Coup Coup Ca-Choo: S&P 500, Seditionist Populism Hit Peak Absurdity

Published by Matt Warder on January 7, 2021

Winning Is Easy, Governing Is Harder

Just kidding… it was a complete s***show.

Now, I don’t mean to imply that the protestors’ underlying anger isn’t somehow justified — I’ve written here before about the generational nature of social unrest and the link between socioeconomic inequality and political polarization.

But instead of inspiring some sort of resounding wake-up call for democracy at large, this angry mob showed us they were no different than any other.

Full of sound and fury, signifying nothing.

The shock of the insurrection’s surprising success was clear, as one member of my home state’s legislature demonstrated… illegally.

But that shock eventually wore off, and people found themselves openly wondering “OK, now what?”

Mostly, they milled about, rummaging through papers, or sitting down to look at their cell phones.

Source: NBC, My TV

And in consistently bizarre fashion, the angry mass of humanity — one that had just violently pushed through a police barricade — mostly stayed between the velvet ropes that line Statuary Hall.

Source: NBC, My TV

One minute, they’re revolutionaries, and the next… they’re just tourists.

The impromptu autocoup didn’t have a follow-through.

Winning is easy, governing’s harder.

Am I the Walrus?

Yesterday’s events resulted in four deaths, so the notion this was all fun and games — for the lulz, in dystopian internet-speak — is an incorrect one.

But I remain dumbfounded by the sheer absurdity of the entire publicity stunt.

While I might be aware of a few of the underlying causes, the analyst in me wants to ascribe some sort of deeper meaning to the insurrection itself.

But that would be akin to what 60’s music critics often did to Beatles lyrics.

And sometimes, I suppose, the absurdity is the point.

When John Lennon wrote “I Am the Walrus,” it was purposefully directed at those listeners who were reading too much into the songs they wrote.

Pulling lyrics equally from random periods of his life — a police siren at his home in Weybridge, transcendental meditation, his arrest by the London Drug Squad — Lennon flung farce after farce at his fans.

In his 1968 book The Beatles, official biographer Hunter Davies noted while incorporating a childhood nursery rhyme into the lyrics, Lennon remarked, “let the f***ers work that one out.”

But humans are creatures of habit, and I’m an analyst, so… challenge accepted.

Or Am I the Carpenter?

As mathematician Émile Borel is thought to have said, if you provided a typewriter to a monkey and gave it limitless time, it would eventually — almost surely — write the complete works of William Shakespeare.

What the “Infinite Monkey Theorem” purports to say is that even the Brownian Motion of chaotic life finds order from time to time, if just by accident.

And Lennon’s iconic song is no exception.

First, he purposefully borrows the title from the personal mantra he received from the Beatles’ meditation guru, Maharishi Mahesh Yogi.

The walrus in that mantra happens to refer to the Lewis Carroll poem The Walrus and the Carpenter — part of the larger work Through the Looking-Glass.

In the poem, the Walrus and the Carpenter are on a beach, deep in wonder at the limitlessness of the sand surrounding them. They invite several nearby oysters on a walk to have a chat.

The eldest oyster knowingly winked and declined, but four younger oysters eagerly jumped at the chance, eventually drawing a crowd of others with them.

When they arrive at their destination a mile or so away, the Walrus begins to eat the oysters (of course) with bread and mignonette, but feels some regret for eating them.

The Carpenter, blinded by hunger, focuses on eating until the meal is over, then unironically asks the now-devoured oysters if they’re ready to go back home… end scene.

In an interview with Playboy shortly before his death in 1980, Lennon noted “It never dawned on me that Lewis Carroll was commenting on the capitalist and social system. I never went into that bit about what he really meant, like people are doing with the Beatles’ work.”

“Later, I went back and looked at it and realized that the walrus was the bad guy in the story and the carpenter was the good guy. I thought, Oh s***, I picked the wrong guy.”

“I should have said, ‘I am the carpenter.’ But that wouldn’t have been the same, would it? [Sings, laughing] ‘I am the carpenter …’”

While one could certainly draw parallels between the poem/capitalism/socialism — the capitalist Walrus entrepreneurially organizing all the oysters and the socialist Carpenter taking a large portion for himself — the truth is likely that was not the intended meaning at all.

As it turns out, illustrator John Tenniel actually chose to draw the character of the Carpenter over the equally rhythmic words “butterfly” and “baronet,” so there’s no inherent importance to the Carpenter at all.

Moreover, in The Annotated Alice, the fantastic writer and mathematician Martin Gardner instructs readers that Looking Glass was created for children’s imaginations rather than the speculations of “mad people”.

And while it’s ironic that Lennon applied the same kind of over-analysis to Carroll that he lamented others were doing to his music, knowing this fills me far more with admiration than it does with criticism.

Because it’s human to look for those connections — to find meaning where there perhaps is none.

It’s human to speculate that perhaps the actual “good guys” in Carroll’s poem were the oysters — unaware, obtuse pawns caught up in a larger scheme by more powerful entities to extract value from their very lives.

It’s human to think that if we somehow just created better, more self-aware versions of the Walrus or the Carpenter, that they might just eat mignonette sandwiches and let the oysters remain free.

It’s human to go one step further, and say “hey wait a minute, those protestors are sounding a heckuva lot like those oysters!”

Perhaps there’s even some truth to be found in all of that.

But reality is a cruel mistress, and perspectives are often arbitrary.

So, while I’d like to think that John Lennon ended “I Am The Walrus” with a Shepard Tone — a chord structure built on simultaneously ascending and descending melodies — to symbolize the growing socioeconomic disparity between the rich and the poor…

The reality is he probably just thought it sounded cool.

Maybe I’m Actually the Market

While chaos reigned at the Capitol, the S&P 500 was unfazed, closing up on the day, and rallying to fittingly absurd all-time highs today.

Source: Bloomberg

Ironically, those all-time highs came on the same day as our country’s trade balance hit a multi-decade low.

Source: Bloomberg

One prominent talking head postulated the rally somehow represented a strong faith in capitalism rather than simply the aggregation of late-stage capitalist money aimlessly sloshing around.

But if the previous thought exercise taught me anything, it’s that the reality here is simply apropos of nothing. The market does whatever it does, and while we need to do the hard work to get out in front of changes, we also need to recognize where the random Brownian Motion driving this rocket ship is taking us right now.

At the moment, that destination remains the commodity space, which has done nothing but go up at a 45-degree angle since April.

Source: Bloomberg

That makes some sense, as the massive debasement of the dollar over that time has forced wealthy I-bankers and hedge fund pod bros into assets rather than cash.

Source: Bloomberg

And though energy has sucked up most of the resulting inflation over that period, it’s most recently been rotating out of the beleaguered oil sector and into the EV/battery and industrial metals space.

Albemarle (NYSE: ALB), one of the world’s largest lithium producers, took off today, rising over 5%.

Source: Bloomberg

With Biden now officially confirmed by the Senate, the EV transition will be in full (albeit slow) swing over the next couple of years. And given this recent momentum, we might as well play along.

Rather than get into single-stock risk here, I’d rather gain broader exposure to the sector, which can be done via the Global X Lithium & Battery Tech ETF (NYSEArca: LIT).

It’s at all-time highs, but frankly, so is everything else… I’m fine with a quarter tranche here and a 3% trailing stop to protect downside.

Because at the end of the day, we can’t read too much into one thing.

Sometimes, it just is what it is… accept the absurdity and move on.

Stay safe, everyone.

All the best,

Matt Warder