So, the inevitable transaction, leads, naturally, to the inevitable question.

First, as was pre-ordained by the Gods, Reddit, which bills itself as “the front page of the internet”, has filed for an IPO. And why not? It is the 15^th most visited website in the world, trailing only such titans as Google Search, Facebook, Insty, Amazon, YouTube and (regrettably) PornHub. It runs, also, just behind TikTok, but, given the recent antagonistic action emanating out of Washington against the Sino-video colossus, how much longer the latter can it hold its lofty position?

Reddit, meantime, generates hundreds of millions of dollars in revenues and is growing in a gratifying manner.

For the uninitiated, the site is subdivided by topic (or in the parlance of our times, subreddits), which cover any and every obsession under the sun. Interested in the pending move of the Oakland Athletics to Las Vegas? Simply visit r/OaklandAthletics. Prefer to commune with others, who, perhaps like many of us, enjoy passing our time by gazing at pictures of body parts mangled by motorized lawn instruments? Well, I can’t divulge the name of this subreddit, which, at any rate, is private, so perhaps the less said about this, the sooner mended.

Reddit achieved the Wall Street equivalent of the Warhol 15 minutes a couple of years ago, when a group of retail stock spit ballers took down some legit hedge fund ballers with one whale of a short squeeze. This adds an element of irony to the Reddit listing — a topic which we may (or may not) return to later.

All of which evokes the above referenced question: what is the ideal ticker symbol for the new listing?

To me the answer is obvious: AITA, which, as insiders know, is a reference to one of its most iconic subreddits, one that is in expanded form, is AMITHEASSHOLE, or r/AMITHEASSHOLE. Its content consists of posters presenting a conundrum wherein they have been compelled to act in ways with which they are not entirely comfortable. They lay out their stories and ask for the forum’s judgment as to whether or not they are the asshole. Commenters respond with NTA (Not the Asshole), or, at the other extreme DTA (Definitely the Asshole).

Now, it should be acknowledged that there is an element of subjectivity in these postings, as to ask posters to have laid out their strife-laden stories with perfect objectivity is perhaps beyond the realm of reasonable human expectation. But the collective wisdom of Redditors is routinely entertaining and occasionally enlightening.

Having looked this up, I find that r/AMITHEASSHOLE ranks a meager 100 on the list of most popular subreddits. But, for a couple of reasons, this is not an entirely fair representation of its influence. First, the traffic is split up relatively equally between r/AMITHEASSHOLE and r/AITA, which, when combined, places the concept at about 50^th in the standings. Beyond this, I believe that AITA, more than anything else, is the most a propos branding for the Reddit platform.

One would believe, nay, expect, that the singularly brilliant company co-Founder/Owner Alexis Ohanian (who, among other brilliant strokes, managed to marry the fabulous Serena Williams), would understand this better than anyone. But one would be wrong on that score. Ohanian (no doubt as advised by an army of PR and Investment Banking types) has chosen instead the pedestrian handle of RDDT. The lawyers probably weighed in here as well, as AITA is allocated to an obscure Asian real estate consulting concern. Given that it has never, near as I can tell, traded, this can hardly be an obstacle.

One further wonders whether he might not be inclined to post to r/AITA whether or not he was the asshole for not selecting the sublime AITA for his ticker symbol. And, more broadly, whether an IPO is timely.

To wit respecting the latter, Reddit is unprofitable, having dropped a cool $90M last year. Moreover, the projected valuation is ~$6.5B – a material down round from the $10B at which, in the private market, it last raised capital.

I have no idea whether he has done so, but, much as I admire him, my only answer could be DTA, and I am compelled to assume that his early-round investors would vote the same way.

However, and in any event, I would counsel Alexis against losing heart. Because the world is full of As. Consider, if you will, the doings in Cambridge – a town which has seen happier days. In the most recent episode of Crimson Bathos, Harvard University released a summary of its finding in an investigation of Business School Professor Francesca Gino, renowned for research into fraudulent behavior by economic agents, for – get this – falsifying data. Moreover, the results only became public in consequence of Gino having sued the University for $25 large. My verdict here is that ETA – Everybody’s the Asshole.

However, returning to our primary theme, the RDDT (AITA) listing should make for some interesting Bathos on its own accord. On this tape at any rate, it is likely to be over-subscribed. Then, if the script holds, hedge funds that believe they know better will perhaps aggressively short it. Whereupon the Reddit investment militia will gleefully engage in another round of nut squeezing.

And, if current conditions sustain, they’re bound to be successful. The miscreant hedge fund owners will fold up shop. And probably console themselves with the purchase of sports franchises.

Because the tape remains mad powerful, its relatively tepid performance last week notwithstanding. Equity indices were tragically flat, and even the mighty BTC sold off. On the other hand, the data flows from macro land were fairly putrid – particularly on the Inflation front, and this is to say nothing of the depressing reality that the two ass-hat losers (DTAs) that no one wants have now locked down their party nominations.

The Inflation numbers (combined with disappointing Retail Sales figures) alone should have been a signal sufficient to engender, say, a couple of percentage point reversal, which might, under other circumstances, have done little more than corroborate an extension of the Bull Market. But nothing of this nature came to pass. One potentially curve-fitting explanation for this is that, somewhat improbably, the Fed went out of its way to reassure skittish investors that upticks in pricing be damned, interest rate cuts are still on their way. The FOMC, in any event, weighs in on Wednesday, so I reckon we’ll see.

Nominally, we must assume that the buying frenzy will thus continue. For how long, though, is anyone’s guess.

The biggest, darkest cloud on the horizon is the horrifying expansion in credit extension and consumption, as further illustrated below:

I would say that as a society, it’s DTA. The graph on right suggests a highly dubious tendency towards binging. The outcome is the more alarming graph on the left, which indicates that post lockdown, us Yanks are paying thrice the amount of aggregate interest that they was squeezing out of us during that shelter at home yukfest a couple of years back.

Some of this is plainly owing to higher interest rates. The rest? Maybe spending on some stuff we really didn’t need. And some of it, I fear, went into the market. Shame on those who took this route. They are DTA. The current average credit card rate is 22.5%. Thus, and bearing in mind that stock returns are subject to taxation (though not necessarily representation), in order to merely break even on this type of investment financing, one must generate a return of approximately 35%.

So, reiterating one of the cardinal rules of investment risk management, for the retail mooks among us, the best trade that can be made is to pay down credit card debt. Do the opposite and fund trading from this source? Well, DTA. I don’t wish to know you.

If, however, you choose to do so, and join the Reddit Investment Army, holding your fire until some DTA hedge funds load up excessively on the short side of some flukey stock, you will then not need me to tell you what to do.

Perhaps the name in question will be RDDT. If so, your defense of the name would buy you some grace, and possibly place you in the NTA camp.

Meantime, I reckon I’ll keep Redditing. I could post a great deal on AITA, but I am not of a mindset to be flooded with DTAs. I acknowledge both the wisdom and the justice in this. But I mean to fix it. If it’s the last thing I do. At that point, you and I can float away into a parallel universe where neither RDDT nor AITA can possibly enter our entwined consciousness.

TIMSHEL

Nobody told me there’d be days like these, Nobody told me there’d be days like these
Nobody told me there’d be days like these, Strange days indeed
Most peculiar mama

John Lennon

Strange days have found us, strange days have tracked us down,
They’re going to destroy, our casual joys,
We shall go on playing or find… …a new town

Jim Morrison

Yup, a two-fer. No extra charge. And no need to thank me. I just happen to be in a generous mood.

John Lennon and Jim Morrison. For what they did, no one could touch either of them. Ironically, the latter was born on the same calendar day as the murder of the former, who died mysteriously on my mother’s 35^th birthday.

Such are the peculiarities of our existence, the strangeness of our days. And, as I gaze out around me, I am thinking that maybe, our days are now stranger than they have been in quite some time. If one cares to ponder over it, one can see that the old, longstanding protocols have fallen by the boards, and this across many realms – including the obvious ones of race, gender, and other such foci of our obsessions.

But certainly, it extends beyond these overtrodden roads. Consider, for the second consecutive week, basketball, which has, for me become unwatchable, if for no other reason than that they don’t call travelling anymore. Not in college and certainly not in the pros. Highfliers can now begin their nominally allotted 1.5 dribble-free steps from the opposite free throw line, or, at minimum from half court. In result, among other matters, this caused the aggregate final score of the already-farcical NBA Allstar Game to rise to within a shade of an idiotic 400 points.

Then there’s politics. Which are so strange that they must be glossed over. On Thursday, the two presumptive candidates who no one wants, took to the airwaves to insult one another and their respective constituencies, one doing so from the Senate Chamber, the other, presumably, from the comfortable confines of the Mar a Lago resort.

But more to the point, and what got me thinking about all this is the odd doings of the Capital Markets. It has, more specifically, given me the notion that when future generations look back at this pass, they will have no alternative but to conclude that we had no idea, back in those quaint, early days of 2024, what on earth we were investing in.

Examples abound.

Take crypto for instance. While confidently rendered theories flourish as to its logical role in the capital and commercial economy, to me it’s all spit balling. Crypto may become the standard funding mechanism for all commercial activity, or, failing that, a suitable alternative thereto. Conversely, it may be consigned to the ash heap of economic faddishness, joining such other denizens as SPACs, NFTs, and, going back further in time, Dutch Tulips. My theory is that crypto is what it will become, and that as of now, we simply don’t know.

And, for that matter, what is money? I once had a hunch — until > $50 T of it was created out of thin air over the past generation – one that has witnessed a 5-fold increase in the money supply:

Money has always been somewhat of an obtuse phenomenon, having, like crypto, no value other than what we choose to bestow upon it. It unilaterally reflects nothing other than the amount of perceived utility which can be extracted from its exchange.

And, because money, by definition, is only a relative construct, the quintupling of its quantity clearly changes its essence. From what? To what? You tell me.

Moving down the same line of argument, what is debt? An asset for one subset amongst us; a liability for another. It, too, has exploded in proportion – not only against money, but against any asset by which it is measured. Just what Washington owes has grown much faster than even M2 since the turn of the millennium, rising 7x — from ~$5T to ~$35T, and expanding at an accelerating rate. When measured against GDP, the path, over the same period, it looks like this:

We thus entered the new century owing as a country about 30% of what we generate in output; now that figure is well over 100%.

There’s a lotta talk about this, but to analogize it in one imperfect way, consider two economic agents – one who has borrowed 30% of their salary, the other >100%. I believe that any objective comparison would lead to the conclusion that what debt to one is very different from what it is to the other.

I thus no longer believe we have a handle, as borrowers, lenders or bystanders, as to what is meant by the concept.

Among the main differentiator between money and other monetary assets is the time value embedded in the latter, as captured economically by the interest rate. The core of the current conundrum is whether, or more specifically, when, the Central Banks will reduce these, and the associated vibe has migrated over the last several months from euphoria (they’re gonna meat axe ‘em in early Spring) to disappointment (ho, not so fast), to renewed hope, the last of these based upon the soothing comments of Chair Pow at last week’s Humph Hawk.

But why even consider cutting rates? Why now?

I mean, the country is running at full employment, with robust GDP and no recession in sight. Inflation remains a concern and could go either way. Risk assets are at all-time high valuations.

Has the Fed ever cut rates against such a backdrop? No, not if memory serves.

A reduction in yields would accomplish… …what? More borrowing? Swell. Further bloating of equity valuations? Probably. Incremental disadvantages to hard-put-upon savers? Natch. There may, however, be a perceived political benefit to, say, a timely cut in the months leading up to the big November throwdown. If so, I say shame on those behind it. You cut rates when needed, not when expedient, because the need will inevitably arise. I believe this powder should remain dry. But no one asked me…

Moving along, I’m also not sure I can define the essence of the prevailing Equity markets. Here we sit at another round of all-time highs, some of which is undeniably a by-product of all that money printing, but there are other factors at play.

New technologies are enticing to contemplate, but what do they reflect? Everyone is giddy about AI, and perhaps rightfully so, but what impact will it have? Or quantum computing? Fact is, we don’t know, and won’t for quite some time.

Heck, we haven’t even begun to get our arms around the lockdown-abetted explosion in telecommunications. No one, for the moment for instance, knows even where to be. Are we supposed to be in an office? At home? Some hybrid combination of the two? Presumably, new paradigms will more firmly establish themselves. But here, in March ’24, nobody really has a discernable clue.

I don’t know but suspect that the virus response fostered huge breakthroughs in both preventative and response-based medicine. If so, they have yet to be anything but minutely harvested.

Then there’s the odd case of the Energy Complex. As illustrated below, U.S. Production is at an all-time high, while the cost of Nat Gas is at a 25-year low.

What gives? I thought we was shutting down that evil fossil fuel industry, and doing so quickly, lest the entire earth is incinerated in the meanwhile.

The main government response, near as I am able to discern, derives from the Securities and Exchange Commission, taking time out of its busy oversight schedule to force public companies into disclosing their fossil fuel consumption. Forgive me for stating this, but securities regulators policing energy consumption sort of brings to mind Hunter Biden’s lucrative turn on the Board of Burisma.

Perhaps we should simply turn the job of fossil fuel eradication over entirely to Hunter – provided, of course, that he can take time out of his schedule already jammed with criminal defense worries and, you know, painting.

But more to the point, we have no idea what form the future energy matrix may take. We may get greener, but the consensus estimates are that it will take decades to wean ourselves off fossil fuels, that such a transformation will cost untold treasure and considerable annoyance, and that whatever righteous steps we take in this direction, the Chinese, Indians and third world types are unlikely to follow suit.

While I’m ranting and rolling, and on a related note, the NY AG just dropped a whopping lawsuit on the industry’s biggest meat producer, for setting methane gas reduction targets at levels that she believes are unrealistic, and using this pledge as a means of – get this – selling more meat to its customers.
Apparently, and at least in New York, this is a civil transgression.

In summation, everywhere one cares to cast a Capital Markets glance – from crypto to currency to credit to commodities, AND equity sectors ranging from TMT to Health Care to Manufacturing and beyond, the line of sight is blurred and the future more than likely to unfold in ways that we currently do not understand and CANNOT anticipate.

None of which is likely to impede the current buying frenzy, nor should it. Capital assets are, one way or another, likely to become even more expensive than at present, and the best way to address this reality is to own as much of them as one can.

No, nobody told me there’d be days like these, and yes, it’s most peculiar Mama.

But like Jim once prophesied, unless we’re willing to find a new town, we shall keep on playing.

In my estimation, it is fitting and proper that we do so. But let’s not pretend we know, for the moment, what any of this is about.

Strange days indeed.

TIMSHEL

Well, we made it through February, and no worse for the wear. Quite to the contrary, we enter the 2nd sextile of the year in what only can be described as fine fettle (God Oh Mighty, how I hate that phrase).

It’s now, as we all know, March. Which is a difficult month for me. Particularly the early parts of it. I won’t elaborate, because if you know, you know, and if you don’t, you won’t gain much by my having enlightened you. I probably shouldn’t reference it at all, particularly in such an obtuse fashion, but somehow, I feel, it merits (cryptic) acknowledgement.

As in the past, the interlude will soon be over. Then March REALLY begins – taking particularly March- like forms such as St. Patrick’s Day and March Madness Selection Sunday, which, this year, transpire contemporaneously.

So, as of now, we don’t know who’s in and who’s out (they haven’t even held the conference tourneys, FFS!) but I’m here to offer you my secret strategy for crushing the brackets this year. You must promise, though, to keep it TOP Secret.

I’m gonna base my selections entirely on recommendations from Chat GPT. Or maybe Gemini (haven’t decided yet), because the latter will ensure that my picks feature the most appropriate and adaptable sociological makeup.

I don’t know how I came up with this brainstorm, but it is indisputably inspired. This much is certain: no other participant in any pool will lay a glove on me.

I don’t expect to nail every single game, because, after all, even AI models are not thus far equipped to anticipate injuries, perfidious refs, or other accidents which may occur as the tournament unfolds. I fully expect it, nonetheless, to completely crush the Sweet 16, Elite 8, Final 4 and Championship Game.

I’m gonna spread big cash bets across multiple sports books, so as to partially disguise my action. I, was, after all, born at night, but not, as they say, last night.

My entry into these ritualistic proceedings transpires after a long hiatus (I ain’t filled out a bracket in ages), the latter owing to several factors. I haven’t in recent years believed I have had much of an edge, betting the chalk (probably the best human-rendered strategy) is boring, and, most of all, in protest against the NCAA having co-opted the term March Madness from the Illinois High School Basketball Association.

Back when I was playing (OK, not very well), March Madness was a tourney reserved for the top eight teams in the Prairie State, transpiring over two short days, at Assembly Hall in Champaign, IL. The champs would thus be compelled to win two games on Saturday and another two on Sunday.

March Madness indeed. But then the suits at the NCAA and CBS purloined the phrase, and nothing has been the same since they did.

So, maybe it’s not a great idea to bet the ranch on AI-enabled bracket selections after all. And, somehow, I suspect that I’m not the only one who stumbled upon this stroke of genius. In fact, I’m guessing that any number of mooks will try this stunt, and envision untold millions, nay billions, being squandered on this scheme.

Because, while I’m a believer in the potential of AI to transform our lives, I suspect that associated models have not, as yet, conquered the Sisyphean challenge of accurately predicting the outcome of the NCAA hoops tourney. They may have calculated Pi out to a bajillion decimal places, cured cancer, solved Fermat’s Last Theorem in 6 moves, and performed other miracles. But the tourney?

No dice. Not yet anyway.

But please don’t share this shortcoming with investors, who continue to lay into the market with little abandon. This past week brought yet another round of record highs, even as Inflation re-emerges, war rages on multiple fronts, the Fed walks back promised monetary policy goodies, and midsized banks continue to experience the grinding of their gears.

None of the above has caused much, any, disturbance in the buying forces, which have catapulted our indices to yet another round of all-time highs. And they’re not alone.

One might consider, for instance, the rich, creamy contours of the Cocoa market:

And though it pains me to reference it, duty calls: how about that Bitcoin?

Unless either my eyes deceive me or my arithmetic skills have ossified entirely, BTC appears to have tripled over the last rolling year. Which is not a bad showing for a financial instrument the purport of which no one has yet properly and comprehensively set forth.

But – not gonna lie – I get a bit nervous about its coming collision course with AI. What happens if (when) Chat GPT cracks the mining algos?

While I am almost (but not quite) tempted to recommend hedging BTC with long NVDA, I. Just. Can’t.

The standard line is that the insatiable demand for these crypto cookies derive in part from a desire to hedge against the madness of monetary policy – in the U.S. and indeed across the developed world. This seems like a rational, if incomplete, line of argument. And nothing on the horizon – including Chair Pow’s turn on Capitol Hill at his semi-annual Humph Hawk address (Wed/Thurs) is likely to diminish the force of this logic. But still and all, I wonder if crypto buyers truly know what it is that they are buying.

Everyone, by contrast, understands what Cocoa is, being, among other things, the active ingredient in Cocoa Puffs, the signature tagline for which is “I’m cuckoo for Cocoa Puffs”. But surging demand for Cocoa seems to me to be entirely rational, though perhaps not to the extent suggested by CEO of rival cereal maker Kellogg’s, who was recently excoriated for suggesting his products might offer an economical choice for dinner in these hard-pressed times.

This bit of common sense finds no place in the Mad Month of March. So, I say, let’s embrace the mood of the season.

Because, somewhere out there, presumably, someone is running a March Madness Pool, denominated in BTC, with every participant using AI tools to drive their picks.

No, it doesn’t seem rational, but it is March, so, I say, let the Madness run free.

TIMSHEL

Yes, the Superbowl was two weeks ago and yes it was a great game that went into overtime. Yes, we overindulged in result.

But sheesh. One would think that by now, the chips and dip supply/demand curve would have normalized.

But one would be wrong on that score.

Because, by all observation, each commodity is materially divergent from an equilibrium state.

Let’s begin with chips, a product the demand for which is difficult to observe. We can only instead engage in that forlorn exercise, practiced so dismally by dismal scientists everywhere, of estimation.

And our best predictive proxy, which you probably have already guessed, is the astounding performance of bull goose AI chip manufacturer Nvidia, which: a) reported on Wednesday; b) blew the doors off of expectations; c) obliterated the recent, META-set record for single day valuation gains ($277B – an amount greater than the capitalization of all but thirty companies in the global equity complex), and d) shot past the $2T valuation threshold, rendering it the fourth most valuable company in the world. It also, as pined for in last week’s note, revitalized an equity rally that was beginning to look a little saggy in the socks. Meantime, I am now interconnected with 5 of the Mag 7 – a multi-functional user of Microsoft, running my scripts on Apple products – including my aggressive posting of cat pics on Facebook, on the many devices I purchased on Amazon. I Happily search my way through Google, watching the NFL on its YouTube sub. No, I don’t own a Tesla but you gotta draw the line somewheres.

All of which leaves me one short of 7. So, I’m thinkin’ I probably gotta get me some chips, preferably of the NVDA variety. The good news is that you can buy these little buggers on Amazon Prime. The bad? The cheapest of these bad boys will set you back about seven hundred big ones and will take more’n a week to land on your doorstep.

I think I can rustle up the 7 Benjis. But I’m not sure I can wait that long for delivery.

Until then, I’ll just gaze longingly at the product image:

I reckon we can always crank up the foundries/chip factories to meet attendant demand, which appears to be insatiable.

So, I am not going allocate any of my worry to issues that may arise in this pursuit.

Dips. Now that’s another kettle ‘o fish entirely, coming as they do in so many varieties. You’ve got yer tomato-based, avocado-sourced, dairy derivative, and legume originated. There’s something called humus, which I truly do not understand. Dips can also be, or so I am informed, made from caramelized onions. Heck, I have even heard unconfirmed rumors that some demented enterprises sell concoctions based on such back benching foodstuffs as celery and kale.

On the finance side, DIP is an acronym for Debtor in Possession, a trade upon which – trust me – you do not wanna be on the other side. But in the liquid markets, all roads dip in one direction – a noticeable drop in the price of a financial instrument. Unlike chips, dips are a mixed blessing. Nobody particularly wishes to see the dip descend upon what they own, but, more philosophically, market dips are, it can be argued, a healthy element of the construct, offering, as they do, opportunities for strategic and tactical buying, a rationalization of pricing dynamics and other bennies.

Problem is, there ain’t no dips in sight, the last one of any materiality having transpired in October, in result of that nasty attack on a bunch of civilians in Israel. That there conflict is still raging, with much of the world turning its sympathies towards the victims of Israel’s indisputably forceful response.

Tempting though it is, I won’t go down the rabbit hole of offering my opinions on this mess. Suffice to say: 1) the speedy pivot, with barely concealed glee, to blaming the victim nation for the conflict has distressed me; and 2) investors have not cared sufficiently about this to manifest even a skinny 2% pullback in the intervening period.

Nope, investors don’t care. No dips for you. 4 months. And running.

All of which has caused the historic alliance of chips and dip to fray at the edges. The world will take all the chips it can get, dipless though they may be.

We’ll just choke them chips down dry, thank you very much.

And I am starting to believe that the fissure will continue, nay, expand. That the more the world demands of chips, the fewer are the dips that will materialize.

Because the hard fact is that the rate of acceleration of technology development is, well, accelerating – in terms of processing power, the range and scopes of tasks it can and will handle, and other factors.

Yes, there’s AI, but there’s also Quantum Computing. Put these two together and you arrive at a chip- rich dip-bereft market environment.

So, I recommend against shorting NVDA – at these or even significantly higher valuations.

My hunch is that we’re gonna be compelled to pay a heavy price for all the monkey muffins we’ve dropped on this economy since the turn of the century. These the wages of some truly self-serving and economically unholy actions of which we all are guilty.

If I’m right on this, then the associated drop will be more than a dip, might even devolve into a full-scale crash. There is no shortage of catalysts for such a contingency.

Our pig circus that passes for domestic politics could devolve into something deeply unpleasant and perhaps unfixable. Hostile forces around the globe – from the Persian Gulf to the steppes of the Urals to the Yangtze River and beyond could mess with our flow in unthinkable ways. Our bloated credit complex could collapse, taking us back to the good old days of ‘08/’09.

These will be significant tests for our resolve and other human qualities, but, if we survive them, the upside deriving from the next wave of technological innovation is mind-boggling to contemplate. We’re not simply talking about creating term papers with single clicks on our laptops or Power Point presentations generated through this same conveyance. Health Care, Manufacturing, Agriculture, Transportation, all stand to be re-engineered, with unimaginable productivity gains sprinkled like angel dust on the investing masses.

Gloomy Gusses will point out the potential of untold jobs being rendered obsolete. Please. The blacksmith workforce was completely subsumed (and then some) into manufacturing assembly lines. Yes, some clerks lost their lousy gigs at Blockbuster, but how many jobs have replaced them in the realms of streaming content?

Thus, if we can survive (and that, admittedly, is a big “if”), the gains to the capital, commercial and consumer economies stand to be transformative.

But all that is perhaps peering down the road to far — certainly beyond our range of visibility. I don’t see either the big reckoning or the innovation renaissance taking hold on the immediate horizon.

But, meantime, there ain’t much to complain about respecting prevailing market conditions. There are innumerable reasons to expect the worst from the tape, all of them valid, but this has been the case since markets organized themselves a few thousand years ago.

I think that in the meanwhile, the backdrop against which those inclined to add to their holdings is favorable for the cycle.

So, maybe it’s time again to throw a party. Even a stag(flation) party (see last week’s note), which, even if it emerges, I don’t think will do much to stem the demand for chips or the disappearance of dips from the realms of investment.

So, if chips are on back order and dips are nowhere to be found, well, I’m highly confident that with some imagination, most of you will find adequate, alternative forms of refreshment.

TIMSHEL

It’s on. Let the ’24 stag party rage all year. Or (preferably) not.

This past week brought macro tidings which had all the earmarks of stagflation. The two most widely monitored inflation metrics took everyone by surprise by coming in hot. Meantime, measures of economic activity such as Retail Sales and Housing Starts blew unpleasingly frigid.

Slowing economic growth (stag) and rising prices (flation) are thus ascendant. I am always leery of reading too much into one month’s data, particularly in the current era — replete as it has been with counterintuitive, cross-winded content, but if one were to extrapolate, the clinical term for this construct is stagflation.

I’m not in the prediction business, so I will reserve judgment. But the investors have weighed in with their short-term verdict – by throwing a party.

A stag party.

Risk assets, undeterred by mellow-harshing data releases, have continued their upward ascent. Corks is a’poppin’ on Wall Street. Glasses are being raised, with an accompanying variation on the phrase first attributed to Roman Emperor Claudius:

“For those about to buy, we salute you”.

The soiree’ has even designated the logical master of the spin machine in one DJ D Sol, who, in a nod to numerologists everywhere, managed to cop himself a 24% raise in a year where the firm he leads – Goldman Sachs – experienced a 24% drop in profits.

And this in the early days of ’24.

Again, it is premature to hang the stagflation handle on the economy, but I think we can confidently state that a cooldown from ’23, if it comes to pass, would be in some sense understandable. Last year, GDP growth exceeded 3%. Inflation tumbled. There was other good news, perhaps best summarized by the charts in the accompanying link, issued by the White House itself, and which (it must be admitted) reads like a Biden campaign flier.

https://www.whitehouse.gov/cea/written-materials/2023/12/19/ten-charts-that-explain-the-u-s- economy-in-2023/

There’s little doubt that ’23 was a helluva year for the U.S. economy. But it certainly raises the bar for the current solar cycle, now, improbably, 15% in the books.

One might thus be forgiven for fearing that economic conditions can only deteriorate from here.

All the way to stagflation? Who knows? But the markets don’t seem to be terribly concerned. They paid obeisance to the to the nasty CPI/Retail Sales figures, rudely selling off all day Tuesday. By Thursday, we were back at new highs. Friday’s PPI and Housing Starts data put some renewed pressure on stocks. But it says here that the partiers will gather themselves over the next couple of sessions and belly up, yet again, to the buying bar.

And, while there, the imbibers may wish to hoist a Saki to the Nikkei 225 – now a skinny 1% from all- time highs last breached a generation and a half ago. Back in ’89. When I was still young. And cool:

Meantime, on this side of the Pacific, the Inflation numbers were so jarring that it caused no less than Larry Summers – a recognized oracle on these matters – to admonish the spellbound multitudes that the next move by the Fed may be to raise, rather than lower rates. If so, it would be quite a turnaround from the vibes they was layin’ down as recently as December, when the main speculation was whether the Central Bank would issue a baker’s dozen cuts, or the full smash of 967 of them.

Putting this all together, we may be compelled to consider a scenario where the economy weakens, Inflation re-emerges, and the Fed does nothing to ease, may in fact, abet, our ponderous burdens.

Of course, though, investors have an Ace up their sleeve, poised for deployment at the casino adjacent to the DJ D Sol Stagflation dance floor:

NVDA – a three-bagger over the last rolling year and trading at an impressive 20x its 2019 valuation, reports on Wednesday. Here’s hoping they can meet or beat already ludicrously lofty expectations.

If so, we will ask DJ D Sol to kindly kick up the volume and pump up the jams.

If not, well…

In result, I am of mixed sentiment respecting market conditions. Somewhat ominously, corporate chieftains are trippin’ all over theyselves to dampen expectations. And the must know something, right?

So, yes, I’d be surprised if underlying capital economy circumstances are able to sustain/build upon last year’s Goldilocks construct. Beyond the possibility that the CEO earnings partiers may finally fall under the table, a whole lotta stuff could go wrong. We might even stagger into stagflation. And this is to say nothing of the kettle-boiling situation in the Middle East, the looming election battle between two punch drunk, scumbag has-beens, the Damocles Sword of Commercial Real Estate credit…

…and so on and so on and shoobie doobie do.

Conversely, and for the bajillionth time, there remains too much cash chasing too few investible assets for investors, absent a true catastrophe, to turn tail and head for the hills.

This week, after we honor the POTUSes, and setting aside the life-and-death matter of NVDA earnings, there’s little on the docket of import. Moreover, data flows diminish after that, as they always do in the back half of a quarter.

There are, of course, the hazards associated with unscheduled data flows, which are seldom of a nature to gladden our senses. But this is ever the case, and, if we can’t move forward with associated serenity, we perhaps have chosen the wrong existence. Or, at minimum, the wrong profession.

So, while we may look back at this fast-disappearing winter as the beginning of an unpleasant interval of stagflation, I prefer to take a more constructive view.

Let’s just enjoy the stag party. And call upon DJ D Sol to do what he alone knows how best to do.

TIMSHEL

Let’s first dispense with a couple of pieces of important business.

Today marks the 100^th anniversary of Gershwin’s “Rhapsody in Blue”, and I ask you, whether Gersh is your jam or not, to join me in celebration.

It’s also the 215^th anniversary of the birth of A. Lincoln. Who was A Dude by any measuring stick.

Meantime, as we say goodbye to an exciting NFL season (albeit one with an unsatisfactory ending), I’d like to take this opportunity to shout out also to Steve (Mongo) McMichael for his long overdue induction into the Hall of Fame. It came not a moment too soon, as poor Mongo doesn’t (it must be allowed) look to be long for this world, suffering, as he is, in what appears to be in the final stages of Lou Gehrig’s Disease. With admittedly questionable taste, I offer the following before and after images:

If indeed his hours are dwindling down to nil, he will, at any rate, enter the Pearly Gates as a fully credentialed, Gold Jacketed member of the NFL Hall of Fame. And what a ride to get there. 14 seasons in the NFL; 5 as a Pro Wrestler. Alligator wrestler and rattlesnake hunter throughout, with the only black mark to his name being that he spent the last season of the former career with the Green Bay Packers.

But of course, his legacy will forever be tied to that of the magnificent ’85 Bears – almost certainly the greatest team ever. In addition to winning it all that year, they are best remembered for having created that unfortunate “Superbowl Shuffle” video – a project in which Mongo laudably refused to participate.

Those Bears at that time looked unstoppable, with multiple championships there for the asking. But they only got the one, have made it to the big game on a single other occasion (a losing effort), and have been perpetually breaking the hearts of their fan base for most of the ensuing 40 years.

There’s an important risk management lesson here, of course, which is that even the most formidable of hosts has a finite reign. We’re in the midst of an historic market run, having just completed what I am informed is the strongest rolling 15 weeks period in financial history.

It is, for lack of a better description, a Mongo Market. Its QB-stomping/rattler grabbing ways, will, at some point, have run their course, and we will be compelled to pick up the pieces in the aftermath of its grandeur.

But I don’t see nothin’ on the immediate horizon to stem the tide. Last week, in keeping with the general lethargy we NFL fans always feel in the 14-day break between Conference Championships and the Big Roman Numeral Extravaganza, there was little of consequence to report. Yes, the earnings parade marched on, but it featured none of the truly flashy companies that have so captivated us for so long. Important enterprises are many of these, but from a factor risk perspective, they are little more than useful backbenchers — akin to former ’85 Bears like Ron (Chico) Rivera.

Macro data was also back benching and decidedly a yawner.

Our equity indices nonetheless set new records, and, notably for the numerologists among us, the Gallant 500 for the first time ever eclipsed the threshold of 5,000. Back in the deuce, they used to give out baseball caps and that sort of thing to celebrate these milestones, but apparently, we now dwell in a more sober era.

Next week, in addition to the continuation of CEO podium turns, brings tidings of Inflation and Retail Sales. Not much likely, I think, to stem the tide of the rally.

Because the world is figuratively drowning in cash, and, if the Inflation Beast is truly soothed, there’s nowhere to place the (Detroit?) lion’s share of it other than the capital markets.

This I see as the Irresistible Force of the Capital Economy. The Immovable Object: excessive, unsustainable borrowing levels. There’s lotsa talk about this, both happy and concerned.

Indeed, deposit-based lending institutions (banks) are most certainly better capitalized than during the last fiasco and probably have more rigorous underwriting standards. There is, in addition, great comfort derived from the portion of the funding now being provided by Private Credit, which certainly has advantages over banks — taking such forms as locked in capital, and, maybe, smarter and better incentivized custodians at the helm.

Well, perhaps, but I find it difficult to leap to a place of comfort sufficient to offset my concerns that overall indebtedness is approaching 3x the levels it reached in those pre-GFC days of 2007. I also hasten to point out that the first prominent shoe to drop in that crisis was the collapse of two levered credit funds ensconced in the bowels of then-soon-to-be-toe-tagged Bear Stearns.

I don’t think that the world’s borrowers, all the way up the ladder to the United States Treasury Department, can reasonably be expected to pay back all they owe to The Man.

Something’s gotta give.

But probably not yet. And maybe not for a good while. Because credit bubbles take a very long time to reach bursting thresholds, and, given the bloody mess that said bursting evokes, interested, empowered parties move heaven and earth to stave off the evil hour.

And until the reckoning arrives, the rally is likely to continue.

So, y’all have my sanction – for now – to do the Superbowl Shuffle. Mongo sat that one out because at the point of production, the Bears had won nothing. They did go on to cop their rings and entered the ’86 season poised to shuffle on through. Their defense actually outperformed the ’85 crew.

But problems ensued. LT was raging in the Meadowlands. Joe Cool out in SF was reaching his Jerry Rice- aided peak. Still and all, Da Bears were cruising high heading into Thanksgiving Week, when a Packer thug named Charles Martin slammed McMahon to the turf, in what still stands out as perhaps the dirtiest play in NFL history.

It effectively ended the former’s punky career. And the Super Bowl Bears faded to black.

The intervening years have been less than kind to many of the Shuffling Crew. Sweetness died in ’99. Safety Dave Duerson offed himself in 2011, rendering him the poster boy for CTE brain damage.

McMahon suffers from the same ailment, but shoulders on.

Fridge Perry is broke, bewildered and wheelchair bound. Corner (L.A.) Mike Richardson was arrested 21 times for narcotics and now faces a murder rap.

The Bears have plowed through 8 General Managers, 10 Head Coaches and an astounding 45 starting QBs since that dazzling night in New Orleans. Their ownership remains in the hands of its founder and his progeny.

I hold greater hope for the team right now than I have for quite a while. They are gonna build a new and proper stadium. Old lady McCaskey, now 102, can’t live forever, and her 12 children will certainly sell the team to an individual or entity better equipped to operate it successfully.

And I take the dying Mongo’s enshrinement as yet another element of Good Karma. Gods be pleased, maybe he can survive to witness his induction ceremony in August.

But I can’t help looking back wistfully at that ’85 team. At what they accomplished, and, over the longer course, at what they failed to achieve.

Somewhere in there is a message to present-day toilers in these Mongo Markets, but I won’t spell it out for you. If you know, you know. And if you don’t…

TIMSHEL

Truly, I do not mean to be obtuse here. Most of you know about the Raw Dog. Presumably, though tragically, many of us have ridden it more than once – to the potential detriment of our health and reproductive objectives.

So be it.

The Raw Dog thus abides, nay, pervades, across many realms of our existence. I got to thinking about this after having taken my prized 1945 Martin in for some repairs at my favorite guitar shop on the Upper East Side. The Brothers (yes, the Brothers) did a fine job. The thing looks and sounds great. But I had brought it in caseless, and was prepared to depart with it, in the rain, in the same condition. The Brothers would have none of it, or, as one of them put it to me “Dude. It’s a 1945 Martin. You can’t Raw Dog it”.

So, they guilted me into buying a $200 case for my Merry Martin. And I bless them for it. Raw Dog dodged.

I also been Raw Dogging it for more than twenty years with one of my key business vendors, and recently paid the price for so doing. One of my processes went off kilter and I accidentally requisitioned volumes many orders of magnitude above what I needed, some of it pertaining to content that has not been relevant since the waning days of the Obama Administration. They hit me with the full bill and were in no ways inclined to consider an adjustment. Perhaps I should thank them, because, though a costly lesson, they have compelled me to consider eschewing the Raw Dog altogether.

And, owing in part to these idiosyncratic elements of happenstance, I have become increasingly worried about what I believe to be excessive Raw Dogging in the realms of investment.

The most prominent of these, of course, is the Raw Dog ride we’ve all taken in this era of easy money. Those Raw Dog last gen bankers heroically did all in their power to destroy the financial system about 20 years ago, and nearly succeeded, as we all are aware, in 2008. Then, the Fed stepped in, and, in the intervening decade and a half, have increased the Money Supply by ~2.5x, and their own (now nominally dwindling) holdings by a factor of 8. In result, the Gallant 500 is (from its lows) a 7 Bagger:

Col Naz bottomed out at a titch above 1,000 just before Thanksgiving, 2008, with the Fed Effective Rate at 0% and its beggarly Balance Sheet footing to just under $1 Trillion. Quantitative Easing began the following March. On Friday, Nazzy finished at yet another all-time high of 17,643. The math, for the moment, is beyond me, but even those who don’t own a calculator can see that this is a pretty hefty return profile.

The unadorned pooch ride to untold riches for the select-few, on the backs of the uncooked canines that run our Central Bank, is enough to make me weep with joy.

So, with Inflation at any rate statistically tamed, it is small wonder that said riders were now near deliriously anticipating a return to Raw Dog easy money, taking the form of rate cuts and perhaps even a termination of the viciously cruel policy of Fed Balance Reduction.

But then Chair Pow took to the podium and broke everyone’s hearts by barking out that while the next moves will be easy side up, anyone thinking that the festivities would commence before Spring at the earliest should think again.

Well, of course, the mutt riding mob threw an infantile temper tantrum, unthinkably selling off stocks in the last 90 minutes of Wednesday’s session to the indecorous tune of > 1%.

And this is when I really started to be fed up with the Raw Dog rally. Because, why on earth would the Fed even consider cutting rates in, say, March? Inflation is down, the economy is pumping along at a steady growth rate. Jobs are plentiful (if somewhat less than glamorous) for anyone who cares to hold one.

The market is a rocket ride.

The Fed might cut rates soon – if for no other reason than it can. But what benefit, other than further pumping up already-engorged asset prices, would it bestow? And, though wildly imperceptible, something could go wrong with the strategy. The economy, for instance, could overheat. Perpetually over-extended debtors, busy setting issuance records in these early days of ’24, could go on an incrementally unsustainable borrowing binge. Something could blow.

Yes, it’s unthinkable, but not impossible.

So, the selloff reminded me of the kind of tantrum one of my darling grandsons would throw if denied a second ice cream cone. Like puerile investor hissy fits from days gone by, however, the act wore thin quickly. The Fed wasn’t to be scared out of a judicious pause because a few overfed spit ballers sold some stock. I didn’t believe it would last. And it didn’t. Markets recovered approximately half of these reversals on Thursday.

And the sheer folly of an imminent rate cut was reinforced on Friday, with a blowout jobs report that not only obliterated estimates of newly created gigs, but also showed meaningful growth in wages and other bennies.

So, by Friday, risk assets had recaptured their lost ground (and then-some) from the foot stomping selloff we endured on Wednesday afternoon. Then, the Raw Dog Tech Titans began to weigh in with earnings. Zuck was able to salve the wounds he suffered from the grandstanding assault he received on Capitol Hill (aka Raw Dog Roundtop) by watching his stock trade up ~20%, adding a cool $28B to his wealth count by the following morning. Maybe he should seek to testify before Congress more often. META has risen from 90 to nearly 500 in approximately 1 year. Retail Raw Dog AMZN also blew out, while AAPL disappointed nominally, and now languishes towards the back of the pack.

And, unless my ears deceive me, I believe I hear some barking mongrels in the distance. There are still earnings to howl through. We’ve a week’s respite ere the next round of inflation statistics assault our senses, but the time will go quickly.

Most assuredly, there’s epic geopolitical Raw Dogging from D.C. to Damascus. And in terms of domestic politics, well, I don’t even wanna think about it. The 2020 South Carolina Democratic Primary unleashed the Raw Dog sthat obliterated Bernie and elected Biden. This year, the Carolina Canines made not even a pretense of wrapping their packages and merely gifted their Palmettos to Bull Goose Raw Dog Joe. Raw Dog Don is set to win the state and lock down his nomination, trouncing our last, desperate firewall: former Governor/Favorite Daughter Nikki in consequence.

The City of Miami just concluded its annual Hedge Fund Week sequence. From what I hear, there was a great deal of Raw Dogging throughout, but perhaps the less said about that the better.

The NFL Conference Championship Games featured Raw Dogging at its most extreme, resulting in less favorable outcomes relative to my rooting interests in each case (Note to RD Campbell: I admire your aggressiveness on 4th down, but up 14 with 9 mins left, you gotta take the points). This sets up Superbowl LVIII – to be held in the Global Raw Dog Capital of Las Vegas,– as perhaps the Raw Dog GOAT.

So, I fear that the rooting out of the Raw Dog will be a somewhat quixotic task, and, in truth, I do not wish to eradicate it entirely.

To wit, I asked The Brothers what they thought my heretofore caseless Martin was worth in today’s market, and they told me between $15K and $20K. I paid about a thou for it 20 years ago, and have never, till the above-described episode occurred, kept it in a case. True, the percentage accretion falls just short of that produced by Col Naz, but it nonetheless is the best return on investment I’ve ever achieved. It’s only a paper gain, however, because, as I told The Brothers, I never sell guitars; I only buy them.

So, I can’t say I want to kill off the Raw Dog entirely, for either myself or my readers.

Let’s just go easy now, shall we? Because not only do them naked pups bark, but they also bite.

TIMSHEL

Are you crying? Are you crying? ARE YOU CRYING? There’s no crying, there’s no crying in baseball. Rogers Hornsby was my manager, and he called me a talking pile of pigshit. And that was when my parents drove all the way down from Michigan to see me play the game. And did I cry? NO. NO. And do you know why? Because there’s no crying in baseball.

A League of Their Own

OK, so I’m dipping yet again into an over-drained quotation well, and, worse yet, opining upon a brutally over-reported topic. The quote is one of the best written, best delivered lines in sports-based cinema. I especially love the part about Hornsby, who batted .428 in 1922 – a threshold that has not been reached since, and who led the 1926 St. Louis Cards to World Series glory as a Player/Manager. No doubt he was a tough ol’ cuss, who could have easily hurled the above-referenced insult at an errant player.

But I don’t much like baseball these days. Lost interest maybe 25 years ago. Besides, this here note is about football. As the NFL season winds to dramatic finish, with the following taint hovering o’er it.

Someone, anyone please stop the Kansas City Chiefs. Pronto. Before it’s too late to do so.

On balance, I got nothin’ against the Chiefs. Apart from my passionate rooting interests (Da Bears), I tend to empathize with teams that display humility rather than arrogance, ideally from metropolises that bear the same qualities. Never been to Kansas City. But it seems like a nice town, where folks tend to mind their own beeswax, stoking up their Webers, filling their bellies, and going home.

So, over the years, I have had nothin bad to say about the organization. But they began to jump the shark with those Allstate commercials, running on endless loop, featuring Mahomes, the Walrus-like Coach Reid, and the actor they hired as straight man. Them and (the undeniably fetching) Lilly from Verizon have made football almost unwatchable. After all, a guy can only take so many bathroom/beer/food breaks to avoid commercials.

But matters devolved from there, when you know who started dating you know who. The world lost its mind. Suddenly Kelce and Swifty were everywhere, and it didn’t make for good football. I suspected, and continue to suspect, that both these ubiquitous icons will suffer professionally from their globallybroadcast, never-ending coochie coochie coo. Again, I got no specific beef with either of them. Kelce is a helluva Tight End, who has, by all accounts, earned everything he’s got. Swifty doesn’t bug me much either. No, she’s not my jam, but I sort of view her as a latter-day Brian Eno.

But God Oh Mighty, this past Sunday, they took it too far. The Chiefs were playing a tough contest against the Buffalo Bills, with a ticket to the AFC Championship Game on the line. Sometime in the first half, Mahomes found Kelce for 6.

Then everything I consider holy dissolved before my wondering eyes. For what did they witness but Travis flashing the old hand heart sign up to the fancy luxury box occupied by his Lady Love?

I saw it flicker mostly in disbelief, but there it was on the replay, and, in case you missed it:

I do have to admit that the red gloves are a nice touch, and perhaps, as this is the color motif of Chiefs merch, Trav can be forgiven here. But the gesture was otherwise so thoroughly scripted that I nearly retched.

Call me cynical, unsentimental, whatever you’d like, but all I can think of is the TK/TS pre-game canoodle, with the former, awaiting the full fury of a formidable and desperate-to-win opponent (now thrice denied in similar contests this decade alone), saying to his beloved: “listen baby, when I score, Ima gonna flash you the hand heart”.

One can then imagine Tay Tay (as us legit Swifties are fond of calling her) squealing in delight, not only at the romantic panache of the concept, but also (recalling that Tay-girl has sort of co-opted the pose) at the incremental Benjaminz certain to flow their way in result.

Somebody, ideally Von Miller, should’ve taken TK’s head off right then. But it didn’t happen. Kelce led the Chiefs in receiving and scored not one but two touchdowns. Meantime, Miller had all of two tackles. KC won a nail-biter: 27-24, and moves on to face the vicious Baltimore Ravens, where, if there is a God in Heaven, my ex-Bear Roquan Smith will end the madness.

It probably won’t happen, because, apparently, now, all our efforts, all our tears, all our blood and treasure, are reserved and poured over branding opportunities. And it’s a great deal to ask of Ro to go rogue with the narrative.

So, I should hardly be surprised that investors reacted to the gesture that so outraged me by promptly and enthusiastically taking our benchmark indices to yet another set of all-time highs.

And it’s not as if they don’t have other reasons for their giddiness. Q4 GDP clocked in at an astonishing 3.3% — particularly relative to expectations of ~2%. The PCE Deflator is at 2.6%, gratifyingly proximate to Fed target Inflation levels. Consumer spending is a rocket ride.

True enough, earnings are a bit poky thus far in the cycle, and the rally is decidedly narrow. But the Mag 7 is about to weigh in, with investors panting and moaning in anticipation. META, NVDA and MSFT initiate the proceedings, each with an amazing tale to tell. META is up an astonishing 177% in precisely one year. NVDA continues its AI/Crypto/Quantum charge to world domination.

MSFT has joined AAPL as the only company ever to have achieved a $3T valuation. And AAPL, which also reports midweek and is having a bumpy rolling quarter, has suffered the indignity of witnessing its valuation slip to a beggarly $2.98T

And market participants are showing their hand heart love by more than just buying risk assets – issuing a record amount of January debt, with Corporate Spreads tighter than they have been in 8 quarters:

One can hardly blame corporations and governments for borrowing while the borrowing’s good. Yes, rates are up, but though barely conceivable at this juncture, it’s just possible that at some point, in some parallel universe, monetary conditions may tighten, transforming the open heart-hands of bankers into closed fists.

But not yet, and, in a troubled world, I’m not sure market conditions can improve much from their current benign and serene configuration. And, as such, but only for the moment, you have my full blessing to go forth and buy up some shit.

It may even be time for me to embrace the hand heart, loading up also on friendship bracelets and other tokens of Swift-mania. Certainly, it might reduce my aggravation and maybe even improve my mood.

Because let’s face it. Everyone else is doing it. And if you doubt this, consider that the eternally menacing Hillary Clinton just registered her own form of capitulation, taking the form of her “X”ing out a hand heart tweet under the handle #HillaryBarbie.

Many of you may not remember this, but I seem to recall a time when the mention of the First Lady/Senator/Secretary of State/Democratic Presidential Nominee in the same sentence as Barbie – particularly in the former’s regal presence, would have caused the utterer to be fried in hog fat.

But times change, and we must evolve. So, in closing, I offer each and every one of you my enthusiastic hand heart.

Still and all, if someone on the Ravens clobbers Kelce as his fingers form this trademark configuration, they’ll get no complaints from me. However, I’d settle for a Baltimore win of any kind, because I don’t think I can endure another year of counterintuitive, ubiquitous, commercially ionized hand hear football love.

EDITOR’S NOTE: Y’all saw what happened. TK has 11 catches on 11 targets and 1 TD. Ro had 16 tackles, but never saw him lay a glove on Kelce. Looks like a long haul thru the Super Bowl and beyond.

TIMSHEL

Let us acknowledge, to commence matters, that yesterday marked the 100th Anniversary of the death of Vladimir Ilyich Ulyanov, better known as Vladimir Lenin, political founder of the Soviet Union, as well as its first Supreme Leader. Some confusion reigns as to when and why he changed his sir-name from the highly Slavic Ulyanov to the more Germanic Lenin, but it appears to have been around his 30th birthday, and shortly after having completed a multi-year prison term for revolutionary activities. He went on, under the Lenin handle, to lead both the 1905 and more decisive 1917 Revolutions, talked his contemporaries into withdrawing from WWI, and took over operations, whereupon many of said contemporaries tragically and in Grand Russian Tradition, disappeared.

He ran the show until his death in January 1924, leaving those of us among the living to wonder how we have endured a full century without him.

Fortunately, in one sense, he’s still with us. One can still view his remarkably well-preserved corpse, encased as it is in ice, in Red Square. However, as a public service to those not wishing to travel to Moscow at this frigid and geopolitically dangerous juncture, I offer the following image:

He takes a nice snapshot, no doubt, even dead, but let’s face facts. It’s not the same.

But this here note ain’t about Vlad. Instead, I wanted to write about the wholesale dispatch of virtually the entire staff of the iconic Sports Illustrated Magazine, which controlling enterprise Arena Capital Management announced on Friday. The ACM crew is making appropriate noises about ensuring the continuance of the publication, but we’ve heard that yarn before. More likely than not, the script calls for its full toe-tagging, on the same trajectory, as, say, the much more deserving of our lamentations Village Voice.

One wonders what went wrong at SI, and there are several unforced errors that come to mind. Perhaps it was the embracing of the cause of quixotic quarterback turned social justice warrior Colin Kaepernick. More likely, the force multiplier for brand erosion was the unfortunate inclusion (if you’ll pardon my wholesale descent into the vernacular) of trannies and fatties (and, in some cases, both) in the roster of models gracing the pages of their perpetually hungered-for-this-time-of-year Swimsuit Issue.

But if I was to mark the time when this whole thing was set in motion, I would wind the clock back further. To the late ‘80s. And, more specifically to the creation and widespread distribution of the SI Football Phone.

It was, plainly, a remarkable device – part football, part phone, but, objectively, and to borrow from that great 20th Century philosopher Archie Bunker “a little too much of both and not enough of neither”.

It looked like this:

Or, if you prefer action photos:

Operational problems abounded, naturally. It was nigh impossible to throw it in a tight spiral – into, say, the waiting arms of Fred Belitnikoff. Even if you were Ken Stabler. Kicking a field goal or extra point rendered the place holder at direct risk of electrocution.

Using it as a telecom device was also a dubious proposition. It required an ethernet connection, and even if you managed to reach your intended recipient, reception was, at best, sketchy. The dial tone sounded like a ref’s whistle, and signal for an incoming call was not a simulated bell, but rather the Notre Dame fight song.

However, from a commercial perspective, it was an unmixed success. SI outsourced to China the production of hundreds of thousands of these faux pigskin dialing contraptions, at a cost of $4/unit. In a flash of ‘80s marketing brilliance, Time, Inc. then the owners of Sports Illustrated, gave the device away for anyone willing to pluck down $55/year for a magazine subscription.

1.6M did. You can do the math here, but by my cipherings, Time did OK.

But it may have been Time’s top tick. In 1990, it merged with Warner Brothers, thus combining a print world once occupied by such luminaries as J.D. Salinger, Gore Vidal and even Donald (The Bard) Trump with turf controlled by Bugs Bunny.

Even that was hardly a disaster. But then, a mere 10 days into the new millennium, the magazine/cartoon factory merged with AOL, and what could’ve gone wrong there? A couple of years later, I recall asking a friend on the periodical side how the merger was going, and he replied: “what merger?”. “Why, the AOL merger” I answered. “He looked at me and said: “I don’t know. I’m still working on the Warner integration”.

So, Time (which still exists) and Tide (which continues to grace our washing machines) do indeed march on. It’s 2024. AOL is, if not gone, at minimum zombified. We now have smart phones. And metaverses. And AI. I don’t think the designers of the SI Football Phone properly anticipated any of this. And now, perhaps in result, SI is entering its death throes.

The markets have taken it all in stride, with the Gallant 500 and (albeit amid less fanfare) Col. Naz closing at all-time highs on Friday – wobbly first fortnight notwithstanding. I kinda suspected investors would rally and bid ‘em up. I’m not overly enthusiastic as to how high they go from here, but I did know a bid would materialize.

And, while streams of data flows await us up-river, including the fat part of earnings, introductory Q4 GDP estimates, and, by the end of the month, the latest proclamations from the FOMC, I sense that what moves the market in either direction will have more to do with vibe than analytical content. Investors are either gonna take a notion to bid ‘em up. Or they ain’t. And, when one delves more deeply into the matter, there is a solid case to be made for a continuation of the former.

The Fed, depending upon the measure one selects, has reached its Inflation targets. Q4 GDP estimates range around +/- 2% — a Milton Friedman wet dream. The FOMC, albeit with iffy time targets, has shifted its rhetoric towards rate cuts. Somehow, amid the din of despair about the perils of fossil fuel production, the United States has achieved record Oil Production:

Funny how one fails to hear much about this assault on either the planet or the ozone layer – even at the recently completed (and miraculously survived) Gathering ‘O the Hypocrites in Davos. But, then again, it is an election year, and the Green Private Jet crowd might perhaps be forgiven if they allow this outrage on a temporary basis, with notions to rudely shut down the pumps if they emerge victorious in November.

Plus, if all else fails, there’s this handy little item:

So, lotsa cash available, under the right circumstances, to pile into the private securities markets. And All of this represents pretty strong tailwinds for risk assets.

None of which is reason for over-optimism, as factors can change – instantaneously or over time. Time Warner decided that a football is a football, a phone is a phone, and ne’er the twain should (again) meet. Four decades later, Sports Illustrated itself began its own football phone descent.

Lenin shed his mortal coil and gave way to Stalin. There was another World War, a Cold War, the collapse of the Soviet Union. The year he died, the Soviets renamed its spiritual capital – St. Petersburg/Petrograd – in his honor. 67 years later, and not many months after the collapse of the Berlin Wall, they shamefully (shamelessly?) reverted the metropolis back to the original handle of St. Petersburg.

All of which begs a couple of questions. Could a SMART football phone save Sports Illustrated? And, had Vlad simply retained the original Ulyanov, would ANY Russian leader DARED to rename a city away from the elegant (if somewhat garbled) name of Ulyanovgrad?

Well, my friends, these are counterfactuals, and thus unknowable. Better instead, I think, to look ahead. And hope for the best.

TIMSHEL

This week’s theme is based upon a suggestion from one who wishes to remain nameless. He is among the most enthusiastic consumers of this content, as well as perhaps the most discerning. Each week, he offers an unfettered critique of my most recent note, and let me tell you, he doesn’t hold back. More often than not, he gives me the Siskel/Ebert double thumbs down. But makes it all worthwhile on those rare occasions when he flips these appendages heavenward.

When I saw him a couple of days ago, he told me that he had an obvious topic for this week but refused to identify the specifics. He gave me a few clues, but I still couldn’t crack his code.

After some prodding, he spilled the beans. He wanted me to write about Kenny G.

Thus far, 2024 has been a mixed bag for those of us who are honored with this appellation. I myself have faced a few frustrations in the introductory fortnight (my furnace, for instance, has crapped out twice in the first ten days). The effete soprano sax player bearing the name is in a nasty battle with his ex-wife over a $600K/mo Malibu shack that he rents from the recently divorced Jeff Bezos.

Elsewhere in Kenny G-land, on January 5th, a U.S. District Court judge in Alaska denied a motion by one Kenneth Grant, Jr. for relief respecting his refusal, due to health reasons, to take the covid vaccine. Not gonna lie – this one confuses me, so, for those wishing to learn more, I offer the following link:

https://casetext.com/case/united-states-v-grant-384

On the happier side of the ledger, there’s that wily Kenny G, who, last year, moved his gargantuan financial operation from Chicago to Miami, whose fund put up a whopping 15.3%, and who, by my math, may have eclipsed his astonishing 2022 personal take of $16B.

And then there’s the Kenny G who inspired the recommendation. Michigan DL Kenneth Grant, Jr., about whom I’ve written before. Now, just to get it out of the way, neither of the above-mentioned Kenneth Grant, Juniors are (to the best of my knowledge) my sons, nor (again to the best of my knowledge) relations of mine of any kind. Meantime, the Wolverine KG Jr. just came off a monster NCAA Championship Game, capping off a monster season, wherein he dominated an All-American Tackle, recorded a sack, and helped his hated (by me) Wolves to cap off an undefeated championship run.

I could’ve lived without all that Ann Arbor giddiness, and also with the rush to anoint Harbaugh to Rockne status. My risk management advice to him is to enjoy all this while he can. Guys of equal or superior accomplishments in his field got given the gate this past week, including Belichick and Carol.

Or he could just get tired and go home. Like Saban, who was replaced in about 5 minutes by the guy who punted the Championship Game to Harbs.

Moreover, his Kenny G. while only a sophomore, may, with all that fancy ink spilled all over him, declare for the draft.

So, Harbs, like I suggested above, enjoy it while you can. It won’t last, because nothing does.

Something akin to this dynamic is also afoot in the markets, which, come what may, won’t match their U-Mich-like ’23 season. Our equity indices are off to a mixed start, and, while they might ultimately prevail (and, FWIW, I think they will), they are likely to stumble on a few burrs along the way.

The Q1 data drop season is now unfolding at an accelerating rate, with (thus far) mixed results. The big banks reported last week and (apart from the mighty JPM) disappointed. After an embarrassing false start, the SEC approved retail crypto ETFs, and Alpha Dog Bitcoin dropped on the news.

Also last week, we got CPI/PPI, with the former manifesting an annoying December blip while the latter clocked in at a goose egg.

I must reiterate my astonishment at the obliteration of Producer Price Inflation, which a handful of quarters ago breached into double digit territory, and now registers a piddling 1.8%:

But before we get too comfortable, we should bear in mind that this here game may not yet be over, what with us and the Brits locking horns with the unfortunately named, Iranian oil-backed Houthis, in the important energy exporting hub of Yemen, and various shipping rates across the orb going parabolic:

But then on a more encouraging note, and in continuation of what was reported last week, both Corn and Cheese remain on the down.

And yes, today, our favorite corn growers in Iowa must brave a blizzard and sub-zero temperatures to do their quadrennial Caucus Dance. I really can’t add much to the erudition on any of this. But if the line holds and the two misanthropic frontrunners cop their respective nominations, then the November results are likely to leave half of the country as pissed off as they’ve been since 1861, and there’s bound to be a great deal of acting out along the way.

All of which causes me to obsess about the following question: Where are the Bernie Bros when you need them?

And, lest we forget, today is the 95th anniversary of the birth of Martin Luther King, Jr.(as well as the 15th anniversary of Captain Sully’s heroics). We could sure use him now, because, increasingly in recent days, and contrary to his overarching message, color of skin matters more than content of character.

The markets, meantime, remain in jump ball configuration. Or should I say, pre-kickoff coin toss mode? And, before we step one more foot forward, we must endure the annual Gathering-O-the-Hypocrites, otherwise known as the World Economic Forum, held ritualistically in Davos, Switzerland. And about the only good news here, as our betters gas up their Private Jets and prepare to take to microphones to scold us about our grievous energy consumption, is that no one ls likely to be listening.

I think it’s safe to own ‘em here, and, if they drop, to buy ‘em. It’s likely to be a tough contest, but at least for ’24, I think we have the weapons – particularly in the skill positions embodied in the Mag 7, to bring home the win.

But the College Football season is over. Lots of speculation about Harbs, and as of this writing, he is nibbling, and the only issue appears to be whether he has priced himself out of the ~600 NFL Head Coach openings that would otherwise be his for the taking.

His star Defensive Lineman Kenneth Grant, Jr. has a decision to make about the upcoming NFL draft, and my guess is that Harbs’ career choice won’t enter much into his thinking.

Across the rest of the vast expanse of Kenny G-land, the curly-haired pied piper of the ‘90s will presumably split his time between the courtroom and the recording studio, where he toils, in the latter enterprise, in relative obscurity.

The relocated snowbird financial titan will likely continue his path towards global economic hegemony, with little apparently in the way to stop or slow him.

All of which leaves me and my brother from another mother in Alaska. We’ll muddle through as best we can, which is all either of us is able to do.

I’m not sure which of us will fare better, but I at least carry the following advantages.

My furnaces are running, and I’m dosed. Twice.

TIMSHEL