A couple of years ago, I coined a term that I fully feel belongs as part of the permanent universal football lexicon.

Now, this intention has morphed into a demand. I demand that you use it, that everyone use it. More than this, I insist that you provide me attribution. I can, if necessary, document that it traces back to me, and, of course, I’d hate to sic those copyright lawyers on you, so just go with it, OK? It won’t cost you nothing.

Specifically, us football studs have long referred to an interception as a “pick”, and, when the recipient of the errant pass manages to return it into the end zone (in the process recording six points for his crew) we naturally call it a “pick six”.

Until, that is, I re-designated as a “six pack”, which I am now doing on a formal basis. In honor of Super Sunday, 2021. Without fanfare, but rather, with determination.

As in “Stafford serves up a six pack to Sherman”. Which I’m not sure has ever happened, but which is now > 2x more likely — given the former’s recent trade into the NFC West: the district in which Sheriff Sherman is on menacing patrol.

So that’s it. Your QB tosses a pick and it gets run back for a touchdown? Well, he’s served up a six pack. Got it? Good. No need to thank me; just remember where you first encountered it.

And, naturally, it is possible to serve up a six pack in realms other than that of the gridiron.

Take the markets, for instance, where (it strikes me) six packs get served up all the time.

While the memory is still fresh, the late January short squeeze comes to mind. It was one for the ages, reminiscent of certain plays from Madden 2000, of which, in days long past, innumerable copies were sold at a retail outlet routinely seen at (now windswept) malls – under the banner of Game Stop. Here, there is no room for argument: the short sellers served up a six pack of epic proportions.

But that episode, for the most part, has run its course, and no benefit can be derived from piling on in this space. Investors will now turn their attentions to other potential targets – most notably (in my opinion) The Fed, which, by virtue of having printed heretofore unimaginable sums of money to purchase galactic amounts of its own securities, is in a position to have the stuffing squeezed out of it.

It’s truly frightening to contemplate, and it sets up as follows. The country is awash in Roethslisbergers (our one-time substitute for Benjaminz) – all suited up for the big game and wild-eyed for the coach to call its number. When the health situation normalizes, they will get their chance. It will be game on. Everyone will go out and fling cash around in “Hail Mary” fashion. The price of everything should rise, and so too (according to the time-honored protocols of the playbook) should interest rates. Which, by the way, should be on tap to climb anyway – if for no other reason than all of the paper that the Treasury will have to issue to pay for all the free sh_t that the government is dying to give away.

But what if interest rates do rise? With the economy in a condition of impossibly unmanageable indebtedness, the escalating costs of debt rollover/reissuance, and the losses that will accrue to the holders of all those obligations, are disheartening to contemplate. Under these circumstances, buyers of Treasury securities are likely to become scarce, so rates could rise at a blistering pace. Which will exacerbate the cycle of losses and inability to find incremental sources of lending.

So, my guess is that inflation or not, the Fed’s gonna have to buy a pant load of its own debt simply to keep us in the game. Just like the dude short all that GameStop had to do a few days back. And, as such, the Fed is set up for a short squeeze/six pack that will be highly unpleasant in its unfolding.

In football terms, its O-Line is buckling, the defensive ends are rampaging, linebackers and safeties have blanketed the middle of the field, and the corners are edging up. Diagrammatically, it looks like this.

First, the pressure:

Fed Balance Sheet and Crude Oil as a Proxy for Inflationary Forces:

And here’s what passes for The Fed’s protection scheme:

It looks to me like the pocket is collapsing. Can the Fed really hold the line until 2023? If not, it’s hello: six pack – Monetary Policy edition.

And, while we’re at it, a few more emerging six packs – mostly emanating from Washington (a town with a proud but nameless football team) come to mind.

Executive orders disabling pipelines and drilling? Six pack in the making. Energy capacity is already constrained, crude oil is surging, no substantial and suitably sufficient alternative fuel sources are available, and all just at the point when the country is fixin’ for a bull goose road trip.

Nationwide $15 minimum wage? A half a dozen cold ones waiting to be opened. So many businesses hanging by a thread. Others delighted to operate with fewer staff, additional offshoring and more automation. No taking into account the massive differences in living costs/wage rates across regions of the country. But 15 big ones an hour for everybody. Politicians will, of course, celebrate their own noble generosity. But nobody here, I think, wins. However, there are plenty of losers. The suffering economic classes that will find that jobs previously available are now out of reach. Businesses which will be compelled to either enact mass layoffs or shut their doors altogether. Though no one will listen, I’m begging our Congressional QBs not to throw this pass – even if it means taking a sack.

Impeachment? Bring on the church keys and bust out the tall boys. Whatever other forms one’s views may assume, an exercise to remove someone from an office he no longer holds, through a sequence that has dispensed with any form of discovery, pre-trial hearings, and the presentation of exculpatory evidence, is all so farcical that even the very unmanageable Chief Justice of the Supreme Court gathered his wandering wits sufficiently to sit out the proceedings. Which are by and large nothing more than a wasteful sequence of theatrical, political retribution. It’s all unnecessary and avoidable, but it begins tomorrow. 45 goes on the docket one day after Superbowl 55.

Six Pack. Six Pack. Six Pack.

But here’s the good news, my friends. In the markets and elsewhere, serving up six packs does not necessarily equate to losing games. The Fed in particular will keep chucking and may very well connect with its investor/receivers more than once, recording, in the process, what is likely to be a transient, meaningless victory. After all, given these investment conditions, the game plan largely forsakes defense (i.e. risk management); it’s all about scoring enough points to outlast your opponents.

In this way, the Fed reminds me of my former nemesis: one Brett Favre, the record holder in terms of throwing interceptions, and, for what it’s worth, the serving up of six packs. But to Brett, it didn’t matter. Because the next time he got the ball (after the ensuing kickoff), you knew he’d be coming at you with everything he’s got. More often than not, his tenacity worked to his advantage, so, justifiably, he’s in the Hall of Fame.

And every once in a while, it all works to perfection. You’re a receiver, matched up against a bigger, stronger, younger opponent, itching to show you up. The ball is snapped. You zig. Then zag. The defender ends up on the ground, eating his own dust, and your athletically gifted QB throws a perfect spiral that lands gently in your soft hands, after which you waltz in for the TD.

I can’t help but thinking that these are the moments that make it all worthwhile. But they don’t happen routinely, and often, we need to grind it out for a spell to set them up. We stumble, we fall, we weep, we wail. We gather ourselves, dust ourselves off, and try again.

We save some energy and other resources, because we know that if we do what’s demanded of us, in the end, we can, we will, prevail.

It’s that kind of market, kids. It’s that kind of life.

If we remember all of the above, then I’d say that while we may find the serving of six packs unavoidable, all things considered, we got this.

TIMSHEL

I guess this comes from “Caddy Shack”, a movie I’ve of which (I’m ashamed to admit) I’ve seen only a part. I hope you don’t think worse of me for this omission.

Meantime, the entire world is a-buzz about the doings around GameStop (GME), and, though I must fight to be heard against the associated din, I feel no less duty-bound to weigh in on this topic.

Because it has significant implications from a risk management perspective.

Let’s start with the punchline – our title is aimed at you, my newly lauded army of micro investors. Though it brings me no joy to say so, I do indeed suspect that this fate may await you.

An unavoidable retelling of the narrative wants the following disclaimers. First, what has been reported may not match up with the facts, which I believe are deeply misrepresented – in the financial press, in the mainstream media, in the blogs and even in the latest edition of “Field and Stream” magazine.

I believe (but do not know for certain) that these sources have gotten it wrong, that this was anything but a redux of the biblical David/Goliath story – played out on the battlefields of electronic trading. Rather, I think it was a “Beyond Thunderdome”/Two Enter/One Leaves sequence — involving behemoth, battlehardened combatants, and rife with contours that have played out, in various iterations, since time immemorial (and certainly since before the bible was written down on stone or parchment).

Further, to the extent that we are able, we will refrain from naming names, because we’re too classy for that sh_t, right?

OK now, let’s begin.

At the epicenter of it all is a short squeeze in arguably overvalued, illiquid stocks — most notably GME – a buggy whip vendor of electronic entertainment, the owner of retail stores in malls that no one ever visits, where it seeks to sell products that the world now purchases almost exclusively on-line. Other than providing a pre-pandemic meeting-place for hormonal teenager males (not exactly a high margin business — even before covid), I’m not sure it has a raison d’etre of any kind.

So, the stock attracted short sellers like moths to a flame (or like me to you), and, as recently as a few weeks ago, they were comfortably poised to push the valuation of GME — from its prevailing levels below $1B — down to $0B. The shorts then began to concentrate, and the market saw an opportunity to do some squeezin’. Over the 2nd half of 2020, GME rose from ~4 to > 20, which, by my accounting, is a five bagger.

OK; fair enough. This sort of thing happens routinely in the short selling game, often-times with the short sellers emerging as winners. But then the squeeze itself started to take on an epic urgency, catapulting the stock, at one point on Friday, to a market capitalization of over $25B. To place this in context, a purveyor of obsolete Nintendo cartridges and Blue Ray copies of “Caddyshack” is at present worth more than companies such as State Street (world’s largest custodian) and Republic Banks, NASDAQ, Consolidated Edison and Tyson Foods (to name just a few).

Prominent short sellers were caught in the whirlwind, unable to buy back shares at any (fathomable) price and facing margin calls that they could not meet – issuing from the brokerage houses that had lent them the stock to sell. One fund in particular was thus forced to fold itself into the strong (but not always loving) arms of its competitors, with the only other likely alternative being ignominious bankruptcy.

All of the above caused perhaps the biggest market disruption since that bizarre-o day last spring when Crude Oil traded negative. It sparkplugged the Gallant 500’s worst week since October and spilled over into virtually every sector and asset class, as investors, quite sensibly, reduced risk across the board so as to find a quieter space to assess the sequence and its attendant consequences.

It was, if you’ll pardon me for so stating, the type of small black swan that was the theme of last week’s publication. So, maybe I was right when I suggested to y’all that black swans do matter?

But here’s the thing, my loves, I’m pretty convinced that the whole narrative about a bunch of Redditor day traders taking down the big, bad hedge fund dude(s) is not only wrong; it’s counterproductive.

To begin to understand this, we must revert to the truism first coined by Cicero, later purloined by Vladimir Lenin, and ultimately mis-quoted with great hilarity by Walter in “The Big Lebowski”.

Specifically, when trying to determine who was behind a certain sequence of events “Cui prodest \ cui bono (“To whose benefit?”) is as good a place, as any, to start. To which I will add: Et dictum (Who was informed?”).

Well, the fund in question had institutional Prime Brokers that were watching its book tick off in realtime. Its order flow was mapped to big market making institutions, many of which are themselves large hedge funds. These mega-capitalized institutions, who, by the way, are at the top of my pantheon of effective risk managers, were in a position to observe the trajectory of impairment of the misanthropic fund at the center of this morality tale, and were thus able to purchase the shares at geometrically rising prices from this fallen, forlorn fellow, and, by doing so, benefit from his losses.

And maybe, just maybe, they were able to lay off most of these shares to the teeming millions of proles trading their PPE money, on the platform named after the famous, good-hearted thief of Sherwood Forest. Albeit on an uniformed basis, I envision remote agents of these big institutions using social media to feed the buying frenzy.

As matters now stand, yes, a Goliath has been cut down to size. Yes, a bunch of day traders have booked windfall profits, but any of them that didn’t sell out and lock in their gains should know this. They own shares in a zombie company that will certainly soon see its stock price come crashing down, and may end up, in short order, nothing but a memory of Gameboy console days gone by.

If so, oh my riders of the Hooded Orinth, it’s sad but true: you’ll get nothing and like it.

And who benefits? The big institutions, of course. Through it all, the rich grow richer. But that again is a story that repeats itself time and time again, since the unit of investment account was not currency, but rocks.

And though you need not join me in these conceits, one parallel that comes prominently to mind is the demise of MF Global. MF was a trading shop taken over and speedily run into the ground by former Wall Street Titan/New Jersey Senator/Governor Jon Corzine, who, when bounced from the rolls of government, decided to try to regain his glory in the realms of investment and finance.

His is the only name I will name.

Soon after his arrival at MF, he bet the farm, making concentrated speculations that the yields of government bonds in Southern European jurisdictions – then in the high single to low double-digit ranges — would come careening down. His counterparties – some of whom who used to work for him — accommodated him — by taking the other side of these trades, noting all the while, that he had finite liquidity with which to sustain these positions.

So, they crushed him in the markets, traded in a way to keep these yields rising, issued endless margin calls which tapped out all of MF’s funding liquidity, until, ultimately, it was forced out of business.

But the colossal irony here is how right Corzine was about these original trades. Spanish and Portuguese bonds now yield not double digits, but rather fractions of 1%. Didn’t matter, though; Corzine failed the risk management test, the wages of which were the demise of the firm he’d just taken over, and all to the benefit of large institutions with deeper pockets and better risk management.

I could offer other examples but won’t. Instead, I’ll just state my belief that this whole GME saga is nothing but another scene from the same playbill.

*********

What remains, for us, is to take inventory of current risk conditions, with an eye towards deriving what lessons we can from what has just transpired.

So, here’s what I got:

• The GME short squeeze arguably catalyzed, and is at minimum at the epicenter, of a visible risk reduction cycle/rise in risk premium.

• While I do not believe that it will lead to a widespread, longstanding market reset, the disruption by all means could continue for an extended period of days or weeks.

• The characteristics of the new pricing patterns are highly idiosyncratic, implying:
  •  They are not particularly visible in most factor models.
  • Counter-intuitive pricing patterns are materializing in market segments bearing little or no relation to GME or other prominent names in the cycle.
  • They are also evident across a broad range of sectors and asset classes.

• I believe that the cycle will run its course, and, for those who have prudently managed their risk, its conclusion will present an appealing opportunity for incremental risk taking.

• Patience and discipline are the keys here. No need to catch the precise turn.
• If I am correct about the opportunity that is forming, it will extend for a significant period once it begins.

• In the meantime, my specific risk advice is as follows:
  • Shade towards the conservative in portfolio decision-making.
  • If risk reduction is appropriate or necessary, cut down on exposures (i.e. gross down).
  • In other words, as I am fond of stating, if you want to reduce risk, ‘tis better to remove items from your portfolio than it is to add to your holdings.
  • In other other words, hedges are not likely to be effective mitigants here.
  • Unless your investment hypotheses have changed, preserve core positions. This is a very bad time to liquidate well-vetted speculations that that have been indirectly, adversely and (in all likelihood) temporarily impacted by recent events.
  • As we always try to relate, the short side is considerably riskier than the long side. Current events both reinforce this and offer a warning for portfolio construction on a permanent basis.

And finally, let’s say a prayer for those who got nothing and liked it, as well as for them for whom this fate looms large on the horizon. Know, though, for the latter group, there’s a way out.

It’s called prudent risk management, which is the key takeaway from this morality tale.

In the saga described above, those who embrace this holiness not only avoid our titular fate, but routinely find themselves the beneficiaries of the misfortunes of those who don’t.

I can’t emphasize this enough – particularly in these troubled times. Lord knows we’ve been whacked around a good bit lately, and the hits seem to still be coming. But you, and I, together, are too many for even these. Because we know these lessons when we encounter them and have the ability to emerge stronger from their rendering.

And, to the rest, I can only offer that time-honored blessing (which God conveyed upon Cain after casting him out from civilization) which has long served as the salutation for this publication:

TIMSHEL

I know. I know.

Should be obvious — but needs to be said anyway.

I have no objections, in fact, if you choose to include this in your daily affirmations.

Because black swans do matter.

By way of full disclosure, I have, never, in my extensive and varied travels, encountered a black swan of the ornithological type. However, I come by this deficiency honestly, as they are indigenous to the Southwestern Regions of Australia. To which I’ve never been.

Heck, I’ve never set foot inside any part of Australia. Thus, even if one of those dusky, winged beauties took a notion to glide (or fly), North or East — from, say, Perth — to Melbourne, Sydney or the extreme wanderlust destination of Brisbane, it would have made no difference; our paths would not have crossed.

I am thus rendered unqualified to offer an informed opinion about those birdies. As such, this document makes reference to colloquial, and, more specifically, economic, usages of the term, which, for the uninitiated, are defined as unforeseen events that cause acute, unpleasant disruptions to flows in the capital economy. Discussions of the latter are ubiquitous in market circles; investors, quite literally never shut up about these black swans. They are seemingly always lurking around corners, ready to pounce on us unawares, to shove their menacing beaks in our faces, annoying us or perhaps worse.

Sometimes, even, they actually materialize. 2008 comes to mind. And perhaps April of 2020.

And I am somewhat a-feared that a baby cygnus atratus might be waiting to greet us over the next few weeks. Attentive readers will notice that this is a significant departure from my typically perpetual bovine vibe. But I have a hunch that that the intestinal fortitude of me and my fellow perma-bulls just might be tested – ere Q1 runs its course.

Bear with me, if you will, as I set the scene.

A high drama/contentious election just concluded, with one of the parties emerging in control of the Presidency and both Houses of Congress. Lots of folks unhappy about this. Some even threatening and acting in violence.

Markets ended the preceding year in full ascent, and the trajectory extended into January, with a big part of the rally owing to the continued support of the almighty Fed, and the anticipation of all form of accretive policy goodies emanating from the newly installed regime in Washington.

Yes, sometimes I pine for those simpler days of early 2017.

But hold the phone. Four years later, we find ourselves with the exact same set of conditions.

So, I thought it might be useful to look at what happened next, in that cycle of a quadrennial ago.

The Gallant 500 and its fellows were rolling along quite nicely, when, in early February (in cruel irony, less than a week before Valentine’s Day), Vixen VIX, with whom we are perpetually smitten, and to whom we always return no matter how badly she uses us, flashed her womanly fires, and exploded to more than three times her prevailing temperature — over the course of a single session:

Now, of course, as gentlemen, it falls to our lot to forgive her this outburst; she’s entitled to it, and we most certainly deserved it – if for no other reason than (as the chart shows) we had been ignoring her for much too long. In the end, we always make up, and are rendered better for the experience.

But that doesn’t mean it didn’t smart. A lot. We took a stone-cold pounding – to the tune of more than 10%, with no identifiable catalyst (was one needed?) other than the fiery wrath of Vixen VIX, who, when she so chooses, can transform herself from sultry siren to beautiful black swan. And after that, all is at least (temporarily) well. The episode I just described, for instance, caused an indecorous retreat of the Gallant 500 from nearly 2900 to under 2600. Where is it now? A spiffy 3841.

And I kind of have a hunch that something of this nature, something familiar, something peculiar, something for everyone, may be in the offing. Might or might not be caused by Vixen VIX, but if it does transpire, you can be certain that she will be present and active on the scene.

Of course, there’s a lot of fodder out there to catalyze a correction; too much fodder, in fact, to inventory in these pages. Let’s just state that if the market were to take a respite any time and even give up some ground in the next few weeks, we may not need to search far for root causes.

But what’s more interesting to me is the scenario where the black swan catches us off-guard. Maybe due to an unexpected event, or, maybe, because it is the will of the market gods.

And in addition to the unending onslaught of headline news flow (to say nothing of the impacts of the continued high mourning of the passage of New York Dolls guitarist Sylvain Sylvain), in terms of the more time-honored market-moving catalysts, we actually have a big week coming up.

We begin with earnings, which, particularly quarter over quarter, have been surprisingly strong thus far. But sh_t is about to get serious, as this week’s playbill features data drops and associated CEO utterings from many of our most important filers, including Apple, Microsoft and Facebook. These uber tech disclosure cycles have risen to thresholds sufficiently vital as to cause the schedulers to mercifully split the sequence across two weeks. We’ll thus have to wait an extra few days to hear from Alphabet and Amazon.

I reckon it’s OK, though, because we will have plenty of numbers to crunch in the meanwhile. I myself will be paying closest attention to the Thursday release of the first estimate of Q4 GDP, which ought to be interesting to say the least.

The folks in Atlanta (so recently the epicenter of our political psychodramas) have been busy with their tabulations, and here’s what they have to tell us at the point of this correspondence:

One can justifiably wonder if the denizens of that great metropolis might not benefit from a little arithmetic refresher course, as, since early November (!), their estimates have risen from a paltry < 2%, up to double digits, before falling to the perhaps more reasonable and certainly more civilized threshold of 7.5%.

One way or another, it bears watching. Particularly in advance of so much rapid-fire fiscal policy change looming on the horizon.

But I’m gonna step back into character here and state that even if the market takes a digger here, we’re looking, over the next several quarters, at a significant upward spike. The money drops that have already taken place are breathtaking. Those contemplated, on an incremental basis? Mind blowing.

And, come what may, the math suggests that much of this largesse will glide over the smooth, lagoon-like waters, into risk assets — taking valuations, and the very tide itself, to higher elevations. I see one of two scenarios emerging. Either the virus digs its heels in, and wider lockdowns ensue, in which case all sorts of unspent stimulus cash finds its way into stocks, bonds, real estate and bitcoin. Or the gates open up, as, for whatever reason, covid gets curtailed or is canceled altogether, which should lead to a spending/profits/valuation explosion.

We’ll pay for all of these sins someday, maybe soon, through the wages of inflation, but won’t clamp down on it until it’s raging out of control. Meantime, it’s game on.

But of course, there are those black swans to consider. As we’ve already established, they do matter. Maybe a lot. And though it’s just a hunch, I’m a little concerned that a flock of them may be following the trade winds, to alight, without advance warning, on these here shores. They’re dark, they fly at night, and there’s a good chance that, as such, we may not see them before they arrive.

So be forewarned.

Because unlike some ducks I’ve observed at certain watery locations in Central Park, they rarely, if ever, sleep till noon. Nay, they rise early, and it’s best – now and forever to fortify ourselves to address them on some early morning in the near, or not-to-distant future.

TIMSHEL

“If something cannot go on forever, it will stop”

— Herbert Stein

“But will continue till it does”

— kg

I had a different hook in mind for this one, but after this past week, I’ll think I’ll save it for another time.

Meantime, can I get some snaps for my man Herb Stein? Chairman of the Council for Economic Advisors under both Nixon AND Ford?

Admittedly, these credentials are not quite conducive to the materialization of swarms of groupies, but on the other hand, Herb stayed married to his wife Mildred for 61 years (until she passed) and is the father of delightfully quirky Renaissance Man Ben Stein. So there’s that.

He is also the author of the sublimely simple and entirely authentic first half of this week’s title, which has become one of the most bandied about phrases in the macroeconomic lexicon.

This is not Herbert Stein. It’s not even Ben Stein. I can’t take the risk of using their images and potentially violating copywrite protocols on the interwebs. Of which we should all be mindful. Because the interweb cops are out there, and you should be concerned that they may be coming for you (more about this below).

So, instead, I am sharing a photo of my cousin: Ben Finkelstein, which: a) I don’t think is copyright protected; and b) even if it is, I don’t think he’ll sue me. Because me and him are, you know, boys. Ben is Booking Manager at The Birchmere – a fantastic music club in Alexandria, VA, which has managed to survive the covid. They have an interesting set of shows coming up, and, beyond that, I am able to state that Ben is one classy dude. So, everyone, say hello to Ben. If you go to the Birch, he’ll light you up.

Meantime, Stein’s Law is largely indisputable, but I believe the coda that I’ve added is equally valid, and (if I may make so bold) particularly applicable to many aspects of our current, collective experience. Let’s, by way of elaboration, take a brief inventory of these, shall we?

Plainly, there’s no starting point more appropriate than this here virus situation. History (which, as Twain famously tells us, does not repeat but rather rhymes) suggests that it won’t go on forever – at least as a global pandemic. Plagues — from Bubonic to Black (let me assure those of you who did not live through these that that they were MUCH worse) tend to run their course. As, presumably, will the covid.

But like I been telling yas, it will, more likely than not, continue until it ends.

Which brings us to the Public Health mitigants. Will we be wearing masks forever? Will I, for all time, be forced to accept a corpse-length space between myself and any other unit of human flesh (except, of course, you, from whom I cannot, for any reason under heaven, comply with this distance protocol) I encounter? Will businesses and schools continue to either be idled, or to operate with the ball and chain of limited capacity?

Again, probably not. But until these conditions end, they will ensue. Of this I am (nearly) certain.

However, there are glimpses of illumination at the end of this underground passageway. Vaccine development and (imperfectly executed) rollout have been nothing short of a miracle. I find entirely too much of the attendant analysis to be filtered through the frame of personal and political agendas, but the reality is that a bunch of fabulous folks designed, tested, manufactured and effectively dosed millions of humans — in less than a year – a fraction of the time window historically required for such an exercise.

The rollout, of course, is accelerating, and (wouldn’t you know it?) many of our most Napoleonic mayors and governors (including those who shut down whole areas of recreational wilderness this past summer) are now taking a second look. Thinking that now (or soon) might be a good time to open things up a bit.

The lockdowns, of course, couldn’t last forever. Maybe now they are winding down. In the meantime (must I point out?) they continue.

And I believe one can be forgiven for pondering the timing of this new thinking, coinciding as it does with the regime change scheduled take place on Wednesday.

On a related note, I do (to a degree) understand the fears of many that, absent indecorous intervention, the Reign of 45, was never gonna end. I myself addressed this topic in last week’s note, and was met with some responses that (not gonna lie) flat out hurt my feelings.

Please know that I forgive you. But at the point of this correspondence, it appears that no such intervention is in the offing, and the odds are that we will survive until Wednesday’s scheduled power transfer — that big orange hand on the nuke button for three more days notwithstanding.

The Trump Era couldn’t last forever; is now ending. It does puzzle me that many of those most eager for this milestone are seeking to perpetuate his presence through an impeachment proceeding that is entirely irrelevant insofar as it is: a) a process designed to remove someone from an office; which, b) he no longer holds. But this is a rhetorical rabbit hole into which (for the time being at any rate) I refuse to dive.

I will also suggest that the victors in these great political battles are, in some sense, rolling up the score, bringing to mind another test of Herbert Stein’s wisdom. My read is that the Big Butchers of Big Tech are placing their thumbs on the scale in a way that favors the winning side. Conservatives of every stripe are being shown the door, told that their custom is not wanted, while the cabal is contemporaneously and cheerfully selling products, services and access to the Ayatollahs, the Cubans, the power players of the People’s Republic of China and other meanies. Every member of that elite no-names-needed, corporate club – representing more than 1/3rd of the capitalization of Captain Naz (NDX), is guilty of this, er, hypocrisy.

I say it can’t last forever, and therefore won’t. First, I don’t think that even the mighty, collective powers of Silicon Valley can silence for all time any form of thought, including conservatism. Perhaps more importantly, though, is the following. If progressive rhetoric can be taken at face value, it must aim its guns at the Titans of Tech – which operate with deep gender and racial imbalance, and through which an embarrassingly large amount of wealth and income inequality is manifested. The progs and uber-capitalists know that while they are currently operating under an WWII German/Soviet sort of alliance, they must ultimately do battle. This is, in my judgment, inevitable; the détente cannot go on indefinitely. So it will end. And, for what it’s worth, when the footsie game is concluded and the conflict begins, I will be rooting for Big Tech, because I prefer their products to progressive dogma.

But in the meanwhile, the footsie game, with legitimate ideologies under heal from each side, will, indeed, continue.

The firms in question are the main drivers of the Great Bull Market, and whether the latter has run its course is a matter unknowable. The Gallant 500 did yield nearly 2% of hard-won new territory last week, as catalyzed by factors such as tepid bank earnings and (perhaps) an awareness that it just can’t keep advancing — without respite — into eternity. It certainly cannot last forever, and so, like Herbie told us, it the rally will eventually end.

Until it does, though, kg says that it will continue, and when has kg ever been wrong? About anything?

I view last week’s quaint little pullback as entirely consistent with both Herbie’s hypothesis and kg’s corollary.

Because the policy makers are all in cahoots to keep the rally juices flowing – until they can’t. At which point they won’t. But until that happens, they will continue to do so. We got a peek last week at Joe’s economic agenda, and it’s full of goodies for all – but mostly for favored constituents. His incoming Treasury Secretary’s former deputy – now running the Fed – took to the Princeton podium on Thursday, to inform us that he ain’t worried about inflation and is therefore untroubled by the prospects of extending the era of dollar dilution and suppressed interest rates – until he can’t. At which point he will stop.

So, you tell me. We got an economy pumped up on helium with a seemingly never-ending supply of He cannisters on their way. All being shoved into a system which now cannot circulate this stimulus in any comprehensive manner. Much of this liquid matter flows naturally into the markets. And, if one dares to extrapolate to a point when the economy actually is released from its shackles, there is every potential for an explosion of pent up demand.

Sounds like a good plan, right? Well, it won’t last forever, and when it stops (likely because dollars are so worthless, no one will hold them and hyperinflation will set in), I reckon we’ll all have reasons to lament its cessation.

But I’m here to tell you that until this point, it will continue.

Because it has to.

Because we have to. Continue. And grow. Together.

I reckon that’s about all I got. For now. Because, particularly after the last few days, I’m too tired to continue and need a rest. I couldn’t go on forever, right? And you wouldn’t want me to.

But I won’t be gone for long. I will resume; maybe not forever, but for the human equivalent thereto.

Until that point, I will continue. Until I stop.

And so, too, should you.

TIMSHEL

************

ENDNOTE. It came to my attention (somewhat belatedly) as I was writing this note, that the world has lost the great Sylvain Mizrahi – known to his fans as Sylvain Sylvain. He was a founding member of the deeply under-appreciated New York Dolls, and yet another in the string of fat Jewish shredders that seem to be dropping like flies these days.

The Dolls were a bit of a flash in the pan. Exploded on the scene, made their mark, and then, inevitably, went up in flames of their own making. With Syl’s passing, only David Johansen remains. Original drummer Billy Murcia drowned in a bathtub, but was immortalized by the late David Bowie in the song “Time” (“Time, in Quaaludes and red wine, demanding Billy Dolls and other friends of mine”). Johnny Thunders died in New Orleans, with a needle in his arm, some thirty years ago. Arthur (Killer) Kane had a fatal heart attack in – of all places – a Los Angeles Mormon mission, where he worked as a librarian, but not till after David Jo, with the help of Morrissey, dragged him on stage for one last reunion gig.

Jo and Syl reformed The Dolls about 15 years ago, and I had the privilege of seeing them – twice. Even spoke to Syl. Most of all, I will remember him for having penned one of the greatest double entendre songs in the rock pantheon: “Funky But Chic”, of which I’d share a link if not for fear of the copyright cops. Anyway, check it out on your own. It’s not hard to find.

Like The Dolls and everything/everyone else, Syl was not meant to last forever. And he didn’t. But while he was here, he did more than continue.

And, in tribute, I offer him (and the rest of us) an unprecedented, second…

TIMSHEL

There was, of course, a catch: Catch 25. The Trump Catch.

I envision, as I embark on the journey of writing this essay, a series of frantic, closed door meetings, designed to arrange an expedited escort of 45 off the premises — before he blows us all to smithereens.

Because at this point, one could certainly envision an “if I’m going down,so are the rest of y’all” scenario. Which we should seek to avoid – through any and all available means.

There are any number of ways to delete his ass. With (a shred of microscopically retained dignity still intact) resignation being the most painless and logical option. But given what we know about him to whom we refer, it’s a tall order. And, meanwhile, the engine for Impeachment 2.0 – with its gnarly cast of characters, is revving up. Of course, this exercise is practically irrelevant and entirely political – particularly insofar as the proceedings cannot even commence until after Trump’s term is over.

Got what a spectacle. It’s still avoidable, but the clock is ticking. Late Friday afternoon, Senator Lisa Murkowski (R, AK) became the first Republican member of the Upper Chamber to call for The Big Guy’s early exit (stage right).

But there’s still hope. In happier tidings, able to report that the landmark case of Jagger/Murkowski v. Grant has been settled – through means that did not require a ruling by the (still 9-member) Supreme Court. There’s also another way around an impeachment Pig Circus. It takes the form of a Catch. Catch 25. The Trump Catch.

Specifically, I refer to the 25th Amendment, which bestows upon a president’s Senior Advisors the prerogative (or duty) to remove him (or her), if in their best judgment, he (or she) is unable to faithfully discharge his (or her) duties.

To back up a bit, our thematic motif derives, yet again, from Joseph Heller’s Catch 22, which specifies that a medical officer MUST ground any WWII flight crew member deemed to be crazy. But first the crew member must ask to be decommissioned on these grounds. However, by so asking, he proves himself not to be crazy at all, and is thereby rendered ineligible for grounding in the first instance.

I had planned to use this hook when the 25th Amendment concept first reared up, about a year ago. It wasn’t going anywhere at that time, so I reverted to Catch 21. And then Catch 23.

But we’re well past that now, and we’ll skip over 24. All the way to Catch 25. Which is now a go.

Here, the rules of engagement are less clear. Must Trump ask to be deep-sixed because he knows he’s crazy? And if he knows he’s crazy, is he really crazy at all? And if he’s not crazy, can he still be removed?

I reckon it won’t matter much, one way or another. His day is done. His actions and decisions — since the election and particularly last week, rank among the worst series of misjudgments in presidential history. I can’t think of anything that comes close. Neville Chamberlain at Munich? Probably, but that doesn’t count because he was British.

I will spare you a detailed rehashing of the events and their implications. I will, though, state that I take this episode as an affront — to myself and all like-minded individuals (of whom, presumably, there are at least a few). We are very skeptical, downright afraid, of progressive sacred cows such as identity politics, redistribution, and a full menu of rehashed “isms” that appear to us to have a common objective of diluting individual prerogatives, in favor of protocols determined not by the many, but rather by the few.

We managed to convince ourselves that Trump was a partial antidote to the foregoing. A deeply flawed antidote, but the only one available to us in a pinch. None of us really liked him; we all recognized his flaws, but at least he seemed (to us) to be invested in civil liberties, individual choice, and all of the magic that ensues from these life-enriching gifts.

Deep down, though, we were aware that he was all about himself – and nothing else. In this, he is not unique, but we hoped that he could show the infinitesimal amount of discipline necessary to allow us to preserve these virtues – for everyone’s benefit. In the end, our hopes were dashed; he could not do so.

And, in the end, there is Catch 25.

And now, those of us who showed any sympathy or support for him (including yours truly) can just shut the f_ck up. And we (I) will. Well before this latest farce, they were bringing the hammer down on us. People were losing jobs, friends and family for any deviation from woke consensus. After this week? Fuggedaboudit. As I have repeatedly told my soul mate, for conservatism to have prayer — in a world where the field is tilted against it, it must manifest through the virtues of civility, humility and grace. Now, to suggest that we retain this one thin read of advantage is to be scoffed at, derided, dismissed.

Because our guy stoked up a protest that turned into a violent breach of sacred public property, disrupting one of the most important (if designed to be mechanical) undertakings assigned to our elected officials. Happened on his watch; he arguably incited it. Took wholly inadequate steps to address the unfolding crisis.

And this is after pushing the duly elected GA Secretary of State to manufacture votes that simply weren’t there – a stunt that arguably contributed to the loss of both Senate seats — on what once was GOP home turf. And, by doing so, he giftwrapped the entire Washingtonian government apparatus to its opponents.

Through these and other actions, he threw every one of us who heretofore refused to demonize him (and supported portions of his agenda) under the bus.

So, now, there’s nothing for me to do but shut the f_ck up about this. But one last word to the wise. Our political, social and economic challenges are not solved by the fallout from this episode; arguably, they are rendered the worse. I and my ilk were not wrong about everything; a large measure of our concerns will still abide our society, and the challenges faced by those who are convinced that theirs is a “better way” are in their embryonic state – beasts slouching towards Bethlehem, waiting to be born.

I wish our new overseers Godspeed.

Meantime, seeing as how this is a market commentary publication and all, I present, for your consideration, a corollary to Catch 25 – call it Catch 25a: No matter what happens, the market goes up.

The following statement sums it up: you know you’re in a stone-cold bull market when violent protestors breach into the Capitol Building, and the market fails to record a single downtick. But that’s what went down. Bid ‘em up on Wednesday, when that dude from Arkansas had his boots on Nancy’s desk, rallied ‘em on Thursday and again on Friday, when the fallout began and then mushroomed.

So, just to be clear, all of our indices lurched to new record highs in a week where:

• The Republicans lost the Senate.
• There was a murderous attack inside Congressional chambers.
• The whole D.C. power hierarchy turned its focus to the removal of the President.
• For the first time since Spring, the Dec. Non-Farm Payrolls Report went negative (-140K).

It’s enough to make an old market jock weep with admiration and gratitude. And I believe it will continue.

Friday’s cherry top rally, most of which took place long after the dismal Jobs Report dropped, was certainly catalyzed, at least in part, by proclamations by the (now firmly established) President-Elect, that trillions in incremental stimulus will most certainly be needed this winter. And who is going to stand in the way of this wisdom and largesse? New universes of cash are forming, to be super-imposed upon the untold and growing number of monetary galaxies already created. We’re all dressed up, pockets full, but no place to spend. Lots of spare change, though, for everyone to buy speculative assets.

And they will continue to do so. Presumably at the expense of the besieged and beleaguered USD. The only thing that stops or even slows this wave is the threat of inflation, about which (like Charles Dudley Warner’s weather) everyone talks, no one does anything.

There is ample reason to be concerned. Consider, for instance, the Energy Patch, currently operating at ~60% capacity – before the new environmental czars have even taken formal control, weapons trained on the entire fossil fuels complex, and bent on its destruction. What happens when (if) the virus dies down and all those cabin feverish folks take to the road (and maybe even the air)?

Well, energy prices, could, ought to, skyrocket, maybe setting off that whole inflationary chain reaction about which everyone talks, but no one does anything, in response.

I think it has to happen eventually, but the timing is unclear. When it does, the only policy offset will be higher rates. Which will cripple a capita market and economy, drowning in debt, at the most in opportune time. Meantime, Biden and crew enter, stage left, with the Fed Chair’s former boss at the Treasury controls, and, presumably a (temporary) blank check to celebrate the new dawn that purportedly emerges when the Big Orange Blob bounces into oblivion.

There is, however, a catch. And if you don’t know what it is, you haven’t been paying attention.

So, I’ll quietly take my leave, with the sentiment that what goes ‘round comes ‘round. For all of us. No matter what. Be forewarned.

Let’s carry forward with our plans, anyway, shall we? We don’t need to say much about them, and (particularly after last week) nobody is likely to listen to us anyway, right?

But if you let me catch you, then I’ll get caught and stay caught. And that will be the best catch of all – so good, in fact, that it won’t even require a numerical suffix.

TIMSHEL

I know. It’s foolish, it’s consensus, it’s foolish consensus. It’s trite. It’s glib. It’s glibly trite.

But I’m going with it.

Truly, I don’t see any alternative (other, of course, than unspeakable doom).

I’ll use this week’s space to defend this neo annum hypothesis, but we’ve a few matters with which to attend first, so bear with me.

Sharp-eyed readers (of which there is at least one) will recognize that I slipped our title into the body of last week’s musings. There’s even one soul out there with enough game to have recognized that the line is lifted from the early strains of “Tommy” by The Who. The specific setup is one that involves a WWI soldier, missing and declared dead, who comes home to find his (blameless – she thought he was gone for good) wife in another man’s arms, and then blows the dude away – Gail Collins style.

The penultimate words of the misanthropic lover boy are captured in our heading.

But all of this is mere prelude to the main storyline of Townshend’s wandering libretto. The title character/son of the original couple witnesses the whole episode, and is rendered psychologically blind, deaf and dumb by the experience. His sole obsessions are staring in the mirror and “playing the silver ball” — the latter at which he excels to such a degree that a pinball wizard cult forms around him.

The narrative devolves from there.

But god oh mighty, what a great record it is. The same can be said about the musically magnificent Quadrophenia, the storyline of which cannot, even in mixed company, be cogently unpacked. I had the bizarre experience of seeing “Tommy” on Broadway in the mid-nineties (imagine horrible Brit accents singing “come ooon the amoizing juuuhney….”), and reckon I came out no worse for the wear. On a happier note, a couple of years later, I was able to see The Who perform Quadrophenia live, at Madison Square Garden, no less. So, at least there’s that.

One way or another, I find myself grappling with eerie verisimilitude to the Tommy vibe — a century later. As 1921 dawned, the world was still contending with the after-effects of not one, but two, global pandemics. Polio was on the wane by then, but not completely eradicated (case IN point: FDR contracted the disease in ’21). And then there was that whole Spanish Flu thing, which faded to oblivion in the diminishing days of 1920.

Of those plagues, I cannot bring myself to write more.

There are, of course, differences between now and then. 1921 ushered in something of a depression on these shores, with record deflation of 18%, and a GDP that contracted to the tune of nearly 7%. We entered the year with General Dow (the Gallant 500 would not muster in for another four decades) having suffered a rather ignominious retreat — on the order of 6.7% (dropped in 1920 from ~92 to ~86; compare this to the 2020 ride from 28,538 to 30,606) — a cycle which perhaps may be forgiven in the wake of the above-mentioned pandemics and prolonged WWI battle fatigue.

The Presidential Election of 1920 was a rather dull affair, rendered particularly so by the involuntary withdrawal of two previous winners: Woodrow Wilson (whose vainglorious desire for a third term was nipped in the bud by his sponsors) and Theodore Roosevelt (who wanted to run but died instead).

So, we were left with two obscure persons from Ohio: Warren G. Harding and James M. Cox. I’m not even sure who won, and (I ask you), one hundred years later, does it even matter?

On the whole though, I find more similarities with, than differences from, the vibe of a century ago. We are dealing with what (hopefully) is the back end of a worldwide health crisis. The global economy is in recession, most certainly suffering from myriad ills, and being propped up by the artifices of politically driven policy manipulation. We’re not experiencing the major after-effects of a world war, but (like then) everyone is weary, on edge, and very troubled as to what happens next.

Somewhere, some poor heat-packing schlub is walking in on his wife in a compromising position with her lover, with his son looking on. Don’t ask me for further details on this, because: a) I don’t know much; and b) what I do know, I’m not at liberty to divulge.

The markets, from my vantage point, are an easier read. Everybody is all in and can’t fold now. Normally, the mad bull sentiment would be the surest sign available that we are at or near a retrospective top (that we are at contemporaneous time record highs is indisputable), but I just don’t see how this frenzy of incremental asset/financial instrument ownership demand possibly abates in the near term.

The Gallant 500 closed out the year at an historic, frothy 3756, and, as I am describing it to my clients, I can’t envision a pullback to, say 3000, 3200 or even 3400.

1200? Yes; piece of cake.

Because unless the investment universe continues to generate massive incremental demand, everything crashes, and I mean crashes. In the middle of a pandemic. With an amount of indebtedness heretofore unimaginable during our lifetimes. Policy makers are aware of this and acting accordingly. I think they’re terrified of a collapse and taking desperate measures to avoid one.

And they have some tail winds, because another similarity between now and a hundred years ago is the presence of deflationary forces. The CPI may not read -18% but in real (inflation adjusted terms), goods and services are actually cheaper now. The purchasing power of the dollar was about 13x its current level a century in the past. A gallon of milk in 1920 cost 35 cents or ~$4.50 inflation adjusted.

Today? $3.60. Gas? 30 cents in 1920 or $3.90 in current cash. Average price per gallon right now? $2.60. Rents are higher today, but who, at the current moment, rationally pays rent? Wages are about flat (actually down a bit) over the last hundred years, but, objectively, purchasing power has increased dramatically.

I could go on, but the point here is that all of the above has miraculously enabled our care givers to expand the money supply, with impunity, like drunken sailors.

I’ve written a great deal about this, but the manner in which this is continues to unfold absolutely blows my mind. Earlier this past week, I stumbled upon the following graph — of something that us economist types refer to as M1 – defined as the combination of aggregate currency in circulation plus demand deposits, and widely viewed to be the most visible measure of money supply:

Now, I’d like to be able to report that I don’t know who this FRED person is, but I do. It’s the St. Louis Fed crew, who (perhaps needing a sense of purpose) are tasked with keeping track of such things.

And, as the graph clearly shows, FRED has had his hands full counting all that new money. So be it. But what gets me is the big spike that has apparently transpired over the last six or so weeks. Tell me that M1 surged this past spring and I’m like, whatever, of course it did. But what gives with this retro-rocket boost in Q4?

Well, it’s not new currency, and I am unaware of any recent, frantic, nationwide push to beef up checking account totals. Yes, the Fed and Treasury balances are creeping up, but at a measured pace. PPP subsidies were actually disrupted during this interval, so it wasn’t that.

I think it was the Fed stuffing the channel surreptitiously — saving for an anticipated rainy day (kind of like the biblical, clairvoyant Joseph with that Egyptian grain). But it almost doesn’t matter. One way or another, the money supply nearly doubled in 2020, with much of the increase at year end.

And where is this money gonna go? Into investable assets is where. Here, the market is acting with rationality, because, as the monetary base expands, its value against everything else should be going down. Hate to be a broken record, but one way to look at the big surge in stocks, bonds, real estate, crypto, etc. is that it is an adjustment to the oversupply of USD. Heck, even commodities, until recently on a thirty-year slide to oblivion, seem to have gotten the memo.

The Great Commodity Rally of 2020:

And the thing of it is, all of this is taking place before the big monetary-expanding giveaways that are certain to take place in the first half of ’21.

So, you wanna hold dollars here, or anything that is not a dollar instead?

Risk, of course, abides. Don’t really wanna talk about Georgia, but it is on my mind. Can the Dems really take both seats? And, if so, would they dare spoil the party with buzz killing stunts like tax increases? The first is possible; the second, in my judgment, unlikely. I just think that even if they win, they’ll have their hands too full to mess much with the tax code.

But if I’m wrong here, if: a) the Dems win both seats; b) eliminate the filibuster (layup); and c) jack up taxes with the new VP casting the deciding vote, then, yes, it could be “lookout below”. For a time. But I believe that even if this “unthinkable” happens, it’s simply adds to the fuel that fires the engines of the Magic Money Machine. Ultimately, stocks resume their surge. Lots of folks will lose their jobs (collateral damage) and likely suffer other unspeakable indignities, but investors (bless their hearts) will find a way to turn this to their advantage.

There’s also every chance that the pandemic worsens and our mitigants are found wanting. If so, what will they do in Washington? (Say it with me) Print more money. And give it away. Nobody will be able to spend much, but they can and will invest.

One way or another, a big fiscal cash drop is a near sure thing. And there is (in my judgment) an even more plausible scenario under which the public health situation, at minimum, renormalizes come spring, and that economic agents (commercial and consumer), flush with funds, go on a major spending bender that could push stocks and bonds much higher into the stratosphere than even now. Corporations, stuffed with liquidity and the bloated currency of their valuations, will further the goosing with acquisitions.

Could all of this actually catalyze the re-animation of inflation? Of course it could. It already should’ve. Based upon everything we’ve done in these realms since the ’08 crash, we should already be the (hyperinflation plagued) Weimar Republic (which, by the way, was just getting off the ground in 1921, when Warren G. Harding replaced Woodrow Wilson in the White House). But I just don’t see it taking off any time soon – particularly on the (in my view, essential) wage side. Too big a supply of labor is why, and it’s global. And commoditized. And, every day, a bunch of poor souls’ jobs are being replaced by technology.

All of which means that the Fed (including FRED) has a free hand to keep interest rates at microscopic levels, and to take them negative if something goes wrong. All these stock bulls are expecting a spike in yields, but I’m just not there. Too much riding on keeping them submerged at all costs. Over longer intervals, inflation (and attendant higher interest rates) may indeed be found to be the foreign object floating in the proverbial punch bowl. But for now, I think we can fill our cups and chugalug.

And if the unexpected happens and assets start to sell off, well, that’s when the real money machine kicks into high gear (and rates execute a Pavlovian Plunge). I do expect some vol in the coming weeks, but I can’t get past my belief that we’ll gather ourselves after not too much damage and push ahead from there. We have to honey; there’s simply no alternative (other than, of course, unspeakable doom).

“I have no reason to be over-optimistic. But somehow when you smile, I can brave bad weather”. These are the last words spoken by Tommy’s mom’s paramour. And this is true – applies to me and you. Lots of twists and turns await us in the coming months and beyond, baby.

But I got a feeling ’21 is gonna be a good year.

Like I said a while back, I’m going with it. Will you?

TIMSHEL

Fly your willow branches

Wrap your body round my soul

Lay down your reeds and drums on my soft sheets

There are years behind us reaching

To the place where hearts are beating

And I know you’re the last true love I’ll ever meet

— Pappalardi/Collins

So, Merry Christmas, y’all. Strange holiday. Strange year. Strange brew – kill what’s inside of you.

And mad props to anyone who gets the reference attendant to the last of this Outlandish Trio. For the rest of you – the uninitiated, it’s a quote from a song by another triumvirate (a magnificent one at that): The Cream. But it was written by the husband/wife team of Felix Pappalardi and Gail Collins, who made beautiful music right up until the moment that the latter shot the former dead — for cheating on her ass.

For what it’s worth, writing songs (and producing records) for The Cream was actually a side gig for Felix, whose day job was bassist/vocalist for the splendid, under-appreciated ensemble: Mountain. My holiday edition goes out to them, because this past Tuesday, we lost their front man – fat Jew supershredder Leslie West (ne Weinstein). And, as a (formerly) fat, Jew (wannabe) super-shredder, it falls to my lot to remind everyone that his is at least the second demise of a fat, Jew super-shredder (the other one being Peter Green – ne Greenbaum) this godforsaken year.

Here’s hoping I’m not the third. Meantime, please join me in saying a brucha for my main man Leslie West, ne Weinstein – inarguably the greatest fat Jew super shredder of ‘em all.

There’s really not much more that needs to be said about him — other than what is captured in the hook line of his most famous song:

“While the rest of them dudes were getting their kicks, lord I beg your pardon I was getting mine”.

Indeed.

But our titular reference and quote derive from one of their lesser hits: the haunting, whimsically tragic Nantucket Sleighride. Written by Felix Pappalardi and Gail Collins. About a decade before the latter did the former, with a derringer which he had bought her as a gift, just a couple of miles from where I myself was at that very moment cooling my heels, in New York City.

Know, though, that the concept of a Nantucket sleighride dates back for centuries, as a “term of art” for the journey that occupants of a whaling ship typically take when under the conduction of a harpooned whale.

The most famous of these expeditions, of course, is that of the fictional Pequod, vessel of Melville’s “Moby Dick” — a trip that didn’t end too well.

Meantime, I stumbled upon the following old-timey picture of a Nantucket sleighride, which, in the spirit of the holiday season, I thought I’d share with y’all:

It looks pretty cool in this drawing, but I reckon it’s a different story on the quarterdeck. I mean, you got this enormous, wounded fish dragging you around the ocean for f%cks sake! And that is to say nothing of weather conditions, positioning of the masts, size of swells, and other factors.

Still and all, under certain circumstances, it might be an enjoyable ride. You just don’t know until it’s over. And I got to thinking about all this, in the wind-down of 2020, as an analogue to modern times.

Specifically, it strikes me that the world might be in the midst of an extended, unpleasant Nantucket sleighride. Carried forward through the tides by a harpooned whale, not knowing how, where, or when it ends. Work with me here on this one, OK? I’ve got a number of plausible angles.

The virus, for instance, is like the whale (only smaller), right? And maybe the vaccine is the harpoon.

Or, perhaps more precisely, it’s the global economic disruption catalyzed by the covid that is the whale, and the harpoon is the myriad, diverse Saint Vitus dances that we are doing to mitigate the damage. I ask you, if neither analogue floats your boat, to consider the following.

Covid didn’t kill the Rose Bowl this year. They’ll be playing it after all (Notre Dame vs. Clemson). But not in the Rose Bowl. Not even in the greater Pasadena area. Rather, the contest is to be held inside AT&T Stadium in Arlington, Texas.

So, from my vantage point, that we are currently being driven by forces seemingly beyond our control is not really up for dispute. Moreover, said forces appear to be both injured and angry. And the most we can do is hang on and hope for the best. Meanwhile, our good ship lurches forward into the seas of 2021, without much focus on direction, speed or ultimate destination. We do, however, enter these waters knowing a few things.

Market valuations are at or near all-time highs.

We’ve got some form of new government arriving from the visible horizon in approximately four weeks.

As everything shut down for Christmas, the United Kingdom managed to finally cut the cord from the leviathan corpus of Europe, and now can set its own course of affairs across the channel. Took 4.5 years to pull that off, though.

Biden was Vice President when the Brits first bounced into Brexit. Think about that.

But on these here shores, the images that come to mind are of multiple harpoon-stuck whales, pulling us in different directions across choppy waters — ones perhaps more appropriately illustrated by the following image than the one presented above:

Yup, that’s more like it. So, what to do? Well, I think that the biggest harpooned fish out there to guide us is economic stimulus – both fiscal and monetary. This force carries forward come what may. If you’re worried that it won’t materialize, set your mind at ease. The current impasse, after all, came about because Trump didn’t think it was a big enough handout. Once he’s gone, my belief is that we can anticipate a “see and raise”/Texas Hold ‘Em sequence of entitlements and giveaways sufficiently galactic to bring tears of joy to the heart of this fat Jew super-shredder himself.

I’m not sure it’s good economics (I’d rather see these resources applied to job creation and sustenance), but it’s good politics.

And, while I have my doubts as to how much succor it is to supply to the bandied about masses, it should propel further riches for the investment class.

Got a feeling 21 is gonna be a good year (especially if you and me, see it in together), but please bear in mind that even if it is, we will have gotten there by riding the whale.

Just like Ahab. Just like Ishmael: the only one to have survived the tale. The ride won’t last forever, and who emerges (and in what state) is unknowable at the moment. I advise you to stay cool (like Ishmael), keep your wits about you (unlike Ahab), and trust the rest in God.

And if you are jonesing for a Nantucket sleighride, I suggest you begin with the title track of the Mountain album bearing the same name. Think of Leslie. And Felix. And (if the spirit moves you) save a prayer for Gail. But if that doesn’t float your boat, I can only add the following.

The Pequod set sail from New Bedford, MA: a 3.5 hour ferry ride from Nantucket. One can always also, though, take a detour to Martha’s Vineyard. This, of course, is up to you.

My call would be to go with the flow, because you never know where it might take you, and what you might find when you get there. Who knows? Maybe I’ll even be there to greet you when you arrive.

Just please don’t ask me to go on a Nantucket sleighride, because, to that invite, I only have one answer.

I’m already on one.

And so are you.

TIMSHEL

Dope’ll get you through times of no money better’n money will get you through times of no dope.

— Fat Freddy Freak

I begin with two observations respecting this week’s theme. First, our title is based upon logic so acute that it pushes to the threshold of redundancy. I mean, what else ya gonna do with ‘em? Drink ‘em? Leave ‘em on the coffee table to mold or rot?

No y’all. You gonna smoke em. Yet, somehow, not everyone gets it. Hence the need for the slogan.

Secondly, I am aware that over the decades since this wisdom first reached my consciousness, the phrase has been contorted into the less elegant “smoke ‘em if you got ‘em” – in my judgment a pale substitute for the original. There is, for instance, a song bearing the latter title (with which I am not familiar) — recorded by an outfit called Parkway Drive. There is also movie of the same name. Which I haven’t seen. Both works emanate from Australia, which ought to tell you something.

(Maybe this is because Australia looks like a smaller version of the United States turned upside down? It’s a little fatter than us on the ocean fronts, but other than that… …oh, never mind).

But I learned this phrase in its original form, back in my days of surreptitiously consuming underground comix. Most prominently The Fabulous Furry Freak Brothers, pictured in all their glory, below:

Presumably, it is not difficult – even for the uninitiated – to identify Fat Freddy (whose life motto is immortalized as this week’s quote). He’s in the one in middle, flanked by Freewheeling Frank (flipping the bird on the left), and Phineas on the right.

Freddy’s ubiquitous, precocious, perpetually intoxicated and never-named cat is depicted in the lower left-hand corner.

The Brothers led the kind of life that represented the totality of my own ambition, back in, say, ’73. But things change. Oh Lord how they change.

Case and point: for most of my young adult life, not only were you not encouraged to smoke ‘em but having even gotten ‘em was deeply frowned upon as well. At some point (contemporaneous, of course to the moment where getting ‘em and smoking ‘em became a lesser priority for me), we did a 180, and now our titular phrase is taken as a universal given.

And of course, IYGE/SE has recently risen to the dignity of defining much broader swaths of our existence than ever it did — even in the early seventies.

Take me, for example. I don’t remember getting ‘em or smoking ‘em lately, but I must’ve, because – entering my 17th year of pumping out this nonsense – week in and week out – I find that the content has devolved — from probing insights into money flows, earnings, macro trends, investor risk appetite, etc. — into tributes to Fabulous, Furry Freak Brothers.

But whatever I got (and smoked) appears to have been available in abundance, because the market simply no longer cares about the niceties set forth immediately above. Time-honored valuation protocols have been rendered disremembered like high school algebra lessons. Instead, investors are looking at risk assets like a newly baked stoner gazes at a couple of quarts of ice cream staring back at them in the freezer; they hoover them up, wonder where they went, and then wants more.

The whole show, of course, is run out of Washington, D.C., where copping and distributing has transformed from a religion into a cult. Down in those parts, whatever they don’t got, they simply make. All the green that money can buy. All the money that green can conjure up. They don’t live by Fat Freddy’s motto, because they never run out of either (money or dope).

As we trailed off from Friday’s action, with our equity indices still in kite-flying ascendancy to all-time highs, investors were lounging about — waiting for the Congressional delivery guys to show up with ~$900B in reinforcing refreshments. While they were a bit tardy in their arrival, it now appears that it is imminent. Hopefully, it will tide us over through the holidays, because the promised big shipment is almost certain to arrive in the first part of next year.

Meantime, everyone still appears to be holding. A pertinent, recent example is the crew at Tesla, which is scheduled, on Monday, to be the object of the biggest welcoming into the exalted host of the Gallant 500, in, well, in like, forever. Investors get particularly wigged on this sort of thing, which involves adding the new unit, while unceremoniously dumping the disgraced, forsaken company whose spot it’s taking (in this case the ubiquitously fabulous but currently pressed upon Apartment Investment and Management Co.). Really smart guys often judge that, post-add, the new component is a raging short, and from what I am able to discern, this stratagem is indeed at play, in certain quarters, with respect to Monday’s sequence.

Well, you wouldn’t know it from last week’s price action, which sent TSLA shares soaring, and increased stoner Musk’s fortune by about $9B on Friday alone. At its current valuation levels, and by my own back-of-the-envelope calculations, investors deem it to be worth more than the entire rest of the global auto industry, combined. Yes, mes amigos, it could currently buy out all of those Japanese, German, Korean, Italian and Slavic outfits in one shot – and still have enough jack left over to acquire all of that newly-introduced and still-high-flying Airbnb outfit everyone is raging about.

And why not go for it? Because, after you’ve acquired the entire world’s rides (except for yours, because I am your ride), you might want to take a spin. After which, it would certainly be handy to have the keys to cool your heels at every available dwelling on the face of the planet.

Right?

Like the man said: if you got ‘em, smoke ‘em. And as for Elon, well, check and check.

Of course, the biggest buzz kill region on the planet remains in the realms of the Dead Prez. As I’m wearying to point out, not only is the USD continuing to get crushed against its fellow fiats, it is pancaking with respect to just about everything it can be used to purchase, including equities, debt, real estate, commodities, crypto and (from what my sources tell me) cannibas.

It’s not easy being a Dead Prez these days. Particularly in jurisdictions such as San Francisco. Where the current focus of righteous governance is fixed on removing names such as Washington and Lincoln from the front of school buildings. Not to worry, though. Substantially all the schools in the city are closed, so the kids are stuck at home, and thus rendered oblivious to modified academic nomenclature. There, as pointed out a couple of weeks ago, if they got ‘em, they are free to smoke ‘em with impunity from local authorities.

But hey, it’s Christmas, and shame on me for failing to acknowledge the season. Next week features a holiday-shortened schedule, during which, apart from the TSLA add and the extended drama about the lame duck money drop, not much is likely to transpire.

We’re now down to eight skinny trading sessions in the acid trip of the 2020 markets, but my guess is that we’ll still feel the effects well after the calendar turns. The New Year arrives with in much the same condition that the old one will bequeath it. And even though there’s a valid school of thought that the transition between years is no different from any other earthly spin on its axis, I hasten to remind you that every year tells its own market story. 2020 was certainly different from 2019, etc. I suspect, a year from now, that ‘21 will have had its own, unique stamp to place on the world – one that has yet to even begin to have been formed. So, let’s not be too quick to jump into the sack with any specific narratives, alright?

And I reckon that’s about it. I won’t be reasoning with you again until after Christmas. I hope it’s a joyful one for you and yours. Next year, I plan on us celebrating together. In fact, I’m rolling up a few fatties right now — in anticipation of these divine tidings.

My guess is that Fat Freddy, Phineas and Free-wheeling Frank are where we last encountered them – chilled, oblivious, well-nourished and (of course) joyfully stoned. And god bless them for that. Because, we need some things, no matter how transient they be, to provide us with the illusion of permanence.

I hear tell that Musk, though, is on the move. Rolled up his battery powered fleet and pointed it towards Texas. Presumably, the Lone Star State still enforces its narcotics possession laws, but I’m guessing that they may just look the other way if (when) Elon decides it’s time to pull out his glass two-footer and light it up. I feel it’s the least they can do by way of welcome

And as for the rest of us, I revert to our title. “If you got ‘em, smoke ‘em”. This may not always be true, but it certainly appears to be the right course of action for the moment.

I suggest you apply this to your investment strategies.

And, because it is Christmas, I’ll even throw in a heartfelt “smoke ‘em if you got ‘em”, as they say Down Under.

Because at this point, I’m really too wasted to care.

TIMSHEL

Old lady judges watch people in pairs, limited in sex, they dare

To push fake morals, insult and stare, money doesn’t talk, it swears

Obscenity, who really cares, propaganda, all is phony

— Bob Dylan (brought to you without first checking with The Universal Music Group)

Shame on those who have actually asked me whether I would write about this. Have I not a duty, a solemn obligation, to weigh in on this thing?

So, Bob done went and sold off his entire catalogue – some 600 songs – to Universal Music Group – now a wholly owned subsidiary of Vivendi, SA, but with history that is arguably relevant to this digressive, wit-wandering narrative. It draws its origins from the formation of Decca Records, the first recording label of The Rolling Stones. Signing the Stones was a lucky break for Decca — insofar as it occurred just months after their having rejected, yes, The Beatles.

These trades went down in late 1962, and one wonders, 58 year later, whether Dylan recognizes the irony of the announcement of the sale of his songs transpiring on the day prior to the 40th anniversary of the murder of John Lennon. I suspect he does.

I want y’all to know that I’m down with this transaction. There was a time, not too many years ago, when it might have disturbed me. But that time is not now. Because if 2020 has taught us anything, it’s that our most deeply held assumptions and convictions do not rest on as strong a foundation as we have, heretofore, assumed they did. This does not mean that they are wrong/inappropriate; only that they might not stand, Gibraltar-like against the tides, as we had previously surmised.

Or, as Bob put it in our theme song (It’s Alright, Ma (I’m Only Bleeding)):

Disillusioned words like bullets bark, as human gods aim for their mark

Made everything from toy guns that spark, to flesh-colored Christs that glow in the dark

It’s easy to see without looking too far, that not much is really sacred

No, not much is really sacred, but is nothing sacred? Not even “Rainy Day Women #12 and 35”? The subsequent ~$300M question is as follows. Why would he do such a thing? Well, first off, one must bear in mind that if there was a Mount Rushmore for “no f_cks given about what anyone thinks”, Dylan’s image might occupy all four spots. So, the answer, my friends, may not even be blowing in the wind.

I’m pretty convinced, though, he didn’t do it out of a need for the filthy lucre. From everything I have been able to discern, he has coined a maharajah’s fortune across his career, and banked almost all of it. Stevie Nicks needed that trade; David Crosby still needs it. Bob does not.

My guess is that it has more to do with estate and tax planning. He currently pays the government 39% (ordinary income) for the privilege of collecting his royalties; selling them outright only costs him only 23.7% (capital gains). And that presupposes the geniuses in Washington don’t decide to jack tax rates in the middle of a global economic crisis. For additional reasons, the timing is right. He’s gonna be eighty in May. He’s got six children and five grandchildren and probably doesn’t want them squabbling.

To wit, he has no doubt watched in horror as his buddy/(lesser) bandmate Petty’s progeny have fought over the economics of his catalogue and wanted to avoid that pig circus. And Petty was not alone. It was worse with Zappa, so bad in fact that his poor son Dweezil (quite a shredder in his own right) was once forbidden by his brother and his mama to even use his own last name while touring or recording.

Why not instead just punt the songbook to the guys with the spreadsheets at Universal?

And, in terms of the latter, I have two observations. First, I think that UMG got a helluva deal. And beyond this, I will allocate some prayerful moments to the hope that the Company treats the material with the respect it so richly deserves. I suspect that Bob put in some guardrail clauses to ensure this.

I should also state that this here transaction went down somewhere in the midst of what will certainly be remembered as a deal season for the ages. And, like most affairs of this nature, it features winners and losers. The former group includes just about anybody who bought anything this last little while – stocks, bonds, Bitcoin, Real Estate. Heck, even commodities have had their best run since the ’08 crash.

But special recognition must certainly go out to high profile IPOs, most notably Airbnb, whose (let’s just say) generously priced offering set off a public market trading frenzy that caused the new stock to double on the first day of trading. In the first 24 hours of its existence, and before backing off rather ignominiously on Friday, ABNB reached the (you gotta admit) impressive market cap threshold of $100B. Not to worry, though, Airheads, your company – with $6.6B of assets and $3.7 B of liabilities – currently sports a valuation of $84B. As such, it’s worth more than Hyatt, Hilton, Marriott combined; could buy these chains – lock stock and barrel, and still have about $40B of market cap (enough to acquire all of Vivendi – including UMG) with which to play around.

The patrons of the European Central Bank, particularly the Treasury Departments of constituent countries such as Italy and Germany, must also be counted among the winners. The ECB just expanded its moneyswearing pot to the tune of €500B to €1,000B, depending upon how you count your €s, with which it will buy the bonds of member jurisdictions. The program unfolds in such a way that by the end of 2021, the ECB will own more than 40% of the debt issued by the former Axis allies named above. This must be a great comfort to the monetary custodians in Berlin and Rome, who need not now sweat the prospect of finding a home for the gargantuan amount of new paper they are certain to soon issue.

If money doesn’t talk but swears, this suggest that frenzied printing machine operators swear to do their all to induce investors to buy the remaining store of investible securities, while (dwindling) supplies last.

And as for the losers? Well, small businesses – particularly restaurants in large cities – come to mind. Gonna be brutal for them folks; many won’t survive.

I feel that this is a loss for us as well. I love taking you to fancy city restaurants, and who knows when (if ever) that privilege will be restored to us? Oh well, we’ve always enjoyed ordering in anyway.

Been a tough month also for 45 and his backers. Rudy came down with the covid. He’s losing court challenges right, left and center. We can count ourselves victors on that score.

I’m particularly pleased that the Supreme Court refused to take up the case of Texas (and 17 other states) suing Pennsylvania for November 3rd shenanigans. There’s little doubt that some very shady stuff went down that day – in the Keystone State and beyond. But do we really want to set a precedent where every time one of the stars on the flag is displeased with the electoral doings of one of its fellows, the matter is settled in court? Didn’t think so.

And nothing for nothing, but I would appreciate it if all of those breathless voices warning us that Trump’s Supreme Court picks would go into the tank for him on the 2020 election would kindly shut their pieholes. None of them did: not Garland, not Kavanaugh, not Coney-Barrett. They all voted on the basis of the Constitution as they (which is their job) interpret it. Like they said they would.

It thus appears that the inauguration is gonna go down, as scheduled, on 1/20. It will be virtual, but maybe that, too, is a good thing, because, as Dylan reminds us:

Even the President of the United States must sometime have to stand naked.

And now there’s two weeks left in a year that no one will be particularly sorry to kiss goodbye. Not a great deal of particular market import is likely to transpire in what remains. Congress will pass a Continuing Resolution to fund our fabulous government. The calendar will turn. The pandemic will carry on. We will be forced to wait it out and hope those phama companies and the FDA don’t bitch up the rollout of these here vaccines. Washington will gin up a galactic helicopter drop of newly minted cash, which consumers and commercial enterprises will mostly bank rather than spend. And as long as hibernating inflation doesn’t materialize – hungry and angry (which it probably will eventually but not just yet) – there’ll be plenty of cash to go around for investors to hoover up available securities.

Yes, there are risks out there. There are folks in my universe working themselves into some sort of frenzy about looming Brexit resolution. But do investors really care? I mean, the first referendum passed 4.5 years ago. But across the Atlantic, on these here shores, the Gallant 500 is up >70% since that rather unsettling episode, and Captain Naz is a triple.

True, the FTSE is dead flat over this interval, but as the great playwright, Mr. Bernard Shaw, is reported to have said: “England and America are two countries separated by a common language”.

In my experience, he has a point – which brings us back to our original theme. The first widely institutional distributed sale of a music catalogue I can remember was done by the Thin White Duke, who securitized his royalties back in the nineties. I was working for a large hedge fund at the time and begged them to buy a slice of Bowie Bonds. They dinged me, perhaps owing to an English-speaking peoples’ culture clash, but I’ve never fully forgiven them for doing so.

Nobody other than UMG got a shot at the Dylan catalogue – unless, of course, one wants to buy some shares of Vivendi SA, which one is certainly free to do.

As a risk manager, I’m pretty indifferent on this. Buy what you want; sell what you want. Probably won’t matter much – for now. This applies even to Dylan, who never needed a weatherman to determine wind direction. To wit, he concludes our thematic, musical opus with the following observation:

“It’s alright ma, it’s just life and life only”.

You know what kind of life we want. It falls to us – mostly me – to go out and get it.

Because a few verses back, Dylan reminds us that he who’s not busy being born is busy dying. And, operating on this premise, as the dwindling embers of this difficult year burn themselves out, is the best risk management advice I can offer for the moment.

TIMSHEL

Our titular protocol certainly simplifies matters, now, doesn’t it? If (insert discretionary action) is allowed, you must do it; if it is prohibited, you cannot do it. Get it? Got it? Good.

I stumbled upon this divine commandment while reading T.H. White’s “The Once and Future King” (recommended to me by someone I love). A book that (thus far into my reading) describes the adventures of a boy who was to become King Arthur, and his inestimably talented but perpetually confused wizard/mentor: Merlin. The statement itself derives from a sequence where young Arthur (then called Wart) is transformed into an ant, whereupon he immediately encounters a sign containing the abovesupplied slogan. And appropriately so, because it seems to me that the whole Forbidden/Compulsory rubric works well for that sober, humorless, industrious species. But we’ll attend more to that later.

First, it is my solemn duty to pay tribute, yet again, to John Lennon, who fell cruel victim to an assassin’s bullet, forty years ago this coming Tuesday. Gunned down in cold blood. In front of his home. With his wife looking on. With his five-year-old son sleeping upstairs.

I think Lennon knew it was coming. It’s in his songs: “Come Together”, “Strawberry Fields”, “The Ballad of John and Yoko”, “Instant Karma”…

It always seemed that he knew he was playing with primordial forces, and understood the price he would, or might, pay, for doing so. He routinely did that which was forbidden; often failed to undertake what was compulsory. Paid for it with several hollow bullets, fired at point blank range, into his back.

John Lennon would not have made a very good ant.

But the rest of us are, at least arguably, embracing the change, if not enthusiastically, at any rate with equanimity. We are growing antennae, increasingly, monotonously, hauling grains of sand to build anthills, and never asking ourselves the reason why.

In parts of California and elsewhere, going out is forbidden; staying home is compulsory. Will we someday see an Orwellian 180, where everyone is forced out of doors, and entering one’s private place of shelter is not allowed? Well, consider this: the San Francisco City Council just voted 10-1 to approve an ordinance that prohibits smoking inside one’s residence – unless the substance consumed is the ganja blood. Burning a fattie in your North Beach flat is AOK. Lighting up a Newport, Cowboy Stick or (my personal preference) a JFR Maduro 770? Prohibited. Is getting stoned at your Haight Ashbury crash pad now a requirement? Let’s just say that at this point, it wouldn’t astonish me.

It all may change someday, in ways that surprise us all. Forbidden may become compulsory and vice versa. But for now, the message, at least in the markets, is clear: buying risk assets is mandatory; selling them is prohibited. At least that’s how I read the tape, as I bear witness to the Compulsory 500 and other indices in our arsenal of investable securities lurching from one all-time high to the next.

Special recognition for performance goes to out the lowly foot soldiers in our ant army: the Russell 2000, which has doubled since the virus made its presence known, and high yield debt, which rose in price to nearly the lowest yields in American lending history:

Quite impressive when you consider the circumstances. A surging global pandemic with no end in sight. Lockdowns accelerating at an accelerated pace. Tens, hundreds, of thousands of businesses either toetagged, or, at minimum, zombified. Untold of millions of poor souls anything but all dressed up. But with no place to go anyway.

And against this backdrop, the markets have built the biggest valuation anthill, out of the flimsiest grains of sand, in market history.

I believe this is because the greatest ants of all time, the GOAT ants, all reside in Washington DC. They always follow our titular protocols. Unless they don’t. And that’s only because they find something that has heretofore been compulsory, has now, suddenly and without notice, become (yes) forbidden.

While barely drawing any notice of late, the GOAT of all GOAT ants cool their ant heels at the Fed. It is these ants that are tasked with the fearful responsibility of making sure that the hill’s foundation, under no circumstances, be allowed to crumble. My take on this is as follows.

Since the Big Crash of the decade before the last (amazing!), the Fed money machines have been cranking out new units of the USD, without even pausing for a breath. Come covid, and they shoved the crank to full throttle. The outcomes have included, featured, interest rates so low that borrowing has become irresistible. As a result, we are now in the midst of the biggest credit bubble in perhaps a century or more, and there’s no path towards normalization. If credit markets are allowed to function as the Good Lord intended them, the bubble bursts. It’s lights out. There are no down buttons on the debt elevator; only a release hatch that will cause the capsule to crash to the basement.

The politically fed ants at the Fed know this, understand that if the market imposes normal supply/demand dynamics on the credit complex, the whole hill crumbles. Mark-to-market losses on existing paper would catalyze inexorable waves of selling, which would beget more selling. Economic agents would be destroyed, forcing the already-weary ants to carry their carcasses to wherever it is that they are compelled to deposit them. The whole hill is pancaked as though it were stomped upon by the sneaker of a ten-year-old boy.

So, propping up the dubiously rendered foundation is the perpetual duty of the Federal Reserve Bank of the United States. And they’re not alone. Among other allies are Central Banks with similar jobs in other anthill/jurisdictions. You don’t have to do this, but if you dare to, just compare our Treasury ratww (10- year yield: 0.97%) to those of formidable Formicidae foundations created in jurisdictions such as Spain (0.07%), Portugal (0.03%), or Greecw/Italy (both 0.62%).

And all of this is transpiring while our forbidden/compulsory paradigm is applying, in reverse cadence, to our currency, the USD. Which came down with an early case of corona and has been in free fall since Middlemarch:

Among the top beneficiaries of this dollar debacle is the EUR, the unit of account in which the above named countries issue their debt.

As such, one way to look at recent FX/government bond action is to infer that investors are selling dollars, buying euros, and using the proceeds to invest in the long-term debentures, at higher prices/lower yields, of counties depleted or bereft of assets, revenue streams, direct currency issuance prerogatives, or any path out of the economic wasteland that they face – pandemic or otherwise.

None of this makes sense — unless we apply our thematic axiom to the proceedings. In terms of the global capital economy, accumulating the Dead Prez is forbidden; divesting of them is compulsory.

And beyond this, we are witnessing the forming of the foundation of yet another sandy hill of fiscal stimulus. Look like we could cop another tril in the lame duck session, but that’s likely just the beginning. Come the turn of the year and the ushering in of the new Congress/Administration, that weakly constructed hill is likely to rise up to the heavens. Our elected ants tend to run out of steam pretty quickly, but while they are active, they work at a frenetic pace.

And their sandy construction efforts will be greatly enabled/empowered by the increasingly alarming tidings in public health. Current weather and policy trends – particularly as a winter that doesn’t even officially begin for another couple of weeks approaches — suggest that we will be spending a great deal of time at home (smoking weed?), but that they’re gonna pay us to do so. With feeble units of grainy, ever devaluing currency emerging out of the thin air in the Fed building in D.C. Winter won’t last forever, they will remind us, and a vaccine is coming, so just remain at your posts until further instructions are issued.

Spend your time online? Compulsory. Go to work or a restaurant? Forbidden. Buy stocks and bonds? Compulsory. Sell USD? Compulsory.

Get it? Got it? Good.

There’s only one problem. I miss you so much I’m not sure if I can make it. I know I’m supposed to stay away, and I know why, but what’s a poor ant supposed to do? Please. Tell. Me.

I know. As Forest Ant’s mom once said: “ants is what ants does”. But there are exceptions. Wart completed the anthropomorphic 360 back to human form and went on to become the most famous king in all of western folk legend. But he had Merlin’s help, and we don’t. John Lennon refused to be an ant and look what his refusal got him.

But in the end, what is not forbidden is compulsory. Until it’s not. I dream of the latter and hope that you’ll wait with me for that day to come.

In the meanwhile, if you want to find me, I’ll be slaving on the sandcastle hill with the rest of the drones in my unit. Until I’m told such work is forbidden, and something else is deemed compulsory.

TIMSHEL