when Chair Pow took to the podium on Friday, at the decidedly non-virginal setting of the J-Hole Economic Forum. He’s still looking to limpen up the stubbornly firm vigor of Inflation, and one can hardly blame him for so doing. At any rate, the markets took this in stride.
It was one of two signature economic events of the week, the other being the NVDA earnings drop. Which, in keeping with our somewhat salacious theme, was as an epic Doris Day cock tease. Results? Astonishingly strong. Guidance? Even stronger. Upgrades galore across the Street. So, there were the shares – expensive, yes, but fetching, winsome, and waiting to be taken.
But other than a few hot-blooded post-close investing adolescents, no one wanted them. So, no one took them. And, in result, the stock ended down for the week. As my most highly credentialed macro client put it, everyone who could plausibly own NVDA, already owns it.
The Equity Complex held in nicely, nonetheless, as, on balance did Treasuries. But somehow, the trampiest of asset classes, high yielding corporate credit – all the way down to the street walking Leveraged Loans and (even worse) Triple Hook(er)s (CCC paper) stole the show:
In any event, between now and Friday, it’s mostly sloppy seconds, as in, for instance, revised Q2 GDP estimates. There is a smattering of new biz with which to attend – some housing data, and (rudely if you ask me) an ill-timed, Friday, pre-holiday jobs report. In terms of the latter, I doubt many of us are hankering to parse out labor statistics on the last getaway day before the forlorn, ritualistic ending to the summer season. And even here, we’re in sloppy seconds territory, with the two-month revision taking on as much significance as the August number itself.
Assuming (as I do with confidence) that we survive this assault on our buzz, three days of barbeque, suntan oil, etc. await us, and then it will be time to pack the little kiddies off to school – a desolate exercise for me if ever there was one.
And it will be a clean slate for the markets. We will be virgins again.
Yes, in ytd ’23, we’ve been schtupped by a faux banking crisis, squealed in coital delight at the romantic stylings of AI chips, nearly bedded by a government shutdown.
We endured the orgiastic assault of the introduction of zero-day options (what could go wrong there?).
Though still in mourning, we survived that tragic, er, accident in which the head of the Wagner Group lost his life in a plane crash.
All of that is officially erased.
We enter the proceedings as pure as Doris Day.
But all the above is a fortnight away. In the meantime, we all may be well advised to take as full advantage of our pre-virginal status as is in our means to accomplish.
After that, we may wish to enter the interval, as my grandmother advised my sisters, with eyes open and legs closed. Our virginity, after all, is not likely to last long, and it is only in our power to partially control the venue, conditions, and collaborators in this sacrifice.
We cannot, by contrast, control the outcome. But we always knew this.
As did Doris, who, in her signature song, reminds us:
Que sera, sera,
Whatever will be, will be,
The future’s not ours to see,
Que sera, sera
I think she was on to something. After all, she lived to be 97, and if Oscar Levant can be believed, before she died, she became a virgin again.
TIMSHEL