Yeah, Whatever

2024 got started in a similar fashion to which 2023 ended: eyes were tightly focused on the proverbial briefcase of Federal Reserve Chair Jay Powell as to interest rate policy…and the conclusion for now is that interest rate cuts in 2024 remain largely on the table. The U.S. economy managed another “What? Me worry?” positive quarter. Large-Cap technology stocks led capitalization-weighted indices up double digits, a nice annual result in 3 months. Value-oriented equities were mostly ignored until March, when risk enthusiasm broadened out…slightly. And anyone with a decent AI machine was told to buy nearly everything. We chugged along.

“Yeah, Whatever” shall be the annoying theme for the next few hundred words due to a recent and random listening of Liam Lynch’s 2002 important hit, “The United States of Whatever,” whose cultural significance is endlessly supported by this essay.

The reference is the wonderful way in which the history of deftly articulated bearish visions of the future are so easily swept away through higher prices. It’s a long history — take a re-glance at where the Dow Jones Industrial Average was in 1927. Plenty of unpleasant things have happened in the world since, and yes it is important to understand your inherent or implicit leverage issues as well as where your risk tolerance resides in terms of age or contractual commitments, but there is something pleasing about how humanity manages to pull rabbits out of the hat that seem to drag us forward to another millennial lifetime. Unless of course we all boil to death in 2030.

A partial list of whatever happened to that:

  • A serious credit contraction as the banking world licks its wounds from a decade of commercial real estate lending at 2% and interest rate speculation and only 3 banks fail? Whatever.
  • The global credit markets freeze and digest the process of having enabled the highest prices paid at the highest leverage ratios since the debt covenant was invented? Whatever.
  • A full-blown liquidity crisis as the Fed tightened monetary policy? Whatever.
  • Ukraine? The Middle East? Whatever.
  • The formerly best indicator of a recession – an inverted US yield curve – stays inverted for well over a year, the longest stretch on record, and the economy chugs along? Whatever.
  • Disinflation? Inflation? Whatever.
  • Every historical indicator of US equity valuation screaming low future returns? Whatever.
  • Not just Bitcoin is rallying, but dog memes again? Whatever.
  • Biden/Trump rematch? The Ultimate United States of Whatever.