Ten years ago today, my first grandson was born. It is a milestone upon which I don’t care to further comment. Other than this: Happy Birthday, Jamesy.
He came into this world on my brother’s 54th birthday, which he shares, including the year, with Barrack Obama. It was the 105th Anniversary of the arrival of Elizabeth Angela Marguerite Bowens-Lyon – Queen Consort of the United Kingdom and the British Dominions:
She’s old here, but let’s face it: she was never much of a smoke show – even in her best days. Unlike her daughter Elizabeth II, whose tenure on the throne extended, improbably, even long than that of Queen Victoria — not much of a looker herself. I will admit, though, to having carried a torch for Liz II, however, for most of my life.
Of note also is that one year to the day after the arrival of Queen Mum Bess, Louis Daniel Armstrong entered these earthly realms.
But all that is merely sideshow. Our theme, instead, is inspired by the final severing of ties between Bridgewater Associates — the still-iconic, and once, but no longer, largest hedge fund in the world, and its perpetually iconic founder: Ray Dalio. We link this, not to the Paul Simon song implied therein, but rather to the album of the same name, recorded with Paul’s longtime frenemy Art Garfunkel.
It’s hard to find much fault with the tune. Paul once called it his “Let It Be”. If I was gonna quibble, I’d mention that it probably could’ve been improved by omitting the throwaway third verse (sail on silver girl? Really?).
In 1971, The Recording Academy of the United States awarded “Bridge Over Troubled Water” two Grammys – one for the song, and Album of the Year for the LP of the same name. The latter award was not short of astonishing – particularly given its competition, which included “Led Zepplin IV”, “Sticky Fingers”, “Aqualung”, Joni Mitchel’s “Blue”, T-Rex’s “Electric Warrior”, “Who’s Next?”, and “L.A. Woman” – any one of which would’ve been, in my opinion, a better selection than BoTW.
Because BoTW, apart from the title song, isn’t a very good album. “Cecelia” – quoted above, is a nice little tune, and though a bit overwrought, it’s hard to entirely dismiss “The Boxer”. but then there’s a nonsensical piece about Frank Lloyd Wright. And a couple of banal covers – including The Everly Brothers’ “Bye Bye Love”, which was marginal at best as an original and certainly never needed a redo. And “El Condor Pasa” – an early 20th Century instrumental, which Paul decided to use to inform us that he’d rather be a sparrow than a snail, a hammer than a nail, and a forest than a street.
Well, duh.
And it kinda occurred to me that Bridgewater Associates is the hedge fund equivalent of the album “Bridge Over Troubled Waters”. It had some good moments, but: a) its substance didn’t match its hype; and b) it hardly stands out, much less excels, the proximate competition.
A good deal if its success can be ascribed to world class branding, and, while not wishing to judge, I’d say that Ray Ray (or, at any rate his investors) would’ve done better had he maintained a lower profile. But that isn’t how he rolls. So impressed was he with himself and his accomplishments that > 15 years ago, he published an immodestly-titled book called “Principles” – not simply as a guide to sound investment, but indeed as a treatise on living authentically. Unsatisfied, he expanded this tome and re- released it in 2017, this time to much fanfare. The book was literally everywhere, particularly as, a couple of years after its publication, he began giving it away.
And as exemplary of shark jumping at its finest, consider the 8-episode animated version of the book’s content, the link to which I offer to my A.D.D. friends who eschew the written word:
https://www.youtube.com/playlist?list=PLykIL_1_MFWkWDDgvdZ6L7rsvKCKl-39j
When one grabs the spotlight in such avaricious fashion as did RD, backlash is inevitable. And a couple of years ago a former New York Times/Wall Street Journal writer published an expose’ called “The Fund”, chronicling the rise and “unravelling” of Ray Ray and his Bridge. It was an entertaining read for folks like me, who cannot get enough content about morality tales of professional hubris. But its big reveal was something we already knew – Bridgewater was a personality cult, an enterprise, which, first and foremost, existed to gratify Ray’s idiosyncrasies and enable his conceits. It was never wise, so the book tells us, to ever disagree with Ray, because if one did, one could not expect to hang around The Bridge for very long, as they would most certainly be shoved into The Water. Moreover, blame for any visible errors was always assigned in a direction far away from where Ray planted his feet.
There seems to be a lot of this going around. Especially lately and particularly in Washington. One might even state that just as Bridgewater Associates was the BoTW of hedge funds, the regime is the Bridgewater Associates of administrations.
If, for example, one runs a governmental department compelled to release less than politically flattering information, one can expect to feel big orange flames licking at one’s posterior. Chair Pow has been on the receiving end of this treatment all year but somehow has managed to survive (for now).
Not so fortunate is now-former Bureau of Labor Statistics (BLS) Chief Erika McEntarfer, who had a bad day on Friday. First, she released a July Job Creation figure well-below expectations, adding to our annoyance with big downward revisions to the preceding 2 months’ reports. By 3pm EDT, she was gone.
Because, you see, our economy is roaring, surging, the wonder of the current age and of all previous epochs. And cannot possibly be such a meager number of new gigs. This McEntafar person must’ve been cooking the books. For political reasons. So, she had to go.
It also makes me sad because she looks like a modern-day, unhair-washed young Queen Bess:
Queen Erika outlasted some marginally disappointing CPI/PPI drops, which, somewhat improbably, are also in the purview of the BLS. On more solid ground is Vipin Arora, Director of The Bureau of Economic Analysis (BEA). Who, in fulfilling his GDP calculation mission, managed to satisfy our draft dodging Caeser (and perhaps save his own hide after a dismal -0.5% Q1 print) by ginning up a 3% number for Q2. This must’ve taken some extra elbow grease over at BEA, particularly given (and as the report reveals) that the much-ballyhooed domestic manufacturing renaissance, has, thus far, failed to materialize. Moreover, the 3-print was aided substantially by a tariff-driven drop in imports.
Vipin is probably still somewhat outside his comfort zone though, as well he should be, because Big Daddy is not in a giving mood. Case and point, he chose Swiss National Day – Friday, August 1st – to impose a 39% tariff upon the that ancient nation of cheese, watches and unwavering neutrality.
And the markets are beginning to take grim notice – not only domestically, but across the world. Friday’s circumnavigating puke capped off the worst 6-day rout in a couple of years:
Which is a shame – particularly because the earnings cycle, on balance has been a pleasing affair.
It featured, among other developments a MSFT report so strong that it did a drive-by into NVDA’s heretofore exclusive $4 Trillion neighborhood. Recently beleaguered AAPL surprised everyone by announcing a surge in phone sales – mostly emanating out of the perfidious Land of China.
Beats and upward guidance abound.
But most of the week’s action reinforced my growing hunch that the Fed will indeed take a dovish turn as Summer turns to Fall. In fact, with the help of widely read financial pundits, a clearer picture emerges. Much is riding on August Macro data, but the Jobs Market faces some headwinds.
All those Federal Employees that Trump and Musk bizounced will hit the unemployment lines in accelerated manner. Published reports suggest a visible, AI-driven slowdown in tech hiring. If these and other trends catalyze weak numbers, I suspect Powell will face a “cut or walk” conundrum. Trump will fill the two recently emerging vacancies with allies, and two voting FOMC members are already dissenting. Add the Chair and you have 5 doves. One more and cuts are in the bag.
For these reasons and others, I am on balance untroubled by the dourer tones of the market. I wouldn’t rush in here, but I believe that the market finds an end to the recent undignified behavior of investors.
Ray Ray – at least institutionally – won’t be one of the dip buyers. He’s bounced from Bridgewater, and one can only speculate on his plans. Perhaps he will follow in the tracks of his one-time Number Two – David McCormick – now the Junior Senator for the Commonwealth of Pennsylvania. With whom he fought bitterly for many of their innings together in the sun. Heaven help us if he does.
One way or another, his tenure is indeed Over at the (often-troubled) Bridgewater. But his musical opposite number – Paul Simon — is still kicking around on tour, and, if reviews can be believed, delighting audiences around the country.
No doubt he’s playing BoTW, but I doubt that such filler as “Baby Driver” are on the setlist.
My hunch is that he is featuring what in truth is his best song: “The Sounds of Silence”. And one can only wistfully lament that in forming his investment behemoth, he would have chosen, instead of BoTW, the motifs of this masterpiece as his core branding identity.
TIMSHEL