I warned everyone that there might not be much fodder in the coming weeks, particularly given my promise to eschew the moth-to-flame topic of domestic politics. Which I mean to keep. For now.
The early returns on this prediction are mixed. There’s no new information about the much-anticipated Faces reunion. Market data has slowed to a trickle. NVDA survived its earnings release, energetic efforts by the Gloomy Guses seeking to nitpick it notwithstanding. A few PMIs dropped on Friday, and they beat expectations in the U.S., but collapsed in Europe, where they have long toiled in the nether regions.
By a cruel quirk of the calendar, the next round of Inflation numbers is scheduled for release on Thanksgiving Wednesday. When they’ll be blowing up the balloons on the Upper West Side FFS! I suggest that you pay them little heed, as they are unlikely to be sustainingly impactful.
By deductive reasoning, I am thus impelled to point my rhetorical weaponry largely towards next year. And the first factoid I can share is that at long last, the 5-century countdown to the celebrated-in-song Year 2525 can finally begin.
For the uninitiated, “In the Year 2525” is a song by the long-forgotten duo of Zagar and Evans, which, apart from banking some coin on the tune (which sincerely hope they saved), is primarily notable for being: a) the only recording act to have ever reached Number 1 in the U.S. and U.K. and never to have charted again; and b) perhaps (other than the fabulous Electric Flag/Hendrix drummer Buddy Miles) the only credentialed musicians spawned from the plains of Nebraska.
I never liked the song. But my friends did. Even the lyrics are entirely dispensable. But I do owe them a debt of gratitude for supplying me, albeit in modified form, with a theme for this week’s note.
But before we get to what happens next year (i.e. 2025), there are a few emerging ’24 matters with which to dispense. On Friday we learned that the New York (football) Giants will be dime-less in ’25 and beyond – having finally bailed on one of the biggest loser trades in recent sports memory: their $160M investment in Danny Dimes – 6 years into his tenure and less than 12 months after having signed that astonishing deal. He won’t bank the whole buck sixty, more like half. But I impute, after crunching some numbers, that this nonetheless amounts to over 800 million dimes.
And while we’re on the topic of sports, I read with interest that the Number 1 ranked high school player in the country – Bellville MI’s Bryce Underwood, just flipped his allegiance to the (hated by me) University of Michigan. He had committed to LSU, but apparently the lure of the academics at the former institution, and that of playing for his home state’s flagship school, was too many for him.
That and the $10.5M that the Wolves just stroked to him. And I’m not gonna lie — it all depresses me. The B1G now stretches from Westwood to the Jersey Shore. Stanford and Cal, located on either side of the San Francisco Bay – immediately adjacent to the Pacific Ocean, have now joined the Atlantic Coast Conference.
And now, high schoolers are inking eight figure contracts to play college ball. Mark my words – these will be nine figure contracts well before the decade ends, will be sufficiently large to cause even Danny Dimes (late of the ACC’s University of North Carolina) to wish he had a couple of years of eligibility left. But he doesn’t, and in the meanwhile College Football is rapidly becoming unrecognizable.
And if you doubt this, consider that Columbia won a share of the Ivy League title. I happened to be present, as a grad student, at their breaking of their infamous 44 game losing streak when they beat Princeton in 1988. I remember so clearly the joyful “back to Jersey” chants of a half-filled Baker Field on that sunny Autumn day, which seems like a lifetime ago.
Finally, we approach Turkey Day, for the first time in the field of my awareness, without the presence of Alice Brock, eponymous heroine of Arlo Guthrie’s epic saga “Alice’s Restaurant”. She left us on Thursday – precisely one week before the couldn’t-be-beat Thanksgiving dinner she is legendary for hostessing.
Moving on to ’25, after due consideration, I believe that it’s gonna be a baller year for the markets. True, some of this is based upon my favorable reading of the gale-force political winds that prevail, but it begins with my embedded belief that there is simply too much liquidity chasing too few investible assets to keep a lid on valuations.
This would be true under any policy regime other than the ones about which: a) Progressives dream; and b) were roundly rejected by the And I don’t think that the inflatable orange float that will land on Pennsylvania Ave on Jan. 20th offers a unilateral windfall to the investment universe.
So, I don’t expect the next phase of the rally to be particularly righteous, but the new regime will do some things to break some of the chains that have been impeding an even stronger rally. And here I begin at the Federal Trade Commission, which will bid a not-so-fond farewell to the odious Lina Kahn – the minute that carroty hand is placed on the bible. She worked tirelessly, and with considerable effectiveness, to ensure that no capital markets activity transpired on her watch. But she’s about to Peace, against the backdrop of a huge backlog of IPOs, secondaries and other juicy transactions of similar look and feel.
Yes, the calendar will explode, and it should be accretive to our objectives. For one thing, a hot deal calendar just vibes well, and, perhaps more importantly, the prospect of raising capital unimpeded by obstructive regulation should focus everyone on the holy task of putting it to good use.
We are also well rid, from a market and atmospheric perspective, of that cockroach Gensler. Not only was he a terrible CFTC Chair, and an even worse Head of the SEC, but his path has been that tired and detestable journey from Goldman Sachs Partner/Centimillionaire to Social Justice bureaucrat, bent on blocking the Road to Riches of everyone else — after he banked his own. We haven’t had a great deal of luck with these types, dating back to Former Goldman Chair Jon Corzine, who served as Senator then Governor of New Jersey (whose current governor is also a Goldman Fat Cat) – after which he ran a pretty decent financial firm – MF Global – into the ignominious dust.
At the SEC, Gensler tried to ram through Green New Deal, DEI, ESG initiatives, none of which have much, if anything to do with the regulation of securities markets. More broadly, the list of his hostile actions against market participants rivals that of Ms. Kahn at the FTC. The new administration has yet to name his replacement, but another term under his stewardship would have been dreadful, and his removal alone is cause for celebration.
My boy Bessent, after a knock down/drag out fight, did in fact cop the top spot at Treasury. I am inclined to pardon him for his documented slights to me – particularly as it will be difficult for me to eschew entirely the temptation to pimp his name/our affiliation out to those with whom I interact professionally. Please forgive me for this. And try to walk a mile in my shoes. If you were a risk manager still trying to make a living in risk management, and if you served as the long-time risk manager to the incoming Treasury Secretary, you might do the same.
Bessent and I tended to agree on nearly every matter pertaining to economic policy, but I am troubled by his 11th hour embracing of tariffs – something I never discerned in our twenty years of interaction. Yes, sometimes tariffs are necessary and certainly the domestic market protecting/intellectual property thieving Chinese are perhaps sorely due for some of this tough love.
But tell me how tariffs — a program under which a government collects a fee on import-based transactions, is anything other than a tax? More often than not, they are passed along to consumers; if not, the provider of the goods and services swallows them. Either way, the government cash register rings. And someone pays. And then the tariffees start to do some tariffing of their own. Prices rise, and only governments benefit. So, let’s tariff away, but not call it anything other than it is.
I reckon, though, the tariff hyperbole will not translate with the flourish with which it has been pushed, and that one way or another, we’ll survive. Part of the Bessent pitch is the unshackling of the Energy Sector, and whatever one thinks about environmental impacts (and my belief is that in a world where India, China and much of the Third World will voraciously consume fossil fuels, our own restraints are futile), cheaper and more abundant energy will be a boon to our economy. The Health Care and Manufacturing Sectors should also benefit from the arrival of the new Washingtonian sheriffs.
I anticipate this feel-good hypothesis will drive incremental gains between Thanksgiving and Christmas, and that we’ll come out of the gates strong in the early portions of next year. At which point we’ll hit a brick wall of unspecified composition. This is as God wills it and should not cause over-consternation.
U.S. markets will continue to obliterate the competition:
I suspect that Interest Rates will remain stubbornly elevated, that the Fed will be less inclined to help the cross-town managers of fiscal policy, that Musk and the other dude will face great difficulty in attacking the expense side of the deficit, and that at some point, the massive credit bubble that we have (ignoring history) blown ourselves will reach a bursting threshold.
I don’t reckon that it will take to The Year 2525 for this reckoning, but I am not paid to offer 500-year prognostications. On the other hand, I’m not paid to offer prognostications of any kind.
Meantime, it’s Thanksgiving and we’ve many blessings with which to garnish our tables. Markets are strong and likely to remain so. No, we won’t have Alice, at whose place it is said that, excepting her, you can get anything you want. And now she’s gone for good. Maybe she never was there at all. But the menu is abundant, and the kitchen is warm.
The Lions are champs of the Ivy League – for the first time since 1961.
This is about all for which we can hope in this forlorn world, so let’s stuff ourselves now, shall we?
2525 can wait.
TIMSHEL