Rented a tent, a tent, a tent,
Rented a tent a tent, a tent, rented a rented a tent
For reasons which I have difficulty articulating even to myself, I have recently revisited Kurt Vonnegut’s “Sirens of Titan”. As is the case with many in my generation, Vonnegut’s work was, one of my early portals into the world of literature. At the time, I thought he was better than Shakespeare, but my tastes have since evolved. He put out some good stuff, but much of it was sloppy and some entirely drek.
Nothing he wrote was better than Sirens of Titan – a science fiction work which elaborately but plausibly reduces the reasons for the creation of the earth to realms beyond trivial. I reckon the point is to poke fun at existential navel gazers, seeking more profound answers which fit into their own cosmic narratives. I think, in doing so, he performed the Lord’s work.
An early chapter in SoT is entitled “Between Timid and Timbuktu” – an oblique reference to the reality that most words contained in limited edition dictionaries are related to the concept of Time. A subsequent section — “Tent Rentals” pays homage to the rented-a-tent sound of thrumming war drums as armies enter battle. Vonnegut knew something about this, having not only fought in WWII, but in the Battle of the Bulge. Having not only fought in the Battle of the Bulge but having been taken Prisoner of War therein. Having not only been taken Prisoner of War but having endured one of the worst massacres of the entire conflict – the fire-bombing of Dresden in February 1945.
Meantime, the glossary space between Timid and Timbuktu and the concept of martial tent rentals seemed to me to be particularly relevant — as the national holiday melted away and as we marched – inexorably and for better or worse – into the final month of a fast-paced, action-packed year. Time is indeed hurtling forward, not with Timidity but plausibly toward Timbuktu, and those looking for sanctuary can probably do no better than seeking to occupy rented tents and making do as best they can.
Published reports confirm that November was the strongest return month of the year. It wasn’t a milk run though. After some initial post-election euphoria, markets yielded some ground – only to regather themselves for the final, magnificent charge that continued all the way through Black Friday.
I’d be remiss in any failure to acknowledge the Gallant 500’s introductory breaching into a 6 handle, but special commendation, is owing to Ensign Russ – commander of our nautical small craft/small cap forces. The good ensign piloted his boat to double digit gains, but as the accompanying chart shows, it wasn’t all smooth sailing.
Still and all, I am leery of small cap rallies at this point in the year – particularly when the political trade winds blow fair, fearing that they are fueled by a combination of short squeezes and stays of executions for companies which, under other circumstances, might be facing naval tribunals, and, for some, ultimate dispatch into the drink.
Maybe this time it will be different, but I advise my sea-faring small-cap seeking minions to resist the temptation to open ‘er up full throttle.
And now it’s December and one wonders where the time went. It hardly began in Timbuktu and is now anything but Timid. I suspect that the investing army will continue its push to higher elevations – through year end and perhaps beyond.
And why not? I hear the rented-a-tent pounding of the market bulls. They’re on the march and looking to stampede. I don’t believe, from a risk management perspective that it would be wise to wave a red cape in front of them.
I do, however, believe that whatever direction the markets take early in ’25, the first move – particularly if it is acute – is a fade. An improbable early January selloff is likely to be a buying opportunity, and any (higher probability) lurch towards the heavens will run out of steam and reverse itself.
Why? First, because I said so, and second, because that’s just the way it works ‘round here.
As always, we’ll be dancing to the tune of the tech tape. Which looks strong to me heading into year end, but ominous in its broader implications. I read today on Bloomberg of the emergence of an ill-omened new AI app called Death Clock, which purports to predict the exact day of users’ gathering to the dust of their forebears. It has reached about 125K of the curious thus far, but I will cop to be both Timid about this and to preferring a one-way ticket to Timbuktu.
I suspect, meanwhile, with holiday fare presumably digested by now, investors will eagerly turn their attentions to the solemn, ritualistic exercise of the year-end “marking-up-o-the-tape”. This doesn’t happen every year, but at the end of what has been thus far a strong ’24, and with everybody looking to get paid, it’s virtually in the bag. This Friday brings Jobs tidings, and, before the bells jingle, we’ll be treated to new Inflation figures and a final Fed meeting.
But they are more or less beside the point – largely because the investing universe is uber-fixated on the prospects of cashing in some big orange dividends to be harvested in ’25. Had the election gone the other way, these data drops would’ve been more important. All God’s Children would have been focused on the Jobs Market, Inflation and Fed Interest Rate Policy.
But right now, the joyful chorus is ringing “who cares?”.
I do suspect, however, that we will care about some macro issues in the coming months. Or should. In an eerie verisimilitude to the ebbs and flows of the capital economy that we experienced during Trump 1, the once and future Leader of the Free World is engaging in some (dubious in my judgment) saber rattling at important international trade partners.
For instance, just this past weekend, he issued a warning to our BRIC buddies – a multi-jurisdictional consortium of developing nations, acronymed after Brazil, Russia, India and China, but now, as ordained by the Gods, expanded to include South Africa Egypt, Ethiopia, Iran (!) and the United Arab Emirates, not to even think about creating their own currency. Because we will bring the full measure of our retaliatory forces to bear on them if they do.
Fortunately, his associated rhetoric does not extend to sending the can smashing infantry into these hostile climbs, but rather to the imposition of punitive tariffs. And I remained concerned about the attendant implications. I have a hunch that Americans buy some important stuff from these BRIC layers, who will, inevitably, respond in kind. Not exactly accretive, all of this.
Trade wars last reached this temperature in 2018 – the only year in Trump 1 in which our valuation armies yielded ground. Particularly in December of that year, when: a) the nose-to-nose confrontation between the U.S. and China reached its peak; and b) the Gallant 500 beat an ignominious retreat that ruined what was trending towards a solid, if unspectacular return year:
Also that month, Fed Chair Pow began to sound ominous rate raising rhythms – only to do a 180 in January and launching the G5 to its best sequence since 2013 (and one that has not been surpassed since).
Well, a quick review of current contemporaneous conditions indicates that not only are tariffs again on the docket, but there’s every possibility that the Fed could revert to its late ’18 hawkish stance. Particularly, if as is entirely possible, impending tariff policy morphs into an Inflation problem.
Investors may seek to mitigate these risks by renting the most expensive tent ever manufactured. BTC, which flirted with $100K a couple of weeks ago, but has since retreated to microscopically more affordable levels of 97 large and change. This may seem like an elegant accommodation at present, but how it holds up when the shells start flying is another matter.
So, I do indeed expect a war and wish all the best of fortune with their tent rentals. Only time will tell how all this plays out, nestled as it is between Timid and Timbuktu.
Of course, in any properly constructed dictionary, the ordering would be reversed. The ancient city nestled on the banks of the Niger River comes, alphabetically, before the adjective describing lack of courage and confidence. But like I said. Vonnegut was sloppy. And so am I. And so, perhaps, are you.
And so is the world. Which is always, in one form or another, is in a perpetual state of war. Maybe this is why, somewhere in the distance, I continue to hear the following chant:
Rented a tent, rented a tent, rented a tent a tent….
TIMSHEL