By: K(en(neth Louis) G(rant)

Yale Economist Arthur Okun: “Money must be carried from the rich to the poor in a leaky bucket”

Grateful Dead Guitarist Bob Weir: “I may be going to hell in a bucket but at least I’m enjoying the ride”.

This is exchange, between the professor and the musician, actually took place. I was there. In the room. We were in Memphis. Or Nashville. Or Knoxville. Don’t remember, but it was definitely in Tennessee.

OK; not really. I made it up. But gosh oh mighty, it’d be cool if it happened like that.

I think about the Dead routinely, but lately, my mind turns to Okun. I wish he wasn’t right, but I think he was. The bucket leaks. I’m more on the fence as whether (or not) we’re actually going to hell, whether the mode of transport is indeed a bucket, and, if so, if the bucket conveying us there is a leaky one. But maybe we don’t need to find that our right now, because the answers will come to us, one way or another, in God’s own time.

When Okun first busted out this riff, his point was that impelled wealth transference leads to less being received than is taken away. I think this is a sound insight, particularly when viewed against a related hypothesis (so compelling that it’s actually called Okun’s Law) which suggests that when such redistribution transpires through forces of incentivization (e.g. a profitable company hiring a productive employee), the multiplier effects are actually positive. Everyone gains. In these instances, and in keeping with our theme, the bucket doesn’t leak; instead, its content grows in volume.

Sadly, this news came too late for Hank Williams, who once complained to us (as only he could): “my bucket’s got a hole in it, I can’t buy no beer”.

Maybe for the rest of us, there’s still time. As we embark upon a likely journey that will change the way we roll, as we use the economy to right past wrongs, as we allow capital and resources to be allocated, not by market forces, but rather to effect someone’s preferred social outcomes, we could do worse than remember Okun. And his bucket. And his Law.

Meanwhile, leaky buckets abound. The pandemic and its mitigants? Leaky buckets. 8 months into a pandemic and them covid buggers are leaking like crazy through our porous masks. Positive diagnoses and hospitalization rates are climbing to new records, and it ain’t even gotten (that) cold yet.

When (if) we get a vaccine, that, too, will be a leaky bucket.

That politics and the pending election is a leaky bucket in my judgment beyond dispute. Voting processes and protocols are being altered in real time. In Pennsylvania, for instance, not even the Supreme Court was willing to stop the ballot-gathering process from being extended to three days after Election Day, and now, the Penn Supremes have decided that the mail-in signatures don’t even need to match.

So, a few Keystone votes are bound to leak in here or there. Got a problem with that?

Further, I must point out, in wearying, repetitive fashion, that even if the Big Race has a clear winner, dozens of contests at levels below are likely to be thrown into dispute. There are almost certain to be endless recounts and court challenges. I can’t imagine that any of it can be untangled for many weeks, and here I must also remind everyone that the Inauguration Date for the Senate and House is not January 20th, but rather January 4th – seven short weeks after the election itself.

As such, there is a strong possibility that the 117th United States Congress will be unable to convene, on schedule, with its full complement of (dubious) characters. Both sides are incentivized to delegitimize it, and it says here that both (or, at least one – the loser) will. It will, under these circumstances, be difficult to leak out much legislation for several months. But you won’t find me complaining much about that.

I’m hesitant to add the media to our list, but only because I don’t think the analogue fully captures their LB ethos. They are, in reality, more leak than bucket. They whiz out opinion as fact and then tell us or (try to) what it means. They exaggerate stories that fit their narratives, while suppressing news that don’t. So, I’ll throw them into our inventory, while reversing noun and modifier: the media is a buckety leak.

And all of these are mere drops in the bucket of reasons that the markets themselves are nothing but a bunch of leaky buckets. Where to start? Well, much to my embarrassment and annoyance, domestic interest rates are leaking yield in an upward direction. I have a problem with this; the dude minds. This will not stand. Mostly because I don’t like being wrong, but my beefs don’t end there. Uncle Sam, that old mixer, is gonna need to borrow like never before. So are states and municipalities; all will struggle to come up with the extra rate juice. Corporate and individual borrowers will face the same cruel fate.

The USD is leaking towards multi-year lows, losing its innards against even such dubious substitutes as Grains and Cryptocurrencies (remember them? Their buckets, of late, overfloweth). And this even with rates rising, a counterintuitive trend that would have given Okun, had he not died forty years ago, fits. Because higher rates are, according to the textbook, not supposed to extract from, but rather inject vigor into, the Dead Prez.

I now move, reluctantly, to the realms of credit, the gargantuan buckets of which are not now observed to be leaking, but which are under so much pressure that the tiniest dent could cause their bottoms to fall out. However, the prospects of continued economic disruption, higher taxes and increased meddling into the affairs of borrowers, notwithstanding, I see no cause for particular concern on this account.

All of which brings us to the equity bucket. Not much noticeable leakage there, but I cannot help but worry that there’s too much stress on that particular pail to hold its volume much longer. If (when) a leak does spring, it is not likely to be a small one.

Probably, though, that’s a problem to address down the road a bit. In the meanwhile, we’re in earnings season, and this coming week, all of the big dogs (you know to whom I refer) are set to lift their legs and leak out their Q3 results. Here’s hoping that the sequence is not, at least in a colloquial sense, a golden shower.

Of course, standing on the other side of these forces is the Fed, on record as being willing to allow purchasing power leak – in the form of inflation – at a significantly greater pace than that which has been implied in their policy position of years passed. Their ability to goose, and then sustain, valuations, through a near-financial collapse, and then a global economic shut-down, has been one of the miracles of our lifetimes. They’re almost certain to be busting out bigger buckets in the very near future, and I’m sure you’ll join me in my wish that these vessels are of solid constitution.

I should also mention that this coming Thursday brings tidings of the first Humpty Dumpty Q3 GDP estimate. You know, if you’ve been paying attention that this particular egg fell off the wall earlier this year, and that all the king’s soldiers and men, as led by the Fed, have since been scrambling to reconstruct it. The precedent is not a happy one, but I’d hasten to remind readers that, Lewis Carol did manage to patch Humpty together for a cameo in his most famous work. If you doubt this, you can visit him, cast in bronze, just north of the pond in the Central Park Conservatory. And, given the current “Through the Looking Glass” vibe we must all endure, I think you should. Check out Humpty, that is.

But if you’re like me, you’re worried about current seepages, and even more so about leaks that may spring, through events unfolding in the coming weeks and months. My best risk management advice is to keep some resources in reserve, some powder dry – outside of your portfolio bucket. I’m not suggesting that it is either now leaking, or about to, but, at minimum, if other such containers become porous, while yours happens to hold firm, you may find yourself with unique, historic replenishment opportunities.

I reckon I’ll cut it short here. All of this is making me thirsty, but my problem is not Hank’s. He couldn’t buy no beer, while I (due mostly to a cruel twist of DNA) can’t drink none. Bobby may have been right about us going to hell in a bucket, but I can’t really enjoy the ride, because I’m not going there, at least for now, with you by my side.

And all I want to do is be with you. Always. All the time.

About the only short-term solution I can muster is to focus on the work and ask you to do the same. Because this, at minimum, is something we can do, joyfully, and together. Plus, like Churchill said, if we’re going through hell, let’s just keep going.

Maybe it’s time to have that beer anyway. And, if leaking ensues, we’ll just chalk it up to the whims of biology.

Because, when all is said and done, we are all, each of us, leaky buckets.

Unless, of course, you’re Humpty Dumpty, in which case you’re a broken, if not yet scrambled, egg.

TIMSHEL

By: K(en(neth Louis) G(rant)

I begin with an apology for any offense given through the paragraphs that follow. None is intended. This week’s introductory parable (which sets up, in time-honored fashion, the subsequent, probing, market risk analysis) is intended in the spirit of fun. Which, one must admit (whatever their views on current affairs) is in depressingly short supply at the moment.

So, imagine a man, an Ordinary Joe. So ordinary, in fact, that his actual name is Joe. It had to be Joe; his parents had no other alternative. Because he is so ordinary. A Joe Six Pack, a Joe Bag of Doughnuts, he is largely bereft of outsize talents – save one. He is affable. Superhuman affable; an affability for the ages. Episodically too affable? Well, that’s not for me to decide.

But it is an affability that enabled him to rise very high in his (wisely) chosen field of politics. Higher, in fact, than all but a couple dozen folks (all men) had reached during his lifetime. An affability that took him to the penultimate rung of this ladder, and, for more than thirty years, he sought to climb that last step. Then, just when this last, aspirational objective appeared to be out of reach for him, 2020 happened, with all of its signifying sound and fury. This, among other matters, unearthed another redeeming and heretofore undiscovered (or, at any rate, underappreciated) feature in Joe – one that now holds great promise to carry him all the way to the White House:

Joe is not the Other Guy.

And just so we’re clear, there were actually two other guys, coming in “one-two punch” sequence. The first was a crazy old codger who somehow developed mad vibe with the young bloods. He was always yelling about something, and mostly at us. Honeymooned in the Soviet Union. Sidled up to Castro for f$kcs sake. Wanted to give away a bunch of sh!t. Never said how he was gonna pay for it.

He kicked up quite a fuss, and, for a time, in the early Spring, it looked like he was poised to take his party’s nomination. And this justifiably freaked out the Party Elders. Joe was their last hope to avoid him leading them, lemming-like, over the proverbial political cliff, and, together, they avoided this catastrophe. Within a matter of about three subsequent weeks, they rolled over the outlandish old dude with the wild hair and the Bolshevik sensibilities, and stuck Joe in the top spot.

The Party Elders rejoiced, because they knew Joe would do as he was told, but, as everyone was aware, the victory was a mere stop at the weigh station. There was another Other Guy. The meanest, nastiest, ugliest Other Guy around. More about him in a moment, but the mission was clear: take him down.

But the Party Elders were worried, because all the while, Joe was shrinking. By the minute. Some of this was planned in advance, by the Party Elders themselves, who didn’t want to draw overt attention to his impossible-to-miss ordinariness. But the feared that maybe they shrunk him too much, as, when Spring turned to Summer, there was nothing left of him at all. They still dressed him up in his fancy suits, and trotted him out from time to time. But for the most part they wouldn’t let him leave his house. Sent him to bed, sometimes at 9 A.M. It didn’t matter. Because he was not there. The bag of doughnuts disappeared, leaving only the holes. The six-pack remained in the fridge, un-imbibed.

And meantime, the final challenge remained. Absent though he was, he had to beat the other Other Guy. Who was one bad hombre. Uncouth, intemperate, petulant, etc., but whatever other pejoratives one may wish to apply, this much is also true:

He is not an Empty Suit.

It in fact would be more accurate to describe him as a Stuffed Suit. And I mean any suit. Insiders tell me that they keep letting out his trousers and coat, but he fills them up anyway. And then he goes about sucking the oxygen out of any room he occupies – even when he is outside.

So, there you have it: the looming, Beyond Thunderdome “two-men-enter-one-man-leaves” Death Match between the Empty Suit and the Stuffed Suit. If polls and the volume of the din can be believed, Empty holds a big lead.

All of which begs our rhetorical, titular question: How long are the coat tails of an Empty Suit?

If you’re like me, you’d like to think that they are neither longer, nor shorter, than they are when occupied by actual human flesh. I mean, given all we are currently forced to endure, I would rather not be compelled to allocate bandwidth to unpacking the concept of tailoring that shifts in length along with the dimensions of its occupant. But no dice. Gotta consider this, because if Joe wins and the Senate flies with him on his coat tails, well, then, in terms of market risks, all bets are off.

Loyal readers are perhaps well-acquainted with what I think rides on the left (coat) tail of the political/economic distribution. Higher taxes, more regulation, an all-out assault on three market sectors (Energy, Health Care, Financials) which account for nearly 30% of the capitalization of the equity complex. For this week at any rate, I’ll spare you my Casandra-like admonitions, but how the Senate breaks out will go a long way towards determining whether or not our (or at least my) worst fears are likely to materialize. It thus follows that if current trends hold, the length of Ordinary Joe’s coat tails are indeed a matter of great urgency.

In the meanwhile, investors don’t seem to be terribly troubled by rising coat tail risk. The soldiers that comprise the Gallant 500 host are indeed proximate to all-time highs but appear to be too weary to obtain higher elevation. There’s a pant-load of information coming at us (covid trends, earnings, coat tail prospects) and my own theory is that nobody is particularly eager to be the putz that top ticked the Spoos in advance of its unfolding.

With respect to concerns of contested outcomes on the first Tuesday (after the first Monday) in November, the hubbub appears to have died down. But I predict that even if Empty, clearly and unambiguously, knocks the stuffing out of Stuffed, there will be dozens of disputed results — across both houses of Congress, and even more at the state and local levels.

So, coat tails are important, and I’d ask everyone to consider the potential implications of them extending out like those of Rufus T. Firefly in “Duck Soup”.

Because this ain’t Duck Soup. We have pandemics, recession and other nasties with which to contend, and I just don’t think that now is a particularly opportune moment to change the world/atone for our sins through such initiatives as higher taxation, re-regulation and redistribution.

It wearies me to beat on this threadbare drum, but the problem (setting aside the hifalutin moralizing) is that we’re just too much in hock to even consider such actions (even if we are indeed considering them).

The truth, my dearest loves, is that the entire capital economy is burdened by breathtaking debt and only being held up by the strong (but perhaps not infinitely so) shoulders of the Fed.

And the burden is growing. There are too many grotesque ways to visualize in this family publication but one that happened to cross my desk just Friday caught my eye. It tracks the inventory of what are known as “Fallen Angels” – companies that issued debt with an Investment Grade Credit Rating which has since been downgraded by the all-knowing ratings agencies, to “junk”.

TRIGGER Warning: This picture ain’t pretty:

Anybody think that this chart has topped out for 2020? Didn’t think so. Unfortunately, a lot of folks with whom I reason be like “that’s their problem”. But The hard fact is that nearly everyone who lent to these new-fangled FAs lost money. And (news flash) when lenders lose money, they become less inclined to lend more.

Thus, it’s our problem. We’re already at about 150% of the debt we carried in 2009. When companies like Lehman went t!ts up, when AIG, Fannie and Freddie needed massive Fed bailouts. In case you didn’t know or can’t remember, the financial system almost collapsed, would have collapsed if not for some big hacks by our Central Bank.

Superimpose the current global pandemic, a worldwide recession, mad social unrest — upon all of this and consider the potential outcomes. Do we really want our financial system to collapse here?

Just let a few of these Fallen Angels default and see what happens. The Pavlovian reaction of banks — to call in all boats (loans), while otherwise hiding under their desks, structured securities unravelling like the thread of a badly made suit, will be breathtaking in its unfolding. No mortgages available for your dream house. No buyers for the one you need to unload in order to buy it. No hope for your favorite restaurant that cannot obtain the extended financing that it needs to survive.

So, now, anyone for a roll-back of the 2017 corporate tax cuts? A reinstating of the payroll tax (which hits both workers and their employers) at comp thresholds above $400K? How about pushing Capital Gains levies up to ordinary income levels? Forgive me, but I can’t see any outcome, particularly for the untold number of companies carrying crippling debt loads, other than their inability to source capital, retain top tier employees, or to invest in research, development, new plant/equipment and employee training. And they’re gonna cut jobs by the boatload. Many such companies won’t survive at all. This will be a problem. Of course, we can always just expand those weekly stipends to the unemployed, with funds we don’t have and must ask the Fed to create out of thin air. Under any 11/3 outcomes, we will probably do this anyway. It’s just a matter of timing and magnitude, baby.

But if Joe’s six pack contains enough tall boys to carry the Senate, we’ll be looking at immediate tax hikes. In the middle of a wicked recession. Markets may stay giddy for a bit, under the dubious hypothesis that an even bigger Washingtonian giveaway (which will be the first order of business) will: a) not come at enormous cost; and b) will actually be accretive in a sustained fashion to capital markets valuations.

But then will come the tax increases. And the regulation. Energy Companies, Health Services Enterprise and Wall Street will come under immediate attack. Many borrowers will default. All during a cold, cold winter, which may bring with it a resurgence in the Public Health crisis. And every bit of this sets up the next Thunderdome Death Match – between the Progressives and our monopolistic Tech Titans, who have made a Germany/Soviet Union-like bargain of expediency. They have achieved détente, but ultimately their respective agendas are on a collision course with one another, and the point of impact will not be pleasant to observe or endure.

Much, but not all, of this is unavoidable, but what we can avoid of this nature, we should seek to eliminate.

So, my mind remains fixated on coat tails. It’s true that I, like Joe, take up less space than before, and am told that it has upped my appearance game. But my wardrobe remains a weak point. Whatever I have accomplished I owe to you, and we have miles to go before we sleep in these realms.

After November 3rd, we may be able to lay the coat tail quagmire aside for a time and focus more directly on our joyful journey.

But in the meantime, when you stop at Brooks Brothers to examine the fare, please take a look at the lower, back portion of the jackets, and bear in mind that, as is often the case in this crazy world, and, with respect to both me and Ordinary Joe, less may indeed prove to be more.

TIMSHEL

By: K(en(neth Louis) G(rant)

“Yellow matter custard, dripping from a dead dog’s eye”

— John Lennon

I’m sorry; you just ain’t. Not The Walrus. NTW.

If it makes you feel any better, neither am I. None of us are.

One who aspired to, and nearly reached, this pinnacle, has just left us. And here of course I’m talking about Eddie. NGL: Van Halen wasn’t my cup of tea (great musicians but not a lot of great songs), but you gotta give it up to Eddie. Everything about him exuded magnificence (sh!t, even appearance-wise he was f@#king beautiful), and the tributes he’s receiving are well-earned.

For me, one factoid tells the tale. He played the signature lick on Michael Jackson’s “Beat It”. VH was just emerging at that point, while Michael was the undisputed King of Pop. Their convergence served, as much anything else that comes to mind, as the soundtrack for the times.

Smarmy rhetoric bores and disgust me, but this is what I love most about America. Eddie was a Dutch immigrant; MJ was a black man from a working-class family in Gary, IN. Each climbed from humble origins to unambiguous cultural royalty. Both played in ensembles with their brother(s). They came together for one divine moment – black meets white; rock meets soulful pop. This doesn’t happen in, say, France. Or even Sweden. And I think, as we seek to withstand this extended interval of wallowing in our flaws and sins, we could do a whole lot worse than take a moment to appreciate the magic that can happen – here and nowhere else — when we stop whining and start working. Together.

But this note is not dedicated to Eddie. Rather, it goes out to John. John Winston (Ono) Lennon. Who would’ve turned 80 this past Friday. Didn’t make it; was capped in front of his own home in 1980. Before anyone (including him) had ever heard of Eddie. Michael was a worldwide celebrity by then, but his transformative record: “Thriller” (featuring the hit single “Beat It”) was still years away.

Neither of them could touch Lennon, who sang “I Am the Walrus”, but didn’t mean it. Clearly, he was posing mere hypotheticals; asking hundreds of questions and purposefully answering none of them. Left it for us to figure it out, but the answers are elusive and varying. Old flat-top, for instance, had Feet. Down. Below, His knees. But about all he could tell us definitively was that 1+1+1=3.

You say you want a revolution? Well, you know, we’d all love to change the world. And I’ve good news for y’all. The world is changing. Whether we like it or not.

It’s difficult to determine whether for better or worse, but I have my own opinions on the subject. So, too, do investors, who have resumed the bidding up of risk assets into the stratosphere. Our intrepid skipper, Captain Naz, is rewarding those who boarded his ship on 12/31/19 with a 35% compounded return, across what even the most seasoned salts would describe as choppy waters. Meanwhile, our sultry sirens of risk mitigation – Madame X (U.S. 10 Year) and Vixen VIX, have left us at the altar, return-wise. But they are fickle creatures, so we’ll have to see how all of this plays out.

You say you got a real solution? Well, you know, I’d love to see the plan. But here, requests fall on deaf ears. Whose got a plan? Nobody that I can determine. Lots of probing diagnoses of problems. But solutions? Plans? Not so much.

You ask me for a contribution? Well, you know, we’re all doing what we can. Mad props must be given in this respect to our elected officials in Washington, who are trying like the dickens to slather the masses with more money that: 1) we don’t have; 2) might not actually need; 3) must borrow (presumably with new batches of printed money), and which 4) must ultimately be paid back (either by us or our progeny), through some combination of higher taxes, rampant inflation and a diluted dollar.

Meanwhile, there has been some reasonably encouraging economic news of late, which I fear that investors might be over-interpreting. Particularly with the re-energized pandemic lurking like a lizard on a windowpane, an insolvency tsunami visible on the horizon, as well as the depressive prospect of higher taxes, increased regulation, redistribution and other policies, I struggle to see much upside. Be that as it may, the Non-Manufacturing survey issuing from the Institute of Supply Management was a blowout (this is important because it cover such impaired industries as Restaurants, Leisure and Entertainment). And the Fed, as it whips out its knee-pads and begs Congress for more fiscal stimulus, is putting out Q3 GDP growth estimates that bring joyful tears to the eyes of even this crusty curmudgeon at the keyboard:

Now, unless I miss my guess, a ~35% bump would be a significant all-time record. The Wall Street consensus (blue line) is lower but is still growing, and in any event impressive.

The initial estimate drops on 10/29, and need I remind everyone that this is two days before Halloween? What promises to be the strangest Halloween in our lifetimes? The report comes out on a Thursday; All Hallows Eve is Saturday, followed by Monday’s All Saint’s Day, which ushers in the real week of terror. From an investment return perspective, I’m not overly optimistic, but then again, I’m a crusty curmudgeon.

One way or another, the Fed’s plea has indeed reached the ears of those who allocate our taxpayer dollars. and it looks like both sides are keen to get something done. Egg Man investors, by their actions, are egging them on. Of course, it’s all nothing more than a political battle in front of a high-stakes election, and who am I to quibble with this sort of thing (Not The Walrus, I can assure you)?

There is also a growing consensus that a Blue Wave (rising in probability if one chooses to believe the polls) might actually be accretive to valuations. To which I can only offer the following words of ambiguous wisdom issuing out from those Fabulous Fields of Strawberry:

Always know, sometimes I think it’s me, But you know I know when it’s a dream, I think a no will mean a yes but it’s all wrong, That is I think I disagree

Yes, I think I disagree, as Lennon might have. He wasn’t one to mince words, but he’s not here to tell us whether or not it applies to our current situation.

I reckon we’ll find out soon enough, but I just kind of have my doubts that the above-mentioned scenario, with its attendant promise of higher taxes/regulation and redistribution, to say nothing of the plans that some have in store for our Health Care System, the Energy Patch and Wall Street, is going to catalyze much of a boon for investors. And I just urge all within eye-shod to consider these contingencies as they navigate through these choppy, shape-shifting market waters.

You say you’ll change The Constitution? Well, you know, we’d all love to change your head. Well, at any rate, I would. Love to change your head, that is. Because Constitutional changes (and reasonable facsimiles thereof) have emerged as a highly plausible prospect. The Second Amendment is in play, and (as an anti-gun guy) the only negative observation I’ll make is to warn the anti-firearm contingent that it is going out tiger hunting WITHOUT its elephants and (of course) guns. Supporters of Â2 (including Tigers from Clemson, LSU, Mizoo, etc.) are not likely to have their tails pulled with equanimity.

So, in case of accidents, they should always take their mums. And I personally believe that the sacred First Amendment is also under attack, has been for quite some time, and that the threat is growing. If you doubt this, just ask the dwindling roster of conservative academics at institutions of higher learning – or, for that matter, anyone issuing formal rhetoric against the progressive orthodoxy.

And my worries extend beyond the introductory components of the Bill or Rights. Trends right now

clearly point to an end to the filibuster, a packing of the Supreme Court and (perhaps) the addition of a couple of blue stars to the Betsy Ross (now deemed a racist by cancel culturists and their corporate underwriters) flag. To the best of my knowledge, none of these requires a change in the constitution per se, but these are bold, paradigm shifting “if looks could kill, it would be us instead of them” moves.

So, when you tell me it’s the institution, all I can state is that institutions are on the verge of dramatic change, and I’m not feeling all that giddy about the new forms they are likely to take. But Lennon’s response was of course superior to mine. Better free your mind instead.

So, can we all do a little bit of that? Freeing our minds instead? For investors, this is aspirational: neither likely nor wise. In fact, in the short term, I encourage everyone to focus their minds on traversing the difficult path that lies ahead for all of us. Maybe afterwards we can do it. Free our minds, that is.

In the meanwhile, Happy Birthday, John (and to his son Sean too, who shares the date with him). We remember the tearful goodbye we said to you nearly forty years ago. We lost Michael (reputation tarnished but music enduring) in ’08 – another difficult year. Eddie bounced just this week. In 2020, which history may show to be a turning point. If so, I doubt it will be deemed to have been for the better.

Man, oh man do we need The Walrus now. But we don’t have him. And, in my darker moments, I’m not even sure we have the Egg Man. But know this: I want you. I want you so bad it’s driving me mad.

And now, with cellophane flowers of yellow and green, towering over my head, newspaper taxis are appearing on the shore, waiting to take me away. And there’s nothing left for me to do but climb in the back with my head in the clouds, and I’m gone.

In case there’s any doubt, I’m gonna look for the girl with the sun in her eyes.

And I hope I find her where JL left her — at the plasticine porter/looking glass tie train station turnstile. Because Walrus or no, that would do wonders to free my own (troubled) mind.

TIMSHEL

By: K(en(neth Louis) G(rant)

So, let’s set the scene. The year was 1983, and Spinal Tap North American Tour was winding down in utter disaster. Gigs had been cancelled due to lack of fan interest. The band got lost on the way to the stage in the bowels of a Cleveland auditorium. They played a Stonehenge-inspired set that featured replicas of the monument, which (due to a transcription error) were 12 inches, not 12 feet, high, and “in danger of being crushed by a dwarf”. The most recent of its endless roster of misanthropic drummers had died by choking on vomit (not his own). The lead guitarist and road manager had both quit. However, at the end-of-tour party, which almost no one bothered to attend, pipe-smoking optimist/bassist Derek Smalls found himself waxing on about great opportunities for the band to explore new horizons.

“We’re lucky” said Smalls “I mean, people should be envying us, you know”.

To which lead singer David St. Hubbins replied “I envy us”. And Smalls could only agree.

And it all kind of reminds me of the present moment. The US Tour of 2020 is winding down in what can reasonably be called a disaster. There’s a pandemic that we don’t understand and have no insight as to when it ends. Remediation measures have crippled the economy. Social unrest is at a multi-generational high. Cities on flame. Millions newly jobless. Mortgages and rents unpaid.

There’s a presidential election in a month, and the two sides are hating on each other more than at any time in anyone’s memory.

Yet, if nothing else, all of this presents us a once-in-a-lifetime opportunity to change our direction. We can re-imagine policing, criminal justice, health care, energy, race relations, education, the judicial process itself, electoral protocols, professional sports, all forms of entertainment, our very language.

People should envy us. I envy us.

And in fact, there are any number of justifications for us to be both the subject and the object of our own jealousy. For example, and with characteristic understatement, tomorrow, PBS celebrates its 50th Anniversary. For most of us the milestone will pass with little note, but the outcome was far from certain, as, in the wake of the last crash, there was a concerted effort to deep six it. What saved PBS? Well, I gotta believe that the following viral (circa 2008) meme was a major contributing factor:

Defund PBS? Sh!t Just Got Serious

Now, nobody in their right mind would dare mess with these mofos, right? And they didn’t. PBS survived, arguably thrived.

And fast forward to the crisis of 2020. Did anybody threaten Sesame Street or any of the PBS crew? Quite to the contrary, not only was their funding completely secure, but Congress even kicked in an extra $75 Large as part of April’s coronavirus relief package.

Taking another glance at the picture above, I count that as risk management in its most sublime rendering.

And a glance market (in which I ply my trade and where I am invested) paints me in emerald hues. There was a touching, green, tape painting rally into the end of the quarter, which was prophesied in these very pages. Our equity indices shrugged off that disaster of a debate and other nasties to close up ~1.5% on the week.

We woke up Friday morning to the news that Orange Man was feeling a little green around the gills, and in fact had gotten the covid hisself.

45’s medical condition kind of blotted out the impact of a pretty interesting September Jobs Report, the last before the election, which showed some solid gains, but at a decelerating rate – relative, at any rate, to the digits issuing from the BLS during the heat of the summer. The Gallant 500 took it all in relative stride and is currently throwing of a >3% ytd gain. Though you wouldn’t know it from recent days, Captain Naz is crushing it at ~+23% year-to-date.

And as Captain Naz goes, so goes all of us. Because we are Captain Naz. And I envy us.

Moreover, anyone accusing me of whistling past the capital markets graveyard should be made aware that America sports the only major market equity complex registering gains for the year. Other than China. But, what, I ask, do we have to do with China?

But just as in ’08, when Burt, Ernie, Cookie Monster and the rest showed us when they thought we were fixing to stiff them, sh!t is now getting serious. Not to harsh anyone’s mellow, but with the rules of electoral engagement changing by the day, with plausible outcomes that could permanently shift how we roll on all fronts, with the very real prospect of complete government control of (sorta) vital sectors such as Health Care, Energy and Financial Services, with a highly sketchy earnings season beckoning, with the Prez laid up in Walter Reed…

Well, it ain’t no time to be sleeping at the switch my lovelies. I’m not sure the true worth of stocks, bonds, foreign currencies, commodities, cryptocurrencies or cannabis (well, maybe I do have some idea of the value of cannabis), but it does strike me that the current equilibrium is shaky at best and unlikely to hold. It’s a fair bet that all of them asset classes will be on the move, soon, and materially.

And again, if one, for some irrational reason, wishes to search for potential valuation change catalysts, this little tidbit from Bloomberg might be as good a place as any to begin:

Careful observers will note that these trendlines apply to the European High Yield markets, and what, one may ask, do we have to do with Europe (Except Sweden. Because Sweden is cool)?

It can be hoped (but not necessarily confidently anticipated) that the stateside numbers may in fact be a whole lot better. If so, I envy us. But then again, I always do.

Envy us, that is.

Because we have the most righteous, all-knowing, omnipotent central bank in the galaxy: The Federal Reserve Bank of the United States. Originally founded by Alexander (m$^%ther f*@&king) Hamilton. Its pistols are trained, loaded and ready for action, and unlike its founder, we can be confident that the Fed won’t throw away its shot on some forlorn morning in Weehawken, New Jersey.

The Fedmeisters are on official record encouraging their pals on Capitol Hill to stroke in some additional stimulus of their own. They have implored Congress to harvest some fruit from their rich fiscal vineyards. There is ots lof speculation out there that with the President huffing down mad doses of Remdisevir and an election now just four weeks away, the twain of left and right might actually reach an accord here. My guess is that if so, investors will squeal with delight.

At least for a time.

It all should be fascinating in its unfolding: the irresistible force of our dubious re-imagining journey meeting the immovable object of the Fed’s need to prop up (inarguably elevated) asset valuations. Over the intermediate term, my money is on the Fed – under virtually every conceivable outcome. If the virus re-emerges in angry, menacing force, if Team Blue runs the table on 11/3, if, on 11/4, we have no idea the identity of our elected officials, they will be there to print money — to send to people not to work, for redistribution to atone for the sins of our forebears (whether the committed them or not) and for the above-mentioned full-scale takeover of the Health Care, Energy and Financial Sectors.

If, on the other hand, the pandemic withers with a whimper, if the electoral outcome is clear and balanced, if business continues – if not as usual then as “the new usual”, then the borrowing binge will continue, and the Magic Fed Money Machine will be rendered just as essential as ever.

There are morality tales aplenty across this entire narrative, but good luck unpacking them. I can’t. One day, we will look back in wonderment at it all (or, at minimum, our progeny will do so). We are in wonderment now, but it is of a more limited nature, because we don’t know how any of this will end.

But I envy us anyway. In no small part because of the (Spoiler Alert) happy ending associated with Spinal Tap. In sublime denouement, the original saga ends with the killer lead guitarist rejoining the band on stage, and ultimately as a permanent member. Even the road manager returned to the scene. The lads are older now, but still rocking, and occasionally even perform a live gig. They continue to shuffle drummers, who somehow always drop like flies shortly after joining the band.

At the present moment, they could do a whole lot worse than booking an engagement on the fabulous PBS Series: “Austin City Limits”. Maybe they could do some covers of Janis, who died 50 years ago today. Because I love Janis. As much as I love Jimi. Almost as much as I love you.

But there’s nothing I love more in a rock saga that ends with the band reuniting (except you; I love you most). Because really, that’s all we need. Us and the band. Jamming like there’s no tomorrow.

Because there may not be a tomorrow. And we should do everything in our power to avoid that outcome.

So please join me in envying us. I really don’t see any other way forward.

Trust me here brothers and sisters: it’ll do you no harm.

TIMSHEL

By: K(en(neth Louis) G(rant)

Yup, Gotta say a few words about Gale. Galloping Gale. Who galloped off and left us this past week.

But first a point of clarification. Gale Sayers was not the Galloping Ghost. That moniker belongs to a Chicago Bear of an even earlier vintage (back when they wore leather helmets, embraced, rather than avoided, concussions, and when the term “going both ways” referred exclusively to a footballer who played both offense and defense): Red Grange. Running Back and Defensive Back. The Original Galloping Ghost. Maybe the only one. That is, until Galloping Gale shed his mortal coil.

Perhaps now there are two Galloping Ghosts; maybe not. I don’t decide these things you know.

Never saw Red play but was a huge fan of Gale’s. The way I would describe him would be as follows: he was the Jimi Hendrix of the NFL – running with riffs that nobody could imagine, much less replicate – before or since. For me (and in retrospect), when he blew out his knee in ’69, it marked the beginning of the end of the Sixties. The Beatles announced their breakup that month. Sayers returned, a shell of himself, in 1970, which of course was the year Hendrix died.

Now he’s galloped away (this time for good), and America, Chicago in particular, shed many tears. It’s been a tough month in Chicago, kicked off by the shuttering of the iconic Palmer House Hotel, which had been hosting the hoity toity, dating back to a time when the hoity toity’s main residences were caves. Didn’t think it could be toe-tagged, but, these days, the unthinkable is exactly what goes down.

And it’s been a tough month all around. As is widely known, September is, historically, the worst lunar cycle for equity valuations. And this year (even if with respect to nothing else) has followed script. The Gallant 500 is down a decidedly ungallant 5.7% at the point of this correspondence, and this after Friday’s 160 basis point rally. Captain Naz, up >2% on Friday, was knocking on the door of a double digit, month-to-date drop the night before.

Still and all, Friday’s rally was heartening to observe – particularly as it transpired during the penultimate trading session to Yom Kippur – 5781 – which should feature a respectable amount of fasting, (hopefully) a passel of repentance, and (presumably) not much trading activity. It should also be noted that the sands of Q3/2020 (Julian Calendar) are running low, and, as such, ‘tis the season for some enthusiastic tape painting. If so, protocol suggests a bid through at least Tuesday 9/29 (decorum demands that one refrain from this unholy exercise on the final day of the period).

But because we’re talking football here, I’d say Friday surge, perhaps set to bleed into early next week, was an exercise of running up the score.

And, on the whole, I think, absent a further ignominious retreat over the remaining three sessions, the quarterly performance is one that should please us. The G500 gained ~6.4% of third quarter yardage, through some occasionally fierce pressure from the other side. The tape may feel heavy at the moment, but perhaps we should bear in mind the conditions that prevailed coming into the sequence on July 1. Covid was breaking out aggressively in geographic regions, where, based on climate alone, the defense was thought to have been the strongest. The country was, in near-full-scale lockdown, including in such improbable jurisdictions as Michigan’s Upper Peninsula and all of the Great State of Maine.

Social unrest was in full crescendo, barely five weeks after that cockroach cop cut off George Floyd’s carotid artery,

The smart money was proclaiming – heaven help us — that the NFL season itself would never transpire.

So, from that perspective, and looking forward from July 1st, would any investor not have rushed in to lock down a 6.4% index gain? I think not.

So why, in heaven’s name, does everything feel worse right now? Like our offensive line is failing to create even the miniscule amount of daylight required for Grange or Sayers to bust off a big one?

It requires little imagination or cognitive effort to understand the fear and gloom. All of our most dreaded risk factors are fully in play. No clarity on the trajectory of the Public Health crisis. Domestic politics are a complete sh!t show and likely to get worse. But let’s throw the Big Dog a bone here (Big Dog’s gotta eat, right?), and focus, for an instant, on credit.

The recent statistics are beyond terrifying – give off a feeling that must be akin to what the Citadel Bulldogs must have felt like coming out of the tunnel to face #1 Clemson. The final was 49-0 – a whupping that can only be characterized as merciful, considering that the latter pulled most of its starters in the beginning of the second quarter.

And, in terms of credit markets, the following two graphs tell the tale. First, last week, the Bank for International Settlements released its Q1 Debt to GDP estimates:

So, the world, as measured in GDP terms, is 30% more into The Man than it was heading into the ’08 crash. And here, it’s important to bear in mind that the series ends on March 31, 2020; we won’t know the tallies for Q2 for many weeks. Anyone want to take The Under on another surge? Didn’t think so.

Now we move to issues of solvency, and here, though it shames me to do so, I am forced to revert to a graphic I lifted from – of all places – this week’s Barron’s (via Bloomberg):

I know this ratio is a bit obtuse, even to me. To the best of my understanding, an interest rate coverage level of < 1 implies that the enterprise’s entire year’s earnings is less than its annual vig.

Let us hope that the lenders are more understanding here than, say, what is thought to be the attitude of the hard guys in Jersey City. And again, bear in mind that these statistics only take us through 3/31 – when lockdowns were said to be a fortnight’s operation; before we reached the definitive conclusion that the American economy was formed and continues to operate, principally, as a means to perpetuate racebased economic inequality. Neither metric, at any rate, is likely to improve over the near term.

But don’t you despair, my lovelies. Daddy’s indeed gonna buy you that diamond ring. The credit situation is so dire that the Central Banks will be forced to put their magic printing machines into overdrive. They’ve bailed us out thus far in 2020 (I don’t even want to think about where we’d be if they hadn’t) and must continue on, This here debt monetization thus ain’t over; in fact, it’s just beginning.

But we’re gonna have to be patient before these goodies come our way, and some of us may take a pounding in the interim. Hopefully, we won’t blow out a knee like Sayers, because we’re gonna need that knee to lean on during The National Anthem. Don’t ask me why; don’t know. But kneel we will. Kneeling won’t save us – not in this world or the next – but when did that ever stop us?

And now I fear it’s time for me to gallop away myself. Not like my hero Sayers, or even like the Old Gangster Sayre. But in my own way. At my own pace.

You may not recognize it as a gallop, but it’s the closest I can come. And I think we should be generous with one another as to what, in the first instance, constitutes a gallop, which I believe differs for each and every one of us. For some, it is more of a lumber; for others, it generates six touchdowns on twelve touches, playing for a team that finished the season 1-13.

So, gallop with me, won’t you? Even if you have to stifle your gait to do so.

And whatever else you do, please, please, please, don’t give up the ghost.

TIMSHEL

By: K(en(neth Louis) G(rant)

With apologies to Dr. Sigmund Freud

Don’t get me wrong; I’m big into Freud. For one thing, his middle name was Schlomo. Which you have to admit is way cool. And being the father of modern psychology, particularly in these mad, psychotic times, is pretty impressive to boot.

But on this topic, and for reasons about which I am not particularly proud, I happen to be credentialed to go toe-to-toe with him. He may have invented psychoanalysis, but I highly doubt he burned as many stogies as have I.

Most people, and rightly so, think of a cigar as an offensive, combustible obelisk of processed tobacco, wrapped in a tobacco casing which served as the trademark appendage of perhaps the two most towering figures of the Twentieth Century (Winston Churchill and Groucho Marx).

Well, yes. All true. But you should trust me when I tell you that a cigar can be anything else you wish it to be. A daydream. A cantaloupe. The bridge section of the Beatles’ “A Day in the Life”. The knockout trigger of a wonky derivatives contract.

The remotest star in the farthest off galaxy in the universe.

Moreover, if you accept my assertion that a cigar can indeed be anything into which our imagination and whimsy transforms it, it devolves to us mere mortals to determine what, in our field of observation and experience, is a cigar, and, what, alternatively, ain’t.

And, as Sigmund, Groucho and my other co-religionists join me in bidding “good riddance” to the troubling year of 5780 (and in hoping for better tidings in ’81), now is as good a time as any to see where matters stand on the ol’ cigar-ometer.

I reckon we should start with the just-departed RBG. My verdict: definitely a cigar. I tend to play for the other team philosophically, but let’s give credit where credit is due. She was one of a kind. Courageous, Authentic. Courageously authentic. Authentically courageous.

So, I hope everyone understands that when I say light her up and smoke her, I do so with the utmost respect.

But just when the last thing we needed was another psychodrama to add to our depressingly long list of them, the specter of her replacement now changes the already-mind-numbing calculus of our politics. For the record, I’m against the concept of trying to fill her seat before the election, because this will guarantee that when the Dems take over (if not 2021/5781, then sometime thereafter), they will pack the court.

Plus, it is, at best, jump ball as to whether the Senate will confirm any nominee under heaven, and I feel sorry for those running for re-election (Ernst, Collins, others) who might find the air getting hotter (and smokier) around them as the saga unfolds.

But Orange is as Orange does. He will certainly take a shot, and we’ll just have to live with the results.

Let’s now move on to last Wednesday’s Federal Open Market Committee Meeting, during which Chair Pow pretty much froze the Fed Funds rate for the next three years.

A glance at the “Fed Effective” rate over the past three trips around the sun illustrates the incongruity of the statement.

A little over a year ago, the rate was as high as 2.50% but hit zero in the immediate wake of the crisis, only to rise again to the usurious level of 0.09% as of Friday.

And at this point, we’re in completely uncharted territory. In terms of economic conditions and monetary policy, we’re beyond the remotest star in the remotest galaxy. I thus don’t put much stock in Chair Pow’s prognostications, however clairvoyant they may prove to be, about rates three years out.

To me, it was a “no cigar” move; not even close (sorry, but I had to bust that out and maybe sooner is better than later), and I think the markets pretty much ignored it. But investors did indeed take heed of his dire short-term outlook for the economy, and then hit the sell button (not hard, but conspicuously).

Which begs the question: is the three-week pullback a cigar? With respect to its response to the FOMC, I say the answer is no. To me, the sequence falls into the oft-repeated paradigm of a dovish Fed action, to which the immediate response was “holy sh!t, the Fed thinks things are really bad”, only to follow on with the revelation that “holy sh!t, rates are gonna be suppressed, like, forever”.

Whereupon investors go out and do some shopping.

But there are other reasons for the market selloff, as there always are. Even under the most cigar-like lens one can conjure, the late August valuation altitudes were perhaps a little bit oxygen-bereft. Nobody, at least with RBG-level authenticity, could have confidently been piling cash into risk assets at those levels. And in fact, they’ve gone in the opposite direction; selling, not aggressively but noticeably.

And, as we lurch towards November 3rd, the markets will feel the increasingly compelling pull of the political vortex. Is this election cycle a cigar? Decidedly not, and this should be a cause for concern for investors of every stripe. The two sides are at long daggers, the process sets up for mad disruption, the media reports unilaterally according to its affiliations and agendas (as do, in my opinion, the pollsters).

I’ll ditch my cigar to offer one example. Though you may not be aware of this, over the past month, Israel has signed astonishing normalization deals with two Arab nations: The United Arab Emirates and Bahrain. Other such arrangements are in the pipeline, including those with Oman, The Sudan, and Morocco. My theory is that the trend is owing to the growing threat imposed by Iran on its neighbors. The Ayatollahs in Tehran are feeling the heat from America’s re-imposition of sanctions and are sidling up to China. The sheiks that run the other countries are terrified and are taking action.

End result? Israel has more allies in the region than it has boasted in the seventy-two years of its existences.

It is, arguably (or perhaps inarguably) the greatest sequence of regional diplomacy since the founding of Israel in 1948.

And the press has barely taken note. Now, I’m gonna tread lightly down this rabbit hole, but I think it’s fair to opine that had such events transpired under, say, the previous administration, there would be galaxies of press plaudits and grown men (and women) weeping with joy in the streets.

Now? Not so much. Barely an “oh yeah, a couple of countries which, for seven decades, have sworn the destruction of Israel are now setting up diplomatic and trade relations with them”. My guess, though, is that on this Rosh Hashanah in Jerusalem, there is more joyful recognition of the progress.

For these and other reasons to numerous to inventory, I can confidently asset that our current political cycle is anything but a cigar.

But come what may, on November 4th (which happens to be my birthday), whatever oblong object that is thrust in our faces is what we will be compelled to consume. We can smoke it, chomp on it or… (I will leave other options to your imagination), but will be forced, inexorably, to address its presence, and, ultimately, to dispose of it.

In the meantime, we’ve got the rest of September and the always-docile month of October to endure. Lots of big events are pending, so stay tuned. And please, please please, keep jamming, and stay on your toes (note: in risk management parlance, this is referred to as The Toe-Jam. Fair Warning: It is a topic to which I may revert in coming editions).

Your world, my world, our world could look dramatically different over this period, and here’s hoping that it assumes contours that matches our wishes and dreams.

For now, though, we’d do well to bear in mind that while things aren’t always what they seem, sometimes they are. Sig-Schlomo was right in this sense. Sometimes a cigar is just a cigar.

But sometimes it ain’t; sometimes it never is. And the key to our fortunes lies in discerning the difference and making our moves in accordance.

Not gonna lie, though. The whole thing kind of wears me out. And I know what I have to do. It’s just a matter of getting to it is all.

At the moment, though, there’s no need to guess what my next step is. I’m going into my backyard to burn one. I’d love for you to join me, and more than that, to think of my cigar as the key to whatever your soul desires.

Even though the breeze routinely changes courses, I’ll do my best to sit downwind from you.

And, in closing, I ask you to acknowledge neither Captain Jeffery Spaulding nor Rufus T. Firefly ever extended you a better offer.

TIMSHEL

By: K(en(neth Louis) G(rant)

The morning’s dead, and the day is too,

I’ve got nothing left to greet me, but the velvet moon,

All my loneliness, I have felt today,

It’s a little, more than enough, to make a man, blow himself away,

But I continue, to burn the midnight lamp… …alone

— Jimi Hendrix

Fifty years ago, this Wednesday, Jimi played an impromptu set with Eric Burdon and the fabulous L.A. band WAR at Ronnie Scott’s Jazz Club in Soho, London. Twenty-four hours later (+/-), he left us.

But in a very real sense, he’s still here. Millions of people (including your faithful scribbling wannabe shredder) listen to him, think about him, channel him, every day. Untold numbers of guitar hackers try – and fail – to replicate his sound. I suspect they always will. Try and fail that is.

Occasionally, my sister-in-law (who I love but sometimes loves to push my buttons) tries – and fails — to raise my hackles, by randomly (and out of context) blurting out: “Jimi Hendrix is a dead drug addict”.

If you say so, Cass, but on the other hand, whom among us isn’t? A dead drug addict that is.

Dirt-napping junkie or otherwise, his story is a compelling one. To begin with, he was part African/part Native American. His given first name at birth was Johnny; his dad renamed him Jimmy when he was about four. He came up with the Jimi thing on his own, and no one since has dared to use this handle. He trained Army paratrooper. They bounced him. He carried the burden of being a left-handed guitarist, forced by poverty to play his Stratocaster upside down. He was a side man to Little Richard, the Isley Brothers, others. He emerged in London and took the place over, leaving other guitarists in tears.

Came to New York and took this town over too. Built Electric Ladyland Studios in the West 50s, where he recorded our title track. Word is that he injudiciously financed this dream through some hard guys, which may be the reason he checked out early (more about this below). By the time of his death, he was a huge star. Was the headliner (and the highest paid artist) at friggin’ Woodstock.

He became a bigger star after he died.

But during his brief, magnificent run, he was an outsider: a black man playing to mostly Caucasian audiences. African American listeners didn’t know what to make of him. Their radio stations shunned him. He is known to have felt a form of obsequious patronization by all those white hippies that idolized him. For these reasons and others, as is the case with virtually all of the great ones, he carried crippling doubts about his own artistic validity. But hey, even Shakespeare must’ve felt this way sometimes.

And my rebuttal comes from another one-of-a-kind achiever of galactic proportions. “When your good at something, you tell people about it. When you’re great, people tell you”.

This statement comes from the late Walter Payton. And it certainly applies to Hendrix.

I’m wondering how we have endured 50 years without Jimi. But like I stated above, he’s in many ways still with us. His existence wasn’t an easy one, and even his death is shrouded in pathetic mystery. Choked on his own vomit, but was alive when he arrived at the hospital? How does this happen? How did it happen? Maybe it was the mob, but I like to think that Nixon got him. And I’m not alone.

Meanwhile, our own trip, on what Hendrix called the Third Stone from the Sun, continues. Been a little weird lately, no? Well, I suspect it may get even weirder as the year winds down.

The summer season is over, and it passed like a rainy day/dream (away). The ADHD public’s attention now naturally turns to preparations for what promises to be a passing-strange Halloween. New York City has cancelled most of the cool events, but somehow, the Bronx Haunted House show escaped the meat axe. However, in the interest of Public Health, this year, the zombies will not be spitting (faux) blood.

I thought y’all would want to know this.

But the late Oct axe did fall on the L.A. Unified School District, which announced on Friday that schools will not re-open until after Election Day. Los Angeles County Public Health Director Barbara Ferrer was very clear on this. The next check point comes after we vote. Pardon me for wondering how she fixed upon this date. And for crying a few tears for those poor kids in Englewood, turned political footballs, who will be required to fend for themselves until the partisan hacks of the region decide which elections to steal, and which, alternatively, to sanctimoniously claim were stolen from them.

Know this: I am going to be relentless in sharing my fears that the election/vote counting cycle is setting up to be an historic disaster. And I fear for what happens in the markets if (when) this happens.

These and other market risks continue to present themselves, a number of which are beginning to enter the valuation calculus. As a result, the fearfully joyous rally of late August/early September appears to have run its course. Will it gather itself and re-emerge with renewed vigor in the coming weeks? My sense is probably. But: a) it may not transpire at all; and b) if it does, it will be difficult to capture.

We could capture a measure of clarity this coming week, as Wednesday (50 years less one day from Jimi’s passing) Fed Chair Powell takes to the FOMC podium to utter his next policy statement. It should be interesting. Even though these rituals can be dry as chalk, this one may be worth our attention. Because last round, Chair Pow issued some vague guidance suggesting that he and his crew were gonna allow the inflation dogs a longer leash than had been the longstanding official policy protocol (2%). And wouldn’t ya know it? This past week the PPI/CPI data suggested that they got the memo. Officially, inflation, being the first derivative of prices (with respect to time), appears to be on the rise.

So now Powell’s some ‘splainin’ to do. Not a lotm but some. I will be very interested in what he has to say. But then again, I have idiosyncratic obsessions about such matters. So, don’t worry if you blow it off. I’ll be taking notes and sharing them. After all, it’s what you pay me for (except that a lot of you don’t).

I suspect that he will be gentle as a lamb and cooing like mourning dove, but I could be wrong. After all, this has happened before. Me being wrong that is.

But my guess is that he knows, with enough out there to freak us out to fill a dozen or more blood-spitting zombie-infested haunted houses, he’s of no mind to add to our agita.

And, in general, as we focus on the serious business of trying to figure out how to monetize what is without question the strangest tape of our lifetimes, my key observations are as follows:

• We can anticipate a number of cycles of unpleasant and potentially crippling volatility the entire rest of the year.

• They will come without advance warning and may not, on face value, make sense.
• Because of this, risk models (including the impeccable ones that I run) may very well be understating forward-looking performance hazard (i.e. your book may have more risk than you think it does at the moment).

• For all of this, I think that there remains a robust bid for risk assets – particularly at points below prevailing valuation levels.

• Thus, while markets may not have huge upside potential, their visible downside is more constrained, and because of this, the always hazardous short side is particularly risky now.

• Stocks, corporate bonds and other risk assets, cannot, in my judgment, fall much without taking yields down with them, so long Treasuries remains an elegant hedge against these exposures.

And if I failed to mention this before, the election is going to be a hot mess. Almost doesn’t matter what the outcome is. Armies of vote harvesters and lawyers are teed up to disrupt and dispute the outcome. I don’t wish to travel deep down this rabbit hole, but when, I ask you, has a losing candidate in a previous presidential election publicly advised their successor not to concede the next election under any outcomes, as Hillary Clinton just did (and she’s not alone)?

It all brings to mind that debacle of 1876, when New York Governor Sam Tilden legitimately won the election, only to witness the army forcibly overturning the electoral vote in three southern states, and in the process, swinging the victory over to the forgettably unforgettable Rutheford B. Hayes. Of course, I was much younger when this sh!t went down, and don’t remember all that much about the episode. And what I do remember doesn’t pass the test for inclusion in this family publication.

I do think it sets up for a whale of market disruption this time ‘round, and may even eclipse the plagues of pandemic, spectral socialism and social unrest – with which we might have to contend, come what may.

And as for 2020 as a whole, its morning is indeed dead, and its day is fading fast. Soon enough, we’ll have nothing left to greet us but its velvet moon. But all the loneliness we have felt today is mere illusion — a little less than enough, in my judgment, to make us blow ourselves away.

Because we have each other, and that’s not gonna change. We may continue, like Hendrix, to burn the midnight lamp. But unlike him, we will not be doing so alone. We will do it together. Always and forever.

And Jimi will be with us, because he never really left. He’s Stone Free now, but let’s be glad that he came when he did, because the world would have been a decidedly poorer place without him.

Rest well, Jimi; we’ll continue to leave out midnight lamps on for you.

Here’s hoping and expecting that it will provide divine illumination, in the lonely, velvet moon nights that await us.

TIMSHEL

By: K(en(neth Louis) G(rant)

DATELINE: (CONNECTICUT) PANHANDLE. Yes, I’m coming at you, as is often the case, from the wilds of the Connecticut Panhandle.

Of course, no such place officially exists. And I’ve had a longstanding, stated beef, with whoever decides these things, that the portion of Constitution State in which I dwell has never achieved the panhandle status it so richly deserves. I figure it’s time for me to bust out my bitch again, because: a) maps don’t lie; and b) you can decide for yourself:

Do mine eyes deceive, me or does the southwest corner of this layout indeed constitute a panhandle? It sure seems like it does, but the Panhandle Commission continues to show us no love.

It may in be that they are busy the with more important, panhandle-related matters (such as the racism embedded in the panhandle concept itself). Meanwhile, us CT Panhandlers languish, forsaken. I suspect, however, that the Panhandle Commission is chock-full of political appointees, and maybe, if the vote goes our way, we can sneak one or two rabbis into the ranks. Hope, if nothing else, springs eternal.

Now, please don’t misapprehend me. I am not suggesting that our little strip of partially contiguous real estate rises to the panhandle glory of, say, the three states whose PH status is not only acknowledged, but, indeed, celebrated (Oklahoma, Texas and Florida):

And while we’re on the subject, let’s take this opportunity to give a shout out to the OK Panhandle, shall we? Because that is a panhandle to which all other states should aspire. A panhandle for the ages. Pleasingly long. Divinely rectangular. Barren. By contrast, the Texas Panhandle is just too stubby for my tastes. I mean, it’s too wide to grip, and there’s not enough length there to lift the rest of the state’s (largest in the Lower 48) pan. Florida doesn’t suffer from the last of these problems, but I think we can all agree that its handle is just too lumpy to offer much comfort or utility to the holder (and that’s even without all of those oranges, flags and other stuff contained in the image).

But one way or another, there’s a whole lot of panhandling going on at the moment. It’s bad. It’s nationwide. And I suspect it will get worse before it improves.

What, after all, are the markets in recent times but one giant financial panhandle?

Investment panhandling had been a unilaterally joyous exercise — for months – until, that is, last Thursday, when all of the gold diggers turned ignominious tail and started to sell off shares like the Joads in “The Grapes of Wrath”. The puke continued through much of Friday (as spaced between a couple of heroic but largely futile attempts to stem/reverse the carnage), all of which put a big buzz kill on the already historically depressing interval of Labor Day Weekend. Probably, this is a good thing, because the odds on probability is that sh!t gets real this coming Tuesday. Why not get a head start on the drama?

And, notably, the declines came on the heels of weekly and monthly jobs numbers that one had to believe were objectively encouraging. From the Payrolls, Base Rate and Labor Participation metrics, it would appear that the month of August featured an encouraging number of eligible souls who had discarded their pans and successfully re-entered the workforce.

Maybe, investors just like panhandlers more than they should.

Leading into the selloff, the scene was bizarre beyond easy description. I read last week that Apple sported a higher market cap than the entire FTSE 100. I had to check this, and it was true; still is. Now, please understand: I’m typing this here note on an Mac-book, never go anywhere without my I-Pad, and yes, I’m rocking an I-11 phone. Plus, I love the ear buds. But in general, I don’t even like Apple that much. They just sort of suck you in is all.

So, good on them, but as a purely hypothetical, would I trade full ownership of the company for the same status with the 100 biggest corporations in the UK? Which include a couple of baller pharmaceuticals, some important energy names, and Lloyd’s of London? I would not. And neither should you.

The abrupt, (I’ll say it) indecorous selloff got everyone analyzing catalysts, and, in order to do so, one must examine root causes of what took us to those improbable highs we so recently achieved. The wires suggest that a great deal of the last leg up is owing to some aggressive technology stock options buying on the part of both whales and guppies.

The data indeed indicate that weekly equity options purchases are surging. And don’t even get me started here (too late). This. Is. A. Bad. Idea. My risk reports are slathered with a never-ending stream of losses on these quickie options. Please, don’t even think about making decisions of this nature, week-to-week. Given all of the complexities, it’s simply not enough time to accomplish much of anything. Dream big, by all means, but know that it is likely going to take a month or more to turn these dreams into realities. This is as heartbreaking to me, as I know it is to you (maybe more so to me; I’m getting to be a real old bastard after all), but it is true nonetheless. So, let’s look out a little further, and save ourselves both the annoyance and (yes) the heartbreak of living week to week.

Let’s call this Plan A.

Because what weekly options giveth, they also take away, and I do suspect that some of this played into both the long rally and the end-of-week, tragic selloff. Big dogs are said to have made a killing on the quickies, but let’s face facts: none of us are big dogs, now, are we?

But here’s the good news, brothers and sisters: I don’t think the rally is over. The game is indeed on come Tuesday, but what really causes investors to reverse course, and decide that all that buying over the spring and summer was the stuff of irrational dreams? Nothing at the moment that I can think of. Yes, there are enormous risks out there, but they are trending better than they were, say, six weeks ago. With notable exceptions, schools are actually opening and staying open around the country. The political rhetoric seems to be a tad less oriented towards destroying our evil capitalist empire. They ran the Kentucky Derby on Saturday, and on the same day, a passel of brave institutions of higher learning actually sent their football teams onto the field.

Absent unthinkable disaster, the NFL kicks off this Thursday, and that, my friends, may be the most bullish news of all.

But perhaps most importantly, we got the Fed in our hip pockets. Willing to let inflation (that is, if any actually materializes) run a little wild. They’re begging us to stay invested, nay, to increase our investments, and acting in accordance with this desperate desire. One of my wiser compatriots (who is not happy about the development) pointed out to me recently that while he understood the need to support impaired credits during those dark days of April, the Fed Balance Sheet now proudly features debt holdings in Microsoft, Goldman Sachs, and (yes) Apple.

Why are they doing this? Because they are hell-bent on keeping impossibly elevated valuations in the stratosphere. Why? Because otherwise the credit bubble might immediately explode in our faces, and that, my loves, would be a disaster for all of us.

This is their party, and it’s clear to me that they intend to keep it going – even if it means driving a couple of counties over to the single gas station/stop and go market willing to sell kegs at this late hour.

So, unless Public Health takes a turn for the worse (it might) and/or the political forces who want to dismantle what has been a pretty good gig for nine-plus generations score an unambiguous win, I think risk assets do nothing but get scarcer – even beyond the November election. Speaking of the latter, I will again state that I am terrified that the voting itself will be a disaster, with many important races too close to call, an unprecedented level of contested outcomes, and other overwrought sagas which, on the lonely, last weekend of this strange summer, I just don’t wish to contemplate.

But it is indeed time to get focused and stay that way. I’m ready (I hope). Are you? Great hazard but also great opportunity beckons in this last trimester of ’20, now just barely begun.

And, in fairness on the whole panhandle thing, it just may be the case that other states have an equal claim to the status as does CT. Mississippi, Alabama, New Mexico, Massachusetts (if you disregard the Cape) and even New York (if you count Long Island). But with the last two of these, you have to cross a body of water to enter the handle, and as for the first three, well, they can fight their own battles.

And I’ll fight mine, from the Connecticut Panhandle, and other points where my journey might well take me.

With that, I’ll sign off, hoping you enjoy your holiday, and urging you to get ready for the rocky ride to come. I’ll always remember this summer, though, with photographs on dashboards, taken years ago, turned around backwards so the windshield showed every streetlight in reverse. Remember the night. And the things that go away. Replaced by every day.

TIMSHEL

By: K(en(neth Louis) G(rant)

“Jones brings the ball up, dishes to Havlicek on the wing, Russell on the high post, checked by Baylor…. clock running down…”

I’m going really old school here (because that’s how I roll – especially lately), back all the way to my earliest NBA watching days. When Jones, Havlicek and Russell were locking horns with Elgin Baylor, the 24-second shot clock was still a relatively new concept. Moreover, in those years, the clock itself was not above the backboard, as it now, but rather affixed on the floor, at the four corners just beyond the base and end-lines. True story: long ago, my parents had access to floor seats at the old Chicago Stadium for (pre-Jordan era) Bulls games, and several times I was invited to accompany them. On one occasion, I actually had a copy of Pink Floyd’s “Meddle” with me, and, mischievous teenager that I was, I placed it on top of the nearest 24-second clock available. That is, until a ref forced me to remove it.

During another of these outings, I got to slap Mr. T on the back, as he paraded through a wall of fans.

These are my brushes with immortality. They may not seem like much to you, but they’re mine, and I reckon I’ll keep them.

In general, though, I’ve been worried about how much time we/I have left on the shot clock. I’m sure it’s not a great deal. And yes: a) it’s scary; and b) there’s a risk that if we don’t overcome our fears, it may expire before we even hoist one up.

In which case, it’s game over. A tragic, avoidable loss.

And I won’t lie: this whole boycott stunt by the NBA really hacked me off. It may hack you off that it hacked me off, but that’s for you to decide. The stunt passed quicker than my pique; I’m still traumatized by the experience. It felt to me like a bunch of inordinately successful guys got together and decided that maybe, despite all of the ruination which we have faced in 2020, things weren’t ruined enough. So, another cop plugs another minority dude, a teenage loser ups the action (in Kenosha, WI of all places) and what happens in the NBA? The multi-millionaires players decide they won’t participate as required under contracts to which they affixed their signatures – adjacent to those of their billionaire employers, in the process tweaking the trillionaire sponsors of the entertainment package that has enriched them all.

Was the intent to further the cause of social justice? If so, it was doomed to fail from the outset. It did not, could not, advance any cause of any kind. And my guess is that it ended as abruptly as it did because the lawyers for the Player’s Union, that righteous inheritor agency of the Mother Jones/Ludlow Mines labor crusade legacy, convinced the hoopsters that they had not a leg upon which to stand (much less to demonstrate their rad hops). That they must either suit up or risk losing both salary and (shudder the thought) endorsement revenues.

So, suit up they did. Before the clock expired. Didn’t cost them a penny.

So, the shot clock is back running. Not only for those baller ballers, but in fact for us all. Including investors. This month has only one trading day remaining to it (the rough equivalent of 1.2 seconds on the NBA counter), but nobody can accuse market participants of not attacking the rim; in fact, our equity indices, unless they bitch up Monday, will have recorded their strongest August in two decades. This past week, they were ballin’ like ‘Bron. Took their posterizing, elbow-flying talents to previously unreachable realms. As a result, The Gallant 500, since late March (remember late March?), has been annualizing at an eye-popping 57% rate. Other benchmarks are following suit, but there is no room for debate as to who the GOAT is. It’s Captain Naz, who went straight from the McDonalds All-American team to the bigs, and is currently throwing off an annualized return, over the same time, period, of nearly 250% (yes, you read that right). Which, if sustained, would render, by comparison, even Wilt Chamberlain’s (validity questioned) 100-point performance just another night at the office for the Big Dipper.

I can’t help but worry, though, that the shot clock is running out for these high-fliers.

I would also be concerned about that relentless “tic tock” sound emanating out of the Fed, but seeing as how they control the League Office, I’m hardly surprised that they changed the rules to their own liking. The announcement came from Powell (the unanimous MVP of the 2020 season – no matter what transpires from here) at Jackson Hole conference, wherein he unveiled a new policy the apparent gist of which is that, instead of establishing a 2% ceiling for inflation, they are fixing it at an equivalent average. Apparently, this enables them to overshoot the mark as they deem appropriate. Moreover, given the latest inflation trends (as presented below, in a nod to their infinite power and wisdom, through their preferred metric of the GDP Price Deflator), they seem now to be in a position to hold the ball indefinitely:

The equity markets were deeply impressed by the news, but that, in and of itself, is a low bar this summer, as they seem to be reacting to virtually anything and everything with an unmixed delight.

But somehow, Treasuries sold off on the tidings that the Fed can goose the monetary economy until it sickens of the tactic. Here, I throw the challenge flag, or (given that we’re talking hoops in this piece) ask the refs to take another look. Because the statement itself, by all logic, should have been accretive to Treasuries – across the entire curve.

And I’m back to thinking that long the 10-year note presents an ideal hedge against a downdraft in the equity markets– a call I made earlier this year which worked until it didn’t. Yes, Treasuries could continue to sell off, but only against a rising equity tape. Similarly, I just don’t see how the equity markets can suffer a slide without it redounding to the benefit of govies. Investors should naturally move capital there if this happens, and if they don’t the Fed will simply have to step in.

Because remaining among the dwindling inventory of certainties in my bag of prognosticative tricks is a strong conviction that the U.S. and global economies cannot abide higher interest rates at the moment. Wanna kill off that improbably red-hot housing market? Raise rates. Tired of increased value of corporate bonds and other instruments of devilish credit? Same thing.

And in a similar vein, anyone watching the doings of the U.S. dollar should be forgiven for wondering if the sands are running out in terms of its status as the world’s reserve currency. Equities are rising, bonds are selling off – implying higher yields, all of which should be accretive to the Dead Prez. Instead, it’s in free fall, and, again, this is not only against other fiat currencies, but also as measured in terms of most risk assets. Probably, you can fill in your own blanks as to why.

And I cannot continue without tipping my hat (which I don’t own and wouldn’t wear if I did) to Charlie Parker, who would’ve turned 100 yesterday. He was born three days after the passage of the 19th Amendment, and a week after Elvis made his TV debut on an obscure outlet in Shreveport, LA. Bird’s personal shot clock was short, spanning only 35 years. Man oh man, did he make the most of them.

But winding the clock forward, as we must, to the present day, I suppose we should get a word or two in about the election. Because it’s an important election, or so I am informed by several Facebook Warriors with whom I am connected.

It is also important from an investment return perspective, but I won’t elaborate too much on that score.

I will state, however, that I am delighted that the clock has expired on those infomercials that pass for national party conventions in these troubled times. Truly, I miss the balloons. The sashes with state names affixed to them. And the funny hats. Maybe they’ll return some day.

It does appear that in terms of milking the clock, the Dems own most of this tactic. Can they really get to November without their boy debating 45? I think they’ll try. I hope they don’t succeed. Moreover, if the polls turn, you would certainly see their offense in motion, looking to take their shot.

And elsewhere, the clock has officially expired on Japanese Prime Minister Shinzo Abe, who took a knee this past week due to the increasingly debilitating toll that ulcerative colitis has taken on his person. Not sure what happens next over there, but my view is that Japan could and might do a lot worse with his replacement. At the point of this correspondence, Hideki Kuroda remains in control of the BOJ, so at least we can be thankful for that. Because the world needs more JPY, and Kuroda is our guy to deliver it.

But my time is running short, and, in moving towards my close, I will reiterate my call that vol has to increase as the seconds until the election begin to dwindle to a precious few. I don’t expect much action next week, as we finally reach the suckiest holiday of the year: Labor Day. I’ve mentioned this before. I hate Labor Day. Labor Day sucks. Mostly because it is followed by a long slog during which All God’s Children must confront many unpleasant tasks that await us, and for which we used the summer as an excuse to ignore. Gotta get my driver’s license renewed (among other things). Wish me luck on that.

Similarly, I say the clock is running out on this season of one-way rallies and a volatility tape as benign and docile as what passes for defense in the NBA All-Star Game.

Which means we should think about getting our asses in gear. I’m not suggesting that we fire away indiscriminately, at will. But the time has come for everyone to focus, draw a play up on the chalkboard, and, for the love of God, execute it. We don’t have all that much time (as the ringleaders at the County Seat once warned Bob Dylan, after he disclosed that the girl with him behind the shades was not his property).

True, we could throw up a a brick; but I think it might just tickle the twine. Or, if it bounces off the rim, maybe Russell will be there for the rebound, bestowing upon us, in the process, the gift of a fresh 24. Nothing would be sadder, one way or another, than allowing the ticker to expire with the ball still resting in our sweating, sweaty palms. After all, the shot clock is there for a reason: to ensure we don’t dawdle away our precious time with little or nothing to show for the effort.

We’re better than this, right? So let’s show it. It’s (almost) time.

TIMSHEL

By: Ken(neth Louis) Grant

“The definition of insanity is doing the same thing over and over and expecting a different result”

— Falsely attributed to Albert Einstein

I would be remiss if I didn’t begin by enthusiastically acknowledging the 100th Anniversary of the passage of the 19th Amendment, which bestowed, nearly six generations after the nation’s founding, the right to vote upon American women. It’s this coming Tuesday, and it would do none of us any harm to spend a moment (or two) honoring the occasion.

Progress of this sort (as one can hardly fail to notice in these troubled times) is: a) often glacial; and b) occasionally comes in spurts. Better late than never, I reckon. And now, a century after we corrected our priginal, unfortunate suffrage oversight, we’re on the possible threshold (Biden win/Dems keep the House) of two of the top three elected offices in the country being occupied by women. Moreover, modest extrapolation (Biden bounces – or is bounced — early, Harris appoints a woman VP – highly likely – and Pelosi still lords (ladies?) over the House) places women in all three.

It will be different, but will it yield altered result? No clue.

And that’s all I have to say about that.

So, let’s revert to our main theme: the dubious definition of insanity, falsely attributed to Einstein. The phrase is beyond trite, and (perhaps more importantly) patently incorrect. For one thing, doing the same thing over and over often leads to different results. Happens all the time (consider, for instance a roll of a single die), so expecting a different outcome from a repetitive action is often entirely rational.

And then what about the concept of practice? Like me playing the opening riff of “Brown Eyed Girl” to my brown-eyed girl? I still bitch it up sometimes, but a lot less than I did before I went through the sequence, in endless repetition — all those years ago.

I’m delighted to point out that Einstein never uttered such foolishness. Never would have. Because Einstein was cool. He came up with The Theory of General Relativity, don’t you know? And he also could shred on violin. If you doubt this, take a listen to the attached sampling of his riffing on Mozart:

I say he shreds, but you can decide for yourself.

And in these crazy times, I thought I’d take a moment to measure our activities against that glib insanity trope, which may be the definition, not of insane, but rather of inane,

For months, investors have engaged in the recurring operation of buying up risk assets. Have been doing so since late March. Since before the lockdowns. The results have been quantitatively different, with the Gallant 500 galloping to new highs: >50% above the depths it reached on March 23rd. You remember late March, don’t you? A time when we still thought that shutting down major portions of the economy might be, er, dilutive to equity valuations?

Most of the recent surge is attributable to Apple, which during this past week Eve-like investors pushed past the Eden-like level of $2T — dearth of new product pipeline and mortal supply chain issues in China notwithstanding. Still and all, it was impressive to observe the Big A cut through the double tril mark like a knife through butter. I remember those much-pined for days in the Autumn of 2019, when it lurched and lunged its way past the quaint-by-comparison $1T mark, being the first enterprise of its kind to have done so. But it is often said (at least in the rarified circles in which I roll) that the first trillion is always the hardest to cop. After that, it’s Duck Soup. I have not had this experience myself, so I guess I’ll just have to take Apple’s word for it. But as the biggest corporation in the world, it is now trading at nearly 40x earnings, and one can perhaps be forgiven for fearing that it’s a tad rich up here.

Same is true of corporate debt, the levels of which continue to rise, serenely and unabatedly, and which is becoming alarmingly expensive to own (though not, of course, to issue). I do suspect, though, that at some point, borrowers and lenders will indeed experience a different result.

We are doing some things different, though. We’re saving more. Individuals (in direct contrast to governments and corporations) are actually paying down debt. There’s something holy in this, and here’s hoping it continues.

We’re also buying up houses to beat the band. This is different. And I wonder if it can last. Mortgage and rent delinquency rates, after a recent surge appear to have levelled off:

Apparently, this data takes some time to compile, and in the meanwhile, I’m gonna go out on a limb and suggest that the July and even August data will show continued improvement. But I do wonder if it’s sustainable. When this strangest of summers ends (as it is doing so rapidly, and in such a bittersweet fashion), we may face a different set of circumstances.

Because as I’ve pointed out in the past, most the recipients of rent and mortgage flows are not in the happy position of just banking the proceeds. Nay, they owe this bread to the man. Who expects to get paid, and is capable of all kinds of nasties when these payments are not forthcoming.

And in case you were wondering, when the rent and mortgage music stops, properties go on sale. Further, as an exemplar of insanity in action, when property listings rise, buyers disappear, and prices drop.

The housing data suggests a surge in purchases among Millennials, and all I can say is it’s about time. They’ve been lollygagging too long in grabbing a piece of the rock. While some of this reluctance is said to be generational/cultural; a major portion of it is certainly fear of the future. Which is surely understandable. I myself am terrified. And I own two houses outright and am 60 years old.

All of which begs the question: will this new/different activity on the part of the young bloods lead to the same result as it has for us geriatrics? Will the investment provide lifelong shelter, succor, financial return? I pray for this to be the case, but I won’t lie. I’m worried that it won’t. Particularly over the next little while. If the going gets tough as the weather turns cold, some recent home purchasers may find (as may also be the case with newly minted owners of AAPL and corporate debt) that they overpaid for the privilege/face myriad problems harvesting its rewards.

Finally, and in terms of matters of state, it’s actually difficult for me to render an assessment as to whether we’re repeating the same patterns over again and expecting a different result. It certainly feels different, but maybe it always has. Felt different, that is. There’s a lot of anger out there, and when this is the vibe, politicians always feed it. They’re feeding on it now. It’s arguably why we give them so much money – voluntarily and otherwise. So, I anticipate increased anger, and, with it, expanded transfers of funds from private citizens to politicians.

One thing we can certainly expect is an unusually overwrought election cycle, and I suspect it will begin to filter into market sentiment once Labor Day comes and goes. I’m not sure it will remove the undying bid for securities, but it should lead to some interesting volatility paradigms. I’d highly suggest that we prepare ourselves for these doings.

My best hope is that the outcomes are split down the middle, as I suspect they will be. The sides are just so far apart – and so angry about it – that I just don’t see much upside in a lurch in either political direction. But we may not know the outcome of the election – in fact MANY elections – for several weeks after the voting window ends. Several Senate seats, dozens in the House, and even the Presidency may be hanging like Dade County chads circa 2000, for an indeterminate period. And won’t THAT be a barrel of laughs – for investors and the electorate in general?

One last point about the election, wearisome though the topic certainly is. Biden’s VP choice may carry significance beyond her gender, her racial characteristics and the material probability that she could become president without actually winning a presidential election. Specifically, if my instincts are correct and we are indeed facing a too-close-to-call outcome across all the important races, then it is entirely feasible that Biden could win, and the Senate end up being a 50/50 proposition. If so, VP Harris would be the deciding vote in the Upper Chamber. Would the Dems dare to eliminate the filibuster under these circumstances? Well, I wouldn’t put it past them.

On the other hand, it probably doesn’t matter much. Because under the scenario presented above, pretty much anyone who Biden selected would likely follow the same script: the script of his handlers.

So, I’m expecting a lot of hijinks once the calendar turns, come what may. We’re in for a rocky ride, and I will need you every step of the way. But this may be hard on you, harder than you can endure.

But we gotta press ahead. Like Einstein. Who always kept his cool and banged away on his chalkboard and fiddle as best as he was able. The rest of us would do well to follow his example.

And, at the moment, the tightest definition of insanity that I can come up with is anyone doing anything and expecting any result.

I wish I could do better, but I’m not Einstein. None of us are. And he didn’t even come up with the phrase to which he is so notoriously, so nefariously, attributed. Let’s give him a rest on that bit of slander anyway, shall we? It’s the least we can do. Maybe we can go further and kill the phrase altogether.

Because repeating his unspoken words is insane, right? It is what it is, and, in the meantime, I’m out.

TIMSHEL