Well, friends, we managed to make it through May, which strikes me as having been, from many perspectives, a difficult month. I won’t inventory all the vexing aggravations we endured; suffice to state that it was a challenging period in which to generate returns – new record highs in the Naz, and Gen. Dow’s temporary breaching of the 40K threshold notwithstanding.
And now we roll to June, which, as the magnificent Oscar Hammerstein once lyrically observed, is designed for the sublime mission of “bustin’ out all over”.
But in terms of the markets and other realms of human hyper-focus, this year, I’ll take the under.
Please understand me. I am not predicting a major market correction here, much less a crash. While these outcomes are possible, they would, should they to come to pass, surprise me greatly. But, by the same token, bustin’ out (to the upside) all over? I kinda doubt it and will take the under.
Over the course of my longevity-defying career, I have always found June a particularly difficult month to model. First, as the third lunar cycle of a quarter, all the data we are instructed to care about is in, and, as such, not many catalysts tend to identify or manifest in these final quarterly stanzas. But June, the last of the Q2 triad, is often particularly opaque. In March, we begin to see patterns as to the unfolding of the coming year. September is always a big month for matters ranging from public policy to forward-looking corporate plans, and, after Labor Day, action emerges from traders champing at the bit to book their year. December, even with its narrowly rendered, holiday-distracted investment windows, is often chock full of deals and other niceties.
But June? The last month before the always attention divided summer – a typically quiet interval that ushers in a quiet season.
And this particular June, while fitting into many of these constructs, strikes me as being especially translucent. Because I have a hunch it’s gonna be a more rolickin’ summer than any we’ve seen since at least ’20 — with its lock downs, political knavery, wholesale urban rioting (given a pass by civic authorities otherwise ready to bring the hammer down on anyone daring to go to church or undertake similar virus spending activities) and other shenanigans.
Oh yeah, and with the Fed ginning up ~$3T (and not yet halfway done) of new funny money and using it to buy up every asset upon which it could get its grubby hands.
Why do I believe we are in something of a redux (absent the Fed buying spree)? Though I wearies me to go this route: a) much of it is political; and b) I can’t set it down without also laying a rant on y’all.
So, here goes. With respect to a), we may be lurching into the most dysfunctional, disruptive election cycle since at least 1860, and perhaps going back all the way to 1800, in which it took 36 votes by the House to break an Electoral College tie between Jefferson and Burr. Running a dismal third was incumbent John Adams, who arguably got smoked because the electorate had grown tired of witnessing the criminal prosecution of his political enemies.
Sound familiar?
It should, because we have some of this shady behavior transpiring now, before our eyes..
All of which takes us to b). My rant. Please skip if you wish. You may not agree with me, and I have nothing particular to add to the, er, erudition on a topic that is swarming the ionosphere at incalculable magnitude and rapidity. I have only, instead, my partially informed opinion.
First there’s this. I do not like Trump. Never have. Always thought him a huckster. It’s true that I supported him in 2016 — for one simple reason. I despise Hillary Clinton, thinking her to be the embodiment of all that is detestable about the self-aggrandizing elite.
He exceeded my expectations for most of his time in office. Ran, I think, a pretty tight ship. Though I was on the losing end of this, he (very productively) cut taxes. He reduced nonsensical regulation, installed judges who follow the Constitution. He put our geopolitical ill-wishers on their heels.
The virus came, the lock downs came. And very few things piss me off more than the gross fiction that he botched the pharma-based response. He was the one that put together the public/private coalition that created what appears to be an effective vaccine program – in about 10% of the time it normally takes to get these things out. Ordered, at considerable risk (since the development work was not yet complete) some 100 million doses. By the end of his term, 1 million folks had been vaccinated. When his successor came in, he acted like nothing had been done.
But he lost the election. Yes, there was a lot of monkey business involved, but there always is, and, as I wrote at the time, if it was stolen from him, it was stolen fair and square.
Then, within the ten weeks between vote count and inauguration, he acted as shamefully as any president in history. Refused to concede the outcome. Cajoled his minions to obstruct the certification process. Encouraged the folks in GA not to vote in 2 Senate runoffs – both winnable races, which his party lost, ceding the Senate to the likes of Schumer, Whitehouse, Warren, Blumenthal, Durbin, Bernie and the rest of them clowns, to do what damage they might.
All before January 6th.
I personally do not think he conspired to overthrow the government on that wretched day, but what he did was bad enough, and boils down in my judgment to nothing less than failing, as he had sworn to do, to uphold the Constitution.
They’ve been after him since ’15 – nearly a decade, and, in the lead up to this year’s contest, one that I hope and prayed he would sit out, they indicted him over 100 times. And now, as of last week, he stands a convicted felon.
But objectively, if such an adverb is in any way applicable, the whole thing was a travesty of justice, even if, indeed, he is among the least sympathetic victims one could imagine. The judge (selected not by random process, as is the norm, but hand-picked by the Justice Department) is an unabashed Dem operative. They found an end around on the Statute of Limitations, accusing him of Election Interference for paying, with his own funds, a stripper who he smashed, like, 15 years ago.
Election Interference? For paying off a stripper? Seriously? If we’re gonna apply equal justice here, we’re gonna need to dig up a lotta guys: FDR, Ike, Poppy Bush (does anyone really believe that these guys contented themselves with Eleanor, Mamie or Bar?), not mention JFK and LBJ, and, of course, Bubba (still among the quick) for similar offenses.
The jury pool was jurisdictionally biased. The Prosecution, presumably for no other reason than to humiliate the defendant, queried the alleged victim about the gory details of the dalliance. The Court disallowed expert defense witnesses. Worst of all, in final instructions to the jury, the latter were informed that they did not, somehow, need to agree as to the specific crime committed, only that some offense had transpired.
It was like shooting fish in a barrel. Guilty on all 34 counts. Horrible legal precedent, putrid political precedent.
Though early days, it does not appear that any of this has weakened Trump’s political standing.
But we’re entering the pre-election summer faced with the prospect of a convicted felon squaring off against an Octogenarian of indisputably fading mental and physical faculties, who has probably paid off his own paramours and, whose family has indisputably banked tens of millions of dollars off his power and persona.
I’m thinking that Putin, Zhi, the Mullahs, L’il Kim and others are having a laugh riot.
And these realities might just hit the markets this summer, and if so, there will be few places to hide. Stocks and bonds, which run in opposite directions under risk-off conditions, are extending an historic streak of positive correlation:
USDJPY has soared to levels not witnessed in a decade, taking the NK225 along for the ride:
Of late, the BOJ has paid lip service to strengthening the unit of account in the Land of the Rising Sun, but one wonders what their game truly is. Rates over there remain near zero, as they have for a generation. This has kept the yen carry trade in play (under which investors borrow in yen and deploy capital in more lucrative jurisdictions). But God Oh Mighty, if the BOJ ever gets religion and ends this nonsense, well, I don’t want to think about it.
Finally, and having gone over my limit already I won’t say much about this, I read with interest that Dr. Pepper has surpassed Pepsi as the Number 2 carbonated beverage, and Dr. Pepper is undrinkable.
Back in the days of the Adams Admin, tea was the beverage of choice. While it remains popular to this day, the Alien and Sedition Acts have long since passed into the history of infamy.
Their spirit seems to have arisen of late, though, and I fear for the consequences. But I’ll not say more, because, who knows? I may run for office some of these days and would prefer not to have my historical expenditures scrutinized as potential evidence of Election Interference.
TIMSHEL