Fly by night, away from here, Change my life again Fly by night, goodbye my dear, My ship isn’t coming and I just can’t pretend

— Neil Peart

Yes, my friends, we must, albeit with a titch of ambivalence, pay tribute to Peart, who left us, not unexpectedly, this past week.

The mixed nature of our (or at least my) lamentations derives from our (or at least my) inability to wrap our (or at least my) heads around the outfit that made him world-famous: Canadian Rockers Rush. Part of me has always wanted to love them; the other part knows I am obliged to view them with some derision. So, like the economist with one foot in the oven and the other in the freezer, who conveniently concludes that on average, things are OK, I can only conclude that Rush was just that. OK.

To me, they fall into a specific set of ensembles where the musicianship is unquestionably sublime, but their catalogues just fail to measure up. Van Halen is also on this list. Upon this we can all (perhaps) agree: few can touch Eddie (who, according to published reports, is also on the down) as a guitarist, but the list of truly memorable VH songs devolves to somewhere around zero.

The same can be said about Rush. But boy oh boy can they shred. While Geddy’s high alto can certainly grate on the nerves, it is pitch perfect, and his bass licks are unmatched this side of Jaco Pastorius, Jack Casady, and (yes) Paul McCartney.

Lifeson may be the most under-rated guitarist in the galaxy.

And then there was Peart. Who flew away (by night?) a couple of days ago. Ask any drummer. Nobody could play like him. His kit contained about 50 pieces, which is pretty cool in and of itself, but even more so is the fact that he used them all. From what I know, some of Rush’s music was so complicated (if inaccessible to the rational ear) that even they couldn’t play it. I’ve seen interviews where they admitted as much. Songs like “La Villa Strangiatio” were so difficult to capture outside of the studio that they just gave up. Never played them live. A great deal of the pressure in this regard fell on Peart, who held up his end magnificently – until he just couldn’t do it anymore.

And now he’s gone.

As Rush-Heads know, Peart was also the band’s lyricist, owing in part to his status as the nerdiest of member of the nerdiest bands in the rock pantheon. When, in the early days, they were supporting groups like Kiss, but skipping the post-show, groupie-slathered ragers, to retire to their rooms and read books, Peart was clearly the most erudite of the bunch. So he wrote the words.

And I give him a gentlemen’s B on that score. He had his moments, but a lot of his verses seem forced and overthought. “Fly by Night” was his first-ever recorded composition, and (to my thinking) one of his best.

And that ain’t saying much, now, is it?

But I have a column to put out, and I don’t think I’m out of line for leaning on this theme, at the time of the passing of one of the greatest drummers that ever struck a stick, mallet or boot to a trap, bass, snare or high hat.

And y’all can probably see where I’m planning to take this. Lots of flying by night going on out there, kids. At the risk of using Peart-like verbal device, I’m pretty sure our unmanned drone that took out that Soleimani character was airborne during the hours of darkness in Baghdad. Less than a week later, and also under the cover of darkness, his Persian avengers took down a commercial jet over the skies near their home turf airport in Tehran, in the process sending 176 souls to their better rewards. The much-maligned, Horatio Alger-like Duchess of Sussex actually flew commercial to seek her fortune among her colonial subjects in Rush’s home turf of Canada. Night Flight? Wait… …I. Just. Can’t.

Better news derives from these fly-by-night markets. The Gallant 500 and its comrades managed to regather themselves and stage a modest rally last week, but one that nonetheless projects out, in these early days of ‘20, to an annualized return of ~50%. Once could describe the buying cycle as being airborne, but (it must be allowed) most of the action is transpiring under the visibility of the sun’s rays.

And soon now, disinfecting sunlight will reveal where the capital economy stands as the new year starts to unfold. Friday’s Jobs Report was disappointing to some, but on the whole, I believe an acceptable outcome. Next week, of course, the earnings season launches into the nocturnal ionosphere, and whether it soars like an eagle, or swoops down like a vulture, remains to be seen. Somewhat ominously, we are bearing witness to yet another potentially problematic decoupling of valuations and consensus estimates:

One could be forgiven for suggesting that it takes a busload of faith to be buying against this backdrop. But what, my dears, do we really have other than the clothes on our backs and busload of faith? A Dior bag and some of the world’s greatest records on vinyl? Well yes, but they too are rendered by nothing but faithful love. And, even with these treasures, the future is, at best, uncertain.

In newly time-honored fashion, the announcement season commences with the banks (time was, they let Alcoa go first, and maybe they still do, but if so, nobody is noticing). I kinda worry for Jamie, James, Brian and DJ-Sol, because an awful lot of good vibrations are already priced into their recent trading activity:

Now, I feel compelled to remind everyone that I’m not much of a trader or investor, but here’s the thing about the Banks: I don’t want to own them. Not here and not even, really, at their recent late summer lows.

Because, fact is, they just give me the creeps. And increasingly, it strikes me that their whole business is nothing but a short gamma play – clipping coupons in untroubled fashion – but taking the full hit when external forces take nefarious turns. And that’s before their intermediation game get disintermediated by blockchain: a technology upon which I refuse to give up. Blockchain will be back. I think.

Other matters nominally drawing our attention also from my perspective have a “winging it under darkness” feel to them. Trade wars? You tell me. Impeachment? It looks to me like this is the most troubling aerial operation, undertaken in latter-PM, hours and managed by non-instrument trained pilots, since Kennedy Junior went wheels up in his Cessna on a foggy night over the Long Island Sound (sorry, that was rude).

In a little over a week, we can anticipate the World Economic Forum ritual, held, in longstanding tradition, at a ski resort in Davos Switzerland. It features the planet’s most self-regarding fat cats, swooping in on Private Jet Red-Eyes, to utter platitudinous soundbites on topics such as how (everyone except them) should reduce their carbon footprints, and the best means of redistributing wealth (other than their own). I could go on, but, quite frankly, the whole thing depresses me enough as it is.

Politics also rev up somewhere in here. Impeachment papers are likely to be delivered – at long last – to the Senate, this coming week, if for no other reason than there’s not much else that its sponsors can do at this point. About the best that can be said about this spectacle is that it is likely to soon be over. Until, that is, it re-emerges, Phoenix-like and in the darkness, to soar again, say, sometime this Spring. The primaries are now just a couple of short weeks away, and won’t that be uplifting to observe?

Mostly, though, in terms of the markets, I think we remain at elevated valuation levels, largely due to those massive, dusky, helium injections that the Fed keeps serving up, and we keep inhaling. I won’t get into the whole Repo thing again, other than to remind everyone that our CB is still in – to the tune of hundreds of billions, and will likely linger there, perhaps in larger magnitudes, for the foreseeable future. In my darker, more acrophobic moments, I wonder where equity valuations would be without this assistance. My guess is a lot lower. And again, this tells me that: a) we need Team Powell; and b) they know this, and will be there for us, because the alternative is simply too ghastly to contemplate.

So, in closing, I’m not too terribly worried about anything for the moment. And, I’d even go so far as to offer my sanction for you to do some flying by night – that is, if you take a notion to do so. Just a couple of words to the wise, though. First, I hope you select a destination of your dreams, and the best company you can find, because you deserve both. But if you’re going anywhere outside the Lower 48 (along with Alaska and Hawaii), please remember to bring your passport, because, to do so, is, after all, a First Principal.

If you go, I’ll miss you, but will joyfully anticipate your return, and what’s in store for us at that happy moment. Neil has flown, but unfortunately, I can’t offer much hope that he’ll ever be back. But while he was here, he did the best he could, and a lot of it was magnificent.

So please join me in bidding him a tearful farewell, and in trying to emulate his example. His ship did in fact come, but his time for pretension has passed. And please also bear this in mind:

Philosopher and Ploughman,

Each must know his part,

To sew a new mentality,

Closer to the heart

Yes, closer to the heart. If we remember these things and act upon them accordingly, perhaps our night flights will evoke happier landings than might otherwise have been possible.

TIMSHEL

Well, that went fast. Faster than even time can imagine. 2020 came and went, and it all seemed to unfold in less than a fortnight. In fact, less than a week. Risk warning for the young bloods out there: the older you are, the more the clock accelerates.

It all seems like little more than a dream, and maybe it was. A dream that is. But it is our obligation to review its highs and lows so let’s get to it, shall we?

*******

Of course, the most important news came in the waning days of February, in the wake of all that Middle East psychodrama that left the world pretty much where it was before it all began, anew, in early January. The region is no more (and no less) settled or peaceful than it has been over the last thirty centuries. Wake me in early 2121, and I suspect I’ll tell you the same thing.

The Big Event transpired after Iowa, after New Hampshire, after South Carolina, but before Super Tuesday. It was, in its way, pre-ordained. The money people in the Democratic Party, foreseeing the train wreck that awaited them in November, managed to impel, cajole and extort the only person who possibly could enable them to retake the White House, into running. We should have known that Michelle Obama was waiting in the wings, and it should surprise no one that she managed to take out the Orange Man. The only real shocks were: a) that she didn’t win by a wider margin; and b) that her coat-tails were not longer. As everyone knows, the House is now, for all intents and purposes, in jump ball configuration, while the Senate tilts slightly further to the Right than it did just a year ago.

Of course, the markets, which had been bouncing around with high vol and little direction as the inevitable outcome began to sink in, got scared and turned tail. The Gallant 500 has retreated, ignominiously, 10% from the high ground it captured in the first days of 2020. But bonds have rallied, and we’re again testing new all-time lows on the 10-year. I’m not too terribly worried at this point: a couple of short weeks before M.O. puts her hand on the bible. She seems smart and reasonable. Yes, she sports a degree from Harvard Law School, but in this era of increasing woke-ness, it is not our way to hold this against her. Plus, she doesn’t have much juice in Congress to do the bidding of her progressive paymasters, the increasing status/intrusion of The Squad notwithstanding. The global economy continues to slow, rates are yet again in sustained plunge configuration, and, after a frantic flurry of capital markets activity in the lead up to the election, investible securities are in scarcer supply than even a year ago.

So, if you’re so inclined, you have my permission to do some buying here.

*******

Wait, that must’ve been some sort of psychedelic flashback I had. Of course, what really happened was that Biden bumbled through a contested convention, but was forced to take Big Bucks Bernie, and (more importantly) his platform, on as his running mate. With all of 45’s unforced errors across the year (and, indeed, across his entire first term), the electorate found itself so horrified at the prospects of government controlled health care, nebula-like increases in government spending, higher taxes and intrusive regulation, that it unthinkably reinstated the current White House occupant. Looking back on this crazy year, one can only wonder at the Big Guy’s resilience, managing, as he did, to shut down not one, but two rounds of impeachment, and winning re-election to boot.

A couple of other factors helped Trump’s cause, including the reality that the Dem base simply couldn’t work itself up to turn out in force for two septuagenarian white boys. In addition, we can only applaud his shrewd move to ditch Pence from the bottom half of the ticket, in favor of the entirely more suitable Nikki Hayley.

The race, of course, was closer than many of the prognosticators had prognosticated, and, other than comforting presence of the fetching former Governor of South Carolina, little has changed. The Dems retain the House, the Republicans the Senate.

And now, with Blackjack ‘21 unfolding upon us, we’re on that boundary where whether to hit or stick becomes a true conundrum. Equities are up 6% from where they were a year ago, and the 10-year remains in Horse Latitude configuration: between 1.7% and 1.9%. The global economy is still winded and in need of a respite, and I will retain my stubborn call that rates will be going lower. I do expect Pelosi to finagle her way into another two years holding the gavel (almost certainly her last), and the soon-to-be-reappointed Schiff is likely to yet again crank up his impeachment engine. If (when) this fails, he will begin Round 4. At this point I feel pretty sorry for him. He never was carrying a full six-pack in his fridge to begin with, and now I fear he’s on the verge of a full-on nervous breakdown. I won’t lie: this worries me, as does the burgeoning rage of progressives, which, just when you thought they could not further outflank themselves in terms of hysteria, seems to be climbing to new heights of derangement.

Don’t get me wrong: I marginally prefer a second Trump term to the economically crippling prospects of the far left’s policy agenda. But I do worry that we’re going to carry this thing to far.

I’m OK with you buying and holding onto financial securities at this point though. It looks to me like QE5 is on tap, and, again, I remind you that inventories of stocks and bonds are dwindling by the day.

*******

I reckon, though, I should get offa my cloud and (reluctantly) re-enter the realities of terra firma. I am aware that it is in fact the dawn not of 2021, but rather of 2020, and that the latter story has only barely begun to unfold. I do think that the markets will be sucked into an inescapable political vortex, and believe that the scenarios I tripped up in the preceding paragraphs are worth pondering.

In the meantime, we picked up Thursday (1/2/20) where we’d left off on New Year’s Eve: with an unfettered bid on equities. But of course the big news of the week hit that night, with the announcement of the capping of this Soleimani character. Of course, it was viewed entirely through a political lens, with supporters of the current Administration weeping with joy, while their opposite numbers, with measured recognition that the dude was a bad actor, were nonetheless shaking their fingers at the horrific prospects of his delivery into the Land of 72 Virgins.

But while the politicians/pundits spun their webs, the markets reacted negatively, shedding almost all of Thursday’s gains, and leaving the SPX, unthinkably, at a year-to-date return of a meager 0.13%. I encourage my public to take heart, though: even after Friday’s give-back, the figures project an annualized return in the high teens. Which I reckon we’d take under any scenario.

There are a couple of other factors that render my mood about valuations somewhat sanguine. First, and as I suspected, bond yields backed off like a b!tch at the first sign of trouble. Expect more of this as the year unfolds, with every threat, every selloff, every economic stumble,causing galactic flows into Treasuries. Those who have been voting with their Prime Brokerage accounts on a steepening of the yield curve had a particularly difficult week:

So yes, I am stubbornly sticking to my long call on Treasuries. And even more so on my belief that they offer a unicorn-like hedge against headwinds in the equity markets. Nothing is so clear to me as the reality that the capital markets need the warm embrace of the Central Banks to avoid a form of collapse. Except maybe my certainty that the CBs know what they must do to accommodate this financial penury, and will act accordingly.

And, if I’m right, then interest rates will trend lower, creating a paradigm where market participants are for all intents and purposes baited into both borrowing and investing. The world, already facing record level indebtedness, will as a result experience a further bloating of the right side of their balance sheets.

In turn, and according to the rigid protocols of double-sided accounting, this will catalyze an expansion of the happier side of the financial statement, the one that records asset holdings. And, my friends, this will imply higher valuations.

I’m also, from a markets perspective, pleased at the bid that the recent military action catalyzed for on the Energy Complex. Ground Zero of the Credit Bubble is on their turf, and we need oil prices to remain elevated in order to avoid a crippling cascade of defaults. Which, speaking for myself, I’d rather avoid at present. Trust me here: it’s worth paying a little extra at the pump as a form of insurance against a domino-like explosion of insolvencies and bankruptcies that are certain to transpire if (when) the cracks in the bloated credit universe begin to widen.

On this we can all agree: we didn’t get too far into 2020 before the inevitable next soap opera scene of overwrought drama entered the proceedings. I have no informed opinion as to how this will shake out, and as such, won’t offer an opinion of any kind. I will state this, though: even if the current military condition fails to escalate, and the Middle East remains the dumpster fire it’s always been (minus one thug), we’re likely to hit some market headwinds soon. Under most circumstances, I will deem this a buying opportunity.

It all makes me deeply nostalgic for 2019, but we’ve covered that, ad-nauseum. My own personal struggles are not anything with which you can help me. I know this. I must deal with them on my own. And as the saying goes: Reality Bites. That was the name of a film released more than a generation ago. But it’s true even today. Maybe even more so.

I am thinking of going back into therapy. But not today. Instead, I think I’ll just fold into the concept of tucking under my weighted blanket and listening to my five favorite records on vinyl. That I am able to do so is a miracle I can barely describe, and it gives me hope in my ability to navigate what is sure to be a very complicated 2020. We will all face tradeoffs this year, but we always do. We know what we want, but the path to actualization is unlikely to be either linear or pain-free.

So please take care of yourselves, won’t you? Do it for me. I’ll be working on my own stuff, and upon further reflection, the quicker I can source a therapist the better off we’ll all be.

Here’s hoping she (yes it will be a woman) can help me resist the temptation to project out to 2021 until the appropriate time to do so arrives. Because the biting reality is that it will be here before we know it.

TIMSHEL

Alright kids, it’s over. Yes, we have tomorrow to deal with, as well as a stub session on Tuesday, but really: can anything remotely interesting or impactful happen during that slim time sliver? I doubt it.

And, in terms of content for this week’s epistle, it’s decidedly thin gruel. So I’m going to introduce a new feature into this forum, purloined from, of all places, Reddit. The concept is: Am I the @sshole? (AITA), a venue in which those so wondering can submit a narrative in which they have presumably taken some action or decision with which not everyone either impacted or observing is entirely pleased, and ask commenters for an AITA ruling. This, my friends, is what America at its finest, and I think the time has come to include it into our proceedings.

But first a word about Reddit, which bills itself as “The Front Page of the Internet”. Well, maybe, but that is not my experience with it. I find it to be more of the web’s Wild, Wild West. No topic is off limits, and none of any kind are forgotten or forsaken. For the uninitiated, I stop short of fully endorsing it, because some of the stuff inside there is just plain demented. The real meat on the Reddit bones consists of a virtually infinite set of subgroups (called sub-reddits), where topic enthusiasts of every of every stripe are allowed, nay, encouraged, to plumb the depths of their obsessions. There is, for instance, a very active sub dedicated to the Columbine shooters, and, from my brief sojourns there, it would appear that most of the contributors are Eric/Dylan fanboys and fangirls. But I don’t hang around r/Columbine. Much. Though I’m not proud of this, my favorite sub is one dedicated to those who undertake the dainty, delicate practice of exposing their extremities to various types of running lawn equipment, and proudly displaying and describing the outcomes of this exercise. Something inside me finds this touches my soul, stirs up all the romance which, at my advance age, I am able to muster. But then again, I’ve never, at least within these pages, described myself as being particularly immersed in rational thought.

r/AITA is among the most active of Reddit subs, featuring an astonishing 1.6 million members, and offering up hundreds of posts each day. I will defend the construct to the end of time, because I believe it democratizes life’s most difficult issues. AITA (one might, for instance, inquire) for keying my neighbor’s car after the fifth time he blocked my driveway (his ride is an old school, primer grey 1972 Buick Regal)? Well, let the masses decide. For my part, I voted NTA (Not the @sshole) with the caveat that it probably would be wise not to undertake such an action until said neighbor removed his vehicle as an obstacle to this vital point of ingress/egress.

Further, AITA reminds me a lot of the markets, particularly insofar as the outcomes are decided not by rhetorical flourishes of glibness, but rather by the sober judgment of the masses. True, and for the most part, no money is at stake, but unlike, say, political or legal proceedings, it is the forces of fact and choice that determine the outcome.

And for now, the market is rather silent as to what it believes may happen next. It by and large has no particular opinion as to its immediate future prospects. AITA for thinking that this represents sound thinking on the part of the investment universe? You decide.

As covered in last week’s note, the level of serenity experienced during the waning days of this December stands in mindboggling contrast to the pain and suffering we experienced just a year ago. Our equity indices do nothing but take baby steps to new highs. Nothing under the sun seems to disturb their equanimity. I had a holiday egg nog with Captain Naz, and he asked me: “AITA for crushing through the Nine Thousand mark without a second thought, taking associated P/Es to nearly 34?”

I didn’t have a good reply for him.

He left in somewhat of a deflated mood. Then Chairman Powell stopped by, dressed up, in disturbing fashion, like Janet Yellen, and planted himself for an extended period of time under the mistletoe (I didn’t take the bait). He asked me “AITA for goosing the Repo markets with artificially manufactured funds?”:

I wasn’t able to answer him in a satisfactory fashion either. All I could do was share this graph on the left, but we both experienced a DTA (Definitely the @sshole) moment when we couldn’t decipher it’s meaning.

In an element of additional DTA, I did suggest to him that I suspect he will be compelled to do more of this sort of thing in the coming months. AITA for suggesting that 2020 may be a year of Quantitative Easing re-emerging with renewed vigor? That long-term interest rates have: a) not seen their lows; and b) may go negative? If so, I don’t care; I’ll gladly take the hit.

Again, I believe, along with the @sshole consensus, that we’ll have more volatility next year than we have experienced in the improbably magical 2019. AITA for thinking at the beginning of last year, that ’19 was going to be a full on sh!t show? Probably, but who knew at the time that the CBs were going to turn from frosty witches into fully supine Love Goddesses? Answer: Not me. And I had no reason to suspect that there would be angel descending on my world (or anyone else’s, for that matter), prepared to fly me (and others) to realms I’d never dare hope to visit.

We enter a new decade in a couple of days. The 10s brought us an approximate tripling of equity valuations, a reduction in 10-year note rates by approximately half, and a 2/3rds decrease in the Unemployment Rate. Inflation is nowhere on the horizon. AITA for feeling unfulfilled by all of this divine largesse? For believing that it was, in many ways, the worst decade of my life? If so, those of you who know me understand that I come by these feelings honestly.

But I do wonder about the rest of you who are so angry, clinging to the notion that our collective affairs are: a) getting worse by the day; and b) leading us towards utter collapse of civilization. There’s a DTA vote out there for some of y’all.

And AITA for mentioning the biggest news obsession of moment? Impeachment? In one of the larger stories of this otherwise quiet week, Senator Lisa Murkowski (R, AK) became the first of her party to break ranks with the McConnell/Trump playbook. AITA for thinking she looks like Mick Jagger in drag?

AITA for thinking the dude  is the hotter of the two? Even at 75?

And AITA for not having much else to share with you this holiday weekend? I’m guessing the answer is no. We’re all tired, and if you are weary of my musings, I will, albeit with heavy heart, grant you an unambiguous NTA for so feeling.

I will, however, remind you that a new year, a new decade, begins on Wednesday, and that by Thursday, we’re going to have to deal with it in earnest. Fortunately, though, we may be able to ease into this. For some reason, the December Employment Report, which, in time-honored fashion, is typically released on the first Friday of the month, is somehow deferred for a full week. AITA for wondering why the Bureau of Labor Statistics can’t get its act together for the 4th and must instead wait until the 11th? AITA for being, on balance, glad for the delay?

With respect to the latter, I’m guessing the answer is no. We’ll all have plenty of time to process a pant load of data points, and soon. All month. All quarter. All year. By the time the jobs number drops, the Q4 earnings engine will be fully revved and ready to lay its tidings on us. Soon after, we’re looking at quaint concepts like quarterly GDP, the next chapter in the trade war cycle, shenanigans on Capitol Hill, and, of course the primary season.

AITA if all of this makes me tired just to contemplate? Didn’t think so.

And I will presume that I’ll get a resounding NTA for now taking an early exit, wishing everyone, of course, a joyous and prosperous New Year. I am on record as marking ’19 as a very special year for me, and I’ll stick by that, DTA or NTA notwithstanding. It put a sublime cap for what was otherwise a decidedly sucky decade the kid, and I love you for that much-needed blessing. And the truth is, at this point, I don’t know where I’d be without you. I am hoping for the best for us in the 20s, but we’ll take what we get, now, won’t we?

As a public service to my constituents, I will offer up this forum for AITA submissions, so if you have a question, ask me (I won’t say no, how could I)? You’ll certainly receive my honestly rendered DTA/NTA judgment, as well as, if you’d like, those of the teeming millions that comprise my readership.

Fair advance warning though:

It’s a tough crowd.

In in fact, in self-serving DTA reference to publication in this space a month ago, I can tell you that sometimes, it’s the @ssholes on parade. But I love you anyway, so Happy New Year, and of course…

TIMSHEL

Marley was dead: to begin with. There is no doubt whatever about that. The register of his burial was signed by the clergyman, the clerk, the undertaker, and the chief mourner. Scrooge signed it: and Scrooge’s name was good upon ’Change, for anything he chose to put his hand to. Old Marley was as dead as a door-nail.

******

It was the Best of times, it was the Worst of times. It was the age of Wisdom. It was the age of Foolishness. It was the epoch of Belief. It was the epoch of Incredulity. It was the season of Light. It was the season of Darkness. It was the Spring of Hope. It was the Winter of Despair. We had everything before us. We had nothing before us. We were all going direct to Heaven. We were all going direct the other way. In short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

— Charles Dickens

So, first off, London is still calling. This time as channeled through Dickens. As we move inexorably towards the culmination of this holiday season, I take the unilateral accommodation of using a Dickensian mash-up, because: a) it is, after all, Christmas; and b) I just finished rereading “A Tale of Two Cities”, and would go so far as to suggest doing the same will do you no harm.

And yes, Marley is still dead. There is no doubt whatever about that. On the other hand, being nothing more than a creation of the wonderful mind of the most famous British writer this side of William Shakespeare, one could argue that he was never truly alive in the first instance.

And, of course, his namesake, the deified musical genius that brought reggae to the uninformed masses, is dead as well. Been dead for nearly four decades. Got a tumor on his foot that was treatable, but being a Rasta Man and all, forsook medical care, and instead went on an 18-month world tour, By the end of which he weighed about 65 pounds and had nothing left to him other than to meet his maker. We miss this Marley more than it is in our power to express. But other guy did teach us (and Scrooge) a thing or two about the spirit of the Season, and for that we most certainly owe him a debt of gratitude.

Fortunately, and to my great advantage, though, the two above-referenced works of fiction converge to offer what I hope and expect is a tasty little hook for this week’s episode.

Because this, indeed, is a Tale of Two Christmases: the one most recently celebrated, and the other, which is rapidly approaching. For those open to them, they offer important object lessons in terms of what we, who toil for investment returns, should consider, as we point our vision towards the future.

Let’s take them in chronological order, shall we? Last year (call it Christmas Past), as the bells were ringing and the chestnuts were roasting, I was about as nervous about the markets as I can ever recall feeling. Q4 of 2018 was maybe the worst alpha interval I believe I ever experienced. And, considering that the Gallant 500 and other benchmark darlings had corrected to the tune of 20% by Christmas Eve (implying that even modest negative performance was still conducive to positive alpha), this was no mean feat. The Fed, who spent much of the quarter testing the hypothesis that the time had come to end the financing party, was showing no signs of backing off this stance. The trade-based table tennis tournament between the U.S. and China was throwing off of the good vibe of that historic bit of diplomacy arranged by Mao and Tricky Dick – other than the reality that, as they did in ’72, the Chinese might win (Risk Management Tip of the Day: You don’t want mess with the Chinese at the ping pong table).

And the market looked like it was headed to full-on crash. In perhaps the unkindest cut of all, the SPX hit its dead low of 2351 and change at the close of the half-day session on Christmas Eve. I feared the worst for the following day, just as the little darlings in their matching jammies were barreling towards the tree, but then I remembered the wisdom of the custodians of market protocols, and the reality that given there would be no trading on 12/25/18, further price erosion was only a remote possibility.

But proceedings did, as a matter of necessity, resume on Boxing Day, and, in the final sessions of last year, markets, miraculously, register a pulse. Still and all I was worried sick. My thoughts, as committed to writing at the time, were that there was nothing on the visible horizon likely to impede, much less terminate, the downward drift. And this was a great cause for concern for my business, which: 1) (contrary to urban myth) has a positive beta to the performance of my clients, who: 2) almost unilaterally carry a positive beta to equity pricings.

But the holiday passed, and then, somehow, in January, the Fed pulled an unthinkable 180. And other Central Banks followed suit. Rate normalization? C’mon, we’re not even thinking about it! In fact, we’re going to lower rates. And we’re gonna keep them low – maybe forever. And they did. Lower rates, that is. Three separate times. And the markets showed their gratitude in the sublimest way they possibly could, by buying up stocks (and for that matter, government and corporate bonds) to beat the band. Bought all year. Still buying them, even now. And as a result, as we bask in the feel-good awareness of a 2019 SPX year-to-date return of 28.5%, the totality of this move is actually understated – insofar as the accretion from last Christmas Eve (almost precisely a one-year rolling figure) is actually >37%.

I am already on record as stating my belief that the lion’s share, the plurality, maybe even the full-on majority of this heavenward ascent is owing to the largesse of the United States Federal Reserve and its peers in other major jurisdictions. Had they not stepped in, with a resounding thud of their belated Santa boots, well, I don’t know where we would be.

We can now migrate to this Christmas (call it Christmas Present), which arrives with about as much of the financial equivalent of Peace on Earth/Goodwill Towards Men as any I can ever recall. Our equity indices continue to be dissatisfied with the record valuations they repeatedly establish and remain on their quest for higher ground. Interest rates persist, in fact are stuck, at what might be call criminally benign levels, with many jurisdictions still priced to a negative yield (though Denmark and France have careened into positivity, and Japanese Government Bonds rest at a usurious -0.01%) The decade long recovery is showing no signs of meeting either Marley on the other side, any time soon. Inflation estimates, overstated in any event, are tepid and below policy targets. The optics of those menacing trade wars have improved dramatically, and, given the incentives tied to our political calendar, are likely to look even better as 2020 unfolds. The quixotic Impeachment quest has devolved into such a farce that its custodians are delaying it, under the impossibly obtuse argument that it cannot proceed unless the Senate agrees to allow for the calling of witnesses that Congress had the opportunity, but decided against, questioning.

Christmas Past bestowed upon us the further gift of catalyzing such a dreadful earnings season that the comps, heading into 2020, are also impossibly benign. It is perhaps for this reason that the Street consensus is for an approximate double-digit income growth sequence, and this in the wake of an earnings recession that is now three years running.

Ah, what a difference a single yuletide makes! Am I right? So, just as we entered 2019 full of fear, trepidation and loathing, we usher in 2020 in what, on paper, looks like one of the most constructive market backdrops in a generation. If I were writing either a Victorian novel or a Roots, Rock, Reggae anthem, the next chapter/verse, would be slathered in agita and adversity (if for no other reason than to keep the plot going). And I won’t lie, this might ultimately be the best way to look back on what happens next. But we won’t know until it’s over. And it hasn’t even happened yet.

Again, if we’re looking for signs of trouble, they aren’t hard to find. There is a significant problem in the Repo markets, and it’s only getting worse. Overnight funding, at several points over the last few months, has all-but dried up, and might have done so if not for – you guessed it – Fed intervention. By the time ABC busts out that Dick Clark hologram in anticipation of the Big Ball Drop, our CBers are expected to be in — to the tune of $500B (that’s B with a B). And, as a result, the domestic Central Bank balance sheet, nominally reduced to great, self-congratulatory fanfare, is now projected to instead achieve new frontiers of bloatedness – sometime next month:

Now, I can already hear the peanut gallery chorus: “c’mon, KG, must we really interrupt our holiday cheer to put a microscope to the Fed Balance Sheet? I mean, it’s not just Christmas, it’s also Hanukkah FFS!”.

No you do not. Please feel free to ignore the graph on the left. I will be doing so myself – for a number of reasons, including the fact that my eyeballs are already bleeding and I’d just as soon do what I can to avoid a full-on, seasonal, cerebral hemorrhage.

Perhaps more importantly, I don’t think even a further extrapolation of these trends is likely to do much damage over the foreseeable future. As I mission out various scenarios, I believe that we could indeed experience a teapot/tempest funding crisis over the next few months. But then I remind myself that the only (hair of the dog) remedy available will be for Central Banks to further flood the funding markets with liquidity, which, in turn, will set things a-right and keep us on the march to further unthinkable valuation thresholds.

I do expect some pockets of unpleasant volatility in the coming weeks and months, and my hunch is that they come earlier rather than later. But unless something changes, dramatically and for the worse, my guess is that these will be substantial buying opportunities. Support for my DNA-based bovine sensibilities of course features the certainty of further monetary love, combined with my belief (articulated in greater detail last week) that the merger and acquisition calendar will be hot, heavy, and bordering on desperation.

But with that, I must begin to take my leave, my darlings. Unlike Dickens, I am not paid by the word. In fact, I’m not paid at all for this column; it is nothing other than a labor of love. I could be jealous of CD, but on the other hand, I am alive, while he is dead. There is no doubt whatever about that. He’s buried in the most prominent spot in the Poets Corner of Westminster Abbey, and slumbers in close proximity to peers such as Geoffrey Chaucer, Robert Browning and (improbably) Charles Darwin.

Bob Marley reposes in a widely visited crypt in Nine Mile, Saint Ann, Jamaica. His fictional forbear: Jacob lies nowhere, because he never was in the first place. It is indeed the Best and Worst of times for all of us, full of Hope and Despair, Light and Darkness, Belief and Incredulity. And in closing, I want to wish you the happiest of holidays. Please know that the reality we are not spending it together is damned nigh killing me. And also know that I will be thinking of you, every minute, each day.

TIMSHEL

London Calling, and I was there too,

You know what they said, well some of it was true,

London Calling at the top of the dial,

And after all this, won’t you give me a smile?

— Joe Strummer

Can y’all give it up with me one time for the Clash? Perhaps the most underappreciated band of all time? You could at least try. And, for the under-initiated, I urgently encourage you to give them a careful listen.

Start with their Magnum Opus: a double album entitled (you guessed it) “London Calling”, which dropped on December 14, 1979, precisely four decades prior to my writing this tribute. It opens with the apocalyptic title track whose last verse I have purloined above. Fun fact: this Armageddon-themed masterpiece opens with a Mick Jones guitar riff that actually is the Morse Code sequence for S-O-S.

But I have a few thoughts to share about the LP itself. It was sufficiently off-the-hook to cause (its 1979 release notwithstanding) Rolling Stone Magazine to name it the best album of the Eighties. On a more personal note, it has a permanent spot on my Mount Rushmore of records. Because: a) I’m your friend; and b) you’re dying to know, I’ll share the other three. In no particular, order they are: The Doors’ LA Woman (I can’t bear to part with a single note on that Jim Morrison swansong), Bob Dylan’s Blonde on Blonde (I could write a tome about this one but let’s just say that: 1) released in 1966, it set the standard for albums that others – including the Beatles – couldn’t reach until 1969/70; and 2) it is the greatest album title of all time); and Elton John’s Tumbleweed Connection (trust me on this one).

But among other matters, The Clash’s Call from London sounded a menacing alarm to my generation: the latter day Baby Boomers, born after, say, 1955, who hadn’t at that point accomplished much. Not like their decade-older brother and sisters (who gave us Rock and Roll), and certainly less that our parents and grandparents – The Greatest Generation, who shepherded us through the Depression and WWII.

London Calling was in other words a scream at us to get our heads out of our collective @sses. And I think, writ small, we accomplished this. But our track record is mixed. Our music, by and large and by comparison, sucked. We fought no great wars. We did an unimpressive job of improving the world’s ethos. But we did deliver the Internet, so there’s that. And whatever else on might think of Michael Jackson, he was a stone cold musical genius.

But we are probably the most well-born generation since the Roman Empire. We have enjoyed, for our entire lives, an unprecedented interlude of relative peace and prosperity. One could state fairly that measured against this benign backdrop, we kind of squandered our associated opportunities. Maybe, though, that’s not fair, because, maybe, a generation needs more hardships to really squeeze out the juice of transgenerational greatness. Our parents and grandparents did what they did because they had to. Their worlds were imploding. Our older brothers and sisters at minimum faced the real threat of being shipped over to Saigon (now Ho Chi Minh City), and, more vaguely, of their entire universe being blown to bits by the Soviets or the Chinese.

One of my greatest fears is that the good times will not, cannot last. Check all of recorded history and let me know if you can find a similar era of 70 years without plague, famine or militarized global strife. Didn’t think so. Part of me thinks that it’s only a matter of time until the sushi hits the proverbial fan.

But from my vantage-point, the party does not appear to my winding down anytime soon. And, as has been pointed out elsewhere, this past week was a particularly encouraging one from an investor-oriented perspective.

Yes, London was calling. With some accretive news. Breathless (non-exit) polls to the contrary notwithstanding, Capitalist/Tory/Trump Clone Boris Johnson scored a whuppin’ on his Labor Party opposite numbers, and this has several implications for us, my loves. First off, it assures some clarity on Brexit. The Limeys are indeed taking their clotted cream, warm bitters, and splitting the scene. How that works out for them remains to be seen, but at least now we know. Perhaps more pertinently, the result offers an eerie verisimilitude to the electoral tidings of 2016. Recall, if you can, that the first indication that the unwashed populous was mad as hell and weren’t going to take it anymore arrived with the Brexit referendum that June. All of the elites, all of the pundits, all of me, were sure that the Brits would vote to remain in the EU. And we were all wrong.

In retrospect, this surprise outcome was a clear foreshadowing of November 8th, when, even after all three networks had projected a Trump victory, I thought Madame Clinton would have the opportunity to install those Oval Office drapes that she had (prematurely) selected after all. And we were wrong. Again. And I don’t think it’s too much of a stretch to suggest that a similar sequence might be in play, as we are impelled to consider the possible outcomes for the next presidential election cycle. If so, it will certainly redound to the benefit of security valuations.

Certainly markets have embraced this mindset, because, as valuations stretch from one zenith to the next, one has to assume that the heavenward ascent is, at minimum, abetted by the winds of certainty that good Ole 45 is likely to win again. Because, as I’ve pointed out before, any other outcome would rationally induce a wave of selling rather than buying. And one cannot blame investors (much) for so believing. Because here, I must (reluctantly) mention something about this whole Impeachment escapade.

It’s not going well for its sponsors. I won’t delve too deeply, so relax. Just a couple of observations is all. First, after perpetual, wild-eyed determination to deliver two to the head to Big Orange, the vague charges of Abuse of Power and Obstruction of Justice (the latter being the last refuge of (prosecutorial) scoundrels) are laughably thin gruel. And they won’t stick. And one day of official House testimony, mostly delivered by agenda-slathered law professors, wasn’t a very good setup. It will be interesting to see, next week, when the pre-holiday, fix-is-in vote takes place, how the numbers stack up. I truly feel sorry for Pelosi and those Congress members in Trump districts. I don’t think they want this, but are being forced to play along. And this will cost them seats come November. Lastly, and as perhaps the clearest indication that this here project is bombing like that unfortunate post-Mick Jones Clash album, is the reality that the Squad is laying back. Were this not a complete sh!t show, them ladies would be clawing each other to grab the spotlight. But smart women that they are, they know it’s a loser.

As mentioned during last week’s baseball note, Trump also looks like at least a political genius by timing an introductory deal with China contemporaneous to these futile attempts to remove him from office. If, as I suspect will be the case, he papers something that looks bigger this Spring, well, as a political operative, I yet again tip my (Met) cap to him. As a further show of the leverage he is accumulating, he also came to terms with his would-be electoral assassins on that NAFTA replacement deal. A review of the charts suggests that at least the Mexicans and (to a lesser extent) the Canadians loved it.

The major occidental CBs also weighed in this past week, with both Powell and LaGarde (the latter in her ECB Chair debut) laying down a vibe that can only be described as way chill. None of these tidings, it is true, catapulted the Gallant 500 and its domestic peers to material new heights, but hey, we’re already up 30% this year, and, with only 10 legit trading days left, I seriously doubt we’re gonna blow 2019.

Looking past the holidays, I’m nominally optimistic. First, a >20% gain in a given year is almost always followed by a double digit redux.

Mostly though, I think that with laughably cheap financing almost certain to prevail, it may very well be capital markets activity that fires the 2020 engines. It will be a very good time for corporations to acquire market share. The currency of their equity valuations has never been worth more. They can borrow for a song. And even if the acquisition-based objects of their desire are signally overvalued, well, what’s the point of being rich if you can’t buy nice stuff at ridiculous prices? This is true even for us proles. In fact, I’ll meet you at the Apple store. And when you walk out with not only a new Mac Book but also an 11+, I’ll give you a joyful hug. Somewhere down the road, I may have to reign you in, but not during this holiday season, after such a year of magical adventure between us.

Yes, someday this party will end, and if we’re looking for warning signs, they’re not hard to find. The world, as I and others continue to point out, is on an irrational borrowing binge. And it’s lasted 10 years. Since the sheriff last removed the padlocks from the houses we couldn’t afford but bought anyway.

Please bear in mind that in an unprecedented move on my part, I’ve reused a graph from an earlier episode of this series. But I think the content, being unprecedented itself, merits the repeat.

More importantly, I am convinced that there’s no way that this money can ever be paid back – other than through the shameful process of monetization. Ultimately, these trends scream of whirring monetary printing presses, full on government bail outs, and other stunts about which we used to laugh at Banana Republics for even considering.

But that’s a problem for another day; for now, the binge continues. And I think it implies higher valuations, more wealth concentration, and a greater scarcity of investible securities, ere we come pleading to the custodians of taxpayer dollars for forgiveness, and, more importantly, release of obligations we can’t hope to honor.

In closing, I encourage you to celebrate what has been, by most measures, a magical year. Yes, I’ll be writing next week, but you won’t be reading, because it’ll be Christmas Eve Eve Eve. As a twist of the calendar, the date will mark the 17th anniversary of the death of the one and only Joe Strummer, who keeled over at age 50 from a congenital heart condition that he didn’t even know he had. I’m using the occasion to write a song – not dedicated to him, but channeling his genius as inspiration. I may also buy a few books, and pull a couple of other surprises as well.

It crushed me when he died, and I still miss him. We all should. But let’s face it, there’s innumerable spirit destroying realities we dwell on if we so choose. I won’t go into them. Instead, I’ll ask you for one small, pre-holiday accommodation:

After all this, won’t you give me a smile?

Thanks; I needed it more than you know.

TIMSHEL

Greetings from Met-land. It may be a little bit premature, but I’m confident enough in the outcome to get ahead of myself, disclosure-wise. It may be days, or even a handful of weeks, but soon enough, the already overheated press wires should be humming with the announcement of my joining the team.

Now, I must offer a few qualifiers here. First, I actually don’t even like baseball. Finding it unwatchable, I haven’t attended a game in nearly 20 years. On the field, I never put much fear into the opposition when I stepped up to the plate, and as for my curve ball? Don’t ask (I don’t have one).

And even my feeble interest in our (misnomer) National Pass time, places my allegiances elsewhere, much to the west of Citi Field. I still hold something of a grudge against that ’69 squad for that stretch of the August, coinciding with Woodstock, when the Mets humiliated the Cubs out of what looked like an insurmountable 8 game lead, and went on to take home the Big Prize.

The Mets last trip to the Ring Measurer transpired in 1986, largely owing to the sadly capricious glove of Red Sox First Baseman Bill Bucker. And I’ve always had a soft spot for Billy Buck, who died about a year ago, having received only tepid, Bostonian redemption for his error on that Mookie Wilson grounder in the late innings of Game 6. The ball took a funny hop, and the reality that he alligator-armed it is beyond dispute. But Billy was a pretty tough out for 22 seasons. How many of us can say the same?

So, trust me on this, I find myself as astonished as most of you that this coming season, I’ll be suiting up for the New York National League team. Plus, in addition to all of the above-mentioned factors, I managed to strain my calf on Friday, and, with Pitchers and Catchers reporting in nine short weeks, I’ve got some serious rehabbing in front of me.

But duty calls, and I intend to be ready. As many of you may already be aware, Hedge Fund Titan Steve Cohen recently came to terms with the clueless and misanthropic Wilpon family, to acquire a controlling interest in the team. It would have been hard to have missed the viral reporting on this, but what at least some of you may not know is that I worked for Steve for several years. Over two tours of duty. And right now, his newly acquired asset is such a hot mess that though he has yet to reach out to me, I’m pretty certain it’s only a matter of time. Because he’s gonna need my help. I owe him a great deal — for the faith he placed in in me (twice), and its attendant impact on my career, so I can’t let him down now, when he (arguably) needs me the most.

So Steve, in case you’re reading this, I’m pleased to offer you, free of charge, the following bit of introductory advice, upon which I implore you to act immediately.

Lose the theme song. Right now. Because it’s by far the worst anthem in the sporting universe. A respectable hook is nowhere to be found, and the lyrics are so cringe-worthy that my fingers almost refuse to type them (but again duty calls). “Meet the Mets, meet the Mets, Step right up and greet the Mets, Bring your kiddies, Bring your wife, Guaranteed to have the time of your life…”.

It actually, and against all odds, gets worse from there.

No wonder the team hasn’t won anything in more than three decades. Because not only is that the worst sports anthem ever written, it may just be the worst song of all time.

I’ve been working on its replacement: an aggressive riff with less effete lyrics, and strains of Mendelson and Godsmack. But if he wants it, he’s going to have to pay me. After all, we’re capitalists, right?

I also think that the organization could benefit from a healthy dose of risk management. But I was more fired up about this until I discussed it with the wisest person I know. Who is not even a sports fan, but who but managed to point out the whole Money Ball/been there/done that element of this concept.

OK, fair enough. But while Billy Beane did a nice job of stealing some of my analytics and applying them to the return on monetary investment, as measured by on-base percentage, etc., he left out some critical elements. For instance, how are Innings Pitched and Slugging Percentage impacted by changing Foreign Exchange Rates, a discrete rise in Implied Volatilities, or, say, a Factor Shift — from Growth to Value? Well, Steve, I’m here to assist you in unpacking these mysteries.

And undertaking such a project is fortuitous for me from a timing perspective, because, if investor activity and market data are to be believed, right now there is virtually no risk worth measuring in the financial markets. Equity indices move from one high to the next. Friday’s jobs report was an unambiguous blowout. The FOMC meets this week, but can’t possibly pull a fast one at this late date in the year. There’s a baker’s dozen worth of trading days left in the 2019 (including, I must point out, one on a looming Friday the 13th), and by all accounts, there appears to be little on the horizon that is likely to impede the safe and docile migration of the Good Ship 2019 into Dry Dock.

Maybe the best news I unearthed all week was the following chart I heroically sourced from the Bloomberg home page:

Now, I only have a couple of comments on this graph. First, please ignore the encircled arrow at the Northeast corner. I could’ve eliminated it, but I’m feeling kind of lazy this morning.

More importantly, one of the most unshakeable rules in the investment game (kind of like sending the runners when there are two outs, the count is 3-2, and the bases are juiced) is that when the strategists are all negged out, it’s time to do some buying.

But we’re not here to cover any of that, now, are we? Let’s keep talking baseball. According to that holy virtual shrine: MLB.com Mets Pitchers and Catchers report to their Spring Training HQ in Port St. Lucie, FL on Valentine’s Day. And though it will break her heart, I plan to be there to greet them when they arrive. In fact, I’m in Florida right now (at the Big Art Throw Down and no, I haven’t seen Stevie yet), checking things out. I took an Uber ride with a driver who also played some minor league ball in the early 70s for the Tidewater Tides: former Triple A affiliate of, you guessed it, the New York Mets.

Really nice guy. New Yorker and retired lawyer, but we will hold neither of these against him. And what it got me to thinking was that it’s time for us to ease back on all of that shade we are throwing at companies like Uber: enormous disruptors that are hated on by factions such as Wall Street and Progressives. Yes, Uber loses money, and no their drivers are not employees, but, of their own free will, independent contractors. But are there aren’t many informed users of the service who don’t swear by it. For reasons of my own, I am under a partially self-imposed ban from driving around Mid-Town, and cannot be other than highly thankful that with a couple of clicks on my smart phone, a driver will cheerfully take me to where I need to go.

I’ve been feeling a similar form of wistfulness about We Work. Really stupid business model. Unfathomable that purportedly smart investors took the bait. We can all take some perverse gratification in the financial comeuppance currently being dished out to Company Founder Adam Neumann and Softbank Papa-san Masayoshi Son, for their undeniable greed and hubris.

We Work may or may not survive its well-deserved financial reckoning, but God bless them for disrupting the long-rigged commercial rental market. Before they emerged, one of the most difficult challenges for small and start up enterprises, especially in cities like New York, was that of securing office space. Unless your organization had a large, pristine balance sheet, renters would not accept it as a lessee. Instead, individual owners had to sign, lock in for several years, and hope for the best.

Even then: a) you’d be lucky to find anything suitable; and b) you were almost guaranteed to have paid an egregious premium for the privilege.

Enter We Work, and now they’re giving away office rental space all over town. My guys are pressing me to finally take down a spot, and I find that I can go month to month, on virtually any square block in Manhattan, at a small fraction of the cost that would have applied a few short years ago.

So I’m gonna tip my orange and blue cap to Neumann and Son-san, and hope they find a way.

I’d throw Tesla onto the list of hated on companies that maybe deserve some kinder consideration, but the truth is that I’m not there yet. I will state this, however. Some of these days, an enterprise is going to crack the whole electronic car and lithium battery code, and if it’s not Musk and his team, it will at any rate be an organization that owes a significant debt of gratitude to them for their innovation, insight and daring.

But I reckon that’s nearly all I’ve got to say about baseball for the moment. Mookie was very gracious to Billy Buck for the balance of the latter’s life. We probably will secure some Manhattan office space, and though my preference is towards Regus over We Work, I am clear on the economic advantage conveyed on entities like mine by the arrival of WW on the scene.

So don’t let anybody throw cold water on your dreams is my best advice. If you can’t sing, you can still play guitar. If you can’t draw, don’t let them tell you that you can’t paint.

And even though I can neither deliver, nor make contact with, anything that resembles a curve ball, I still plan on being in uniform when the Mets open their season, against the Defending World Series Champion Washington Nationals, at Citi Field, on March 26, 2020. In fact, I intend to be in the lineup. I just haven’t decided yet which position I intend to play. But one way or another on 3/26/20 I’ll be good to go. And I’ve been working hard on my swing, in what is likely an irrational expectation that sometime in late February, I’ll take both deGrom and Syndergaard downtown.

It is, I believe you’ll agree, the least I can do for my former and future chieftain.

TIMSHEL

Your dancing child with a Chinese suit, He spoke to me I took his flute,

You know I wasn’t that cute to him, Was I?

But I did it because you lied, because he took you for a ride, because time was on his side,

And because I… …I Want You

— Bob Dylan

I begin by thanking the teeming millions for their touching outpouring of support on last week’s note about my parade fixation — particularly the Macy’s Thanksgiving Day Parade. I received one note that was particularly special to me, but we won’t get into that, now, will we?

It is my sad duty to report that from a personal Thanksgiving Day bucket list perspective, the holiday was something of a bust. I was up in the mountains, without access to a television, and must shamefully report that perhaps for the first time in my six decades roaming this here planet, the parade spectacle ensued without the benefit of my observation. Maybe this is just as well given that the Ronald McDonald, Snoopy and a few other backbencher balloons suffered injuries had them limping their way to the 34th Street finish. Alex, wherever you are, I am yet again sorry misunderstanding your transitional wisdom.

I also failed to watch a minute of football. But I reckon I’ll live to survive that particular tragedy.

But here’s where the glitches turned into outright fiasco. No. Turkey. Or stuffing. Or sweet potato pie (I love sweet potato pie). Had reservations at a restaurant. Confirmed them. Twice. Then we all got dressed and headed over to the joint for the roasted bird they promised. The lights were on, but (as is often the case), there was nobody home. We were in fact very fortunate that a food mart/gas station was open, and that we managed to score some Potato Buds, a couple of packets of bacon and some frozen fries. And we made do. I think that on the whole, the experience was one that is reminiscent of that overused line by German philosopher Friedrich Nietzsche: “that which does not kill you makes you stronger”.

It was certainly a holiday to remember, but now it’s over and we must move on. The caprices of the calendar are such that Black Friday – that day of frantic shopping that has often devolved into violence, comes immediately on the heels of Thanksgiving. Not this year. Published reports suggest that the malls were full of more crickets than humans. But there is hope, as indications suggest everyone has finally given up the physical shopping ghost, and has fully embraced the on-line mode of personal consumer enterprise. I reckon we’ll find out soon. Because tomorrow is cyber-Monday, the electronic analogue to the before-midnight lines of the lines that used to form in front of Walmart. Here’s hoping that the pundits are correct, that the on-line point and click action will be hot and heavy.

As a further bit of hopeful news on that score, I am pleased to report that I find myself in a bit of a consumption frenzy, or, to be more accurate, an almost unchecked desire to purchase everything and anything that is brought to my attention and available for purchase. Most of my wish list comes from watching advertisements on television, but one way or another, lately, I can hardly witness a product offering without feeling an overwhelming desire to acquire what is being described. In summary, when I see something all I can say is “I want that”.

And it doesn’t matter what it is. I am, for instance, currently feeling extremely acquisitive about such goods and services as pillows made by a Minnesota guy in a blue shirt, insurance products of every kind, cars from all leading auto manufacturers, chicken wings, and of course, adult undergarments for both genders designed to battle the tragic problems of incontinence. I am especially enamored of pharmaceutical products: the ones where the ads show the happy Grandma twirling her little darling in the daisies, or the old guy blowing jazz to beat the band. When they get to the list of side effects (diarrhea, nausea, shortness of breath, muscle spasms and even death), it’s all I can do to stop myself from calling my doctor and begging for a script.

I’m hoping and guessing that virtually everyone feels the same way as I do, because if so, it will indeed be a Happy Christmas, economically speaking.

Investors, of course, remain in acquisition mode, as all of our martial indices – including that laggard Ensign Russ, continued to seize new ground — at least until Friday, when (perhaps in response to a turkey coma that I did not have the privilege of experiencing this year) they retreated modestly.

And now it’s December. How, possibly, can it be December? It’s probably a glitch in the I-Phone 11s that I just purchased for myself and my entire staff. But maybe they did it on purpose, and if the crew in Cupertino indeed arranged this winding the calendar forward to goose holiday sales, they pulled off perhaps the greatest marketing stunt of this young century, because, among other matters, the dates line up with my scant inventory of non-Apple devices that I have used for purposes of corroboration.

So the year’s almost over, and I don’t mind telling you that when the ball drops at the end of this month, I’m will be more wistful than usual. Because I’m gonna miss 2019. A lot. Some bad sh!t happened, to be sure (for example, I lost my daddy and we all lost Ginger Baker), but so it goes. On the other hand, I had some of the times of my life. I think we all did. Well, most of us anyway.

I think, for all of this, we all owe a debt of gratitude to Jerome Powell, Mario Draghi Hideki Kuroda, and whoever sets monetary policy in China, because without their divine largesse, we might be singing a different tune this holiday season. They’re still giving money away, with no signs that (to mix a metaphor) the gravy train is likely to end any time soon. The global economy, against all odds, seems to be showing signs of a modest (to mix yet another metaphor) second wind. And even the bi-polar folks at the Atlanta Fed have perked up (further mixed metaphor alert) and are whistling a happier tune:

I won’t lie, though. I do worry about the folks in Atlanta, who don’t seem to have the ability to make up their minds. Beyond this, there’s really almost nothing of substance upon which to report. Which is good, unless risk management is your game. Because the sad truth is that us risk managers need some fire and brimstone injected into the proceedings from time to time, just to remind everyone of how vital we are to their existence.

I attribute the glad tidings to a combination of suppositions that pass for such — mostly because they aren’t sad tidings. The Impeachment saga, at present, appears to whimpering. With the 2020 election season now hard upon us, the Progressive platform has taken such outlandish contours that it becomes almost unthinkable that it can prevail from a political perspective. I don’t wish to put too fine a point on this, but market participants have clearly, at least for the moment, discounted the probability of a Liz/Bernie outcome to the statistical equivalent of zero. Whatever one’s personal viewpoints, that much is true, because if the tides turn, and the full-on takeover by Washingtonian bureaucrats of all private affairs gathers steam, then investors, who have real money at stake (even if it most of it belongs to someone else) can only take one rational step. Sell EVERYTHING. And they’re not. They’re buying.

The China thing remains a risky mystery, but then again it always has. Back to before the Ming Dynasty, and kind of like Dylan’s flute. I will state this, though. If Trump indeed manages to assist in the maintenance of the economic balloons at higher elevations than Ronald and Snoopy on Thursday, and then cuts a deal with the Chinese, say, this spring, we are all going to have to give him his props for political strategy. Further, if market valuations and economic statistics are to be believed, so far so good.

Corporations, and All God’s Children, seem to have faith, because they are borrowing to beat the band:

I draw your attention to the footnote at the bottom of the right-hand graph. The ’19 figures do not reflect a full year’s action. They certainly don’t include November, and October and September might not even be in these tallies, because, you see, it takes a little while to compile these statistics.

Somewhere down the road, all of this money is presumably gonna have to be paid back. But as this holiday weekend winds down, why worry about that? To yet again do some thieving from the great Everett McKinley Dirksen (R, IL), $2.5T here; $2.5 T there, and it soon starts to look like a lot of money. And as for $250T? Well, even Dirksen detractors must admit we’re there.

But for borrowers, the price is right. Due to the complete absence of inflation, real interest rates are almost certainly negative. So why not grab with both hands? I doubt this would all be transpiring if the economic and political prognosticators that CEOs somehow manage to justify keeping on their payrolls felt we were staring in the face of an all-out trade war.

An early glimpse at 2020 suggests that it will have a tough act to follow. There were events this year, financial and otherwise, that were sufficiently remarkable to take one’s breath away. I suspect we will face greater headwinds next year, but then, again as a risk manager, I’m supposed to say that, right?

But I don’t see much on the horizon in Month 12 that is likely to end the 19 party. And, on this weekend of ritualistic gratitude, I ask you, yet again, to remember how last Christmas felt, and to take in one more dose of gratefulness, before we return to the somber slog of bringing this year to a productive close.

That’s all I got, though. For now. I think I’m gonna lie down and rest. I hope you never experience this, but a Potato Buds coma makes a turkey coma feel like a walk in the park. And then do some shopping

Maybe I’ll buy you something. And don’t worry, I still want you. But I also want that. Maybe I can have both, but some of it is out of my hands. And that, my friends, is what this great game is all about.

TIMSHEL

@ssholes give the order, @ssholes row the boat,

@ssholes get elected, cause @ssholes get to vote,

@ssholes in the morning, @ssholes every night,

@ssholes to the left of me, @ssholes to the right,

As twenty thousand @ssholes do the @sshole promenade,

Step aside good people, it’s the @ssholes on parade

– Pat MacDonald

Here’s a little riff brought to you, courtesy of Pat MacDonald, who hung around Madison during my years there, and then went on to modest fame on the grander stage of Austin, TX, with his fleetingly chart-registering band: Timbuk 3. I actually jammed with Pat a couple of times. At least I done that. Hendrix? No. Page? Please. Keith? I wish. But Pat MacDonald? Check.

At least I done that.

He wrote this particular tune in, er, celebration of the first Reagan Inaugural, and, one must admit, it’s a pretty good hook. Even if he was wrong about Reagan. Which, at the time, we all were. I can at least admit it; I doubt Pat has done the same.

But it’s not, per se, @ssholes on parade upon which I wish to focus this week’s attention, but rather parades in general. Because, you see, I love parades, any parades, all parades. So much so that I have been known to travel up to 1,000 kilometers to attend a processional that might not run more than a couple of blocks through a quaint small town.

And it should come as a surprise to no one when I reveal myself to be something of a parade snob.

A brief summary of my quality criteria follows. Bands are essential, particularly high school marching bands. As are floats. I am also quite partial to the baton twirlers, especially if their mothers are trailing after them carrying their coats. Balloons are pretty cool, but not essential (more about this below). And the Grand Marshall must completely own his or her role. I’m talking full conviction, full commitment, starched uniforms, and, of course, immaculately shined buttons.

In my vast but (alas) finite parade experience, I know of nothing that compares to the Mardi Gras cycle. Particularly the Rex Parade. I love the Rex Parade. But if you’re at any MG procession and don’t find your pulse a’racing and your blood a’flowing, well, maybe you actually died a few years ago, because there are no @ssholes on parade at Mardi Gras. They are not allowed. I am also quite partial to the Tournament of Roses, held each New Year’s Day in Pasadena, CA, and, each autum, there’s a Pumpkin March in Sycamore, IL that goes on for six hours, and which, to mine eyes, is a great delight.

As a long-time New York resident, I’d say my favorite local marching festival is the one celebrating that imperialistic, racist scoundrel: Christopher Columbus. I never miss that one, and wait in breathless anticipation for each of the many floats that feature a Long Island Car Dealership owner singing “That’s Amore”, in karaoke fashion, to the adoring 5th Avenue crowds. St. Patrick’s is pretty cool, but has one glaring flaw: no floats. You just gotta have floats. But in NY, all St. Paddy’s participants are on foot.

This leaves something to be desired, no? The Puerto Rican Day parade is wild, but entirely too crowded for my tastes. I could say the same thing about the Halloween affair in Greenwich Village.

All of which brings us to this coming week’s most ubiquitous attraction: that marching equivalent of the Granddaddy of ‘em All: the Macy’s Thanksgiving Day Parade. Never miss it. On television, that is. Went in person a couple of times, but it’s kind of a crush. The first time was around 1996, on a windy day, with my then-six-year-old son (he would’ve turned 28 this Tuesday) accompanying me — in abject terror of being crushed by one of the balloons. Heaven forgive me, but I teased him about this. And he got his karmic revenge, as, the very next year, a woman did indeed expire from injuries suffered at the hand of the inflated, aerial version of Sonic Hedge Hog. He never let me forget it. And I didn’t. Ever.

And all of this got me to wondering: what are the most menacing of those big, bobbly, capital markets balloons that are even now bounding their way down Central Park West and other thoroughfares? Elevated valuations, across virtually all asset classes (except, of course, commodities), are certainly on the list. The tragic and still-unfolding events in Hong Kong also come to mind. As does the windy bloviations of the domestic and global leaders of the free world. Bibi, that big Israeli (non-Led) zeppelin, got indicted this week. And nobody noticed. Our ubiquitous, orange, helium-filled chieftain faces a functionally similar fate. The markets, for the moment, if they pay attention at all, don’t seem to care.

I deem it worthy stating a word or two about what over the past few days has passed for breaking market news. It’s was a data-bereft week that marked the beginning of an inexorable grinding down of the action to a pre-holiday halt, but still the presses must roll. So here goes. Stone cold baller Louis Moore Bacon decided to return all outside capital from his once-high-flying, eponymous hedge fund, and I have a couple of thoughts here. Though he kept a somewhat low profile, for a generation, there was no one better than Louis. You just didn’t want to be on the other side of his trades. And he’s not going anywhere. I figure he’ll still have about $7B or $8B of spare change to play around with, and will be able to do so without having to deal with pain in the @sshole investors, and even greater pain in the @sshole regulators. And I reckon he’ll do just fine.

But about a decade ago, guys like him were eclipsed by the lofty elevations of Ray Dalio, who breathlessly made the headlines when his Bridge (over troubled) Water investment platform was reported to have established a $1.5B short position against the global equity complex. Shall we infer from this that the great, decade long, bovine promenade has run its course, finishing, as it must, in front of Macy’s flagship store on 34th Street, with those wretched dancers assaulting our sensibilities?

Well, I say no, not yet. And this for a number of reasons. First, and though I’m skeptical about the reported numbers, at last count, Big Ray had a cool $150B (that’s B with a B) under management, so the size of the position, even if correct, barely rises to the dignity of 1% of Bridgewater’s AUM. For OGs like me and Ray, this is a small change short. But I do have to acknowledge that: a) the rest of y’all don’t necessarily have a yard and a half (us playas have long referred to a billion dollars as a yard) to throw against the stock market juggernaut; and b) one way or another it’s a significant market position.

But I think this might be a case not so much of Ray being wrong, but rather that of him being early. Though the details of his nefarious speculation have not been disclosed, references to a time window that ends in March suggest that they take the form of derivatives; probably options.

So is the market gonna crack by March? I kind of doubt it. Mostly because the rationale he offers (accompanied by denials that he put the trade on in the first instance) include the perverse persistence of ridiculously cheap financing, the likelihood of expanded government deficits, and the runaway trends of asset inflation.

Except Commodities. Which continue to suck wind.

And just as we prepare to honor the original, if temporary, era of peace between European settlers of these shores and their Native American adversaries, it might be worth giving thanks that the maize (corn) that was (along with peace pipes) the ingestible centerpiece of the celebration, continues to be available at lower and lower prices.

Corn Being, Er, Corn-Holed:

I really don’t have that much to say about corn. After all, who does? I will admit that I enjoy it in virtually all of its derivative forms – even when it comes out of a can — in dubiously rendered liquids. I am hearing talk of supply disruptions from the heartland to the East Coast, due – get this – to international trade worries. But I won’t let this ruin my Thanksgiving and you shouldn’t either.

But back to Ray for a minute. Yes, there’s asset inflation, yes, financing is problematically cheap and yes, deficits are growing at an alarming rate. But RD: these things end in a bang not a whimper, right? Do you really expect the Big Bang to transpire in the next 4.5 months?

Well, maybe, but I probably take the other side of that trade (albeit, tragically, in smaller sizes). I think that absent some retrospectively unpredictable disasters, money remains cheap, deficits continue to grow, and assets continue to inflate and concentrate into the hands and pockets of fewer enterprises (including yours). I have also taken some renewed comfort in the re-emergence of the negative correlations between stocks and government bonds, and believe this trend will forcefully accelerate under any buzz-killing constructs that may materialize in the capital economy. The 2s/10s Treasury spread has already collapsed towards zero again, and is sure to migrate to material negative territory if the economy continues to slow and/or the equity markets feel the pull of acceleration due to gravity. All of this will be both enabled and empowered by political forces in a critical election year.

So money will be stay cheap, and those who are able to borrow will simply lever up further, with the intent of owning an even greater share of the world’s increasingly scarce pool of financial assets.

In short, at least for a spell longer, the bands will play, the baton twirlers will twirl, the coat-carrying mothers will trail behind, and the @ssholes on parade will continue to march, in trademark, preening fashion, until the music stops.

It will, eventually. Just not yet. In the meantime, I’d encourage everyone to enjoy the spectacal (sorry for the spelling error, but spelling isn’t my strong suit). Twenty thousand @ssholes, to the left and to the right, are truly a sight to behold, and I think, as these days of goodwill and better eating approach, we should just learn to love them.

Step aside good people, and let them take their stroll. However, as we watch the procession, each of us will face temptation to join in on the march. Please don’t do it. 20,000 @ssholes marching down the avenue is quite sufficient I think.

If I see the number has expanded to 20,001, I will (fair warning) be coming to you looking for answers.

Happy Thanksgiving, y’all. And of course…

TIMSHEL

I offer this week’s note in tribute to my one-time professor: the late, great, Nobel Laureate George J. Stigler. To whom I owe multiple debts of gratitude, because in addition to reviewing and approving my (somewhat mediocre) Master’s Thesis, he was actually the speaker at my entirely anticlimactic MBA commencement ceremony. My parents didn’t come, and I myself almost didn’t attend, but I’m glad I showed up, mostly because of Stigler’s talk. Which was all about uncertainty: an unambiguously bittersweet topic, but one that, as the fates would have it, formed the basis of my entire career.

Stigler is best known (but inadequately appreciated) for something called The Economic Theory of Regulation, which holds that Regulatory Services are simply another sector of the economy, much like Health Care or Industrials. If one accepts this premise, it follows that the purveyors of this product sell their wares (as well as, it can be argued, themselves) to the highest bidder (don’t we all?). As a result, according to the theory, because the regulated are always more organized and incentivized, and therefore willing to pay a higher price for these services than are their customers, throughout history, it is in fact the enterprises subject to regulation that always call the net beneficiaries in the regulatory game.

Stigler backed up his theories with empirical data across a wide swath of regulated industries, including Air Travel, Logistics and Financial Services. In each case, he was able to demonstrate that regulatory schemes unilaterally worked to the benefit of those subject to the rule-making, invariably at the expense of the rest of us. Through such devices as creating impenetrable barriers to entry, establishing minimum pricing, etc., regulation arguably exists for little else but the purpose of aiding the great ships of industry to traverse their waters — unimpeded by stowaways and riff raff that might be dilutive to their agendas.

Stigler published his seminal work on this topic in the ‘60s and ‘70s, and, for the better part of the next generation, the world largely ignored it. But one person who was paying attention was Ronald Reagan, and, when he took over the helm at 1600 Penn Ave, he put this theory into practice, deregulating a large number of industries, including those named above. The corporate fats cat howled with outrage, but the result was four decades of largely unimpeded growth and prosperity. For example, when Reagan deregulated the formerly rigid, rigged and overpriced universe of stock market commissions, the chieftains of America’s brokerages descended, en masse upon Washington to issue dire warnings that the move would crush the equity market. It now trades at twenty times the levels that prevailed when they first laid out their big bitch. AT&T prognosticated frightful consequences if – god forbid – it lost its monopoly on long distance telephone calls. Anyone looking to travel round trip from JFK to LAX in 1975 would be hard pressed to do so for less than $1,500. Now? Smart shoppers can ride for about $200.

I’d encourage my readers to bear this in mind – in the modern world where in certain jurisdictions, due to the dynamics that Stigler identified, a woman wishing to become a manicurist must spend thousands of dollars and wait up to 18 months to gain certifications to engage in the potentially hazardous act of painting someone’s nails. Her would-be competitors unilaterally benefit. Her customers? Not so much.

But on that hot summer day of celebration in 1987, Stigler didn’t come to speak about regulation. Instead, he encouraged his robed audience and their well-wishers to understand, indeed to embrace, the ambiguities of the world in which we live. The one line that stuck with me from his speech didn’t even come from him; it actually is a phenomenon called Segal’s Law: “A man with one watch always knows what time it is. A man with two watches is never sure”. And boy oh boy is that ever true. Case and point: no one even knows who this Segal character is. Or was. Apparently, he was a jeweler of sorts, and the original quote was first published in 1930. In the “San Diego” Union of all forums.

But his point: that taking a double measure of anything pertaining to human affairs virtually ensures a diminished confidence in the associated accuracy, is resonant through the ages. And I’ve been feeling this in acute fashion my entire life. Take, for instance, metrics of options sensitivity, such as deltas. I have often been fond of telling the following joke: “Options deltas are like snowflakes – no two are exactly alike”. And, despite it’s being stone cold hilarious, almost no one ever gets it.

And right now, as I take stock of my professional world, it feels as though I have more than two watches. In fact, I have at least six; maybe as many as eight. So, as long as I’ve wasted this much of your time anyway, let’s review them, shall we?

I have, for instance, two political watches. One of them tells me that we’ve got a rogue, would-be dictator in the White House, who must be removed at all costs before he goes full Stalin on us. He’s shredded the Constitution; he’s put us on the brink of Armageddon, he cannot take a single breath without committing a heinous crime. If he does not belong in the slammer, it’s only because his appropriate destination is at the end of a rope. My other political watch sees a guy who has been attacked by a mob since he first descended that golden escalator in his own building to announce his run for president. He’s boorish beyond measure, and unambiguously narcissistic. But, despite an onslaught of assault (mostly ad-hominem, or, if you want to go the whole homonym route, ad-homonym) on his character, persona and policies, he has presided over an interlude of relative peace, prosperity and (under certain paths), visible hope for its continuation. As I type these words, he’s being impeached, and, while one of my watches says that this is necessary, the other tells me that the, er, high crimes and misdemeanors of which he is accused are nothing more than Standard White House Operating Procedure. Anyone who doesn’t think that presidents always muscle other foreign leaders in a manner consistent with their political agendas is just being naïve. Heck, I have it on good authority that even George Washington used to dial up guys like Louis XVI all the time, and he left office a century before the invention of the telephone.

I also have two economic watches. One shows a remarkably resilient environment, a recovery improbably humming along into its second decade. The country is at full employment. Inflation is nowhere to be found. Financing costs are at multi-millennial lows. Overwrought fears to the contrary notwithstanding, the threat of recession does not appear to be on the visible horizon. The other watch sees a world awash in record levels of debt, which is accelerating, and living on the sugar high of cheap financing. Both the military and the overall Federal budget are set to expire this week, but no one is talking about that. Above-mentioned political strife – on both a domestic and global basis – practically guarantees against any sound government action. Watch 1 sees a strong holiday season and the possibility of glad tidings in 2020. Timepiece 2 says that the entire planet will be smoldering cauldron in little more than a decade, and that even if we don’t manage burn the entire planet to the ground, all of its riches will be owned by about a half dozen nasty folks who must be garroted by pitchforks immediately.

And for what it’s worth, the now-casters at the Atlanta Fed appear, at the end of the week, to have lost Watch 1, and to be relying entirely on Watch 2.

I may need to take a trip down there soon to see time it is. I was only there once. Visiting Emery, where I was accepted. But they wait-listed both of my kids, and I’ve not since forgiven them for doing so.

But if they are right on GDP, Watch 2 will have us in a full-scale depression before the Snoopy float blows its way down Central Park West on Thanksgiving Day.

Lastly, and perhaps most importantly (after all, this is an investment blog), I have two market watches. On one wrist, I see our various indices registering one all-time high after another, and showing no signs of reversing course anytime soon. Further investigation of these dials indicates that we have endured, nay, prevailed, through most of the potential buzz-killing news for Q4, and that if the happy talk in the trade negotiations turns into happy action, we could be in for higher elevations. It also informs me that the years following >20% gains in the Gallant 500 (currently up, year-to-date, a spiffy 24.5%) are almost always “up” sequences; the last time we had a down year following such a cycle was 1937, you know, the year that FDR tried to pack the Supreme Court.

Market Watch 2 wonders what all of the buyers out there are smoking. I would’ve been down with a recovery to earlier year highs, at 3,000 and change on the SPX, but I stand in wondrous awe of the last 100 handles or so. Late Friday, Vixen VIX breached into the 11 handle from above, before some at-the-close weekend hedging pushed her up to a still-strumpet-like 12.05. Then there’s all of that debt, Impeachment, the largest political party in the free world espousing full-on redistributive socialism, and big, bad Myles Garret taking a swing at a diminutive-by-comparison Mason Rudolph, using the latter’s helmet as the bludgeon.

Market Watch 1, to summarize, says load the boat here; Market Watch 2 is completely bewildered by all the monetized optimism.

So, does anybody really know what time it is?

Does anybody care (Sorry. I couldn’t resist)?

I think, on balance, the answer is no. We don’t, none of us, know what time it is. Because the truth is that we are, all of us, just dealing with too many watches. As a result, what Jeweler Segal first observed, and what Professor Stigler described as useful perspective, has simply overwhelmed us.

So what do we do now? Well, for the moment, I’d say not much. We shouldn’t, for instance, Uber home alone after a major surgery. If the spirit moves us, we should absolutely order the best cookery we can afford for our new kitchen, but we should probably make sure we’ve contacted Con Edison and had the gas turned on so we can actually use these utensils.

And we should by all means wait and see what transpires in front of us before we make any sudden investment moves. Because things are changing too rapidly for much upfront planning. It certainly makes sense to synchronize our watches, but I should, before taking my leave, admit that I don’t even own such a device, to fit either pocket or wrist. Haven’t for years. And I really haven’t missed it much. Because everywhere I cast my eye, multiple GPS devices are in perfect accord in terms of what time it is.

So times have changed from Segal’s day, and even from that of Stigler. But the latter was still right about so many things. Regulation is still a game rigged to benefit the regulated. And as for my Master’s Thesis, while barely remember the subject matter, I do recall the Professor giving me a grade of B minus, minus on it, and calling it a superficial literature review. That was his only comment. But it was enough. Because I knew he was right.

Like so many others glorified in this space, he’s gone. And while it will be a long day before we witness his like again, his work lives on. At least we should all hope it does. His protests to the contrary notwithstanding, I think he had as clear a sense of what time it is as anyone I’ve ever encountered.

TIMSHEL

Another week; another confession. On Wednesday night, I succumbed to the illusive allure of my local Chinese Takeout joint. One of them, anyway. Fact is, as my apartment is located between Amsterdam and Indigenous Peoples’ (formerly Columbus) Avenues on the Upper West Side, I have an embarrassment of rich choices in this regard.

Usually, I resist this temptation, and even on Wednesday, my spirit had the will to win, but oh, the flesh was weak. So I rocked out on General Chao’s Chicken, some brown rice and (as is de rigueur on these occasions) an egg roll.

Looking back, it all seems like a daydream that I was already in, but, as is so often the case when spending a portion of one’s evening General Chao and his subordinate side orders and condiments (particularly the hot mustard), it didn’t take long for me to be overcome with shame. And heartburn.

I have been encouraged by those who love me (after, of course, a well-deserved scolding), to embrace this transgression, and I know of no better way of doing so than baring my sins in this forum.

So let’s talk a little bit more about Chinese Take-Out, shall we? First, I’m happy to report that the whole saga set me back little more than $20 (including a generous tip), so I’m pretty sure that whatever tariffs that may have previously been levied on these sorts of transactions, they had been lifted in the intervening years between my preceding visit to the joint on Amsterdam, and the one that I am (with shame) describing in these pages. I checked the newswires just to make sure, and it appears that there is indeed progress on the U.S.-Sino trade front.

From that perspective, perhaps my timing was impeccable. And so, for that matter, might be Trump’s, but we’ll get to that below.

Certainly investors seem to be of that mindset, as they chose, all week long, to consume risky delectables, at levels sufficient to take our indices into record territory. All week. All over the world. Much to my chagrin, they appear to have financed much of this shopping spree through the sale of global bonds, which (my aggressive embracing of the latter notwithstanding) had about their worst week in quite a spell. The U.S. 10-Year Note is knocking on the door of 2%, and the poor Swiss are now forced into the indignity of accepting an annual rate of less that 50 bp for their borrowings. It could be worse, though. The Swiss could be the Germans (probably they ARE the Germans), who only collect a beggarly 26.5 bp/year from their borrowers. The USD shot up like a rocket. As did a number of commodities.

But that critical ingredient to the purveyors of my culinary odyssey: soy beans, did not participate:

Soy It Ain’t So: Beans Flat for November:

The good news here, I suppose, is that the soy sauce all up and down Amsterdam Avenue can still be had free of charges, and, therefore, of tariffs.

On the other hand, I don’t use soy sauce on my General Chao’s Chicken. Or my egg roll. And I hope that you don’t either. Because I feel that to do so in either case would be something of a crime against humanity. Hot Mustard? Yes. Soy sauce? A Hard No.

I spent the rest of Wednesday evening (as I had most of the week), trying to figure out what on earth has investors so gosh darn giddy — on a tape that looks to me to be somewhat toppy. It could be the case that Trump’s trade strategy is working like Elway against the Browns in the ’98 AFC Final. Interim deal during Impeachment; final one, say, right before Super Tuesday. I’m not saying that this is how it will play out, but if it does, you’d have to give the Big Guy mad props for political timing, right?

I do think that (yawn) presidential politics are driving some perverse valuation dynamics.. Perhaps the best news of the week, at least from an investor perspective, was the release of the financial details of Warren-Care. The plan cost $20T over the next decade (approximately one year’s GDP), but hey, that number is probably overstated, because Senator Warren, like all other politicians, always injects a dose of conservatism into these types of projections, just so she doesn’t give anyone sticker shock down the road. Private Insurance disappears. Doctors and hospitals are to be given fixed revenue rations, calculated at levels of precision that only Harvard-educated social engineers can muster. Corporations are to be taxed at higher levels. Wealth is to be taxed. Businesses are to be taxed. Best of all (if inevitable), Wall Street is to be taxed.

For everyone else? Free Fortune Cookies.

One cannot help but wonder, on balance, though, how well this will all work out in real life. Pondering these matters (as I always like to do while digesting the ornithological culinary delights of General Chao), it looks like the release of this plan could be the biggest political blunder of a generation. This, too, is no certainty, but it sure seems like a possibility. And, stone-cold feminist that I am, the timing seems like kind of a shame to me. The plan was announced on the proximate date of the 100-year anniversary of the passage of the 19th Amendment, which bestowed the suffrage on women that our Founding Fathers somehow, in their zeal to create a free and equal society, neglected, when forming the nation, to include.

But the program itself does not look politically appealing to me, and neither Senator Warren nor her party will be able to walk it back. About their only alternative is to go bigger and embrace Bernie’s plan, which will cost twice as much. And anyone who the Dems nominate will have to go out on the road next summer and sell this pile of bird feathers to an electorate that: a) is doing pretty well right now; b) worries about higher taxes; and c) probably has a tough time envisioning better health care outcomes when all associated decisions are made not by individuals, but rather by the government.

Of course, with Impeachment (which now makes better sense given the wretched policy/candidate choice offered up by the Dems in what should be for them the most winnable election since, well, since 2016), trade uncertainty, an upward trajectory for interest rates, and myriad other problems that plague us, pretty much anything could happen. But under certain scenarios, I see the whole Warren-care thing not only giftwrapping 2020 to Trump, but toe-tagging the Democrats for at least another couple of election cycles.

What is visible to me, in the meanwhile, is as follows. The Dems need some new blood, and, while I hate to do this sort of thing, I need to remind everyone that I’ve been writing about Mayor Mike laying in the weeds for several months. Welcome in MM; and know I’ll be rooting for you. At least in the Primary Election. I’ll happily accept your rather school-marmish attitudes about super-sized sodas and the like, if you’ll simply let me keep some of my hard earned pay, and allow me to manage my own health decisions – up to a point where my fast-approaching dotage renders me non-decisional.

The other trend that I believe I can observe is some glee among the investor class at how thoroughly the progressives are b!tching things up. I would go so far as to hypothesize that the Warren-care finance plan was sufficiently outlandish and nonsensical to gin up some buying just in its own right.

So here we are, less than seven improbable weeks before the conclusion of this most improbable year. Our equity markets are sitting at records, trade wars, tepid economic conditions and the like notwithstanding. Q3 Earnings are now in the bag, and, while (as was always likely) better than expected, they still aggregate to a third consecutive quarter of negative growth. At 12.07, the VIX is residing at about an 18-month low.

Given all of this, and in light of the saga described immediately above, I feel it entirely fitting and proper to issue an MSG warning. Now, here, I beg you to consider the source. Chinese food is slathered in Monosodium Glutamate, and no dish has a bigger dose of MSG than does General Chao Chicken. But there are other forms of MSG that worry me more — ones that apply to the financial markets. The more benign of these is something I call Mostly Speculative Guesses, which, when taken to the extreme, adopt their more wretched construct: Massively Stupid (Portfolio) Gyrations. Let’s avoid both forms, shall we?

Because, believe it or not, there are less than 35 trading days left in the year, and we can throw out about a quarter of them due to holiday distraction and associated lack of liquidity. Most every known bit of data is already in the books, and most of what’s unknown shades to the negative. It reminds me a little bit of what Woody Hayes used to say about passing the football: there are 3 outcomes, and 2 of them are bad.

A lot of good stuff, one would have to argue, is already priced into current valuations, and, on balance, I think that this looks like a Woody Hayes passing market. Could we continue our current improbable rocket ride? Of course we could. On the other hand, Trump and Xi could say mean things, hurtful things, to one another. The drip-drip-drip of impeachment could finally cause the ceiling of the political economy to cave in. Those crazy, nutty, zany Ayatollahs could decide to lob one over to Tel Aviv.

The world as you see it could turn out to be a very different place from the world as you find it.

And, particularly at these valuations, how much more good news can you, or for that matter, anyone around you, stand?

So, because I see very little edge out there for the remainder of the year. I’m inclined to suggest we all play a little D here, and this particularly applies to those who, thus far in 2019, have enjoyed a good run. Yes, you owe one to the Fed, but our gains are hard-won, nonetheless, my darlings, and I’d hate to see you blow them in the few short weeks left to us before the ball drops.

No, I’m not suggesting that you shut it down completely on this here Veterans Day; just that you, at least for the rest of the month and next, avoid Speculative Guesses, and even more so, Stupid Gyrations.

And remember, you are not alone. I am here in every way that I can be for you. And the more joy you can take out of each moment, the happier I myself will be.

But right now, I must take my leave. I hear the doorbell ringing, and most of you know who it is. Yes, I have fully succumbed to the force of will exerted on me by one General Chao. And if there’s any endeavor that puts one in greater MSG danger than Chinese Take Out, it’s Chinese Delivery.

But for me, the ship has sailed; the bell has rung. And all I can do is offer my full support to you in your efforts to avoid the kind of mistakes that have driven me to this humiliating pass.

What, they forgot the hot mustard? Must be a message from above. So I’ll just send the guy packing, fry me up some kale, and try, in the future, to set a better example for my minions.

TIMSHEL