Ooh, see the fire is sweepin’, our very streets today,
Burns like a red coal carpet, Mad Bull, lost your way,
Mick and Keith
As the ’23 wind-down continues, we’ve some last-minute milestone business with which to attend.
First, today, this very day, is Keith’s 80th, and if there’s any among you who doesn’t want to celebrate this watershed, well, all I can say is that you are a horrible person whom I don’t wish to know.
Beyond having contributed immensely to the creation of what I believe to be one of humanity’s most important art forms, Keith has been confounding, surprising and delighting us, in myriad ways, since 18 December 1943. The stories about him are endless, and some of them are even true. Perhaps among his greatest accomplishments is that after being at the top of everyone’s croak list for decades, the world has now conceded that he will outlive us all.
I will only share one tale about him, heard indirectly from two different sources, describing separate but otherwise identical occurrences. Though I’ve never met him, he has a house not far from mine — in Fairfield County, CT. He has, over the years, been known to routinely and enthusiastically patronize many local watering holes, always with his crew in tow. Two friends of mine told me of episodes wherein unknown strangers (members of the Keef Krew) approached them at these establishments, tapped them on the shoulder, and said “see my friend over there? He really likes your shirt and was wondering if he could have it.”
Each time, the interlocuter in question happily surrendered the desired garment. Because, let’s face it, we owe Keith that shirt, and, arguably, so much more.
I can imagine the glee with which Keith pulled this stunt, and it delights me greatly. Yes, we’ve done well by Keith. So well.
Also, last week marked the 200th Anniversary of the Monroe Doctrine. You know, the one which staked this country’s exclusive claim on the Americas, while pledging, contemporaneously, to leave Europe to tend to its own affairs?
How has this worked out for us? I’d say, on balance, pretty well. It has been far from perfect. Canada has played a stolid To(or)nto to our Lone Ranger, Mexico, from whom we were able, for better or for worse, to steal both California and Texas, has given us relatively few problems, and South America has for the most part behaved itself (and made many of us rich).
There is, on the other hand that annoying case of Cuba. From whom we still cannot buy cigars. Whose leaders tore down those fabulous casinos Meyer Lansky built in the fifties. Which almost caused us to exchange big blasts with the Soviet Union in ’62.
There’s also all them pesky immigrants pouring across our southern border, a problem, which, under MD protocols, is ours to solve on our own. But too much ink and too many pixels have been spilt on this topic for me to add erudition to the debate.
It also must be acknowledged that we’ve been unable, from time to time, to refrain from meddling in (European) Continental incidents (two world wars come to mind). But, on balance, we have indeed left them to their own devices, and have found ourselves none-the-worse-off for adopting this strategy.
So, I’m inclined to endorse the success of our titular doctrine.
But that’s one thing that separates the Monroe Doctrine, from, say, Keith. Because if Keith were to (God Forbid) defy all the combined knowledge of medical science and shed his mortal coil, his contributions to art, culture and society would still pay dividends for, I believe, centuries to come.
Not so with the Monroe Doctrine, which must, across all eternity, continue to justify its existence.
And the world has changed a bit since 1823, continues to change even now. A generation ago, for instance, Europe succeeded in creating the world’s most mind-numbing bureaucracy – otherwise known as the European Union. Though not widely monitored, it has its own three-branch government, but it’s a toothless sort of affair, focusing mostly on weighty matters such as the maximum allowable curvature of bananas, while still-sovereign member nations such as Germany and France go about their governance business as if the EU never existed.
The enterprise does, however, feature its own currency and Central Bank, responsible for the monetary policy of the whole region Monroe promised we would let alone. While not wishing to minimize the importance of setting monkey food convexity limits, this renders ECB Chair Christine LaGarde arguably the bull goose of the whole conflagration.
The ECB, unlike its opposite numbers in Washington, has been on a rate hiking tear of latter days, because, somehow, it manages to remain at least one step behind our own monetary chieftains. The gap is perhaps as wide as ever, given that both rhetoric and consensus now suggest that the Fed, presumably having tired of all those hikes, is a’fixin to cut rates multiple times next year.
NGL — I’m a little iffy on this. The Fed, it will be remembered, only explicitly controls borrowing costs at the short end of the curve, through the setting of the notorious Fed Funds Rate. In doing so last Wednesday, it delighted investors with its dulcet, dovish tones.
But the yield curve is still mad inverted, with thirty-year rates a gaudy 1.2% below those associated with borrowings just two years out.
The pictured glidepath, according to the textbooks, suggests the likelihood of a recession, a condition which the Gloomy Gus(es) among us have been warning against since before I can remember. But thus far, it hasn’t materialized, and I am beginning to doubt whether it will ever do so. Always-infallible economic projections suggest a significant slowdown next year, but I reckon even these reliable sooth– sayings can be wrong now and again. It has, after all, happened before.
So, I find the projection of three rate cuts next year to be a sketchy proposition. It certainly is possible, but I tell you fairly that if it happens, political considerations will have loomed large in the associated calculus.
Because despite all the bleating about independence, the Fed is, in my judgment, an entirely political enterprise. Though a controversial viewpoint, I believe that it giftwrapped a second term to Obama – by announcing QE3 (which I rechristened QE¥) at Jackson Hole, just six weeks prior to the (closer than widely remembered) 2012 election.
My guess is that they especially wish to do their part to preclude a Big Orange redux, and, if the economy is flagging, say, around mid-year, will certainly offer succor and assistance.
I would prefer that they stand pat until needed. The way things are going, the possibility of a serious economic downturn, a surge in Inflation, the combination of both, or anything in between, is ascendant.
So, why not load up on the dry powder?
But they didn’t ask me.
Meantime, ’24 investment conditions look like a jump ball to me, and, from a market risk perspective, I continue to counsel for a reactive approach to the early innings of the contest.
Meantime, the holiday season is upon us. It’s one week to Christmas, and all that jazz.
It’s therefore time to celebrate, as bleeding edge investors have been doing for weeks. General Dow reached new, previously un-breached ground last week, and the Gallant 5 and Col. Naz aren’t far behind.
If it’s in you to do so, maybe hoist one for James Monroe. Revolutionary War hero who crossed the Delaware with Washington. Who, as Ambassador to France, was instrumental to the completion of that diplomatic heist otherwise known as the Louisiana Purchase. Who authored the Monroe Doctrine. Who died, like Adams and Jefferson, on the 4th of July, 5 years after his predecessors and 55 after the signing of the Declaration of Independence.
And by all means, let’s celebrate Keith’s 80th. The markets certainly are, even if as is evident, mad bulls have yet to lose their way. The Stones are touring in ’24, as led by a couple of octogenarians one of which, according to the smart money, was never to have reached thirty.
And, in closing, I wish you a very Merry Christmas. I’m not yet sure whether I’ll weigh in next week or not.
So, one last piece of advice. If your festive wanderings – particularly today — take you to a tavern in far-Western Connecticut, and if, in so doing, a burly guy asks for your shirt, by all means give it to him.
It’s for Keith, and, as indicated above. You owe him that much.
TIMSHEL