Yes, I’m struggling but determined to carry on. For you, my loves.
It’s not a case, per se, of Writer’s Block, which I understand to be a condition under which an aspiring scribe knows what he or she knows wants to convey but is unable to put it to page. Mine is more of a case of lacking subject material that generates inside me any enthusiasm.
We’re in the dark back half of a quarter, and as such, the time-honored flow of key market data has slowed to a trickle. There are some little nuggets here and there. NVDA, at long last, reports this Wednesday, and I suspect – particularly given the absence of other decipherable catalysts upon which to trade – it will cause some superficial action. But not for long.
On a more extended time horizon, the geniuses at Microsoft announced some sort of Quantum Computing breakthrough, upon which I believe it pays to keep a casual eye. I have written about this before, but Quantum Computing will ultimately be a monster, and when it bisects the AI road, we’re looking at a world where technological power may be millions of orders of magnitude greater than it is at present. I’m not even sure I want to live to see that day, which I believe to be a couple/few years off, but, on the other hand, I’m not particularly inclined to off myself in associated anticipation.
If one cares to look, the Washingtonian action remains frenzied indeed. Depending upon how one chooses to consume this content, it foretells either a new, unimagined Golden Age, or the rapid disintegration of all we hold dear. As for me, though I am impelled to opine about it, I find myself, nonetheless, in wearisome boredom of it all.
So, I turn to some good news: Herb Alpert, musician/entrepreneur extraordinaire, who will celebrate his 90th birthday next month, is heading out on tour. One must be of a certain age to remember Herbie’s heyday, but those who do (or care to check) must acknowledge that he had some fabulous innings in the mid-sixties, when he was the Sandy Koufax of non-rock and roll music. Back then, I was a young fanboy, not the least because of my wonderment that a Los Angeles Jew could form a Latin ensemble (the Tijuana Brass) and proceed to conquer the world. Perhaps his pinnacle came in a three-album sequence over a one-year period that included “South of the Border” (October 1964) “Whipped Cream and Other Delights” (April 1965), which hit #1 on Billboard that Thanksgiving and spent > three years in its Top 40, and “Going Places” (September 1965). As special treat, I will share the iconic cover of the middle release:
I was further pleased to learn that the stone-cold dish who graced the cover of this album – Delores Erickson – is not only still with us but will also turn 90 this year.
But our titular song “Tijuana Taxi” did not appear on this album. Rather, it surfaced on its follow up, released later that year.
It is a joyful instrumental which, once having entered one’s head, never departs.
What is less well-known about Herbie is that he is the co-founder (i.e. is the “A”) of A&M records, upon which he not only released his own above-mentioned gems, but also put out magnificent works by artists ranging from Cat Stevens, Carol King, the Carpenters, Wes Montgomery, Joan Baez, Billy Preston, and later, the Police, Oingo Boingo and Joe Jackson. A&M was acquired by what ultimately became Universal Records in the early ‘90s. At which point the creative flow ossified. But after some inevitable litigation, Herb and his partner Jerry Moss made a killing, and I say good on them.
And next month, while the 15-years younger David Johansen lies in a hospital bed needing cash to pay his rock and roll nurse, Herb AND The Tijuana Brass will tour the nation. They begin on March 11th at the Devos Performance Hall in Grand Rapids, MI and end August 23rd at the Gaylord Performing Arts Center in Oklahoma City, OK.
The full schedule, for those inclined to follow him, can be found (among other places) on StubHub. But one must hurry. Tickets are selling fast, and it ought to be a hella series of shows.
So (one might ask), what does all this have to do with the price of eggs? Or for that matter, risk assets? Well, with regards to the former, I’d first point out that eggs are a) indeed a risk asset; and b) on a high- profile rocket ride of late. However, other than a possible increase in cantina orders of huevos rancheros – particularly as a post TJB hangover-cure breakfast, I don’t believe we can lay any of the causes on the doorsteps of our aging, touring troubadour.
And, with respect to the latter, I am also inclined to let Herbie and los chicos off the hook. Rather, though with great reluctance, I am forced to blame the current heaviness of the tape on affairs of Washington. It’s not so much that any of the flurry of recent action is explicitly dilutive, but rather that everything is happening so fast that it’s difficult to track, much less incorporate, into one’s investment attitudes.
At the risk of trudging rudely upon over-trampled ground, in one month since assuming office, the current custodians of the national government have begun re-engineering, with an eye towards downsizing, each department within its rubric. It has assertively begun the modification of relationships with virtually every impactful nation in the world. In doing so, it has sought to recast the entire landscape of International Trade. Mexican tariffs are still on the table, and, closer to home, the White House cancelled that dubious NYC Congestion Pricing tax. Given that this policy has a disproportionate impact on livery services, I can’t resist the temptation of wondering aloud how this all hits the pocketbooks of those seeking to hail a Tijuana Taxi.
It has unilaterally assumed control of pseudo-independent agencies such as the SEC and National Labor Relations Board
Some of this, as the sponsors well know, is Constitutionally iffy, and cogent analysis suggests that this is intentional, intended to compel the judicial review of certain grey areas of governance.
But ALL of it stands to impact various aspects of the Capital Market. As one example, our newly appointed Defense Secretary has already announced plans to cut 8% of his department’s budget. Lord knows there’s gotta be a lotta fat over there, Pentagon-way, but can a relative neophyte like Pete H. state with any credibility his ability to follow through without causing more harm than good? If history is any guide, he is very likely to cut more bone than fat. And this to the detriment of companies not only in the Defense Sector, but also in the Energy, Technology and Telecommunications industries.
And one way or another, a single lunar cycle is perhaps an insufficient interval to have formed fully rendered plans. But anyone who doubts the authenticity of these projects should bear in mind that just this past week, virtually the entire top tier of U.S. military leadership was shown the door. What could go wrong there?
Across the mighty Atlantic, Trump, as was perhaps inevitable, is negotiating with Putin, but in doing so, playing both sides against the middle, by securing hundreds of billions of precious mineral rights, along with a revenue share, from the Ukraine as a bounty for holding the line. Cui Bono (who benefits)? Cui Patitur (who suffers)? What do the Russians think of this? I say the markets have a great deal at stake respecting the answers to these questions, and, at this uncertain point, are unprepared to risk incremental capital based upon their partially informed judgments.
47 and his peeps are also talking about deep-sixing the IRS, and who among us wouldn’t like to see that happen? But with a ~$37T outstanding obligation, which, by the way, is growing at an alarming rate , one wonders, in an IRS-less world, how we might decide to pay down these liabilities. Here, the entire Interest Rate Complex is in play, and investors perhaps can be forgiven if, under the circumstances, they demonstrate some circumspection.
I am thus unsurprised that speculators, for the moment, are treading lightly. But I suspect that they will be shopping again soon – particularly of Friday’s putrid selloff – one that hit Small Caps disproportionately, taking the Russell 2000, improbably, down on the year – extends itself.
One further sign that there’s a bid out there is a sharp drop in the obtuse Put/Call Ratio, measuring the proportion of options purchases allocated to portfolio insurance against those secured as an act of levered speculation:
As indicated above, I’m not prepared to declare the new policy regime either a triumph or a disaster. I do believe that it has elevated the macro risks embedded in the Capital Markets, which may work out wonderfully or leave us in tearful frustration.
But again, it’s all wearying this here Baby Boomer. So, I reckon I’ll sign off. I’ve hailed a Tijuana Taxi and issued instructions to avoid any routes that cross 60th Street, where, despite the directives issuing from Washington, I will pay an incremental $9 Entrance Fee.
I’m on my way to Grand Rapids, three weeks in advance of Herb’s arrival, and in the likely forlorn hope that Delores Erickson will be there to greet me when we reach our destination. Because, if she’s not, I’d be inclined to visit the local Hooters, except that it is closed and the whole Orange babelicious franchise is on the verge of bankruptcy.
But my taxi is beeping, blowing its horn, and I will take my leave, hoping to see you at the show.
TIMSHEL