Allow me, first, to offer a belated, celebratory acknowledgement of the 80th anniversary of Jim Morrison’s birth, which occurred this past Friday. Jim was born precisely 37 years before that cockroach did Lennon (and FWIW, four solar circular circumnavigations to the day before Greg Allman came down the shoot). He died exactly two years after they found Brian Jones floating face down in his own swimming pool.
It was my mother’s 36th birthday.
Such are the circumlocutions of our existence, but it’s time to move on to the theme of this here note, which centers around the ill-fated love story of Howie and Weezy.
Probably you don’t know either of them. Howie’s been my friend for about forty years, and it is through him I met Weezy. NGL — I was pretty impressed with Howie’s romantic exploit. Weezy is attractive, articulate and pleasant to be around. Howie is a bit of a Renaissance Man (among his acting credits is his legendary Reparatory Theater portrayal of Puck in Midsummer Night’s Dream), but, while I won’t say that he is entirely bereft of redeeming features, and embarrassment of such riches he has not.
As can perhaps be expected, they had a quirky kind of love. Weezy, for instance, would go batshit if not able to consume her daily breakfast grapefruit, and would often, if denied, and no matter the true cause, take it out on Howie. Of Howie’s, er, idiosyncrasies, there is not adequate space to enumerate; suffice to say they are both acute and manifold.
So, they would routinely fight like cats and dogs, often while in the company of friends such as me. One time, having invited them for the weekend to my house in Eastern Long Island, and having picked them up upon their disembark from a public conveyance, I was greeted not with a “hello old chap” or any of that sort of thing, but rather with the following statement:
“We’ve figured it out. One of us has ADHD. The other is OCD.
“We’re just not sure which is which”.
Attention Deficit Hyperactivity Disorder (ADHD) and Obsessive/Compulsive Disorder (OCD). Are they mutually exclusive? I rather think not, and it is thus probable, maybe even likely, that both Howie and Weezy suffer from each malady.
As do many of us — including, it must be feared, those in the investment community.
With an approximate baker’s dozen of trading sessions left to this year, investors have been trained on asset purchases like Weezy trolling the Sunday morning fruit bins of lower Manhattan bodegas. The long forsaken Japanese Yen is now also the object of a relentless bid. Capital pools are tapping the Fed’s repo facilities at levels last seen during the ’20 lockdowns.
No love for the Energy Complex, though. WTI broke into a 6 handle last Thursday, before staging an ADHD rally to close out the week, nominally due a strong jobs report which runs in analytical conflict with a socialized belief that the Inflation beast is, if not dead, then, at minimum, in the Critical Care Unit.
But the happy gas emanating from Inflationary Expectations measures, has, if anything, accelerated in OCD-like fashion, as evidenced by the massive divergence between the University of Michigan (professional home/alma mater to the ADHD/OCD-addled Jim Harbaugh) survey expectations (4.3%) and published result (3.1%):
And now, somehow, some way, we’re one month from the start of the Presidential Primary season. It seems like only yesterday we were counting votes stored in shady storage boxes, trucks, and meat lockers — producing, in result, the sponsors’ hoped for outcome. This time ‘round, it appears almost certain that the combatants on the top card will be the two guys that the country least wants.
It’s been a tough quarter at 1600 Penn (to say nothing of the hardships at UPenn). The Big Guy seems to have alienated nearly all the flimsy, sketchy coalition that fixed his election. He receives low marks in particular for his performance on the economy, and here, in fairness, I must say I don’t get it.
To wit, let’s wind back the clock to January 2021, and project forward. Three years ago, what would have been y’all’s mood if you knew, heading into ’24, you’d be experiencing an economy that had cut inflation by more than 2/3rds, with no accompanying recession, with Crude Oil prices 25% below their post-Russian Invasion highs and Nat Gas prices at sub-lockdown levels, the raging of jets and the raining of missiles in two key oil-producing regions notwithstanding? With the labor market not only achieving but sustaining full employment?
My guess is that you’d happily have locked that in. As would have I.
Now, trust me here, as I believe that: 1) the remarkable resiliency of the domestic economy may be owing to any number of factors, but the effective stewardship of same by Biden is not among them; and 2) as has been beaten to death in the economic press, it no doubt feels worse out there than the published metrics would suggest. But objectively, the economy has held up pretty well under Shady 46.
*******
But now, as is consistent with my legendary ADHD, I must inform you that I am pretty much done with ’23, and ready, to turn my attention to MMXXIV.
It promises to be a wandering journey, worthy of the most nomadic expression of Howie’s wits, and featuring a wide range of plausible potential outcomes. I have only one firmly established hunch here: that the first material move is a big fade.
If, for instance, we commence affairs with a material selloff, then it will be, I believe, simply a matter of time and valuation until investors, flush as they remain with government supplied liquidity, determine that the time has come to do some shopping. And my guess is that when they do, the spree will extend itself for a spell.
But I’l feel particularly strongly about prevalence of “the fade” construct if the market comes out hot, as it will, I believe, set up a classic, oft-repeated paradigm of a raging early-in-the-year rally encountering a brick wall just at the time when All God’s Children are fully invested.
The most prominent recent episode of the latter transpired at the start of 2018:
I post the accompanying Vixen VIX chart because as it became immediately apparent, the selloff was triggered by the unwind of a series of wonky VIX derivatives. It was a total fiasco, but I won’t say more.
The flipside emerged the following year, triggered by some pre-Christmas hawkish smack talk by Chair Pow, which absolutely crushed ’18 returns. Then, in January, to most everyone’s surprise, Pow wowed ‘em with a hard 180. On 12/19/18, having already indecorously raised rates twice, he promised more of the same. Not two weeks later, he walked it all back “more rate hikes?” he says “who ever suggested that? I thought we were all friends”.
It set off a whale of a rally – one that lasted until those mutating viral cells worked their way across the Pacific Ocean, and, for a brief time at any rate, killed everyone’s investment buzz.
However, while those pesky covid buggers caused all kind of mischief, they could not quell the market bulls for very long, as their impacts were counteracted (and then some) by a gargantuan Fed money printing/fiscal giveaway cycle:
21/22/23 broke the mold, with a strong/sucky/strong sequence, but I believe The Big Fade will reemerge in ’24. It may be caused by something obtuse and technical, or by a more substantial turn of affairs, but either way, I’m kinda figuring that early ’24 may feature this type of particle collider action, and I urge reactive caution in the early innings of the contest.
Because that’s the best way to play ‘em in an ADHD/OCD world – one which featured cruel endings for both John Lennon and Jim Morrison.
And as for Howie and Weezy, they’re still around but not together. As part of their separation, they agreed to an equitable split of their accumulated psychoses.
As I retain mine. Taking care to pick up a few new ones as time passes. I am not always able to be selective in these acquisitions, but, in this ADHD/OCD heavy world, it behooves me to take what I can get.
TIMSHEL