Two bits, four bits, six bits a dollar…
Attributed to George (Mr. Two Bits) Edmonson, Jr.
Not a tremendous amount to this story, but on this First of April, it seems a propos.
Mr. Two Bits was an avid Florida Gators fan, but ironically, he never attended the big school in Gainesville. Instead, he spent two years at the Citadel Military Academy, enlisted in the Navy after Pearl Harbor, went on to fly Grumman F6Fs in the Pacific Theater, and, in the aftermath of V-J Day, settled in Tampa to sell insurance, where he developed a passion for the blue/orange chomping grounds of Emmitt Smith, Steve Spurrier and Tim Tebow.
Early on, he took to leading the two-bit chorus and this avocation was so encompassing that from 1950 until his “retirement” in 2008, he was the official cheermaster of our quoted chant.
I think the incantation predates all the above by a good bit, but it was Two Bit Edmonson who immortalized it, and I say God Bless him for it.
By inference, and unless there are non-linearities involved, two bits equates to a quarter. And that’s just where we are; we’ve expended two bits – one quarter — of ’24.
And what a quarter it was. Equity indices across the globe soared. Bitcoin posted a two and a half bagger and is now, priced as it is near $70K, implied a modification of our titular canto must now be modified to something on the order of: “two bits, four bits, six bits, $560,000”.
The groundhog saw its shadow. Easter came early. The Chiefs repeated. Voters, in their wisdom, all but confirmed the Biden/Trump rematch.
The Jobs Market engine hummed at full gear. GDP chugged along. Inflation acted up, but for the moment at least, has not gone hog wild.
Contemporaneously, some significant monuments toppled. They handed SBF a two-bit sentence of 25 years. Gravity pulled RDDT to below its Day 1 close, leading to countless queries about purchasing the stock (particularly post-IPO) on r/AITAH.
The impeccably decent but decidedly dorky Joe Lieberman took a tumble and died. As did Daniel Kahneman – Father of Behavioral Finance.
Whatever that is.
No matter, we move on, with 6 bits of the year burning a hole in our collective pockets, which we must, one way or another, spend by the end of December.
If current patterns hold, we will continue to belly up to the securities bar, consuming till we’ve had our fill. My own view is that we’re still in a sweet spot. Fundamentals remain strong. And, more importantly, the technical configuration (which I, somewhat gratuitously, define as the implied supply/demand characteristics of a given market) are positively on fire.
I posit here that at the intersection of these crossroads resides the most recent comments from Fed Chair Jay (Mr. Six Bit) Powell, who earned his new handle by sustaining his commitment to three 25 bp rate cuts this year. In addition to the plain fundamental goose this supplies to the market, the technical implications are even more profound, implying his willingness to come to the rescue of the investment community the instant that signs of trouble emerge.
Problematically, though, as likely as anything else, it may be that said signs will arrive in the guise of a resurgence of inflation. I do get tired of this topic, but if one looks at the Energy Complex, there may indeed be some cause for concern:
Crude Oil: Gasoline:
And if that ain’t enough to cool your jets, consider the Cocoa market:
Perhaps, with Easter now behind us, we can obtain some relief with respect to the last of these. I can personally attest to having consumed so much chocolate over this past weekend that I couldn’t choke down another Cadbury to save my life.
And, of course, we must keep a leery eye on those rascals in Washington. They did manage, heroically and statutorily, to expand their own borrowing by a cool $1.2 Tril, which I reckon will last us till sometime in the summer. This will take our debt servicing costs to > $1.5T/year, rendering it the largest line item in the Federal Budget.
By then we’ll be staring down the barrel of the major parties’ two-bit convention. The Dems hold theirs in Chicago. In August. Against a backdrop of acute and expanding civil unrest. What could possibly go wrong there?
Richard J. Daley won’t be there to issue a “shoot to kill” order. So, there’s that. But at some point, we may hit that “holy shi+” moment, when: a) the entire electorate realizes how patently pathetic are the choices it has made for us; and b) investors realize that this may indeed be problematic to their risk- adjusted return objectives.
But for now, the six bits that remain to us look like quite a bounty, and I can almost hear Edmonson Jr. (who went to that Big Gator Swamp in the Sky in 2019) gearing up that time-honored Gator chant.
Personally, I prefer the ritual down the road in Tallahassee, where games commence with the righteous Seminole Spear Plant, wherein a lucky Noles fan mounts the noble steed Osceola, and solemnly impales a burning spike into the logo at midfield. A few years back, in a pricelessly sublime moment, this honor devolved to a former Nole halfback/QB named Burt Reynolds.
Even more sublime to that is the stationary steed on Main Street in Sag Harbor, who feeds not on hay and oats, but rather on – you guessed it – two-bit coin pieces.
It is my dream to ride this horse with you into eternity and wish you to know that I am saving my quarters, two bits at a time, with this in mind.
But in the meanwhile, I reckon I’ll move through the bits we got, as the hero of this story did so elegantly for nearly six decades.
What was good enough for him, must be, as a matter of necessity, must be good enough for me.
TIMSHEL