Lordie how I hate writing about politics and world affairs; would rather offer probing and nuanced insights into the nooks and crannies of the markets.

But the former is chockful of subject matter, while the latter is a content wasteland.

In each realm, however, our titular phrase applies. It is so concise a description of so much of what happens in our world that one would think that it dates back to my youth, when we mostly spoke in Sanskrit.

But even Wikipedia – my favorite website, now under the dual threat of political assault and the surging power of Artificial Intelligence – cannot identify a source earlier than a 2015 album of the same name — by a British post-punk producer named Samuel Kerridge.

Now, I had never heard of this Kerridge person, and, as further evidence of his selective appeal, it should be noted that he doesn’t even have a Wikipedia page. I did stream a couple of his tracks – including, of course, AO/NA, and, while I didn’t hate them, I can confidently assert that the album will never supplant any of the existing elements of (“Blonde on Blonde”, “Tumbleweed Connection”, “London Calling” and “LA Woman”) my personal, sonic Mount Rushmore.

But his titular sentiment is nonetheless, well, sentient. And here I reckon I’d be remiss if I failed to acknowledge the 2-year anniversary of that dainty Hamas attack on an Israeli music festival (and other targets), which (among other matters): a) caused the death of some 1,200 indigenous civilians; and b) somehow awakened us to the reality that the denizens of the southern portions of that country, rather than being the victims, were the transgressors in the episode.

Kinda makes you nostalgic now, don’t it?

It took roughly a week for the global political consensus to turn assertively against Israel, and “enlightened” thought has maintained this attitude over the ensuing two years. I have no doubt that the Israeli Defense Force has responded with all its substantial retributive powers.

But the vigor with which the world has taken offense has been somewhat frightening to behold. And, near as I can determine, no one is ashamed of this.

As we went to press with this week’s edition, there seems to be some momentum towards settling this thing. Count me as skeptical. I have long believed that if Middle East anti-Zionists do not wage war on Israel, they will turn their fire on each other, which they’d prefer not to do. Moreover, and particularly with the backing of most Western World nations, along with that of the entire Squad, Bernie, and our fabulous performing betters – including Ariana Grande, Mark Ruffalo and Angelina Jolie, they have very little incentive to bust out the branches of the ten million olive trees that populate the war-torn region.

Instead, it is in their interest to pay lip service to peace efforts, continuing to lob bombs into Zion, while burying their key military apparatus beneath hospitals and orphanages in order to paint the enemy as cruel, heartless savages, bent on sinful destruction and little else.

Serves Israel right for having been attacked two years ago.

And, by our thematic scorecard, it’s Offense oo/Shame 0.

Closer to home, there’s this whole government shutdown thing going on and it’s impossible to discern where we are with this unholy mess. This, like William Makepeace Thackaray’s “Vanity Fair”, is a tale without a hero. The straw man core of the dispute appears to be whether undocumented non-citizens are entitled to federally subsidized health care. Both sides appear to agree on this much – from a political perspective at any rate, the answer is a resounding “no”.

We can be certain of this because the Democrats are claiming that no such money will be so allocated (“Not. One. Dime”), while Republicans insist that the proposal contemplates the distribution of several hundred billions of taxpayer funds to this same cause.

Both cannot be correct. And I suspect that the answer lies somewhere in the middle – no direct subsidies but oodles of loopholes to get around this constraint. In other words, both sides are deeply offended and lack a shred of shame. And both sides are lying.

Meantime, I don’t mind stating that these infantile nomenclature designations for everything that either annoys Trump or gets in the way of his agenda are nauseating me. In this case, the designation of the standoff as the Schumer Shutdown is particularly vomitous — for the following reason.

The dude will be 75 this November but looks more like 90. Yes, he holds the title – oxymoronically — of Senate Minority Leader – nominally in charge of a caucus that pays him no heed, is more inclined to listen to Cory Booker or even Bernie Sanders (10 years his senior), and spending most of his time living in holy terror of being primaried by The Squad. He didn’t cause the shutdown for the simple reason that he didn’t have the juice to do so.

But gosh how clever these cute little nicknames are.

More to the point, though is how obvious it is that the government shutdown is a pretext for a serious skirmish in advance of the 2026 midterms. Both sides are bent on hurting, or at least embarrassing, their opposite number. Thus, instead of passing a resolution that would extend the deadline by 7 weeks and achieve little more than a can kick down the road, they have agreed to select this as the hill on which to kill or be killed.

(God Oh Mighty! Ain’t that some metaphor mixin’ to beat the band? I hope you’re not offended. I am ashamed. But not much).

Dems are betting on their ability to scare the public into believing that their health care is at risk, and, in all honesty, it’s not a bad bet.

Meantime, Team Trump is having more fun than a speedboat ride in cancelling projects designated for hostile jurisdictions and firing whole government departments that annoy or offend him.

On this, though, perhaps we can agree: the sequence is both offensive and lacking in all shame.

And in terms of the economy and the markets, neither characteristic has materialized

I’m less confident about the former, for the simple reason that this most recent nonsense has caused the suspension of economic data reporting. Thus, for the first time in my professional life, there is no Employment Report to analyze at the beginning of the month. Near as I can tell, Inflation statistics, otherwise due this very week, are cancelled as well.

At least we still have the Atlanta Fed’s GDP Now metric – even if I’m not sure why it hasn’t been cancelled like everything else. And it sure is purty:

Yes, GDP Now is still a thing – for now. A look at the explanatory notes, however, indicates that it is currently relying upon its own models, rather than actual government statistics, and that if they don’t re- open some key bean-counting departments soon, they may need to suspend operations altogether.

There are other matters that adhere to the AO/NA construct, including the widely reported episode where the Secretary of WAR (no longer DEFENSE as the latter has been deemed too sissified) summoning all generals and admirals to Quantico for a little fat-shaming. None present appear to have taken offense.

And then, of course, there’s the pending takeover of the Fed by the Executive Branch, about which we have already written so much. It is being done sans shame, and if anyone is offended, they’re keeping pretty quiet about it.

Maybe because, I believe, it is the key driver of the current, improbably extended rally. Which for the same reasons, is likely to continue.

And as for you and I, I believe we have gone too deep for either attribute to apply to our bond. Nonetheless, I feel some level of shame, which I am determined to convert into the actions we want and need. To carry on.

But I reckon it’s time to close. It’s probably best, for our own peace of mind to embrace the AO/NA vibe. Because it has always been with us and is unlikely to remove itself anytime soon.

And neither will its ideological companion – Entitled to Everything, Contributing Nothing.

But that, my friends, is a story for another day.

TIMSHEL

The darkness drops again but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?

William Butler Yeats

I thought I was back. But now I’m not so sure. So, let’s forget about my Second Act braggadocio from last week. Because the truth is that September got away from me. Almost entirely. As such, and in honor of my favorite poem, written darkly in 1919 – the aftermath of WWI and the tail end of the polio epidemic.

Call it thus, not a Second Act, but rather a Second Coming.

It seems, or so I’m told, that a number of significant proceedings may have passed me by this past month. So, I’ll rely upon all of y’all to tell me if the following events did, or did not, occur:

• Did somebody murder the country’s most well-branded young conservative, with a WWII rifle, from 200 meters away?

• Did the Justice Department really lay indictments down on the perfidious James Comey?

• Does it really now cost one hundred large to apply for an H1B visa?

• Did the entire British Empire recognize the Palestinian State?

• Did Trump tell the N. General Assembly that the whole organization is worthless (he has a point) sham?

• Did he actually appoint his Chief of the Council of Economic Advisors to a voting position on the Federal Open Market Committee (FOMC)?

• Did this clown really vote for an >150 bp cut at the last meeting?

• Did the Fed, nonetheless, make me look stupid by only cutting 25 bp?

• Are we really now only a couple of days away from another one of those annoying government shutdown psychodramas? YAWN.

And all the above notwithstanding, did our equity indices, entering the final two sessions of the month, put up respectable positive returns?

This, at any rate is what I find, as my beastly, ursine body awakens from an extended slumber. And, on balance, it is no more, and no less, confusing than my last images from these dominions ere I nodded off.

However, one might argue that the stakes are higher now than then. Summer is over. We are entering the fourth quarter. Otherwise known as the “money quarter”. The one which will determine (at least for some of us) whether or not we get paid.

Thus far, and from a market perspective, it’s been an interesting year – perhaps one of the more interesting ones of my overlong career. We entered the proceedings, whatever our political predispositions, in a nigh-giddy state at the prospect of the return of our heroic, capitalist-businessman- turned-television personality-turned politician’s return to the White House. Now, at last, or so we told ourselves, we can do some business. But something went wonky along the way. Oh sure, we came out of the gate strong, but a few weeks into the proceedings, our peerless leader not only co-opted trade policy but began managing it like some cross between Finnegan’s Wake and a Pink Panther movie.

Investors didn’t like this, and, by the early stages of Q2, the Gallant 500 was down an ignominious high single digit amount.

But as I wake, the G5 is showing a ~13% gain on the year – quite a turnaround from those early days of Spring, and what has caused this remarkable reversal is difficult to pinpoint. Trump scored some optically pleasing trade wins – as well as some victories in the realms of domestic and geopolitics. One could therefore fairly deduce that market participants were imbibing some orange kool aid.

Earnings were about as strong as any rational investor might’ve hoped. GDP clocked in pleasingly. The Jobs market showed some signs of fraying, but giving hope to one and all that the Fed might, at long last, cut rates. However, Trump wasn’t living on hope in this regard – preferring, instead, to exert his by now well-honed muscles — on the Central Bank. He threatened Powell within an inch of the latter’s life. More hawkish members of the Federal Open Market Committee began to either change their disposition or resign. He tried to remove one of these on legal grounds, and, while at present still thwarted, I wouldn’t take the over on her extended tenure.

He also installed his Chief Economist into the FOMC, dropping even the flimsiest pretext that he believes in Fed Independence. And I believe that before long, he will have taken over the whole organization. The first step of which will likely be the completion of his long-pined-for dispatching of Chair Pow. And if you doubt this, take a look at this clever little tidbit, posted yesterday by the Leader of the Free World, to a for-profit media outlet of which he is the majority owner:

I’m not sure that he drew this picture; mad props to him if he did.

Washington’s Farewell Address to the Troops it is not. Neither is it Lincoln’s Second Inaugural (“with malice towards none, with charity towards all”). As a eulogy, it falls well short of Marc Antony’s tribute to Caesar — as re-imagined by Shakespeare.

But you gotta give the big guy points for clarity. He’s drawn a bead on the Federal Reserve Bank of the United States and intends to take it down.

His immediate objective will be to dramatically lower interest rates. This is an entirely political calculation, based on the premise that lower rates will boost the economy, generating immediate bennies to the electorate, and that if Inflation surges, it will do so over a longer period of time – ideally to a point beyond the ’26 Midterms. After which, if his party retains both chambers of Congress, he’ll have a hall pass to do whatever he wants.

And if they don’t, he’s in for a passel of aggravation.

Either way, a bet on being long Treasuries across the entire curve looks to me like a solid one. And the market will like this. It already does.

Between these dynamics and the excess funding liquidity which has plagued us since 2008, it looks to me to still be game on. Valuations may not go into afterburner velocity here, but, absent the immediate appearance of the rough beast slouching towards Bethlehem, any material selloff will be arrested by those seeking to accumulate all available securities in a world where, relative to the demand catalyzed by all that QE, they are in increasingly short supply.

What worries me most at the moment, however, is the looming government shutdown. Oh sure, we’ve been through this sort of thing before – maybe a million times. But this round, somehow, seems different. The battle of the wills between opposing sides in the political debate seems nastier, more personal and less conducive to the type of give and take that the Founders intended. There are no good guys here. The Dems appear to wish to make a stand – primarily on the topic of health care spending. But there is little pretense that this is anything but an exercise in making the other guy look bad.

To quote W.B. Yeats – the centre cannot hold.

It will be difficult for either side to back down from their current positioning, and it appears to me that the Dems are taking the bigger political risk – willing to move forward with the shutdown unless huge medical subsidies are immediately reinstated. They already rejected a bid to extend the discussion a mere 7 weeks, and it looks to me like this indeed might be the hill upon which they are prepared to die.

On the other side, we can take it as a near-certainty that Trump is spoiling for this fight – if for no other reason than that he has demonstrated his preference to spoil for any fight. If armistice terms are not soon reached, he’ll start firing Federal workers by the truckload, and the other side may dig in – because they have few other alternatives.

I could see that getting quite messy – and in such a way as to displease the investor class. Ultimately, these things tend to resolve themselves, but if you’re looking for a near-term “sell” catalyst. This may very well be your ticket.

Absent that, I believe we’ll end this crazy year on an uptick. But just like Yeats’ bird, turning and turning in the widening gyre, if the falconer is out there, we can’t see him.

I reckon this is grim fodder for my own Second Coming. But I will strive to reclaim my ceremony of drowned innocence.

I can only do this with you. And no one else.

Turning our lack of all conviction into a passionate intensity will be quite a challenge. But we have no other alternative. It’s our hour. Or that of the rough beast.

So, let’s be reborn, shall we?

TIMSHEL

Well, I’m back. After a two-week absence – the first such breach of protocol in this column’s nearly 2- decade history. Prior to this, no matter what else was going on, I. always represented.

Where was I? What was I doin? I ain’t sayin’. Other than this: IFYKYK.

Call it my Second Act — yet another refutation of that ill-formed observation, attributed to F. Scott Fitzgerald, that there are no such scenes in American lives. Perhaps this was true in Fitzgerald’s time. But that was a century ago. And, in the interim, I’d (oxymoronically) suggest that we have evolved in such a way as to now enjoy more Second Acts than first runs.

And this is true across virtually all realms of human operation. Let’s consider some examples, shall we?

The first which comes to my mind is Martha (M. Diddy) Stewart – a dewy 20^th Century fashion model who built an entire industry around the concept of (what?) tasteful living. It all came crashing down in 2005, when she was (ridiculously in my judgment) convicted if Insider Trading – on the skinniest whisp of evidence I’ve ever encountered. She went to prison, where the other inmates loved her so much that they hung the above-mentioned Diddy appellation on her. And when she got out, she, I believe with great humility, began rebuilding her empire. It worked. She sold it for a shit pile, and just a couple of years ago, made history again by becoming the first octogenarian to pose for the Sports Illustrated Swimsuit issue.

Sports? Consider the sagas of Kurt Warner, Warren Moon, Baker Mayfield, Muhammed Ali, or Michael Jordan. Tommy John had a virtual pitching arm transplant and returned to produce his greatest mound- based glories. Bill Walton – so thoroughly crippled that he could barely hobble his way to 200 Dead shows he attended the previous year, summoned enough mojo to join, and, at minimum, inspire, perhaps the greatest season in NBA history — the 1986 Boston Celtics championship run.

And speaking of The Dead (and of music generally), they went from Summer of Love Sensei in’67 into relative obscurity in the mid-70s – only to re-emerge for a 15-year run as the top grossing act on the touring circuit. Fleetwood Mac has reinvented itself so many times that it is difficult to keep track of them. Before he died, Johnny Cash dropped several successful alt-pop records with the improbable assistance of Nine Inch Nails and the Violent Femmes. Lou Reed transformed himself from the leader of the magnificent Velvet Underground into an edgy but nonetheless commercially successful solo artist.

And then there’s Def Leppard – a marginal band on their best day but distinguished by the following points: 1) their lead singer stole my uncle’s sister-in-law from the late Ronnie James Dio. Married, divorced her and now presumably pays her substantial alimony; and 2) they retained their founding drummer after the latter lost a wing in a car crash – prompting perhaps the greatest rock and roll joke of all time (Q: what has nine arms and sucks? A: Def Leppard).

Closer to my own professional domain, comebacks are legion. Jamie was the deposed heir-apparent to Sandy, having been rejected in favor of Sandy’s daughter. Brick by brick, he built a banking colossus and now reigns as the indisputable king of depository institution overseers.

My longest-standing client spawned itself out of the ashes of an earlier-rendered multi-strategy hedge fund, which blew up in a highly public fashion not long after M. Diddy was released from prison. The “new” platform (now in its 18^th year) is bigger, badder and more profitable than its siring organization.

After seeing his firm indicted, convicted and banned from the Money Management biz, my old boss achieved a reversal of this judgment, re-opened his fund to outside capital, and, not only has crushed it ever since, but manages to find time to run a Major League Baseball franchise on the side — that he purchased with his investment profits.

Finally, in the dominions of politics, we can present perhaps the greatest Second Act in all recorded history: the return not only to prominence, but towards absolute power, of one Donald J. Trump.

While a matter of overwrought, over-prolific public record, for our purposes, some context here bears reiterating. That as recently as, say, 2.5 years ago, he stood, a wardrobe-less, deposed emperor, twice- impeached, four times indicted – 88 counts in all (and probably more on the way), 34 of which he had been found guilty. He’d been fined to the tune of ~$500M. Under what amounts to only slightly modified circumstances, he might right now be cooling his heels in federal prison.

Perhaps his last, best hope was to recapture the White House, and we all know how that played out.

Most of us would have deemed this a sufficient self-vindicating Second Act performance, but as is more apparent every day, we’re dealing with a different breed of cat here.

It appears, moreover, that seeing as how he’s back in town, he might as well make the most of it – issuing swift beatdowns to his political enemies, using his office to achieve unfathomable personal enrichment, and assuming Executive Powers never even imagined by the framers of the Constitution.

I wrote about this extensively during the last portions of Act 1 (Scene 5?) and am not over-inclined to relitigate much of what was covered at the time. Suffice to state that the pattern continues. And few paying attention can doubt that locking horns with 47 comes at a significant price.

Some of it is annoying, some worse than bothersome. I was, for example, irritated by his “suggestion” that the SEC reduce Corporate Earnings reporting requirements from once a quarter to twice a year. Completely apart from being a stone-cold grandstand play, the idea is entirely counterproductive. Though the New York Real Estate market may fail to recognize this, shareholders are the owners of corporations, entitled, as such, to more, rather than less, information about their holdings. This does not imply that they should have the ability to strike and publish a daily P/L, but what benefit is served by reducing the frequency of their public disclosures? And to whom? And to what purpose?

Moreover, to my way of thinking, the ability to operate in such a way as to publicly and formally share results with the investing public every three months is an excellent measure of operational competency. Those enterprises that can do this (particularly profitable ones) can only advance themselves by dhering to this time-honored practice.

And finally, even if Trump muscles something like this through, my guess is that few corporations will avail themselves of this enhanced latitude and will instead continue to report 4 times a year. Because I believe that investors will punish them if they don’t. And one can hardly blame them for so doing. A company that reports once every six months is operating with more opacity than a quarterly reporter, and, for this reason, compels a higher risk premium.

But all this is small potatoes compared to the latest stunts pulled by the Administration on the Federal Reserve. Though stopped by the Supreme Court (for now), they did all in their power to remove dissenting Governor Lisa Cook from her post – ahead of last Wednesday’s FOMC meeting. And the Committee itself cut only 25 bps.

But they were just getting started. The Big Guy filled the open seat with Steven Miran — his own Chairman of the Council Economic Advisors. For form’s sake, Miran took a “leave of absence” from the top Economic advisory post in the Executive Branch. But please. Trump just installed his top econ guy as a voting member of the Fed. Of course, he was there for Wednesday’s vote and, as indicated in the following dot plot, he made his presence felt:

I draw your exclusive attention to the left-most data set – indicating the current-day preferred levels of Committee members.

For the most part, they present themselves in a tight band between 4.0% and 4.5% (we’re currently at 4.25%).

Except for one – which clocks in at < 3% — over 100 bp below current levels.

Steven I. Miran. Once and future Chairman of Trump’s Council of Economic Advisors.

Yup, T-bear is muscling in on the Fed, and, for better or worse, will soon control the whole shebang. Meantime, there’s been a great deal of pointy-headed debate as to whether, and if so, why, Fed Independence is important. Its formation documents are vague on the issue. And, for that matter, one might question the need for a Central Bank in the first instance. Hamilton created the First Bank of the United States in 1791 – largely to consolidate the Revolutionary War debt of the former colonies, and under a 20-year charter that was not renewed in 1811. The country then managed to muddle through for more than 100 years before the modern-day Federal Reserve was established in 1913.

But to my way of thinking, if we’re to have a Central Bank at all, it must have a measure of separation from the grasp of elected officials – lest it become little more than another tool in someone or other’s political arsenal. At which point, any pretense of dainty, anachronistic objectives such as the dual mandate of maintaining price stability and full employment become little more than cruelly farcical ruses. Instead, it evolves an instrument of pure political tactics – a role it is well on its way to assuming right now.

Trump wants lower rates, and by God, he’s gonna get ‘em.

And after that, any pretext of monetary policy decoupled from our perpetual game of Thunderdome politics will have vanished. It kind of reminds me of the scene in Goodfellas, when Henry convinces Paulie to take a stake in that restaurant. After which the dining establishment became little more than a fencing operation, which, after the last dollar had been squeezed out of it, you torch the place.

But I reckon there’s a titch of good news in all this. Rates – particularly at the long end of the curve – are coming down – as impelled by our overseeing betters. And with those lower rates, a period of extended (if finite) valuation expansion.

Plus, I’m back. In Round 2 and energized by the concept. Heck, when I contemplate the possibilities, I can even anticipate a Third Act. If so, I’ll take my inspiration from The Dead, whose Second Act ended (for what I believe should’ve been all time) with the demise of Jerry. But over the last several years, the remaining founding members have re-gathered themselves, and formed an enterprise that I believe generates more income in a month than the original band could produce in a year.

Round 2 will be OUR round. Justifiably earned by us for having never properly experienced Round 1.

Fitzgerald, on the other hand, died at age 40 – drunk, broke and discredited. He has since experienced a magnificent revival. But he never lived to enjoy it.

Which is a shame, because it might’ve changed his mind about Second Acts, and, for my sake, and ours, I hope that it would’ve.

TIMSHEL

“Now I suppose you’re thinkin’ I’ll bet he is sinkin or he wouldn’t get in touch with me”.

Rod Stewart and Martin Quittenton

Well, you’re half right anyway. I am sinkin’. But not get in touch with you? I thought you knew me better than that. Sinkin’ or risin’, I’ll always be in touch.

Meantime, having nothing to do on this hot afternoon, I’m trying to write a line, an elegy — a poem of reflection, a lamentation for the dead. For Beppie. Who we lost last week (ironically, on the 30^th anniversary of the death of underappreciated VU guitarist Sterling Morrison). Not being a poet, I’ll do the best I can in terms of lyrical flourish. As a start, I’m lifting quotes from my favorite song: “You Wear It Well”. The one I danced to with my daughter. At her wedding. Where Beppie was an honored guest.

Beppie had been my friend for more than 40 years. But we didn’t start out that way. Our beginning, marked by religious and philosophical differences, along with optically conflicting agendas, was, shall we say? A titch icy? But ice melts, and when ours did, a warm friendship emerged. One that was informed but went beyond her being my mother-in-law, grandmother of my children, and great grandmother of my four grandsons. When each these beautiful laddies was born, she would call me with congratulations. To which I always responded:

“Beppie, I couldn’t have done it without you”.

Which was true, biologically and in other ways.

But seeing as how, in addition to being an elegy, this is a space is devoted to all matters relating to the markets, you should be made aware of this:

Beppie was the best damned trader I ever came across. And I’ve worked with some stone-cold legends – Stevie, PTJ, the current Treasury Secretary among them. Over the past ~40 years (or any subset thereof), her track record obliterated theirs – on both a nominal and risk-adjusted basis. She traded exclusively prominent American stocks, long only, with no tools at her disposal other than her own wits and the materials provided to any schmuck of a retail investor that cares to open an account.

Yet never a down year. And overall average of ~25%.

How did she do it? Beats the hell out of me. But what I can to discern is that much of it is owing to her having developed a comprehensive, well-adapted methodology, and sticking to it. Which is a great deal more than I say about any number of professional investors with whom I have had the pleasure to interact – across my (arguably over-long) career.

She paid attention to trends – particularly in Retail. Read every research report upon which she could get her hands. Watched the markets on a tick-by-tick basis. Always meticulously planned her time horizon and price entry/exit points.

Plus, it must be stated, she just had that certain je ne sais quois. That indefinable edge. Like Stevie. Like Paul. You didn’t want to sell what she was buying. Or buy what she was selling.

And, other than routine performance setbacks which investors of her pedigree know to be opportunities in disguise, I never knew her to fail.

About than 10 years ago, I gave her some of my money to manage, and let’s just say that them Bejaminz proved prolific, were fruitful and multiplied. In the wake of her passing, I am left, from a market perspective, with two primary regrets: 1) that I didn’t give her more of my cash to invest; and 2) that she is no longer here to work her portfolio management magic for me.

In pertinacious turn of fortune, I was not entirely unprepared for this. Beppie had been sinking for the last several months, unable, all year, to trade. So, I’ve been forced to fend for myself for some time. I left the portfolio alone until a few weeks ago, when, on my own (and I am extremely proud of this accomplishment) I managed, somehow, to execute a transaction – specifically the sale of some NVDA, which represented a disproportionate percentage of my overall risk profile.

Which goes to show that even with the gathering of the Great Beppie to the dust of her forebears, the world marches on. Each of us is assigned our time slot, and perhaps hers had fairly run its course. Even for me, matters are moving beyond the scope of my easy understanding.

Consider, for instance, that at long last, the number of listed ETFs now exceeds that of plain old stocks:

I’m having a hard time understanding how this can even be a thing. But that, I reckon, is beside the point.

And as for Beppie – she was always a single stock kind of gal – none of this ETF monkeyshine for her!

Thus, perhaps in some perverse way, the heavens were sending signals to her that her time had passed. As it will, eventually, for all of us.

The logic of more and more of what is transpiring before our eyes escapes and worries me. But not much of this is immediately revelatory.

AI models are assigned culpability for multiple suicides, murders and other breakdowns of decorum. Is genocide next on the menu?

U.S. taxpayers, widely known as the world’s greatest technology engineers, are now in the microchip production business. State governors seek to outflank one another in gerrymandering frenzy – not disguising, in fact celebrating, the undiluted political agenda driving these efforts. Federal troops have subsumed local police in multiple jurisdictions – including our nation’s capital. More such activity is on the horizon.

Annoy Team 47 Insiders and you get busted down to the ranks, demoted, for instance, from running the IRS to being named Ambassador to Iceland. Run a department that pumps out some statistics inconsistent with the prevailing political narrative and you get disappeared altogether.

What concerns me most acutely now, however, is the emerging takeover of the Fed by the President and his minions. At this point, one can neither deny nor ignore their acquisitive intent. Their Goon Squad is digging up dirt on FOMC voting members — anywhere the earthy stuff may be found — and is well on its way to co-opting the entire commission.

But this, to me, is simply the prelude to a plan the ultimate objective of which is to subsume the Central Bank into the Executive Branch. And I shudder to contemplate the near and longer-term implications. As a pseudo independent entity, lord knows it’s political enough. Place it inside an administration – inside this administration – and we can forget about any pretense of sound custodianship of the money supply and Interest Rate Complex.

If a Trump-controlled Fed operated in any mode like their management of International Trade Complex, we can anticipate the shifting of monetary regimes with the approximate frequency at which the Big Guy changes his socks. It will be weaponized to punish enemies and achieve tactical political ends. If we get lucky, the issue will be fought out in the courts, which it almost certainly will. Like tariffs.

Won’t that be fun?

And, when this outfit gets run out of town, its successors will be worse.

The implications for disruption of the management of the Capital Economy are breathtaking to contemplate, and, under the circumstances, it’s small wonder that Beppie chose this moment to take her departure from the scene.

The carnage is, at present, difficult to see clearly. Equity Indices, while ginning up a modest sell-off in advance of Labor Day festivities, reside nonetheless at proximate all-time highs.

Our friends at the Atlanta Fed, goosed Q3 GDP estimates by a big slug just this past week:

This bump notwithstanding, though, futures markets regained their conviction about a September rate cut, again throwing off a probability of same to nearly 90%.

We will find out in a couple of weeks, and lord help us if they’re wrong. But they’re not. The cuts are coming.

But it’s important to remember, that by a wide margin, September is the worst-performing month on the investing calendar. I don’t say that 9/25 will necessarily contribute to this dismal tally, but it ought to be, at any rate, volatile. With virtually all roads leading to the next FOMC meeting on the 16^th/17^th. In addition to learning the next step in the Fed Funds Journey, it will be interesting to see how the Committee is constituted, or if, indeed, there’s any Committee left at all.

But now my coffee’s cold and I’m getting told, that I gotta get back to work. So, when the sun goes low and your home all alone, think of me and try not to laugh.

And spare a thought for Beppie. Now in the palm of the Good Lord’s hands.

And whatever else can be said about her, this much is true:

Wife, mother, grandmother, great grandmother, sister, aunt, friend, businesswoman or investor, she wore it well.

TIMSHEL

“Since I’ve become a central banker, I’ve learnt to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said”.

Alan Greenspan

We are plainly operating on a rate-sensitive tape – perhaps as best exemplified by the market’s giddy reaction to Powell’s dovish tilt at J-Hole this past Friday. As I will further argue below — and particularly given the uber-politicized nature of the issue, I believe Chair Pow indeed spoke with undue clarity – for a Central Banker at any rate. Perhaps he should’ve taken a page out of predecessor Greenie’s book. On the other hand, he may not have had the luxury to do so.

But we’ll get to all that.

Meantime, I’ve been jonesing to give a shout out to my main man Gaius Plinius Secundus (AD 23/24 – 79) – known to us street cats as Pliny the Elder – Warrior, Man of Letters, Statesman. He was also the, er, spiritual guide of Gaius Plinius Caecilius Secundus (AD 61 – 113), — known by the same crew as Pliny the Younger and mostly famous for writing letters about the Elder.

Historical records indicate that the latter was the former’s nephew. But one look at them side by side gives rise to the hunch that perhaps the Uncle/Nephew link was nothing more than a ruse, employed throughout the ages, to mask a more – shall we say – in depth relationship:

The Plinys – Oncle et Neveu:

No matter. I’m not here to judge.

What is more to our purpose is that P the E (a prolific author if ever there was one, having penned, among other works, the 37 book/10 Volume “Naturalis Historia” – the first ever compendium on the History of the Natural World) is widely credited with having coined the phrase “cum grano salis” – “a grain of salt”. In modern-day vernacular, the inference is one that challenges the veracity of any claim or statement – as opposed to its original application: implying the powers of small amounts of sodium as an antidote to certain poisons.

In today’s world, there are probably better correctives than salt to menacing materials. But I still believe that much of that which our crania consume should indeed be so taken.

But perhaps not Chair Pow’s J-Hole remarks. He tells us that he’s now more worried about the Jobs picture and less so about Inflation. And we should believe, if not whether this truly reflects his mindset, then at least its implications for going forward monetary policy.

I believe there is undue clarity on the latter – not so much owing to a sober reading of macro trends, as of the political forces impelling the statement. Because politicians of every stripe are indisputably on the warpath for these and other policy objectives. Trump, for instance, has dispatched one Fed member, threatened the liberty of a second, flipped two others. Most importantly, he’s neutered the Chairman.

And he’s just getting started. You can bet your boots that he and his crew are working every single FOMC voting member – 24/7.

All of which has me thinking that: a) a 25 bp cut next month is in the bag, and b) if anything, the Fed might go big and cut 50.

But investors are taking it all with a grain of salt. Instead of shifting the futures market, which was ~90% 25 cut/ ~10% flat to some split between 25 and 50, they have instead reduced their expectation of any rate cut at all — down to a paltry 75%:

Last Week:                                                                                   This Week:
Maybe somebody knows something I don’t. But I stick to my guns here, not only in my conviction about the Fed’s next moves, but in my belief that the Treasury will manage, over the next several months, to slash rates across the entire curve.

One only need review the overall news flow to understand indisputably that it’s adult swim in macro land. The political sharks are circling and gobbling up everything within reach. Texas passed its gerrymander stunt this past week, and is being seen and raised by California, New York and Maryland. The FBI raided Bolton’s crib, and not just for yuks. Albeit with some justification, the Administration has co-opted the funding and/or mission of the Corporation for Public Broadcasting, The Kennedy Center and the Smithsonian Institution.

Finally, and as important as all the others, the Government has announced the finalization of its intent to purchase approximately 10% of chip-maker Intel. And this just weeks after practically accusing the Company’s Chair of being a Chinese spy.

All of which offer examples of an approach to governance which features acute long-term memory, and a penchant for score settling.

Impacted agents are taking notice. A judge threw out that (admittedly ridiculous) $0.5 Bil levy against the Big Guy. Epstein’s Girl Friday is now certain that, while Trump did indeed visit the former’s eponymous island multiple times, he apparently, on each occasion, acted with the utmost decorum.

And, under the circumstances, can anyone doubt that until the political winds shift (and they will), if Trump wants lower rates, he is, by God, gonna get ‘em?

So, the markets ended last week with a resounding rally, but between now and Labor Day, there’s not much on the scheduled tape to either extend or impede this trend. Except, of course, the most important data point of all – the Life and Death NVDA earnings drop on Wednesday. Not much else really matters in this world. Humanity, at this point, is little more than an NVDA derivative, a single-stock ETF, a wholly owned subsidy thereof. And there’s not much more to say on the subject.

It’s probably worth checking in on their latest tidings Wednesday after the close. After that, y’all have my permission to bounce, to focus on the long bittersweet weekend ahead, the one that marks the end of yet another summer season, gone forever and gone too fast.

We will return to greet the last trimester of what has been, to say the least, an interesting year. I don’t think we will enter the proceedings with an abundance of undue clarity.

Heck, the Fed doesn’t even weigh in until just before the Autumnal Equinox, and I do expect a frenzy of speculation in the lead up to this watershed announcement.

In extended closing, it should be noted that Pliny the Elder died saving people from a rather nasty eruption of Mt. Vesuvius — in AD 79. He was in his mid-50s. He left behind quite a legacy. Including the above-mentioned Naturalis Historia, which is the largest written work to have survived from the Roman Empire. In addition to the grain of salt bit, he is the author of record of the quote “nothing is certain but uncertainty”, and several other idioms we still use to this day.

He is also immortalized by a malted beverage, produced by a Northern California brewery:

I have never sampled this libation. But seeing as how it’s the end of summer and all, it might be worth choking down one or two of these bad boys.

You could probably do worse than by emulating my example.

And if you do, you might spare a thought for Gaius Plinius Secundus. Pliny the Elder.

He covered a lot of ground during his five and a half decades on this earth. He has a beer named after him. And he left behind a nephew to tell his story.

“Nothing is certain but uncertainty” he informed us, while, elsewhere, admonishing us to take things with “a grain of salt”. Both statements are applicable across the ages. Maybe no one understood this better than former Fed Chair Alan Greenspan. Who, with elegant purpose, mumbled a lot.

Greenspan is an economist/amateur musician, as am I. In his younger years, he jammed with the Great Woody Herman and Stan Getz. Whereas I have never jammed with no one famous, not once. We both attended Columbia University, but he completed his PhD, and I did not.

But neither of us are Warriors, never, unlike our hero Pliny, having saved a single soul from an erupting volcano.

Neither Greenie nor I, to the best of my knowledge have a beer named after us.

So, perhaps on this late summer day, it would be wisest to take what we say with a grain of salt.

And if I have been unduly clear in this note, then you have most certainly misunderstood me.

TIMSHEL

Now, before y’all get any ideas, this note has nothing to do with race – to me a wearying, abused topic if ever there was one. Instead, I revert to my singular obsession: The Beatles.

In 1968, they released a double album, with nothing but the band’s monochrome embossed name on the cover, against a snowy, virginal backdrop. It is referred to, for all time, as The White Album.

It was a tough interval for the lads. Arguably, the beginning of their end. Their indispensable manager – Brian Epstein, had just been murdered. Contemporaneously, and seeking spiritual direction, they debarked to the ashrams of India, whereupon they found that their would-be spiritual mentor – the Maharishi Mahesh Yogi – was little more than a horndog, sniffing after the Farrow sisters. Paul and Ringo quickly grew bored. And bounced.

They wrote some good music over there, but on the heels of the perhaps over-thematic “Sgt. Pepper’s”, it was by and large a hodgepodge of compositions, recorded more as a compendium of individual solo tunes than as a group effort.

One could hardly blame them, after Pepper, for hitting a thematic wall, and so it is with this column. Which lacks a coherent theme. Case and point: I am also inspired, in the lead-up to “Spinal Tap II”, by the sequence in the original where the suits decided to release their most recent album “Smell the Glove” not with its intended cover that featured a woman on all fours, with a man’s gloved hand in her face, but rather, and to the disappointment of the band, with a plain dusky cover. Which their misanthropic manage described as “simple, beautiful, classic” Choosing also to look on the sunny side, guitarist Nigel Tufnel adds: “it’s like, how much more black could it be? And the answer is none. None more black”.

The White Album. And None more black. Indeed. It is, from a thematic perspective, all I’ve got for you this week.

It’s not as though there isn’t content upon which to focus. Because there’s some. So maybe we’ll just get to it early.

The Alaska Summit. Nah… …nothing to say about that.

The Gerrymandering Wars? I can think of scant more solid evidence of the accelerated deterioration of our mode of governance than this nonsense. Two political parties cynically rigging electoral maps. Each claiming righteous cause while accusing their opposite number of the most odious hypocrisy. I could say more, but the topic only gives me a headache.

Which leaves two subjects that merit perhaps more a more sobering probing. The first is the prospect, socialized in viral rumor, that the Federal Government is contemplating the purchase of a portion of once- iconic chip manufacturer Intel.

What could possibly go wrong? Yes, there’s precedent here. A great deal of this sort of thing, for instance, went on during the Great Financial Crisis. Taxpayers took huge stakes in the Big 3 Auto firms, under the partially plausible justification that America needed an auto industry. But Ford, GM and Chrysler had at that time transformed themselves primarily into finance companies, getting their clocks cleaned when credit markets turned tits up.

But the government stepped in, the industry was saved, and we only lost $10 Billion in the effort.

The Federal Balance Sheet, at the time, also expanded to include AIG, Fannie and Freddie, but these companies were so enmeshed in the global derivatives/financial engineering morass that the collapse of any of them (particularly AIG) would’ve probably destroyed the banking system. And, speaking of the banks, they also were recipients of large public investment – funds that a couple of them – recognizing that once the government has a piece of the action, they control the whole show – tried to refuse. And their refusal was rejected.

Then there’s Amtrack. Which has always been majority owned by Washington, and which has streamlined operations with such breathtaking efficiency that it currently loses only $5B/year.

All of which begs the question: why do we need a chip company? Answer: we don’t.

Because we already have them. Most notably, NVDA, which: a) currently sports a market cap that exceeds that of the entire Russell 2000, and b) is, in many ways, an entire economy unto itself. There’s also AMD and a bunch of others. Collectively, they’ve been eating Intel’s lunch for the better part of a generation. If any combination of them want to pick up what is, after all, still a pretty spiffy portfolio of tech assets, I would have no objections.

But the government? Just no. More than anything else, it extends a disturbing pattern of increased incursion into what should be private affairs, which is only impeded by protocol and pushback by the proletariat. Otherwise, Goldman would have a new Chief Economist – one who presumably would limit his commentary to plaudits aimed at the current administration, we’d be inefficiently attempting to domestically manufacture all kinds of shit we’re better off importing. Companies would be paying through the nose for the privilege of selling their products abroad, and the top law firms in the country would either be disbanded or graced by new leadership.

OK; maybe the law firm thing would be a step in the right direction. But please.

And beyond this, the conflicts of interest are mind boggling. Like, who gets government contracts? Classified information? Advanced knowledge of corporate plans – upon which to trade? And where does it stop? Are taxpayer dollars to be allocated to the task of crafting a diversified portfolio of corporate assets? And if so, who runs the thing? I won’t say much about this but having worked for many years in the service of a former hedge fund manager who is currently Secretary of the Treasury, I’d say there are better choices. Maybe, for instance, the Commerce Secretary, whose Wall Street firm, while, unfortunately on the Sell Side, was a perpetual profit machine.

So, let’s just hope this doesn’t happen. And, moving on, we come to the heart of the matter, the one factor which, in my judgement, will drive valuations for the next year and beyond.

I am referring, of course, to the trajectory of interest rates. I am on record as being well-nigh convinced that they on their way down and this across the Curve. Well, this past week did my hypothesis no particular favors. There was a horrific PPI print, followed by a stronger-than expected showing in Retail Sales. Both of which argue against lower yields. But I stand by my hypothesis, nonetheless. Why? Because political forces impel the plunge. And, in the present day, after voting soundly for a removal of government interference in private affairs, we find ourselves, instead, in an environment where politicians determine all matters of import – according to their private whims and agendas.

The FOMC does not meet for another full month, but the action picks up this week, with the righteous ritual of the Jackson Hole Economic Symposium, held high in the Teton Mountains. It is sponsored by the Federal Reserve Bank of Kansas City, because somebody figured out that they needed to give the KC Fed something to do. Chair Pow speaks on Friday morning, and I continue to believe that his job is on the line – in result of his comments and his subsequent guidance of upcoming Fed decisions. I believe that if he fails to deliver the goods, Trump will fire him.

The pretext, as previously discussed, will be the $2.5B upgrade of the Bank’s HQ, which I must admit is something of a travesty. In a better world, he would’ve simply rebuilt the Kansas City Fed, a building that is elegant in its simplicity:

It’s a short jump from the point where the Kansas River flows into the Missouri, which of course merges with the Mississippi, and the out into the Gulf of Mexico (yes, Mexico). Allowing its members to make a quick, watery exit any time the need to do so arises.

The Washington Fed is similarly proximate to the Potomac, with its easier egress into Chesapeake Bay and the Atlantic Ocean. It perhaps has occurred to Powell and his crew that whether in KC or The District, it may be well-nigh time to aweigh anchor.

I doubt that DC’s newly installed National Guard troops will do much to impede their exit.

Of course, this geography lesson is mere sideshow, in a column that has been designated as themeless.

But as the Summer swiftly winds down, I think that investors can relax a bit. The economy is performing competently. Rates, as mentioned above, are coming down. I wouldn’t call these ideal risk conditions, but they’re pretty close, and, as they won’t last, I’d encourage all to enjoy them while they can.

The White Album ends with the rambling, incoherent Revolution #9, in my view a one-finger salute by Lennon, which stands in sharp contrast to the sublime, compact masterpiece Revolution #1.

I think we’re living more in a #9 world. The Revolution of the early part of this decade failed. As many such Revolutions do. As did the Revolution that Lennon ambiguously touted in #1. What replaced it is little more than noise.

But it’s our noise, and we must take it as we find it. The Beatles, after all, regained their footing, ending their fabulous innings with the highly underrated Let It Be, and the justifiably lauded Abbey Road. And as for us, I ask you to light on the best of it, because all our lives, we’ve been only waiting for this moment to arrive.

It is here. So, let’s set aside nonsensical Revolution, and Come Together, as it were.

In other words, let’s do it (in the road if necessary).

TIMSHEL

Perhaps, after all, there is hope yet for my home state of California. Maybe, this most beautifully diverse spot in these here parts, featuring, as it does, an endless oceanfront, mountains, lakes, rivers, breathtaking vistas, and other amenities too numerous to, well, enumerate, can somehow restore its grip on reality.

It is also a center, if not the center of artistic, technological and commercial innovation. And a goodly portion of the populous is comprised of stone-cold smoke shows. So, there’s that.

But in a tale as old as time, the state has long been a victim of its own hubris, with Beverly Hills and Pacific Heights overlords, shielded both economically and politically from experiencing any associated consequence, uttering diktats to the rest of us folks as to what we should do. Where droughts and wildfires occur in the middle of historic floods (a sin against humanity if there ever was one) due to criminal resource mismanagement. Where the big shots throw money at the poor (rendering them no better off), and at an ever-burgeoning bureaucracy – all at the expense of the hard-pressed, rapidly vanishing Middle Class.

Somebody ought to wake them up. I’m not gonna do it, and I don’t hold out much hope from indigenous policymakers, who benefit from the system as disproportionately as those other groups named above.

I was certainly pleased to learn that recently deposed Vice President Harris has decided to give the ’26 gubernatorial race a miss. But only mildly so. Because I’ve no doubt they’ll replace their term-limited, hair gelled Sacramento Skater Boy with someone just as bad. Perhaps even worse.

Nope. That ain’t my good news. Rather, I am delighted to report that the iconic journalistic enterprise known as the New York Post is expanding operations to the Golden State.

Those on the opposite side of myself on too many issues to name have often derided The Post, which lord knows has given them ample ammunition for so doing. It was founded at the beginning of the 19^th Century, by one Alexander Hamilton, whose handsome visage (though I doubt that he would approve of its current content) still graces the masthead. In the intervening 2 ¼ centuries, it has emerged as the epitome of what is pejoratively referred to as a rag, with those pointing such fingers taking great delight in such hardcore stories as that which engulfed the front cover on April 15, 1983, and from which we derive this week’s theme:

I bought this issue, hot off the presses, at a bodega in Morningside Heights, a few months after my arrival in this Metropolis. I also remember (but cannot locate) the headline proclaiming, after John Bobbitt’s, er, successful member re-attachment surgery and his testing of same, the paper’s simple leader:

“It Works”!

It’s hard to take this stuff seriously. But I didn’t laugh too hard. Or for too long.

Instead, I quickly discerned that The Post is perhaps the best daily periodical around. Set aside the hyperbole (and the depressingly bad crossword puzzle/scant comics section) and what’s left is a pesky news organization that breaks important stories all over the world, that puts out thoughtful (if somewhat slanted but who’s isn’t?), editorials, and (most important of all) boasts the best Sports Section in America.

They seldom pull punches, as evidenced by their in-your-face attitude toward 47, which stands in sharp contrast to their Trumpie-loving rep. Because the ties between them and Big Orange run deep. Contemporaneous to the gruesome discovery immortalized on those pages on 15 April, 1983 was the emergence of the Big Guy into the global awareness – in no small part owing to the generous coverage of him by the paper. He seemed to emerge from a sea of faceless NY developers into ubiquity, as catalyzed by the 1984 purchase of the ill-fated New Jersey Generals, local representatives in the long-defunct USFL. It was then that the whirlwind courtship between The Post and The Donald was fully consummated, and the latter has never had the grace to lay low ever since, even for a brief respite.

And as for The Post, say what you will of them, they call it like they see it, and nothing is more needed, or in shorter supply, in Cali, than this sort of attitude. Thus, in sending an expeditionary force there, I believe they are doing the Lord’s work.

I suspect that there will be considerable content overlap between the two broadsheets, much of it complaining about the current goings on. Maybe they’ll find more headless bodies in topless bars (of which the latter, so I am informed, exist in abundance out there). But that riff is sooooo New York. So, while I will not wish that a decapitated humanoid washes up on the Pacific, I will hope and expect that if this does transpire, The Post will know exactly how to capture these tidings in front page large print.

I also presume that the Cali Post won’t be any more of a tariff fan than is the flagship paper. Here, the action is fast and furious. We dictate terms and the other side signs. Then the two leaders shake hands. After which, the Administration crows about what a great trade they just pulled off. Next comes the gratuitous reading of the latest macro data, along with claims that the new deal came at zero cost.

Well, we’ll see. In part through this week’s CPI/PPI drops. Meantime, doomy predictions of economic cliff diving combined with rising inflation are scoffed at. This line of argument may be politically justifiable – unless and/or until the above-mentioned digits take a turn for the worse. But I’m not buying it as a reality. Consider, for instance, last week’s whimsical announcement of a 100% levy on imported microchips. This, of course, is a boon to those who produce those little buggers domestically, and many tech firms are indeed reshoring these critical components. But at what cost? A fancy gadget can perhaps run effectively on AMD circuits as on those manufactured by Taiwan Semi. But as efficiently? I rather doubt it; otherwise, these critical components would’ve never been offshored at all. More likely, rather than focus their R&D dollars on innovation, companies will be compelled to figure out how to build existing products using parts, which, absent government coercion, they would not be purchasing.

Slap me, but I think that this sort of thing – sooner or later – catches up with us. Especially because microchips are only one of the endless number of products that economic agents – so much Trump’s inferior in wisdom and understanding of all things – have made the foolish decision to purchase from venues beyond our borders. They stand corrected. And chastened.

But I will state this: if International Trade disrupts my efficient receipt of my Chinese-manufactured, mind-relaxing meds, well, I won’t be responsible for the outcomes.

Meantime, as sourced from Matthew 6:34 and purloined in this space: sufficient to the day is the evil thereof. On the sunnier side of the ledger, there is gathering momentum for rate cuts – so much so that the infallible futures market now rates the possibility of a September slash at nearly 90%:

Fed Vice Chair Michelle Bowman has joined the hacking chorus – one-upping her colleagues by calling for three such action in what remains of 2025.

OK; she’s Vice Chair for Supervision, not Monetary Policy. But I highly doubt that she would’ve stuck her nose in this extra-departmental business if the thing weren’t close to being in the bag.

This will be accretive to valuations, but the real action, which will take place over the next year, will be at the longer end of the curve. The very freedoms, not of ourselves but of our capo di tutti capi and his crew, are at stake in the midterms. They will do what is needed to suppress borrowing costs — at durations where voters actually borrow (e.g. mortgage rates).

All of which has me rather chipper about short-term market prospects, which will improve as the above- mentioned important election emerges onto the visible horizon. Because not the Fed, but the Treasury will ensure that this is the case.

I’d also add that the action on Gerrymandering King’s Highway between Austin and Chicago may further tilt the odds. But the King’s Highway runs in ALL directions. And us average wretches will be treated to the entertaining spectacle of Congressional Districts across the country being further carved up, to the extent that they are still in any way recognizable, beyond any recognition. But that, my friends, is a story for another day.

Meantime, I urge all to be of good cheer. The NFL season has, at long last, arrived. And, for me, not a moment too soon. The USFL shuttered decades ago.

Cat Stevens (aka Yusif Islam) is playing at the Beacon in a few weeks, and with all our troubles behind us by then, we’ll be there. Together. We’ll build our house, of barley rice, green pepper walls and water ice. With tables of paper wood, windows of light. And everything emptying into whi-hite.

And we’ll buy a subscription to the Cali Post. We will take it to the beach and do its sucky crossword puzzle. I don’t think they’ll find us headless on the sand, but if they do, let ‘em write about it. Because we won’t be able to read about it anyway.

And that, I reckon, is good enough for me.

TIMSHEL

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 54^th birthday, which he shares, including the year, with Barrack Obama. It was the 105^th 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 20^th 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 1^st – 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

I can feel the teardrops, the pain, and the sorrow
Ever since you’ve been gone, they’ been comin’ on strong.

Little David Wilkins

Answer me this: what is it about The Hague that renders it the epicenter of all human thought and endeavor? It seems that nothing of import, nothing of worth which transcends time and space, that does not either originate there or pass through this divine Dutch port.

Is it its proximity to Rotterdam/adjacency to the North Sea?

I suspect that this may play a role, but perhaps not an essential one. London, after all, is a mere 500 kilometers away. Brussels is < 200 km but of course is landlocked.

I have a friend who was born there but went to high school in Racine. He married a girl from the latter-named Wisconsin metropolis, and they recently moved from West L.A to somewhere in South Florida.

All of which, if nothing else, goes to prove to even the most skeptical among you that reach of The Hague, if not, perhaps infinite, is, at any rate, global.

It is also the home city of Dutch King Willem-Alexander and his fetching bride, Queen Maxima, the latter being > 35 years His Royal Majesty’s junior:

The Royal Couple:
The Hague is, in addition, where the venerable (if oxymoronic) Court of International Justice resides. That Palace of Jurisprudence has recently made headlines by declaring failure to fight Climate Change a criminal offense. It indicted Benjamin Netanyahu for War Crimes. It is, in general a rather humorless, if toothless jurisdiction. Nobody ever seems to stand trial there, but if anyone ever did, they might not have all that pleasant a time of it.

But of course, all this is merely sideshow to the city’s main claim to fame: that of being the hometown to the fabulous Golden Earring. To whom we must pay tribute in consideration of the death of its front man – George Kooymans, who left us last week from a town across the border in Belgium, at age 77. His demise was of course subsumed in a news stream more inclined to feature the passage of Ozzy, Theo, Hulk and even Connie Francis. But the righteous among us know which forfeited treasure is to be most lamented.

I am pleased, at least, that GK lasted long enough to bask in the glory of this author’s having redesignated his signature hit to the top of the list of the Top 10 Songs to Trade to (20^th Anniversary Edition).

So, we revert, as always, to “Radar Love”. The song about a telepathic connection between a roadster and his lady fair. Though it never occurred to me, the interwebs are single-minded in the notion that the lyrical sequence ends with a fatal crash, which (natch) fails to destroy the cosmic romantic connection.

I’m not so sure the dude dies in the end, but no matter. Let’s instead transfer our attention to the tributes therein paid to “Coming on Strong”. Full attribution is given to Brenda Lee (with nary a mention of the song’s composer Little David Wilkins), who went on to even greater heights with her version of “Rockin’ Around the Christmas Tree” – a song that instead of being forgotten, refuses to die.

Not gonna lie: it gives me the squicks. And it ain’t Christmas. Not even if it is still July.

Meantime, Comin’ on Strong could be considered as appropriate an anthem for the risk asset market as any that recalls to mind. Because they are on something of a tear. All-time highs everywhere one meets the eye. What a difference a quarter makes. Three months ago, the Gallant 500 was in full retreat and Vixen Vix was on a hellcat rampage:

All is much cheerier now, and why not? It’s been a risky year, policy-wise, but this far everything – trade negotiations, fiscal considerations, geopolitics – has broken favorably for investors. They’ve responded by buying in an orderly, gentlemanly/ladylike fashion.

Thus far in the cycle, there is some debate about the quality of Earnings. A first glance suggests that they’ve been Comin on Strong. But FactSet is whining about the tepid nature of upside surprises and some other stuff that few of us understand.

One way or another, the technicals of the market are virtually indestructible, as, for many years, any time valuations retreat to certain support levels, they come bounding back impressively:

This here chart is hard to argue with. As long as the wheels keep turning, your gonna wanna buy the dips.

Unfortunately, however, dip-buying based on 200-week logarithmic Moving Averages doth not a sustainable investment strategy make.

Nope, we gotta trade through it. And the action remains worthy of our full attention. This week ought to be particularly pregnant — with the first glimpse of Q2 GDP, the FOMC announcement, and, by Friday, the July Jobs Report.

FWIW, I will go with the consensus in projecting a “hold steady” Fed meeting. However, I have a hunch – particularly given the recently observed lovey dovey cross-town rhetoric, that Trump and Powell have cut a deal that portends at least nominal reductions in September.

We’re also in the full-throated portion of the earnings season, with 3/7ths of the companies about which we care taking their turns at the podium this week.

I kinda think we’ll still be Comin on Strong when all this dust settles. Because we – you, me, Brenda Lee, Little David Wilkins, George Kooymans, The Global Capital Economy, and, indeed, All God’s Children, got a thing that’s called Radar Love. And it trumps nearly every ion of buzzkill out there in the nearby and Great Beyond.

Mostly You. And. Me. Stuck in Radar Love. But with our more authentic journey just around the corner.

But today, The Hague is draped in black. The King and Queen are in full mourning regalia. I do not know what either Little David or Brenda (both of whom are still blessedly with us) are up to, but I imagine they feel it – perhaps more than anyone else.

And somewhere in this world, that gnarly, sublime GK guitar riff is blasting away.

But now it’s half past four and I’m shifting gear, and in doing so, will bid you, yet again, a pleasant ride.

TIMSHEL

I begin by thanking everyone for their overwhelming outpourings to the 20^th Anniversary of the 10 Best Songs to Trade To. I particularly appreciate all the suggestions for incremental inclusion and want to assure my readers that I am taking them under consideration. But no, recent events notwithstanding, and tempting though it may be, I will not be adding anything from the Coldplay catalogue to the list.

However, we’ve other matters with which to tend. Some pleasing, some frustrating. Let’s begin with the former, shall we?

I’m delighted to learn that CBS has shitcanned The Late Show – once a crackling center of wit, creative energy and modern sensibility, the show should’ve died with the departure of its visionary creator: David Letterman. They instead replaced him with that petulant hack Steven Colbert, whose one joke seems to be to utter sardonic witticisms, in tortoise-like cadence (so that those deemed obtuse will understand what he’s saying), issued at the expense of anyone who fails to rise to his level of hip sensibility. He generally lets us in on the gag, inviting everyone who comprehends how things really are (i.e. those that agree with him) to be part of his exclusive circle, while rudely dismissing anyone who doesn’t.

I don’t really care that he’s a liberal from Central Casting. So is John Stewart, who at least manages to bring some joyful self-deprecation into his scoldings.

With fitting verisimilitude, and though the network denies any linkage, the decision comes on the heels of Colbert’s pithy criticism of parent Company Paramount’s $16M out-of-court settlement with Trumpy Bear – the reality that The Late Show loses ~$50M each year notwithstanding.

In an even happier (and predicted in this space) turn of events, the Banks have all reported blowout earnings, and this always brings the waterworks to mine eyes. Who, after all is more deserving of these riches than our friends on buttoned-down Wall Street? I was a bit worried about them, what, with all that market carnage in April and all. But wouldn’t you know it? April was the best month of the three.

And Goldman Sachs – a company for which anybody who fails to root can truly be said to possess neither heart nor soul – clocked in with record revenues.

Meantime, it’s on. The information is flowing in fast and furious. Inflation statistics? A mixed bag. Further consolidation in the Energy Patch. Epstein. Jumbotron Gotchas.

At least it’s quiet – on a relative basis – in the Middle East.

But what’s really on my mind is all this monkeyshine talk about the need for interest rate cuts. Drives me crazy. Trump thinks the Fed Funds Rate should be at 1% (its current lower bound is 4.25%), and, in his spare time, plays with the market like an overly sadistic cat, toying with a crippled mouse, about firing Chair Pow.

Early this past week, it looked like he might do just that; the infallible PolyMarket was displaying a jump to a 40% probability of same, before he issued a trademark “just kidding”, sending the chances back to just below 20:

These are bad, terrible, ideas. First the significant lowering of Fed Rates and second the premature dispatching of our beleaguered Fed Chair. Now, I’m not gonna holler much if the Fed decides to throw the wolves a bone and lob in a modest cut. But the material slashing of yields is plain bad economics.

Before I school y’all as to why, a couple of disclaimers are in order. First, I am firmly in the camp of those who prefer borrowing costs to reside at the upper end of appropriate ranges — so as to maintain as much dry powder as is possible for cuts when they are actually needed.

They are not. Needed, that is. Midway through Q3, the Fed is projecting real growth of ~2.5%. Risk assets are priced at an all-time high. We enjoy full employment.

Meantime, Interest Rates while above levels prevalent after the three significant crises we’ve endured this young century, are, particularly at the longer end of the curve, well within levels of familiarity and comfort:

If we were to obliterate them now, we would likely face the following annoyances:

Rising Inflation. Must I really bust out an IS/LM curve here to show you? Easier money means more borrowing, which, if you hadn’t noticed, is a major aphrodisiac for our unchecked consumption orgy. At lower rates, individuals and organizations will borrow more, and, having borrowed more, will spend more.

It is doubtful that increased supply can keep pace, so stuff will cost more.

Increased Indebtedness. Did I mention that economic agents will borrow more at lower rates? I hope so because they do. Institutions, Individuals, Corporations, Municipalities, States, Sovereign Nations – All God’s Children – beef up their liabilities. And this against a backdrop of global indebtedness many orders of magnitude greater than that which has ever prevailed – including the interval leading up to the 2008 crash. Many – including, arguably, the U.S. Government — owe amounts which they cannot hope to repay by conventional means.

I hardly think, under the circumstances, that new borrowing inducements are warranted. Indebtedness is likely to expand under all circumstances; we cannot resist gorging ourselves upon it. But someday it must either be paid back or otherwise disposed of. And that, my friends, is unlikely to be a pleasant affair. In the meanwhile, the concept of turbocharging it by jamming down rates strikes me as being a less-than-optimal selection among our alternatives.

It Crushes Savers. Answer me this: what on earth do policymakers have against us wretches that keep large portions of our wealth in liquid, interest-bearing accounts? I mean, first, we cram down rates at the slightest whiff of a pretext to do so, and then we tax the meager proceeds as ordinary income. And, after years of pre-tax returns in the 0% to 2% range, we were finally getting some relief. One could, and still can approach, the purchase of a CD that yields the princely sum of 5% (pre-tax). But if Trump gets his way, we’re back to zero.

The well-worn platitude (attributed to, but never uttered by, Benjamin Franklin): “a penny saved is a penny earned” is still around. But you wouldn’t know this from economic policy, and if the low-rate crowd gets its way, they just might toe-tag it altogether.

Misallocation of Capital. OK, pay attention, because this here is the big one. When rates are suppressed, economic agents make bad decisions: borrow too much and allocate proceeds in the wrong places. With unfortunate outcomes, sooner or later, ensuing.

Let’s begin by setting the stage. In textbook economics, there’s a tiresome but important concept known as real interest rates. It is defined as the nominal interest rate, less the rate of Inflation. For illustrative purposes (and though I think that the statistics understate the reality on the ground), let’s assume that the latter is 2.5%. Set the nominal rate at 1.0%, and it implies a negative real rate of 1.5%. Creating a construct under which borrowers are the actual recipients, rather than the burden bearers, of the cost of money.

Who wouldn’t borrow to beat The Band under these circumstances. Not borrowing means you’re losing money.

So, what happens? Companies issue credit and allocate to projects unworthy of underwriting. Enterprises that should be shut down refinance, or, if private, go public. Governments rejigger their financials to show lower interest repayment expense. And borrow more. Banks, which may or may not pass on the reductions to their borrowing clients, book wider spreads. And lend more. Many borrowers will default, causing untold upheaval. But bonuses will have been banked by then, and it will be someone else’s problem.

And the poor consumer? Well, we face the worst fate of all. You’d think we would have learned something about this during the Great Financial Crisis, but, apparently, we didn’t.

Credit card and other forms of Consumer Borrowing are at an all-time high:

Of course, the Lion’s Share of this is in the form of mortgages. And, while there were many contributors to the last crash, I believe mortgage debt was the Head of the Dragon. Bad behavior prevailed across the entire transactions chain. Aspiring homeowners reached too high, as empowered and enabled by unscrupulous mortgage brokers. Banks gobbled up this paper, knowing in advance that they could bundle it and sell it to greedy, ill-informed investors. It was great while it lasted, but then it all went kapoof, producing abandoned dwellings and empty offices everywhere one cared to look. And bankers pounding the pavement.

At present, the cost of home ownership is at record levels, and glib analysis places the blame on high mortgage rates. Fair enough. I get that folks refinanced when the refinancing was good and are thus kinda stuck in terms of mobility. But if we unleash the hounds of lower mortgage rates, it’s a sure bet that the same bad behavior witnessed 20 years ago will resurrect itself. Mortgage bucket shops will multiply like hobgoblins and sell their wares to unsuspecting homeownership aspirants. They will comfortably pay the first few installments, and, unable to meet balloon payments, will hand the keys back to the bank, walking away from all those swell new appliances that they purchased on their credit cards, which charge 16% rather than 18%.

The Party line suggests that this will simply catalyze a surge in building, thereby divinely increasing supply. But here, it pays to remember that we have recently implemented a tariff of 15% on the Canadian Lumber that comprises 30% of the cost involved in the construction of houses in Lower 48. And there’s talk of taking this level to 25%. At which point, the incremental homebuilding expense will rise comfortably into the double digits.

I could go on, but hopefully I need not. Meantime, Conservative rate policy, as I have demonstrated, holds Inflation in check, serves as a guardrail against the acceleration of already excessive borrowing, and offers a salve to misanthropic savers such as myself.

Most importantly, the cost of money at appropriately sober levels forces economic agents into sounder decision-making. Because the cost of being wrong becomes more acute.

There’s not much space left in this here column to protest the concept of firing Chair Pow. But we’ve covered this before. Suffice, meantime, to state that Jerome H. Powell is not Steven Colbert. And for this, at any rate, we can and should be thankful.

I’m not sure any of this means much for the markets. Until it does. At which point, it will mean a lot. Rates are probably going down, near-term, and this will help goose already-lofty risk asset valuations.

A reckoning may be coming, but whose to say when?

TIMSHEL