I’m going to catch that horse if I can. And when I do, I’ll give her my brand,
And we’ll be friends for life, she’ll be just like a wife, I’m going to catch that horse if I can,

“Chestnut Mare” by Roger McGuinn and Jacques Levey

I draw your attention to this fine composition by The Byrds, without further comment.

Save this. I got to thinking about the elusive Chestnut Mare recently, because, in my eternal quest for that nutbrown equine beauty, it occurred to me that I need an upgrade of my brand.

Because branding is everything these days.

And what’s the point of catching the horse, if I can’t give her my brand? Or, perhaps worse, branding her in a manner that falls short of her majestic stateliness?

Or, most mindboggling to contemplate, what, if, in my case, horse and brand are one and the same?

So, I been trying to enhance my brand. I begin with the logo, recognizing that branding extends well beyond symbology. But one must start somewhere, mustn’t one? And that if I do manage to catch that horse, and she turns out to be non-branded, it’s surely my logo I would affix to her lovely hindquarters.

And here, I’ll be asking for your assistance.

Our current logo was kind of an afterthought, dating back to our launch in 2017:

It’s not like it’s bad or anything. My guys did the best they could. If you care to deconstruct it, the concept of a magnifying glass revealing an upward sloping bar graph (with a trend arrow added lest any of the obtuse miss the meaning), it is certainly uplifting and nothing in my judgment to be ashamed of.

But let’s face it. The image is tres 1.0 – even for 2017. More than six years later, the generous might call it 0.5.

Finally, and perhaps most importantly, my family just this weekend mistook it for the AARP logo.

And speaking of AARP/branding, I noted with interest that the Rolling Stones, having just announced their 2024 performance dates, contemporaneously disclosed that the tour sponsor is – you guessed it – the American Association of Retired Persons. One can look at this as be being a refreshing dose of candor from the lads, now octogenarians, who have buried two original members, and chased away their founding bass player, but continue to rock on.

On the other hand, it stands in sharp contrast to, say, the 1969 Altamont concert, which had no sponsors but enlisted the Hell’s Angels for security, a move which didn’t work out particularly well.

I will resist the temptation to take it as a sign that maybe I’ve lived too long, but the news from the tape renders this more difficult by the day. I read this week, for instance, that Hall is suing 0ates, and that restraining orders are involved.

But back to this branding thing. My guys have been busy working up new logos, and again I salute their efforts. A couple of the more eye-catching ones are presented below:

I could live with either one. But if the teaming millions that comprise my readership wish to weigh in, I’d be more than obliged.

I am aware that my gratitude is not the favored currency of the realms we occupy. So, to sweeten the pot, I offer a free month of service to anyone submitting a winning entry, and a gratis consultation to interested parties who constructively opine upon this, most vital of issues my enterprise must confront.

Because branding is everything – a reality that has perhaps never prevailed as much as it has during the current decade. Which began with a virus and associated mitigants. Those of certain predispositions were aggressively disdainful of vaccines and therapeutics until the political power balance shifted, after which, not only did they embrace them, but cast aspersions of treason at anyone who disagreed with their narrative. Thus, even in a burgeoning pandemic, branding of response trumped substance.

We also received branding assaults from Swiftie, Barbie, BLM, LGBTQ+, Bud Lite, TikTok, Twitter/X, Meta, Marvel Comix, Disney and dozens of others.

In the markets, we’ve been besieged by SPACs, NFTs, Defi, DEI, ESG, 0-day options, Quantitative Easing, Quantitative Tightening, factor parity, risk parity and heaven knows what else.

What have all these in common? Say it with me – BRANDING.

Yes, everyone is trying to catch that horse if they can. But it doesn’t appear to be a Chestnut Mare.

But whether dominated by branding or driven by other forces, at least for now, the external factors being brought to bear on the capital economy are bring forth nothing but miracles.. Security prices are riding a one-way-ticket to the heavens. Energy prices are gratifyingly docile.

And, in result, Vixen VIX has lowered herself to levels last observed prior to the lockdowns:

Though off-brand, I might suggest that now is as good a time as you are likely to find to purchase portfolio insurance. But instead, I reckon y’all will wait until it morphs from cheap to unaffordable.

Yes, I would’ve bet against this giddy construct at virtually any point this year, but then again, I have already demonstrated that my branding chops leave a good deal to be desired.

I reckon there are some risks with which to contend that remain to us. Q3 GDP revisions drop this week, along with associated inflation measures derived from this metric. There’s all of December in front of us, and who knows what happens then?

I suspect that it’ll be a quiet week, as the nation recovers from its seasonal coma. Further, I reckon that the first action in December will feature an attempt to extend the rally. Because, well, why not?

After that, it gets a bit more real. And then it’ll be 2024. With political action likely to reach new heights of hysteria. With two wars still going on, either of which could expand in nasty ways.

But as for me, I’m gonna catch that horse if I can. And, with your help, I’ll give her my brand. Unless, that is, the horse is the brand and vice versa. Which would be OK by me.

So, how ‘bout it? Can y’all pitch in? A month of risk solutions services will likely not do you any, or much, harm. Maybe, together, we’ll catch that Chestnut Mare. We won’t be able to hold her for long, but we will have made a friend for life.

And if all fails, you can do what everyone else does. Blame me. Which, for many of you, is about as onbrand as it gets.

TIMSHEL

Sixty years on (this Wednesday) and they’re still handing us the same old line.

I retain my doubts about the prevailing narrative. And I suspect I’m not alone. A marginalized nut-bag who defects to/un-defects from the Soviet Union and spends his other free time advocating for Castro, takes a menial job located on the 6th floor of a building where he can draw a direct bead on a presidential motorcade, and he nails two kill shots, at an open, moving car, over 100 meters away.

He then strolls out of the building — unnoticed amid the chaos, hops a city bus, murders a misanthropic Dallas beat walker (the insufficiently lamented J.D. Tippit), saunters into a matinee at a downtown movie theater, and is promptly arrested for the Crime of the Century.

Two days later, perhaps the most prominent suspect in American criminal history, held in custody by the notoriously ferocious Dallas Police Department, along with swarms of units from the FBI, CIA, U.S. Postal Service and God knows who else, is plugged in the stomach on national live television by a local putz, known around town for his meshugana tendencies, and dies on the way to the hospital.

A week after, the newly installed president forms an investigatory committee, chaired by the sitting Chief Justice of the Supreme Court and featuring a future U.S. President (Gerald Ford), a former CIA Chief (Allen Dulles) and a few other dignitaries, which, ten months later, releases a report that adds nothing to what everyone saw with their own eyes. Oswald killed JFK and acted alone.

Nothing to see here folks, sayeth the Warren Commission.

But it certainly was an unsavory conclusion to one of the saddest sagas in our collective awareness.

In result, ever since that horrible week sixty years ago, the world has poured untold resources into calling bullshit. Theories, too numerous to recount, have abounded, among the most prominent of which is the existence of a second shooter from a spot forever enshrined as the “Grassy Knoll”:

I have several reactions to this, the first of which is that the Grassy Knoll is not much of a knoll, and that it is largely bereft of grass. Beyond that, the guy in the lower right looks highly sus, and nobody has ever explained the presence of the heat-packing green avatar in the center/right of the image.

However, while I am willing to accept the hypothesis that Oswald was the lone shooter, I refuse to believe he acted alone. The Kennedy Assassination has the stubborn look and feel of a mob hit, as most prominently evidenced by the shooter himself being taken out before he could sing like a canary.

The Syndicate certainly had its beefs with the Kennedy clan, dating back to unsettled scores from their Prohibition-era bootlegging partnership with Papa Joe. They worked hard to elect Jack, who placed his whacko brother Bobby in the AG’s slot, whereupon he pursued the Mob with a vengeance. And all of this is to say nothing of the problems that arose from the presence of multiple shared side pieces.

So, I reject the Grassy Knoll but not the Conspiracy, and I reckon that it’s all exemplary of much of what we experience in this life: conspiracies abound, but not the ones we envisage.

And all this makes me wonder about the possibility of a great conspiracy being perpetrated in the Capital Economy. Which is showing astonishing signs of health and resiliency entirely inconsistent with the economic transgressions it has committed. We over-borrowed. Overspent. Printed new wealth out of thin air. We idled the workforce for several quarters and made up the difference by awarding various forms of handouts – generous subsidies for the empowered, direct cash giveaways to everyone else.

Two nasty wars ensued that do not present encouraging prospects for tidy resolution. In the latest, the world erupted into victim-blaming protest. The populace is restlessly unsatisfied – all with an election pending that features two of the most disfavored frontrunners in the history of national politics.

Against this backdrop, the capital economy is surging. Equity indices on a double digit run over less than a month. 10 year yields down more than 0.5% over roughly the same time period. Inflation statistics were nothing if not encouraging.

The long-anticipated Recession is nowhere on the horizon, with Q4 GDP estimates now exceeding 2%. Earnings and guidance have been encouraging. The Feds can now miraculously fund themselves into ‘24.

Crude Oil is trading in a range last observed prior to the start of Russian/Ukrainian war.

So, maybe we should just lock everybody down again, print more money, and give it away.

Not gonna lie – it all makes me very nervous – perhaps in part because it goes against all my graduate school training, funded as it was by student loans that it took me a decade to repay.

Perhaps I should ask for a tuition refund.

I also must admit that I wrongly proclaimed the early-4Q relief rally should have run its course by now.

But there’s some statistic, the specific details of which escape me, that when the Gallant 500 is up (I think) > 5% on November 15th, it has always closed out the year at incrementally higher levels, so my latest call is looking iffier by the minute.

And, in perhaps the most telling sign of the times, Jim Chanos, arguably the most prominent short seller around, and the guy who catapulted to fame by taking out those d-bags at Enron, is shuttering his iconic Kynikos (the Greek word for cynic) Asset Management Fund at the end of the year.

I would therefore very much like to jump on the current bandwagon. But. I. Just. Can’t.

Because I think there’s a conspiracy afoot. I can’t quite put my finger on the details, but this all just seems too good to be true.

So, it all boils down to what you want to believe: me or your lying eyes. Harbaugh caved to the B1G suspension, and I would’ve bet against that as well. But then again, I didn’t think that the country that suffered the slaughter of 1,200 innocents and which drops leaflets in advance of retaliatory action would be the one accused of genocide.

Or that Bin Laden propaganda would lead the trending TikTok streaming parade.

But, then, what are the chances of a poor local cop getting plugged one sunny afternoon by a guy who had, not an hour earlier, had successfully, and allegedly without help, murdered the Leader of the Free World? Or that the shooter could be murdered while in custody with the cameras rolling.

Or that a grassy knoll can take its place in history despite having not much grass and barely rising to the dignity of a knoll.

But hey, that’s where we are, and I continue to urge caution in your risk deployment.

Today, though, on the threshold of Thanksgiving week, my thoughts turn to Tippit. Helluva a shame that Oswald (and of this we can be pretty sure) did him. He survived as a paratrooper in the wake of the Battle of the Bulge, was injured and awarded the Bronze Star. He had longevity in his genes. His father Edgar died at age 104, and his mother May Bug (not kidding) reached 85.

J.D. only made it to 39. His widow died a couple of years ago, at 92. He left three children.

Kennedy – also a decorated WWII hero, and Oswald, who received a hardship muster out of the Marines, have been consigned to their places at the opposite ends of history, and my own theory is that the country was saved from abject depression from the assassination of the former in large part by the contemporaneous emergence of the Beatles.

The Grassy Knoll remains at its post adjacent to Dealey Plaza – apparently neither grassier nor more knolly that it was sixty years ago.

Somewhere, somehow, somebody knows something about what happened that day. But they ain’t sayin’. So, I’ll reckon we’ll keep askin’.

If I hear anything, I’ll be sure to let you know.

TIMSHEL

I must cop to having something of an inferiority complex with regards to the University of Michigan. Having taken my degree from the flagship institution of the state immediately to its left (and one that has the more legit claim to the Upper Peninsula, but that’s another story), I’ve had to live with the following realities.

It consistently ranks higher on the endless string of academic surveys that plague us, but which we cannot ignore. It has the more illustrious alumni (one former president, Madonna, the founder of the SDS). It sends many more graduates to Wall Street.

Heck, even in terms of team nomenclature, I am repeatedly compelled to remind myself that badgers are members of the wolverine family within in the short-legged omnivore sub-genus Mustelidae.

In the signature sport of football, they have cleaned our clocks – 18 B1G titles to our 14; Four Heisman winners to our two. Head-to-head record 17 to 52.

And, if I’m being completely honest, they have a better fight song than we do.

So, naturally, I shed no tears that the B1G has taken the baller step of suspending slightly unhinged Michigan coach Jim Harbaugh for the final three games of the regular season.

At issue is a convoluted sequence where a staff level coach booked himself tickets to upcoming opponent’s games, busted out his cell phone, and stole hand signals issuing from the sideline. Is this even illegal? Or immoral? Heck, I think that not doing so would represent a grievous failure of due diligence.

The suits at B1G HQ felt otherwise and banned Harbs from the sidelines for the final three games of the conference schedule.

Perhaps this is a message to incoming institutions UCLA and USC (which are certainly capable of various forms of espionage in their quests for glory for the Bruins and the Men of Troy) not to pull any fast ones.

But Harbs is not happy (not that he ever is), and is taking his case to the courts, where, presumably, his argument will take the form of reminding the judge that stealing signals is the American Way. For 2.5 centuries, our boys have died face down in the mud to protect the ritual, which, if not codified in the Bill of Rights, certainly ought to be.

So, there’s a lot riding on the pending ruling here. Perhaps even the very existence of society as we know it.

Meantime, taking a quick glimpse at the calendar – which I do from time to time – I note that there are a mere 6 weeks left to 2023.

At the risk of stating the obvious, it seems like it has barely begun, or, at minimum, should be no more than half over.

But here we are – two weeks left in November and four in December. That adds up to six.

Translated into trading days, we’re looking at ~30. But if you factor in holidays such as Christmas, Thanksgiving, as well as the market irrelevant Black Friday, the Christmas Eve midday close, and, of course, the 10th of Tevet (12/22), which consigns me and my observant Mishpocha to fasting, the number of sessions in which to authentically chop some wood dwindles to 25.

That’s 25 out of 250 each year, or, in other words, somehow, we’re 90% completed with this trip around the investment sun. It’s thus now or never in terms of generating a respectable full-year result.

Time is therefore running out to use signal stealing as a means of posting a constructive ’23 return.

This week’s action suggests that investors are taking notice and are striving mightily to create accretive market scenarios. Our equity indices have all rallied +/-10% over the last fortnight, and Col. Naz closed Friday a skinny 20 index points from its year-to-date highs. 10-year yields are off 40 bp. USDJPY hit record levels during Friday’s session.

Crude Oil, the raging of wars in geographic proximity to two important production centers notwithstanding, has settled in at benign levels. The VIX is at a subdued 14. Bitcoin is up by >30% over the past rolling quarter.

Outperforming all contestants, though, are two tasty edibles – Sugar and Cocoa – both of which are surging from one all-time high to the next:

But unless your bag is quirky commodities, there have been few signals to steal, and the signal supply for the remainder of 2023 is dwindling down to imperceptible levels.

I reckon that this week’s CPI and PPI readings will give us some indication of Inflation trajectories (else why calculate these figures at all?), but nearly all of us will receive these data points contemporaneously, and anyone seeking a purloined early read should probably think again. The enforcement crew at the Bureau of Labor Statistics are meaner than rattlesnakes, and I would counsel one and all against locking horns with them.

Both measures are projected to be benign, suggesting further progress in our battles against price demons. But this comes at the expense of dilutive economic activity. On Thursday, we get a look at October Retail Sales, projected to have declined 0.7%.

It also bears mention that Wednesday marks the close of the always-dreaded 45-day hedge fund redemption window, which, alas, is unlikely to offer much insight.

Moody’s – that Uber patriotic organization that is the only major credit rating agency to steadfastly maintain its top rating on Treasury debt – has now put this paper on ominous “Negative Watch”. A signal? A portent of things to come? The answer will require our patience.

Other than that, not much. For the rest of the year.

Of course, there are less data-driven stimuli on the horizon, including the progression of the latest scuffle in the Middle East, the approach of the increasingly depressing presidential election cycle, another debt ceiling showdown, etc.

But I suspect that all this is thin gruel for signal stealers. For those deriving signals from reading charts, they all look great, but I suspect that the good vibe feel of this tape will soon run its course. And we will be left where we began. In a valuation limbo where the signal to noise ratio is alarmingly low.

Which is another reason why the expected return to signal stealing is probably not worth the attendant risk.

Whine about it if you will. The Wolves, when not singing their punchy fight song “The Victors”, were crying rivers all weekend.

But to The Victors go the spoils. Michigan, with Harby reportedly attending a Wolve hockey game in Ann Arbor, scored a victory on Saturday on Mount Nittany against the 10th ranked Penn State Lions.

And, to add insult to injury, one of the key plays featured a TD saving tackle by a 340-pound Michigan DT, whose name I couldn’t help but notice.

There he is. Number 78. In Maize and Blue. But he ain’t me. While the Mich KG was motoring, I was in NY, fixin’ to watch my Badgers suffer perhaps their most ignominious loss in decades, getting crushed at Camp Randall by lowly Northwestern. The score was 24-10, but the game was an absolute slaughter; perhaps the most humiliating loss by them that I have ever witnessed.

My eligibility ran out in the early ‘80s, and these days I am rockin it sub-200. But in these troubled times, if they need me to line up over Center, all they need to do is give me a call.

Score another one, meanwhile, for the Wolves, who don’t even have a real or anthropomorphic mascot, while Bucky the Mighty Badger licks his noble wounds.

Alas, some things never change. But I’m not gonna cry about it, because I am not a whiny wolverine.

TIMSHEL

I pledge to you that some of these days, I will desist from using this column as a running obituary. I would have liked even now to have desisted, but God Oh Mighty, they keep droppin’ like flies.

So, today’s note goes out to one Robert Montgomery Knight, the iconic college hoops coach who, while at Indiana University, made laughingstock of my Badgers year after year. Perhaps owing to his having launched his coaching career at the helm the U.S. Military Academy, as well as to his martial bearing, he was widely referred to as The General.

As am I. Ever since I took on the CRO post at an iconic, eponymous hedge fund whose founder was reared in Tennessee and got his advanced book learnin’ in Charlotteville, VA. The CEO and COO also hailed from the Old Dominion, and the place sometimes resembled a latter-day Confederate Encampment. Noting, on my first day, that I shared a sir-name with the Commander in Chief of the opposing force in the War of Northern Aggression, the guy whose name was on the door hung the handle of The General on me.

In that environment, it was hardly a compliment, but it stuck. I even used it as the corporate moniker of my current outfit.

And one thing that you should know about us Generals: when one of our number falls, whether they be friend or foe, we weep for them. I myself, my status as leader of the enemy army notwithstanding, have still not recovered fully from the loss of Albert Sidney Johnston at Shiloh, or the friendly fire demise of that rascally Stonewall Jackson at Chancellorsville.

And now we bid farewell to General Knight. He was so tough as a coach that he ran Larry Bird, maybe the coldest assassin ever to lace ‘em up, out of Bloomington in a single month. His practices were pure torture. He forced his guys to go to class. Almost all graduated, which is more than can be said about Coach K: his protégé that somehow eclipsed him. Nobody on his squad took payouts or gifts. It was a tight outfit, one that even my nemesis, R.E. Lee, could appreciate.

He could not always control the fire inside him, however, and, after incidents of public misbehavior too numerous to recount, they chased him out of Indiana. He re-emerged in Lubbock, TX, at Texas Tech, which just last month celebrated its Centennial. There, in the heart of football country, where roundball is barely an afterthought, he created a perennial contender.

In 2008, he ran outta gas. And not long ago, Indiana University welcomed him back into the fold. Ran him a big party. From what I can tell, he then resettled in Bloomington, and passed away in that town of his greatest glories – mid-last week.

I doubt he left with many regrets. Like Butkus, and maybe even Byron, the world had arguably passed him by. Life these days is about, shortcuts, hacks – the very antithesis of what Coach Knight was all about. It’s a world of Participation Trophies, which clearly were not Coach Knight’s jar of jam.

I wouldn’t even have a problem with any of this if it were even remotely sustainable. But it ain’t. Sustainable, that is.

So, it’s a mixed bag for us generals. Since we’re covering buckets, consider the Washington Generals, a squad created to serve as foppish foils to the fabulous Harlem Globetrotters.

As of 2015 when they folded (they reformed in 2017), their record against the Trotters was 6-16,000.

On Thursday, Guns and Roses dropped a forgettable tune called, yes, The General. It was written during the oxymoronically named Chinese Democracy sessions. That recording session began in 1994, but CD wasn’t released until ’08. The General came out in November 2023.

Which is all I have to say about Chinese Democracy Generals.

But there are other generals to consider. On the losing side of recent battles is, for instance, General Motors, our country’s largest auto maker, and a host once so mighty that was said of them that as they went, so went the nation. Well, they and their competing battalions just got their clocks cleaned by the United Auto Workers, which gained nearly everything they sought in their recent job action, with enemy funded Combat Pay thrown in for added humiliation.

In fairness, though, they were locking horns with that modern-day Napoleon – UAW President Shawn Fain, pictured below:

There he is on the immediate left, dressed in fatigues and looking like no one so much as George S. Patton relieving another Montgomery (U.K. Field Marshal Bernard) in the Battle of the Bulge.

His image evokes memories of ancient martial glories, including those of, say, Alexander the Great, of whom it is said that he wept when there were no more worlds to conquer.

Fortunately for General Fain, though, new contests are on the immediate horizon, including those against Tesla, Toyota and Nissan.

May he follow in the footsteps of other great labor leaders – including James Hoffa, James Hoffa, Jr., Jackie Presser, and of course Fran Drescher. But how well he fares is a matter of broad interest to us all. The new contract places the Big Three at an approximate 60% labor cost disadvantage to upcoming strike targets (Tesla, Toyota, Nissan, etc.) – which will certainly impact everything from auto purchasing pricing patterns to the geographic distribution of manufacturing labor forces.

All of which comes against the backdrop of a Jobs Market that may be losing steam. Friday’s BLS report not only showed tepid job creation, a downward revision of numbers for the last two months, and an unexpected jump in the base rate, but also a disproportionate contribution from the Public Sector.

Investors, however, took all in stride, bidding up stocks, bonds and even Bitcoin. Ten Year Yields are down ~50 bp from Mid-October highs. Here, the contribution of the flanking civilian army led by Fed Chair Powell, bears mention. He and his compadres are, somewhat surprisingly, speaking openly about declaring victory in the Inflation Wars, and sending his battle-weary rate hikers into muster-out configuration.

And thus, we can offer warm congratulations to one of our favorite generals: General Dow, who surged back into positive ytd territory this past week. This pleases me immeasurably, because – not gonna lie – he was facing a threat of being busted down to the ranks and being superseded by Col. Naz (promoted only earlier this year from Captain), up >28% in ’23.

The big question that emerges is whether recent victories on the investment battlefield are signs of a surge towards victory, or, simply the back and forth of the fortunes of war, as perhaps best exemplified in the WWI trenches of France.

I wish I had a better read on it for y’all, but if forced to commit, I opt for the latter. The tides are bound to reverse themselves again ‘ere long, and I believe we are best served by to gird our loins for future bloody contest.

So it goes in the generalship game, which I am sad to inform you is more than just putting stars on your shoulders and receiving salutes. As mentioned above, when I first achieved the rank, it was anything but a compliment, though I do believe it was well-intentioned.

I was thus compelled to repeatedly remind my colleagues over there just who won the War of Northern Aggression. Because it was 16 decades ago, our memories are short, and the world has continued to battle ever since.

In closing, your still-alive general thus urges you to stand alert and prepare for further orders, which should be forthcoming shortly.

TIMSHEL

Continuing with our mortality theme, and having already paid homage to departed rats, cats and bears, I mark with interest the passing of Wall Street icon Byron Wein. In offering up the following, I mean no disrespect to the man. I only knew him as everyone else did — from his annual list of 10 surprises for the upcoming year. True, he was wrong on most of these, but that’s precisely the point. I like the gamma associated with the strategy, because, when you miss, you fare no worse than having met expectations, while, on those occasions where your improbable predictions come true, you are entitled to an ostentatious victory lap.

I did have one personal encounter with By, though, which, in the telling, does not reflect particularly flatteringly on him. For all I know, he was a nice enough fellow, and I am idiosyncratically leery of disrespecting the dead. But I enjoyed the episode so thoroughly, particularly as a tale of the human foible of hypocrisy (mine and his), that I cannot resist the temptation of sharing with y’all.

Though, for a variety of reasons, I now shun these affairs, back in the deuce, I routinely participate in conference panels. And one time in 2005, I was invited to join a hoity toity confab — for which Byron acted as moderator, and which featured, among others, the former CIO of Soros Fund Management. It was one of my higher profile gigs, and I wanted to be at my best. So, I paid particularly close attention on the prep call and even (highly uncharacteristically for me) took some presentation notes.

Then the big day arrived. About 500 attendees – including my mom who drove down from Schenectady and my Aunt: New Mexico Mitzie, took their places in one of the larger presenting rooms at Chelsea Piers. I was ready. Or so I thought.

Byron took to the mic and immediately went off script from what we had previously discussed. One by one, he threw softballs at the other panelists, and then, with about 10 minutes left in the session, he turned to me, announcing:

“Folks, we have with us a gen-u-wine hedge fund risk manager, and I want to ask him a question. So, Mr. Gen-u-wine Hedge Fund Risk Manager, I don’t think guys like you have any clue about risk management. Convince me that I am wrong”.

More in amusement than in sorrow or anger, I did my best. I admitted my own fallibility and that of my peers. Spoke briefly of our methods and of our humble desire to little other than add modest value to our organizations. I saw encouraging looks on the faces of family and friends (though Aunt Mitzie had murder in her eyes), and felt that, at minimum, I had not failed.

Byron apparently thought otherwise, ending the session with the following comment:

“Thank you everyone for attending. This concludes the panel. I am now going back to my office to redeem out of all my hedge fund investments”.

I don’t know what I did to piss Byron off, but this much is certain: whatever I was laying down, he wasn’t picking up.

I’m not sure from which funds, and in what amounts he withdrew his capital, or, indeed if he withdrew any capital at all. But now, 18 years later, I apologize to those impacted — for abetting the loss of this most coveted investor allocation.

However (and on my immortal soul), I learned later that week that Byron had resigned from his post as Morgan Stanley’s Chief Investment Strategist — to assume the position of Vice Chairman of Peaquot Capital – a “first generation” hedge fund straight out of Central Casting. It had a storied run, including significant regulatory trauma, during the last round of which, in 2010, the Federales forced it to close its doors, extracted a substantial fine, and imposed a lifetime ban on founder Art Samberg – from the Investment Management Industry.

Peaquot was always a bit sketchy, but I was forever willing to give them a pass for having a cool name. I always thought that its moniker was a tribute to the ship in the novel “Moby Dick”, and that the concept of an investment vehicle dedicated to hunt Big White Whales was highly clever. But I was wrong. Captain Ahab’s revenge-seeking vessel name was Pequod, while Peaquot is simply the appellation assigned to a rather obscure Native American tribe, located in the Northeast, whose main claim to fame is its ownership of the Foxwoods Resort and Casino in Ledyard, CT. In other words, hardly the Apaches, Comanches or Seminoles.

So, I withdraw the mad props I previously awarded to the late Mr. Samberg, and, by connection, to the recently departed Mr. Wein.

Byron’s actions were, in my judgment, highly hypocritical, but I stop short of calling him a hypocrite. Because we’re all hypocrites. Take me, for example. Though I vibed humility in response to Byron’s 2005 grilling, it was all a ruse. I know for certain (as do you) that my risk management riffs are pure gold, that choosing to work with me will virtually ensure your safe passage to fame and fortune. So, I lied through my teeth on that panel, moderated by a recently departed Wall Street legend, 18 years ago.

But what in God’s name does any of that have to do with the probing market analysis that is the hallmark of this publication? I’m glad you asked. Because, whether due to hypocrisy or irrationality, investors are acting in ways that plainly contradict associated messaging.

For the moment, of course, market participants are taking their cues from geopolitical events transpiring in the Middle East, and here, beyond doubt, the hypocrisy well runs deep and wide. Outrage tilts towards the victims, rather than the perpetrators, of the worst terrorist attack in at least two decades. World leaders spit mad warnings at Israel, while giving a pass to the Ayatollahs that cooked up this mess.

Take the Turks, for example, and their polecat leader Erdogan. Sunday marked the 100th anniversary of their existence as a democratic republic, having been formed out of the WWI ruins of the Ottoman Empire, the latter of which, since the 16th Century, included Palestine. Not sure how well the Palestinians did under the four centuries of Ottoman rule, but I suspect it was a rough go for them.

It is thus rather dubious for the Turkish leader to label Israel a war criminal, and to call for its outright destruction. Is it hypocritical as well? I reckon that’s for each of us to decide on our own.

But the markets are reacting in odd ways to these tidings. Crude Oil continues to trade in yawningly narrow ranges, military action notwithstanding. And, increasingly, investors are tired of owning it:

I call this strange, believe that the risk/reward for a long Crude position is materially favorable, and encourage you to act accordingly.

Meantime, the equity markets are positively anemic, so much so that General Dow has faded into negative territory, having, in aggregate, yielded ground from its positioning when the Comeback Year of ’23 began. What gives? The economy is booming. The Fed, set to weigh in again on All Saints Day (Wednesday), is, according to the market indicators, 99.9% certain to stand pat.

Earnings are humping along, stronger than they have been in several quarters. But investors are punishing the reporters – no matter what tidings they bring to the podium:

In terms of doings in Washington, there’s a new Speaker in town, which, first principles, looks like a win for us all. But it does appear to me like the whole sequence was under Trump’s control, which – not gonna lie – scares the bejesus out of me.

At any rate, if we make it past Tuesday, we will have survived another October, leaving, improbably, less than forty trading days in this once joyous/increasingly bitter investing year. The final eight weeks will not be easy, and the best advice I can offer is that the more honesty and the less hypocrisy with which you operate, the better off you’ll be.

So, it’s time for me to own up to a few things. My mother lived in Chicago, not Schenectady. She did not attend the above-mentioned conference or panel discussion.

I have no Aunt Mitzie, in New Mexico or anywhere else.

But what I related about the infallibility of my risk management magic is the stone-cold truth. And I invite you to ride with me to untold riches. You may choose to challenge me on that, but there’s only one way to find out.

So, give me a call.

TIMSHEL

He was someone, who to know was to drink with, and to drink with, was, unfortunately, to pay for.

Thomas Hardy

If we’re so happy, why do I flinch, if our feet should accidently touch?
And why, when we undress, do I blush?
If we’re so happy, why are we drinking so much?

Dave Rotheray — Homespun

Well, why the hell not? Drink so much, that is. And, for what it’s worth, the same answer applies when we’re not happy. Which we’re not.

And why the hell aren’t we? Happy that is.

Well, why the hell not?

Doesn’t much matter, but I got to thinking about liquor as the cure to our dour condition when reviewing an article in Friday’s WSJ – about the joys and hardships associated with the bending of the elbow.

First, the good news: wine is now more a more potent potable than ever before. Bordeaux grapes, after hovering for eons at ~12%, are now > 13% alcohol content.

But now the bad. Apparently, as indicated in the following chart, booze not good for us:

So, according to the American College of Cardiology, I should have died 18 years ago. Thanks, guys. For nothing. A piddling 50 drinks a week – by my booze-impaired math a mere 7 drinks a day, and you’re half again as likely to turn tits up?

Somebody should’ve told me about this around, say, 1982.

Timelier tidings are also of concern. Recent housing data indicates a continued downturn — not just in existing home sales, but now even in home construction. And, while Big Paulie’s pad remains on the market, a hedge fund whale has announced the construction of a residential compound for which he has budgeted a big fat $1B (that’s $1B with a B). As this guy is something of a protégé’ of mine, being: a) a few years younger than me; and b) another Kenny G, I advised him that for an equivalent sum, he could purchase the equivalent of more than 40 of Big Paulie’s White Houses (maybe including the one on Pennsylvania Ave), or, like 700 of Don Carlo’s digs. But youth must be served; he will have his own way.

He and his ilk, when not gorging themselves on Real Estate and professional sports franchises, are busy cutting off funding to the endowments of the universities that launched them. Including The University of Pennsylvania, founded by Benjamin Franklin, and whose alma mater: “Drink a Highball at Nightfall” may be the greatest musical composition this side of Bach’s Brandenburg Concertos.

And the market is having none of it. The equity tape stays quite weighty. Madame X (Ten-year Treasuries) is knocking, ever so demurely, on the door of 5% and her wilding younger sister – Vixen VIX – is apparently throwing ‘em back like it’s Purim or something:

Energy traders appear to have finally gotten the memo about the potential impact of recent geopolitical events on the price of their flagship products and have bid them up energetically. The other commodity significantly on the rise, perhaps due to its well-understood benefits in relieving the after-effects of our excess imbibing, is Coffee:

Not gonna lie: I could use a cup right now.

Meantime, we’re more than a fortnight since the 10/7 attacks, but the elite (as well as the unhinged) of this nation are divided as to who they should direct their ire against. Angry protests about Israeli reprisals began many days before any such action even transpired. I don’t seem to recall any such outrage associated with the Russia/Ukrainian dustup – the civilian casualty totals of about 20x those in the Gaza throwdown notwithstanding.

And what does the world – the market in particular – expect Israel to do? Roll over and get stiffed? Though they have taken their sweet time, they will go into Gaza. Hard. And then there will be a retaliatory strike. The West might even gather the liquid courage to go after Iran’s second biggest cash cow (behind, of course, U.S. monetary giveaways) – their flow of Crude Oil exports. Yet Crude continues to trade at levels below where it resided a month ago, around the time when Netanyahu assured the U.N. General Assembly that all was quiet on the Gaza Front.

And, if this here thing spins out of control, which it very well might, what’s gonna happen to Madame X? The Russian invasion offer a clue. Traders, at that time, bid down yields by ~30 bp. Now, in the wake of these attacks, yields are up by an equivalent amount.

So, I kinda reckon that Madame X is more of a long than a short at this moment.

We should at any rate hope that I’m right. Recent publish reports suggest that the amount of junk debt that is scheduled to roll over the next couple of years now exceeds 2007 levels and stands at a gaudy 19%. These outfits, due to their impaired financial state, were compelled to borrow at junk rates when the benchmark (none other than Madame X herself) was fixed at much lower yields than today. When they approach their bankers, hats in hand for another round, it will thus presumably be priced, if at all, at much higher rates. Some may fail to complete the trade; bankers may get scared away altogether.

I don’t even want to think about it.

The slim-majority-holding Republican Congressional Caucus is no closer, is indeed further, from electing a leader than it was when a few Jumoke’s decided to shitcan their last Speaker. The third attempt to put Jim Jordan in the top job received fewer votes than the second round, which received fewer votes than the first.

Nice job, guys and gals. It’s a great time for an intraparty squabble, what, with the debt ceiling deadline looming, a burgeoning, escalating war, and a presidential election just a year away. As I type this out, Minority Leader Jefferies is the top vote-getter, which tells you all you need to know about the GOP Caucus.

And unless something changes across the political landscape, we’ll have ample cause to drown our sorrows come January of 2025. The only three visible feasible outcomes are: 1) Biden beats Trump one on one – with the Dems gaining seats and retaking the House in the process; 2) Trump takes Biden down, mano a mano, and God help us then; or 3) Trump loses the nomination but runs as a Third-Party Candidate, utterly gutting the Republican Party in the process.

Not a lot to give hope in terms of an investor-friendly policy environment.

But hey, the market keeps trading, the bartenders keep pouring, and we stumble on. This coming week, we can anticipate with brain-impaired glee, the first Q3 GDP estimates, and the beginning of the big kid earnings cycle, as ushered in by Meta and Amazon.

Meantime, the war in the Middle East will continue to boil. There is chaos in Washington. I don’t believe a crash is imminent, but I cannot fathom a justification for any sustained rally.

I’d retire to an adjacent watering hole, but truth is, contrary to what’s written above, I don’t drink. At all. I am so bereft of alcohol intake that I fail to capture even the below zero dip, in the above-supplied graph, associated with a pissant 3 drinks a week.

I kinda wish I did drink, because it often seems like I’m missing the party. But my body simply doesn’t take to the hair of the dog.

It’s not that I’m happy, and often wonder if excessive sobriety is to blame. Meantime, I can only rephrase our titular rhetorical question and ask why, if I’m so unhappy, I’m NOT drinking at all.

Maybe it’s because I don’t know you. Because if I did, it would mean drinking together.

Which doesn’t sound like a bad idea.

So long as you pick up the tab.

TIMSHEL

Somewhat counterintuitively and despite all that bruhaha broiling in other realms, this much is true: If you wanna know what’s really going down, keep your eyes on The House. Or, more precisely, The Houses. As was widely reported for instance (in this space and elsewhere), the Brady Shrine trading flat a few weeks ago, which I interpret as falling short of a unilaterally encouraging sign.

But now, an even bigger test emerges, as 177 Benedict Road, Staten Island, NY – offered by Connie Profaci Realty, at the sacrificial price of $16.8M, hits the market:

https://www.zillow.com/homedetails/177-Benedict-Rd-Staten-Island-NY-10304/32294383_zpid/

But the sales history, location, comps, amenities, etc., fail to tell the whole story on this here piece of The Rock — as: a) the listing agent is none other than Connie Profaci, daughter-in-law of the late founder of what is now known as the Columbo Crime Family; and b) it was constructed as the palatial residence of the successor to Carlo Gambino himself – Paul (Big Paulie) Castellano. It’s a round trip for Connie, who brokered the last sale of the property – for ~$3M, in 2000.

When Big Paulie took over for his brother-in-law Don Carlo, a lot changed, and not much of it for the better. For one thing, Carlo lived most of his adult life in a modest track house in Brooklyn, a home that stands in dignified contrast to the inappropriately showy digs constructed by Big Paulie:

And by all accounts, Carlo was the better Don. Ran his eponymous outfit like a Special Forces Unit. Maintained an improbable but uber-effective low profile. Served as capo di tutti capi to the 5-family Commission for more than two decades – until his death (of natural causes) in 1976.

Because of Omerta I am not at liberty to mention too much about his reign; suffice to say it was a marvelous time to be a made guy, or even just a connected guy, and that it ended all too soon.

He probably committed his only major error of judgment at the very end of his life, as he prepared for that Big Sit-Down in the Sky, when he failed to appoint his successor from the ranks of the meritorious. Instead, he plucked, from the relative obscurity of the semi-legit meat business his wife’s brother: one Constantino Paul Castellano, and elevated him to the top spot.

History shows that it all unraveled quickly after that. Paulie hired the entirely unreliable Westies as his enforcers, began shaking down his capos in highly indecorous fashion, built himself the above-pictured garish palace, allowed his home/HQ to be bugged by the Feds, engaged in an affair with his Filipino housekeeper, got himself RICO’d, and was facing a few centuries in the can.

Then, just before Christmas in 1985, he took that meeting at Sparks Steakhouse in Midtown, but never made it to the front door.

The guy that did him landed, unsurprisingly, in his seat, and nuance was not his strong suit. Wars ensued. Guys ratted. Most notably his underboss, dropping the dimes on everyone, including Don Carlo’s own son, who left us last week at the advanced age of 94. The Dapper Don eventually landed in jail, where he died, his legend fully intact. But the Gambino Family, and indeed the entire Commission structure, crumbled, and is now a shell of its former formidability.

And the fellow who sits in the White House a few hundred kilometers south of Big Paulie’s manse somehow reminds me of Big Paulie himself.

He was nobody’s choice for the job, and only succeeded because enough of the crew believed the alternatives (basically either DJT or Bernie) were worse. Won the post by staying in his basement and letting his handlers deal with the dirty business of electing him. He blusters and prevaricates. Listens to the wrong people. Quite often makes the wrong decision for the wrong reasons. Demands excessive vig from the ranks – most of which lands in the pockets of his family, cronies, and rent-seeking supporters. In the process, gives comfort to his enemies and ours. All like Big Paulie.

And, in result, though he is rattling his octogenarian bones manfully to retain his spot, he stands every chance of being taken out by perhaps the most thuggish Don in the Lower 48 (who, like Castellano’s brutish replacement, was born in Queens) – blowhard 45. If Biden wins, I believe, it will only be due to our collective fear of turning 45 into 47.

Plus, like Big Paulie, it’s not like 46 doesn’t have legal problems of his own. All that cash flowing into the hands of family members, and nothing for The Big Guy in the White House? Please.

There is barely concealed discontentment among his capos and front-line crew, and, meantime, he’s physically fading in front of our very eyes. His underboss is disliked. To top it all off, given the events of the last fortnight, he faces more pressure to go to the mattresses than at any point during his reign. And, like Big Paulie, he hates going to the mattresses. Doesn’t mind putting guys to bed one at a time, but hates the mattresses, because cannot conceivably benefit from any attendant outcome.

He can perhaps take his greatest comfort from the disfunction emanating from rival crews, most notably the Republican House, which is leaderless, and, as such, takes its instructions from Mitch (The Chin) McConnell, who reminds me of Vincent Gigante – albeit with a better wardrobe.

But for the rest of us, the mattresses beckon. My gut tells me that what we have witnessed in the Middle East is more prelude than afterword. You don’t send a squad into a dozen cities and villages to murder civilians, completely ensuring, among other things, disproportionate retaliation – simply because the terrible return blow will make your enemies look worse than you. And certainly not without having worked out a second strike. Most likely, and as is the consensus, sending your Lebanese goons down south for another massacre of the innocents.

It appears to me that the mullahs are indeed calling the shots here, with the primary objective of creating a full-on conflict with the Western powers. I suspect that if I’m right on that score, they are likely to achieve this goal. I doubt they will derive much benefit, but then again, they didn’t ask me.

However, in terms of the markets, it all feels like suspended animation. The world’s calculus may have changed, but none of the key risk factors I track have migrated out of their current ranges. Not Equities. Not Treasuries.

And not Crude Oil, still trading at levels below where they hovered a week before the attacks. I sense this is all due to comprehensive, well-earned confusion on the part of risk takers.

Thus far, the West has done nearly nothing to counteract the Iranian threat. They continue to export as if nothing has happened. No bank accounts have been frozen. Will this continue? And, importantly, what will the Saudis do? Clearly, the Hamas attack has, at minimum, side-tracked their deal with Israel. But if the war escalates, they will not have the option of remaining silent and passive. Will they fill the Oil production/distribution gap manifested by the Iranian adventure? The market seems to be indicating a belief that either they will, or that the ayatollahs will continue to pump and dump — unimpeded by recent events.

Meantime, we have another house to watch. The House of Representatives, which lacks a Godfather, and which (among other things) cannot possibly pass a budget deal next month.

Inflation ticked up in September and could go into rocket booster configuration if geopolitics incrementally disrupt the energy markets. Q3 GDP drops this Friday and continues to look boffo.

The earnings calendar heats up. No disasters thus far. The Banks came in fine, with the only caveat being that their leadership is scared spitless about the geopolitical situation. This may be a strong earnings quarter, but nothing is likely to repair the current dysfunctionality emanating out of DC.

I am thus advising my clients that other than for the clairvoyant, there is no edge of any kind for incremental risk-taking. Perhaps Staten Island Real Estate is the best bet after all. For < $17M, you can own Big Paulie’s White House, and, while it will cost you $113K/mo to meet mortgage, taxes and maintenance, you should bear in mind that it is > a five bagger since its last sale price in 2000.

Plus, it will keep the world’s most menacing Don out of one White House, while much of the country strives mightily to block his re-entry into the other one.

A couple of words to the wise, though. Don’t even think about stiffing Connie Pro on her commission, as she is likely to take it personally. And do something about it. Which she can.

And, most importantly, if one of your crew invites you for a holiday dinner at Sparks this December, it may be just as well for you to send along your regrets.

TIMSHEL

I wouldn’t ever set out to hurt anyone deliberately unless it was, you know, important – like a league game or something.

Dick Butkus

Last, week, in yet another of our endless tributes to Jim Morrison, we paid homage to dead cats and rats. Now, we turn from the dearly departed feline/murine to the expired ursine (dead Bear), offering what props we are able — to the one and only Dick Butkus.

No, he never scored a Billboard 100 single, nor, to the best of my knowledge, even a major label recording deal.

But let’s not mistake ourselves, Butkus was a rocker.

His presence was ubiquitous in my youth. From sideline to sideline. From the backfield into the deep secondary. On bad teams and worse ones. Like the ’69 squad, which featured him at Middle Linebacker and Gale Sayers (rehabbed from a crippling knee injury but still managing to be the only ball carrier to tally 1,000 yards that season) at tailback.

They went 1-13, defeating only the then-woeful Pittsburgh Steelers, who, in consolation, were able to use their well-earned top pick to draft Terry Bradshaw. Butkus made All-Pro that year, as he did five times in his 11-season career. He never, however, reached the playoffs, and, indeed, played on only one winning team – in his rookie year of 1965, his entire career.

Yet he is the consensus choice for greatest Middle Linebacker of all time.

But to understand his singular essence, a bit more context is required. He was the youngest of eight children – the first to be born in a hospital — on Chicago’s rough and tumble west side. Throughout his youth, he was thus compelled to carry the burden of perhaps the most derision-inducing name a boy could have; phonetically: Dick. Butt. Kiss.

But his peers presumably learned early on not to mess with this or any other element of his persona. He starred at Chicago Vocational High School. Played Center/Middle Linebacker for the University of Illinois. Then there was his time with the Bears, which only ended when he could barely walk.

He left football, but it never left him. I remember him as the Bears’ radio announcer. During games (where he always seemed a little oiled up), whenever there was a fumble, he could be heard screaming “ball, ball, BALL”. And one could clearly envision the entire crew needing to restrain him from leaping out of the press box to recover the thing himself.

And now he’s dead. But I envy him, nonetheless. He’ was what we should all aspire to be. But, like so many essential men that have come and gone, we must now find a way to carry on without him. Presumably, this will be easy for most of you, but for me it is an authentic hardship.

Perhaps it’s fitting that he left us when he did; I can only wonder if he didn’t occasionally feel that the modern world had passed him by. Because we live in an entirely anti-Butkus construct, where kicking ass and taking names has fallen away, where there’s always somebody else to blame for the hardship, and even minor annoyance, we are compelled to endure.

Back in his glory days, they’d tape up a busted knee, apply aspirin to a concussion, and send the guy back in. Butkus wouldn’t have had it any other way. Now, the grazing of one helmet against another is a 15-yard penalty; two such transgressions will get you bounced from a game.

We bail out banks that gorge themselves on dubious enterprise, close down entire education systems and economies for sicknesses that we don’t understand. Then, we quadruple the money supply – the economic equivalent of chugging a gallon off cough medicine — as a means of applying a cure for all our ills:

Investors make a bundle, as do homeowners. Consumers binge. We throw up Hail Marys, and the refs, such as they are, award us with ticky tacky pass interference calls. The reckoning awaits, and, for all I know, may be hard upon us. But there are few signs that it is imminent. Friday’s Jobs number was a blowout (even if the quality of the newly created gigs is a bit on the lean side). Q3 GDP estimates suggest a boffo quarter. But we won’t know for nearly another month. In the meanwhile, we’ve got inflation numbers this week, and they are projected to be benign.

But those inclined to fuss and fret have plenty of fodder. Consider, first of all, those pesky oil markets, surging menacingly until early last week, then putting in a V-top that was reminiscent of Fran Tarkington running for his life to escape the clutches of Number 51:

And all of this BEFORE the weekend mess between Israel and Hamas. It all seems beyond tragic, and nobody knows how long it will last. But this much is certain: it will surely add to the confusion among those seeking to monetize by trading in the Oil Patch.

The House Republican Congress managed to bounce the seemingly reasonable fellow who was running the show, their razor-thin majority notwithstanding. This does not bode well for a range of contingencies, including the striking of a non-transitory budget deal, and, beyond this, the prospects for sober governance emanating from either side of the aisle.

Trial balloons are now afloat to put DJT into the Speaker’s Chair, and, prior to the ’22 election, I would’ve found the prospect at any rate amusing. Now, though, it would be a disaster. He don’t own a seat in the House for one thing, and the specter of a workaround involving another obliteration of legislative protocols to meet short-term political objectives gives me the shivers. Plus, he’s not gonna do this INSTEAD of running for Prez; he’ll do both. And is likely to raise such a ruckus as to render the World’s Second Greatest Deliberative Body unrecognizable.

I don’t know how much of a distraction these matters will be in the otherwise data rich content sequence that is now set to begin. There’s the above-mentioned Inflation reports dropping this week. And, of course, it’s earnings season.

Ah, earnings season. What unmixed joys await us there. I don’t have much of a read in terms of outcomes but suspect that the cycle will leave us as confused at its conclusion as it has at its commencement. Investors, as evidenced by their recent indecorous treatment of the Energy Complex, don’t seem to have a clue either.

Meantime, the Bear is dead. Maybe the greatest Bear of them all. Fittingly, on the day he died, his team broke a 14-game losing streak that extended nearly a full calendar year.

So, perhaps, somewhere up there, in that great scrimmage pileup in the sky, he’s smiling.

The markets have arguably been attempting to enter Bear configuration for months, alas, with minimal success.

The Investment Bear isn’t dead — but has perhaps been engaging in what best can be described as extended hibernation.

It wasn’t the way Butkus rolled; hibernation wasn’t his jam. But there’s only one of him. And now he’s gone.

So, somebody else must fasten the chin strap and face down the O-line. Maybe it’s you. Maybe it’s me.

Maybe it’s all of us.

So, let’s break the huddle and get after it.

It’s what 51 always did.

And what was good enough for him is sufficient for me.

TIMSHEL

Dead cats, dead rats, can’t you see what they were at, all right
Dead cat in a top hat, wow
Sucking on a young man’s blood, wishing he could come,
Sucking on the soldier’s brain, wishing it would be the same
Dead cat, dead rat, did you see what they were at?
Fat cat in a top hat, Thinks he’s an aristocrat
Thinks he can kill and slaughter, thinks he can shoot my daughter
Yeah right! Oh yeah!

Jim Morrison

This is nothing more than a protean rap, busted out by Jim Morrison towards the end of Side 3 of the Doors’ magnificent double disc “Absolutely Live”, recorded, for the most part, at the long gone and now much lamented Felt Forum, in New York City, in mid-January, 1970. For my tastes, if there is a better live album ever recorded, I don’t know it, maybe don’t want to know it. Maybe this is in part due to finding the band so fully in the pocket, their longstanding rep for erratic live performance (itself owing to Morrison’s fatal unreliability) notwithstanding.

Our theme offers an opportunity to transition glibly to the markets, whose participants often refer to a rally amid an extended selloff as a “dead cat bounce”.

But this piece has nothing to do with the counterintuitive upward migration of deceased felines (or, for that matter, rodents), whether encountered in the markets or in the wild. Rather, and as was the case when Jim, supported by John, Ray and Robbie laid this down, I prefer to now launch into “Break on Through (to the Other Side)”.

Which much of the market has tried, but failed, to accomplish.

As September ’23 is now in the books, we can certainly describe it to have lived up to that month’s reputation as the most gruesome of the year. And the carnage was everywhere. The Equity Complex got pounded, with the Gallant 500 shedding 4.6%, General Dow down 3, and Colonel Naz (now facing the threat of being busted down to the ranks) shedding a full 6%.

As did Treasuries, and this on a global basis, causing, among other annoyances, Mortgage rates hit levels last seen in the previous millennium.

Energy markets surged, but this is hardly good news for investors – particularly in a rising interest rate environment driven by policy makers obsessively battling against inflation.

USDJPY continues to flirt with the ominous 150 handle, but, like the song says, failed to break on through.

In the real world too, we continue to hit walls that we fail to breach. The UAW general strike, for instance, ensues in broadening configuration.

Our legislators careen towards yet another round of government shutdown brinksmanship, with the latest headlines indicating the passage of a six week can kick Continuing Resolution – devoid of incremental aid for the Ukies in their righteous battle against the Rooskies, and in spite of a Democratic Congressman (a former school principal) apparently undertaking the adolescent stunt of pulling the fire alarm to delay the vote.

This issue, I suspect, is likely to harsh our collective mellows for many months to come. For one thing, the extension only runs until mid-November, implying that the same headlines we’ve been perusing all week will re-emerge in about a month (when, presumably, the fire alarms will be guarded and secured). Moreover, and as less-than-widely understood, the government doesn’t shut down all at once. First, they stiff their vendors, then, perhaps furlough some of their staff – a hardship which we all can presumably endure. It takes months and months for anything essential to be threatened, the last and most menacing of which would be to disrupt the flow of payments on the $33 Tril we owe. Were this last eventuality to come to pass, we would truly have broken on through. But it’s not to be – particularly in an election year. They’ll come to an agreement, and name the public as the winners, if for no other reason than because nobody wants to hang a Treasury default on their resumes.

Meantime, the President continues his bumbling, confused pandering, taking a full 12 minutes out of his busy schedule to march with the down-trodden Detroit assembly line crew. His likely opponent in the ’24 election has taken to his own social media platform to demand the court martial and execution of the recently departed Chairman of the Joint Chiefs of Staff. In addition, he’s calling for the raiding of the offices of his political enemies and the removal of certain unfriendly media outlets.

Our oldest senator, one Dianne Feinstein, gathered to the dust of her forebears this past week, leaving her heirs to divide up a billion-dollar pittance between them. (Is it just me, or are these SF politicians exceedingly skilled at accumulating wealth? I mean like Joe Montana good. Jerry Rice good. Steph Curry good. The Pelosis are worth a quarter bill. Gov Newsome clocks in at >$50M. There must be something particularly lucrative about running the Bay area into the ground in the name of social and economic justice).

We thus enter Q4 full of dead cats, dead rats, and yes, even dead aristocrats, but having failed to break on through.

None of which is conducive to investors springing out of bed, on this, the first day of quarter, with anything resembling a bounce in their step.

It’s not all bad I reckon. Q3 GDP estimates, not to be released for more than a fortnight, are nothing short of gaudy. The gears of the great American job creation engine create continue to hum along serenely, with the next indication coming this very Friday. Plus, there’s so much cash floating around that it’s hard to envision anything akin to a crash unfolding.

But risks abound. First and foremost, in my judgment is the trajectory of the Energy Complex, with alarmists suggesting that WTI could rise as high as $150/bbl. And it’s hard to argue their logic, what, with a policy mix designed to cripple domestic production, with the Strategic Petroleum Reserve depleted to 40-year lows, and with geopolitical tensions across the global oil patch that are, shall we say, less than accretive to global production/distribution.

But pricing dynamics say otherwise, placing WTI in dramatic backwardation, indicating a clear expectation of declining crude oil prices in the months and quarters to come:

Here’s hoping they’re right. Because if the $150 crowd prevails, well, I don’t want to think about it.

Naturally, all this has profound implications for Interest Rates, which will be highly correlated with energy prices. And with equity valuations. Particularly in the already beleaguered Naz-land.

We’ll now have monthly/quarterly data, and, of course, earnings, to consume, and I suspect that when the dust settles, we will still have failed to break on through.

Because, while change happens all the time, with day destroying night and night dividing day, breakon- throughs take eons.

Consider, if you will, the history of the Felt Forum, maybe the best-named music venue of all time. But much to my chagrin, I find, in researching this here piece, that its nomenclature is not derived as a funky, modern tribute to the meeting place of ancient Roman Senators, but rather as an alliterative nod to the president of the adjacent Madison Square Garden: Irving Felt. It went through many appellations in the ensuing decades (based, of course, on compensated naming rights): The Paramount Theater, The Theater at Madison Square Garden, The WaMu Theater (in honor of the debacle-creating depository institution Washington Mutual, which went tits up in The Crash), and the Hulu Theater.

In ’23, it reverted to the bland Theater at Madison Square Garden. But to me, it will always be the Felt Forum. Where so many of the greats played. The Velvets. Jimi. Janis. Cream. The Kinks. Zappa. The Dead.

And the Doors. If you put on Side 3 of Absolutely Live, you can hear Jim’s Dead Cat rhymes pounding off ts felt walls. Approximately 6 months later, Jim was gone, and, to this day, no one knows exactly what happened.

Yes, he got to the other side, but as your risk manager, you’ll just have to trust me when I tell you that there are better ways to break on through.

TIMSHEL