Yes, it’s Cinco de Mayo, that, holiday, er, ginned up by American corporations to goose domestic alcohol consumption. Its pretext involves a commemoration of the impressive, but, on balance transient, victory of the Mexican Army in 1862, over the French Empire, in what is known as the Battle of Puebla. It was indeed a solid win, against the much larger and better fortified forces of Napoleon III. So impressive, in fact, that even 15-odd decades later, it catalyzes more single-day beer-drinking in the United States than any 24-hour period other than Halloween, and, of course, St. Patrick’s Day.
And just in case you doubt this, I’ve got the data to back it up:
A couple of points are worth mentioning here. First, I exclude March Madness because presumably they’re referring to the whole tourney, which unfolds over a 2-3-week period. If I’m correct about this, then NCAA hoops doesn’t even belong on the list! When expressed in daily equivalents, I’m not sure it would outrank Arbor Day.
One would also hope that the 5/5 malted hop consumption does not come at the expense of the more obvious beverage of choice: tequila; ideally Mezcal, and of course with the worm floating in the bottom. Shout outs to all of you worm consumers in my vast readership. All I can add is that you’re a better Mexican than I.
But this column is dedicated not to our southern neighbors, but rather to the French, the losers in the Battle of Puebla showdown. It is they, after all, who coined the term purloined for the title of this piece. They did so, as everyone knows, at a different time in history, nearly eighty years later: a point when they were not the victors, but rather the vanquished; the oppressed, not the oppressors. Despite all Allied efforts to duck the confrontation, the Nazis were, by early 1940, rolling their tanks through the Grand Republic with surprising ease. The surge through the Maginot Line (once thought impenetrable), turned out to be a milk run, and, by the Summer of that year, big old gnarly Swastikas banners were flying atop of the Eiffel Tower and the Hotel de Ville. Everybody assumed it was permanent, and started busting out their German language books, to settle in for a long stretch of Teutonic hegemony.
Well, not everyone. Shortly, a resistance of sorts began to form. It was a spontaneous uprising that turned into a formidable military force under the leadership one Charles de Gaulle. The French Resistance was of course instrumental in the ultimate liberation of their home turf, and helped restore a measure of dignity to that country, so steeped in failure in its efforts to reverse the tide of expansion, and evoke the ultimate collapse of perhaps history’s most famous military bad boys.
In its way, Le Resistance never died. It went underground for many periods, but occasionally it has popped up. About 25 years ago, for instance, I bore witness to a full-scale shutdown of the great city of Paris, as workers took to the streets to protest against the horrors of a workweek that had reached the inhuman duration of 38 hours, and the cruel extension of the retirement age to 60 years.
And of course, L’R has cropped up again in recent months, and in arguably more prominent fashion, in the form of le gilets jaunes – yellow vests – who, over the last half year, have made it a habit of busting out their torches to protest a range of grievances. It all started with rage over what is by any definition a counterproductive, regressive tax on fossil fuel products. But it expands out from there. Les Gilets Jaunes ne sont pas heureuses (they are not happy), and are hell bent on doing something about it. In a recent gesture that should shock everyone but surprise nobody, they came out in full force to express their disgust at the approximate 1 Billion that had been raised by philanthropic interests to restore what may be the best G_D church in all of Christendom.
And, naturally, Les Esprits Du Resistance have traversed the Mighty Atlantic, and have resounded their angry din on these here shores for the better part of the last 2 ½ years. Cries to “Resist” can be heard everywhere, even as those winter caps with the dainty earlike flaps at the top have more or less disappeared from the landscape. These folks are also very angry; maybe angrier than they have been in at least 50 years. They see the country falling apart, and want to fix it – before it’s too late. They see their freedoms disappearing before their eyes, and wonder why some of us don’t see the same. Many of them believe that, like their French forbears, the modern equivalent of Tiger Tanks are rolling down the streets of Washington, and Nazi flags are flying atop the Capitol Building. The irony embedded in the reality that they do so in complete freedom, without fear of retribution or even a loss of social standing, is, apparently, and entirely lost upon them.
Meanwhile, the wheels of the righteous engine of free enterprise roll along, untroubled by the above-mentioned hysteria, or, if troubled by it, not showing itself much worse for the wear and tear. For the most part, Resistance or no, everyone who wishes to do so is waking up each morning, making a show or go of doing their jobs, and even, in some cases, minding their own businesses while so doing. As the clearest case and point of the forgoing, consider the glad tidings of Friday’s Jobs Report. Something in there for nearly everyone’s taste – including the Resistors — who might quibble with the drop in the Labor Force Participation Rate/Average Hours Worked, and the continued tepid showing of any signs of Wage Inflation. Might quibble? Strike that. They already have.
This is perhaps particularly the case in the wake of Chair Pow’s Wednesday FOMC presser. Both stocks and bonds rallied upon release of the “no action” policy statement, but when Jay took to the podium, these asset classes started to bounce around, albeit in narrow ranges, like particle colliders, with each answer to every question. It does seem to me that the Fed is perhaps back in play, or may be so soon. If so, the Jobs Report, with all of its nits and nicks, would trend towards a central bank leerier of economic overheat.
I’ve mentioned this before and I’ll probably do so again: there’s every chance, particularly if the capital economy continues on its current magnificent trajectory, that the Fed itself will act in such a way as to create its own form of Resistance. If so, they’ll meet with some investor-based counter-resistance, and, while such a contingency might cause some pain to investment portfolios, it will nonetheless be entertaining to observe.
But in the meanwhile, equity investors applauded the jobs result, bidding up such indices as the NASDAQ to a record sequence of 18 weekly gains out of 19. The NDX continues to annualize at a greater than 90% return clip, but unfortunately, I think everyone would concede that triple digits for Naz ’19 is probably no longer on the cards. But I’ve some more encouraging news for everyone on this fifth day of the month of May. Specifically, annualized returns for the SOX, the Philadelphia (Philadelphia?) Semiconductor Index, are clocking in at a boffo 153%:
Now, one could argue that this action is positively surreal, and it certainly redounds to the bafflement of virtually anyone to whom I speak that follows these stocks. Most notable among many anomalies is the reality that virtually everyone in the actual industry (i.e. the guys and gals that actually produce the chips) is warning that Q2 is either going to produce a record sales slowdown, or at least close to a record.
Of course, as mentioned previously in these pages, the storyline here is one where Q2 will be a cycle of inventory clearance, after which the world will be buying chips at a rate equivalent to the selling of umbrellas on any NYC street corner this rainy April.
And who am I (or we?) to doubt this rhetoric? And the further good news regarding all of this is that in what is certain to be a 150% up year for the SOX, we’re only 35% of the way into this sequence of luscious returns. So there’s still time for you to get in on the action, but you’d better hurry. 2019 isn’t getting any younger, and neither, for that matter, are you.
For those with less intestinal fortitude, there’s always the Gallant 500, a few percentage points of which actually represents semiconductors, so you wouldn’t be missing out entirely if you chose this more beaten path. Here, though, we’re looking at projected index returns in the beggarly mid-sixties. Adjust your expectations accordingly, mes amis.
One other factor to consider about the Gallant 500 is that it appears at the moment to be at least nominally threatened by The Resistance. Thrice since last September, it has reached or modestly breached its own Maginot Line of 2940, and twice it’s been beaten back from this level. As of Friday’s close, it’s at 2945, and, if it somehow can resist The Resistance, who knows how high it can climb?
So next week shapes up as an interesting one. The data flows begin to decelerate, on both the macro and the earnings calendars, but published reports suggest that this China thing may reach a point of clarity over the next several business days. So there’s that.
However, I suspect that a good bit of next week’s action will be driven by the murky world of technicals. Our favorite indices are at very interesting thresholds, and, according to the history books and chartist manuals, should now either bust through them or beat something of a retreat. I’m not thinking they will foretell of a big upside blowout, but that seems more likely to me than, say, a late September redux, where, as will be recalled, after hitting 2940, the 500 managed to drop 600 excruciating handles over the subsequent ten weeks.
So, in conclusion, all that one can do is reiterate our main theme “Viva Le Resistance”, may it wax or wane. One way or another, we’d be well-advised to know it’s out there, and that it will certainly materialize at some point.
But that’s all I got for now. If I didn’t mention it before, it’s Cinco de Mayo, and I think it’s time for a beer. Anyone care to join me?
I thought so. After all, I’ve checked the data, and it appears that it’s “bottoms up” all around.
TIMSHEL