Acadian driftwood, Gypsy tailwind
They call my home, The land of snow
Canadian cold front, Movin’ in
What a way to ride, Oh what a way to go
Jaime Royal “Robbie” Robertson
Friends, another monument has indeed toppled. Garth Hudson, oldest but nonetheless last surviving member of that iconic ensemble known as The Band, has gathered to his dust. He died in Woodstock — appropriately, as that was the locus of some of the group’s most legendary innings.
Garth hailed from just across the Canadian border: Windsor, ONT, which is basically a suburb of Detroit. He was rigidly brought up and classically trained – by parents who themselves were musicians. As described in the magnificent “Last Waltz” documentary of their farewell performance, being afraid to tell his parents that he was joining a rock and roll outfit, he signed on as the group’s “music teacher” – at a compensation rate of $10/week. This was more than pretense; he actually charged his mates these rates for these services, through a point well beyond when their musical exploits were minting them millions.
But I have always been puzzled by The Band. They made their bones in Toronto’s sizzling 1960s music scene (as lively as that of jurisdictions such as London or San Francisco). Established incremental bona fides by backing up Dylan in his at-the-time-deemed -treacherous migration to electric music. Lived communally in a house they called Big Pink, in the above-named township of Woodstock, NY.
Throughout, they carried a reputation of epitomizing the best of what rock and roll had to offer — both musically and in lifestyle. In addition to Dylan (who spent 18 months with them at Big Pink, recording 100 songs now immortalized as “The Basement Tapes”), all the elite of the genre wanted to in.
Big Pink: West Saugerties New York (not much to look at but History inside):
Thus, during a Beatles Hiatus, George hung out with them and was so impressed with their demeanor and musical comportment that upon his return to London, he (temporarily) told John and Paul to sot off.
But there are, to my way of thinking, some chinks in their armor. They had some fine, arguably spectacular moments, but how many of their songs are truly memorable? A half dozen? A dozen? I struggle to get past this threshold.
Perhaps more importantly, after their Last-Waltz-documented swansong, the brotherly feeling which everyone else strove to emulate descended into vitriol and acrimony. Robbie Robertson – principal though non-exclusive songwriter, took the money and ran. The other guys resented this. Particularly their divine drummer Levon Helm. They reformed without Robbie but couldn’t make much of a go of it. Their haunted, underappreciated other keyboard genius: Richard Manuel, hung himself after a performance in 1986. Bassist Rick Danko died of cancer a few years later. Levon set up his own thing, back in Woodstock, where the greatest of the great sojourned to join his quaint, intimate, collaborative performances. But he never forgave Robbie — until, perhaps, on his deathbed, when the latter made a pilgrimage of apology. And, of course, we lost Robbie himself a year or two ago.
How a musical partnership, with enough audacious authenticity to call itself The Band — the crew which All God’s Children wished to emulate, ossified into the depths of acrimony, leaving behind so few memorable records, is something I’ll never understand.
But one prevailing, timely lesson we can derive from the saga is its illustration of the triumphs and tragedies of International Trade. They formed in Toronto as a backup to transplanted Arkansas homeboy Ronnie Hawkins, who brought fellow razorback Helm along for the ride. Having outgrown The Hawk, signed on with Dylan, and then went out on their own. Thus, arguably, Hawk imported them (or they imported him), and included American export Helm, and then Dylan ended up re-importing them.
And while it was in many ways a great run for all concerned, it ended in tragedy.
With shameless transition I note that The United States and Canada are now going nose to nose in a simmering trade battle. There’s a deadline this coming Saturday (Feb 1) by which time, if the latter has not toed the line, the former will impose a 25% tariff on goods they send down south. This amounts to >$100B/year. Approximately 30% of this is Lumber – including our titular driftwood.
The Canadians, not ones known to simply roll over and get stiffed, will, of course, respond. The two-way trade is roughly balanced and aggregates to >$900B. If this goes through, the two governments will thus be the recipients of more than $200B/year of incremental transfers from the Private Sector.
Call this what you will; I call it a tax. And I think that taken to its extreme, it continues to represent the largest threat out there to the continuance of the present market rally we are all enjoying.
I reckon that the good news here is that Trump, his frenzy of first week activity notwithstanding, did not go all gangbusters with tariffs – yet. Much of what he has socialized is already priced into valuations. Thus, unless he pulls a fast one (which, of course, he is entirely capable of pulling), the market can probably absorb this assault on free trade without much annoyance.
The early returns are indeed encouraging. Investors bought enthusiastically all week, before initiating a modest pause on Friday. In doing so, they shrugged off that wretched, annual Gathering-o-the-Hypocrites circus in Davos. On the other hand, published reports suggest that the forum splayed a much different vibe this year than in events past. In trademark self-interest, they ditched the green/woke (GWOKE?) rhetoric in favor of full-throated endorsements of the spirit of free enterprise. But then again, no one ever accused that crew of original thinking.
Thus far, though still in its early innings, what threatened to be a tetchy earnings season has been, on balance, encouraging. The battle unfolds in greater earnest this coming week, with Titans MSFT, META and AAPL all on the docket. Alphabet follows on 2/4, then AMZN (2/6) and, of course, we’ll have to wait until the end of February ere we hear howls from the biggest dog in the manger Mag Manger: NVDA.
The unmentioned member of the Mag 7: TSLA, which reports this Wednesday, is an interesting case. My own belief is that it is resting on a slippery soap bubble. Marshal Musk continues to suck all oxygen out of the joint, posting up a string of wins and losses that are breathtaking in their scope. On the plus side, he managed to two-tap his hedge fund partner at DOGE, which was perhaps inevitable. Not so good was an inadvertent gesture of his, captured on film, which the unhinged have likened to a Nazi salute. Please. A Nazi he may be, but my guess is that he’s smart enough to reserve his “sieg heils” — in favor of more opportune times.
But that he is making legions of enemies is undeniable. And, meantime, his baby TSLA is trading us up > 200% over the last rolling year, boasts an arguably optimistic Market Cap of $1.3 Trillion (> 10x that of Ford and General Motors combined, notwithstanding that the former sells more than more than twice the cares, and the latter more than three thrice, that of TSLA) and a less-than-shabby P/E of 193.
Presumably, investors are staking a great deal on his relationship with his Big Daddy, and perhaps this will bear fruit for his electric-powered auto outfit and other enterprises. But he may want to have a word with the Mooch respecting the latter’s experience during Trump 1, because (as one of my favorite clients points out), if that relationship turns sour, then TSLA is in serious trouble and may be the biggest short opportunity in recent memory.
But in my world, all eyes are trained on Miami and its annual Hedge Fund Week ritual. ’24 was a good for all concerned, and one can feel the frenzy – even from rigid climes of the Northeast. Fund Managers are swarming the place, waiving their most recent returns and expecting to unending rings of the allocation bell. Allocators are similarly giddy, particularly as they are, more than ever, Belles of the Ball.
This may work out great for all concerned. But I will state that I’ve seen this movie before, and its ending is always uncertain. Funds may depart the premises with their subscription tchotchke bags less than full, and allocators, believing that they have indeed found their next “can’t miss” revenue generators, may live to find disappointed hopes in future return cycles.
I don’t wish to be a Gloomy Gus here, but the current vibe reminds me a bit of the crossover from ’21 (Gallant 500 up ~27%) to ’22. When the former year ended, I was, I kid you not, perpetually buttonholed by investors of every stripe – professional and avocation-based – rushing to inform me that not only had they crushed it in the just-ended year, but had cracked the code in such a way as to ensure that the profits would keep rolling in.
By the end of ’22 (G5 down ~20%), they were singing an entirely different, much sadder, tune.
But I don’t wish to kill anyone’s buzz here. I do believe that the arrows are pointing up. Our resilient economy is gathering juice. Tax relief (which BETTER more than offset the tariff tolls) and regulatory relaxation should be accretive. And, short term, I believe that investors are apt to test the hypothesis that the good times are here and here to stay.
Problems, from that point, will, inevitably, ensue. They always do.
Before I take my leave, though, I offer the following rant which I believe to be exemplary of the types of problems we are bound to face in the visible future. In the days leading up to the Inauguration, the organization surrounding The President-elect saw fit to issue its own digital currency. In many ways, this is understandable – a matched set with his social media SPAC, both of which every Leader of the Free World needs. Adopting the clever handle $TRUMP, this new, most patriotic cryptocurrency sports a lofty valuation of ~$30B, 80% of which is controlled by insiders who are locked up until 3/4ths of Papa Bear’s term is in the rear-view mirror.
As someone who is sympathetic to the Trump project, who very much wants to see him succeed in his current endeavors, I am nonetheless shaking with anger at this. His holdings in this, er, asset, are worth an amount orders of magnitude greater than anything he’s ever sniffed in his Real Estate-manipulating, Reality TV show-hosting, SPAC-issuing life. The potential conflicts and attendant optics, too numerous to inventory in this space, are breathtaking in their scope. This little stunt drew scant coverage – even from hostile media actors. But God help us if something goes wrong here.
But to conclude on a more uplifting note, $TRUMP has leveled off after a few giddy, Inaugural- coincident sessions since its release.
$TRUMP:
Thus, the tide rolls, the driftwood floats, some to be harvested; some not. It all recalls for me images of Upstate NY, where, in the late ‘60s, in a non-descript pink house, some of the most legendary moments of rock and roll transpired.
It was great while it lasted, but like everything else, it ran its course, leaving, in this case, a legacy of bitterness that lasted for decades.
Maybe we’ll do better this time.
But now we’ll have to do it without Garth or any of his mates, and as such, it’s an open question.
TIMSHEL