Exit, pursued by a bear
William Shakespeare, A Winter’s Tale (Stage Direction: Act III, Scene 3)
Our ritualistic purloining of Willie Shake is not in this case of a quote, but rather of perhaps the most well-known stage direction in the history of theater.
And I will be the first to acknowledge that it is over-indexed, particularly in the highfalutin intersections between literature and finance – where I am best known to vibe. Among me and my peeps, one must take great care to avoid excessive usage of such cliches – or risk the worst designation that can be applied in these realms – that of being trite.
Here, though, the set-up is so delicious that I feel I must take up the cudgel. First, because it’s Winter. And not only Winter, but a particularly harsh one – with vicious storms attacking and disrupting folks in the last weekend of January sufficient to ensure that no one in these parts could possibly mistake the season. And this winter, just as was true in our titular work, there are confusing tales to tell.
Because A Winter’s Tale is a very perplexing play, so much so that the plot cannot even be described. And the above-mentioned stage direction fits the chaos with precision — accompanying — as it does, a principal character’s efforts, at his king’s command, to desert a baby girl, experiencing associated guilt, finding his ship destroyed by a storm, and, finally, executing his ursine-induced departure. The Bard offers no context here. The boat is destroyed, he thinks better of abandoning the child, and then, somehow, a big ol’ Grizzly chases him off stage.
All of which kind of reminds me of the present condition of both the Capital Economy and the markets.
And adding neither clarity nor uplift to the ambiance is that this past week, the main center of action was the annual Gathering O’ the Hypocrites, otherwise known as the World Economic Forum of Davos Switzerland.
In a touch of verisimilitude, the main topic, of course, was ownership and control of the icy arctic mass known as Greenland. On this matter, silliness abounds, but, for our purposes, we can gratifyingly tie it to our main theme, through the device of an 1850s folk song – Farewell to Tarwathie, recorded by (Suite) Judy (Blue Eyes) Collins on her “Colors of the Day’ Album:
The cold coast of Greenland, Is barren and bare
No seed time nor harvest, is ever known there
And the birds here sing sweetly, In mountain and dale
But there’s no bird in Greenland, to sing to the whale
There is no habitation, for a man to live there
And the king of that country, Is the fierce Greenland bear
And here we was, thinkin’ our main problems in Greenland would be with Denmark, which, after all, is the home turf of one of Shakespeare’s most notable protagonists – Hamlet, who is also known as The Mad Dane. When riled, The Mad Dane was known to raise quite a ruckus.
But no, what we really need to worry about is them bears. There’s only a few thousand of them, but the locals tell me that they’s a fierce bunch, not likely to simply roll over and get stiffed.
Proving, though, that even at an assembly of preachy, entitled billionaires can generate pockets of rationality, somewhere between ski runs and apres festivities, the Trumpian/Greenlandian diktat evaporated. Exit plans for a military strike, combined with yet another round of tariff coercion to anyone who objects; enter a kumbaya announcement that a negotiated settlement was in the offing. All followed by claims that this was the objective from the start, and, of course, by declarations of glorious victory.
We were also treated to a stone-cold bitch fight, with California Governor Newsom on one side, and Treasury Secretary Bessent, acting as a proxy for Big Orange, on the other. It featured ad hominem tonsorial insults and even rather unfortunate props such as knee pads. I’m pretty sure that no such exchange had ever before transpired between Golden State Guv and Treas Sec — not between Leland Stanford and Salmon P. Chase during the Civil War, or Friend Richardson and Andrew Mellon in the lead up to the Great Depression. And certainly not when George P. Schultz ran Treasury and Ronald Reagan oversaw matters in Sacramento. In fact, so enamored were these two that the former served as Secretary of State for the three quarters of the latter’s two magnificent Presidential terms.
But hey, that’s Davos for you, a shindig where our betters hop on their private jets to convene, amid unimaginable luxury, to scold us about our over-consumption of energy and our greed/reluctance to completely subsidize the underclass. It makes, moreover, for some good sound bites and photo ops, and this year didn’t disappoint on either account. Pissing contests were ascendent, with the targets scanning the globe – from the Fertile Crescent to Caracas to the Twin Cities.
But perhaps my favorite moments came when 47/45 announced that he is suing JP Morgan — to the tune of $5B — for allegedly debanking him a half decade ago. And my first reaction was, bearing in mind that I have maintained the same account with them since opening it at the Chemical Bank branch at Broadway and 113th Street in 1982, that I wish they’d debank me. Heck, I wouldn’t even charge them the full $5 Bil; half that amount would, for me, more than suffice.
However, more broadly, I am forced to marvel at the notion that the President of the United States/Leader of the Free World is suing the world’s largest privately held depository institution1, as well as being the largest in this here country. It kinda seems to me that hauling this outfit into court on a personal matter is outside what The Founders had in mind when they set forth the duties and responsibilities of the Chief Executive. Because, among other matters and though I hesitate to mention it to this polite society, such a move creates at least the temptation to use awesome executive powers for personal gain.
And, as exacerbated by the Alpine altitudes, these doings appear to have sucked the oxygen out of the atmosphere of the Global and Domestic Capital Economies.
Which is a shame, because there’s stuff going on that merits our more righteous market attention. GDP dropped with a 4 handle on Wednesday, with associated measures of Inflation clocking in at ~2.7%. The earnings reporting engine is slowly cranking up, with MSFT, META and TSLA on the docket for Wednesday, and AAPL, Visa and Mastercard due up on Thursday.
Meantime, investors have thus far been expressing some petulance at these podium turns, with, in “exit, pursued by a bear” fashion, neither upside nor downside surprisers being spared the brunt of their derision:
The FOMC meets next week, with their standing pat coming in as a virtual lock. Fed watchers will then be reduced to following the actions taken by the Justice Department against voting members. At the point of this scribbling, SCOTUS is reviewing the case that Governor Lisa Cook brought against Papa Bear, for seeking, unjustly she believes, to fire her, and it does not look good at the moment for the latter. Powell was at the hearing, and presumably, is preparing for his pending Star Chamber turn with the same division of the executive branch, which, approximately a fortnight ago, subpoenaed his ass.
What impact these measures will ultimately have on Interest Rates is unknown. However, recent innings have not been encouraging. The Fed is likely on hold. Longer term yields on these here shores are on a moderate upswing, and rates Japan, as has been widely discussed, are at multi-decade highs. Which has failed to facilitate, as presumably they hoped it might, in the recovery of their currency against ours:
Normally, this graph is presented in the inverse – as the number of JPY required to purchase a dollar (~158), which is the way the market is quoted. Because, for eons – and I am not making this up – the Foreign Exchange trading system operates by a protocol under which the member of the pair with the larger unit is always on top.
But just as I did last week when I showed Captain Sully’s Hudson River-grounded airplane, sometimes, it’s simply better to review things upside down.
But mostly, I blame Davos. Because they have made it so easy for me to do so.
The confab is over, though, but winter persists, cold and harsh – never more so that this past weekend. And you’d think that it’s been too cold in MN for either ICE or its detractors to stir up much nonsense. But they were out there, freezing their asses off, and the federales even managed to complete the murderous trifecta of Minny martyrs, featuring George Floyd, Renee Good, and now Alex Pretti.
And, for all we endured – Arctic Blasts, bloviated geopolitics, pissing contests between the Executive Branches of Washington and Sacramento, the markets, while pressed, finished the week flat.
So, in taking my exit, I do so not directly pursued by a bear. But I worry that he’s out there. And if he is, he’s not likely to be in a particularly pleasant mood. Perhaps this is because this is hibernation season, and he should be sleeping. However, in this frigid winter cycle, full of tales too strange to tell, as the Mad Dane famously observed, to sleep, and, perhaps, to dream, appears to beyond our aspiration. So, let’s stay awake, eyes wide open, and prepare to react to whatever next this wacky Winter’s Tale may bring.
TIMSHEL
1 Standard and Poors ranks JPM number 5, immediately behind 4 state-owned Chinese banks.