Rejoice brothers and sisters, we managed to survive January. It was, however, touch and go. The weather sucked throughout, worsening across the cycle. On the plus side, and even though the blizzards of snowflakes whined about it, we managed to capture that cockroach Maduro, who is now cooling his heels at Rikers. But tens of thousands of protesters died in Iran, and here, right in our own heartland, inside one of the most vanilla-flavored cities the gods could, with all their awesome powers, create, federal agents managed to kill not one but two civilian types.
NYC swore in Zo, and I reckon we’ll see about all that.
Bob Weir exited, stage left, and though his contributions to a great band were finite, the world nearly lost its mind over this – expressing its grief by playing, of course, Jerry songs. Then we lost Catherine O’Hara, and that one really hurt.
We also, though barely, endured Davos. Lately, I measure the limits of my mortality by my ability to survive this annual Gathering ‘O the Hypocrites, and I’m not sure how many more of them I can endure. This year’s jumble, full of Greenlandic sound and fury, signified nothing but nearly did me in anyway.
Throughout, Trump was, well, Trump. He dropped a $5B lawsuit on JPM from that fabulous Alpine perch, and, upon his return, this past Friday, announced a $10B action against a division of his own Treasury Department – the Internal Revenue Service. This one blows my mind, because: a) if he wins, it is the taxpayers of America that will foot the bill; and b) as he oversees the Executive Branch (of which the IRS is plainly a part), he is responsible for the defense of a suit where he himself is the plaintiff. Let’s hope at least that in this legal action, serving as plaintiff, defendant, prosecutor and defense counsel will soothe his galactic ambitions
And wherever else we may differ, upon this much we can perhaps agree. As illustrated by the following graphic, Trump II has been very good for, well, Trump:
If this doesn’t encourage the young and ambitious to consider a career in Public Service, I fear nothing will. And even these figures are both dated and understated. Most recent estimates suggest that he’s added a cool $1B since the Senior Senator from Vermont (yes, you know who) published this chart.
And all this prior to the successful adjudication of the above-mentioned lawsuits (which we know will go his way because he always wins). At which point the combined $15B of judiciary awards will place his wealth at levels over $20B – a ten-bagger since they ran him out of town in the magical year of 2020. And he’s only just finished Year 1 of this term. The amounts he might coin before booking it back to Mar a Lago are almost too delicious to contemplate.
I have mixed feelings about the presidencies of Jefferson, Grant and Truman, but at least they had the decency to depart the Oval Office in rank destitution.
Indisputably, though, biggest news of the week, and perhaps, the month, was Friday’s announcement of Trump’s designated successor to the Chairmanship of the Fed – Kevin Warsh.
If approved by Congress, Warsh would take office in May, giving the lie to my prediction that Papa Bear would dispatch the current holder of the position prematurely. I was wrong and I apologize for this.
But perhaps retribution is on its way – taking the form of compelling me to derive yet another nickname for the new sheriff at the Central Bank. Across my adult life, this process has been relatively easy. I was too young to be forced into a nomenclature dilemma with respect to William McChesney Martin (1951 – 1970), Arthur Burns (1970 – 1978), or G. William Miller (1978 – 1979). Volcker (1979 – 1987) was, well, Volcker, and, similarly, Greenie (1987 – 2006) was Greenie.
Though embarrassingly obvious, I designated Ben Bernanke (2006 – 2014) Chair Bernie – in large part because he presided during the Madoff scandal. His successor, Janet Yellen (2014 – 2018) was, naturally and organically, Chair Yell, and her replacement/current man-with-the-plan Jerome Powell (2018 – 2026), became Chair Pow.
But what to do with Warsh? Well, the best I can conjure for now is a removal of the R from the center of his Christian name (even though he is Jewish). Thus, in anticipation of his conformation, I proclaim Pow’s successor to be Chair Wash. And, in doing so, I feel some literary pride. Wash is a synonym for launder, as in money laundering — a practice in which our Central Bank has been known, from time to time, to dabble. In addition, and with lyrical flourish, it should be noted that Mrs. Wash is the former Jane Lauder (granddaughter of Estee; daughter of Ron), and if we add an N to the middle of her Maiden Name (in part to compensate for the confiscation of her husband’s R), we arrive just there. At Launder.
Chair-designate Wash is said to be the preferred choice of the Wall. Street community (particularly Druck, who is his business partner and my investment hero), which 47 has not recently bent over backwards to please. So, the choice is little confusing from that perspective. However, it may be that he figures anyone would be a political uptick from Chair Pow, whose group outrageously held rates steady just this past week – instead of patriotically cutting them to do Trump’s political bidding.
And I have a word of further risk management advice for Chair Wash, which is: don’t stick around too long, lest you end up like your predecessor, who appears to have aged about 3 decades in the years since accepted the job:
There he is on the left, back in 2017. A somewhat anonymous member of the Federal Reserve Board of Governors, swarthy brown eyes giving us all a near-irresistible “come hither” glance. Which stands in sharp contrast to the just taken image of him on the right, less than eight years later, looking like an exhumed executive from Alexander Hamilton’s First Bank of the United States.
Still and all, and at minimum, Wall Street didn’t hate the pick, and that, by God ought to be, and is, good enough for me. In fact, and in “buy the rumor/sell the fact” fashion, the leaked Wash news took the Gallant 500 past 7,000 for the first time on Thursday, only to indecorously sell off as he was officially welcomed in during the following session.
Perhaps, now, we can get down to ordinary business, of which there is plenty to attend. We are in the first phases of the 4,967th government shutdown of the millennium but are so benumbed by the spectacle that we can barely take notice. The earnings engine revs up, and is purring, save for MSFT, punished and pummeled by investors not for not minting profits (they did mint them), but rather for announcing a big AI spend that investors would have torched them for not undertaking.
It was the second worst capitalization slaughter in market history (~$357B), surpassed only by the NVDA rout of exactly one year earlier — as catalyzed by the certainty that DeepSeek (remember them?) would render them obsolete.
But it didn’t stop, as indicated above, the G5 from scaling previously un-breached heights.
Matters were less rosy in anti-currency land, with Gold, Silver and BTC all being waxed. I am compelled, at least for the time being, to advise investors to avoid these casino-like rat traps.
Instead, direct your focus to the earnings calendar, which this week features Gooooooog, AMZN, Palantir and AMD among others. Also, there’s the January Jobs Report, which, for anyone who cares, drops on Friday.
My best guess is that we are in for a blessedly less overwrought February. And I don’t see much edge in the world of factor migration. I wouldn’t want to be short this market, but contemporaneously, I cannot work up much enthusiasm for incremental buying. Sometimes, this is as it ought to be.
After all Peter (Chapter 5, Verse 2, King James Bible) warns us to shun the “filthy lucre”. And he’s right. But as a last word of risk management advice, if you find yourself with a stash of the latter, hold on to it.
Chair Wash and his bride Mrs. Launder will soon arrive on the scene to take us all to the cleaners. Because it’s my guess that they have no less elegant office appointment tastes than Mr. Powell.
And that, my friends, has been a tad problematic for the latter.
TIMSHEL