“Time isn’t holding up
Time isn’t after us
Same as it ever was
Same as it ever was
Same as it ever was”

Welcome to the new year. We have before us another infinite opportunity to learn, to be enriched, to be deprived, to be completely validated and to be completely curb-stomped! Same as every other year.

It’s been a hot minute so let me just diatribe for a second:

My view of the markets is admittedly limited by the willful ignorance I wield on prejudicial terms – for what is significant in market/economic news? That’s the plight investors face everyday as they research relentlessly for their edge. Is it everything? Is it just some things?

News about the president has dominated the airwaves with (at this point, benign) regularity, and thus the tail officially wags the dog because the purveyors of news are at the mercy of the visual-monetization machine that modern broadcasting is existentially based. No matter the hate the purveyors may have for their product, they cannot reduce its reach and appeal, for it in fact makes them. Without it, they would be irrelevant.

Remember Afghanistan? Me neither.

According to Chartbeat, a company that measures audiences for online journalism, readers of the sites in its database spent 2 million hours in 2019 reading about Afghanistan, this is the same amount of traffic and time that Trump delivers for his purveyors on a weekly basis (The Economist, The Trump Bump, Vol. 433 No.9174).

Is this because of genuine interest in the orange-man, over-saturation? Maybe everyone likes a good old fashion Florida-man-esque dumpster fire (i.e. click-bait). Hilarious Nickleback memes notwithstanding.

Put down the pitchfork and torches; I am apolitical and more so by the day as my much maligned perspective moves further and further away from what is seen as ‘moderate’. The reason I point out this highly weighted factor in news publication and penetration is that it has infected my precious pipeline of market information. I tend to believe the most significant piece of information for 2019 as it relates to the markets are two-fold and related to each other, not to Trump.

First: Harmony in global central bank rate policy.

Second: The resultant glut of M&A.

A headline in FT (Financial Times) Companies & Markets section reads “US megadeals drive year’s $3.9tn global tally”. The US accounted for half of this figure and represented “15 out of the year’s biggest 20 deals”, Europe saw a 25% decline in total acquisition value. PE activity has for 2019 hit $478bn the highest amount since 2007 (FT – 12/31/2019, “Companies & Markets, “Spending splurge Private equity buying hits post-crisis peak”).

This is incredible activity during a time that everyone was supposed to spend in fear of a recession, no?

The FED went dovish, money got cheap, and buyers emerged.

Europe has been quiet relative to the U.S. in 2019, their central bank policy rate was also cut and sustained at lower levels unlike their U.S. counterpart (relatively) since 2008. While it’s difficult to make this comparison due to European banking authority’s variable treatment towards member-states on matters of credit, they could be showing signs of balance sheet recession market behavior. That is, companies so saturated with debt they are adverse to taking on more for sensible mergers. The U.S. on the other hand is ringing in the new year with a prophetic homage to their brothers and sisters a century ago. Credit is loose, and appetites are irresponsible.

We could be entering the balance sheet recession party with this incredible spending, done on the back of low central bank policy rates. If we are, we should always ask ourselves, what opportunities does it bring for the investor? How can I protect and sustain myself and my family. The concerns, like the times, never change. Same as it ever was.

So ends my diatribe.

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Some things I’d like to research into the new year to understand this better include the Japanese experience from mid 80’s to late 00’s. M&A activity in Europe since 2008. Bank performance in general during extended albeit light recessionary periods – while there might not be explosive growth in most sectors, don’t the banks still collect their due from their over-imbibed customers?

Welcome to you all to 2020. I hope we all hit our resolutions whatever they may be. My apologies for the inactivity, as you can probably tell, a resolution of mine includes more activity on this blog, if only for a time stamped record of my thoughts.

Until next time, take care.