Back in “B.C.” times (Before Children) when I owned my BMW 3-series convertible, it was pretty standard practice on long trips to put the top down, blast some tunes, and gun it down the highway.
There’s something about that combination of speed, loud music, and the wind blowing through your hair that is just viscerally satisfying… and I miss it terribly.
That’s because – to paraphrase a line from author Nick Hornby’s Songbook – in the “A.D.” era (After Dadhood), I possess neither a convertible nor as much hair.
Happy to say, though, that the loud driving music part has largely managed to stick around.
And of all the great road trip and driving songs that have existed throughout history – Bruce Springsteen’s Born to Run, Sammy Hagar’s I Can’t Drive 55, Whitesnake’s Here I Go Again – I always seem to come back to the same one.
Stairwell to Bonham
The thing about Led Zeppelin’s When the Levee Breaks that always sucks me in is the drum sound – a byproduct of a great-sounding room, some creative engineering, and hitting the drums like a sledgehammer.
The band’s entire fourth record was recorded at Headley Grange, an giant old English workhouse that gained notoriety as a recording location in the 1960’s and 70’s due to its live-in quarters and general lack of neighbors… after all, It Might Get Loud.
Recording engineer Andy Johns took advantage of the spacious surroundings, pulling Zep drummer John Bonham’s drum kit into the lobby, and placing two microphones above him in the stairwell.
He then ran the signals through two limiters (which prevent audio inputs from becoming too strong) and then into an echo device called a Binson Echorec.
The end result is this massive, ambient, jarring “CRACK!” and echo that sound like gunshots… or trees falling…
Or a dam bursting open.
Ol’ Man River
Approximately 500 people perished and another 700,000 people were left homeless as heavy rains broke levees along the US’ oldest and longest river system in at least 145 places, flooding more than 27,000 square miles of land.
Monetary damages totaled nearly US$1 billion – about one-third of the country’s entire budget in 1927.
If a flood of that magnitude were to happen today, it would affect as many as 30 million people, and cost as much as US$ 1 trillion.
Although we’ve had some heavy rains of late, weather so far in 2020 has thankfully been fairly mild in the US.
But unfortunately, the same can’t be said for China at the moment.
Source: Demis Web Map Server
Serious flooding has already been reported in Wuhan – epicenter of the COVID-19 outbreak – and other inland cities such as Yichang in Hubei Province, leaving at least 106 people dead or missing, and affecting 15 million residents… so far.
The Yangtze River is held at bay just upriver from Yichang by the world’s largest dam and hydroelectric power station, the Three Gorges Dam. Construction on the massive project took a total of 18 years, becoming fully operational in 2012.
But despite its relative youth, some experts are saying that the massive structure is in danger of collapse.
This isn’t the first time such rumors have circulated, and so far they have proven to be false. But in a year beset by such biblical-type events as a pandemic, swarms of locusts, and even the bubonic plague, discretion is probably the better part of valor.
The dam has already opened its spillways, flooding some historical sites in the process and raising questions as to how much more can be done to combat the heavy rains. At least as of this morning, they do not appear to be relenting much, with one strong system heading northeast in the direction of Wuhan, and another not far behind.
In total, there are roughly 400 million people – or 1/3 of China’s entire population – living along the river system, mostly from Chongqing to Shanghai. Because of that, any significant flooding events have the potential to shut down the bulk of the Chinese economy, thereby grinding global trade to a halt in the same fashion COVID-19 did earlier this year.
While it’s far from inevitable, it never hurts to be prepared.
First off, these events once again bring into focus potential downside on the iShares China Large-Cap ETF (NYSEArca: FXI). It just made a huge move up yesterday as Chinese stocks rallied nearly 6 percent, closing at a 5-year high.
With the US revoking Hong Kong’s special status, it’s unlikely the money grab represented by China’s new national security law will bear serious fruit… which makes me think FXI is looking a little frothy. We may make a move here in the next two weeks.
Secondly, any slowdown in China’s trade will result in a slowdown of imports to the US. That negatively affects companies leveraged to logistics on the West Coast, like rail provider Union Pacific Corporation (NYSE: UNP), which gets 1/3 of its revenue from “premium” freight, including intermodal shipments.
Similarly, we would want to look at the downside of China-levered freight companies like Air Transport Services Group (NYSE: ATSG), which handles a significant amount of Amazon’s air shipments from the country. Shares of ATSG were nearly cut by 50% during the global lockdown in late February/early March and could see a similar fate if another slowdown were to occur.
For now, however, their Zeppelins… err, planes… are in a holding pattern near all-time highs.
And thus for the time being, there’s not much for us to do but Ramble On…
All the best,