Ken has been offering his thoughts on global markets, events, and trends on a weekly basis since early 2006. His rational perspective, based on decades of experience in risk management and analytics, provides all readers with helpful insights, commentary, and context. Both informative and entertaining, the posts offer clarity and simplicity, often using inspiration from his favorite artists and musicians.
Ken also authored Trading Risk: Enhanced Profitability through Risk Control (Wiley 2004), which challenged the traditional focus of risk management on loss avoidance. The book introduced a new risk management program that can help both money managers and individual traders evaluate which elements in a portfolio are working efficiently and which aren’t using an extremely simple set of statistical and arithmetic tools.
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- Let’s Do the Time Warp Again Monday, January 20, 2025
It’s just a jump to the left. And then a step to the right.
O’Brien/Hartley
Frank: Well, Brad, Janet, what do you think of my creation?
Janet: Well, I don’t like men with too many muscles.
Frank: Well, I didn’t make him for you!Rocky Horror Picture Show
The time has come to celebrate the magnificent 1975 film “The Rocky Horror Picture Show”. Yes, this young year encompasses its Golden Anniversary, but that date is either April (U.K. Release) or September (US Release).
Meantime, the “Time Warp” motif should be obvious to all but the terminally obtuse, and we’ll get to it anon. But a word, first, about Rocky Horror – a low budget effort with a wandering, convoluted plot that somehow captured the imagination of my entire generation. As most are perhaps aware, its weekly midnight showings, complete with audience counter-script and props, originated/perpetuated at the Waverly in Greenwich Village, became a matter of longstanding ritual. I wasn’t a regular there, but went a couple of times, and it was, indeed, a hoot.
But audience participation aside, I believe the delights of the film derive principally from its wicked but well-meaning lampooning of many of the hangups of the time – our vanities, our fears, our fantastic delusions. Rather than analyzing, attacking and obliterating, the film seeks to celebrate them. And succeeds with decadent, inelegant flourish.
Meantime, in shameless setup, I now traverse to the Time Warp theme. We’ve managed to wind the clock back precisely eight years, where, on a windy platform in the Nation’s Capital, an overblown, overbearing Real Estate mogul will place his hand on the Bible and then assume occupancy of the same Oval Office he departed, amid multi-pronged chaos, exactly four years ago.
He brings with him a new cast of characters – hopefully less demented than “Rocky’s” Dr. Frank N Furter’s crew of Riff Raff, Magenta, and Columbia, but I reckon we’ll see. The only return performance from Trump 1 is assigned to Linda McMahon – co-founder of WWE, in the elevated from running the Small Business Administration to role of Education Secretary. Everyone else is new, except, of course, The Master of Ceremonies.
But in a very real sense, we’re entering, today, an 8-year Time Warp, with the country having just completed another jump to the left, is now preparing a repeat of its step to the right.
So, I thought it might be useful to refresh our memories as to what was going down exactly 8 years ago.
The markets, with valuations ~1/3rd of their present levels, continued their giddy upswing, begun in the pre-dawn hours after the ’16 election, when a world shocked by Trump’s drawing the political equivalent of an inside straight, first sold off hard and then ginned up a rally that took the markets from one high to the next, for the ensuing 20 months.
Crypto was all the rage, with Ferraris and Lambos endlessly buzzing 6th Avenue in what seemed like an infinite sequence of investor conferences. On Inauguration Day, BTC closed at a titch under $900. It enters the current festivities at approximately $105,000.
In 2017, the Best Performing Dow Stock was Boeing (up 89%), and if that doesn’t make you feel the change, I reckon nothing will. It closed on Trump’s swearing in at $160, and is now, endless sequence of disasters notwithstanding, trading at $170.
A little-known chip maker called NVDIA also made that year’s 10 list – entering 2017 at ~$2.50 and closing it at a near-double of ~$4.80. Back then, its rise was driven by the role its chips played in crypto mining. It has since deftly trained its sights on AI, and concluded Friday’s session at $137 and change, outpacing the performance of even BTC during our Time Warp interlude.
A passel of politicians boycotted the 2017 festivities, and up the road in Manhattan, Madonna was threatening to blow up the White House. But you know who was there?
OK, I know. That wasn’t the Trump 1 shindig, it was Biden’s 2021 swearing in. Still and all, I give Bernie credit for being there. It was cold, after all.And this is to say nothing of the reality that the Party Bigs flat out stole the nomination from him and handed it to Blundering Joe Biden. We know what happened after that.
God Bless him, I say. There he was this past week, larger than life, grilling cabinet nominees, and looking, if anything, younger and more vigorous than he did in this famous image.
For the record, a maskless, mitten-less Bernie did attend the Trump 1 ceremony. But then again, like Biden in 2020, Hillary had robbed him of the nomination that time as well.
In March of that year, the Big Guy delivered his first State of the Union address, and Pelosi, consigned to the House minority, was not on the podium. However, two years later, having recaptured the Speaker’s post, she could be seen towards end session making dainty little tears in the transcript, before, upon conclusion of the speech, ostentatiously ripping it into shreds.
Also that month, the United States Budget Deficit – somehow – reached its Statutory Limit. After months of fenagling, our betters in Washington raised it, for the first time, to the now-quaint threshold of $20 Trillion. It currently is 80% above that mark (~$36T), and – oopsies – is poised for another breach on Tuesday, January 21st – eight years less one day ago.
Outgoing Treasury Secretary Yellen has written to inform Congress of same, referencing extraordinary measures that must be taken if legislators fail raise it yet again. I will cop to being puzzled by this language, because, by Tuesday, Sec Yell will be out of office, and presumably back in the leafy hills of Berkeley – up North and thus untouched by the fires – with her Nobel Laureate husband. It will thus be my boy Bessent’s problem by then. And Trump’s.
Finally for our purposes, that month featured a low ebb of Crude Oil prices, at an even $40/bbl. One must revert to the immediate aftermath of the 9/11 attacks to observe a lower price, and, winding forward, to the early days of the lockdown, when the bubbling sticky Black Gold, improbably, though only for a few hours, traded in negative territory:
At just under $78/bbl, the commodity is nearly twice as expensive as it was at that point. This, in part, is owing to some sanctioning and offshore drill banning in which Ol’ Joe (along with some other shady stuff he pulled) engaged in the waning days of his dying administration.
That he is departing in anything other than a blaze of glory is obvious to all. But I can’t resist the temptation to reference one final, exemplary moment, when late last week, he unilaterally declared The Equal Rights Amendment to be officially ratified and demanded that it be affixed to the Constitution as #28. This, of course, notwithstanding that it failed to meet a couple of minor bureaucratic details – such as passage by 2/3rds majority in both Congressional Houses, and formal ratification by 3/4ths of the States.
It’s moments like these which will make me, from time to time, miss the old cuss.
Time, however, and whether warped or not, marches on. And now, as back in ’17, we can anticipate some heavy incremental action emanating from the Oil Patch, and with it, lower prices.
So, considering all the above, the main question remains is this. Are we indeed in an 8-Year Time Warp, complete with the jumps to the left, steps to the right, pelvic thrusts and the like?
I’d say the answer is yes, albeit with some caveats. And if so, from my controversial perspective, we could do a good deal worse than how we fared during the ensuing four years (until, that is, them covid buggers showed up and took over the joint).
There are many out there who are no doubt horrified by this sentiment, hating the guy barreling into the Oval Office and throwing major shade at those who put him there.
But to paraphrase Frank’s response to Janet when he asked her to rate his creation, they didn’t make him for you.
In partial spoiler space, I will inform my readers that things didn’t work out too well for Frank. Or Rocky. Or, presumably, for Brad and Janet.
But somewhere across this great land, some dark theater is running a midnight showing this magnificent film. And the audience is screaming “asshole” at Brad and “slut” at Janet. And throwing toast at the screen. They’re jumping to the left, stepping to the right, placing their hands on their hips and thrusting their pelvic bones. And, I hope, thoroughly enjoying themselves in so doing.
I’m not here to tell you what to do, but if you did decide to join them, answering the call of our title song and doing the time warp again, you have, from a risk management and aesthetic perspective, my unmixed blessing.
TIMSHEL