A Contrarian Gives Thanks

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Oct. 7, 2015: Families for Excellent Schools rally for equality

Italians can be quirkily superstitious souls. When written in Roman numerals, XVII, a.k.a. 17, can be re-arranged to spell VIXI, as in Latin for, “My life is over.” Funny thing, it’s not Friday the 13th that spooks those of Roman heritage as much as Friday the 17th. In fact, 13 is still considered to be a lucky number in many Italian quarters, especially in places like Monaco and Macau.

This week’s very American tradition has been given short shrift by the decorators at large who appear to have misplaced Thanksgiving on their calendars. How else could millions of Christmas trees magically appeared the minute the last Trick or Treat was posited on the West Coast?

To punctuate my dismay at the rush to the holiday races, I thought this week would be a good time to pause and give thanks for the many things for which we have to be grateful. For those of you who’ve wondered if I’ve ever seen a glass that’s half full, this proud to be of Italian American heritage henceforth offers out 13 optimistic observations starting with the markets and ending with what’s really the most important thing to all of us.


  1. Be thankful that some sanity has returned to credit markets. I think we all agree that five percent yields on junk bonds are a bit irrational. It is therefore reassuring to see yields pushing the seven-percent mark reflecting a more realistic risk/return tradeoff. High yield as an asset class has lost about four percent on the year. That’s not so bad considering the weakness in energy prices, which themselves have provided budgetary relief for many households.


  1. News that cracks have started to appear in some of the frothiest coastal housing markets can only be construed as good news to would-be first time homebuyers. At 31 percent of October sales, the ranks of first-timers have improved off their 26-percent December 2013 low. Getting back up to a ‘normal’ 40 percent all but requires home prices to fall, which will naturally follow a slowdown in sales. A bonus: home equity withdrawal has slowed providing evidence that Americans are better preparing for their retirement years.


  1. Location continues to matter in a country where doing business can be a challenging exercise. With that it’s heartening to see so many states competing for new business. A recent study found that the bulk of the 9,000 businesses that have relocated or diverted business from California over the past seven years have landed in the Lone Star State. Rounding out the top ten are Nevada, Arizona, Colorado, Washington, Oregon, North Carolina, Florida, Georgia and Virginia. Bear in mind, these are purely business decisions: the cost savings that resulted amounted to 20 to 35 percent.


  1. A good state in which to conduct business is not necessarily a good state in which to invest one’s hard earned savings. With that, we should be thankful for the opportunities presented in coming years in the municipal bond market. As weak states confront deepening pension challenges, it will be critical to have a strong municipal maverick in your corner. There will be great entry points when good credits get hit with headline contagion. A good primer to familiarize yourself with the lay of the land: http://mercatus.org/statefiscalrankings.


  1. Forget the gridlock in DC. New York City’s traffic gridlock has never been as intense as it is today. With that we should all be thankful for the powerhouse combination of Uber and Waze and all of the other apps we never knew would make our quality of life that much better, or at least more bearable. Give thanks that we remain a nation of innovation and a charitable one at that. Our collective entrepreneurial spirit can never be quashed.


  1. Despite near record valuations in you-name-the-asset-class, a few independent voices manage to be neither hysterical nor delusional about the markets’ prospects. I am thankful to call many my friends including Jim Bianco, Peter Boockvar, Arthur Cashin, Brent Donnelly, Philippa Dunne, Richard Hill, Doug Kass, David Kotok (and the whole Maine fishing crew, especially my capable and economically well-versed fishing guide J.R.), Michael Lewitt, Michelle Meyer, Oleg Melentyev, John Mousseau, Barry Ritholtz, David Rosenberg, Josh Rosner, Tiina Siilaberg, Liz Ann Sonders and Chris Whalen, among others.


I would add that I am deeply grateful for having had the privilege of working with Richard Fisher, David Luttrell, Zoltan Pozsar, Harvey Rosenblum, Jeremy Stein, Joshua Zorsky and Teresa Bermensolo-Cutler.


  1. In a world overrun by mad scientist central bankers, we should all be thankful for the Reserve Bank of Australia. There’s been no such thing as a perfect backdrop for monetary policymakers in recent years. The global economy has hurled from boom to bust and back again buffeted most recently by a commodity supercycle unwind. It would have been all too easy for Australian central bankers to respond by injecting stimulus into the economy. Leaning against the wind, however, was their chosen path. How very luxurious to have two whole percentage points at their disposal in the event of a true economic calamity.


  1. Our nation should be thankful to live in an “era of energy abundance,” basking in the riches we’ve produced on the path to independence. So says resident expert and friend Randy Randolph of Southern Gas Association. That’s not to say the Shangri la of energy independence is not in the cards. Achieving this ultimate goal requires a comprehensive and visionary energy policy that recognizes the eventual benefits of exporting and investing in a natural gas grid. In the meantime, the U.S. is the largest producer of petroleum and natural gas hydrocarbons ensuring a permanent shift in the balance of power on the world stage.


  1. The terrorist attacks in France have given politicians worldwide a new standard to which to aspire. French President Francois Hollande may not jump to mind as a national hero in this country but he should. Hollande’s immediate imposition of a state of emergency and declaration that the attacks were, “an act of war perpetrated by a terrorist army” left no doubt he’s a man of action. He’s taken advantage of the latitude availed him by the French constitution to attack Syria as it should have been long ago. Hollande has added that Assad cannot be part of the future and that the Kurds must be supported. Solidarity will not suffice, he rightly says. The world must act together. How can we not be thankful for decisiveness in the face of evil?


  1. Where is the American Dream? The answer to this question was demanded by thousands of single African American mothers who marched across the Brooklyn Bridge in October. Their plea was a simple one: Find the space to open more charter schools that outperform the public schools. Quit leaving so many American students behind. The stakes are enormous. According to a new study, one in five American families led by those with college degrees attain millionaire status by age 40. At a minimum, liberate future generations with the literacy to choose their path, whether it be vocational or a four-year degree. Closing the inequality gap for the greater good, for the country’s long term prosperity requires we educate each and every American and do it well. Be thankful for parents who have hit their pain threshold on their children’s behalf.


  1. Forget for a moment their colorful or not-so-colorful personalities. Ask yourself what it means that so many outsiders have garnered so much support in the current presidential election. It can’t be as simplistic as angry, uneducated Americans drinking spiteful Kool-Aid. That doesn’t capture the breadth of supporters. Perhaps Americans across the entire income strata have begun to sense that the present path has little to do with what our founding fathers envisioned.


  1. Life is funny in the way you don’t appreciate some of the most important episodes you’re taking a part in until many years later. With that in mind, I will never not be thankful for having taken a first amendment class in the year 2000 with Anthony Lewis and Vincent Blasi. The Columbia Journalism School academic experience, if you could call it that, left an indelible mark on my identity as a citizen of this country. Blasi’s greatest conviction: the abuse of official power to achieve an end is the gravest of sins. The remedy: a strong and well-financed media to always shine a bright light.Lewis, a man of many wise words, captured the very essence of what it is we all must hold dear and true and for which we must be ultimately thankful: “With one terrible exception, the Civil War, law and the Constitution have kept America whole and free.”


  1. The last, lucky 13th gift this Thanksgiving is the most cherished — family, faith and friends. They are the ties that bind, our past, present and future, both in this world and beyond.


I will add that I am thankful for you, those who have become loyal and steadfast readers over the past five months. The feedback has been humbling and endearing and I do give thanks knowing you take the time week in and week out. Happy Thanksgiving.