I’m all lost in the supermarket, can no longer shop happily,
Came here for a special offer, guaranteed personality,

I wasn’t born so much as I fell out, Nobody seemed to notice me
We had a hedge back home in the suburbs, Over which I never could see
I heard the people who lived on the ceiling, Scream and fight most scarily
Hearing that noise was my first ever feeling, That’s how it’s been all around me

Strummer/Jones

We’ve a lot of ground to cover, kids, so let’s get to it.

First, Kristofferson A true giant. Saw him twice: once solo and the other time at Farm Aid 1, in Urbana, IL, with the original Highwaymen plus Glen Campbell on lead guitar. It was a performance I’ll never forget. But all are dead now. Save Willie, who is giving Keith a run for his money with respect to indestructability. Meantime, there is almost no way to capture the authentic genius of K. Kris, who left his mark in ways about which the rest of us can only dream.

Next, Rose. Let him in the Hall, FFS! I have no doubt that he was a true putz, who one would have been well-advised to avoid in real life. That he bet extensively on baseball and lied repeatedly about it is not a matter of dispute. But he was the most accomplished player of his era, one of the all-time greats, and, perhaps more importantly, the MLB Hall of Fame features a plethora of criminal sociopaths (Ty Cobb comes to mind) whose deeds are sufficiently heinous to make Pete Rose look like Saint Peter.

On a happier note, rumors are rampant that the surviving members of The Clash (Mick Jones, Topper Headon and Paul Simonon) are considering some sort of reunion. Which is one of the reasons for this week’s theme. I am sufficiently enamored of The Clash that I stone cold pity anyone who has failed to appreciate their magnificence, so I’m all in on this one.

Their finest moment, for me, at any rate, was the release of their master double work: “London Calling”: a record so powerful that notwithstanding its 1979 release, Rolling Stone Magazine named it the best album of the 1980s. It was a wakeup call for my generation – a much-needed admonition to get off our dead asses – which, in the ensuing ~4.5 decades, we have largely ignored.

Well, The Clash warned us at any rate. And I thank them for it. Their own story is appropriately complicated and cannot be reviewed in this space. Suffice to state that the dream ended for good when the divine Joe Strummer succumbed to a lifelong heart ailment about which he knew nothing.

That was over 20 years ago, and now, Jones and Simonon are kicking around the idea of some Strummer- less shows. But it is unclear whether Top will join them, believing (as does fellow can smasher John Densmore about Jim Morrison) that performing without their principal voice would be, shall we say, a less than authentic exercise.

But we will always have the astonishing London Calling, which features, as one of its lesser tracks, our titular song. Joe was all lost in the supermarket, could no longer shop happily. And it would be fair to ask, nearly 22 years later: has the situation gotten better? Or worse?

However, the song itself probably fails to rise to the dignity of meriting an entire column, save for the following realities: 1) the investment world is indeed encountering a SUPERmarket; and 2) 1) makes me feel a bit lost.

The rally paused and then took in stride the Iranians and Israelis swapping of ballistic missiles (and here I’d be remiss if I failed to note that today is the one-year anniversary of the brutal terrorist attack that ignited these war flames. While one would hope this would lead to an interlude of sober remembrance, one is likely to be disappointed on that score). It surged in the wake of the most damaging hurricane in twenty years. Lit its retro rockets as the East Coast Longshoremen not only walked out but threatened by so doing, to “shut the entire country down”.

Though the issue has now been postponed, this job action sent me into a near-panic. Biden’s strong men, such as they are, copped them most of the raise they sought. They have also, tragicomically, striven to impose a moratorium on automation, which may work in the short-term but will be a costly failure in the end. Automation will ultimately win; always does. And it is we who will pay for the disruption; already have. Because anybody who knows anything about the East Coast docks is aware that they may be the most mobbed up locale in the entire universe. When the bosses show their displeasure, we are ill-advised to shrug it off. In result, I called my shrink and begged her for a special order of my meds, not only to calm my nerves but because all our happy pills arrive from China and pass through the iron, controlling hands of the local longshoreman.

Meantime, I managed to calm down and resume focus. Friday capped off a stable week with a superficially strong Jobs report, and investors are on a low budget shopping spree. As illustrated by the following graphs, long interest in equity index futures is at record levels. However, and paradoxically, investors are shunning the Mag 7, with associated ownership plunging in ominous fashion:

Metaphorically, investors have indeed arrived at the supermarket, armed with a full arsenal of coupons and discount codes. But they cannot seem to find their way to the lobster tails or two-inch thick ribeyes. Presumably, they have meandered over in Aisle 7, where the generic cereal and Hamburger Helper reside. But my question is: why?

I wish I had an authentic answer. Meantime, while we have survived the first week of a raucous October, there is a shopping cart (or two) full of risks to consider, ere we even think about checking out.

Earnings reports, delayed a titch, presumably in honor of Yom Kippur, begin this Friday. Analysts are cutting their estimates, but not by much. As a special treat, CPI and PPI are sandwiched around our day of atonement. Immediately before Halloween, Q3 GDP drops.

I don’t believe any of it will matter much.

To wit, we are presumably in the early innings of what history will certainly deem a full-scale war in the Middle East. The IDF has promised a response to last week’s attacks, and it behooves us to view this as other than saber rattling.

Because the IDF don’t saber rattle. Any more than, say, the Gambinos or Luccheses do if you come messing around with the Seaport or any of the other docks of entry they control.

The U.S. is completely handcuffed with respect to their influence on these proceedings, in part because somebody should have long ago sent the old man to bed, but didn’t, rendering us essentially leaderless. And partly because in the immediate lead up to the ’24 election, the current administration must thread a needle of appeasement of all those patriotic Islamic militants in Michigan, while not pushing the somnolent Jewry far enough to recognize how deeply we are being sold down the river (and sea).

And were this all not enough to merit that extra dose of meds for which I begged, I am becoming increasingly worried about what may happen in the ~10 weeks between the election and the inauguration of our 47^th president.

If Harris wins, the markets must contemplate higher taxes, outrageously inappropriate and clearly unconstitutional levies on unrealized capital gains, unfathomable increases in regulation and redistribution, and other niceties best summed up in the attached read-em-and-weep economic plan:

https://kamalaharris.com/wp-content/uploads/2024/09/Policy_Book_Economic-Opportunity.pdf

I defy anyone to put forward an argument as to how this is anything but dilutive to risk assets.

If, on the other hand, Trump wins, in addition to the many ill-advised elements of his economic platform, I truly fear the chaos that will ensue. For one thing, if there is any plausible framework to do so (and maybe even if there isn’t), the whole thing will be thrown into the courts. For another, we will still be compelled to endure 2.5 months with an addled prez, an outraged lame duck VP, and half the country prepared to burn the other half down, with the outgoing administration, if they choose not to encourage this, will certainly do nothing to stop it.

Meantime, a full-on war in the Middle East may be raging, our docks will remain under threat of a job action, and any number of unforeseen problems may rear their heads. I see market hazards coming from multiple directions, including from across a modern-day hedge, back home in the suburbs. Joe could never see over it back then, and, today, it is perhaps fair to say that it is the hedges themselves that have the obstructed view. So, yes, it is a SUPERmarket, but please take care; one wrong turn and we’re all lost.

But on this Indian Summer day, I’d prefer to focus on The Clash reunion, and of their indescribably brilliant London Calling, the magnificent title song of which tells of life by the Thames in the aftermath of a nuclear error.

And I conclude as Strummer so memorably did:

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?

Well, won’t you?

TIMSHEL

Much as I hate laying ultimatums on y’all, I feel I have no choice but to bring the hammer down — this one time.

I’m giving everyone until year end, at which time I am putting a permanent moratorium on the term “word salad”. And I insist on this deadline — irrespective of the outcome of the November election, which might very well see the person who is (somewhat justifiably) most associated with the term, emerge victorious.

Doesn’t matter if she wins. And we must endure, at minimum, four years of literary lettuce thrust upon us on a daily basis. The term W            S            will be banned from the vernacular.

Because, you see, having been accused many times of tossing verbiage in a bowl that also contains tomatoes and other garnishments, and combining them into expressions – often in this very space — this is one of the few areas of solidarity between the current Vice President and yours truly that exists.

And I think that both of us would agree: the term itself is little more than Word Salad.

None of which is to suggest that the issues we all confront, and/or articulation of same, is easy to deconstruct and communicate. But for me, the problem is more one of trying to figure out what in the hell is going on out there. Yes, my considerations are all scrambled up in a bowl but are more suitable to be pureed and boiled than they are for tossing.

Call it Word Salad (for now) if you will, but I am more prepared to deem it Thought Soup, and I feel particularly justified in doing so considering, as discussed in our September 16^th issue, the Campbell folks in Camden, NJ have removed the word Soup from their corporate branding.

So, we take up the mantel for those iconic purveyors of frothy delights encased in red and white metal cans. And appropriately so, because it is truly soupy out there, so soupy, in fact that a nearly forgotten but once beloved comedian of a brothy handle must be looking down on us with a big ol’ toothy grin:

I learn from my erudite research that Soupy Sales obtained his nick from the reality that he was born one Milton Supman, in the otherwise non-Semitic burg of Franklinton, NC.

He was a World War II vet. He lived to be nearly 90. His two sons played in bands with Todd and Bowie.

His humor is dated by modern standards. Most of us wouldn’t find him funny now. But I’m sure he’d find us to be hilarious.

And it can be cogently argued that we have hit (though God knows what happens in the future) peak
soupiness. And this comes at a rather inconvenient time, because, though we’ve tried to stave it off, October is upon us. And with it, all possible vagaries converge upon the investing populus. There are monthly and quarterly economic data points to parse, along with quarterly earnings.

The geo-political situation has hit a new elevation of temperature, with Israel’s aggressively masterful attacks on Hezbollah. Whatever one’s view of these tidings may be, this much is certain. The IDF is the baddest set of mofos anywhere. First, they blew the shorts off thousands of beeper bearing banditos, Since then, they’ve taken out three top layers of Hez leadership without breaking a sweat. By contrast, it took us a decade and a half to bag Saddam, and nearly 10 years to do Bin Laden – neither of whom had the infrastructure of the Mullah-backed terrorist organization headquartered in Lebanon.

Bibi went into the most hostile territory (for him) this side of the Reichstag (i.e. The U.N. General Assembly) last week, to announce to the world that he had no intention of stopping or slowing until the dogs call off the assaults (averaging ~30 a day since October 7th) on Northern Israel.

And all of this in the days leading up to Rosh Hashanah, this Wednesday, ushering in the year 5785. Due to the caprices of the calendar, Rosh transpires precisely one month prior to the quadrennial American election, a linkage which reminds me of the widely circulated axiom that much of American Judaism can be summed up as the Democratic Party Platform, with holidays added.

Our election itself is perhaps the soupiest part of the soup, and I won’t allow myself to fall too deeply into its deconstruction. More than anything else, it reminds me of a soup that a restaurant produces out of
yesterday’s otherwise-to be discarded ingredients.

The candidates deeply are both flawed, and the prospect of either one of them taking the reins is deeply depressing to me. But I do wonder why any Israeli-supporting Jew would consider voting Democratic, because the latter organization has, at minimum, backed itself into a rhetorical corner in terms of its associated support. They can only do so much, may do nothing at all. And this means that the mullahs will be given a free, no, make that subsidized, hand to wreak havoc – from the River to the Sea.

But what implications any but the most extreme electoral outcomes will have for the markets is entirely soupy to me.

And what I really think is this. By Halloween, or, at latest by Thanksgiving, the economic and financial condition of the markets, such as we can read them, will matter less than investor perceptions of same. Be it right or wrong, a consensus will form which will set the tone for year-end activity and beyond.

For now, investors continue to bid up risk assets, and, perhaps in ominous nod to those who, through lawfare, ballot eligibility manipulations and other tactics, are seeking to save democracy by attacking its protocols, have engineered what can only be described as an economically democratic rally this quarter:

Interestingly, investors are also incrementally embracing the highly democratic asset class of commodities:

I think this makes sense, in part because the portfolio mix includes beef, chicken, rice, eggs, corn and other staples commonly found in any variety of soup one cares to name. Perhaps also, with war beats rising to crescendo and with interest rates on a downward path, owning tangible stuff that is actually useful doesn’t strike me as the worst idea I’ve ever heard.

So, now it’s on to October, and the soggy, soupy state3 it is likely to feature. We’ll get the ball rolling with Friday’s Jobs Report, set to drop as me and my co-religionists emerge from our 5785 celebrations. Then I reckon earnings will begin to dribble in. The inflation figures come cruelly amid our day(s) of atonement. But we will be forced to wait until the eve of All Hallows Eve (10/30) to process (introductory and sure to be revised multiple times) Q3 GDP results.

We will be compelled, all the while, to keep a worrying, wearying eye on the tidings from the campaign trail and on the ominous doings abroad – from Eastern Europe to the Middle East, to the Far East.

None of it, I suspect, will amount to much with respect to asset valuation consensus.

Because we won’t know, save for a glance in the rear-view mirror, what form that new consensus, which surely must be slouching towards us, will assume. These are not conditions for portfolio heroics, and I urge caution on any and all who give a care for that which issues forth from my wandering wits.

Perhaps, much as I hate to ratchet down my consumption everything from Bullion to Bean with Bacon, I should stop this liquid diet nonsense. Because it’s beginning to go to my brain. And, from my brain to my keyboard. And from my keyboard to your screen(s).

I think that all the solid clarity I can muster for now is sufficient to warn everyone that it is not only soupy out there, but also risky.

So, in closing, I encourage everyone to mix in a salad – a word salad if you must. While you still can. And, in reading back the content of this note, I find that for nonce, I am taking my own advice.

TIMSHEL

Everybody’s smoking and no one’s getting high
Everybody’s flying and never touch the sky
There’s UFO’s over New York and I ain’t too surprised

Nobody told me there’d be days like these

John Winston Ono Lennon

Strange days have found us. Strange days have dragged us down.

James Douglas Morrison

In an environment dominated by exploding pagers and other such dainties, I find myself increasingly unable to recapture the thread, any thread, all of which I seem to have lost years ago.

A brief inventory of the doings that most mystify me is provided below.

First, Puff, about whom I have little to say. Other than this. He was born ten years to the day after me. Which is the sole reason that I, and nobody else, am allowed to call him Puff.

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

I also read with interest that after more than a decade of it languishing on the market, MJ has finally received an accepted bid for his Highland Park, IL manse – complete, as it is, with a deluxe basketball court and cigar lounge — at a fraction of its original listing price. Sadly, I have neither the wallet nor the hops to have bought the place myself. Those who know me will, however, agree that I could’ve rocked that cigar bar.

It was never to be. I did, however, take the virtual tour, but is no longer accessible online. Which is a pity for you. Because it was a hella show.

Congrats are also owing to His Air-ness’s baseball squad – the Chicago White Sox, who, featuring common ownership with his roundball paymasters, are about to accomplish the near-impossible: losing 125 games in a 162-game season. Statistically, this is as nigh-improbable as the feat of the ‘95-’96 Chicago Bulls, who went 72-10 in the regular season, 15-3 in the playoffs, and settled the argument once and for all as to the best squad in NBA history.

And, of course, Washington, that epicenter of odd behavior, joined in the hijinks, as perhaps best exemplified by Old Joe, now rendered as irrelevant as any public figure in recent memory, having turned the gavel, in what might very well be his last-ever cabinet meeting (the one preceding took place in October of 2023) over to his better half. The First Lady. Dr. Jill.

Having performed a cursory check, I find that this is unprecedented in United States History. Mary Lincoln performed no séances in official conferences with Seward, Chase, Stanton, Blair and the rest. Didn’t happen when Edith Wilson took over all presidential duties as her husband Woodrow recovered from a stroke. Eleanor Roosevelt, she of the mammoth stones, and equipped, as she was, with enough dirt on her husband to hang him, never pulled it off. Heck, even Lucretia Garfield, her husband dying slowly from a bullet wound which doctors insisted on prodding with unwashed hands and poking with unsterilized probes, never presided over the latter’s cabinet.

I think we can all agree, though, that Dr. Jill is cut from a different cloth, and I will cop to digging her in her leathers.

But at overseeing a formal confab of Mayor Pete, Secretary Yell, General Gar and the rest, I draw the line.

However, the strongest evidence that Strange Days (indeed) prevail comes from the marble halls of The Fed, which, for nonce in a lifetime, made good on a prognostication of mine, by reducing overnight rates by a baller 50 bp.

And for this I am grateful.

Everyone is asking me, in the wake of this miracle, the same question: what happens now? Investors, not pausing for me to weigh in, have thus far responded to Central Bank largesse (that is, to all but those schmucks like yours truly that continue to maintain large portions of their wealth in Savings Accounts) with giddy appreciation. General Dow and the Gallant 500 now reside at proximate all-time highs.

I don’t reckon that this is either surprising or, per se, problematic. Whether it is sustainable is a different matter. Given the behavioral free for all unfolding before our eyes, nearly anything could happen between now and the end of the month. But the calendar is largely bereft of scheduled shenanigans.

Then we come to October, a month in which it’s all up for grabs. We can anticipate, must endure, monthly economic data, quarterly economic data, and quarterly earnings. The Middle East is on the brink of an expanded war footing.

Oh yeah. And the wind down of the presidential election, about which I am beginning to fret more with each passing day. I needn’t say much about the core of the Progressive agenda and its potential impact on the Capital Markets. It won’t prevail – even if they win – because of the patent disfunction of the process. However, it remains a matter of dire concern.

But – Not Gonna Lie – Trump is beginning to worry me. Even more than usual. As days go by, he moves further away from a free-market agenda and towards a control economy. Some of this is not new. Punitive, free-trade destroying tariffs for instance. But lately, as he bust outs more hair-brained ideas such as honeycombing the tax code to engineer carve outs for revenue sources such as Overtime Pay, as he utters platitudes about suicidal policies capping interest rates on debt, I begin to be squicked.

Every one of these constructs points toward redistribution of resources. Placing limits on interest rate on debt will do little beyond denying credit to many who rely upon it. Exempt overtime pay from taxable income, and watch millionaires and billionaires put themselves on hourly wage regimes, and claim the lion’s share of their comp as a deduction.

Meantime, the National Debt, now well above $35T, is growing by $200B a month.

And, of course, we are galaxies away from a stopgap measure to avoid breaching the debt ceiling.

Meantime, not only are these ideas as bad as the subsidizing of new homeowners and home builders, but they suggest to me a hint of panic down in Mar a Lago. It’s simply not an encouraging sign when, a month and a half prior to the election, a Republican candidate is energetically seeking to bribe large elements of the electorate. He’s now even talking about removing the SALT caps – a move which, as a resident of a high tax state, would accrue to my benefit. But c’mon. In the first instance, the main impact here will be to render the inexorable climb of state and local levies in high tax jurisdictions an easier task. Also, does our boy really think he has a prayer in New York? Or California? Or Massachusetts? Or Hawaii? Not. A. Chance. And somebody ought to remind him of this reality.

This much is certain. The whole election – including the down ballot contests – is likely to come down to the wire, and the markets are apt to be a bit jittery with each new sound bite. I don’t look forward to the action that awaits us as the fatal date approaches.

But I reckon we’ll just have to punch through. And it may not be too early to take a terrifying glimpse as to what awaits us, once these matters are settled, and 2025 beckons.

It’s hard for me not to be concerned about the markets next year. For one thing, the current action reminds me of 2021, when everyone in my range of encounter believed they had the game beat. Then came ’22, which was an absolute car wreck.

I also have difficulty identifying an electoral outcome that won’t be problematic for the Capital Markets. If Trump wins and takes Congress, he may move forward with some of his above-mentioned stupid ideas. In addition, those who believe him, somehow, to be the evilest person in human history (and there are many) will stop at nothing to visit terrible retribution on an electorate that dared to vote him in.

If it’s Harris, with a similar mandate, it might well be time for all of us to seek another profession altogether. I can’t bear to even contemplate the carnage associated with a reversion to a 28% Corporate Tax Rate, or, worse yet, a big fat levy on yet-to-be-realized capital gains.

I’ll be 65 in exactly 6 weeks and the thought of professional reinvention is beyond what I can contemplate.

But I reckon I may as well look on the bright side. Puff will be 55 on the same day, and it will probably be even harder for him to transform himself from music/cultural empresario into laundry folder at Rikers. Plus, as indicated above, the overwhelming likelihood, for which I fervently pray, is a split government which can do little other than jawbone their whacky ideas.

Shortly before he died, John Lennon sang of UFOs over New York, which failed to surprise him. They may be back. And soon, in Highland Park, some sweaty local lawyers and investment bankers may be huffing their way up and down a court that was once graced by MJ, Magic, Charles and even Isaiah.

There are still five games left in the 2024 baseball season, and perhaps even the White Sox could win two of them, sparing themselves the ignominy of that 125^th loss. I’m not optimistic about this, but given what I observe, it is not out of the question.

Strange days have found us, Morrison said. And he was right. He was born 37 years to the day before Lennon was murdered, but only made it through 27 of these. Shortly before he died, Lennon resurrected this sentiment. Perhaps in a nod to the Lizard King, he modified it a bit, and at least this week, I prefer his take:

Strange days indeed.

TIMSHEL

I don’t know about you, but I’m hungry. So hungry, in fact, that I am taking the extreme step of embracing a culinary theme for this missive.

I feel further justified in this literary license in the wake of two developments in the Land of Grub – neither earthshaking, but both of which bear some personal significance for me.

First, I read with interest that the Campbell’s Soup Corporation is moving to eliminate “Soup” from its corporate handle, fixin’ instead to operate under the simpler moniker of the Campbell Corporation. OK; fair enough. It’s their company, and, if Facebook can be Meta, if Google can be Alphabet, then I reckon Campbell’s Soup can be Campbell. Plus, in fairness, them folks in Camden, NJ do offer some non-soup products, including the iffy Goldfish snack crackers and Prego Tomato Sauce. But please. Nobody eats that shit. And, by contrast, the amount of Campbell’s Chicken and Stars alone that is consumed each month by folks within 50 kms of me is sufficient to float a battleship.

So, I’m a bit sorry that they are eschewing their core product in their corporate documents and correspondence, and I’d take it up with the family, who: a) still runs the show; and with a scion of which b) I had a partnership of sorts. But he hurt my feelings a few years ago. So much so that I took, with admitted glibness, to calling him the Soup Nazi (I know), but never to his One way or another, I figure there’s no point now in feeding him my beefs.

Besides, who am I to spit out advice to the custodians of a stock market juggernaut:

The other signal event was the closing of the doors, the shutting of the ovens, of La Grenouille Restaurant, on 52^nd Street in Manhattan. I wasn’t a regular there – too rich, both from a digestive and financial perspective – for my blood. But I did go there once. In 1994 – shortly after I returned to New York, never again to depart. It was a milestone celebration of sorts, so we put on the dog (or the frog, which is what a grenouille is) and headed over. We were unable to finish all we ordered (a rarity for me at the time), and, upon settling the bill, asked for a doggie bag.

Whereupon we were informed that such a conveyance was against restaurant policy. Which was a first for us. But we took it in good stride, never forgot the experience, and never returned to the frog.

Now, I don’t know if they ever changed their tune or if this rather stingy protocol contributed to the demise of the establishment. But it probably didn’t help.

Now there’s no soup for Campbell Corporation, and no doggie bags issuing from La Grenouille.

I will largely resist the temptation of transitioning to either offering any specific allusions to the disputed topic of the dietary habits of foreign nationals who have migrated to Western Ohio or a general discussion of the recent debate. I will only share that having decided against watching what was certain to be a pig circus, I caved and tuned into the show at the precise moment when the Trumpster made his irregular carnivorous claim. At which point I switched it off.

In time-honored fashion, the markets shrugged off broth nomenclature issues and the demise of iconic French restaurants to by and large recapture all the ground it lost the preceding putrid week. It absorbed some yawner inflation and dismal Confidence data, and now turns its focus to this week’s Fed meeting.

I don’t wanna take too much credit here, but the markets have certainly warmed to my prognostication of a half percent rate cut, which is now, improbably, a precise coin flip:

Not gonna lie – all this piling on makes me a bit nervous. But I’ll stick to my call. The Fed will cut 50. Why? Because it can. Plus, while they will feel the full, immediate consequences of having wielded their axes too parsimoniously, nobody is likely to point their fingers here at them for over-aggressive hacks, for months or years (if at all).

And aside from more cynical considerations, a larger cut is inarguably the more patriotic move, particularly considering recent revelations that: a) annual Federal interest expense for the first time ever exceeded $1 Trillion; and b) the deficit surged in August to an astonishing $380B

And this in a month where most of the government cash hoovers are on vacation.

There are other troubling signs on the horizon. For example, and though not widely reported, bank investment portfolios are bleeding out losses like a punctured porcine:

And, perhaps owing to all the above, Gold is surging from one all-time high to the next:

In addition, and in keeping with this gilded theme, I unearthed this little nugget from the WSJ:

I reckon the good news here is that we’ve still aways to traverse until we hit those magic Great Financial Crisis levels, but the trend is not encouraging.

Moreover, absent some Newtonian counterforce, it’s hard to envision this trend reversing itself.

Such as a jolting rate cut. Which is another reason why I am fairly sure that the Fed will go big and go quick with its rate reducing ways.

And if all this weren’t enough to kill our buzz, I read with disgust about those two aging stars of hybrid supergroup Jane’s Addiction: Perry Ferrell (ne Peretz Bernstein) and Dave Navarro, who got into a throwdown in Boston on Friday night – prematurely ending the show and perhaps ingloriously capping off a nearly forty-year (with interruptions) run of a pretty good band.

C’mon, fellas! We’re better than this.

So, to summarize, we’ve got a wonky economic condition, as headlined by a looming credit crisis, awaiting succor from the Fed. There’s an election coming up, with sucky candidates on both sides. The broth makers in Camden, perhaps not denying us soup, are, at any rate, de-emphasizing it. Not only can you not get a Doggie Bag at La Grenouille, you can’t even order a meal of any kind. One of America’s best-preserved bands cannot get through a set without bigging up on each other.

And the market rallies all the while.

All the above not only dampens my appetite a bit, but kind of pisses me off to boot.

I guess it’d be fair to say that I’m hangry, and don’t know what to do about it.

And no, choking down a heated bowl of Prego with Goldfish sprinkled atop just ain’t gonna cut it.

TIMSHEL

Tis the threshold of Autumn, and as such, time to don the colors and cheer for Alma Mater. Given that the football season is underway, as are classes, it is perhaps natural that my mind turns towards leafy green quads and brick buildings graced by the names of ancient philosophers, but annoyingly bereft of anything that resembles carpeting.

What further focuses my attention is the release of a couple of academic ranking reports, an exercise, which, as is the case with mock NFL drafts, now seems to have extended into the infinite. Time was that these realms were dominated by “U.S. News and World Report” Magazine. But that era has long since passed. Now, everyone appears to have gotten into the act, and, if it might be fair to state that we are perhaps rendered no worse for this proliferation, we are most certainly none the better.

The one that really caught my eye was published, improbably, by the Wall Street Journal, whose ratings topped out, at 1 and 3, by perennials Princeton and Stanford, but which surprisingly sandwiched in tiny Babson College, nestled as it is in Wellesley, MA at number 2. I know a couple of Babson Beavers, to whom I extend my congratulations. Nice job, Beavs!

My issues, though, are fixated further down the trough. One must migrate to Page 4 to locate my University of Chicago Maroons, who clocked in at 75. My undergraduate alma mater can be found almost adjacently – at 77. These recipients of my hard-earned tuition dollars thus trail significantly behind such Academic Edens as Loyola Maryland (23), Towson College (40), and, for careful readers of this space, the Institution Formerly Known as Manhattan College (52).

I remind myself, by way of consolation, that Dartmouth College (which should be in the Top 15 simply for its having been the model for “Animal House”) rates by the Journal at 62.

All things considered, the other venerable ivies made a decent showing. Harvard ranks 7^th, and one can only envision their alums responding with condescending pity at this atrocious, uniformed, jealousy- driven judgmental folly. Columbia, their campus now an armed camp notwithstanding, is 14^th.

However, and as if to remind us that the world as we once knew it has not dissolved entirely, Harvard and Columbia continue to rank, according to the Foundation for Individual Rights and Expression (FIRE), at the bottom of the Free Speech tables. Harvard, to its infinite credit, received a rating of 0.0 – ironically equal to Flounder’s GPA in Animal House (to which Dean Wermer admonishes him: “fat, drunk and stupid is no way to go through life, son”).

But to add a little zip to the Columbia figures, its “sister” school Barnard College, across Broadway (and please take it from someone who knows – if one traverses to the west side of 116^th, it is best to keep a zipped lip there rather than risk offending any of the fair but perpetually triggered matriculating damsels, because them bitches will cut you), comes in 4^th from last.

The University of Chicago, perhaps the GOAT due to its instituting a free-speech manifesto called The Chicago Principals, has slipped a little, but still ranks at a spiffy 13^th from the top.

One can perhaps extrapolate the oddities in the longstanding college ranking protocol of the world’s leading financial industry daily to the confusions we are experiencing in the markets. Equity indices suffered their worst week in, well, in quite a while (OK; 18 months). And the punishment cruelly focused on some of my paying clients. I am not terribly sure what caused any of this, but the common pattern is one involving sated investors pushing away from the risk table. And one can hardly blame them on that score. Perhaps perversely, a putrid Friday session was catalyzed by an Employment report from the proven-to-be-perfidious Bureau of Labor Statistics, which not only missed on job creation estimates but also featured yet another downward revision to previous months.

And this in the near aftermath of the announcement of a rather alarming decrease in Jobs Openings:

As the labor picture weakens, there are further indications that the economy might indeed be rolling over. Crude Oil is in free fall, and speculative buyers are fleeing like rats from a sinking barge:

All of which is implies a pattern of diminished demand (as opposed to surging supply) which convinces me that when the FOMC meets Wednesday week, they will throw down a 50 bp cut, as catalyzed by the following motivations. They plainly wish to reduce rates, and apart from their no doubt laudable desire to do right by the economy, they have politics and their image to consider.

These factors induce them to go big. The totality of the data suggests that the economy would benefit from lower rates. If they wish to assist their political paymasters this November, .50 would provide significantly more succor than .25, and my read of the financial press suggests that their image now bears more risk to accusations of being too tardy, rather than too hasty, with the wielding of their axes. So, yes, I think they’ll lay down 4 bits, but it’s not in the bag. Yet. This week we must first endure, in addition to those annoying University of Michigan (22 on the WSJ Hit Parade) consumer surveys, and, of course, the latest Inflation data.

Upside surprises in these latter-mentioned realms could upset my whole hypothesis, but I don’t think it will. And anyway, even if Inflation ticks up, it can hardly hope to match that emanating from our institutions of higher learning, with respect to their time-honored currency of measuring the performance of their clients. The average GPA for a Harvard student, for instance, now stands at a gravity defying 3.8 – the result of decades of Grade Inflation. On the other hand, continued upside is mathematically challenging. They’ve already approached a ceiling here, because, unless they change the rules (which they very well might), this metric top ticks at 4.0.

I do believe that while the sober, somber timbre of the tape is somewhat justified, I also suspect that investors wish to offer the Fed the appearance of anemia, so as to further incentivize the latter to provide the full measure of rate relief which it is able to muster. Moreover, this dynamic traverses asset classes, as evidenced by the widely reported dis-inversion of the Treasury Curve, which, at maturities from 2 to 20 at any rate, has reverted to something recognizable by historical standards:

I never thought I’d live to a time when an upward sloping yield curve was not referred to as “normal”, but rather as “dis-inverted”, but that’s where we are. The Fed can help amend these perversities by further lowering overnight rates, and I them to give it the old college try. And this here note being about college, has, indeed, imbibed me with an extra dose of school spirit – so much so that I tried to follow the fortunes of the Babson (football) Beavers, only to learn that the school does not have a football team.

Neither for the years 1939 through 1968, did the University of Chicago. During which time it maintained a superior place in the U.S. News and World Report rankings – certainly many notches above Babson. In 2024, the WSJ has upset this order in dramatic fashion. It’s far too early to follow Babson and bail on football again – even if they did lose 24-0 to the Clairmont-Merced-Scripps Bobcats on Saturday. Next week, there’s another game; next year another WSJ rankings cycle, and, as ever, hope springs eternal.

TIMSHEL

The Summer of ‘24, as we live it, is now over. For me, its death throes begin each year when I see the little ones heading off to school. Which always makes me a bit blue. Not only for them, but also for us, I think, because it removes any pretext for intellectual relaxation — for man, woman, boyo, or girlie. There’s no excuse for not summoning our focus now. And harvesting it — for benefit or ill.

Due to the caprices of the calendar, the holiday marks beginning of the final trimester of this year, and it promises to be an interesting one. The whole global capital/political economy is in play. Moreover, what transpires and what we make of it might very well, like the devil, bear a long tail.

Unfortunately, we must devote disproportionate attention to politics, because, like it or not, there’s a depressingly important election immediately on our horizon.

And we enter it with what is in my judgment perhaps the deepest fallows in our two-party system – at least in my lifetime and maybe since the Civil War. Both parties have failed us in such signal fashion that we can no longer dismiss the shenanigans as merely the diverting pig circus that it is.

Let’s begin with the Dems — the party originated by Thomas Jefferson, which held the Presidency for the entire first generation of the 19^th Century. In his often-mean-spirited-but-spirited-nonetheless debate with lifelong frenemy John Adams (both died on the same day – the 50^th anniversary of the original 4^th of July) the latter often pointed out that while TJ was concerned with the tyranny of the individual, he himself was most worried about what he described as ‘the tyranny of the few” – an elite class that would: a) command absolute power; and b) likely (among other accomplishments) destroy themselves – French Revolution style.

That’s what I see when I look left. But a more modern analogy would be the Five Families, with tuti di capi tuti bearing names such as Pelosi, Schumer, Cortez, etc. Together, they form a Commission: the arbiters of all disputes, the bearers of the final say of all important matters. You wanna hit someone inside? You need a sit-down. Such as the one which so recently dispatched Joe (Moe Green) Biden.

And they nearly always get what they want. And so long as it aligns with their agenda, any pursuit is fair game. They sanction violent, destructive riots one week; lay down flimsy felony charges against political foes the next. Ballot harvesting and ballot removal efforts exist in a similar two-step. Throughout, they claim both the high intellectual and moral ground and deride you if you disagree.

They are a formidable host, and if they weren’t slathered with corruption and ineptness, they would win by Slaughter Rule. Because their opposite numbers insist on bringing knives to a gun fight. And I think I know why. So astounded were they at having pulled off that historic inside straight in 2016 (taking down Hill-dog and capturing both houses of Congress) that they have refused to abandon either the playbook or reign in its author, ever since. Having come from the outer political galaxies to the heights of governmental power, he has (as was the case with, say, Maximilien de Robespierre and John Gotti) too thoroughly relished his victories to be an effective wielder of political authority.

In result, the GOP got trounced in 2018, lost not only a winnable presidential race but also both legislative bodies in 2020, failed miserably to meet obtainable objectives in ’22, but has yet again handed all decision-making authority to the above-described three-time loser. While he smugly glided towards presumed victory over the barely warmed cadaver thought he was up against, the Dems pulled a fast one. Not only did they switch stalking horse ticket leaders, but they rebranded their selection into something (if she is anything at all), she clearly is not. Then they screened her from authentic scrutiny.

Thus far, it’s working beyond any reasonably gleeful expectations. The Republicans got caught entirely flatfooted, and, if they lose in November, it will all be on Trump.

Why should we care?

Because either outcome will be a disaster. Let’s start with Harris, who, as has been widely reported, has recently backed off the articulation of the core elements of her agenda. If elected and (more importantly) empowered, we’re looking at the policy of circular firing squad, featuring higher taxes (including suicidal levies on unrealized capital gains), the gutting of the Energy and Health Care sectors, the funding and enfranchisement of millions of immigrants beholden to them, the regulation of pricing, and other practically dubious but politically potent bennies. Again, in this over-branded sham of a campaign, she has disavowed much of this. But c’mon! Are we so shortsighted that we cannot remember 2020? When basement-bound Biden told us that, aw shucks, all he wants to do is to unite us in a harmonious spirt of compromise? And then proceeded to govern to the left of Castro?

They are recycling this pap, and about the only mitigant that I can envision is that they are no more likely to pull off their most nefarious agenda components than they have been for the last 4 years.

Conversely, if Trump wins, half of the country will go bat shit; the rest labelled as fascists. Cities will burn. He, in his arrogance will ignore it all, and we will pay a terrible price. Throughout, he’ll brag about what a great job he’s doing. And then the party will get crushed in ‘26, ‘28….

I will, however (if he loses), cop to looking forward to packing him off once and for all. For my money, he’s done enough damage.

The markets are either ignoring all this or adopting a laudable, if unwise, Zen. My guess is that this is owing to the collective wisdom of investors, who believe that whoever takes power will reliably bitch it all up. Again. I share this hope but will feel a whole lot better if there’s a split outcome from an election which, again due to the caprices of the calendar, falls one day after I turn 65.

But the election is still two months off, and, in the meanwhile, there’s still September to endure. And October. Both look like a bumpy ride. We will overanalyze the data flows, as well as the actions and rhetoric of the FOMC. If there is a debate, we’ll read too much into it. And I must again remind my readers that September ranks 12^th out of 12 in terms of risk asset returns.

Then there’s October. Which I don’t even want to think about.

There are some signs that certain investor groups anticipate aggravation and are taking actions to mitigate it. Take hedge fund for example (please?). Though I don’t see this trend in my reports, the primes are showing significant reductions in nets exposures:

Well, maybe, but on the other hand, it could simply reflect a temporary lightening of the load heading into the just-completed workers’ celebration.

I suspect, though, that generating returns will be a difficult task in the coming weeks. Not like the first two thirds of the year, when everyone made a king’s ransom by simply buying Colgate and selling Intel:

Tried and true though the toothpaste/semiconductor spread trade is, I’m not sure it has legs to carry us through to the end of the year.

Such are the nature of the trials we must endure every year, after we’ve retired our white belts and shoes. The final third of 2024 looks and feels more problematic than most, but it always does.

At this moment, I feel like the need to cleanse myself — by brushing my (remaining) teeth (again) and tossing my Dell desktop (Intel Inside) over the balcony. This, after all, has been the winning strategy in ’24, and who knows? It may continue to pay off. Our political parties adhere tightly to their old tricks, after all, and, whatever else transpires this much is certain:

One side or the other, unfortunately, is gonna win.

TIMSHEL

Well, we survived, that is, after a fashion. Four long days of over-produced self-congratulation in Chicago, and then a 72 hour economic coffee klatch in J-Hole, capped off, on Friday, by the only relevant aspect – Chair Pow’s “will-he-or-won’t-he-and-if-so-when” Policy Statement.

The answer to the latter was “not yet, but soon” – a stance for which I forgive his having denied me yet another stroke of prognosticative glory, by surprising everyone, as I predicted he might, with a big cut then and there.

But I anticipate myself. So, first things first. Our theme derives from “Duck Soup” – a fabulous film by the fabulous Marx Brothers, who are not everybody’s jam but are most decidedly mine. The punchline in question is so pithy that it is uttered twice in the script: once by Groucho and once by Chico.

And the rhetorical choice enunciated by the brothers continues to prevail across various realms of our existence. Case and point: against last week’s orgy of economic and political theater that swallowed up the news, came an announcement, issuing from the eastern bank of the Hudson River, that Manhattan College, formed in 1853 by 5 De La Salle Christian Friars, is, as of August 1st, Manhattan University.

The modified nomenclature is entirely appropriate, particularly insofar as, if you define a university as a college with graduate programs, the institution has long since met the criteria, and its new name simply reflects this longstanding reality.

However, its principal, indisputably visible deception remains – it is located not in Manhattan, but rather in the Bronx. Bronx University would thus always have been a more apt moniker than Manhattan College, but the former hardly trips of the tongue, and now they’ve corrected half of the problem.

But back to Powell, who was compelled to confront the me-or-your-lyin-eyes conundrum himself at J- Hole, as his speech transpired three days after the Bureau of Labor Statistics announced that it had overstated year-over-year job creation by an estimated 818,000 gigs.

Oopsies.

To make matters worse, a few banks had advanced knowledge of the tape bomb, and the best that can be said about this is that they weren’t tipped off. Instead, in their justifiable panic, the propellor heads at BLS first delayed the announcement by more than half an hour, offering, as consolation, a number to call for further inquiries. A few enterprising financial institutions took them up on this offer, and, so doing, got the news early. Good on them, says I. I hope they crushed the associated trades.

Meantime, the official numbers, while now in the books, beg a few questions.

It should come as a surprise to none of my readers that I smell a political rat, that the number crunchers had their fingers on the scales in hopes of creating Labor Market optics superior to associated reality.

But what puzzles me is the timing of the revisions. If whoever engineered this feint had a notion to push the correction beyond the November election, it would all make sense. But no, the adjustment came in August, annoying everyone, embarrassing its sponsors (to the extent that they are capable of feeling embarrassment), and creating, if anything, a political liability.

This is the sort of thing that calls into question the reliability of the entire economic reporting complex, a concept that I find particularly triggering, for the following reason. Occasionally, in my day job providing risk analytics to hedge funds, a client will spot an error in our reports, and, when this happens, they invariably question me as to the validity of every number my system has ever produced.

So, I empathize with the statistical bureaucrats, but only up to a point. For one thing, my livelihood depends on pumping out accurate digits, and I’m not sure that theirs does. In addition, on those rare occasions when a bona fide error does pop into one of my reports (much more frequent are instances of bad data sent to us or misinterpretation by the client), my company is excoriated for it. But while a few bond-trading Wendy Whiners might make some noise about misplacing >800K gigs, at the end of the day, the act caries no consequence for its perpetrators. Whatever its cause, they just shrug their shoulders, blame some unintended but not ill-intentioned glitch, and offer the following platitude:

“Who are you gonna believe? Me or your lyin’ eyes?”.

The markets took the whole thing in touching stride, focusing perhaps more directly on the potential contribution the downwardly adjusted numbers will have on the prospects for rate reduction. They rallied ‘em all week.

Except for Thursday, which featured what I would describe as a modest “don’t get any ideas, Powell” selloff, which was offset and then some on Friday. The Gallant 500 now resides a skinny 30 index points from its all-time highs.

And things ought to quiet down next week. Yes, there’s the NVDA earnings, and, as the stock has already largely recaptured the unseemly selloff manifested earlier this month, a surprise in either direction could indeed move the markets.

But then comes the big Labor Day exodus, which traditionally features the emptying of trading desks. And here, our lying eyes again impose upon us a veracity test. Because trading desks by and large are a thing of the past. Case and point: the trading floor at UBS American HQ in Stamford, CT.

A generation ago, it was the Taj Mahal of the trading industry, with world class workout facilities, a state-of-the art espresso bar, etc. It was the largest floor of its type anywhere in the world. I also remember that its opening was ushered in by the Bank’s purchase of ~25% of the area’s houses – at a fat premium, in order to supply dwellings for the legions of ex-pats designated for assignment.

But that was then. Technological advances in the science of trading, combined with the ubiquitous, and now seemingly permanent impacts of them damned lockdowns have rendered the facility obsolete.

And now, if one passes Exit 8 on I-95, in either direction, one finds that the facility is the global headquarters of the World Wrestling Entertainment enterprise:

There’s something entirely relevant to our theme in the conversion of a trading floor that once processed trillions of dollars a of financial transactions volume a month into an office whose main business is to produce scripted battles between bearded, jeweled behemoths, that all involved parties (participants, sponsors, audience) acknowledge to be not sport, but mere show.

Trading, across dispersed physical locales ensues, and here too, participants must choose between what is in their field of vision, and what the tape is telling them. Other than the political St. Vitus dance, the data flows should be finite. There’s the next Jobs/Inflation reports, which now, in addition to the implications of various outcomes, must be questioned from an accuracy perspective. The Big FOMC meeting, with its promise of rate cuts dancing in our heads, comes a couple of weeks down the road.

Though wrong about the J-Hole surprise, I continue to believe the Fed wishes to dazzle us. So, I’m guessing 50 bp is on the docket.

By all rights, this should goose the market, but I am obliged to urge caution, nonetheless. September is by a wide margin, the worst return month on the calendar, and the trend has been acute these past 4 years, which, try not to remember though we might, has produced G5 returns of -3.9%, -4.8%, -9.3%, and -4.9% respectively.

I am not overly worried about this. But then we’ll be in the home stretch of this fucked up election cycle, and probably, it will behoove us to pay attention. All candidates will ask us the question first put forward by Groucho and Chico. And it will be up to each of us to determine whether we can believe our own lying eyes, or, alternatively, the spiel of either of the dissembling consortiums seeking to sell us their bill of fare. But, FWIW, I will cop to having less faith in the the krew that continues to undertake undemocratic actions in the name of “saving democracy”, who fly their private jets into O’Hare to lecture us about carbon emissions, who cry crocodile tears about working families and the poor while the cameras roll, and then excuse themselves to Dom Perignon/caviar parties on Lake Shore Drive.

I’m left wondering what those 19^th Century La Salle friars would’ve thought of it all. They did establish their organization in lower Manhattan, and only migrated it to the Bronx a couple of generations later. Their leader was a guy named Jasper, and their teams still honor him in their nomenclature. In light of it all, the Manhattan University Jaspers will have my full support this coming basketball season. My lying eyes will ignore their Bronx locale, and celebrate their overdue elevation to university status.

TIMSHEL

So, the big event has arrived, and rather than using it as pretext for political diatribe, I’ll invite you on a journey through my past.

I was a little shaver when the convention came to town, and it came amidst a torrent of troubles. The party’s incumbent was floundering. There was deep political unrest that threatened to upend the whole shindig. A good bit of it was race related. A handful of months earlier, the country’s leading civil rights activist had met with a violent end. It was all a hot mess, with the only certainty being that one way or another, the country was going to inaugurate a new president the next year, as the prevailing office holder, though eligible, had decided not to run.

But memory dims, so, many of the doings in and around the Republican National Convention of 1860 resides in my brain’s geriatric haze. I do recall, though that while it took several ballots, the delegates eventually settled on an obscure Illinois favorite son named Abraham Lincoln.

One other fact prevails, which I will never tire of sharing with anyone willing to listen. That convention was catered by a company called David Berg, Inc. – primarily a purveyor of kosher hot dogs. A couple of generations later, Mr. Berg sold the enterprise to my maternal grandfather and his brothers, who held it, fought over it — until 1992, when their progeny sold it to the much larger and presumably more civilized Vienna Beef Products. My branch of the family had been swindled out of its share in the 1950s, so I had no (hot) dog in that fight.

Longtime local and family legend has it, though, that a) Abe himself sampled the fare; and b) it was during the convention that the longstanding, solemn rule that prohibits the application of ketchup as a hot dog condiment – at any rate in the Chicagoland area — was established.

(But I often confuse this affair with one held 20 years later, in the same venue, where they continued to serve Berg Dogs and debated Race and Reconstruction. Another incumbent was bailing, and my old commander/cousin Ulys was spoiling for a comeback. It was not to be. After 40 ballots, they selected an obscure congressman from Ohio, who became one of my heroes).

Sharp-eyed readers will have noticed that I tried to slip a fast one in there. The setup is, for the obtuse, intended to evoke images not of 1860, but rather of 1968. And the parallels are striking. Race was front and center both years. But the differences are illuminating as a point of contrast if nothing else. It was a Dem, rather than a GOP event. The murdered civil rights activist was not John Brown – but rather Martin Luther King, Jr. The nominating process was geared towards replacing not the inept James Buchanan, but rather that ol’ polecat Lyndon B. Johnson, who, like Buchanan and perhaps wisely, had determined that he’d had enough of the job.

And now, we wind the clock forward to 2024. And another political extravaganza in the Windy City. Here, too, comparisons are enlightening. The party’s incumbent/erstwhile presumptive nominee has again withdrawn from the proceedings – if not by choice at any rate in advance of the national gathering.

Its selection for a replacement, as was the case in 1860 (John C. Breckenridge) and 1968 (Hubert H. Humphrey), is the sitting vice president. Notably, in each previous instance, the Chosen One lost in the general election, and, in the case of Breckenridge, shortly thereafter renounced his citizenship, and accepted a post as a general in an army that soon declared war on his country of origin.

Now, I’m not here to suggest that should Kamala lose, she plans to take up arms against the United States, but she and her cohorts are certain to be beyond miffed at the tidings, and, likely, we will all bear the brunt of her/their womanly ire.

What we get if she wins is only now coming into focus. We’re gonna make food affordable by establishing price controls. We’re gonna pay people for having children, pay them not to have children, build them houses, and pay them to buy the new dwellings. And, of course, we will do it all by increasing taxes on those who won’t notice.

I’m sorry, my sweets, but this is simply bad economics. If the government further inserts itself into our affairs by fixing prices and profits, subsidizing both the construction and acquisition of residential dwellings, enters our reproductive bedrooms, hires and pays our babysitters for us – all on our own dime – we end up with both fewer options and fewer resources with which to attack our challenges.

It was ever thus. So sayeth this century-and-a-half convention goer/product of the Chicago School of economics.

The proposed capping of food industry profits is particularly galling. Not too many financial masters of the universe have issued from that quarter in ages. K wants to ensure this remains the case, by limiting their upside. Among other problems, though, I have with this is a lack of understanding as to her plans for the downside. What if their input costs rise, their selling prices drop, reducing both their output and their ability to retain the service of their workforces (hardly a herd of sheiks themselves)? She got any programs to ensure their continued viability? For faltering food companies and farms causing unemployment and empty store shelves? If so, I ain’t heard of them.

And if she loses, the White House will take over the Federal Reserve and, through tariffs, the purchase foreign-made goods will be rendered incrementally less affordable.

Here’s hoping that they at least carve out Chinese-produced pharmaceuticals, because without full access to reasonably priced Xanax and Ibuprofen, well, let’s just say you might not see or hear much from me.

But the markets don’t seem to give a care. Last week brought about a rally robust enough to bring tears to the eyes of all flesh-and-blood well-wishers. Each and all the Mag 7, as led of course, by our fearless, bloodless leader: the pre-earnings NVDA and extending to back benchers NFLX and TSLA regained the full measure of their vigor.

Outpacing them all is glittering Gold, which closed at an all-time high on Friday – as part of a move that came at the expense of the Almighty Dollar, which – NGL — has experienced better rolling months:

The general theme here is thus to shed dollars in favor of other assets with presumably more favorable fortunes. There are worse trends to endure, but the eschewing of the Dead Prez – including Lincoln but explicitly non-inclusive of Buchanan or Johnson, is not costless. Makes my huffing of Xanax/Ibuprofen a more expensive enterprise for one thing – and that’s before any new Orange Tariff regime comes into play.

Part of the dumping of the Benjaminz is owing to expectations of lower interest rates across the foreseeable horizon. This is probably a good bet.

If we somehow manage to survive the DNC, we may obtain incremental insight on Friday through the auspices of Jackson Hole. I retain my hunch that the Fed will make a big, dovish policy statement during those proceedings. However, those paid to make these prognostications believe that the fully priced-in rate cuts will commence a few weeks later – at the September FOMC summit.

Well, maybe they won’t cut rates at J-Hole, but they could, instead, do something at the long end of the curve. At the end of the day, it matters little. The Fed will almost surely lower rates ere the quarter ends, goosing the economy into the final stretch of the election season.

It all makes me rather serene about short-term market risks. But these here conventions are dangerous affairs. We all know what happened to Lincoln, and it was the same deal, in quicker fashion, for 1880 winner – the magnificent if forgotten James Garfield. In 1968, RFK got taken out before the first balloon had dropped inside the International Amphitheater. And one cannot help but note the verisimilitude associated with his son/namesake hovering outside the proceedings.

David Berg, though, is no more. It survived and thrived during World War shortages largely because my granddad played cards with the Swifts and the Armors. They didn’t have government-imposed caps on their profits back then and did pretty well. But they couldn’t endure the squabbles that carried forward into two subsequent generations of family infighting.

To my knowledge, Vienna is not catering this week’s festivities, as the host organization frowns on the consumption of their products. However, if you’re planning on attending and decide to choke down a dog, please, as a matter of basic risk management, hold the ketchup, because if you can’t do this, I fear I am unable to help you in any way.

TIMSHEL

Fifty years ago this past Thursday, Richard Nixon climbed up the steps of Marine One, issued an awkward, sweeping wave at nobody in particular, and helicoptered out of the world’s most important job. And into History’s Purgatory. I feel as if the anniversary merits some modern-day attention, if for no other reason than for the parallels it has evoked to our current trials and triumphs.

I spent the Summer of ’74, working at a record store in the Newtown neighborhood of Chicago. “Too Much Too Soon” by the New York Dolls and Mott the Hoople’s “The Hoople” had just dropped, drawing much of my energy and attention. Each, as matters unfolded, was to become the swansong for the bands in question.

While not slamming to these fine records as we unpacked seemingly endless crates of vinyl, we spent much of the summer debating the prospects for the bouncing of Tricky Dick. It was, to us youngbloods, a dream too to truly expect its manifestation.

Because Nixon exemplified everything we: a) disdained; and b) wished to avoid becoming. He was old and wrinkly, with a big nose and a set of jowls that are still unmatched in bio-history.

Nobody has ever accused me of being overly elegant – either sartorially or with respect to my movements. But I believe that even I could have managed to unbutton my suit coat prior to issuing my farewell gesture to the American public that had so rudely rid themselves of me.

It was all so culturally confusing. The hippie movement was ossifying, and we didn’t know what vibe with which we wished to replace it. But we knew what we didn’t want to become: Nixon. At all costs.

Two anecdotes come to mind to illustrate the point. I remember him, during the ultimately ill-fated 1972 election campaign, finding himself on the stage at the Reiman Theater/Grand Ole Opry. For reasons unknown, the great Roy Acuff handed him a yoyo, which he took in his hand and examined as though it was a Jupiter moon rock. He ultimately encountered the string, held it while letting go of the disc, and watched in amazement as it rolled down the twine and bounded up (not that it bounded far).

Now, never have I demanded or even expected the leader(s) of this great nation to possess the yoyo dexterity of masters such as Dale Oliver or Dennis McBride. But FFS (!), they should at least have gained enough awareness to understand the basic functionality of the plastic Duncan sphere.

The other, which I didn’t find out about until years later, was related, I believe, by Greg Norman. Apparently, he was part of a baller Nixonian foursome, and, during one round, the latter shanked one into an adjacent wooded area. Eschewing a penalty stroke and refusing accompaniment from his Secret Service detail, he strode to where the ball landed – in a thicket of trees, whereupon, and immediately thereafter, the other players observed the errant ball sailing majestically back onto the fairway.

Everybody knew, but nobody said anything. Suffice to state that no combination of Palmer, Nicklaus or Woods could’ve made that shot to save his life.

Shady and sus he surely was, and so, as the summer of ’74 unfolded, we was all hoping against hope that he would be gone. It looked iffy up until the last moment and what ultimately did him in was a visit by his party’s Elder Statesman – Barry Goldwater. Who told him, mob style, that it was time for him to, you know, to peace. And peace he did – in his own, singularly creepy way.

All of which is relevant for a couple of reasons. I’ve read some analysis lately offering plausible arguments that he was railroaded. His main transgression was using one government agency (in this instance the CIA) to impede some pain in the ass project undertaken by another (then the FBI). That sort of thing had been transpiring for thousands of years, but since Watergate, the mottled manufacture of inter-agency squabbles to mask bureaucratic naughtiness has become Standard Operating Procedure.

Perhaps more pertinently, it is now beyond all doubt that the Biden Bounce was orchestrated by his, er, allies in the Democratic Party. To be fair, it was them that shoehorned him into office in 2020. So, arguably, it was their call to make. It is also them who decided amongst themselves who his replacement would be, as well as, presumably, selected her running mate.

None of which is cause for overmuch complaint by the electorate. We get the governmental leadership we deserve. And — just as was the case before Ol’ Joe was disappeared, we are confronted with depressingly suboptimal choices – two candidates neither of which (or so it seems to me) would fall into the top 500,000 of ideal applicants for the job.

It all leaves a political muddle in its wake – at a rather inconvenient time. Perhaps in sympatico, the markets are muddled as well. Wicked selloffs followed by recoveries, which, while energetic, have thus far been insufficient to recover lost ground.

Early last week, somebody got to Vixen VIX. This much is clear. For a brief time on Monday, she had levitated above 60. By Friday’s close, she was back at a hardly demure but much more pristine 20.

On another obtuse note, the yield curve – as measured by 2s/10s, briefly recaptured its natural upward slope, but has since retreated yet again into inversion, with two-year rates now fixed at 4.055%, and ten-year yields declining to 3.941%.

And we won’t get through August without enduring a few more tiresome trials, the first of which, lord help us, is the Democratic National Convention. It promises to be high on glitter/hype, bereft of substance, and quite possibly subject to annoying disruption by thugs. It will be difficult to ignore. But as with the drunk’s relation to the proverbial lamppost, will serve more for support than illumination.

Immediately thereafter is the Jackson Hole Economic Policy Symposium, held high up in the Teton Mountains, and sponsored, in time-honored fashion, by the Federal Reserve Bank of Kansas City. I’m not sure what else the KC Fed does, so they tend to pull out all stops for J-Hole. And often, meaningful consequences ensue. It begins with a whole bunch of economic wonks droning on about God knows what, but all eyes will be on trained to the customary address by the Chairman of the Whole Damned Federal Reserve System. It’s his party after all, so we owe him our obeisance.

Plus, I have a hunch that J-Pow at J-Hole will be an address worth attending to, that he won’t leave us empty handed, as the timing is perfect from a political (if not economic) perspective to lay down a big ol’ bag of monetary easing tchotchkes on the masses.

Here, I am reminding my clients of the 2012 sequence, when Chair Bern used the occasion to announce QE3 – an intervention unparameterized in terms of duration and magnitude, rendering it large enough for me to have dubbed it QEoo. Though debatable, I believe it went a long way towards giftwrapping re- election to Obama, in a race that was closer than it appeared or that anyone remembers.

Then, ushering in the all-too-rapidly approaching Labor Day rituals, comes the earnings tidings of NVDA. I am not an equity analyst and have no formal opinion on the results for giant AI-job stealer. We do know that: a) it’s been the main driver of the extended rally; and b) it’s off 30% from its giddy mid-June highs. As such, the conveyance of its tidings may move the markets.

I don’t anticipate any of the above with much enthusiasm. I’m tired and it seems to me that everyone else is too. It all reminds me a bit of the Summer of ’74 – a time when the future looked opaque indeed.

There are other parallels. Inflation was stubbornly brewing up. The Middle East was a mess. We were justifiably terrified of Russia and China. An unpopular president was dispatched by insiders, not long after, for political reasons, having yielded to defeat in a foreign conflict (then ‘Nam; now Afghanistan).

The music was better back then, but this is not something within our control.

But somehow, we survived the departure of Nixon. Who was followed by the underappreciated Gerald Ford. Then came Carter, Reagan the two Bushes (two in the Bush?), Obama, Trump, Biden and now God only knows who.

The Gallant 500 is an approximate 80 bagger since then, so there’s no reason to lose heart.

Yes, my loves we have problems aplenty with which to contend. But I reiterate that on August 8, 1974, the G5 closed at 80.76. I just checked my charts and find that on Friday, it settled at 5344.16. If I had diverted what I spent that summer on glam rock records into the markets, it’d be worth like $5M.

In the last 50 years, we survived everything from disco to the twin towers to three impeachments to a global lockdown and other trials too gruesome (or at any rate too numerous) to inventory. Yet the rivers of equity valuation flow choppily but inexorably downstream – past every effort to gate them.

The above-mentioned waters are nothing if not troubled, but as I offer a heartfelt, jacket-buttoned farewell wave this week, I encourage y’all to remember that our boat has endured rougher seas these past two generations, and has, thus far, kept to its singular, God-given course. Invest accordingly.

TIMSHEL

Longtime followers of this space are aware that are few actions that draw my ire as fully as when somebody harshes my mellow.

My sentiments here are strong enough for me to have taken the extreme step of researching the origin of the phrase. But I came up empty. About as close as I can come is an exchange between Stoney and Dave in a film called “Encino Man”, which I’ve never seen.

But, just as Bogie never uttered the phrase “play it again Sam” to Dooley Wilson in Casablanca, I can find no evidence that Sean Astin, Brendan Fraser or the immortal Paulie Shore ever muttered our modified, titular command as part of the forgettable 1992 film in which they starred.

But I reckon all this is beside the point, because it’s not the harshing of my mellow that is currently at issue, but rather the mellowing of my harsh.

Because I’ve been in something of a harsh mood lately, and, when one is in a harsh mood, the last thing for which one bargains is somebody or something coming around to spoil one’s (presumably) well- earned snit, by mellowing it.

So, what caused my harsh? Glad you asked.

We can begin with the global/political/capital/commercial/socio economy, and, within this catch all category, what had risen to the top of a large inventory of indignities was the recent announcement that prosecutors at whatever passes for a military court in Gitmo had accepted a guilty plea from KSM and those other tower demolishing cockroaches, which spared their lives — 23 years after the largest and most astonishing criminal act since at least when he Nazis were goose-stepping about.

Apparently, Defense Secretary Lloyd Austin cancelled the deal, presumably, at least in part on political grounds (i.e. not wanting his team to lose any anti-9/11 votes). Good on him. But he did mellow my harsh.

What else? Well, we’re now 2.5 years into a war in Eastern Europe and have a major throwdown brewing in the Middle East, where the baller Israelis went into Iran itself to take out a major target.

The domestic political winds may be shifting towards the Left the last couple of weeks, and it is uncertain whither they will they migrate from here. Should they continue their current trajectory, though, into the cold months, they bode ill, in my judgment, for both the cessation of hostilities in and around the Holy Land/Fertile Crescent, and for the affordability of goods issuing from the domestic energy sector.

All of which is harshing me. But not the associated markets, which are beyond mellow about all the above. Crude is on the down, and Nat Gas, as we anticipate the inexorable winter winds, is at a generational low:

Also mellowing my harsh are tidings that the CrowdStrike problems experienced at The Sphere have been eradicated, enabling Dead and Company to proceed with its never-ending residency – during the interval comically designated as holy by Deadhead leaders as the “Days Between” – a period that runs from Jerry’s Birthday (8/1) to his yahrzeit (8/9).

On the monetary front, we encountered a latter-day, Central Bank version of the 1837 English fable “Goldilocks and the 3 Bears”, with the BOJ raising rates, the Fed standing pat and the BOE cutting. The markets reacted in nightmarish fashion across all three (hot, cold, and just right) paradigms, with USDJPY plunging in especially alarming fashion, taking nearly all the NK225 ytd gains with it:

Our Baby Bear/just right Fed held rates constant and murmured its time-honored platitudes about being alert and on its watch to step in at any signs of trouble. And, mid-week, investors were lapping it up like pleasingly warmed porridge. Ironically and contemporaneously, the National Debt passed the quaint $35T threshold. All of which was mere prelude to the wicked hissy fit they threw not long after the markets opened on Thursday, which extended all the way through Friday’s close. I didn’t do the math, but published reports suggests that our equity complex shed ~$3T in valuation over this sequence. Which is a pretty drastic diet. Even for a bear.

Root explanations feature a tepid July Jobs report, along with a Mag 7 (less the always tardy NVDA, which doesn’t weigh in until Wednesday, August 28^th – two days before the start of a Labor Day weekend celebrating the careers that the company’s products seek to destroy) cycle that is best described as “mixed”.

Mixed it may have been, but investors undeniably turned tail. And, in support, that fickle strumpet Vixen VIX, who has lain supine for longer than memory allows, has risen to her dainty legs and doubled in approximately one month:

Thus, in the equity complex at any rate, rather than having my harsh mellowed, the markets seem intent on harshing it. And it is not pleasant to experience the harshing of one’s harsh.

In fact, the episode is so annoying to me that I find myself with no alternative other than to mellow my own harsh. And perhaps yours as well.

So, I’m gonna step out here and suggest that all this agita is overblown, that I think risk assets are a buy here. I will try to be brief in my justifications, but headline inputs include the following.

The global capital economy is awash in cash. The Fed is now gonna probably cut aggressively. Not only energy prices, but the entire commodity complex is on the down, with grains bearing the brunt of the carnage. Even high-flying Copper is down > 20% this summer. While everyone has chosen this moment to yet again fret themselves about a recession, Q3 GDP estimates are >2%. For all the hand wringing about earnings, with 75% of precincts reporting, were looking at +11.5%.

We thus are staring at a capital economy that is remarkably, impossibly strong, mellowing out against many harsh headwinds. Valuations are now more rational, and I think the real market ballers will be doing some shopping ere long. It might be wise to follow their lead. But I’d wait till they get going to tag along, because if there’s truly a rally out there, it’s likely to ensue for a spell.

To close, while trying to mellow our harshes, I wonder if I’m getting too old for all this, and I dream of the day when I can spend my time mellowing my mellows. Even that thought though, does little but mellow my harsh. Which I reckon is my very point, throughout.

TIMSHEL