I ask for your patience here as I wade through the gratifyingly endless volume of responses that I received for the GRA logo contest. Hopefully, I’ll be back to you by Christmas; if not, T’isha B’av for sure.
Besides, they’s a good deal going on these days. It’s not every week, after all, that we lose three iconic nonagenarians (Carter, Munger and O’Connor) and an even more iconic centenarian (Kissinger).
But on a happier note, published reports confirm that the long-awaited sequel to the magnificent film “This is Spinal Tap” is in the works, set for release in 2024 – forty years after the original. It follows the format of Marty’s singular “The Last Waltz” and features cameos by no less than Paul McCartney, Elton John and God knows who else.
This is indeed cause for unmixed celebration. The original lineup of David, Nigel and Derek will all be in the house, and the whole shebang will be directed, yet again, by the indisputably talented but (to my taste) personally annoying Rob Reiner.
No announcement has been made as to the drummer. But having gone through 32 can slammers in their original run, each of whom died — not due to natural causes but rather from such improbable catastrophes as spontaneous combustion, and (everyone’s fave), choking on vomit (not his own), I don’t reckon it matters.
I’m also glad to find the lads solvent. Over 30 years, the owners of the original film – Vivendi, SA – paid out a total of less than $200 to the creators. Who sued. And finally settled for an undisclosed sum almost certainly reaches the nine-figure threshold.
And the episode offers this week’s first risk management teaching moment.
The beef, as I understand it, derives from the band having struck their deal on a net rather than gross revenue basis. Thus, while even those rascals at Vivendi acknowledged consistent mega sales of the film and its merch, they claimed zero profits, presumably having creatively journaled over bucketfuls of dubious expenses to eradicate revenue streams a large portion of which would otherwise have been owing to the actual creators of the product.
Though it pains me to disclose it, this is a well-worn lick in the investment industry. So, I urge my risktaking minions to carefully monitor the expenses which are being applied to their accounts for the purposes of calculating annual compensation.
But it’s all about the art, now, isn’t it? The Tapsters have a very prolific original catalogue, perhaps topped off by the sublimely named LP “Intravenous De Milo”, whose cover features the famously armless statue on the receiving end of a fluid conveying medical device.
It was followed up by a couple of other gems “Shark Sandwich” (for which one prominent critic offered the two-word review: “shit sandwich”) and perhaps their magnum opus “Smell the Glove”.
As Tap-heads such as myself are only too aware, StG almost didn’t get released, due to a dispute over the cover art. The band wanted a dainty, romantic image of a leather-mittened man with his hand in the face of a woman on all fours. The unsentimental suits at Polymer Records said no dice, and the record came out with a blank, black cover.
This pissed the boys off, until the Tufnel pointed out that the image begged the question “how much blacker can you get?” and also supplied the answer: “none more black”.
But Tufnel was always the philosopher of the ensemble, having also famously designed a guitar whose volume dials peaked out not at 10, but rather at 11.
All of which leads us to this week’s investment conundrum. Though the answer presumably lies somewhere in the middle, one could justifiably take either side of a debate as to whether the markets we confront are in “none more black” or in “dials turned to 11” configuration.
I know, I know. Recent pricing action favors the latter over the former. But is it reliable? Risk assets all still hover at dubiously gratifying thresholds. General Dow, for example, down for the year as of a month ago, is no knocking on the door of a double digit ytd return.
Treasury yields, energy prices, the VIX, are all, pleasingly at or near their recent lows.
So, why do I feel as though we are lurching towards a “none more black” moment?
About the best explanation I can come up with is that economic conditions cannot improve much from here.
Inflation is on the down, Recession is nowhere imminent, earnings growth has returned, and multiples are below their 5-year averages.
If these conditions persist, one could envision cranking the dials up tot 12, or (dare I say it?) even 13.
But can the environment weaken. Can “none more black” darken further?
I suppose it’s possible.
And I’m not sure we’re ready for it.
I suspect that as this final month of the year unfolds, the bulls will seek to continue their stampede. Because, if they ain’t goin’ down, and seeing as how this is the month we get paid and all, we might as not push ‘em up.
They might break some new ground here. Whether they can hold it is another matter.
Because, for all the giddy euphoria we are currently experiencing – some of which extends beyond the impacts of post-Spinal Tap announcement bliss, the Gallant 500 is trading at precisely the level where it resided on exactly two years ago.
It reminds me of that unfortunate episode in the original Spinal Tap when the band got lost between the dressing room and stage underneath a stadium in Cleveland, were guided by a custodial gentleman to “take a little jog to the left”, and, having done so, shortly found themselves back in the custodian’s presence.
Only this time, rather than dubiously and tentatively emerging from an extended lockdown, we are in the midst of an economic renaissance.
It also bears mention that back in the palindromic month of 12/21, All God’s Children were making a fortune in the markets. I could scarcely walk down the street without someone buttonholing me to informed me that they’d cracked the code of the equity complex.
These proclamations dwindled shortly thereafter and disappeared altogether across the coursings of 2022. Folks in my world have had a good year but seem to be doing less chest puffing this time around.
And I cannot resist the temptation to worry aloud about our own, discernible “little jog to the left”. It is arguably running out of steam, and, truth is, we won’t know for sure until next November, when America goes to the mailbox which passes for a ballot box in these troubled times.
For the sake of the markets, I’m gonna hope that we foresake, politically speaking, on that “little jog to the left”, because if we take it, the BEST we can hope for I feel is a second encounter with our friendly subterranean janitor.
But Spinal Tap is back, and I have every expectation that they will make it unimpeded to the stage. The talented Mr. Reiner, who always takes that little jog to the left, will resume his post behind the lens, but apparently his attention will be divided, as I read this past week of a soon to drop 10-episode that purports, with trademark Reiner humility, to have definitively cracked the JFK assassination.
The JFK podcast is a hard pass for me, but I’m all in on Tap. The show is a-ways off, and we’ve got some wood to chop between now and then. I wouldn’t get too jiggy about incremental risk assumption in the meanwhile. I think, rather, the next few months will feature intervals of imposed capital preservation.
Which, if successful, will allow us to Smell the Glove once again.
TIMSHEL